The level of competition in the waste management sector has been under scrutiny of late, with the publication of two reports from the Office of Fair Trading (OFT) and the Office of Government Commerce (OGC).

The OFT report ‘More competition, less waste’ called on local authorities to set more flexible selection criteria, offer shorter-term contracts and set a more level playing field for in-house providers and private bidders.

The OGC report ‘Improving competition and capacity planning in the municipal waste market’ found a number of market characteristics which are inhibiting competition and acting as barriers to new entrants.

Foremost among these are the small number of companies which dominate, with only eight or nine responsible for around 78% of the market. With the current trend towards consolidation, it could become even harder for smaller organisations to challenge the established order.

The OGC report also found that a supplier’s ability to bid effectively was dependant on a strong regional presence and the ability to utilise or expand existing infrastructure. In addition, larger organisations with their existing regional infrastructure are better placed to secure the necessary finance.

While securing investment may not be such a problem for international organisations like the Tiru Group, which has a reputation for successful development and operation of such facilities in other countries, for smaller companies without such a track record, this must be one of the biggest barriers.

Clear guidance needed

The Tiru Group is a relatively new entrant to the UK market – two of the issues we have found most challenging are the problems caused by the lack of clear information on procurement requirements, processes and timescales and co-ordination of the process.

Communication with individual authorities is usually good, but the number of organisations and channels providing information on funding, regulation, planning or just trying to offer advice can make the process unnecessarily complex, time-consuming and ultimately costly.

The lack of co-ordination between LAs over contracts can also be a problem because of the sheer number of up-for-grabs. Our experience on this is borne out by the OGC report findings that there are more than 50 LA contracts to be awarded each year. The sheer scale limits our ability to respond to these opportunities. For smaller companies with even more limited resources this must make responding to more than a few opportunities at one time, all but impossible.

Another issue highlighted by the report is the lack of clear policy direction. LAs need a clear steer from the Government to give them the confidence to determine their strategy. Without this clarity, there is an understandable degree of nervousness among waste management companies about committing the level of investment required for modern treatment facilities.

The OGC report makes a number of recommendations aimed at helping to improve the operation of the market. The first steps have been taken by Defra in the establishment of the waste infrastructure development programme (WIDP) which will be responsible for the delivery of the report’s recommendations.

It is hoped that the publication of the revised Waste Strategy, the formation of the WIDP and the implementation of the reports’ findings will help to open up the market to more new entrants like ourselves.

This is vital if the UK is to secure the level of new facilities required to meet its commitments on waste management. Beyond this, a more open and competitive market will provide greater levels of choice for LAs and help to drive up standards of delivery.

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