Shanks bags £25m recycling deal

RECYCLING levels in East London are set to soar under a new £500m agreement. Thousands of homes in four boroughs will be given 'survival' bags for waste cans and newspapers to cut down on the amount of rubbish sent to landfill.

The East London Waste Authority (ELWA) has selected waste management company Shanks as a preferred bidder for a 25-year contract.

Shanks will handle an estimated 535,000 tonnes of waste generated each year by homes in Redbridge, Barking & Dagenham, Havering and Newham.

The deal will specify how much is to be recycled or composted and ELWA hopes to keep ahead of government targets over the life of the contract.

Shanks is also planning to build two new materials recycling facilities to biologically treat and convert waste that cannot be recycled into fuel for power plants.

These two facilities are likely to be built on existing sites in Rainham and Barking at a cost of £100m.

ELWA said the deal, worth £25m a year to Shanks, should push recycling rates up to 33% across the four boroughs by 2007.

This is a far cry from the 6% the authority anticipates will be recycled by the 340,000 homes in the area this year.

Work on the contract is due to start in July once the two parties officially sign the deal.

It would represent Shanks' largest council agreement in the UK and its shares surged 9% in the City.

Chief executive Michael Averill said: 'This is absolutely the right decision for ELWA and this part of east London. We have put together a solution to meet local needs and which can radically increase recycling and recovery in the four boroughs.'

Around £47m of government funding is being given torough the private finance initiative (PFI).

Today's announcement follows a two-year tender process and the ELWA's chair councillor Roy Patient said the authority had secured a value for money deal.

He added: 'We can be confident that we have identified the best partner for this critically important job.'