Community projects will suffer as a result of a council decision to appoint new refuse collectors in south Oxfordshire.

South Oxfordshire District Council has sacked SITA from its £1.7m-a-year contract to collect household waste from the area's 53,000 homes.

It has awarded a £2.6m-a-year contract to Grundon instead.

The council says the switch was because SITA repeatedly failed to empty dustbins and collect recycling on time, particularly in Thame and Didcot.

But the move means substantial sums will have to be diverted from other sources -- probably the council's £72m community trust fund, which is intended to support community initiatives.

The fund was set up in 1997 with cash from the sale of SODC's council housing stock to South Oxfordshire Housing Association. It provides the council with an income of about £3.5m a year.

SITA, which signed a six-year contract with the council in 1999, had been negotiating for an extra £370,000 a year to make its service financially viable.

Following ten months of dispute, the council lost patience and awarded the contract to Ewelme-based Grundon for £900,000 a year more than it was paying SITA.

Council leader Jan Morgan, who heads the council's ruling Liberal Democrat/Labour alliance, said Grundon's higher charges for collecting refuse and recycling would not result in increased council tax bills. But she warned that taxpayers would lose out in the long-run.

She said: "Council tax bills won't go up. We will use some of the interest from the community trust fund, which, in the past, has been re-invested to try to keep it inflation-proof.

"But ultimately there will be less money in the pot to spend on community projects."

Conservative leader Ann Ducker criticised the council for funding some of its own projects with community trust fund money, such as new fitness suites for Thame and Berinsfield, instead of saving the money for initiatives by community groups.