Wakefield Council £750m PFI deal with waste recycling firm Renewi 'at risk of failure'

A £750m deal between Wakefield Council and the operators of a huge waste recycling plant is at 'risk of failure' - a report says.

Wednesday, 18th September 2019, 11:28 am
Wakefield Council signed the 25 year deal with the operators of this recycling plant in South Kirkby, in 2013.

A report of Priority Risks was prepared for the council’s audit committee on Monday and it gave the 25 year contract between the Labour-run authority and Renewi plc, which was signed in 2013, a medium risk rating of 15 out of a possible 25.

Renewi, which was known as Shanks until it changed its name in 2017, look after all rubbish recycling on behalf of the council and run a waste plant in South Kirkby, which employs 60 people.

The private finance initiative deal (PFI) also saw the group take over the running of waste depots in Wakefield and Glass Houghton.

A total of 60 permanent jobs were created with the opening of the plant six years ago.

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The report said: “Due to the waste contract not being commercially viable to sustain or irrecoverably poor performance by the contractor, there is a risk of failure of the municipal waste PFI contract, which may result in termination of the contract, re-financing and in-sourcing.”

In a statement Wakefield Council said the report was an update of hypothetical risks that are identified across the organisation to enable it to prepare business continuity plans.

And that risk management is part of the normal business procedure of running an effective council.

Gillian Connolly, Corporate Director for Business Change, said: "Wakefield Council prudently identifies risks across the organisation and one of the hypothetical risks relates to the waste management contract. We assured the committee that business continuity plans are in place and that as far as we and our contractor, Renewi, are concerned, it is business as usual. There are no changes to the services provided by Wakefield Council or Renewi."

The facility was officially opened in 2016, long after it had been running in practice.

The council is due to make repayments to Renewi for the South Kirkby waste plant until 2038.

The company changed its name from Shanks two years ago after it merged with a Dutch firm called Van Gansewinkel Groep.

Renewi’s latest statement of accounts, which was published in July, showed that it made a loss of almost 98million euros during the last financial year.

The statement described 2019 as a “challenging year” for the group, and said that payments to shareholders had been temporarily reduced.

Another waste recycling centre Renewi, which was due to be built in Derby has been delayed.

The company declined to comment when approached by the Local Democracy Reporting Service.

Wakefield Council declined a request for an interview about the issue.

But in a statement, Glynn Humphries, the service director for environment, said: “We have good governance and a robust approach to contract management, which highlighted some performance challenges last year.

“We are working together to resolve these and both Renewi and the council are committed to delivering the best possible waste management contract for this district."

Local Democracy Reporting Service