Agenda item

Decision

RESOLVED

To recommend to Full Council an addition to the Capital programme of £385,000 to purchase two new refuse collection vehicles and that the £385,000 be added to the residual £65,000 that is left over from the original budget to purchase refuse vehicles from 2019 to date.

That Cabinet recommend to Full Council that the purchase be funded by borrowing of £335,000 and a revenue contribution of £50,000.

That Governance, Risk & Audit Committee assesses the risk element of the proposals at the meeting on 13^th June 2023

Reasons for the decision:

To ensure the Council can meet customers’ expectations and provide a service that can keep up with the continuing increase in demand for garden and commercial waste collection services.  To ensure statutory duties around waste collection can be fulfilled.  To support the future growth in revenue generating services.

Cllr C Ringer, the Portfolio Holder for IT, Environmental Services & Waste, introduced this item. He began by explaining that the report outlined the requirement for allocation of capital funding for the purchase of two new refuse collection vehicles for the commercial and garden waste collection services delivered by Serco on behalf of the Council. The additional vehicles would bolster the ability to provide extra capacity, following an increase in demand for both trade and garden waste collection. It would be funded via a combination of borrowing, residual capital budget, plus a revenue contribution of £50k. There was also a buffer for inflationary pressure. It was hoped to use Serco’s pre-allocated build slots to ensure that the vehicles were built soon and would be in use by the end of the year. He added that the Council was continuing to explore how to access sources of HVO fuel from ethical providers and it was hoped that these avenues would also be in place soon.

The Environmental & Safety Manager confirmed that the Council was currently in dialogue with Serco regarding HVO fuel and the vehicles could run on it with no additional conversion costs.

The Chairman invited members to speak:

Cllr C Cushing said that the process for the setting of the Annual Budget required all departments to submit bids for large scale projects and he queried why the purchase of these waste vehicles had not been included in the Budget for this year. The Director for Resources replied that she did not know why a capital bid was not submitted, it was possible that at the time of the budget setting, officers did not realise that additional vehicles were required. The Chairman added that garden waste collection was currently increasing by 1500 requests a year and with the limited availability of build slots for vehicles, the Council needed to act quickly to ensure that capacity could be maximised as soon as possible.

Cllr L Shires, Portfolio Holder for Finance & Assets, said that she welcomed Cllr Cushing’s question and she shared his concerns about requesting such a large sum of money so soon after the budget had been agreed. She said that she had a number of questions.

-       Section 2.3 – prices being valid for a limited time – could a specific timescale be provided

-       Section 2.6 £200k per year was listed for garden waste, could clarity be provided on the £500k for trade waste – was this annually or over a 5 year period.

-       Section 3.1 – doing nothing resulting in a deteriorating service, no timeline was provided. An indication of when this would start would be helpful.

-       Section 11.1 – how are we estimating demand if we are already at capacity

-       Section 11.2 – which financial year is it anticipated that borrowing would ‘land’ in

The Environmental & Safety Manager said that quotes were valid for 1 – 2 months. To provide context, he explained that, when similar vehicles were ordered in 2020, they were £50k less than the current price. Regarding the £500k for trade waste, he said that it was a total budget increase from 5 years ago.

Serco were currently providing additional vehicles and this was tied into their current waste collection round reorganisation process, for which they had borne the costs. It was intended that a similar process would be followed for garden waste collection rounds later in the year and this was one of the reasons that this was going forwards now. Serco had not undertaken a review of the garden waste rounds at the point when a capital bid could have been submitted in time for the budget setting process. Cllr Shires commented that the reorganisation was intended to streamline the service and make it more environmentally friendly but if this had led to requiring additional vehicles, she was not convinced that the reorganisation of garden waste services would not also result in requiring additional vehicles. The Environmental & Safety Manager replied that the requirement for additional vehicles was purely down to customer growth. It was not possible to serve all of the additional customers with the current number of vehicles. Regarding the collection of trade waste, Serco had miscalculated the impact of trying to include some of this on the domestic rounds and this had caused some of the capacity issues, which had led to the loss of customers.

