Meeting documents

1 THE ISSUE

The West of England Waste Management & Planning Partnership have produced a Draft Joint Residual Municipal Waste Management Strategy, which was recommended for adoption by the Member Project Board at their meeting on the 12th March 2008 (background paper no.7). Approval of this strategy is now sought by each individual local authority Cabinet, along with approval to begin the Phase 2 (interim treatment) procurement for waste treatment capacity, as detailed in the strategy.

2 RECOMMENDATION

The Cabinet agrees that:

2.1 The West of England Waste Management & Planning Partnership Joint Residual Municipal Waste Management Strategy May 2008 is adopted (Appendix A).

2.2 Bath & North East Somerset does not participate in Phase 3 of the Joint Waste Strategy, as detailed in the document and in accordance with the rationale stated in Appendix A (pages 83 and 84) and section 7.5 below.

2.3 Approval is given to commence with the Phase 2 procurement (Appendix B) with Bristol City Council to act as the lead authority until the new governance arrangements for the West of England Partnership have been implemented, (refer Council resolution 11 at the 8^th May 2008 meeting)

3 FINANCIAL IMPLICATIONS

3.1 The strategy will introduce measures to reduce residual waste tonnage as required by the Council's reducing LATS (Landfill Allowance Trading Scheme) permit allocations. If the Council does not achieve its LATS targets (related to reductions in landfilled waste) substantial penalties will be incurred. It is possible to buy and sell permits in the short-term to provide flexibility in managing in-year fluctuations in permit deficits and surpluses.

3.2 The decision to enter procurement of Phase 2 with our West of England partners is generally justified by economies of scale, through procurement cost sharing and offering a larger, more attractive contract to market.

3.3 An evaluation of Bath & North East Somerset's exclusion from Phase 3 procurement has been undertaken using a financial model to 2040, which enables comparisons to be made with the regional waste Phase 3 proposal. This assumes household growth of 18,800 in the period until 2026 as anticipated by the Regional Spatial Strategy conclusions.

3.4 We have assumed that residual waste tonnage will reduce as the following initiatives are introduced:

a) Food Waste collections from 2009

b) Significant reduction in Trade Waste collection by the council

c) Switching Cardboard to "free" Green Box collection service to encourage participation

d) Continued education and marketing to promote and encourage waste reduction & recycling

e) Other waste limitation measures when residents' demands and expectations justify any relevant changes.

The financial implications of these changes will be modelled in detail over coming months as part of a comprehensive review of the Council's waste services forward planning. As new waste reduction and recycling initiatives emerge and are introduced, and primary legislation changes are made waste tonnages for disposal/treatment may reduce further with associated financial implications. Waste-flow forecasting and financial modelling will need to be monitored and updated on a regular basis

3.5 Initial findings from the modelling for this Council's choice of Phase 3 type solutions, show the following cost analysis:

Therefore, the financial benefit of EfW amounts to £9m, in total, over 32 years when expressed as a discounted cash flow sum. It is reasonable to conclude that the benefits arising from the B&NES strategy contained in Appendix A and in paragraph 7.5, coupled with the uncertainties over such a long period of time, outweigh this opportunity cost (the financial benefit of the EfW that is foregone).

3.6 We have assumed that mechanical biological treatment capacity (or other suitable technology) can be procured through Phase 2 to obtain a gate fee per tonne. This route of procurement has greater exposure to prevailing market conditions but it also allows the Council to take advantage of opportunities which may arise. An equivalent standalone model for B&NES only waste was undertaken for mechanical biological treatment, but Council-only tonnages were too low to make this economic at £270m (i.e. higher than do nothing).

3.7 The principles of cost sharing agreements for Phase 2 are being developed by the WoE Project's Finance Officers Group and will be brought forward for recommendation to the Cabinet in due course.

3.8 The Council is developing a 5-10 year financial plan for waste management to be considered in the Autumn. The Council's new landfill contract (to be awarded in June) covers a 5 year period from 1^st October 2008 with the option for a 3 year extension. This contract has very low minimum tonnage guarantees and allows the Council the flexibility to procure other treatment processes as the waste treatment market develops and as the Council's waste strategy moves forward.

4 COMMUNITY STRATEGY OUTCOMES

• Sharing resources, working together, and finding new ways of doing things
  
• Taking responsibility for our environment and natural resources now and over the long term
  
• Improving local opportunities for learning and gaining skills
  
• Improving our local economy
  
• Improving our local environment

5 CORPORATE IMPROVEMENT PRIORITIES

• Reducing Landfill
  
• Developing a sustainable economy
  
• Improving the public realm
  
• Improving customer satisfaction

6 CPA KEY LINES OF ENQUIRY

• Ambition for the community - i.e. What the council, together with its partners, is trying to achieve
  
• Prioritisation of ambitions
  
• Increasing capacity of the council to deliver ambition for the Community to ensure we achieve what we say we will

7 THE REPORT

7.1 The West of England Waste Management & Planning Partnership consists of Bath & North East Somerset, Bristol, North Somerset and South Gloucestershire Unitary Authorities.

