The waste and recycling service in the London Borough of Hounslow could be ‘in jeopardy’ if a £16.6 million investment into the council’s in-house waste company is not immediately approved, according to a report being presented to the council’s cabinet tomorrow (14 June).

Lampton 360, an arms-length company developed by the council, is due to take over the collection and treatment of waste and recycling in the borough at the end of October this year, after the termination of the council’s contract with SUEZ.

The decision was taken in an attempt to give a boost to the borough’s ‘stagnating’ recycling rate, which is stuck between 34 and 36 per cent, which the council concedes is the worst in West London compared to around 50 per cent in ‘good-performing London boroughs’.

Through a new kerbside sort system to replace the current co-mingled one, utilising new vehicles and IT systems to make collections more effective and efficient, the council hopes that bringing the service in-house would lead to a 15 per cent recycling rate increase by 2018/19, leading to landfill savings of £1.35 million, and also deliver estimated operational savings of £500,000 a year.

The council’s 2015/16 budget had initially approved investment of £11.5 million in Lampton 360 to prepare for the switch. However, a report to the cabinet in December stated that the total investment required had increased to £18.93 million, with this week’s report once again increasing the amount needed to £28.15 million.

This means that the council must now sign off on an additional £16.65 million of capital funding, as well as an additional financing cost of £2 million, or risk ‘a significant financial impact’ by not being ready when the service hands over.

While the report, written by Cllr Amrit Mann, Deputy Leader of the Council and Lead Member for the Environment, states that officers have been able to place orders using the already-approved capital investment, from mid-June the budget will have been used up, meaning any delay in providing further funding would delay the construction of necessary facilities.

Costs of new depot underestimated

The large rise in cost of implementing the service has been attributed largely to the need for a new depot to replace the council-owned facility currently used by SUEZ.

The report notes that SUEZ uses the council’s Bridge Road depot for its waste vehicle fleet, while keeping its recycling fleet at a different depot in Hanworth. Because of this, Lampton 360 would not be able to operate exclusively from Bridge Road, and there would not be space to put the materials recovery facility (MRF) needed to sort and bale materials on the site.

Therefore Hounslow will have to create a new depot at Southall Lane, where both waste and recycling operations can be based, with an MRF large enough to offer a recycling service to other authorities in the future. This will also enable the agreed development of the Bridge Road site into housing.

These changes will now require an investment of £18.0 million, compared to the £5.9 million agreed in the budget and the £9.45 million indicated in December. The December estimate was based on an extrapolation of the costs of developing the proposed Space Waye household waste and recycling centre, though the report admits ‘in the event the cost of designing and building a complete new depot from scratch (rather than adapting an existing site) have proved to be significantly higher’.

If the funding is not approved and the facility not completed by the October handover, the report states that there would be ‘a significant financial impact on the revenue budget’ caused by the inability to sell the recyclable materials collected and offer a commercial recycling service.

With very little time to meet the contract handover with SUEZ, the report adds: ‘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.’

Additional investment increases have come in the form of:

• bins and containers (£600,000 to £2.33 million) – to provide boxes and kitchen waste bins to residents for the relaunch of the council’s kerbside sort scheme;
• garden waste (£300,000 to £420,000) – to provide an increased number of garden waste bags to residents, though this may reduce slightly; and
• vehicles (£5 million to £6.4 million) – due to higher tendered prices than estimated, reflecting ‘an increase in vehicle prices – particularly for the kerbside-sort vehicles’.

Writing the report, Mann said: ‘The total net revenue effect will not be known until Lampton 360 provide their price for the delivery of the waste and recycling service. This will be reported to cabinet in June. At this stage it is not possible to say that this increase in cost can be offset by additional savings from the waste and recycling service.’