Councils and waste management companies have revealed they are reviewing their transport and haulage operations as they seek to soften the “massive impact” of rising fuel costs on their services.
This increase in fuel costs was compounded by a rise in VAT on January 4 2011, which added an average 0.76p to every litre of petrol. And, industry analysts have suggested that oil and petroleum prices will continue to rise.
Speaking to letsrecycle.com, waste management firms and councils said that current high fuel costs – and projected further increases – could adversely affect council budgets and also, in the case of contracted waste companies, force customers to shoulder the costs.
Waste management firm Viridor stated that, while it had not currently had to change its working practices in response to rise in fuel costs, it would be keeping a close eye on developments and the government stance on increase in fuel duty.
A spokesman told letsrecycle.com that “we won't be passing any of the costs onto our customers,” but added “this is something that is going to have to be reviewed. It is going to have an impact for everyone.”
Elsewhere, in an internal document seen by letsrecycle.com, Scottish waste management firm William Tracey Group said it would be introducing an “unavoidable” 5% fuel surcharge on transport rates for its chemical and liquids division from today (February 1). It is understood that these costs will soon be felt on the waste management side of the business as well.
In a notice sent to customers, William Tracey Group said: “With the recent fuel price increases we are experiencing across the UK this has, unfortunately, become unsustainable for our organisation and today we find ourselves in a position where we require to implement a 5% surcharge on to all Liquids and Chemicals Divisional transport rates as of the 1st February 2011.”
Councils
The fuel increase does have a massive affect on our budgets, obviously we are also looking at our operations
Gary Brownridge, Lichfield district council
The current prices, and projected increase, will also have a major impact on local authorities operating in-house waste and recycling collection services. Gary Brownridge, head of street scene and fleet manager at Lichfield district council, said he was acutely aware of the impact rising fuel costs would have on waste services.
He told letsrecycle.com: “The fuel increase does have a massive affect on our budgets, obviously we are also looking at our operations and how we can make more efficient ways of cutting down the overheads. But we still have to buy fuel and we have still got to buy it in considerable quantity.”
Mr Brownridge said the impact would be partly mitigated by its joint-working with Tamworth borough council to deliver its waste and recycling collections (see letsrecycle.com story).
“We have made various scheme changes over the past few years. We have joined up with Tamworth to do a joint waste service and it is a more effective way of doing the service. It has addressed ongoing issues with cost of the service and made savings on that basis,” he said.
Joint working
Echoing the joint working route, councils in Lincolnshire are currently tendering a joint contract to procure a single fuel contract covering seven local authorities. The move is intended to help secure savings through achieving an ‘economy of scale' and help councils achieve fuel savings.
Nick Davis, fleet manager at East Lindsey district council – one of the seven involved in the joint measure – said that the council was at risk of losing savings made through reworking collection rounds if fuel prices continued to skyrocket.
He said: “Just recently we have done a round rationalisation at East Lindsey which will save us £100,000 per year but at the projected price for fuel, we will spend that just on fuel for refuse and recycling. And, with a small percentage increase, we could be looking at another £100,000 and we simply haven't got that money in the budget.”
Fuel duty
The rise in fuel price continues despite Chancellor George Osborne last week seeming to renege on plans to scrap a proposed one pence per litre increase in fuel duty, which had been considered as part of April's Budget.
The FTA welcomed the suggestion that the Chancellor was willing to withdraw the fuel duty increase but suggested it would only act as a “short term fix”.
Theo de Pencier, chief executive at FTA, said: “We welcome Mr Osborne's public support for scrapping the fuel duty rise but we want more than just warm words from the Chancellor for the sake of UK businesses and the country's economic recovery. We look forward to seeing the small print.”
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