Yorwaste Ltd, which is owned by North Yorkshire and City of York councils, would also be able to develop partnerships with other local authorities and public sector bodies under the proposals.
At present, Yorwaste holds a number of local contracts to process dry recyclables including on behalf of Ryedale, Scarborough, and Redcar & Cleveland borough councils.
Until now Yorwaste has had to bid for waste and recycling tenders through a competitive procurement process, but North Yorkshire has recommended obtaining Teckal-compliant status for the firm.
Teckal exemptions are already enjoyed by a number of councils in the UK, allowing them to branch out into commercial waste operations. City of York council first looked at the benefits of entering into a Teckal arrangement with Yorwaste at a meeting in March 2014 (see letsrecycle.com story).
A report on the benefits of Teckal has already been approved by North Yorkshire, and will now be decided on at a meeting of the city council executive on March 3.
Northallerton EfW
If approved, the councils would be able to award contracts to the firm without undertaking ‘lengthy’ procurement procedures or outsourcing to the private sector. According to the county council, the exemption would also allow both authorities to ‘maximise’ the amount of waste delivered to the Allerton Waste Recovery Park.
The energy-from-waste facility is being developed under a 25-year, £1.4 billion PFI deal signed between AmeyCespa and the two councils in 2010. North Yorkshire and York secured a combined investment of over £183 million from the Green Investment Bank for the project in November last year (see letsrecycle.com story).
The councils will aim to facilitate the exemption by April 1 2015. However, in order to comply with the exemption, Yorwaste would be required to either transfer or sell its shares in SJB Recycling Ltd – its wholly-owned subsidiary – directly to the councils.
Either a sale or transfer would require an amendment or material change to the councils’ capital programme. If Yorwaste retains its shares in SJB then its likelihood of achieving Teckal status will be ‘less certain’, according to the report.
Legal challenge
The report also warns that its Teckal status could be subject to ‘legal challenge’ – as there is ‘limited case law’ on the use of the exemption.
The precedent was established in the Teckal Srl v Commune di Viano case in 1999, which established that a contract let to a third party will not count as a public service contract if “the local authority exercises over the person concerned a control which is similar to that which it exercises over its own departments and, at the same time, that person carries out the essential part of its activities with the controlling local authority or authorities”.
The increase in local authorities applying for Teckal exemptions has drawn criticism from the private sector – with the Environmental Services Association recently warning councils not to breach procurement law when tendering services (see letsrecycle.com story).
However the report concludes: “The risk of legal challenge has been mitigated by North Yorkshire county council seeking appropriate legal advice. As mentioned above, Ashfords LLP now also owes a duty of care to the council in relation to such advice.”
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