Hounslow in-house service costs could soar by over £16m

Council chiefs in the West London borough are due to decide whether to approve the additional investment, following its decision to bring collections back under local authority control last year.

Under the proposals, Hounslow’s own arm’s-length company Lampton 360 is due to take control of collections once its current contract with Suez expires in October. It follows a decision to cut the frequency of refuse collections to fortnightly and launch a £50-per-year garden waste charge (see letsrecycle.com story).

The new waste service was initially anticipated to involve a £11.5 million investment, which was approved by the council within its 2015/16 Budget in September 2015.

However, this forecast had risen to £18.93 million by December, and by this month has climbed to a final estimation of £28.15 million – a £16.65 million leap in less than a year.

Impact

In a report to be discussed by Hounslow council’s cabinet tomorrow, deputy leader Amrit Mann concludes that if the new budget is not approved, waste and recycling services will be in “jeopardy” from 31 October, as the absence of a depot and an outlet for the collected recyclable materials would have a “significant financial impact” on revenue.

Reasons behind the increase are due to several factors, the greatest being the need for a new waste depot at Southall Lane to house both the council-owned waste and recycling fleets, a vehicle workshop, and facilities to sort and bale materials for onward sale.

At present, Suez currently operates its waste fleet at the council’s depot at Bridge Road, while its recycling fleet is housed at a separate facility in Hanworth, owned by the company. As Lampton 360 cannot operate from the site, and requires a new location to handle recyclables, the estimated depot costs alone have increased from £5.9 million to £18 million.

Mr Mann notes: “There is still a degree of uncertainty around the final cost which should be clarified by the end of July when we will have firm prices and construction programmes from our contractors.”

Bins

For new bins and containers, the council had put aside £600,000 – a figure which has now reached £2.33 million as a result of providing new kitchen waste bins in the relaunch of its kerbside scheme.

And, price of the new waste vehicles – first valued at £5 million last year – now stands at £6.4 million reflecting “an increase in prices, particularly for kerbside-sort vehicles” according to the company.

Other price increases include provision for garden waste collections, commercial waste collections, and the IT systems.

The report concludes that it is “not possible” to say if an increase in the costs will be offset by the additional savings from the waste and recycling service until Lampton 360 provides a price for delivery later in June.

However, the report recommends the increase should be approved. While construction of the new depot may still be delayed “due to the complexity of the project”, approving it would give the borough a “major asset” for a minimum of 20 years as well as the chance for Lampton 360 to offer a recycling service to the private sector, it adds.

Lampton 360

Lampton 360 was set up as a trading company by Hounslow in 2013 in a bid to boost commercial operations.

Speaking to delegates at letsrecycle.com’s Remunicipalisation Conference in London this year, Andrew Baker, interim head of commissioning for waste and recycling at Hounslow, argued that the council had been unhappy with the lack of control it has over its current arrangements with Suez.

Mr Baker continued that the borough’s recycling rate had “stagnated” at 35%, adding that the move in-house would be equivalent to 30% of the £59 million saving the council hoped to achieve across all services between 2015/16 and 2018/19.

By using a local authority company, a Eunomia-produced study showed, the council could also save £600,000 per year compared to an external contractor as it would not have to pay a Local Government Pension Scheme or make a profit.

Commingling

The budget issues are the latest in a number of setbacks and U-turns to hit Hounslow as it looks to change the way it delivers waste services. At the end of 2015, the council announced that it would retain kerbside sorting of recyclables to ‘future-proof’ the service against future legislative changes.

And, in November, council leader Steve Curran was forced to call police after newly rolled out refuse containers were stacked up outside his house in protest (see letsrecycle.com story).