2.15 Whatever the type of vehicle chosen, there are a number of positive attributes of such a model and a number of strong disadvantages in its adoption.
2.16 Whilst companies or entities can have advantages in being outside some of the controls over local authorities, companies are subject to Corporation Tax on any "profit" and also, unlike a local authority, cannot recover any VAT shortfall.
2.17 Setting up a jointly owned entity such as a company can be seen as providing some neutrality in a situation where a number of authorities wish to work jointly where a lead authority model was not suitable (see below). However the creation of a corporate vehicle introduces a level of complexity to the overall joint arrangements and may not be attractive to the private sector. For example, given that the established company has a separate legal personality from the establishing authorities, the private sector will not accept a contract with such a vehicle without the need for a parental company guarantee from all participating authorities.
2.18 One critical factor in the choice of an appropriate legal structure is the question of whether the participating local authorities can delegate functions to the new corporate body. A local authority can only delegate the discharge of its functions to a Committee, a Joint Committee or another local authority. It cannot delegate the discharge of its functions to a company or non-local authority body without an order from the Secretary of State under the Deregulation and Contracting-Out Act 1994. The result of this is that whilst a local authority may procure a service from a company or similar body, it cannot pass responsibility to such a body for taking decisions which are by statute vested in the local authority. In the context of waste, there are key statutory decisions in respect of the relationship between Waste Disposal Authorities (WDAs) and Waste Collection Authorities (WCAs) relating to the extent of WCA recycling and manner of delivery of collected waste, as well as a range of WCA decisions about the manner of waste collection and enforcement which cannot be passed to a non-local authority body.
2.19 Careful consideration needs to be given to any emerging option for a corporate vehicle to be established as part of a solution for joint working on waste, as its complexities and disadvantages could outweigh the perceived advantages.
2.20 Appendix Two includes a more detailed analysis of the types of entity which could be set up and Appendix Three explores the key features of each.