7.2 The Joint Residual Municipal Waste Management Strategy (the Joint Waste Strategy) is the outcome of two years work involving two major public consultation exercises, a detailed technical evaluation of the technology options available to the Partnership, a financial appraisal of the main options and further technical work to consider environmental issues, including the impact on climate change.

7.3 The Joint Waste Strategy defines the strategic framework for managing residual waste over the period 2007-2027 through a four phased approach.

7.4 This approach has the support of Defra, it meets the objectives set out in the Waste Strategy for England 2007, aligns itself with the aims and objectives of the South West Regional Waste Strategy and is likely to offer the greatest competition from the market and value for money for Council Tax payers.

Phase 1: On-going waste reduction, reuse, recycling and source segregation to help reduce the tonnage of residual waste needing treatment. Each local authority will maintain a long term commitment to increase waste reduction, recycling and composting, and will move towards a longer term aim of achieving zero waste.

Phase 2: Interim treatment to meet short-term Landfill Allowance Trading Scheme (LATS) allowances

The procurement of medium term treatment of all four authorities' residual Municipal Solid Waste for a minimum five year period but with the option to extend for a further 5years (2010-2020) to meet Landfill Allowance Trading Scheme (LATS) allowances at least until Phase 3 is in place.

This is likely to involve a bio-stabilisation type process (Mechanical Biological Treatment(MBT)/Biological Mechanical Treatment (BMT) type technology), or an autoclave process. These processes will produce materials which still need to be landfilled, or in some cases fuels which can then be burnt for energy

Phase 3: Long term treatment of 160,000 tonnes of residual Municipal Solid Waste per annum to meet LATS allowances. This is proposed to be procured by a Competitive Dialogue procurement process leading to a 25 year contract carried out in partnership by Bristol, South Gloucestershire and North Somerset Councils. An Expression of Interest has been submitted to DEFRA for PFI credits for the phase 3 procurement. It is recommended that B&NES does not be participate in this phase 3 procurement (see pages 83 and 84 of Appendix A and para 7.5 of this report).

Phase 4: Longer Term Treatment Contract - intended to be procured once phase 3 is operational. This phase looks to the future beyond 2020 and allows new and evolving treatment technologies to be fully assessed, and will use lessons learned from previous phases to continue to meet targets.

7.5 The Cabinet is recommended not to participate in Phase 3 of the Joint Waste Strategy. It is not considered to be appropriate for Bath and North East Somerset to enter into a 25 year contract funded by PFI, because there are so many uncertainties inherent in waste forecasting and technologies. It is recommended that Bath & North East Somerset works in partnership with the other Authorities to procure Phase 2 capacity to treat its residual waste stream for a 5-10 year period (2010-2020) whilst during this time developing further Zero Waste initiatives, enabling assumptions detailed in tonnage modelling to be realised, and developing further source segregation of recyclables to meet its LATS obligations.

7.6 Bath & North East Somerset will then need to consider, with the other Authorities participating in Phase 2, whether an extension of the Phase 2 contract is appropriate, assess any viable alternatives that may exist, and work jointly to determine if there should be a Phase 4 procurement (from 2020 onwards).

7.7 The Environmental Report for the Strategic Environmental Assessment of the Joint Residual Municipal Waste Management Strategy was drafted in February and further revisions carried out in March/April 2008 to cover the final version of the Strategy. It highlighted the importance of regular monitoring procedures and reviews to ensure that the objectives of sustainable development are met. A summary of the Environmental Report can be found in Section 5.7 of the Joint Waste Strategy document and the full report can be viewed or downloaded on the Rubbish or Resource website (www.rubbishorresource.co.uk).

7.8 The West of England Partnership has also been developing a joint Waste Core Strategy (a statutory planning document which forms part of the Local Development Framework (LDF)). This will establish the spatial strategy for distribution of strategic waste facilities for all controlled waste, including commercial and industrial waste. It will set out where controlled waste will be managed and it will identify some potential sites.

7.9 A number of sites will be brought forward in the Preferred Options Document as being potentially suitable for the development of municipal waste management facilities. The Preferred Options Document will be consulted on later this year.

8 RISK MANAGEMENT

8.1 The report author and Lead Cabinet member have fully reviewed the risk assessment related to the issue and recommendations, in compliance with the Council's decision making risk management guidance.

