Welwyn Hatfield Council loans Serco £1m for rubbish lorries

PUBLISHED: 15:30 26 September 2010

Welwyn Hatfield rubbish truck

Welwyn Hatfield rubbish truck

Archant

SIX new rubbish bins will be bought ahead of the borough’s switch to fortnightly bin collections – and Welwyn Hatfield Council will pick up the £1million bill.

That’s despite the council’s streetscene partner Serco, which will retain use of the vehicles, recording profits of £115.6m in the first six months of 2010.

This week, councillors agreed to loan Serco £995,000 in order to buy six new refuse freighters, ahead of the alternative weekly collection scheme being rolled out in early 2011.

But Bob Jewell, director of finance and operations at the council, said the deal was “financially beneficial” to both parties in the long term.

As a local authority, Welwyn Hatfield Council could access money at a lower rate of interest than a private company, Mr Jewell said.

Serco would then pay the money back to the council at a higher rate of interest, but still lower than that of a bank loan, saving Serco cash and making the council a profit.

“Businesses need to borrow money in order to operate,” he said. “This is a least cost option to Serco, and also beneficial to the council and the taxpayer.”

A spokeswoman for Welwyn Hatfield Council also defended the move.

“The new process for waste and recycling management in Welwyn Hatfield will save the council around £320,000 per year, however, in order to implement the new system Serco requires additional vehicles,” she said.

“The council has loaned Serco £1m from capital reserves to procure the required vehicles, which will be paid back over the next seven years.”

When contacted by the Welwyn Hatfield Times, a Serco spokesman said he did not feel it was appropriate to comment.


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