Northamptonshire council will not have to pay £6.5m to former bin contractor after pension dispute

A councillor said the payout would have been an "unfair windfall" to contractors from pension funds.

Thursday, 3rd June 2021, 4:26 pm
Updated Thursday, 3rd June 2021, 4:28 pm
A former bin contractor for Northampton and Daventry will not be entitled to a £6.5m claim on a pension fund through an "exit credit", a high court has said.

West Northamptonshire Council will not have to pay a £6.5m windfall to former bin contractor Enterprise after a pension dispute.

The private contractor, which used to handle bin collections for Northampton and Daventry's local councils, lost its contractor in 2018 after seven years on the job.

But, in June 2019, the Local Democracy Reporting Service revealed that Enterprise was suing the two councils' pension funds claiming it was entitled to £6.5m through a then-recent 'exit credit' scheme introduced by the Government.

Now, a high court has ruled West Northamptonshire Council - which replaced both district councils this year - owe nothing to Enterprise or its owners Amey PLC.

Councillor Malcom Longley, portfolio holder for finance on West Northamptonshire Council, said: "We welcome the High Court’s decision, which avoids this council and others like it being bound to pay contractors unfair windfalls from pension funds, which would ultimately need to be made up by taxpayers."

The claim began because in the last months of Enterprise's contract, a change in legislation introduced ‘exit credits’ for employers when they left the Local Government Pension Scheme, meaning Enterprise/Amey could have a claim on the pension fund’s £6.5m notional surplus.

The Government later amended the 2018 regulations, allowing councils to make the decision whether any exit credit should be paid.

Councillor Longley added: “The court has found that the Government was right to correct its earlier error, and now the regulations allow the Council, as pension fund administrator, to fairly consider if Amey should receive money from the pension fund, and if so how much that would be.”

Enterprise Management Services Ltd operated both Daventry and Northampton's waste collection from 2011 to 2018, during which time it was heavily criticised by residents, councillors and this newspaper. It was acquired by Amey in 2013.