Connaught placed into administration (From Daily Echo)

Connaught placed into administration

11:21am Wednesday 8th September 2010 in

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WORK to revamp hundreds of council homes was thrown into chaos last night when troubled housing repair and maintenance firm Connaught announced it was going into administration.

The stricken firm, which had a £12m contract with Southampton City Council, collapsed after lenders refused to offer additional support. Local firms and tradesman could also be hit by the meltdown.

Connaught has been in turmoil since it warned in June that Government spending cuts could blow a £200m hole in revenues over this year and next and that it was in “urgent” need of additional funding.

It has repaired 1,300 kitchens and a similar number of bathrooms in council properties across the city under a three-year Decent Homes initiative, which had until the end of the year to run.

Council bosses insisted they had received “complete assurances” that the remainder of work to refurbish 370 council houses wouldn’t be affected by its financial woes.

But behind the scenes scheduled work to homes in Swaythling has already been handed to rival Drew Smith. The council yesterday claimed it had a “contingency plan” to finish work in Maybush, Lordshill and Shirley.

It is understood payments have only been made for completed properties.

Reassurance Housing boss councillor Peter Baillie said: “We await further information on Connaught’s financial position and will advise our tenants directly of any changes that may affect them individually. However, we would like to take this opportunity to reassure tenants that we are working hard to protect their interests.”

Connaught last year found itself in the midst of an asbestos scandal after the Daily Echo revealed a council leaked memo to the head of Decent Homes which warned tenants at over 100 properties may have been exposed to the deadly material.

A council health and safety investigation found Connaught had removed kitchen tiles and other asbestos-containing materials without proper training or safety precautions. The council insisted no tenants were put at risk.

Exeter based Connaught, which employs 10,000 people, suspended trading in shares yesterday saying lenders were unlikely to provide additional funds. Shareholders have seen the company’s value plunge 95 per cent in recent months from almost £450m to £23m.

The chairman of the company attempted to put together a rescue plan with the help of several new directors but bank creditors wanted to put the business into administration. Connaught debts are estimated to be in region of £220 million.

Alan Ritchie, general secretary of construction union UCATT, said: “Outsourcing is expensive and leads to poorer services. With private contractors, unlike council services, there is always a danger they could go out of business. Councils need to consider taking essential services such as housing maintenance back in-house.”