Decision details

The Environment Portfolio Holder presented a report on the Recycling Income from the Waste Management Contract.

The Portfolio Holder reminded the Cabinet that, since 3 November 2014, the Council had a contract with Biffa Municipal Limited, which covered domestic waste and recycling collection and street cleansing services. The contract was subject to an indexation mechanism which covered the majority of activities and also contained a further specific provision for an increase in the contract price in line with a formula for recyclable materials which reflected changes in the prices for commodities. The Portfolio Holder advised that the Council and Biffa had yet to reach agreement on the financial outcome of the arrangement for this year. By virtue of the pending decision on the Council’s budget on 22 February 2018, it was felt to be prudent to seek a provisional contingency sum to be included in the Budget for 2018/19.  In addition, the Cabinet was also advised of a letter received from Biffa regarding changes to the importation of waste to China, which again could present a financial risk to the Council.

In response to questions from the Members present, the Portfolio Holder stated that the contingency sum was based on advice received from Biffa, and it was not anticipated that a further supplementary estimate would be required. In relation to the changes for the importation of waste to China, it was not possible to quantify the financial aspects at the current time as it was not clear what the future measures would be, but the Portfolio Holder would liaise with other local authorities.

Decision:

(1)        That the inclusion of a contingency sum, as set out within the report, be included in the 2018/19 Budget in the event that Biffa were successful in their claim regarding the Recycling Income Unit Rate;

(2)        That, as part of the negotiation with Biffa, mitigation of the potential costs to the Council be sought by Officers and expert external advice be sought if required in support of this outcome;

(3)        That the fundamental changes to the importation of waste recyclable materials announced by the Chinese Government be kept under close review; and

(4)        That an item be included in the Council’s Corporate Risk Register to reflect the potential impact on the Council of its Waste Management Contract with Biffa Municipal.

Reasons for Decision:

As a result of the current failure to agree the financial implications of the recycling income unit rate for November 2017, it was prudent to make a contingency allowance within the budget for 2018/19, at the same time as other bids were being made. This would avoid having to seek supplementary funding at a subsequent Council meeting, immediately after the budget had been set.

Other Options Considered and Rejected:

The Recycling Income Unit Rate arrangements were contained within the Contract with Biffa Municipal, and whilst there might be a disagreement on their application for 2017, there was no other option but to seek a resolution.