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Response to CMBC's Assessment of Kerbside

This is CMBC’s original statement with Kerbside’s comments. The original statement is in black. Kerbside’s statement to put the record straight is in blue. The original statement was written by CMBC’s Chief Executive, Owen Williams and was read out by the Portfolio Holder for Health and Social Care, Graham Reason at full council on 30th July.

Over the course of discussions with Sita, a range of offers were discussed with Kerbside. These included:-

  • Kerbside providing recycling to all 87,000 households in Calderdale, which would mean Focsa staff previously involved in recycling, TUPE transferring with budget to Kerbside;

Kerbside was prepared to take up this option but CMBC had given the negotiation of this deal to SITA but they only gave Kerbside two days in which to analyse the final data and costings to enable them to prepare a bid. Kerbside met that challenge but was told their bid was not acceptable to SITA and that the offer of doing the job for the cost price (without a margin) was the only acceptable figure. There was no negotiation offered to Kerbside after the submission of that bid. Sita told Kerbside "if you can do it any cheaper than cost you will make some money". It would be irresponsible of any organisation to take a job on at cost (unless it was a loss leader). It was Kerbside’s view that it could not commit to a job at cost and would offer a fair and market competitive price.

Note: Kerbside was not engaged directly by CMBC because its turnover was deemed too small to take on such a large contract. In engaging SITA, CMBC was comfortable that SITA’s turnover was large enough to handle any risks. With this in mind, at the beginning of the dialogue Kerbside and SITA agreed that Kerbside would cost the job based on the resources SITA estimated would be required. Kerbside reasonably expected that the costing exercise would include a modest margin.

CMBC failed to present details of Kerbside’s final offer at full council. At a meeting between CMBC, SITA and Kerbside, SITA agreed that 5 Kerbside employees who were to be transferred to them under TUPE terms (regulations which protect the employment and pension rights of employees when ownership of the company for whom they work is being taken over) could remain at Kerbside and the wage bill for these employees, which SITA would have incurred, would be made as a payment to Kerbside. SITA also agreed that, subject to price, they would sell Kerbside the loose mixed cans which they collected. Later the same day, Kerbside offered SITA the market rate for the loose cans. SITA declined the offer. Kerbside then offered to pay a premium above market rate for the cans. SITA declined saying it would not be possible to sell Kerbside the cans as it contravened their company policy. The deal offered by Kerbside would have secured some of the social benefits of its employees whose future in a big corporation might be less certain, it would have allowed Kerbside to continue its highly efficient and cost effective recycling activities in Calderdale and it would have made SITA money. The reader must judge whether SITA ever really intended Kerbside to have a future in Calderdale.

  • Kerbside providing bulky waste collection services, which was estimated to give them a minimum operating profit of £5k on running costs of £190k;

SITA offered Kerbside the bulky waste collection on a similar basis to the one detailed above with 5 staff to be retained at Kerbside and wages paid to Kerbside (hence no additional cost for SITA), plus an estimated fee for bulky waste collection (total £194k). Kerbside checked the fee per collection with other organisations who all said it would not be possible to carry out a service for that money without finding grant support. Owen Williams, CEO of Calderdale MBC, requested the cost of our operation; this is what I provided (forgive the jargon):

    • The bulky scenario. The £194,380 offered would just cover our £190k operating cost, but then we'd have to pay for the capital and running costs to run bulkies and build reuse on the back (to get the items back into disadvantaged homes in the community). We are talking 2-3 vehicles, crews, running costs, a retail outlet etc. SITA suggested we could sort out the capital by cutting off the backs of the wagons and putting a curtainside on and adding a tailift. Apart from the expense of those modifications, I believe our wagons would be too old to comply with the council's restriction on vehicle age. SITA knew all of this. Was there a pattern of impossible offers developing here?
    • Bulkies continued. The figures for Calderdale show a peak of 20,000 collections and an average of 17,000. Where the 24,000 stated (by CMBC) in the meeting (between Sita, CMBC and Kerbside 23 July) comes from I don't know. If Sita want to pay us the £240k they mentioned in the meeting (on 23 July) we'd go with that but, as I have proven (in writing), the offer from SITA only came to £96k.

Hence at full council on 30 July 08, it was wrong to state that the bulky offer would make Kerbside a profit of £5k. We estimate that a loss in the tens of thousands would be incurred – CMBC and Sita had been informed of that.

  • All Kerbside staff TUPE transferring across to SITA with increased salaries at an additional cost to SITA of £100k which is outside of the current contract.

At their SITA induction meeting on 28 June, Kerbside employees were told rates of pay would remain the same. This was restated on the 21st July when SITA came to Kerbside. Some, but not all, Kerbside staff, have received TUPE letters (24 July). The letters do not state what the improved rate of pay is, but it does state that they will move up to current Focsa rates (Focsa have been undertaking some recycling in Calderdale in parallel with Kerbside in recent years). As far as I am aware, Focsa pay rates went up after the Best and Final Offers were submitted. Hence, under TUPE rules, this cost would have been incurred by SITA irrespective of the situation with Kerbside. Note, Kerbside matched Focsa’s pay rates in December 07. Not being aware of the increased pay rate, I cannot calculate the cost to SITA. If it was, say, 10p per hour and it affected 15 employees, the cost to SITA would be £3.5k per annum. It is difficult to get close to the claimed £100k without massive increases in the pay rates being involved. This also begs the question, if SITA are prepared to incur an additional £100k pa cost, could they not have added some of that to the offer made for us serving 87,000 households thus creating a sustainable and workable offer?

  • None of these offers were acceptable to Kerbside who basically wanted their current situation to be maintained.

As you can see from the above, Kerbside were happy to do what they do now, to expand to the whole of Calderdale, to try the can reprocessing option, to do bulkies. We could not accept loss-making jobs, SITA would not accept one that made them extra money, we could not accept a job at cost.

  • On the one hand it is easy to see why Kerbside would want things to stay the same. However, things changed for all households across Calderdale the day the decision was taken to move to wheelie bins.

As I have demonstrated, this claim is unjustified. In addition, we would have to remove materials from our collection and reduce the number collected to 4 from August 08.

  • This means that regardless of whether Focsa or SITA had been working for the Council, Kerbside’s circumstances would’ve changed due to the new combination of household wheelie bins, black bin bags and weekly food collection across 87,000 households.

Of course it would, we never said otherwise.

Paul Brannigan,

Chief Executive, Kerbside

31 July 2008

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