COMMITTEE FOR THE ENVIRONMENT
OFFICIAL REPORT
(Hansard)
Draft Local Government (Contracts and Compulsory Purchase) Bill
and Draft Local Government (Finance) Bill
23 April 2009
Members present for all or part of the proceedings:
Mr Patsy McGlone (Chairperson)
Mr Cathal Boylan (Deputy Chairperson)
Mr Roy Beggs
Mr Trevor Clarke
Mr David Ford
Mr Tommy Gallagher
Mr Ian McCrea
Mr Daithí McKay
Mr Alastair Ross
Mr Peter Weir
Witnesses:
Ms Julie Broadway )
Ms Marie Finnegan ) Department of the Environment
Mr Tommy McCormick )
Mr Denis McMahon )
Mr George Craig ) arc21
Mr Ciaran Quigley )
Mr Damien McMahon ) North West Region Waste Management Group
Mr Eamon Molloy )
Mr Gev Eduljee )
Mr Marshall Hay ) SITA UK
Mr David Palmer-Jones )
The Chairperson (Mr McGlone):
I welcome Ms Marie Finnegan, Ms Julie Broadway, Mr Denis McMahon and Mr Tommy McCormick from the Department of the Environment. I invite you to give the Committee an overview of the draft Local Government (Contracts and Compulsory Purchase) Bill. You have been asked to remain after you give your evidence, because representatives from the other groups, including SITA, may raise issues from which we might learn something. The Department may have overlooked something or could benefit from learning about experiences elsewhere. Similarly, the other groups may learn from your experiences.
The consultation on the draft Local Government (Contracts and Compulsory Purchase) Bill ended on 12 March 2009. At our meeting on 11 December 2008, the Committee requested a departmental briefing on the synopsis of responses to that consultation. Members should note that the draft Bill makes provision for local authorities to establish long-term financial arrangements under public-private partnerships (PPPs) and public-private initiatives (PPIs) to enable Northern Ireland’s landfill-directive obligations to be met.
The draft Local Government (Finance) Bill has been delayed, but, owing to time pressures, the Department is considering consulting on the severance and transitional-arrangements elements of the draft Bill separately in advance, before adding them to the Local Government (Contracts and Compulsory Purchase) Bill. The relevant consultation documents will be considered later in the meeting.
Members should note that the Committee has given a commitment to the Department that it will not seek an extension to the Committee Stage of those draft Bills, and the Department has agreed not to seek accelerated passage. However, in Committee on 26 February 2009, the Minister said that the squeeze on time is getting tighter because the draft Local Government (Contracts and Compulsory Purchase) Bill has not yet received Executive clearance.
Mr Weir:
I forgot to mention at the beginning that, should there be any discussion on the transitional arrangements, I declare an interest as a member of one of the transition committees and, more pertinently, of policy-development panel A, which is tasked with the governance of the transitional arrangements.
The Chairperson:
Thank you for that. Members’ packs contain a synopsis of responses to the consultation on the draft Local Government (Contracts and Compulsory Purchase) Bill, along with copies of the policy documents for that draft Bill and for the draft Local Government (Finance) Bill. Written updates on the draft Bills are included for Committee members’ information.
Julie will give the Committee an initial overview of the draft legislation. I ask that you take 10 or 15 minutes in which to do that, before taking queries from members.
Ms Julie Broadway (Department of the Environment):
I thank the Committee for affording us the opportunity to brief it on the consultation responses to the draft Local Government (Contracts and Compulsory Purchase) Bill. In addition, I will update members on the current position of the draft Local Government (Finance) Bill.
First, I shall introduce my colleagues and tell you about their specific interests in the two draft Bills. Denis McMahon is from the Department’s planning and environmental policy group (PEPG), which deals with the waste-infrastructure programme. Marie Finnegan is the head of the finance branch of the local government policy division (LGPD), and Tommy McCormick and I are from that division’s policy and legislation branch.
