Thursday, 12 January 2017

Wrexham Council's waste bill rises to £419m

Back in 2014, Plaid Cymru raised concerns about the rising cost of Wrexham Council's private waste management scheme. The scheme is a Private Finance Initiative, a controversial scheme popular in the 1990s and 2000s as a way to get private money to pay for public projects.

Unfortunately, it saddled councils, health boards and other public bodies with long-term commitments to re-pay that were out of all proportion to the original capital cost.

Despite warnings, Wrexham Council signed a contract with WRG (which has now been taken over and is operated by FCC, a Spanish-based multinational company). The original capital cost for developing the Bryn Lane recycling centre and re-organising the existing waste sites was £40m and the Welsh Government provided £40m towards that cost.

But the ongoing costs are staggering and they keep going up.

In the council's 2012-13 accounts, our story revealed that the total cost of the contract was estimated to be £332m.

Just three years later we now find that the council estimates the cost will be £419m - a rise of nearly £86m - with the contract extended from 25 years to 29 years.

The cost is only estimated because the contract has no ceiling - it can vary according to fuel costs or inflation - and has continued to escalate beyond the initial projections each time we've asked.

The council says that the new costs relate to Phase 2 of the scheme. This is a re-use centre that opened in 2015 and effectively consists of a two-storey building on the Bryn Lane site.

This then prompted the question as to whether the council should consider buying out the contract rather than continue to pay up to £20m a year - about 10% of its total spending - by 2033.

However, in a response to our request for information, the council confirmed that it had not discussed a buyout of the contract and had no estimate of the potential cost and potential savings over time.

This contrasts markedly with Denbighshire Council, which decided to terminate a PFI contract on a new council building in Ruthin in December 2015.

Despite getting some stick for the enormous cost of getting out of the contract early, the long-term savings were estimated to be £575,000 a year for a PFI contract that was far smaller than Wrexham's.

At the very least, Wrexham Council should look at its options before blindly continuing to pay this ever-escalating contract, which is scheduled to cost more than 10 times the original capital costs. Of course there are ongoing annual revenue and maintenance costs but the cost is completely unacceptable and is likely to continue to rise.

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