Job losses rise to 1,100 at Connaught

The number of redundancies at collapsed social housing firm Connaught rose to 1,100 today - but a new deal with a rival company could offer hope to nearly half of its former employees.

Administrator KPMG, which was brought in last week, said eight Connaught contracts will be transferred to Mears, a social housing repairs provider, and it was "hopeful" that some of the 600 redundant staff who worked on the contracts would be re-employed.

But the administrators also revealed 400 extra redundancies at the same time, following an initial 700 redundancies announced on Friday.

KPMG was brought in as administrator for Connaught's main company as well as subsidiaries Connaught Partnerships and Connaught Technical Solutions and initally said 4,200 jobs were at risk.

Construction group Morgan Sindall announced a deal on Friday to take on the majority of contracts at Connaught Partnerships, the social housing arm, saving 2,500 jobs.

Morgan Sindall's affordable housing division, Lovell Partnerships, said it had taken on the bulk of Connaught Partnerships' contracts in a £28 million deal.

Mears, based in Gloucester, would not confirm how much it had paid for the Connaught contracts, but it is thought to be a nominal fee.

Founded in 1988, Mears employs 8,000 people and provides maintenance and repairs services to 500,000 homes nationwide.

The administrators said they were also in urgent negotiations on two contracts with Norwich City Council. Connaught had won a £125 million five-year contract with the authority.

One of the contracts, which involves social housing services, is staffed by 300 Connaught Partnerships employees, who are all still facing the threat of redundancy.

In addition to the Norwich City Council contracts, KPMG is providing assistance to the customers of four remaining contracts in transferring services to alternative providers.

The administration of Connaught's main division left around 280 contracts for councils and public sector bodies up in the air, and caused uncertainty for suppliers and contractors.

Connaught was thrown into turmoil after warning in June that Government spending cuts could blow a £200 million hole in revenues over this year and next.

Bosses at Connaught held talks with its lenders, led by taxpayer-backed Royal Bank of Scotland, and other potential financiers in an attempt to keep the company afloat.

But it told investors last week that it was left with no option other than to start the process of administration after failing to secure further financing.

Other regional bases affected by the decision included those in Glasgow, Bromsgrove, Crawley and Essex.

More than 4,500 staff work at its other subsidiaries, which have not been placed in administration - Connaught Compliance and Connaught Environment, which employ 1,800 and 2,700 respectively.

KPMG said these businesses continue to trade as normal.

Connaught, which started in 1982 as a concrete repair specialist in Sidmouth, Devon, provides services to the environmental, social housing, public sector and compliance markets.

The firm employed around 10,000 people across all its divisions.