We last briefed the Committee on the two draft Bills in September 2008, so I will bring members up to date with what has happened with both since then. On 5 March 2009, the Executive gave policy clearance for the draft Local Government (Finance) Bill. Instructions have been sent to the legislative draftsmen, and the Bill is being drafted. It is anticipated that it will be drafted by the end of May 2009, when we will seek the Executive’s approval to commence consultation on both the policy and the draft Bill. We hope to be in a position to consult on the proposals from July to October. The consultation will take place over the summer, so we are aiming to conduct a four-month consultation. The consultation document will, of course, be referred to the Committee before it is issued, and we will send the Committee a synopsis of the responses once the consultation period has concluded.
The Local Government (Contracts and Compulsory Purchase) Bill will take the form of a local government Bill rather than a contracts Bill, because of the need to add certain measures from the draft Local Government (Finance) Bill to it. The main purpose of the legislation will be to clarify councils’ power to contract with the private sector in order to remove any concerns that contractors and their financiers may have about entering into such contracts. That will reduce the possibility of delays, particularly in the waste-infrastructure procurement process. In addition to the provisions on local government contracts, the Bill will contain provisions to enable councils to acquire land by means other than by agreement, such as vesting for waste-management purposes.
In our evidence to the Committee in September 2008, which I have already mentioned, we indicated that two other elements will be added to the Bill: severance arrangements for councillors; and transition committees. For the Committee’s information, the consultation documents for those provisions have been issued, with a closing date of 31 May 2009.
The main aim today, however, is to brief the Committee on matters for which consultation has already taken place, primarily on contracts. The consultation document, which included a copy of the draft Bill, was issued in December 2008, with a closing date for replies set at 12 March 2009. We received 14 replies to the consultation: seven from councils; three from waste-management groups; and two from other local government bodies. We have forwarded a synopsis of those replies to the Committee, together with the Department’s response to the points that were raised.
We are happy to take questions in response to the matters that I have outlined.
Mr Weir:
I seek some clarification on a couple of points. Am I right to assume that the compulsory-purchase powers for vesting apply not only to councils but to groups of councils? For example, would each of the three waste-management groups be able to avail itself of those powers?
Mr Denis McMahon (Department of the Environment):
That is correct.
Mr Weir:
Much focus and, to be fair, urgency has been directed towards waste management as a result of the European Union’s focus on it. I presume that there may be implications for the future, both good and bad. If, for example, shared services were being considered as part of the review of public administration, would there be opportunities for groups of councils to come together to avail themselves of those powers?
Ms Denis McMahon:
Yes.
Mr Gallagher:
The urgency to which Mr Weir referred is an important element. Given the pace of development heretofore, I do not quite see how the development of public-private partnerships will match that urgency. In the great majority of public-private partnerships, there is a history of delays and further delays. Given the different economic climate that we are experiencing, such delays will continue to operate for the foreseeable future. What are your views on the need for urgency in the development of public-private partnerships?
Mr Denis McMahon:
There are two points to be made. First, we must ensure that there is confidence in the market. Frankly, there is no point in entering into any tendering process unless one is going to get an appropriate response from the market. We have had a strong response from the market, as demonstrated by the number of bidders, and, so far, we have two waste-management groups at that stage of the procurement process.
That is one area that may be a bit better than some other areas of private investment, because a public-private partnership is a long-term, fairly safe type of contract for the private sector to enter into. However, it is very important that legislation is in place to reassure potential private-sector partners that the councils are going to have the appropriate vires. In the past, in England, there have been cases in which councils have found that something has gone wrong but have not had the power to address the problem or make the payments. That is the sort of thing about which the banks get very nervous.
When we get to the financing stage, several options are available. We tend to think of public-private partnerships as having one particular model, which is the one that applied in the past. However, one of the distinguishing characteristics of the procurement exercise is that, through the strategic waste infrastructure fund (SWIF), which is published, we will probably end up using some Government capital. Therefore, it is not necessarily a case of going to the bank for everything. In fairness to the waste-management groups — one of which the Committee will be talking to today — and without getting into the issue of public-private partnerships, as far as budgets go, they have met all their timetable targets very effectively. That is what we need to see now that we are in the middle of a procurement process.
At a later stage in the procurement process, an opportunity will arise to address the funding issue, but that will depend on the market conditions throughout. Between now and the end of 2010, when the contracts will be ready to be signed, we must have absolute clarity on the issue of vires. This is a very important step in that process.
