Lancashire waste recovery plants to be mothballed

Lancashire waste recovery plants to be mothballedMore than 250 jobs are set to be lost in a ‘major transformation’ of Lancashire County’s Council’s (LCC) waste operations that will see two six-year-old sites run by Global Renewables Lancashire Operations Ltd mothballed.

After a meeting of LCC’s Executive Scrutiny Committee on Friday (19 February), all but eight jobs at each of the two waste recovery parks at Farington and Thornton will be cut as the council seeks to make a £8.5 million a year saving on revenue costs.

The decision comes just nine years after the £2-billion, 25-year private finance initiative (PFI) contract to design, construct and develop the two sites was first signed. Each site cost £125 million to build, with operations commencing in September 2010.

Under the contract, of which £90 million was PFI credits (said to be the UK’s largest PFI contract at that time), the parks were expected to process around 600,000 tonnes of the county’s household waste.

However, in August 2014 LCC and Blackpool Borough Council took over the ownership of the PFI contract with Global Renewables and construction firm Lend Lease. The parks currently house the reception, storage, treatment and transportation of 240,000 tonnes of residual waste, 66,000 tonnes of green waste and 78,000 tonnes of recyclable materials from the two authorities.

Changes to the service level agreement (SLA) will see treatment of residual waste and co-mingled garden and food waste discontinued at both plants. Community work, including an environmental education service and community liaison, waste minimisation, development and communications programmes, will also be stopped under the changes.

The only facility at either of the parks that will continue operation as normal is the materials recovery facility (MRF) at the Farington site, though this too will be subject to an ongoing review.

Although both parks are fitted with mechanical and biological treatment (MBT) facilities, they will now be used solely as transfer stations for residual waste, which will then be transferred to third-party facilities for processing.

Service changes

Responding to questions from councillors asking what would now happen to residual waste, Steve Scott, Head of Waste Management at LCC, said that even before the changes, a third of the waste ended up in landfill at Whinney Hill, near Accrington. A third-party operator, he said, would deal with the waste more cheaply and skip the removal of the organic element, processing it all straight into fuel.

A report submitted by Scott to the cabinet argues that the service changes present both the lowest cost option for the council, but also the lowest risk in operational and environmental terms.

It states: ‘It is intended to source alternatives to landfill which it is believed can be secured at the same or less cost than landfill. Should this not be the case, the county council would either take greater advantage of contracted landfill capacity or reduce the savings it achieves by sourcing more expensive alternatives.’

As well as alternative treatment of residual waste, garden waste will also be processed at third-party facilities, with composting facilities at the parks being closed. Co-mingled garden and food waste is currently treated using an in-vessel composting (IVC) process at both parks. The council report stated that this process was necessary due to the food content of the waste but that it is ‘significantly more expensive than traditional garden waste composting yet the food content is extremely low; less than one per cent.’

Under the original contract with Global Renewables, the company provides a number of ‘soft services’, including an environmental education service, and programmes promoting community liaison, waste minimisation, community sector development and communications. Under the new SLA, these will be stopped by 31 March.

Changes present ‘lowest risk’ to council

LCC states that the changes agreed by the Executive Scrutiny Committee represent the ‘lowest cost, lowest risk operation to the county council’.

LCC has already delivered a reduction of over £300 million in revenue spending over the past five years and currently estimates that it will need to cut spending by a further £300 million by 2020. In November 2015, LCC agreed cuts to the waste contract, warning that a ‘significant proportion’ of the 340 staff would face compulsory redundancy.

In 2014/15, the council recorded a recycling rate of 47.3 per cent. It reports that 33.6 per cent of this was achieved through doorstep collections, 11.35 per cent through household waste recycling centres (HWRCs) and the remaining 2.37 per cent through the two waste recovery parks.

LCC argues that with financial penalties for the UK missing an EU target of 50 per cent in 2020 liable to be imposed on local authorities due to the Localism Act 2011, the council must improve this rate, and states that ‘the ability to improve this rate is severely restricted by the financial position both of the council and the waste collection authorities given the lack of resources available to improve or incentivise collection services; or persuade householders to recycle more’.

The cuts are, the council says, the ‘only viable way of achieving the prescribed cost reduction’, with the service changes estimated to save £5-8 million of allocated transitional reserve over the financial years 2016/17 and 2017/18. The one-off company transformation costs to the council, including those surrounding redundancy, decommissioning and contract breakage, are estimated to be around £4.5 million.

All service changes and transformation are expected to be completed by autumn, with voluntary redundancy made available to staff leaving in April 2016 and beyond.

The redundant processing equipment and other assets will be protected and preserved while market options are assessed and could be re-introduced into service should future opportunity present itself. Scott said at the meeting of the Executive Scrutiny Committee, however, that ‘a number of companies’ have declared an interest in the facilities.

Government ‘moved the goalposts’

After the meeting, Jenny Mein, Leader of LCC, said: “Lancashire is in a much better position than a number of other local authorities which also invested in PFI-funded mechanical and biological treatment facilities because we successfully restructured the financing for the sites in 2014 to make an annual saving on the contract of £12 million. That has also put us in a position to now consider other options and save a further £8.5 million a year.

“The process we have was designed to prevent organic waste, such as food left in household bins, being landfilled, and provided a more cost-effective method of dealing with our rubbish as well as producing a form of compost.

“People are throwing far less food away, meaning the proportion of organics in residual waste has greatly declined, leaving us with a process which is effective, but costly for a relatively small proportion of organic waste, particularly when compared with other options.

“At the same time, a separate reason why we must take advantage of cheaper options to process Lancashire’s waste, and why the waste recovery parks have become uneconomical, is because the government moved the goalposts in 2013 by abolishing what were very high penalties for landfilling organic waste.”

Resource approached Global Renewables for comment but has not received a reply.

Video of the meeting of LCC’s Executive Scrutiny Committee can be seen on the council’s website.