16 February 2007
The government has changed the system for allocating Private Finance Initiative credits for council waste services, but campaigners say this will do little to improve environmental sustainability.
The Department for Environment, Food and Rural Affairs said on February 9 that its new rules – which abolish the current 'first come, first served' approach to allocation – will help authorities meet their targets for reducing landfill waste by 2010.
But environmental campaigners have told Public Finance they doubt this as the rules will do nothing to end councils' dependency on monopoly contractors who have little interest in environmental objectives.
Anna Watson, waste and resources campaigner at Friends of the Earth, told PF that the use of the PFI to finance waste collection and disposal services had led to a 'concerning' tendency to bundle recycling services together with landfill and incineration.
'When the collection and disposal is all in one contract, there is little or no incentive to minimise household waste,' she said.
'But the smaller, more innovative and recycle-focused players find it difficult to bid for PFI contracts because they don't have the track record or the resources… These current changes don't look like they'll do anything to change that.'
Defra's new system will effectively begin at the end of March this year, when authorities will first be invited to submit expressions of interest for PFI schemes. A fresh opportunity to apply will also be available in September and again in March 2008.
Under the old system, authorities could theoretically apply at any time in the year as long as funds existed.
In a letter to local authority chief executives, the director of Defra's waste infrastructure delivery programme, John Burns, said the new system would enable better comparison of the value and contribution of each project when awarding limited credits and help it 'match deal-flow to the capacity of the market as it expands'.
Last year, the Office of Fair Trading warned that the waste collection and disposal market was monopolised by five large multinationals, and raised concerns about collusion.
Watson said Defra's new strategy of staggering contracts could exacerbate that situation. 'Perversely, these changes may not address the monopoly problems but could instead favour it, as it could help those in a monopoly position by spreading out their contracts and bidding processes more evenly.'
Eight out of 11 Defra-sponsored operational PFI waste contracts are controlled by just three companies: Sita, Biffa and Veolia-Onyx.
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