8.2 The Partnership has developed a comprehensive risk register which is being overseen by Capita Symonds, currently Project/Risk Managers to the Partnership. A summary of the technical risk assessment and the manner in which these risks can be mitigated/controlled is set out in Appendix E of the Joint Waste Strategy document.

8.3 A specific project risk register and assessment has been prepared for the Phase 2 procurement which will be managed by the Joint Waste Officer team and overseen by the joint directors programme management team, both of which include B&NES representation. The risk register covers a range of areas such as technical, contract, financial, planning, political, market, partnership working, stakeholder engagement and consultation, which will require proactive management to ensure successful outcomes.

8.4 In procuring the Phase 2 treatment capacity, it is unknown as to where this site/sites will be, what the haulage implications are, and the actual gate fee will not be known until the contract is tendered. These factors will obviously impact on financial modelling.

9 RATIONALE

9.1 TOWARDS ZERO WASTE 2020: A Waste Strategy for Bath & North East Somerset 2005 - 2010 details initiatives that Bath & North East Somerset is undertaking whilst striving to meeting its LATS targets of reducing biodegradable waste to landfill. http://www.bathnes.gov.uk/BathNES/environmentandplanning/recyclingandwaste/wastestrategy/strategy.htm

9.2 The waste disposal/treatment market is in a period of extensive change and development at the moment, driven by EU and national policy and strategy. A wide range of treatment technologies are being developed which will provide appropriate alternative options for residual waste in the future; however many are not yet wholly proven in the UK on residual waste and there is currently no such infrastructure in the West of England.

9.3 In the interim short to medium term (5-10 years), mitigations to avoid additional costs are implementing Phase 1 (waste reduction, reuse, and recycling) and Phase 2 (interim treatment capacity procurement).

9.4 The proposed Joint Waste Strategy details partnership working with neighbouring Unitary Authorities to develop new waste treatment infrastructure which will allow the sub-region to meet its landfill diversion needs in the future. Partnership working allows the authority to benefit from economies of scale and achieve Best Value.

9.5 The four phase approach to treating the sub-region's municipal residual waste allows Bath & North East Somerset the flexibility to continue to develop Zero Waste initiatives whilst benefiting from economies of scale achieved by partnership working in developing the necessary waste treatment infrastructure.

10 OTHER OPTIONS CONSIDERED

10.1 Consideration has been given to participating in the Phase 3 procurement, but this option was rejected for the reasons set out in pages 83 and 84 of Appendix A and paragraph 7.5 of this report. It is also considered that a long term 25 year contract would not be appropriate within the context of the Council's Zero Waste strategy.

10.2 The "do nothing" option was considered, but rejected on the grounds of being the most expensive cost option.

10.3 Procuring an individual contract for Bath & North East Somerset alone has been considered for waste treatment infrastructure but rejected, as a joint partnership procurement of Phase 2 capacity will enable the benefits of economies of scale and enhanced market opportunities to come forward.

10.4 Potential development of working arrangements with other Authorities outside of the West of England boundaries for example Somerset, Wiltshire and Gloucestershire have been explored at various stages. This has not produced viable proposals to move forward with for various reasons, such as timings, technology preferences and self-sufficiency principles.

11 CONSULTATION

11.1 Cabinet members; Overview & Scrutiny Panel; Service Users; Local Residents (through 2 public consultations as noted in 11.2); Community Interest Groups; Stakeholders/Partners; Other Public Sector Bodies; Section 151 Finance Officer; Chief Executive; Monitoring Officer.

11.2 The development of the Joint Waste Strategy involved 2 major public consultation exercises in Summer 2006 and Spring 2007, involving roadshows, leaflet distribution (including questionnaire survey), website information and public meetings. A strategic consultation forum was formed from a wide group of interested parties and stakeholder groups from each Partner Authority to help design and deliver the consultation programme and to ensure that all aspects of the community were fully engaged and involved.

11.3 A Joint Overview & Scrutiny Reference Group has scrutinised the Joint Waste Strategy at their meeting on 21st January 2008 and each individual local authority Overview & Scrutiny panel have also had the opportunity to review the draft Joint Waste Strategy. Feedback from these meetings is detailed in background paper no 7 Appendix D.

12 ISSUES TO CONSIDER IN REACHING THE DECISION

12.1 Customer Focus; Sustainability; Human Resources; Property; Corporate; Other Legal Considerations

13 ADVICE SOUGHT

13.1 The Council's Monitoring Officer (Council Solicitor) and Section 151 Officer (Strategic Director - Support Services) have had the opportunity to input to this report and have cleared it for publication.