Government awards south London boroughs £112.9 million

Central government awarded the South London Waste Partnership (Croydon, Kingston, Merton and Sutton councils) £112.9 million of Private Finance Initiative (PFI) funding today.

The announcement made by the Department for the Environment and Rural Affairs (Defra) means this is the first waste PFI money allocated to London since 2002. The successful bid brings state-of-the-art waste treatment within the partnership boroughs a step closer to being realised.

The PFI funding will contribute 50% towards the cost of building a new treatment facility. This will enable the South London Waste Partnership to treat over 200,000 tonnes of waste per year that would otherwise have been sent to landfill.

The success of the partnership’s bid for funding was partly due to an increased commitment by the four boroughs to minimise the waste they generate in the first place and to improve re-use and recycling rates to over 50%. Such a reduction would cut down on the climate changing gas methane released to the atmosphere. The reduction of waste sent to landfill will also reduce the impact of the landfill tax and potential fines imposed by central government on councils which exceed their landfill allocations.

Following the award of the PFI funding, the tendering process for developing a waste management facility is set to begin in the spring of this year with the contract awarded in spring 2011. It is expected the new facilities would become operational in 2014/15.

The four boroughs generate half a million tonnes of rubbish every year. Recycling rates are improving, but over 70% currently goes to landfill. Most rubbish can be re-used, recycled or composted in state-of-the-art waste management facilities and the remainder could be used to produce heat or energy. Modern facilities are needed to deal with our rubbish in this way and reduce the quantity sent to landfill.

Chair of the South London Waste Partnership Councillor Derek Osbourne said: “The funding will provide a huge opportunity for us to work for a cleaner, greener and more sustainable south London. We are committed to dramatically reducing the waste we send to landfill and contributing significantly to minimising climate changing gas emissions in the atmosphere. We are a strong and successful partnership working together to deliver efficient services that provide value for money. Now we are going to have to take responsibility for dealing with our own waste by managing it locally.”

Notes to editors

1. The Private Finance Initiative (PFI) is a method of procurement in which the private sector finance and management skills are used to deliver public infrastructure services. The public sector passes many of the risks of delivery and operation of the facility onto the private sector provider.

2. The South London Waste Partnership boroughs have a combined population of 868,000 residents. The total municipal waste generated by the four boroughs is about 420,000 tonnes per year.

3. The PFI funding is part of ££319.2 million awarded by Defra to develop waste management facilities in three areas in England. In addition to the South London Waste Partnership the following projects have also been awarded funding:
· Hertfordshire County Council has been awarded £115.3 million in PFI credits. Their waste management project has the potential to divert up to 170,000 tonnes of BMW from landfill per annum once operational.
· Norfolk County Council has been awarded £91 million in PFI credits. Their waste management project has the potential to divert up to 200,000 tonnes of BMW from landfill per annum once operational.

4. Landfill tax: Local councils have to pay a tax for every tonne of waste they send to landfill. The amount of tax that a council has to pay depends on the weight of the material the council sends to landfill and the kind of waste the council is disposing of. The standard rate of landfill tax is £32 per tonne, up from £24 in 2007. Over the next two years the tax will increase by £8 each year, reaching £48 in 2010-2011.

5. Landfill Allowance Trading Scheme: Through the Landfill Allowance Trading Scheme each Local Authority across the country has a fixed amount of waste they can dispose of to landfill. The amount landfilled must decrease to meet European Union landfill targets. Landfill sites give off greenhouse gases so reducing landfill will reduce the release of these damaging gases into the environment.

6. The four boroughs have conducted the first consultation about potential suitable land for building waste management facilities and will be conducting a series of further consultations over the next two years on this issue.