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STSB publishes proposals for future waste funding

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Monday 27 June 2022

The provision of household waste and recycling services is costing around £1 million a year less than was forecast prior to the changes to collection and charges in 2018/19.

However a review of the current funding model, which requires the cost of these services to be fully paid for through direct waste charges, has concluded it is unlikely to ever achieve that aim. Instead, the States' Trading Supervisory Board (STSB) is proposing that the forecast deficit of between £1.4 million and £1.8 million a year is met through funding from the States' general revenue budget. 

The STSB has also signalled an intention to introduce a small charge for recycling, of around 25p per bag. That will reduce the requirement for central funding, and reflect the 'user pays' approach that already applies to general waste. It will contribute towards the cost of processing these materials, but be set much lower than for general waste, to continue to encourage recycling.   

As well as providing funding in future years, the STSB is proposing the Policy & Resources Committee writes off the deficit that Guernsey Waste has accumulated since 2019. That is forecast to be £2.97 million by the end of this year. 

That deficit and the anticipated future shortfall have mainly arisen because far fewer bags of waste are being produced than was anticipated before the changes. As a result, the amount received through the pay as you throw sticker charge has been more than £2 million a year less than was forecast.

However that also means the amount that households have spent on waste charges since 2019, excluding parish collection charges, has been around 25% less than had been expected. 

Before the changes, it was estimated that on average households would pay the equivalent of £4.25 per week, through a combination of Guernsey Waste's annual charge and the sticker charge for general waste.  However the actual cost has been just over £3 a week. 

Under STSB's current proposals, the annual charge and sticker price would increase by above inflation over the next three years.  This would bring the amount households pay through direct charges more in line with the original forecast. However, excluding inflation, it would still be less than the predicted £4.25 per week. 

In its policy letter, the STSB acknowledges that States Members may prefer not to increase the current charges or introduce a charge for recycling. If they decide against these revenue raising measure this would require additional central funding. 

STSB president Peter Roffey said the Board was in a very difficult position, and States Members were being asked to give a clear direction.

"As a Board, we have been given responsibility for the States-owned trading bodies, and tasked with operating them on a commercial basis. That is proving particularly challenging in the case of Guernsey Waste.

"We have a strategy that aims to reduce the amount of waste that we generate as a community. At the same time, we rely on that waste being produced to meet a significant proportion of the costs that we incur in managing the island's waste and recycling. No other commercial operator that we are aware of would be actively looking to prevent its primary source of revenue."

One of the targets for the Waste Strategy was to recycle 70% of household waste by 2030.  That target was met by 2019, the first full year of the current collections charging arrangements.  That initial success is one of the reasons why the number of bags of general waste being produced is much lower than was anticipated. 

"At the outset, there was an expectation that the combination of the sticker charge and the annual charge would raise enough for the system to be self-funding.  However the strategy has already been so successful, and islanders have embraced the new arrangements to such an extent, that has not been the case so far and we do not foresee it becoming self-funding in the foreseeable future," said Deputy Roffey. 

"We have examined potential options, and we do not believe it is sensible to retain the current reliance on waste charges to meet the full costs of the strategy.  Particularly given developments elsewhere, which could help drive down further the amount of waste being produced as governments look to encourage more sustainable use of resources." 

Under the STSB's proposals, Guernsey Waste would effectively operate similarly to Beau Sejour.  The leisure centre charges users for use of the facilities, but does not to recover the full costs.  Central funding is used to address the shortfall.

The current law allows for a charge to be applied to any waste or recycling containers, after that was previously agreed by the States.  However the recycling charge has been set at zero since the new funding arrangements were introduced in 2019.

Under STSB's proposal, the charge of around 25p per bag would only apply to the blue and clear recycling bags.  There would not be a separate charge for glass or food waste. 

As well as the shortfall from household charges, income from commercial waste received at the waste transfer station is also much lower than was forecast.  The STSB proposes working with the Committee for the Environment & Infrastructure to review policy for commercial waste.   

It is also proposing to review the current household collection arrangements, in conjunction with the parishes and their contractors.  This will examine whether any improvements can be made, based on the experience gained in the first three years.

The STSB's policy letter states: "This is not, in any way, a negative reflection on the way that parishes have continued to organise their affairs or the service their contractors provide. In fact, it should be acknowledged that throughout the Covid-19 disruption, all household waste collections continued without interruption.

"Nevertheless, these services involve significant contracts, which in 2022 amounts to £2.4 million. This cost is passed on to islanders, and it is therefore incumbent on all parties to demonstrate value for money and ensure services are being delivered in the most cost-effective manner." 

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