Secretive waste firm bailout labelled a scandal

A £7.5m bailout loan for a waste collection firm a council bought to make a profit has led to accusations of "desperate measures" involving public money.

Tom White Waste (TWW) was purchased by Coventry City Council in 2020 for £14.9m as part of a strategy of investing in commercial businesses.

A council report, meant to be kept from the public but leaked to the BBC, shows the waste company's mortgage lender has called in its debt due to ailing financial performance, and the Labour-controlled council stepping in to avoid the business going into administration.

A spokesperson for the council said commercial investment had helped to keep front-line services running.

But speaking during a council meeting on Tuesday, Peter Male, Conservative shadow cabinet member for finance, said the bailout was "a desperate measure to avert the loss of significant millions of public money", and suggested attempts to keep the financial details of the bailout secret were "a scandal".

The private council report showed the waste management company, which employs 150 people, was generating £1.5m cash a year as of 2022/23 compared to £2m when the company was first bought. That was despite the company experiencing growth in the top line revenue, from the £14.5m on acquisition to £20m today.

The report blamed the financial performance on lower profit margins on new contracts as old contracts expired. But it said performance had recently improved after the company's managing director was replaced in September 2024.

The deal will see the council take on the company's assets and lease them back to the business at £600,000 a year for 25 years – ultimately generating a profit for taxpayers if the business becomes as profitable as the council forecasts.

During Tuesday's meeting, Labour councillor Pervez Akhtar said: "In simple terms, the council is buying an income-producing asset at market value. The rent paid by TWW will cover the borrowing costs and produce a surplus."

The latest bailout follows a £22.7m loan taken on by the council to allow Tom White Waste to upgrade recycling facilities in 2022. The local authority said at the time that move would ultimately help to cut costs.

The council's private investments have previously come under fire from opposition Conservative councillors – including Coombe Abbey Hotel which was previously shown to be losing millions of pounds.

The council has also committed in excess of £60m to repurposing the former Ikea building in the city centre – although the project has been beset with problems, including the contractor appointed to deliver the scheme going bust.

A spokesperson for the local authority told the BBC: "Coventry City Council has made a number of diverse commercial investments in recent years including company shareholdings and property.

"Last year this portfolio gave us a collective return of 10.6% and this income has been critical in helping us to fund front-line services and overcome the lack of funding we've received over the last 14 years.

"Indeed, without it, further cuts to many of our services would already have been made."

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