Mr Gallagher:
You said that you are confident that, in the waste sector, such partnerships will move forward fairly quickly. If I understood you correctly, you said that it will be different in the waste sector than its will be in those sectors in which we have been developing public-private partnerships. Is that correct?
Mr Denis McMahon:
All the sectors have different strengths and weaknesses, and one of the strengths of the waste sector is that it provides a service that will definitely be required. It is secure, because long-term solutions are required. That reassures the banks, perhaps more so than other sectors do.
Mr Gallagher:
The business will always be there, so to speak.
Mr Ford:
I shall make a couple of procedural points. In annex A to your letter to the Committee of 20 April 2009, it states:
“There has been a slight slippage in the legislative timing for the Bill and it is now expected to become operational from November 2009.”
Are you confident that there will be enough time for the Bill, including the added provisions to deal with severance and transitional arrangements, to have a proper Committee Stage and still be enacted by November 2009?
Ms Broadway:
Yes, the provisions on severance and the transitional arrangements are enabling provisions. The body of the provisions will appear in the more detailed regulations. We are confident about that.
Mr Ford:
Good. All nine respondents referred to aspects that they considered necessary in what was described as the “next phase of legislation”. Their request for a power for councils to take part in a joint venture is to be addressed a forthcoming local government Bill. What is the timing for that particular Bill?
Ms Broadway:
We will not be in a position to have those provisions in place in time for the third Bill that we plan to introduce, which will be known as the Local Government (Reorganisation) Bill. We are working on the policy proposals for that piece of legislation, so those provisions will appear the next Bill. Therefore, that will happen after May 2011.
Mr Ford:
Is that likely to satisfy the need for the development of joint ventures?
Mr Denis McMahon:
No. If that need exists, it is not likely. However, the key question is whether that need exists. The waste-management groups are currently working towards having a project structure that will not require a joint venture. Therefore, at this stage, we do not see a joint venture as being a real option. However, it is useful and important to have that option. We would like to have that option in place, and, in an ideal world, we would have it in place now.
Mr Ford:
Are you satisfied that, for the next three or four years, the three existing groups will be adequate?
Mr Denis McMahon:
We are content that a joint venture will not be required for the purpose of those procurement processes that are currently under way. However, we would like to have provisions on the statute books in the event of their ever being required in future. The waste-management groups have raised some other points that, it is important to stress, are absolutely critical. The powers to make guarantees, warranties, and indemnities will have to be in place in time for the contracts to be signed in 2010. Those powers are all being built into —
Mr Ford:
I appreciate that, under your suggested timescale, those powers should be included in legislation very soon.
Mr Denis McMahon:
It is critical that they are. If they are not in place soon, that would cause us a problem, but we are very confident that those will be put in place through the waste Bill, proposals for which are currently out for consultation.
The Chairperson:
When will that consultation be completed?
Mr Denis McMahon:
It will be competed at the end of May.
The Chairperson:
Thanks you. I ask you to take a seat in the Public Gallery, please, because we may need clarification on some points that other witnesses raise.
The next item is the briefing by arc21 and the North West Regional Waste Management Group (NWRWMG) on the draft Local Government (Contracts and Compulsory Purchase) Bill. Representatives from SWaMP2008 are unable to attend today.
The committee contacted arc21 and NWRWMG on 3 March 2009 to request details of their responses to the consultation on the draft Bill. A copy of the response from SWaMP2008 was received and has been included in members’ packs. Representatives from arc21 and NWRWMG have been invited to brief members on their views on the draft Bill.
We are joined by Mr George Craig, who is the financial director of arc21, and Ciaran Quigley, who is its legal adviser. Damien McMahon from Derry City Council also joins us — tá fáilte romhat, a Uasail Mac Mathúna — as does Eamon Molloy, who is NWRWMG’s development officer. You are all very welcome.
The evidence session will follow much the same format as the departmental briefing did. You will be given 10 or 15 minutes in which to brief the Committee, and there will then be an opportunity to answer members’ questions. I am sure that you will feel at liberty to tell us about any issues that may not have cropped up during the questioning of the departmental officials, or about any likely problems or possible solutions.
Mr Beggs:
I declare an interest as a member of Carrickfergus Borough Council.
