Onyx drops bombshell

The company has told Arun it is unwilling to continue with the contract, which still has around 10 of its 15 years to run.

Arun services director Colin Rogers this week refused to comment on any moves by Onyx to pull out of the service.

But he confirmed: "It has been made public that Onyx admit they are losing money on the contract. They are concerned about the future and we are in discussions with them about that."

Arun's cabinet of senior councillors discussed the crisis in private at its meeting last week.

When the 15-year, fixed price deal with Onyx was set up in 1997, it was hailed as a model contract. But problems began to develop before long, with Arun invoking financial penalty clauses when the service fell below targets.

Last year, the original fixed price was abandoned, and the contract was re-negotiated, to include additional cash for Onyx to cover increased costs from extra recycling collections and a general rise in the amount of rubbish in residents' dustbins.

The problems were added to when Onyx workers rejected the company's pay offer and voted to take industrial action two months ago.

Bin collections and street cleaning were disrupted by a one-day strike, but further trouble was avoided when the dispute was settled, with the acceptance by the workforce of a 20 per cent phased pay deal.

Onyx's wish to end the contract leaves Arun with difficult choices to make about the future of its refuse and street cleaning service.

The council could insist on the company abiding by the contract; it could bring the service back "in-house", run by its own officers; or appoint a new contractor.

Gary Smith, organiser for the GMB union, which represents the great majority of Onyx employees on the Arun contract, said the council would have difficulties in signing up a new contractor.

"The industry has moved on since the days when this deal was first set up. It will be nigh on impossible to get the same price for the work.

"This contract was hailed as revolutionary and ground-breaking, but it has been an absolute disaster. Our fear is that Arun will again go for the cheapest bid, which would not be good for the service, nor for the workforce.

"Arun has to look at the option of bringing the service back in-house. Ultimately that could be cheaper.

"Our members are really worried about what is going to happen. They have had a very difficult time and, effectively, their low pay has been subsidising that contract."

Onyx declined to comment.