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‘Red alert’ over increased costs with outsourced rubbish deal

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‘Things are going to get worse’ said Mayor Jason Perry earlier this year. And looking at the outsourced deal he’s lining up to replace rubbish contractors Veolia, in that respect he is as good as his word, reports KEN LEE

We’ve bin done: Big Belly bins were bought at huge cost, to save Veolia the trouble of emptying them. With predictable results

Having binned Veolia, Croydon Council says that it could face increased costs when it agrees a deal with whichever company replaces the rubbish contractors ifrom the end of March 2025.

Croydon and the three other councils in the South London Waste Partnership – Sutton, Merton and Kingston – last year decided to give Veolia notice that their contract would not be renewed.

It was originally argued that economies of scale by doing a deal across the four boroughs would save the councils money. The reality was that, as with so much outsourcing, bidders offered unrealistically low prices in order to win the deal, and then did not provide the levels of service that had been expected.

In 2020, Croydon gave Veolia a £22million contract “uplift” in order to improve the service provided. There was no noticeable improvement.

Among the cost-cutting measures the council applied to ease Veolia’s workload, at least 1,000 bins have vanished from the streets of Croydon. Fewer bins to empty for Veolia requires fewer staff, and lowers their costs, but sees littering around the borough worse than ever. With fewer roadsweepers roaming the streets – another cost cutting wheeze introduced at Veolia’s suggestion – there’s even less chance that the litter would get cleared up, either.

Despite the borough suffering #Binmageddon as part of the Veolia deal, Croydon’s £82,000 per year Tory Mayor, Jason Perry, has no plans to bring the waste and refuse service in-house, and is now going to seek to outsource again. But without any of the economies of scale available when doing its deal via the SLWP.

And that all comes with a “red warning” over costs, according to a report submitted to Perry’s council cabinet.

Increased costs are among several risks surrounding the council’s procurement process.

The cost of delivering the borough’s waste collection, street cleaning and related services on a like-for-like basis will increase, the report said – with the solution on offer likely to be an even worse service than residents receive under Veolia.

“We are confident that this will be an attractive contract and generate a competitive interest from the market,” the cabinet was told in a report on the waste procurement plans.

“The council will continue to review service designs, technology, commercial dialogue will enable the council to highlight the markets proposed financial cost early in the process and gives the flexibility to amend the specification and service requirements within an agreed financial envelope.” Get that?

According to the report, other risks – rated as “amber” – include that four neighbouring councils are also in the market for contractors at the same time, which may “result in resource pressure within their respective bid teams”.

Oh, and the situation gets even worse for cash-strapped Croydon. “The private sector is changing and focusing on quality contracts along with reducing their appetite for risk.

Pay more, get less: it is possible that Mayor Perry will get a worse deal than Croydon had with Veolia

“This significantly reduces the size of the market and level of competition.”

Which sounds like the epitome of an all-round bad deal – from a council which has a terrible record in procurement already.

Perry’s nodding-dogs cabinet nonetheless approved the Mayor’s outsourcing plan, their main concern not being on service delivery to residents, but on shaving costs by not incurring any pension liabilities for the waste contractor’s workers.

“The outsourcing model carries much lower risks for the council in terms primarily of HR and pension contributions and is thus the recommended option,” the report said.

Mayor Perry, meanwhile, maintains that the cheaper, outsourced contract, likely to provide an even more reduced service than Veolia manages now, will somehow “improve the image of our borough and provide more reliable services for our residents”.

According to a statement issued from the council’s propaganda bunker, “Executive Mayor Jason Perry has also been clear that the council will be taking a greater focus on contract management within any new agreement to enable the council to hold contractors to account if they underperform.”

Although long-suffering residents have heard all that before, too, with no appreciable improvement in the services they receive.

But as is becoming very clear, with Mayor Perry, the people of Croydon always seem to pay more and get less.

Read more: How Mayor Perry was shamed to take action by a video nasty
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