Mr Eamon Molloy (North West Region Waste Management Group):
I begin by thanking the Committee for giving us the opportunity to appear before it again. We view this meeting very much as a follow-up to our previous engagement with the Committee at the end of 2008, when local government raised the issue of vires and legislative provision.
We wish to speak specifically today about the waste-infrastructure programme in which we are all engaged. It is fair to say that developments have occurred since we were last in Committee, and that will be referred to in due course by our legal representatives here today. Local government’s chief concern is that a sufficient legislative framework be in place to allow the waste-infrastructure programme to be implemented, allowing it to meet its obligations; that is, to meet its targets to avoid potential fines. Another issue is when the necessary legislation will pass through the House.
At the outset, I should have apologised for the absence of our colleague from SWaMP2008, who is unable to attend today.
The Chairperson:
Do you have concerns about the timing of the legislation?
Mr E Molloy:
No. We heard earlier from departmental officials that the timings should be satisfactory. At our previous meeting, the Committee raised the issue of timings, but things have moved on since then.
Mr George Craig (arc21):
On behalf of arc21, I thank you for the invitation to appear before the Committee. I offer apologies from our chief executive, John Quinn, who cannot be here today. We welcome developments on the issue of vires. It is an important issue for arc21 and local government, and, in particular, for generating greater confidence. We are inviting submissions of outline solutions, which is a very important stage of our procurement process. We anticipate that, over the next year and a half, we will reach the stage at which we will award a contract at the end of 2010. Therefore, it is encouraging that, for bidders’ confidence, the issue of vires is being addressed progressively. Ciaran Quigley, who is the legal adviser for Belfast City Council, will address legal issues for the draft Bill.
The Chairperson:
Do you have anything to add, Mr Quigley?
Mr Ciaran Quigley (arc21):
I act in the role of general legal counsel for arc21. We have been considering for some time now the issue of vires for major waste-disposal contracts that we are about to enter into. We had a number of specific issues that we originally thought would not be addressed in the draft Local Government (Finance) Bill. However, the situation has moved on somewhat, and the Department has now produced a draft waste Bill, which will pick up on some of our concerns over what is not covered in the draft Local Government (Contracts and Compulsory Purchase) Bill. Therefore, we view the legislation in a positive light, but we hope that outstanding matters will be addressed by the draft waste Bill. The only issue for us now is one of timing.
We thought that the Bill did not cover the technical issues concerning the vires — the powers — of local authorities in Northern Ireland over waste contracts or any big PPP/PFI contract. For example, we have concerns about the powers of district councils to give guarantees, warranties and indemnities when working in a subregional situation. That is the situation at present with the three subregional groups that have been established. Therefore, a question arises about whether one council could guarantee the performance of a contract by another council or, indeed, by the subregional group. That was a legal concern. Another concern is the issue of councils entering into joint and several liability arrangements.
Another substantive issue, which was mentioned earlier, is the whole question of joint-venture arrangements, and the power of district councils and subregional groups to enter into such arrangements. In our view, none of those issues is covered by the draft Local Government (Contracts and Compulsory Purchase) Bill, which is really a translation of legislation that was brought into force in Great Britain in 1997.
However, the fact that the Government have now recognised that those are issues that need to be resolved, and that the vehicle for doing that is the waste Bill, we are much more comforted. Our only concern is the timing, and at this stage, we do not know the timing for the waste Bill.
The Chairperson:
You seem to be fairly satisfied, except for the timing of the Bill. If there is anything that you need clarified, the Committee can request that that be done here today.
Mr Damien McMahon:
The issues mentioned by Mr Quigley are, to a very great degree, common to all three groups, and we would not take away from them. The Department did, I believe, propose initially that some of the issues that needed addressing would be addressed through the two forthcoming Local Government Bills, which are designed primarily to cater for the arrangements under RPA.
However, now we have the waste Bill, and I must say that, at first glance, it seems very much to address the issues that were talked about. In general, therefore, we are content enough with how things are progressing. With regard to timing: I believe that we had identified with the Department ―and it had accepted ― that the draft Local Government (Contracts and Compulsory Purchases) Bill does not, in itself, really address the necessary vires issues.
