Greater London Authority Act 2007

Written submission from the London Waste and Recycling Board (GLA 08)

Introduction

The Communities and Local Government Select Committee have called for evidence in response to the post legislative review of the Greater London Authority Act 2007. This submission responds to the question the select committee have asked about the achievements of the London Waste and Recycling Board (LWARB) set out below:

"What benefits have been achieved through the establishment of the London Waste and Recycling Board? For example, has it improved efficiency, recycling rates, joint working or instead created further layers of bureaucracy? What hard and fast evidence is there of tangible improvements which would not otherwise have occurred?"

Summary of LWARB achievements

LWARB has:

· Recently reached financial close on an Anaerobic Digestion plant and In Vessel Composting facility in East London, which is now under construction and expects to reach close on a further two projects this year, with a combined tonnage of circa 150,000 tonnes per year;

· Committed finance to five infrastructure projects that will deliver almost 10,000,000 tonnes of waste diversion from landfill over their lifetime, and nearly 3,000,000 tonnes of CO2 avoidance. LWARB’s total commitment to these projects is £22m, which will lever in around an additional £182 million of private sector finance.

· Made an £18m investment into a waste Urban Development Fund under the umbrella London Green Fund (LGF). The total waste fund stands at £60m. Debt is often an essential ingredient in meeting equity investor return requirements.

· Provided £14m to support reuse and recycling initiatives in London. It is expected that this will lead to an additional 230,000 tonnes of material reused and recycled over the lifetime of these projects. Current data indicates that these projects have reused and recycled almost 80,000 tonnes of material to date;

· Funded the London Reuse Network (in addition to separate food and furniture reuse investments) which is expected to deliver around 200 jobs (of which 50 have been delivered to date), just over 3,000 training places (148 to date), 3,700 volunteer places (85 to date), and 1,600 work placements (42 to date);

· Established an efficiencies programme. It is hoped that the first two Efficiency Reviews could lead to savings of around £1m;

· Established a joint equipment procurement scheme that leads to savings of around 10%.

Background

The London Waste and Recycling Board (LWARB) was established under the GLA Act when it was revised in 2007. This followed the government’s review of the Powers of the Mayor and the Assembly in 2005-6, and in particular the former Mayor, Ken Livingstone’s proposal for a Single London Waste Authority dealing with waste disposal.

In response to the review, there was broad agreement from London Boroughs and the Mayor about the need for the development of additional waste infrastructure in London, and about the need for better strategic planning and co-ordination. There was significant disagreement between the London Boroughs and the former Mayor of London about the need for a single waste disposal authority as a functional body of the GLA.

The government decided upon the creation of the London Waste and Recycling Board, in order to bridge the gap between these two views, and provide a forum, underpinned through statute, to bring the regional and local tiers of governance together within a body requiring no change to existing governance arrangements. LWARB does not, and was intentionally designed not to, place additional bureaucratic burdens upon waste management within London. As such, its introduction was welcomed by London Councils (who had argued for such a body) and supported by the current Mayor (and was explicitly supported within both his Mayoral manifestos).

LWARB’s Objectives

The GLA Act 2007 established LWARB with the three main objectives to promote and encourage, so far as relating to Greater London;

a) the production of less waste;

b) an increase in the proportion of waste that is re-used or recycled;

c) the use of methods of collection, treatment and disposal of waste which are more beneficial to the environment in London.

The Act also allows that, for the purpose of achieving its objectives, LWARB may provide financial assistance to any person towards or for the purposes of:

a) the provision of facilities for or in connection with the collection, treatment or disposal of waste produced in Greater London;

b) conducting research into new technologies or techniques for the collection, treatment or disposal of waste;

c) securing, or assisting in securing, the performance of any function of a London borough council or the Common Council relating to waste.

In carrying out its functions LWARB must act in accordance with the Mayor’s Municipal Waste Management Strategy and in general conformity with the London Plan so far as relating to the collection, treatment and disposal of waste.

