Councils’ privatisation of waste management services is a massive mess – Greater Manchester has borrowed £500m to end PFI waste deal

Privatisation is not just making a mess of our NHS. It is also making a mess of a whole host of Council services, including waste management.

An article by Greg Pitcher in today’s Local Government Chronicle reports that Greater Manchester Combined Authority has borrowed £500m to end its PFI waste deal with Viridor Laing.

It has done this in order to re-procure a cheaper waste management services contract with a private company. Viridor is among 6 companies that are in the running to win the contract. So Greater Manchster Combined Authority are paying £500m to buy out a contract so they can re-procure a cheaper one, possibly from the same company.

The Local Government Chronicle website provides a sorry saga of waste management services profiteering, rip offs and incompetence. The argument that private sector provision of public services would increase efficiency and value for money lies dead in the water. If it ever had any life in it,  it certainly doesn’t now.

The litany of privatisation disasters with waste management services includes Calderdale Council’s abandoned attempt in 2013 to get Defra PFI money to fund  a PFI contract with Pennine Resource Recovery, to build and run a waste incinerator in Bradford. Calderdale Council said it spent £537k in respect of procurement costs for the PFI waste incinerator, with the risk of further losses needing to be assessed should the Council decide to pull out of the contract (which it did). Does anyone know how much that botched nonsense ending up costing us all?

In the first two weeks of June alone, the Local Government Chronicle reported:

  • Gloucestershire County Council told to publish secret incinerator deal data (13 June, 2018 By Mark Smulian)

    “We have to make sure we balance the needs of our contractors for commercial sensitivity with the desire to provide as much information as possible”

  • City and contractor in row over ‘lost’ recyclables (6 June, 2018 Mark Smulian)

    Contractor Amey faces a bill of almost £300,000 in a dispute with Gloucester City Council which has claimed the company lost 2,000 tonnes of recyclable materials.
    (That is the same Amey that has the roads maintenance PFI contract with Sheffield Council and is busy destroying trees rather than spend money on flexible paving. While Sheffield Council does its darnedest to send tree protectors to jail.)

  • District apologies over troubled new waste contract (6 June, 2018 Mark Smulian)

    North Hertfordshire District Council has apologised to residents about the performance of its seven-year waste collection and street cleaning contract with Urbaser only a week after it started.

Greg Pitcher’s 26th June 2108 Local Government Chronicle article about Greater Manchester Combined Authority borrowing £500m to pay its way out of its PFI contract with Viridor Laing says that the figure was revealed when the Combined Authority published its statement of accounts for 2017-18.

EU Procurement Regulations made cost cutting impossible in the existing PFI waste management services contract

EU Procurement Regulations (2014) made it impossible for “efficiency cuts” to be made through the PFI contract, which is why Greater Manchester Combined Authority has ended and bought out the PFI contract.

However this will not end privatisation of Greater Manchester’s Waste Management services – it just opens the door to a cheaper re-procurement of them with a different (or possibly the same) company – since Viridor is in the running for the re-procured waste management services contract.

After Greater Manchester Waste Disposal Authority (now brought under the Combined Authority) ended the PFI contract with  Viridor-Laing (Greater Manchester), they said in February this year that six companies had progressed to the next stage of procurement to provide waste and resource management services in the area. These were Suez, Veolia, Viridor, FCC Environment, Biffa and Biowise.

Calderdale and Kirklees 999 Call for the NHS has just reported on the role of procurement law in governing contracts in the NHS, and the fact that it exists in order to open up UK public services to bids from EU companies. Which basically opens them up to bids from international companies from anywhere – since USA private health companies like Cerner are acquiring EU companies as a way to expand further into the EU.

The back story to the PFI buy out – seems there may be some pork pies involved

The Local Government Chronicle article by Greg Pitchser reports that this spring
Greater Manchester Waste Disposal Authority (GMWDA)  transferred all its duties and powers to the combined authority – after saying last summer that it was ending the £3.8bn PFI deal by acquiring Viridor Laing for £1. The article continues:

“But a report in the Manchester Evening News this month said the combined authority spent £500m buying out the deal. A spokeswoman for the combined authority told LGC’s sister title Materials Recycling World: “The figure of £500m is correct, that’s how much was borrowed.”
When the termination announcement was made in August last year, GMWDA said it would be paying back outstanding bank loans at full value as part of the agreement.

The PFI contract – covering waste collection, treatment and disposal along with construction of various related facilities – was signed in 2009.”

There have been problems with the deal to design, construct and commission 46 waste facilities across Greater Manchester and  the mechanical biological treatment process was “capturing significantly less organic material than originally envisaged” in the area in 2017-18, while there had been “unexpected corrosion in the anaerobic digestion facilities resulting in the reduced generation of green energy”.

 

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