A central point that we made was that those are such major contracts, much bigger than anything in which local government has been involved, that there needs to be specific, direct legislative provision rather than having to rely on a hotchpotch of powers. One concern that we had about the draft Local Government (Contracts and Compulsory Purchases) Bill was that it does not address the vires issues; it is geared more towards providing comfort to contractors. That, in itself, is important, too, but it should not be regarded as a Bill that provides powers to local government in the context of that waste.
A central part of the draft Local Government (Contracts and Compulsory Purchases) Bill is “safe harbour” provisions. That applies to all council functions, and not specifically to waste management, although that was the trigger for the Bill. Our concern all along was that, yes, in itself, that is good, but it is not enough to deal with all the issues that are raised. However, I agree with Mr Quigley that as things have developed, and as we heard from the Department today, they seem to be moving along satisfactorily.
The Chairperson:
Thank you.
Mr Beggs:
You said that the timing is crucial. I take it that in order for you to get the quotations for which you are hoping in the PPP stage, all those items have to be in place at the appropriate time. Just to be clear: are you saying that the waste Bill could end up being the critical timing issue for when you can trigger that process?
Mr Damien McMahon:
Yes, I think that the waste Bill will be critical, and we would want to be sure that by the time that we come to contract-signing, the provisions that, it appears, will be in the waste Bill are in place.
The Chairperson:
What would be the earliest potential time for signing?
Mr G Craig:
The end of 2010.
Mr Beggs:
Surely, it would need to be in place well before that so that those who are tendering would have that degree of certainty.
The Chairperson:
We shall clarify that with the Department. There are several issues on that. It comes down to the issue of timing. The date that we were given previously for closure of consultation on the waste Bill should have been 3 July 2009, not the end of May.
Thank you for that. Another private firm is here to share its views. I am sure that you are known to each other, and I would be surprised if you have not met. I ask you to stay with us. Thank you.
Go raibh míle maith agat.
We will now have a briefing from SITA UK on the challenges facing waste management. I advise members that Mr Noel Brady from SITA wrote to the Committee in September 2008 to ask to brief us on waste-management issues. At our meeting on 18 September, the Committee agreed that representatives from SITA should be invited to attend a future meting to consider the Local Government (Contracts and Compulsory Purchase) Bill.
SITA UK has provided a memorandum on the challenges facing waste management, and members should note that SITA welcomes some of the initiatives that are included in the strategy document, especially the removal of the link between best practicable environmental option (BPEO) and the planning process bringing Northern Ireland in line with other Administrations. I advise members that the Waste Management Advisory Board called for clear leadership to enable the strategy to be implemented as planned. Members should note that SITA endorses that recommendation and hopes that the structural changes related to the planning process will support and deliver Northern Ireland’s waste-management strategy.
Mr David Palmer-Jones, chief executive officer (CEO), Gev Eduljee, public affairs director, and Marshall Hay, development officer for Northern Ireland are here from SITA UK. You are all very welcome to share your knowledge and practice with us. You have heard some of the presentations that have been made today. If you have any comments or observations to make on those, you are welcome to do so. I ask you to take a maximum of fifteen minutes, and members will then put their queries.
Mr David Palmer-Jones (SITA UK):
Thank you, Mr Chairman, for inviting us to present to the Committee. I am the CEO of SITA UK. Gev Eduljee is the head of external affairs, and Marshall Hay is the commercial manager with SITA Northern Ireland.
SITA UK has had a waste-management operation in Northern Ireland for over 10 years, and it is the largest service provider here, employing over 90 staff. We are particularly pleased to have been given the opportunity to come to speak to you about some of the current issues that you face. We approached the Committee with a view to giving evidence in 2007. That is clearly included in the minutes on your website. As the waste agenda gathers pace, our appearance today is timely.
It is also, perhaps, rather sensitive. You are, undoubtedly, aware that we are responding to a call for tender from arc21 for the provision of waste-management services, so we are acutely aware of the need to preserve the integrity of the bidding process, both from the standpoint of SITA UK as a bidder and from that of arc21 as a tendering authority.
With that in mind, we respectfully decline to respond to questions that relate specifically to arc21 waste-management plans and to the details of our bid, and to questions that might be construed as compromising the bidding process. However, with that proviso, we are more than happy to speak to and engage with the Committee on general issues relating to the delivery of Northern Ireland’s waste-management strategy.
