ECT Recycling tight-lipped over future social role

However, the organisation has kept tight-lipped about how ECT Recycling's community status – which ensures it acts for the interest of the community rather than for profit – will be affected by the deal.

Earlier this week, ECT announced that ECT Recycling- which employs 1,100 people – had been sold for £3.4 million to May Gurney – a support service company listed on the London Stock Exchange (AIM) (see letsrecycle.com story)

The deal excludes ECT's successful Bryson Recycling operation, which has been sold to its joint venture partner the Bryson Charitable Trust.

ECT said that first and foremost it was “business as usual” at ECT Recycling and that its management team would remain in place, led by Stephen Sears, and the focus would remain on delivering service quality to the public.

It explained that, for some time, it had been exploring ways to “secure” the future of its recycling business and build upon its “successful business formula” in delivering waste services to local authorities.

Mr Sears said: “ECT has been looking for a partner for our recycling and waste management business with a good reputation in the local authority market place and with the commercial muscle to help us secure bigger contracts.

“This will allow us to deliver our social and environmental objectives as well as the financial results that are essential to continued success,” he added.

CIC

However, Mr Sears did not explain how the takeover would affect ECT Reycling's current Community Interest Company status (CIC).

CICs are created for the use of people who want to conduct a business or other activity for community benefit, and not purely for private advantage and must pass a “community interest test” and “asset lock”, which ensure that the CIC is established for community purposes and the assets and profits are dedicated to these purposes – which would appear to be incompatible with a private firm.

This morning, ECT Group interim financial director Peter Child refused to elaborate on the issue and pointed to an announcement by May Gurney which appeared to shed no further light on this point.

He said: “I won't comment on that – it has been made quite clear by May Gurney.”

Mr Child added that the money raised by the sale would be invested in ECT- in services including transport in Ealing, Milton Keynes, Cheshire and Ealing's 195 bus service.

He said: “It is needed for the running of the remaining ECT activities such as transport services.”

Sector

Within the community sector, the takeover received a mixed reaction.

One social enterprise told letsrecycle.com: “We are all digesting the news at this moment, it is quite a surprise and the move does not seem appropriate for a social enterprise.”

A spokeswoman for the London Community Recycling Network said that while it was not vehemently against or in favour of the move, the takeover demonstrated the “success story of social enterprises.”

Mal Williams, chairman of Welsh community recycling network CYLCH, added that ECT has always been a “special case” in the community sector and he could not foresee Welsh social enterprise organisations such as Newport Wastesavers and Cleanstream ever joining the private sector.

“These are created for stakeholder and local beneft and have stakeholder and local accountability,” he said.

Two years ago the conversion of ECT to working under a private sector company could have jeopardised the future of the community recycling network as a whole. Now, community sector and social enterprise experts say it is in a much better position to move forward beause of a policy over the past two years of developing smaller scale operations.

Others in the sector noted that ECT had expanded rapidly in the past few years and this could have put the organisation under pressure. In 2003 it took on six local authority contracts from Avon Friends of the Earth after it went into receivership.

Welcomed

May Gurney heralded its takeover as one which would strengthen its position in the municipal waste management market.

David Sterry, May Gurney chief executive, said: “We are delighted to welcome a company whose long-term customer orientated culture and focus on partnerships is aligned to our own. This acquisition significantly enhances our capabilities and customer relationships in the local government waste services market, a market where the demands for our customers and challenges for our customers are growing rapidly.”

Councils in Somerset and Ealing, where ECT holds recycling contracts, also welcomed the move.

ECT Recycling has held the contract to collect Somerset's recyclables and refuse since October 2007, and had been working with some of the county's councils on recycling since 2004.

Somerset Waste Partnership managing director Steve Read said “the deal provides long term financial security for ECT Recycling without affecting the way the service is delivered, future plans or costs to the community”.

He added “We are also assured that May Gurney wish to propagate the trust we have built up in our relationship with ECT Recycling. All told, this appears to be good news for Somerset”.

A spokeswoman for Ealing council said: “Residents will not notice any change in services in the short term. In the longer term, the new ownership will support further improvements to refuse and recycling services. The council works successful with a number of private sector partners. Our priority is to deliver high quality services to residents.”