Somerset taxpayers will have to shell out an extra £47m to ensure their bins are collected for the next six years.

Suez’s contract with the then-Somerset Waste Partnership (which brought together Somerset County Council and the four district councils) began in April 2020 and will run until April 2030, with the option to extend for a further decade.

Suez disclosed in May that it had experienced “significant financial losses” and may have to exit the contract if payments are not increased.

Somerset Council (which assumed control of the contract in April 2023) has now provisionally agreed to provide millions of pounds extra per year to prevent rubbish lying uncollected at the kerbside.

The contract is currently worth around £24M a year, with Suez being required to provide the following to 385,000 homes:

  • Refuse collections (i.e. black bin waste) once every three weeks
  • Weekly recycling and food waste collections
  • Garden waste collections
  • Ancillary waste collection services, including clinical waste and bulky waste (e.g. white goods)
  • Operation of waste transfer stations to bulk and consign recyclable material

The company has experienced numerous challenges since the contract begin, including the coronavirus pandemic, the national driver shortage, periods of high inflation (leading to higher staffing costs) and a drop in revenue from the materials it routinely recycles.

The council has reviewed options to either re-procure the contract or bring it partially in-house, operating the waste vehicles through either an arms-length trading company or a direct labour organisation (DLO).

However, each of these options would take at least a year to implement and could prove to be more expensive.

The last six years of the contract (from April 2024 to April 2030) are worth around £144m without any uplift in payments.

Under the proposed changes, the council will shell out an extra £3m in the current financial year, which will be funded through reserves or savings from other corporate services.

This additional payment will rise to around £7m in 2025/26 and then £9.25m per year for each following year – meaning a total additional bill of £47m on top of the existing contract.

In spite of these additional payments, Suez will still be making a loss on the contract – just “not to the same extent.”

Councillor Dixie Darch, portfolio holder for climate change and the environment, released a statement before the council’s executive committee met in Taunton on July 15 to approve the changes.

She said: “This is a hugely frustrating position to be in, but all ways forward involve paying more.

“What is being recommended is very much the ‘least worst’ option.

“These are not options we expected or want to consider, but we have to make sure this vital service continues.

“There was a detailed competitive tendering process, but we are in very different times to when this contract was signed.

“According to independent, external analysis, the proposed settlement would reflect what we can expect to be charged for a contract of this size.”

Councillor Sarah Wakefield, portfolio holder for adult social care, stated during the meeting: “Dealing with a large, commercial, foreign-owned company is not an easy thing to do.

“We can’t revisit the fact that they may have under-assessed the value of the contract when they bid for it  – and of course, lots of things have happened since then to make it less viable.

“I think this proposed solution is a really excellent one for the council and for Suez as well.

“This is a good service that we get from this provider – generally people’s bins and recycling are properly dealt with, and that should continue.”

Council leader Bill Revans said it was difficult to secure a more competitive settlement due to the recycling market being dominated by only a few companies.

He said: “Regarding the national market in waste collection, my understanding is that there aren’t that many big players, so effectively they have a monopolistic power.

“Where that power is motivated by foreign investors, as I think may be the case here, who know what impact that has across the country?

“I think that’s a wider point we can raise with our colleagues in the Local Government Association, and see if there’s some lobbying we can do with government about making sure that there is actually competition in the market.”