Meeting documents

Cabinet
Tuesday, 16 January 2007

CA160107-13

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ITEM CA13

CABINET - 16 JANUARY 2007

OXFORDSHIRE WASTE PARTNERSHIP GOVERNANCE AND FINANCE

Report by Director for Environment & Economy

Introduction

  1. On 19 September Cabinet agreed a new waste strategy prepared by the Oxfordshire Waste Partnership (OWP), entitled ‘No Time to Waste’. This set out policies and targets for waste management in Oxfordshire over the next 20 years.

  2. Effective delivery of this strategy requires more accountable governance for OWP and also financial arrangements which incentivise all 6 councils to work together to achieve the targets. On 24 October 2006 the Oxfordshire Leaders Group unanimously agreed a new constitution and legal agreement which would provide both of these things – which is appended at Annex A (download as .doc file).

  3. This paper seeks the approval of Cabinet for these documents. The 5 District Councils are similarly seeking approval from their Cabinets or equivalents.

    4. Background

  4. Waste management is one of the biggest environmental and financial challenges for all 6 councils in Oxfordshire. Under the Landfill Allowance Trading Scheme (LATS) Oxfordshire County Council as disposal authority needs to achieve substantial reductions in biodegradable wastes sent to landfill. If we fail to meet the required reductions we must either pay a fine of £150 a tonne or purchase allowances from other authorities – potentially at a cost approaching this sum. The main action for managing this challenge is through the procurement of new treatment capacity, as was also agreed by Cabinet on 19 September. But treatment is only one part of a wider strategy for reducing the volume of waste needing to be disposed of. The strategy as whole depends on strong partnership arrangements with the 5 district councils – who are the collection authorities. This strategy has benefits both for the environment (through reduced global warming gases from landfill) and for the Council’s objectives to achieve value for money and limit council tax increases.

  5. Hitherto the Oxfordshire Waste Partnership has not had a formal constitution nor delegated responsibility in its own right. It has acted until recently more as a forum for exchanging information and experience than as a driver of co-ordinated action. Whilst a strengthened Memorandum of Understanding was approved by Cabinet on 6 September 2005, this still falls short of what is required for the challenges of LATS lying ahead, and a report by the Audit Commission published in August 2006 was critical of the arrangements as being insufficiently effective.

  6. Faced with similar circumstances partnerships in other county areas have increasingly constituted themselves as formal joint committees, underpinned by a legal agreement between the constituent councils. An example of this is Project Integra in Hampshire.

  7. Some councils (eg Lancashire and Buckinghamshire) have also developed their own financial arrangements to supplement or replace the statutory arrangements for recycling credits. Recycling credits are payable by the disposal authority to the collection authority where the latter recycles waste rather than handing it over for disposal. Whilst these have helped to encourage recycling, they do not reward waste reduction, nor do they directly incentivise collection authorities to help avoid LATS costs.

  8. The arrangements described briefly below, and set out in full in the Annex to this paper, are Oxfordshire’s response to these challenges. They follow best practice elsewhere and in the case of finance go beyond it.

    9. Proposed new OWP arrangements

  9. Under the new arrangements, the OWP would from 1 April 2007 be constituted as a joint committee. Its functions would be as in Annex 1 to the Legal Agreement. They are in large part strategic, overseeing delivery of the ‘No Time to Waste’ strategy’. The OWP would have some operational responsibilities for research, campaigns and publicity, but not for collection and disposal of waste. The latter would continue to lie with the partner authorities, but acting within the policies and targets in the strategy.

  10. The chairmanship of the committee would rotate every two years in alphabetical order of council. In the first place it would (as at present) lie with Cherwell, followed by the Oxford City and then the County Council. Decisions would be taken one vote per authority, but with an override vote by any council who might be adversely affected financially or contractually. This voting arrangement, as with many of the other detailed arrangements, is taken from the Hampshire constitution. Decisions would be open to Scrutiny by the relevant scrutiny committees of the partner authorities. There would be no joint scrutiny committee.

