Agenda item

Cllr C Ringer – Portfolio Holder for IT, Environmental & Waste Services introduced the report and informed Members that two additional refuse vehicles were required specifically for commercial and garden waste collections, which were statutory services for which the Council was entitled to levy a charge. He added that the reason additional vehicles were required was due to significant increases in collections over a five year period, with garden waste customers increasing by approximately 1000 per year, whilst commercial waste collections had risen 50% over five years. It was noted that because these services were statutory,  the Council could not turn new customers away, and therefore steps had to be taken to increase capacity, so as not to impact domestic collections. Cllr C Ringer informed Members that the report was coming forward now to make use of Serco’s pre-allocated build slots for vehicles in November, as opposed waiting until late 2024.

Questions and Discussion

      i.        The Chairman asked whether any cost-benefit analysis had been undertaken to outline the growth in chargeable services. Cllr C Ringer stated that he had seen this information, but it was not possible to provide full details within the public report due to commercial sensitivity. He added that it was important to purchase vehicles now so that the services offered by the Council could remain commercially competitive and continue to grow. The DFC stated that Serco were already providing services using hired vehicles, but the Council was contractually obliged to provide waste vehicles, following a decision taken to avoid risk. He added that whilst there was a cost-benefit to the proposals, the overall position was that the Council was obligated to provide vehicles. It was noted that this would enable Serco to continue to meet the additional demand created by successful trade collections which had increased from 88k to 130k lifts per annum, and growing garden waste collections. In response to a question from the Chairman, the DFC noted that whilst vehicles were owned by the Council, they would still be specified, used and maintained by Serco.

     ii.        Cllr C Cushing stated that there was a compelling case for the purchase of the vehicles, but the original report had not made this clear, and the supporting information could have been provided in a confidential appendix. He referred to the cost of the vehicles and stated that whilst the report suggested this would be funded through borrowing, more details were required, and the impact of borrowing, or the use of reserves should be considered if possible. Cllr C Cushing asked when the costs of borrowing would be incurred if used, and why an explanation for the timing of the request had not be included in the report, or the 23/24 budget. The DFR replied that the vehicles would be funded in part by money returned from Serco as part of the non-performance compensation accounting for £50k, whilst the remainder would be covered by borrowing from the Public Works Loans Board with a preferential rate. She added that it may be possible to use cash reserves to avoid borrowing, which would avoid interest, but this would not be known until nearer the time, but otherwise borrowing costs would incurred the year after purchase in 2024-25. It was noted that earmarked reserves could only be used for specific purposes and could not be used in this case.

    iii.        The ESM referred to cost-benefit analysis and stated that whilst the waste collection services were statutory, the Council did levy a charge for the services, and though costs had increased, the service continued to return a considerable surplus which had been placed in the general reserve and would continue on an ongoing basis. On the timing of the report, it was noted that a Serco reorganisation and management changes had delayed the report and the position was not confirmed until April, by which point the Council was preparing for the upcoming election. The Chairman suggested it would be useful to know the amounts that had been paid into the general reserve.

   iv.        Cllr V Holliday referred to Serco performance over the past year and stated that she was under the impression that performance compensation would in the region of 200k, and she therefore expected more could be used to offset the costs of the vehicles. The DFC replied that the £50k outlined in the report was from 21-22, which had been allocated for vehicle expenditure, but the full figure for 22-23 was not yet agreed, though it was possible that more could be used to offset the vehicle costs, once known. He added that these funds were placed into an innovation fund to improve the service beyond contractual requirements. Cllr V Holliday suggested that it appeared aspirational to look for improvements to a service that had not met required service levels, but accepted that any improvement would be positive. The DFC stated that these funds could not be used for Serco to meet its existing contractual obligations, and instead had to be used for service enhancements, though it was possible to use this for the purchase of additional vehicles.

     v.        Cllr N Housden stated that it would have been helpful to have had the reasons the Council was obliged to purchase vehicles in the report, and referred to previous meetings with Serco where they had admitted that they did not have a strategy which could have identified the need for additional vehicles earlier. He added that previously Serco had difficulties recruiting drivers and crew, and if this was still the case, then additional vehicles would not help. The DFC replied that officers had worked hard to address issues caused by revised collection routes, which had been compounded by pay disputes, however these issues had now been resolved and rates of pay were now at a point that recruitment was no longer an issue. He added that providing additional vehicles was intended to put Serco ahead of the curve in terms of service demand, so that they were prepared for continued growth. Cllr C Ringer welcomed Cllr Housden’s views on a more strategic approach and noted that the Council were awaiting the outcome of the Government’s review of the waste strategy, which may provide challenges better met with strategic planning.  

   vi.        Cllr S Penfold asked how long the vehicle quote would remain valid, and whether placing the order soon would save the use of the contingency funds. The ESM replied that the figures quoted were valid until May, with contingency added to account for delays, though significant increases were not expected. The DFC stated that the Council was in the same position during contract mobilisation, with prices only fixed for seven days. He added that during purchase of the original fleet, vehicles had cost less than originally quoted, and though some volatility could be expected, the contingency was added to cover any cost fluctuations. Cllr S Penfold asked whether a specified cost could be given once the build date had been agreed. The ESM replied that price agreed at the point of order would be fixed as the price paid, but this would not be known until the point of order, with fluctuation expected up to that point.

  vii.        Cllr N Housden referred to the increase in bin lifts for trade waste, and asked if there was any modelling of potential growth. The DFC replied that figures could be provided, but these would be skewed by the size of bins if trade customers increased their bin capacity.

 viii.        The recommendation was proposed by Cllr R Macdonald and second by Cllr P Fisher.

RESOLVED

1.    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. It is also recommended to Full Council that the purchase be funded by borrowing of £335,000 and a revenue contribution of £50,000.