HWP Briefing for Members Intermediate Inter-Authority Agreement The legal context Nicky Sumner Sharpe Pritchard

Agenda for today Some terminology What are the respective rights and obligations of a WCA and WDA (a canter through the relevant legislation) What are the key ingredients of a waste PFI owhat is PFI othe process othe structure of the contract Why is an IAA needed? What other authorities are doing The HWP IIAA Next steps

Terminology

Background to Statutory Framework EU Landfill Directive – requirement on all Member States to reduce biodegradable municipal waste sent to landfill UK Landfill Allowance Trading Scheme (LATS)– introduced in April Local authorities only permitted to landfill up to their allocated allowance levels or suffer fines. Allowances to be reduced. Allowances can be traded between authorities UK Landfill Tax – payable on waste sent to landfill. Set to increase year on year to further encourage diversion from landfill (Landfill Tax Escalator) UK National Waste Strategy for England 2007 – Government’s strategy for implementing EU framework and setting national targets for recycling and recovery of municipal waste

Statutory powers and rights Environmental Protection Act 1990 County Council is a Waste Disposal Authority (WDA) Districts are Waste Collection Authorities (WCAs) S45 EPA WCA obligation to collect household waste (free of charge in most cases) and commercial waste where asked to do so (for a charge) Other collections are optional (eg industrial waste) but WCA has power to collect S46 EPA WCA can dictate the type of receptacle for household waste to be collected, the number and kind Can be at Council or householder’s cost S48 EPA WCA must deliver the waste collected to the place where the WDA directs (the power of Direction) There are no provisions setting out location of disposal points, opening times or the specification in design, vehicle turnaround times etc S 47 EPA WCA may retain waste for recycling provided it notifies the WDA The WDA may object if it has already made disposal arrangements S51 EPA WDA has duty to make delivery points available and dispose of waste

Statutory powers and rights WET Act 2003 WDA power to require WCAs to separate waste Household Waste Recycling Act 2003 Duty on local authorities to provide kerbside collection for at least two recyclates by 2010 National Indicators NI 191 – residual household waste per household NI 192 – household waste reused, recycled and composted NI 193 – municipal waste landfilled

What is a PFI? Arrangement for the provision of services which require an asset financed by the private sector Off local authority balance sheet so does not count as public borrowing Procured through the competitive dialogue procedure of the Public Contracts Regulations 2006 Usually Project Finance but sometimes other forms of finance (eg corporate debt) but issues similar

The PFI process OBC submission and approval OJEU PQQ short-listing Competitive dialogue Preferred Bidder appointment FBC approval Financial close Planning, construction, operation

Typical PFI Project Structure

Why is an IAA needed? 3 key reasons o Defra requirement o Certainty o Value for money

Defra requirement Defra’s “Criteria for securing waste PFI credits” (version 1.2 published 16/08/07) auth/funding/pfi/pdf/pfi-criteria-aug08.pdf auth/funding/pfi/pdf/pfi-criteria-aug08.pdf Criteria 1 is the key criteria for our purpose – “In two-tier areas, proposals [for PFI credits] should demonstrate how the two tiers of local government will work together to deliver their targets under legally binding agreements or constitutions, which should be in place by the start of procurement.”

Certainty Assists authorities in two tier authorities to work together Augments statutory framework (fills gaps in legislation) Certainty for Defra and private sector that HWP can work together before investing in multi- million pound facilities

Value for Money Issues and risks for the private sector  Scope of project  Composition and volume of waste  Changes overtime Certainty (leading to better competition) Better risk profile for PFI (good for public purse) Less risk, more manageable risk – cheaper finance

What other authorities have done Essex – joint committees supported by MoU. Developing binding IAA Northamptonshire – MoU in place. In process of executing binding SLAs Leicestershire – statement of understanding signed for OBC. Legally binding, in place until financial close of PFI Suffolk - detailed IAA signed pre procurement. To be reviewed following LGR if required Buckinghamshire - interim IAA signed for waste management project and long term arrangement for composting Cambridgeshire – RECAP supported by statement of understanding

The HWP IIAA Contractual document – legally binding Builds on and formalises provisions in the MoU Parties to continue as the HWP in accordance with the 2007 Joint Municipal Waste Management Strategy provisions In place for start of PFI procurement until Financial Close of PFI Structure to assist HWP to work during PFI procurement: to comply with Defra’s requirements for OBC to encourage competition by giving certainty to the private sector to ensure value for money Is a first step. Long term IAA envisaged once PFI procurement in final stages

What the IIAA includes Partnership working WDA and WCA commitments during PFI procurement WCA Baseline and information provision Delivery points and tipping away Funding Flexibility  Intermediate agreement  Review Procedure Dispute Resolution Procedure

Next Steps Workshop 3 – Tuesday 13 th January HWP Members Group- 26 th January OJEU – April 2009