To receive a presentation on relevant Ubico contract matters. 

35.1          The Chair indicated that the Lead Member for Clean and Green Environment had been invited to give a presentation on Ubico contract matters. 

35.2           The following key points were raised during the presentation:

·      Ubico – A Teckal Company – A local authority-owned company that must have 80% of its activity with the company owner i.e. Tewkesbury Borough Council and the other Councils; the other 20% could be work for other bodies and could generate income for the owning company; allowed for flexible trading arrangements; Tewkesbury Borough Council had the same control as if it was a Council department.

·      Advantages of a Teckal – Tewkesbury Borough Council remained in control; shared risks and benefits; potential for economies of scale; savings from efficiencies benefited the owners; 20% headroom for commercial trading.

·      A Local Authority-Owned Company – Seven shareholding authorities: Cheltenham Borough Council; Cotswold District Council; Tewkesbury Borough Council; Forest of Dean District Council; West Oxfordshire District Council; Stroud District Council; and Gloucestershire County Council.

·      Ubico is Growing – Since the start of Ubico in 2012, with a turnover of £7m, it had grown rapidly: 650 employees; 450 vehicles and plant; 2017/18 turnover £29.9m.

·      Benefits to Shareholders – Retain control over service provision and the company; economies of scale – purchasing strength, greater resilience, costs do not increase as much as a private contractor; flexibility to change services with minimal costs or legal fees; shared best practice.

·      Medium Term Commercial Opportunities – Fleet: setting up of a vehicle rental company to reduce the cost of hiring vehicles; Staffing: setting up of a staffing agency to reduce costs of agency staff; Ubico Consultancy: use the Ubico model to support other Councils that want to set-up teckal companies.

·      Longer Term Commercial Opportunities – Disposal and material recovery: setting up a Materials Recovery Facility (MRF); Acquisition: look to acquire businesses that complement Ubico’s operation; Diversification: look to deliver a wider range of services to shareholders e.g. facilities management, transport and highways.

·      Tewkesbury Borough Specifics – 350,600 collections per month – 4.2m collections per year; 175 hectares of grass maintained; monthly contract meeting to discuss performance; quarterly performance meetings; weekly customer services meetings; regular project meetings e.g. continuous improvement, garden waste club, street cleansing review, grounds maintenance, Javelin Park.

·      Fleet – In 2017, £3.1m was spent on a new fleet for Tewkesbury Borough Council; an audit of how the fleet is being managed was being reported to the Audit Committee later in the year; in the process of commissioning a valuation of the fleet.

·      Javelin Park – The new Energy from Waste facility would start to take waste from Gloucestershire authorities in March 2019 and be fully operational by August 2019; negotiations currently underway as to whether Tewkesbury Borough Council would deliver waste directly or via a waste transfer station; Members would be updated in due course.

·      Tewkesbury Borough Member Involvement – Planned: Overview and Scrutiny Committee visit to the Swindon Road depot; visit West Oxfordshire to look at grounds maintenance; Ubico presenting commercial strategy to Council in January 2019.

35.3          The Chair thanked the Lead Member for his presentation and invited questions from the Committee.  A Member sought an update on plans for a commercial trade waste service and was advised that the revised target date for this project was April 2019.  The Head of Community Services explained that it had become evident from discussions to date that each local authority provided the service slightly differently, for example, some recycled which Tewkesbury Borough Council did not have capacity for, and Officers were continuing to explore the options.  The Association of Public Service Excellence (APSE) report had recommended that this service be handed over to Ubico; however, this had not been considered favourably as the Council would not benefit from any profit generated.  There was a further complication in that some local authorities may opt to join Publica - a local authority-owned company which delivered services on behalf of Councils - and therefore the commercial opportunity may not be as beneficial to Tewkesbury Borough Council; notwithstanding this, he provided assurance that discussions were ongoing with other authorities via the Joint Waste Partnership.  The Lead Member reiterated that, in order to make it a viable service for Tewkesbury Borough Council, it was essential that it was offered in partnership and, whilst other local authorities were keen to offer a trade waste service, there were a number of complications which needed to be overcome.

35.4          A Member noted that Ubico had grown quite quickly and she raised concern that some of the aspirations seemed quite grand for what was a relatively small workforce.  The Head of Community Services indicated that this had been recognised and one of the new Managing Director’s first tasks had been to restructure the organisation and allocate additional resources to the corporate centre to be able to deliver these aspirations.  In his view, one of the key issues which needed to be addressed urgently was staffing – there was a significant problem with attracting drivers which resulted in a reliance upon agency staff which cost Ubico, and therefore the Council, a lot of money. The Member questioned whether the Council was able to influence Ubico to prioritise this and she was informed that Tewkesbury Borough Council, via the Chief Executive, was a shareholder and the Deputy Chief Executive was Director of the Board so they would certainly have an influence.

