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The Advantage in the Waste Industry

Joint Working and Efficiency Gains

Dr. Adam Read and Sarahjane Widdowson
The enTire globe is suffering aT The hands of the worst recession to hit since the 1940s, and this is not only a concern for the financial sector and people with savings and investments, but it is also a major worry for municipal authorities who are charged with delivering front line services that underpin our modern way of lifepolicing, health care, schooling and, of course, waste management. In October 2010, the UK Government announced a fundamental spending review outlining how they were going to address public sector funding and help the economy grow. This has proven to be the biggest shockwave to hit local waste management services since the EU Landfill Directive was launched in 1999 and single-handedly led to the widespread adoption of curbside recycling programs and innovative residual waste treatment solutions to divert organic waste from landfills. This new shockwave has had a similar impact on challenging municipal authorities to think about the efficiency of the services that they offer, prioritize the services delivered and encourage greater joint working with neighboring municipalities to deliver the efficiency improvements required to satisfy the current government funding framework. in local municipal grants from Central Government, equivalent to an overall 15 percent cut in municipal budgets, along with a predicted 30 percent cut in capital spending programs. Waste management remains the single largest contract led by many municipalities whether for collection and recycling or treatment and disposaland as such, waste management has been targeted for an overhaul in terms of local priorities, service design and implementation. Clearly, these are challenging times for all of us involved in municipal waste management and challenging times require innovative solutions. The UK Government has limited municipal budgets from April 2011 and authorities across the country have been left to generate their own ideas and realize these savings over a three-year period. The last five months have since brought on an unheralded amount of activity involving community stakeholders, budget holders and officers to look at the options available, often with the help of independent consultants who can comment on efficiency options and delivery alternatives from a wider perspective. In some places, municipal authorities must save 50 percent of their operating budgets over the next three years. Birmingham City Council (the UKs largest municipal authority) announced recently that 7,000 staff would be going in a bid to save 300 million per annum (about $489 million), while Blackburn Council will be cutting 1,000 jobs and Wakefield Council will be cutting their workforce by 10 percent. Job losses such as these arent simply trimming measures where departments are streamlining perceived nice to have positions; these cuts (in scale and breadth) will require wholesale restructuring of departments and reductions in front line services such as waste collection and recycling. A hash reality for those of us involved in delivering waste-related services, but one that cannot be ignored, and perhaps one we should be embracing as it affords us with the opportunity to critically review our service design, performance and programming.

Considering the current global economic climate, UK government funding cuts and the need to find service-related efficiency gains will drive greater joint worKing in the UK waste management seCtor over the next two years.

Budget Cuts
Across the UK, we are looking at a 28 percent cut

Balancing Budget with Service

Difficult decisions about priorities and budget allocations will need to be made, and difficult decisions

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WasteAdvantage Magazine May 2011

Case study
The Surrey Waste Partnership (11 collection authorities and one disposal authority) has a successful track record of working together on major strategy and the procurement of a residual waste treatment solution. Current budgets totalled 40 million (about $65.2 million) per annum, with likely increases due to rising landfill tax and disposal fees of 1 million (about $1.6 million) per annum. Given Central Government budget cuts and increasing pressure to deliver local savings, the partnership was keen to identify how it could determine and realize further efficiency gains and other benefits associated with working more closely together. They commissioned AEA to develop opportunities for efficiency gains or cost savings, from benchmarking all of the existing services to major service innovation and procurement opportunities. Up to 2 million (about $3.2 million) of savings over two years were identified from the benchmarking exercise, the majority of which was attributable to all the 11 collection authorities getting the best price when they sell their recyclables (a significant range existed even with the same reprocessors), and using economies of scale when buying new bins, containers and fuel. In addition, lessons learned from each other on service delivery would ensure that more efficient crew sizes, container types and communications messages would be used by all parties going forward. AEAs work also identified potential savings in excess of 15 million (about $24.4 million) over the next five years through the alignment of recycling services (similar collection system in all 11 authorities), common policies on side waste, bulky collections etc., economies of scale in procuring new solutions (joint working), and ultimate savings in disposal costs and taxation. Other opportunities identified included a single call center for all the authorities, identical branding of vehicles, central communications, sharing of depots and vehicles, and regional management teams in hubs across the county. The partnership has recently approved the recommendations within the AEA report and are moving ahead to explore new governance systems to enable greater joint working, and are jointly procuring new green waste treatment capacity. Each of the authorities is also undertaking a detailed benchmark review of their services and will share best practices with one another to enable immediate savings to be achieved. The partnership has had to put aside political differences and concerns about local sovereignty to address the bigger issue of budget cuts and service enhancement. The challenges have helped to bring the authorities together to fight a bigger cause and the benefits are now being realized by all.
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Joint Working and efficiency gains
need difficult questions to be asked about current policies, priorities and services. This will only be achieved through a dedication to informed analysis and data collection and by thinking differently about how services are designed and deliveredpartnerships and joint working are no longer a nice idea, they are a must have if municipal services are to continue to be delivered in a way that our residents recognize and understand. So how are we trying to balance these massive budget cuts with the need to deliver ever better front line waste and recycling services that meet the requirements of residents, and comply with the added pressure of the UK governments localism agenda? The first step is benchmarkinganalyzing your service against the best authorities or your neighbors to see how your performance compares to theirs. But you need to be brave and consider all aspects of your services, both front line and back room staff. Dont leave this review up to the service manager as they may be too close to the services to see the opportunities; get a fresh pair of eyes in to look at all of the aspects that could be improvedhowever small. If you find savings can be made then you must act upon them and implement change swiftly. Cutting services is not politically palatable under any circumstances but given the development of the localism agenda in the UK, the need to satisfy residents needs is placing additional pressure on what would otherwise be considered prudent decision making. Recycling bring banks are seemingly a bone of contention for many authorities currently. With the ongoing expansion of curbside collection schemes, many bring banks are not well used by residents, but the idea of cutting some of them is creating local uproar in many locations. Using valuable vehicles and crew to collect recycling that is often deposited by bars or small businesses without payment is adding to local authority bottom line costs. Many authorities are looking at a combination of rationalization and diversification to solve the problem. Retaining banks in the locations where residents need services makes sense, but either removing banks in other locations or diversifying offerings with textiles, book banks and Waste Electrical and Electronic Equipment (WEEE) banks instead of more traditional dry recyclables can provide additional material capture without removing The Advantage in the Waste Industry a service. Innovation is required to ensure that rationalization provides service enhancement. This is an area that will require greater investment by authorities as they map materials capture, usage and quality from bring sites, re-use centers and the local tip.