Waste management in the UK is undergoing a radical change as the policy landscape responds to EU legislation on landfilling, to the treatment of waste materials as a second resource in the revised waste framework directive and, especially, to the climate change agenda, which has brought renewable energy and resource conservation to the forefront of policy development. Waste management is now recognised, rightly, as playing a key role in developing a low-carbon strategy for the UK.
Along with the rest of the UK, waste management in Northern Ireland is influenced by a number of common but interrelated drivers, which were discussed in our submitted memorandum. However, I will pick out the four main elements, because it is important for members to understand.
First, the legislative requirement for the diversion of municipal waste from landfill will require the creation of an alternative new infrastructure comprising a range of technological options for the treatment of specific material streams and the residual stream. Delivery of that infrastructure poses planning and funding challenges, which have to be resolved within the timescale allowed by the landfill directive, if onerous penalties are to be avoided.
Secondly, the landfill tax, which is apt at present, is a critical business driver. It is currently at a level of £40 a ton, which favours, marginally, the recycling recovery option over direct landfilling. That, perhaps, applies to commercial industrial waste in particular, but, as the tax increases, it is becoming more of an issue for local government. The UK Government have consulted on the future development of landfill tax, and as announced in yesterday’s Budget, it will increase further by £8 a ton, to reach £72 a ton by 2013. That puts it among the highest in Europe. That increase will only add further pressure on the planning process to deliver an alternative capacity in the timescales.
Thirdly, funding is an important element. The senior debt market, as members will understand, has undergone a rapid change in the past year as a corrective to the credit squeeze in the wider economy. That applies to all types of projects, including PPPs and PFIs. Senior debt-funders are more risk averse now, and, often, they are seeking returns over a shorter period. That pushes up the cost of debt financing and, therefore, the overall cost of the service.
Fourthly, planning is also an important element. We comment on the challenges in delivering planning consent, even when applications, such as this, are plan-led. We stress the importance of strand six in the national waste strategy, which deals with learning and communication and the partnership approach to the process of infrastructure delivery. Four stakeholders have a part to play in ensuring that the national waste-management strategy is implemented. If there is one message that I would like to leave you with, it is that leadership and community engagement are at the heart of infrastructure delivery. Plan-led infrastructure and delivery presuppose that the community that is participating in a consultative process owes its waste strategy to the waste authority and that the latter should express and act on the wishes of its community.
By the same token, a service provider such as SITA UK has an equal responsibility to engage with the community vis-à-vis safe operation, environmental protection and contributing to the local economy.
The Chairperson:
You are a big conglomerate with a lot of experience in this industry, what lessons can we learn from your experience elsewhere?
Mr Palmer-Jones:
When I look at the situation in Northern Ireland, I see a pragmatism. One of the biggest issues is planning. If there is one element that causes difficulty in producing the infrastructure that is required to meet the new challenges, it is planning. Northern Ireland has the ability, because your planning structure is slightly different to those in England, Wales and Scotland. Your process has a more strategic element, which allows the more difficult and more sensitive strategic planning permissions to be agreed. In that sense, you have the capacity to do it. However, I come back to the need for consultation and leadership. You face major planning issues, and there will be a requirement for strong leadership from the Committee and the other local politicians who will make the decisions.
Mr Ford:
In the past, some of us have perhaps taken the view that the three waste-management groups are small in comparison with some of the potential authorities that are planned for GB. Do you have any views on that? Clearly, those three groups are providing leadership that could not be provided by the 26 district councils. Should we perhaps be considering moving to a single authority for Northern Ireland?
Mr Palmer-Jones:
As you can appreciate, that starts to stray into difficult territory. Our business runs on volume. In order to get cost-effective treatments, volume is quite important. Thus, the idea of bringing the 26 councils together into three groups was, initially, an intelligent move. We do not see any of those groups as being of a size that would not attract some form of interesting competition or not give the volume effect that our business requires to give a good price. I do not think that you should be concerned with that.
Mr Ford:
You referred to the proposal for a £72 a ton landfill tax. Clearly, that is getting beyond what you described as the marginal position. At this stage, what experience has SITA had of the different technologies?
