ITEM CA12
CABINET – 15 JULY 2008
OXFORDSHIRE WASTE PARTNERSHIP (OWP) – NEW FINANCIAL ARRANGEMENTS
Report by Head of Sustainable Development
Introduction
1. On 16 January 2007, the Cabinet approved governance and financial arrangements for the Oxfordshire Waste Partnership (OWP). These arrangements are critical in securing the effective delivery of Oxfordshire’s Joint Municipal Waste Management Strategy - ‘No Time to Waste’. At that time, it was reported that the financial arrangements needed further detailed development. This has now been undertaken and has led to some amendments to the legal agreement. The purpose of this paper is to explain these amendments and seek approval for them.
Background
2. Whilst existing financial incentives such as recycling credits have been vital in supporting increased recycling costs, they do not encourage waste reduction. Recycling credits only reward District Councils for recycling as much as possible with no regard to the overall amount of waste generated or the amount of waste landfilled.
3. The new OWP financial arrangements between partner authorities are designed to continue to reward recycling but also to incentivise waste reduction, which is the ultimate goal for sustainable waste management.
4. The new OWP financial arrangements encourage waste reduction by allocating residual waste allowances to each of the District Councils, and having a credit or penalty system for over, or under, performance. The amended financial agreement is set out in full as Annex 1 (download as .doc file) to this report.
Proposed Amendments to the Financial Arrangements
5. The proposed amendments have been suggested following detailed work by the Officer Strategy Group and consideration and agreement by the OWP at their meeting on 29 February 2008.
6. The majority of the amendments have been introduced to clarify and simplify the payment process and the calculation of household numbers. These changes do not change the financial implications or impact of the arrangements on OCC or the other partner authorities.
7. The major change has been to remove the biodegradable municipal waste (BMW) targets from the arrangements. The first draft included two targets for each of the District Councils, one based on overall landfill and the other based on the biodegradable fraction of residual waste. However, detailed work highlighted that District Councils alone could not reach these BMW targets and therefore were faced with penalties they could do little to avoid.
8. In removing the BMW targets, the risk for reaching the landfill allowances remains with the county council as is prescribed by law. However, the arrangements do put in place a target for reducing waste to landfill that will also contribute towards meeting our BMW targets.
9. The development and introduction of the new financial arrangements has already begun to change the way in which partners design their waste management systems, with an overall focus on waste reduction for the first time. The removal of the BMW targets has not unduly affected the powerful incentives provided by the financial arrangements.
Financial, Risk and Staff Implications
10. There are no material county council staff implications beyond the time already spent developing the arrangements now proposed. The OWP partnership officer is employed by Cherwell District Council and funded by the partner authorities.
11. The financial arrangements’ effect on the county council is assessed by using the tonnage projections that predict the performance of the District Councils. Some of the partner authorities are still in the process of finalising their collection schemes and therefore an overall financial impact cannot yet be determined for OCC. However, for every additional tonne of waste diverted from landfill, OCC will save the cost of disposal including landfill tax and in some cases the associated Landfill Allowance Trading Scheme (LATS) fine, minus the £20 credit paid to the Districts for minimising waste.
12. Further work is being undertaken to establish a robust forecast in order to establish the potential financial benefits for all partners. However, for every 1% of reduced waste sent to Landfill the county council could potentially realise a saving of £111k
RECOMMENDATION
13. The Cabinet is RECOMMENDED to agree that Oxfordshire County Council should formally sign the attached Legal agreement, subject to any minor drafting changes to be approved by the Head of Sustainable Development following consultation with the Cabinet Member for Sustainable Development.
CHRIS COUSINS Head of Sustainable Development Environment & Economy Background papers: Oxfordshire Waste Partnership Governance and Finance Cabinet Report – 16 January 2007 Contact Officer: Carolyn Durrant, Tel. (01865) 815499 July 2008
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