  11. The council chairing the committee would have a wider lead role as ‘host authority’ leading the officers’ group and supervising the partnership’s own officer. In addition Cherwell would always act as formal employer of the partnership officer, and the County would always act as ‘accounting authority’ managing the OWP’s day to day finances.

  12. The OWP’s own direct budget would be agreed annually and funded 50% by the County Council and 12% by each district, reflecting the current arrangements. Given the limited direct responsibilities of the OWP, the budget would only form a very small percentage of overall waste spending by the partner authorities.

  13. The legal agreement however also commits the partner authorities to new financial arrangements for their own operational responsibilities. These arrangements are described in outline in Annex 5. They are to be developed in greater detail by the end of February 2007 and take effect take effect from April 2009. Under these arrangements each district council would be given an annual tonnage of waste which would be disposed of free by the county council. Rewards would be paid by the county council for undershooting these tonnages with penalties due to them for any overshoot. The tonnages would be set so as to achieve the targets in ‘No Time to Waste’ including the LATS requirements falling on the county. The reward payments and penalties would replace recycling credits. Importantly they would reward reduction as well as recycling and provide districts a direct incentive to avoid LATS penalties falling on the county.

  14. The arrangements also require all partner authorities to pay into a central fund the reward grant which is due for achieving the Public Service Agreement 1 stretch target on recycling (£1,075,600 in total), and any reward grant that may be received for achieving the Local Area Agreement on recycling (£480,000 in all, although there is potentially a further £480,000 if the Public Service Board agreed to waive their 50% top slice). This fund would be used to help start up capital funding for schemes which would reduce LATS liabilities.

  15. The legal agreement attached is as agreed by all the Oxfordshire Council Leaders and the Oxfordshire Waste Partnership, but is still subject to some drafting points being agreed between legal experts of the OWP partner authorities.

    16. Financial, Risk and Staff Implications

  16. 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.

  17. The financial arrangements, as they apply to the Partnership as a whole, have been described at Paras 12 – 14 above. Their effect on the County Council cannot be worked out in detail ahead of the detailed financial arrangements being settled but are likely to be beneficial overall. The following points are particularly relevant:

    • the arrangements whereby the County Council fund 50% of OWP’s own direct budget are more costly than at present (we pay 50% of all costs except for the project officer salary, of which we meet only 16.7%) but the difference is small;

    • the voting arrangements for OWP enable us to prevent any adverse financial impacts on us as disposal authority;

    • the system of penalties and rewards to replace recycling credits will have the general effect of driving down the volumes of waste needing disposal and hence minimising our LATS liabilities, with districts and county sharing in the benefit ( LATS will still lead to extra cost for the Council as explained in the Cabinet paper of 20 September 2006 on treatment, but the new arrangements will tend to mitigate those extra costs);

    • we have anyway budgeted on the basis that the County Council’s share of the PSA and LAA reward money will be centrally pooled so this will not involve extra cost;

    • the County Council will receive some financial benefit from changes to the statutory recycling credit arrangements in the 2 years before they will be superseded; we will use part of this benefit to mitigate extra transitional costs falling on Cherwell District Council (much greater than other districts), and pay a further part into the fund referred to at paragraph 14 above;

    • the risk register for the waste treatment contract includes risks from any partnership failings and risk from LATS penalties resulting from allowances being exceeded. The proposals in Annex 5 help mitigate both of these risks, and reduce the Council’s overall risk exposure.

RECOMMENDATION

  1. The Cabinet is RECOMMENDED to agree that Oxfordshire County Council should formally sign the attached Legal agreement, subject to minor drafting changes to be approved by the Director for Environment & Economy following consultation with the Cabinet Member for Sustainable Development.

RICHARD DUDDING
Director for Environment & Economy

Background papers: Nil

Contact Officer: Richard Dudding Tel: (01865) 815827

December 2006

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