MPs say serious questions need to answered about Norwich City Council contracts after more than 150 workers laid off by Fountains Group

Fresh calls have been made for an independent inquiry into the way Norwich City Council awards contracts, after the collapse of another council contractor cost more than 150 people their jobs.

Norwich MPs Chloe Smith and Simon Wright say serious questions need to be addressed by City Hall after Fountains Group went into administration.

The environmental management company, formerly known as Connaught Environmental Services, had a �4.6m a year contract with the city council to clean streets and maintain parks and a �3.3m a year contract to collect rubbish and recycling from thousands of city homes.

Those contracts have their roots in the controversial deal the city council signed with Connaught in 2010, which ended in September that year when the company went bust.

The city's MPs are questioning why so many contracts agreed at City Hall have hit problems, with the latest job losses coming on top of 300 redundancies when Connaught Partnerships went into administration.

But City Hall leaders said they stood by their process of awarding contracts and insisted they could not have forseen the private sector problems which have led to so the companies going under.

They said exhaustive financial checks had been done when the contracts were awarded and that it was the administrators KPMG which had deemed Fountains, then called Connaught Environmental, a viable business when its parent company collapsed in 2010.

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Council leaders said another company - Biffa - and city council staff had stepped in to ensure that, waste and recycling is still collected from thousands of homes around Norwich, that burials go ahead and that city centre litter bins are emptied.

In the longer term, the council is likely to have to award a new contract to run those services.

But Norwich North MP Miss Smith and Norwich South MP Mr Wright said there are questions which need answering including why BDO, the administrators of Fountains, had been able to save 1,500 jobs by selling contracts to another business, yet the Norwich contract was not among those sold.

Conservative Miss Smith said: 'Firstly, everyone's thoughts are with those who have been made redundant. It is an absolute tragedy for those families in what are very difficult economic times.

'But this does raise important questions, yet again, about the city council's handling of contracts. Clearly we need to understand all the facts before drawing conclusions, but people are extremely worried about how this can have happened in such quick succession after the Connaught collapse.'

The MPs have written to city council chief executive Laura McGillivray to ask how Fountains came to go into administration and whether 'lessons have been properly learnt' from the previous experience with Connaught.

They have also written to the administrators to ask why the Norwich contract had not been successfully sold. The city suffered the highest tally of the 446 jobs lost, with a contract in Liverpool also not sold on, leading to 139 redundancies.

Miss Smith added: 'There are questions about how the Norwich part of the firm was not considered viable when jobs were able to be saved elsewhere and there are questions about how staff have been treated.'

The Evening News contacted administrators BDO to ask why a buyer had not been found for the Norwich contract, but was told that information was not available as it was commercially sensitive.

Liberal Democrat Mr Wright, who previously called for an independent probe into the original Connaught contract, said: 'I was calling for an independent inquiry because there was a feeling by many that the contracts were awarded at a lower value than could be realistically delivered.

'We never got to the bottom of those problems previously and I think this does show an inquiry is the right thing to do, to ensure this sort of thing does not happen again.'

But Alan Waters, deputy leader of Norwich City Council, said: 'The Connaught contract was a strong business case. When Connaught collapsed it was the biggest company which had done so since Woolworths. A number of financial checks were carried out and none picked up the problems which later emerged.

'We stand by the Connaught contract. We had tested the business case really thoroughly, with external experts and it washed its face over the five years.

'But there were flaws within Connaught which we could not have known about. There have been several investigations nationally into the failure of Connaught and I suggest that maybe Simon Wright would like to look at those.'

On the collapse of Fountains, Mr Waters said it was symptomatic of problems across the whole of the private sector and was not confined to companies which Norwich City Council dealt with.

He said there was a risk those problems would become more common under a government which wants councils to grow smaller and to outsource more work to private companies.

Meanwhile, trade union UCATT has vowed to fight for the job of every worker formerly employed by Fountains.

Brian Rye, regional secretary for UCATT Eastern region, said: 'It is absolutely disgraceful the way in which Fountains, without any warning or consultation, have dumped these workers who have dedicated their lives to public service.

'We are looking to the council and to any incoming contractors to ensure these workers who have lost their jobs through no fault of their own are swiftly re-employed. They should not suffer due to the failings of others.'

UCATT is urging workers affected to get in touch with its regional office in Newmarket.

• What do you think of what has happened with Fountains? Write to Evening News Letters, Prospect House, Rouen Road, Norwich NR1 1RE or email