Hundreds of Scots jobs face the axe as Connaught totters

Published on Monday 6 September 2010 22:07

THE future of social housing maintenance group Connaught - and hundreds of its workers in Scotland - was cast into doubt last night after the bulk of the business was placed in administration.

The company, which works with a number of councils and housing association across Scotland, had seen its shares suspended earlier in the day amid fresh funding woes.

In a brief statement issued after the close of the London stock market, the group said it was "saddened" to announce the appointment of partners from KPMG as administrators of Connaught plc and its subsidiary, Connaught Partnerships - the core social housing division.

In July, Royal Bank of Scotland provided Connaught, which already had debts of more than 200 million, with 15m in short-term finance but the company has failed to secure longer-term financing.

Devon-based Connaught, which was founded in 1982 as a concrete repair specialist, employs 10,000 across the UK with around 500 in Scotland.

In July, the Connaught Partnerships division won a four-year 15m contract with Renfrewshire Council to carry out kitchen, bathroom and central heating improvements to hundreds of properties. A spokeswoman for the council said it was meeting to decide how to proceed following Connaught's suspension statement.

The company has also recently completed a 23.5m contract to upgrade kitchens and bathrooms in council houses and sheltered housing blocks for Perth and Kinross Council.

It is expected that rival firms such as Mears and Mitie, which are also active in Scotland's social housing market, will look to take on work.

A spokeswoman for the Scottish Federation of Housing Associations said it had been monitoring the Connaught situation for some weeks and providing advice for members.

Although it is thought housing associations and councils have financial protection in place under maintenance contracts, re-tendering the work would inevitably result in delays on maintenance work.

Construction union UCATT yesterday said it wanted an urgent rethink of the outsourcing of council services.

The union has advised affected workers to continue to work normally unless they are formally told in writing to do otherwise.

General secretary Alan Ritchie said: "The biggest losers are tenants who have genuine fears that vital repairs and maintenance work will not be completed. Councils have a duty of care to ensure that these services are fulfilled."

Until their suspension, Connaught's shares had fallen by more than 90 per cent following a warning in June of delays on spending on projects due to public-sector cuts.

The company estimated the delays would reduce turnover by 80m this year and a further 120m next year.

Founder Mark Tincknell left the company earlier this year on health grounds and new chairman Sir Roy Gardner, the former Centrica chief executive, has been attempting to put together a rescue plan with the help of several new directors.