£1.5m spending increase on Peterborough’s waste removal service after ‘true financial picture’ revealed

City council trading company Aragon Direct Services took over the running of services from private firm Amey in early 2019.

The decision to terminate the 23 year contract 15 years early was because the council believed it could deliver better value for money itself and improve recycling rates.

The council said it has now reviewed the service and discovered that Amey was running it at a bigger loss than it previously realised.

As a result, and because it is seeking to replace or update refuse vehicles, street sweepers, transport fleet and other equipment, it will spend an extra £1.5 million a year on Aragon.

The council said many of the vehicles were coming towards the end of their use, while it is also working towards having a totally electric fleet by 2030.

The impact of the coronavirus pandemic is also said to have played a part in the additional costs.

Services run by Aragon include: refuse collection, recycling, street cleaning, parks, trees and open spaces.

Peterborough City Council corporate director for resources Peter Carpenter said: “Amey were subsidising the contract in terms of central overheads quite substantially, so what we were paying wasn’t the full cost.

“A lot of infrastructure needs replacing. We need to go green and make those investments now. But we’re still paying substantially less than what we were paying Amey.

“It’s been a successful transfer and we’re now future-proofing the service for future years.”

Council leader Cllr John Holdich said: “We knew they were subsidising it but not to what extent. We didn’t realise until we got in there how much they were subsidising it.”

Plans for Aragon to make money by outsourcing its services has been impacted by the coronavirus pandemic, but on a positive note Cllr Holdich added: “We’ve not been getting complaints since the transfer. We used to have them regularly with Amey.”

The extra cost on the service was outlined in the council’s latest budget proposals.

Overall, the authority needs to make savings of £36 million which it has put down to government cuts to its funding and the impact of Covid-19.

Further budget articles will appear at www.peterboroughtoday.co.uk.