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CABINET Powered By Docstoc
                                       7 October 2008

                                     AGENDA ITEM 6.2



Enquiries contact: Mike Shaw (01245) 606638,


To seek Cabinet’s endorsement for the replacement cremator programme with mercury
abatement to proceed in 2009 in order that the Council’s Regulator can be informed by 31
October 2008.

   1. Proceed immediately as already planned with the replacement cremator
      programme to include mercury abatement equipment and notify the Regulator
      accordingly. Capital cost £1.4 million, ongoing revenue £25,000.

   2. Replace the cremators only (on a like-for-like basis) and join the ‘CAMEO’ burden
      sharing scheme for abatement. Capital cost £650,000, ongoing revenue £62,500.

   3. Proceed with a phased programme with the cremators replaced on a like-for-like
      basis in 2009 and the mercury abatement equipment added in 2010. Capital cost
      £1.4 million, ongoing revenue £25,000.


         It is recommended that Cabinet confirms the Council’s intention to continue with the
         abatement programme by agreeing Option 3 and authorises the Director of Safer
         Communities to notify our Regulator of this intention by 31 October 2008.

Corporate Implications

Legal:                       Emissions from the crematorium are controlled under the
                             Pollution Prevention and Control Act 1999.
Financial:                   Capital funding of £1.5M for the full abatement scheme with a
                             possible income from the CAMEO scheme.
                             Capital funding of £0.7M for replacement cremators on a like-
                             for-like basis only with an annual payment of approximately
                             £62,500 into the ‘CAMEO’ scheme.
                             The Council may face higher capital costs due to VAT rule
                             changes. Details are noted in the report.
Personnel:                   No change anticipated to the existing establishment.

Risk Management:             There is a risk that if insufficient crematoria carry out
                             abatements that DEFRA may dictate that larger crematoria such
                             as Chelmsford install abatement equipment.
Equalities and Diversity:    None.
(For new or revised
policies or procedures has
an equalities impact
assessment been carried
out? Y/N)
Health and Safety:           None.
IT:                          None.
Other:                       None.

Consultees                   Deputy Chief Executive
                             Director of Financial Services

Policies and Strategies

The report takes into account the following policies and strategies of the Council:


Corporate Plan Strategic Themes

The report relates to the following strategic theme/themes in the Corporate Plan

Excellent Customer Services                              X
Social Inclusion                                         X
Environment                                              X
Value for Money                                          X

1.    Introduction

1.1   This report seeks to provide information to the Cabinet on the current position with
      regard to the proposed replacement of the existing cremators and the installation of
      mercury abatement equipment at Chelmsford Crematorium.

1.2   The Crematorium currently undertakes approximately 2500 cremations per year. The
      site has three existing cremators (Diamond 2000EF models) that were installed during
      1994/95 by J.G Shelton & Co.

1.3   Cremators have a typical life-span of approximately 15 years and therefore we had
      anticipated their replacement in 2010. In the past two years there have been several
      problems encountered with the cremators’ automated operation that has resulted in
      some essential upgrading particularly to the computer and software side of the system.

1.4   Emissions from crematoria are subject to the Pollution Prevention and Control Act 1999.
      The Secretary of State provided Guidance for Crematoria in 2004 under Process
      Guidance Note 5/2 (04) requiring that 50% of all cremations carried out in England,
      Wales and Scotland are abated by 31 December 2012.

1.5   The replacement of the cremators had been anticipated for 2010 and through previous
      discussions with successive Cabinet members it had been agreed that the most
      appropriate route to follow would be for the new cremators to be abated. There would
      also be the opportunity to have at least one wider cremator to deal with larger coffins.

1.6   A capital bid (No. 0809 07) was submitted in 2007 for funding to the sum of £1.5M. This
      sum was for the provision of three new cremators and associated equipment together
      with modifications and extension to the existing crematorium structure necessary to
      house the new equipment.The bid was endorsed by the Projects and Improvement
      Panel which recommended that the Cabinet and Council include funding for the scheme
      in the Capital Programme for 2009/10, which was duly agreed. This also approved an
      additional £25,000 revenue addition from 2010/11 for maintenance and increased
      energy costs.

2.    Current Position

2.1   The Crematorium’s existing permit has recently been amended and now requires the
      Council to advise our Regulator by no later than 31 October 2008, what action it intends
      to take on mercury abatement.

2.2   As an Excellent Council, it is felt appropriate for the Crematorium to be equipped with
      modern technology. It is our aim to be leaders in our field in line with the Council’s
      corporate objective to innovate through new approaches to service delivery, particularly
      through exploiting new technologies. Adopting the mercury abatement route would
      contribute to the Council’s ‘green’ agenda, particularly the outcome to achieve a
      reduction in the Council’s carbon footprint by becoming more energy efficient as an

2.3   However being mindful of the Council’s continued financial pressures, the Cremator
      Replacement Project Team has also discussed the possibility of carrying out
      replacement of the cremators on a like-for-like basis and also a phased approach. The
      new cremators would be capable of having abatement equipment added at a later date.
      The Team agreed that this option should be investigated further, revised budgetary
      costings produced and a report submitted to the Cabinet for due consideration.