Mr Palmer-Jones:
We talk in terms of the tipping point. Gavin and I were involved in the consultation with the Department of Environment, Food and Rural Affairs (DEFRA) on the landfill tax. We encouraged the Department to increase the landfill tax. Today, at £40, it has a marginal effect on allowing other technologies to come into play. At £72 a ton, the price for alternative treatments will approach £100. That will happen quite soon — 2013 is not so far away — and will mean that all other forms of technology — such as energy from waste, anaerobic digestion, in-vessel composting, and, of course, recycling, which is already an influence — will become available. That visibility will give the private sector confidence in its investment. We told DEFRA that it is very important for us to have that visibility in order to plan for the future, given that we know that the tipping point will be reached around 2010. It allows us, and gives us confidence, to continue with our planning and with the building of the new infrastructure, which is required to meet your targets.
Mr Ford:
As a company, has SITA had any experience of technologies such as anaerobic digestion (AD)?
Mr Palmer-Jones:
Absolutely. Five or six years ago, perhaps certain technologies, such as AD, were feared, or seen as being more avant-garde. However, having asked the interested parties to find a balanced approach using new solutions — from organic solutions to energy from waste — we have seen a lot of money going into new technologies. As a result, those new technologies have become much more robust. It comes back to the need for robust solutions, specifically on PPP contracts, so that funders will be interested in them. I think that we are seeing a continued improvement in technology, which allows for the tipping point to be reached and for new technologies to arrive on the scene. Obviously, we are very encouraged by that.
Mr Beggs:
One of the financers dropped out of the hospital project in Enniskillen, although I think that the money has since been recovered. Does, what could almost be described as, the nationalisation of some of the banks mean that the Government will be able to apply pressure so that money will be available for projects such as that?
Mr Palmer-Jones:
Take Manchester as an example. It has an extremely complicated PFI solution, through which the Treasury created a fund, as was mentioned earlier, to assist in the latter stages of such projects. The fund provides what is perhaps the final part of financing, to make sure that projects are delivered. If you have a good, robust solution, and the risk is apportioned in a fair manner, good projects will still get funding. We still have the ability to find funding, even long-term funding, as long as the structure of the deal is sensible and robust, and the technology, as I said, is of a more pragmatic nature.
Mr Beggs:
Do you see what is coming together in Northern Ireland as fitting into that category?
Mr Palmer-Jones:
I do not see anything that worries me. As I said earlier, people in Northern Ireland have a pragmatic approach. I will leave it at that.
Mr Ford:
You may have heard the earlier discussion about Rose Energy’s plan for chicken-litter incineration, which is a technology that has not attracted community buy-in. Will you provide us with some information on the work that you have done with community engagement, which you highlighted in your paper?
Mr Marshall Hay (SITA UK):
It is important to meet the community. SITA has been providing exclusive support to businesses and the community in Northern Ireland through arena network. That is a community action programme, which is tailored to meet with communities to find ways to help and support them in implementing activities such as litter-picking, tidy-ups and initiatives for their homes.
We have held three workshops in Belfast, Ballymena and Londonderry, which were well attended and positive. On meeting with local people, we focus on ensuring that they take ownership of what is happening. It has been positive, and SITA has done that for quite a while.
Our children are Northern Ireland’s future. SITA has provided environmental information through the classroom 2000 network for Key Stages 2 and 3. The pack has been put together by education professionals, and it has been well welcomed. It is important to put the information to the community. The problem arises if the community is not brought along with the project; that can result in problems. The community needs to own a project and to buy into it.
Mr Gev Eduljee (SITA UK):
The general principle with which we approach consultation is to engage as early as possible. Most of our contracts are won on the strength of specific technological solutions. In the early stage, following the award of contract, we are able to develop information sheets and other information regarding the technologies and how they fit together in providing the overall solution for the community.
We also provide information about the company. For instance, we provide information on our compliance record and details on what and where we operate. We also invite communities to engage with us; we have nothing to hide. Communities can visit any of our facilities and talk to us about any aspects of our proposals.