35.5           A Member queried where Tewkesbury Borough’s recycling was taken and was advised that the contract to sort the mixed recycling was with Suez Resource and Recovery at its Materials Recovery Facility (MRF) plant in Avonmouth; 92-95% was recycled at the plant and any that could not be recycled was taken to an Energy from Waste plant.  The Chief Executive indicated that this had recently been raised at a Council meeting and a Member Update had been circulated with more information.  Another Member went on to query whether the partner authorities in Ubico dealt with bin collection in the same way and if each Council had their own vehicle fleet as Tewkesbury Borough Council did.  The Lead Member confirmed that Tewkesbury Borough Council shared Cheltenham Borough Council’s depot; Cotswold, Forest of Dean and Stroud District Councils all had their own vehicles; some local authorities leased their vehicles rather than owning them.  Each authority collected residual waste in more or less the same way; however, Tewkesbury Borough and Stroud District Councils collected co-mingled recycling whereas the other authorities did a kerbside sort.  Whilst the majority of the local authority partners sent food waste to anaerobic digestion, Cotswold District Council still mixed food waste with garden waste which went for composting, although the Joint Waste Committee was seeking to influence that authority to come into line with the others.  In response to a query as to why Cheltenham Borough Council did not use wheeled bins for its recycling, the Lead Member clarified that each local authority was able to choose what type of service it offered to its residents - Cheltenham Borough Council had carried out a survey which had shown that the majority of residents preferred a kerbside sort and it was easier to use recycling boxes for that.  Given the different approaches taken by the local authorities, a Member raised concern that it would not be possible to achieve economies of scale.  In response, the Lead Member reiterated that residual waste was collected in the same way, and the majority of food waste collections were also the same, so there was potential for some efficiencies to be made e.g. through bulk buying bins, fuel costs.  The Chief Executive confirmed that approximately 70% of the service operated by Ubico was similar for all partners.  It was important for Tewkesbury Borough Council to retain control and flexibility which, unfortunately, did limit the amount of operational economies of scale achieved; however, there could be other benefits to that, for example, the Council owned its vehicle fleet which offered some protection should Ubico ever get into difficulty and it meant that the vehicles were limited to working in Tewkesbury Borough so mileage etc. was kept in check.  In response to a query, clarification was provided that some of the partner authorities leased their vehicles.  A Member indicated that he would like an independent valuation of the Council’s vehicle fleet and confirmation was provided that this was being commissioned.

35.6           A Member raised concern about the possibility of having to take residual waste to the Energy from Waste plant at Javelin Park as there would be a significant increase in mileage for Tewkesbury Borough Council given the geography of the borough and the location of the plant.  He questioned whether there would also be additional costs in terms of double-loading.  He also pointed out that, to his knowledge, the possibility of joining Publica had not been discussed by Members and he would be keen to understand all of the ramifications, particularly in terms of staffing.  With regard to Javelin Park, the Lead Member explained that there would be two options: direct delivery, which would be extremely expensive to Tewkesbury Borough Council, or use of a waste transfer station.  This was being discussed and Gloucestershire County Council recognised the impracticality of direct delivery for all of Tewkesbury Borough.  In terms of Publica, the Head of Community Services clarified that Tewkesbury Borough Council was a waste collection authority in its own right.  The Chief Executive explained that Cotswold, West Oxfordshire and the Forest of Dean District Councils were partners in both Ubico and Publica and they had a slightly different contract; when staff had been transferred from the various Councils to Ubico, those authorities had transferred all staff into Publica which provided the rest of their services.  He stressed that the relationship with Ubico was unchanged and those authorities were shareholders in the same way as Tewkesbury Borough Council - rather than employing staff directly, they had a contract with another teckal company to provide staff.  The Member went on to indicate that, if Tewkesbury Borough Council was to take its waste to a transfer station, Gloucestershire County Council would incur additional costs of having to go to the transfer station and he was concerned that these costs may be passed on.  Clarification was provided that the County Council was a waste disposal authority, not a waste collection authority, so it did not have a fleet of vehicles.  The Head of Community Services reiterated that negotiations were ongoing; the bottom line was that, if the County Council directed Tewkesbury Borough Council to take waste to Javelin Park, the amount that would be paid to Tewkesbury Borough Council would not cover these costs so it was necessary to look for an alternative solution, either delivery to a waste transfer station or a combination of that and direct delivery.   The County Council recognised that Tewkesbury Borough Council was not willing to disrupt existing rounds and he was optimistic that a solution would be found within the next month or so.

35.7           A Member pointed out that there was a perception among some that Tewkesbury Borough Council joining Ubico had been at the expense of its waste service.  The Head of Community Services stressed that the service was very good and, whilst there had been some issues over the last year, they were not necessarily down to Ubico as any significant service change caused disruption.  A Member expressed the view that there was vast difference in the quality of the service provided by Tewkesbury Borough Council and other local authorities in the area which should be recognised.

35.8           A Member noted the proposal to visit West Oxfordshire District Council and she queried whether this was because it operated differently.  The Head of Community Services confirmed that the main purpose of the visit would be to look at grounds maintenance and he indicated that this was an example of an area which paid for 17-20 cuts per year, compared to 10-12 in Tewkesbury Borough.  The Committee welcomed the opportunity to understand more about Ubico and several Members indicated that they would be happy to visit the Swindon Road Depot.  A brief debate ensued as to whether it would be beneficial to invite West Oxfordshire District Council to give a presentation to the Committee and it was agreed that this should be put on hold pending the review of the grass cutting improvement plan in February.

35.9           It was

RESOLVED          That the presentation in respect of Ubico Contract Matters be NOTED.