Opposition councillors have called for an urgent restructuring of Merton Direct Services (MDS) following major problems with local refuse, cleaning and building services.

They want either private sector managers to be brought in to a restructured company or the company to be put out to private tender.

The call comes as nine jobs became redundant and a further 12 employees face being transferred to other contractors with the winding up of MDS's building contract following "significant financial losses".

This announcement followed last month's forced handover by MDS of its rubbish collection service to the council after thousands of complaints from furious residents over uncollected waste.

Councillor Chris Grayling said: "The council has completely failed to run the services properly. We are keen to ensure the fiasco the borough saw over refuse collections is not repeated in other areas."

MDS operated three building contracts - gas servicing in Mitcham, out-of-hours emergency repairs for housing and social services and building maintenance for the Eastfields area of Mitcham.

At a Merton's Direct Services Organisation Board meeting, Tory councillors heavily criticised the council for the speed at which it is dealing with problems. After the meeting Coun Grayling said: "The slowness of the council to respond to the crisis hitting MDS has created a totally unfair sense of uncertainty for employees."

Councillor Peter Morss added: "All is not well with Merton Direct Services. Hot on the heels of the vehicle maintenance contract not being awarded - despite being the lowest bidder - and the refuse collection contract being taken back we now have the disbanding of the building works contract.

"I only hope the real cost to Merton will be made public."

A Merton Council spokes-man said although the council is committed to in-house service provision it is also aware of the need to address some serious concerns about the operation of MDS.

"We are currently reviewing its future operation and the position will be clearer when the council meets in September to choose a contractor for the new refuse and street cleaning contracts which start in October."

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