Improvements in Recycling and Reuse

A summary of LWARB achievements is included as an Appendix.

LWARB has provided £14 million to support reuse and recycling initiatives in London. It is expected that this will lead to an additional 230,000 tonnes of material reused and recycled over the lifetime of these projects. Current data indicates that these projects have reused and recycled almost 80,000 of material to date.

The focus of LWARB’s recycling and reuse expenditure has been:

· recycling communication messaging – both strategic and local

· recycling collections from flatted properties

· the establishment of the London Reuse Network (LRN). This network has invested more than £2 million to date establishing a variety of programmes and infrastructure, including reuse workshops for the refurbishment of electrical items and furniture, depots for the storage and sale of reusable items, and pan London paint and bicycle recycling schemes.

These recycling and reuse projects are innovative and are generating additional jobs and training opportunities as well as additional tonnes of waste diversion from landfill and incineration. For example, the LRN (in addition to separate food and furniture reuse investments by LWARB) is expected to deliver around 200 jobs (of which 50 have been delivered to date), just over 3000 training places (148 to date), 3700 volunteer places (85 to date), and 1600 work placements (42 to date). These schemes would not have happened without LWARB, as we have been able to lever additional resources into programmes through a combination of match funding and joint procurement. For example, LWARB saved £200,000 (10 per cent of the quoted price) on the procurement of equipment required for recycling from flatted properties.

Waste Infrastructure

LWARB is also, through Board commitments, helping to develop infrastructure projects in London that would otherwise not be able to secure all of the required finance. It is LWARB’s experience that there are very few developers capable of funding the entire project investment off balance sheet. As such, alternative sources of funding have to be sought. Sources of private sector funding are constrained for many projects for a variety of reasons including the projects being too small or the contractual structure not being sufficiently securitised to satisfy a bank. Additionally, project returns are often not high enough to support equity only structures. The projects in LWARB’s pipeline echo this sentiment and LWARB’s finance products reflect the requirements of the market to enable delivery.

LWARB offers a range of financing products that are tailored to the requirements of each individual project. The products are offered at commercial rates and fill the financing gap in a project. Projects are robustly assessed, and LWARB aims to invest on the same terms as commercial lenders where possible. LWARB has recently reached financial close on an Anaerobic Digestion plant and In Vessel Composting facility in East London, which is now under construction. LWARB expects to reach close on a further two projects this year, with a combined tonnage of c. 150,000 tonnes per year.

The current pipeline of five committed infrastructure projects will deliver almost 10,000,000 tonnes of waste diversion from landfill over their lifetime, and nearly 3,000,000 tonnes of CO2 avoidance. LWARB’s total commitment to these projects is £22 million, which will lever in around an additional £182 million of private sector finance.

In addition, LWARB has made an £18 million investment into a waste Urban Development Fund under the umbrella of the London Green Fund. This is primarily an equity fund that has been further capitalised by the European Union (through its JESSICA programme) and private sector funds. The total waste fund stands at £60 million. Debt is often an essential ingredient in meeting equity investor return requirements. As such, LWARB and LGF are often looking co-invest. A sufficiently funded LWARB is therefore a key ingredient to enabling these infrastructure projects to happen.

This infrastructure will provide additional waste capacity that is generally available for waste streams that are offered on short term contracts. Capacity will be available to both businesses and waste authorities in London (and beyond) and will enable waste authorities to access spot market capacity on short to medium term contracts, outside of their long term PPP/PFI contracts.

LWARB will only invest in projects where it can be demonstrated that the funding cannot be obtained from the private sector finance community.

Improvements in Efficiency

LWARB launched an Efficiency Programme in March 2012. LWARB aims to help London Waste Authorities save £10 million per year by 2016.

