Fife council has established an arms length organisation to provide waste treatment and disposal services, in what is believed to be a first for Scotland.
Fife Resource Solutions LLP, which was registered in July 2013 and came into operation from last month, will offer landfill activities including the disposal of special wastes, and treat and dispose of fly ash from biomass facilities.
While it does not provide household waste and recycling collections, which will continue to be conducted in-house by Fife council, it will also deliver marketing and consultancy services to public and private sector organisations, including waste compositional analysis via Zero Waste Scotland.
Fife Resource Solutions has also taken control of 61 staff previously employed by the council, and a recently opened anaerobic digestion plant near the Lochhead landfill site in Dunfermline, which processes 40,000 tonnes of food and garden waste collected by the council each year to supply 1.4MW of power for the local network.
The plant has been developed and installed by ENER-G at no upfront cost to the council, and generates heat for use in the councils existing district heating system for 230 flats and seven public buildings.
The move is understood to be the first instance of a Scottish local authority establishing an arms length company to deliver its waste management services although Glasgow city council has set up similar organisations and limited liability partnerships to handle its building and maintenance services.
Income
In addition, the council has also created Resource Efficiency Solutions, a partnership between the council and Fife Resource Solutions to outsource some commercial services to generate income.
I think the interest to the council is in the long term and also the social benefits for the outer community and business community that will enable the development of an efficient, cost effective organisation that is able to provide key services to the local business community to an affordable cost.’
– Chris Ewing, environmental sustainability manager for Fife council
Fife has stated that Resource Efficiency Solutions which is not a wholly-owned company – has been set up to ensure local businesses have access to high quality waste management services.
The local authority is currently working on a waste treatment and disposal framework in order to enable it to offer mini-tenders to between nine and 10 councils in Scotland and the North East of England.
It mirrors the move by English councils to set up teckal-exempt companies in order to outsource commercial services to other local authorities in the wake of cuts to local government funding.
The procurement model was recently adopted by by Cheshire East, and City of York council is considering entering into a similar arrangement with its waste service provider Yorwaste (see letsrecycle.com story).
Concern
But the growing trend could be of concern to the private sector, which fears the introduction of the council-owned companies would see it unable to compete for the in-house tenders and offer the same low-cost services.
In the latest edition of Resource Management & Recovery magazine, Environmental Services Association chairman and SITA UK chairman David Palmer-Jones wrote: The concern among ESA members is that the introduction of these new public companies into the market has the potential to erode the private sector as the public sector could provide lower-cost services by effectively subsidising them with their main waste management contract.
This, coupled with the aggressive marketing of zero VAT on their commercial services, could create a compelling argument for organisations to change supplier, which would be to the detriment of the private sector.
Asked whether the council would consider privatising or selling off Fife Resource Solutions if it proved to be successful, Chris Ewing, environmental sustainability manager for Fife council told letsrecycle.com it would not be in their long-term interest.
He said: I think the interest to the council is in the long term and also the social benefits for the outer community and business community that will enable the development of an efficient, cost effective organisation that is able to provide key services to the local business community to an affordable cost.
Objectives
He added: One of our objectives is to provide cost effective and sustainable services to other councils. I think the overall business benefit needs to be taken into account. These arms length companies operate in such a way that they cant be subsidised by their parent local authorities. The local taxpayer should not be subsidising those companies to compete unfairly with the private sector.
Register for free to comment