JARVIS and Herefordshire Council have signed contracts - beginning a pioneering £270m environmental services partnership that could save money.

'Cash-strapped' Herefordshire Council should be able to reduce overheads as part of the new arrangement with facilities, management and infrastructure services group, Jarvis.

The innovative arrangement, the first of its kind in the UK, involves Herefordshire Council 'bundling' services, simplifying contractual arrangements, reducing costs and realising economies of scale.

The partnership, called Herefordshire Jarvis Services, will provide the community with highways and traffic services, civic and schools catering, grounds maintenance, street and building cleaning, recycling facilities, building management and maintenance and other support services.

The contract is expected to be £270m over 20 years. Around 521 staff from the council's commercial services department have become Jarvis employees.

The county treasurer, Ian Hyson, described the council as 'currently strapped for cash'.

"This is due to factors such as having had to use council reserves to soften the last, above inflation, council tax rise - this money will have to be replaced.

"There have also been changes in government funding. These changes resulted in a considerable drop in the amount of funding Herefordshire receives from central government," he said.

Jarvis' chief executive, Kevin Hyde, describes the project as 'an exciting new challenge'. The company is currently pursuing opportunities worth in excess of £3bn.

The council's director of environment, Graham Dunhill, said: "Jarvis has a strong reputation not only for technical expertise, but also for its work ethic and this deal ... is good news for the people of Herefordshire."