Essex County Council (ECC) is set to take control of waste processing directly, but bringing with it the “highest level of risk”.
It represents a shift away from the current model that has been in operation since 2013 when Veolia was given the contract to support delivery of ECC’s waste obligations.
This has involved operating and maintaining ECC’s recycling centres for household waste network, and operating and maintaining ECC’s waste transfer stations – places where local waste collection vehicles will deposit their waste cargo prior to loading into larger vehicles.
The option results in the “highest level of risk transfer to ECC”, however, it brings a number of important potential upsides including the opportunity to benefit from more control over the processes that could reduce residual waste tonnages.
The most significant attractive feature is the removal of the private sector profit margin on several of the service elements, including the labour element which forms over 50 per cent of the integrated waste handling contractor expenditure currently going to Veolia.
But one of the most apparent risks created by this option relates to the potential transfer of staff from the contractor to ECC under the Transfer of Undertakings (Protection of Employment) Regulations (TUPE) and the associated costs.
Such staff transfers may lead to increases in employer liability costs.
The council has built up substantial waste reserves of more than £100million which ECC says are in place “to smooth the impact of the year on year increases in anticipated waste disposal costs due to increases in population, volume and landfill tax, with net contributions to the reserve in early years being balanced out by withdrawals later.”
Although the waste operations would be brought in-house for direct delivery by ECC, waste haulage services, plant and equipment, including vehicles, operational plant and waste containers for efficient operation of the services, material marketing services and other services to meet the operational needs of the recycling centres, waste transfer stations and associated obligation would be done externally.
An ECC statement said: “Whilst the staff costs associated with the recommended option have been modelled, as we are not yet in due diligence, we cannot be clear on the current or future liabilities, which remains a risk.
“This includes costs associated with contractual terms which are both written and implied. There could also be an additional cost to integrate this workforce and their terms onto our current systems, previous changes have come with considerable cost and have had long lead in times, however this detail cannot be provided until further information is available.”