Doubts raised over CBI '£190m waste savings' claim
Outsourcing more waste management services could save local authorities up to £190m according to the CBI, although some have questioned whether the figures stack up.
The CBI's Open Access study released today argues a compelling business case for opening up more public sector services to private providers including collection and disposal of domestic waste, and street cleansing.
According to the report, just over half of councils (53%) run these services in-house with the remaining 47% sub-contracted out to the private sector.
It states that collectively, local authorities spend around £2.4bn a year on these services and claims that a "conservative estimate" of 15% cost savings could be achieved if those delivering in-house switched to a private provider.
However one waste economist who wished to remain anonymous said the 15% figure quoted in the study appeared to come from "primary research with private sector providers" and that the suggested savings seemed high.
"I am a big fan of outsourcing waste services to the private sector but ... I feel that a lot of the efficiencies in the waste services market have already been driven through.
"Margins on waste collections are very tight and further improvements may be more difficult to achieve. I also don't believe that such large savings would be realisable without half of authorities spotting them. It just doesn't seem credible, although I could of course be wrong," he said.
He added that there was in fact an increasing trend for councils to bring waste services back in-house due to the high value of recyclates: "Authorities have seen these high revenues as a potential cash cow in straightened times," he observed.
However he pointed out that falling prices may mean this model is undermined going forward and that more authorities will realise that fierce competition between private sector providers for feedstock has the potential to deliver decent savings to public sector budgets.
It's a view echoed by the CBI which argues that the private sector's competitive nature and drive for efficiency savings will result in significant "productivity improvements" in waste services.
The report highlights North Somerset Council's partnership with May Gurney which has increased the amount of waste recycled to 19,000 tonnes a year, saving the council £1m in landfill costs.
While welcoming the report's findings, May Gurney's managing director of public services John Wilkinson argued that waste authorities needed to go further than just outsourcing services.
"Working with private and third sector experts to re-engineer and redesign services can have an even more transformational impact ... local authorities should look to use 'creative commerciality' to unlock the value of assets ... by using them to generate revenue streams," he said.
This could be achieved by offering services on a commercial basis or investing in infrastructure such as local power generation, he added.