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The people of Newfield have lived next to the vast Todhills landfill site for years - cheek by jowl with thousands of tons of rubbish from across County Durham.

In the autumn of 2007 they were told that was all about to change – the tip was closing and would be landscaped.

Sheila Sherwood: "It was horrendous"

But even as the celebrations were being planned to mark the closure of the tip, a vile new stench seeped into the houses.ÌýÌý

Local resident Sheila Sherwood describes its effect:

"I had a bad stomach for a few days after the smell… every time you went out of your door you needed a gas mask on it was that strong, it was horrendous."ÌýÌý

"Compost like output"

Inside Out has discovered that, since September 2007, Premier Waste Management dumped more than 200 tonnes of waste over the site.

A worker from Premier told us the smell comes from "compost like output" (CLO), which is produced at Premier Waste's processing plant at Thornley.

Premier Waste's processing plant at Thornley

Premier deals with household rubbish from across County Durham – from nappies to meat scraps.Ìý

Waste is composted in giant towers, glass and metals removed - and what’s left is turned into compost like material to use on brownfield sites.

But a close-up inspection of the CLO being produced raises some serious questions.

Inside Out sent several samples to a certified laboratory for analysis.ÌýÌýÌý

Dr Tim Evans, a soil scientist, was not impressed with what he saw. He says the material hasn't been fully composted which is why it smells bad.ÌýÌý

"To me this stuff shouldn't be being applied to soil. There's a piece of plastic cutlery, ballpoint pen, pieces of glass... That's not compost is it? That's not compost like output."

Confidential memo

Even Premier’s own Chief Executive thinks his product doesn't look great.

In a confidential memo sent out last summer Dr Les GrantÌýsays:

Dumping at the site

"The material looked pretty badly contaminated… it almost looked like MSW (household waste )

"Our whole business strategy depends substantially upon this material being usable in brownfield site restoration and without some more serious attention being paid to standards and handling we may be about to score a spectacular own-goal."

We put four samples of the CLO through a test specifically designed for composts. Our samples were taken after the compost left the plant and before it was dumped at Todhills.

All four failed.

The levels of contamination with glass, plastic and metal were, on average, 150 times higher than the test limit.

The samples also showed failure rates for heavy metals - nickel, zinc and lead.

But the tests most disturbing results were for the potentially dangerous bacteria – E.coli.ÌýÌý

E.coli was present in two out of four of our samples – one far exceeded Government test levels.

Our scientist was concerned that if E.coli could survive Premier’s composting process – all be it in varying amounts – other, even more dangerous bacteria might also survive.

So what’s going wrong?

Inside Out has seen documents suggesting that the giant composters are not reaching the right temperatures to make sure potentially harmful bacteria are killed off.

That was confirmed by a former company employee, Michael Massey, who told us the composters were not reaching the required temperatures for the majority of the time.

Premier's Response

Dr Grant criticised our tests that showed evidence of E.coli. He questioned the way the samples had been taken and said they could have been inadvertently contaminated.

Dr Les Grant: criticised tests

He said Premier had carried outÌý "over 400 tests for heavy metals and pathogens" since the plant opened six years ago which showed "consistent compliance with internationally recognised soil standards".

Dr Grant said that trials conducted by academics have demonstrated that CLO is pathogen free and has significant ecological benefits.

He added that this should be contrasted with the "very small number of samples which have been tested" for our programme.

But he went on to admit, there have been times when "the monitoring system recorded that full temperature had not been reached."

He blamed a fault in the temperature recording kit inside the composter.Ìý

On these occasions, he said, the company had carried out further tests – and only four out of 316 tests have failed – so, Dr Grant said, they can be confident the plant is sanitising the rubbish.

CLO being "stockpiled"

Inside Out followed one batch ofÌýCLO which had not reached sanitising temperature in the composter, and discovered it was being spread across the top of the landfill right next door to people's homes in Newfield.

Dr Les Grant, the Chief Executive of Premier told us that the local people had misunderstood what was happening at Todhills after the landfill closed.Ìý

He said the CLO was just being "stockpiled" there until it could be mixed with soil and used as part of the final restoration process to cover the landfill.Ìý

He said that the Environment Agency had not raised any concerns about the stockpiling.

The Environment Agency told us that it had told Premier it needed a licence to use CLO on the site at a meeting in November. The company has applied for a licence – but so far it hasn't been granted.ÌýÌý

Durham County Council is the majority shareholder for Premier Waste Management.

No-one from the council would be interviewed about what Inside Out has discovered.

A spokesman said it had stopped Premier taking CLO to the landfill at Todhills after complaints about the smell - and said it is awaiting the results of investigations before commenting further.