Saeefar Rehman, Associate Director, Public Services Advisory, at Grant Thornton UK, says the waste industry will have to continue to adapt as the global impact of COVID-19 continues to evolve.
The global impact of COVID-19 has largely pushed other news onto the back pages. As government and society have adjusted to deal with the implications of lockdowns and changes in working habits, the headline news has been focused, and rightly so, on health, the strain on public services and business continuity.
The waste industry does however form part of our country’s critical infrastructure. Local authority waste services have coped admirably throughout the pandemic, perhaps masking the true depth of the challenges they have had to contend with.
It is clear that there needs to be collaboration across all parties involved to develop mechanisms that are meaningful, workable and cognisant of the market constraints, to help shape procurements that are both efficient and achieve their objectives.
COVID-19 has affected working conditions (e.g. social distancing, extra cleaning), has resulted in the need to shutdown household waste recycling centres in certain areas (Wales has announced a closure for the current lockdown), has changed the volume and composition of waste being collected, and recycling rates, with a knock-on impact on the price of materials.
Zero Waste Scotland has recognised the sector’s need for support as it adapts to the changing needs caused by COVID-19, and has announced that grants will be made available to waste operators. Although operating conditions have stabilised since the initial shock, challenges do remain.
As things are not expected to return to how they were, for a good while at least, or ever, the waste industry will have to continue to adapt.
Brexit
As if the challenges presented by the pandemic were not enough, the industry must also prepare for the changes arising from Brexit.
From January 2021, there will be changes to how certain materials move to and from the EU, additional administrative burdens and trading with EU states that are also dealing with the issues arising from COVID-19. Increased processing times, and legal and tax issues will inevitably have cost implications for waste operators in the UK.
For example, there is a risk of taxes on RDF exports (depending on the withdrawal agreement) and any increased practical challenges of moving waste could lead to waste being landfilled, all adding to the cost of waste disposal.
Central government, local authorities and waste operators will have to work together to ensure that services are maintained, that challenges are recognised and mitigated as best as they can, and that the financial implications are acknowledged.
The term ‘partnership’ is often used simply because it is a buzz word that works politically but it needs to be more than that going forward, particularly now that uncertainty is the norm.
The incredible level of support provided by the UK government to organisations to help them through the pandemic will inevitably lead to pressure on spend in the future and a push for operational efficiencies and savings.
Local authorities need to be mindful of what they do now and also consider the future. It is not uncommon for contracts to include protections and income share provisions because they help to ‘sell the project’ politically to members, while commercial realities and challenges are ignored.
Uncertainty
Similarly, whilst performance measures in contracts are necessary, they can have a quantifiable cost without a tangible benefit.
At Grant Thornton we have been working with local authorities to understand the conditions and uncertainty that the market is facing and helping to identify areas in existing contracts where savings could be made, and unnecessary risk premiums removed.
It is clear that there needs to be collaboration across all parties involved to develop mechanisms that are meaningful, workable and cognisant of the market constraints, to help shape procurements that are both efficient and achieve their objectives.
Local government will need to discard ‘the way it’s always been done’ approach and adapt to the new environment.
