Household rubbish collection firm Suez could pull out of its contract with Somerset Council unless payments are increased after recording “unsustainable losses”, the authority has said this week.
Councillors will meet later this month to consider the steps to secure waste collections across the county in the event that the firm does pull out of its current deal, which would incur a hefty financial penalty.
Around 385,000 collections of refuse, recycling and garden waste are made by the firm across the county every week which includes the Burnham-On-Sea and Highbridge area.
The authority says it is committed to finding a way forward that secures this frontline service while minimising any extra cost.
Councillor Dixie Darch, lead member for environment and climate change, said this is a “hugely frustrating position to be in.”
In May, the committee tasked officers with negotiating a settlement figure with Suez so this could be considered alongside the costs and implications of the other options.
On July 15th, the council’s executive committee will be asked to consider its options – deciding whether to bring the service ‘in-house’, find a new contractor through a retendering process, or agree to pay Suez more to continue collecting the county’s waste.
Papers just published explain that all options will cost it substantially more than it is currently paying.
It has been recommended that the executive committee agree to the increased payments to Suez for the remainder of the contract, with independent analysis showing this would cost less than bringing the service ‘in-house’ or retendering.
Even with the proposed increase, Suez would still make a substantial loss over the remaining six years of the contract, on top of its losses in the first four years.
Reaching a settlement would also avoid the risk of disruption to collections caused by changing provider or moving services in-house.
The report acknowledges the challenges faced by the contractor including, coping with the Covid-19 pandemic, a national driver shortage and rising inflation.
Councillor Dixie Darch, lead member for environment and climate change, said: “This is a hugely frustrating position to be in, but all ways forward involve paying more. What is being recommended is very much the ‘least worst’ option.”
“These are not options we expected or want to consider, but we have to make sure this vital service continues.”
“There was a detailed competitive tendering process, but we are in very different times to when this contract was signed. According to independent, external analysis, the proposed settlement would reflect what we can expect to be charged for a contract of this size.”
The report sets out a schedule of proposed increased payments, starting with £3m extra in the current financial year.
Increased payments over the remainder of the contract would bring the average annual increase to around £7.8m a year, a total of £47m extra over six years.
Somerset Council’s current ten-year contract with SUEZ is worth around £24m a year and started in April 2020. It was awarded following a competitive tendering process run by the Somerset Waste Partnership, supported by strong governance and quality assurance and third-party technical advice.