The Director for Resources replied to the question regarding borrowing and confirmed that it would be a year after the vehicles were purchased. It would be internal borrowing as this was how other vehicles had previously been purchased. It was anticipated that revenue income would cover the borrowing costs. In response to a further question from Cllr Shires, she confirmed that borrowing would commence in 2025/26.

Cllr Shires asked about projections for growth and sought clarification on whether this was due to increases in price or an increase in customers, she added that there were no projections for future increases in income included in the report. In conclusion, she said that a large part of the business case seemed to be missing.

The Environmental & Safety Manager said that customers for garden waste had increase by 1500 every year. Regarding trade waste, it was a competitive market and prices had been raised recently. This had led to the loss of some customers but the Council’s reputation for reliability had meant that the customer base had remained relatively stable, however, with reduced capacity this was no longer the case, and it was increasingly likely that more customers would opt to leave the service if capacity did not improve soon.

The Chief Executive said that the decision needed to be seen in the context of the Council’s service provision and the anticipated statement by Government about waste strategy moving forward. He said that the purchase of the vehicles was a sound investment and it would strengthen and protect the Council’s service delivery. He added that for the reasons outlined in the report and subsequently by the Environmental & Safety Manager, it was considered to be a good investment at this time and the advice was to proceed.

Cllr P Heinrich asked when Serco had identified the need for these vehicles. He then asked whether the service could be delivered without these vehicles. The Environmental & Safety Manager replied that he believed that the service could not be delivered reliably and to the expected standard without these additional vehicles. He added that Serco had had instability in their local management in the last 12 – 18 months and this had impacted on how they had approached the matter and consequently it only came to light as a serious request after the budget had been agreed for this year. Cllr Heinrich replied that the constant churn in managers at Serco gave him cause for concern. He said how could the Council be confident that what was being proposed would actually work. The Environmental & Safety Manager replied that officers had assessed it closely and fully supported the proposals.

Cllr A Brown commented that there was a good case for the proposal going to Governance, Risk & Audit Committee (GRAC) and he queried why this had not been considered. He said that interest rates were quite volatile and he wondered what mitigation was in place if the Council proceeded and borrowing rates increased. The Director for Resources replied that the current rate for external borrowing would be 5.09% from the Public Works Loan Board (PWLB). However, it was hoped that it could be covered via internal borrowing so that interest rates would not be a concern, other than lost income from investments.

Cllr Brown asked whether the anticipated increase in income would cover the loss of investment income. The Director for Resources confirmed that this was the case.

Cllr Brown said that he felt there was a risk to the Council financially and that it should go to GRAC for consideration. The Chief Executive confirmed that there was an upcoming meeting of GRAC if members wished it to be included on the agenda for that meeting. Cllr Brown proposed that the risk elements of the proposal were considered at the next meeting of the Governance, Risk & Audit Committee. This was seconded by Cllr Shires and supported by Cabinet.

Cllr Shires asked whether the new vehicles would be shared across the partnership. The Environmental & Safety Manager replied that the only vehicle that was shared was for clinical waste collection as this was such a small, specialist service.

It was proposed by Cllr T Adams, seconded by Cllr C Ringer and

RESOLVED

To recommend to Full Council an addition to the Capital programme of £385,000 to purchase two new refuse collection vehicles and that the £385,000 be added to the residual £65,000 that is left over from the original budget to purchase refuse vehicles from 2019 to date.

That Cabinet recommend to Full Council that the purchase be funded by borrowing of £335,000 and a revenue contribution of £50,000.

That Governance, Risk & Audit Committee assesses the risk element of the proposals at the meeting on 13^th June 2023

Reasons for the decision:

To ensure the Council can meet customers’ expectations and provide a service that can keep up with the continuing increase in demand for garden and commercial waste collection services.  To ensure statutory duties around waste collection can be fulfilled.  To support the future growth in revenue generating services.