2.4   If this Council decides not to install abatement equipment at the Crematorium then under
      the new Regulations, it would be obliged to participate in some form of burden-sharing

2.5   Private ‘burden sharing’ arrangements are being put into place by some crematoria, for
      example the Westerleigh Group, who own and operate 9 or 10 crematorium around the

2.6   The Federation of British Cremation Authorities (FBCA), of which Chelmsford is a
      member, has been developing what is known as the ‘CAMEO’ scheme. Crematoria not
      adopting the mercury abatement route will pay money into the ‘CAMEO’ scheme. The
      current estimated charge to be paid into the scheme will be £50 for each cremation
      carried out, for 50% of their annual total of cremations. In Chelmsford’s case, we carry
      out approximately 2,500 cremations per annum. Therefore as a Council, we would have
      to pay into the CAMEO scheme 1,250 x £50 each year i.e. £62,500. It is understood
      that the scheme will become operational on 1 January 2013.

2.7   The money accrued in the ‘CAMEO’ scheme would be shared out to its members that
      have carried out abatement. If Chelmsford installs the mercury abatement equipment,
      as planned, then the Council could still join the scheme and receive a source of income.
      The amount of income is currently unknown and would depend, ultimately, on the
      number of crematoria that have abated by 31 December 2012.

2.8   A recent communication received from the FBCA indicates that from its recent survey
      65% of crematoria intend to abate and that this will result in 70% of all cremations being
      abated. It also indicates that approximately 150 of the 249 crematoria are intending to
      join the CAMEO scheme.

3.    Costings

      Table 1

                                Capital        Capital      Possible     Loss of    Ongoing
                                 Spend          Cost       Additional    Interest   Revenue
                                Phasing                       Vat
      Currently Approved
      in Budget                 2009/10    £1,500,000                    £82,500     £25,000

      Option 1                  2009/10    £1,400,000      £245,000      £77,000     £25,000

      Option 2                  2009/10        £650,000    £113,750      £35,750     £62,500

      Option 3                  2009/10     £650,000       £113,750      £35,750
                                2010/11     £750,000       £131,250      £41,250     £25,000
                                           £1,400,000      £245,000      £77,000

3.1   The current amount included in the Council’s Capital Programme for the approved
      project to replace the cremators and add abatement equipment is £1.5M. It is
      anticipated that the full abatement scheme can be implemented for £1.4M based on
      more recent budget costings.

3.2   Revised budget costings have recently been provided by our current cremator supplier
      for the option of replacement cremators only (on a like-for-like basis). Their view is that
      the cost of just replacing the three cremators together with associated building costs
      would be something in the order of £650,000.

3.3   If Cabinet wished this project to be phased over two years, the cost of full abatement
      equipment is estimated at approximately £750,000. This figure includes a provisional
      sum for upgrading the existing power supply to the site should this be found necessary.

3.4   The Medium Term Financial Strategy (MTFS) reported to July 2008 Cabinet the
      probability that the Council could breach its ‘VAT partial exemption’, this would cost
      some £180-250k each year going forward assuming no new schemes, as the Council
      would no longer be able to re-claim all its VAT. By undertaking works at the
      Crematorium the Council makes this breach a certainty. The cost of the Crematorium
      works therefore could increase by VAT i.e. 17.5%. However, currently there is national
      ‘moratorium’ in place that means councils can individually breach their VAT limits and
      still reclaim all their VAT. This moratorium was started in 2007/8 and extended to 2008/9
      on the basis that local authority VAT rules would be reformed by Her Majesty’s Revenue
      and Customs. The reforms would allow individual authorities to breach their individual
      VAT partial exemption on the basis that nationally Councils would be aggregated
      together. These reforms have not been completed due to difficulties over legislation and
      fears over distortion of markets. Therefore the Council is still at risk of paying VAT on the
      works at the Crematorium. The costings, shown in Table 1, indicate the likely additional
      impact of VAT. Members are not at this stage being asked to approve a higher estimate
      that includes VAT, a further report will be made to Cabinet if necessary.

4.    Conclusions

4.1   There are three options available.

4.2   Option 1 is to proceed with the current proposal and install new cremators with
      abatement equipment. Capital funding is already in place. The Council would join the
      FBCA’s ‘CAMEO’ scheme and receive a source of income from those members who
      have chosen not to abate. The new cremators and mercury abatement equipment will
      have an anticipated life-span of 15 years.

4.3   Option 2 would be not to abate and only replace the cremators on a like-for-like basis.
      The Council would then join the ‘CAMEO’ scheme to purchase its share of abated

4.4   Option 3 is to follow a phased approach. This would still achieve the outcome of
      mercury abatement but the project would be carried out in two phases e.g. replacement
      cremators installed in 2009/10 and abatement equipment added in 2010/11. This would
      also give some additional time to arrange the works. It is important that the work is
      programmed for the quieter time of year that generally occurs during the summer

4.5   It is the Officers view that we should proceed on the basis of providing abatement
      equipment. There may be some financial income derived from the CAMEO scheme but
      at this stage it is difficult to determine what this may be because it will be dependent on
      the number of crematoria that have abated by 1 January 2013.