If a site has been allocated as part of a contract, we are able to do things at a more local level. In such cases, we engage with the local parish councillors and other local representatives and leaders, and we like them to visit our facilities. Some companies have run competitions in which they have asked the local community to design key facilities in their area. That gives them an opportunity to decide what type of technologies they want and what they want to see done with plants’ outputs. Such suggestions must be within limits, because there are contractual obligations to meet.
Once planning applications have been submitted, there is a statutory duty to engage. We do that by trying to spread our proposals as far as possible. Roadshows are one way in which to engage with the public and to encourage comment. That is separate to what local authorities have to do as part of their statutory job in community involvement.
All round, we have found that the earlier we start, the better it is for all concerned — projects come to fruition at the earliest possible time. Of course, there is no guarantee for that. In extremis, a community can reject an application. In that case, there is a statutory right of appeal, and matters are settled at that stage. We would prefer not to go to that stage because it means more delay, but that does not obviate the principle of starting early on both sides.
The Chairperson:
Unless any other member has anything to add or has a query, I thank you for your time, gentlemen. Invariably, if this process goes on, we will meet again at some stage. Thank you for sharing your experiences.
I will ask one of the departmental officials to clarify the issue of the timing. There is a fairly consistent theme there. Can you give us a specific outline of the timing of the sequence that we are going through?
Mr Denis McMahon:
I apologise for giving the wrong date earlier; that did not help. We are out to consultation; that is due to end on 3 July 2009. The draft waste Bill is due to come before the Assembly in January 2010, and to be formally in place by June 2010. Therefore, the first contracts should be ready to be signed in late 2010. That is the current process, but we would be happy to follow up with the details in writing.
Mr Beggs:
You have indicated that the legislation would be in place for contracts to be signed, but surely it has to be in place and firmed-up in advance of that, so that the tenderers can have the certainty that the contents will be enacted as presented. Ultimately, that would give them a level of confidence in tendering, because they would know under what rules they would be operating. Does the legislation not need to be in place well before the signing stage?
Mr Denis McMahon:
Ideally, it would be in place now. In fact, ideally, it would have been in place three months ago. The more confidence that we can give the market, the better, but it absolutely has to be in place at the time of signing the contracts. There has to be a level of belief from the tenderers that we are going to have it in place by the time the contracts are signed.
So far, we have had a strong response from the market, and they are fruitfully participating in the procurement process. We have been working very closely with the waste-management groups on this issue, particularly over the past six months, to make sure that everybody is clear about what is being done about the draft waste Bill, and when.
The Chairperson:
Maybe it might be appropriate if one of the representatives of the waste groups comes forward. I do not want to bounce anybody if they do not want to come forward; I just want to hear what your views might be on that sequence of timing.
Mr E Molloy:
Thank you, Chair. We would be perfectly satisfied if that timetable is adhered to. As Denis said, it is crucial that the market has confidence, and in an ideal world, the legislation would already be in place. However, the fact that we can confidently engage with the market, knowing that the legislation is going to be in place, gives us a sufficient safeguard.
Mr Beggs:
Presumably, you will be going through some form of select list — a shortlist — at least, that is the way in which other large contracts are operated. At what point will you seek best and final tenders? Presumably, you would like this in place before you reach that final stage?
Mr E Molloy:
Ideally, yes. The entire process is 18 months long, so —
The Chairperson:
Can you just clarify what process?
Mr E Molloy:
Sorry, the entire procurement process will take 18 months, so we will be engaged in a competitive dialogue. We will engage directly with the potential bidders. We need to be able to relay the details of the provisions of the Bill to them. By that stage, we will know the provisions of the legislation; after the consultation is completed by January 2010, when the Bill is presented to the Assembly.
As long as we have that information, we can be confident in our engagement with the market, and that should engender sufficient confidence in the market.
The Chairperson:
Is the process that you spoke about the 18-month one that starts at the end of next year?
Mr E Molloy:
We are engaged in the process.
The Chairperson:
Are you happy for the timetable that has been outlined to be adhered to?
Mr E Molloy:
Realistically, if that timetable is adhered to, we should all be able to proceed with confidence.
The Chairperson:
Mr McMahon, will you outline the details of that in writing?
Ladies and gentlemen, thank you for your time. This evidence session has proven useful in distilling the issues and thus sorting out a timetable.