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Partnerships and Joint Working

In parallel, the partnership agenda has been growing steadily within the UK waste and recycling sector with many authorities entering both informal and formal partnerships, often linked to residual waste treatment and municipal strategy delivery. The increasing need to cut budgets over the last 12 months has catalyzed this activity and many authorities are now looking at how services can be delivered more effectively and at a lower cost by working together. One of the biggest announcements to date has been the proposal to share services between the three London Boroughs of Westminster, Kensington and Chelsea, as well as Hammersmith and Fulham. It has been estimated that administrative savings alone could be worth between 50 million (about $81 million) and 100 million ($163 million) per year for a range of services including waste management. Every service, from chief executive and senior directors to street cleaners and social workers, could be shared, and under the plans, each authority would keep its council leaders and local elected councillorsthus ensuring a local perspective on strategic decisions. There are numerous successful examples of joint working to look towards for guidance and evidence to support future partnership initiatives. We have seen the development of partnership working in West Oxfordshire and Cotswold District Councils, which has resulted in alignment of waste management services and the development of a Joint Chief Executive and a senior management team. Nearby, South Oxfordshire and the Vale of White Horse have a joint waste service and joint waste services team which procured together, but rolled out at different times. Adur and Worthing councils are delivering a joint waste collection service to their residents to cut costs and improve

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quality, while Tamworth and Lichfield Districts have a joint service program that extends beyond waste management and which for waste services alone is delivering 750,000 (about $1.2 million) per annum in savings because less vehicles are in use, they have a single depot and there is only one client team. The Somerset Waste Partnership (several collection authorities and one disposal authority) is achieving savings of more than 1 million (about $1.6 million) per annum through alignment of services, sharing of best practice and the ability to buy and sell as a single entity ensuring better prices for fuel, containers and recyclables. The Hertfordshire Waste Partnership (several collection authorities) has formed a consortium to sell their recyclables and is generating significant additional income when compared to when they acted independently (an additional 5 million [about $8.1 million] over four years from the collection and sale of paper alone). Joint working can provide many opportunities to improve service efficiencies and can lead to significant savings (both cashable and non-cashable). Efficiencies can be realized through joint depots, sharing of vehicle fleets (thus reducing spares across the partners), buying together (fuels, bins, etc.), sale of recyclables, route optimization and by having a more attractive portfolio when you go to market (size and logistics). However, many of these savings will be achieved through invest to save activities where investment is required to fully understand the range of options available, and short-term spending is not something that many authorities are currently considering. This could prove to be the fly in the ointment and result in decisions being wrong in some circumstances as insufficient data was available to inform the decision-making processbut only time will tell.

The time is now right for a major change in the UKs approach to joint working. The scale of budget cuts and the need to enhance local service delivery will force authorities to benchmark their services Advantage in the Waste Industry are working The to ensure that they effectively over the next six months. Once this has been done, the emphasis will shift to considering joint working, shared services, re-alignment of delivery and potential municipal mergers to ensure that economies of scale are optimized. Perhaps the recession will have a silver lining after alllong-term efficient delivery of waste management services? That cant be a bad thing! | WA Dr. Adam Read is Global Practice Director for AEAs Resource Efficiency and Waste Management Practice. He has had more than 17 years of operational experience both in the UK and overseas, the last 10 in consultancy. Adam leads a team of waste and resource management consultants at AEA specializing in resource efficiency, product design, clean technologies, waste management strategy, recycling service design, technology appraisal, procurement, training and behavior change. He can be reached at 07968 707 239 or e-mail adam.read@aeat.co.uk. Sarahjane Widdowson is a Principal Consultant at AEA specializing in local authority service design, benchmarking, joint working and communications. She has 10 years of sector experience and was formerly a municipal waste management officer responsible for recycling service design and delivery. She has also delivered reviews of waste management service performance for a number of London Boroughs and has modelled bring site options in terms of materials capture and expenditure for WRAP on behalf of a number of local authorities. Sarahjane can be reached at +44 (0)7581 621 795 or sarahjane.widdowson@aeat.co.uk.

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2011 Waste Advantage Magazine, All Rights Reserved. Reprinted from Waste Advantage Magazine. Contents cannot be reprinted without permission from the publisher.

WasteAdvantage Magazine

May 2011

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