The programme offers assistance on a variety areas such as joint procurement of equipment and marketing of recycling; support for developing shared service opportunities, the provision of Efficiency Reviews and good practice tools. Successes to date include:

· the creation of a joint textiles recycling contract, that comprises 7 boroughs (with the possibility of a further 3 joining at a later date) that will provide a better income stream for this material;

· the first Efficiency Reviews have been conducted on borough waste services and the recommendations are beginning to be implemented. It is hoped that the first two Efficiency Reviews could lead to savings of around £1m (including some one-off savings). The costs of these Efficiency Reviews are covered by LWARB but are repayable upon savings being realised;

· work on shared services is much more challenging although we are currently working with boroughs in the South and West of London who are interested in examining the possibility of joint working. This is an emerging area for LWARB, but to increase the pace of change in London, LWARB has established an Efficiencies Committee with member and senior, and chief officer membership;

· delivery of a number of good practice workshops focussed on key areas for development i.e. low performing areas, high rise and flatted properties, contamination and supporting crew training.

Does LWARB add a layer of Bureaucracy?

LWARB does not impose any additional burden upon boroughs. It does however, provide a forum where local and strategic issues can be discussed. LWARB works closely with the GLA and with London Councils and the London boroughs. The establishment of an efficiency programme and efficiencies committee provides the opportunity for London’s waste authorities to exploit the opportunities for shared services and pan London waste governance issues. Previous attempts to change governance structures within London have failed due to the top down nature of the approach taken. LWARB, by its composition, is the only forum where these issued can be resolved collectively.

LWARB leverages additional resources through strategic partnerships with national organisations operating in this space, and through the additional private sector investment that it generates.

The London Waste and Recycling Board provides a substantial financial and organisational resource for London boroughs and the Mayor to engage in partnership on waste issues. LWARB Board members have a strong background in local and regional government, waste and investment issues [1] and LWARB i s an example of London Councils and the M ayor working in partnership.

Both London Councils and the Mayor support LWARB’s request to government to provide additional funding in the next spending review. The aim is that, through its investments, LWARB becomes self financing, and can continue to deliver improvements in waste management in London without relying upon further additional tax payer support.

February 2013

Appendix

LWARB Achievements

Unique projects:

· London’s first AD plant: TEG

· UK’s first and probably worlds largest materials reuse network: London Reuse Network

· UK’s first large scale Gasification plant: Biossence

Bullet point narrative

· Since it was established LWARB has committed c. £54 million to various waste minimisation, reuse, recycling and waste infrastructure projects to improve waste management in the capital

· These projects will create over 330 jobs, and over 3000 trainee roles, 3700 volunteer roles and 1600 work placements

· Anticipated 2.8 million tonnes of CO2 displaced over project life spans, once all funded projects are fully operational

· Anticipated c. 465,000 tonnes diverted from landfill annually, once all funded projects are fully operational

· £226m of external investment attracted through LWARB commitments

· £18m invested in the London Green Fund, Waste UDF (Foresight Environmental Fund) – matched by London European Regional Development Fund – and at least another £35m from the private sector

· Wide range of projects, from waste infrastructure through to community reuse projects:

- 1 x Gasification plant

- 1 x MHT plant

- 2 x AD plants

- 1 x plastic reprocessing plant

- 3 x reuse projects, including UK’s first and world largest reuse network

- Consumer campaign (RfL)

- Local Authority £5m grant funding through the ‘Flats Recycling Programme’

- £18m investment in the London Green Fund, Waste UDF – ‘Foresight Environmental Fund’

· Flats Recycling Programme:

- 29 projects – across 26 boroughs - Seeing an average recycling increase of 43 per cent per project - Over the first four years: - 600,000 households will have new/improved recycling services - Diverting around 70,000 tonnes of waste from landfill - Prevent almost 110,000 tonnes of CO2 from entering the atmosphere *All projects are fully operational by March 2012

· Pipeline capacity: 1,075,000 tonnes from landfill each year