Thousands face dole as homes firm folds

Social housing firm Connaught, which employs 10,000 maintenance and repair workers, is in the process of appointing KPMG administrators to take over the company and its subsidiary Connaught Partnerships Limited.

The debt-ridden firm based in Exeter holds around 180 multimillion-pound social housing contracts in Britain.

Its shares had fallen by more than 90 per cent since June when it warned that government spending cuts would cost it £200 million in revenues over the next two years.

And Connaught's bosses have been striving for support from its lenders and potential financier to keep the company afloat.

A statement from the company's board said the talks "failed" and it was "clear that sufficient support would not be extended."

Public-sector union GMB met the councils and public bodies which pay for the outsourced public contracts to urge them to step in and clean up the mess as "the lender of last resort."

GMB national officer for outsourced public services Rehana Azam said: "Outsourcing has led to all this wasted money, worry and loss of services and a trail of small businesses left with debts that will sink them.

"All this could have been avoided if the councils had continued to run the services themselves.

"As the collapse of Connaught shows, the private sector cannot always be relied upon to provide vital public services."

The union is seeking a meeting with the administrator to urge him to ensure an orderly transfer of the work and the workers back to the public body that outsourced it.

It also warned that Connaught's collapse could be just the tip of the iceberg, with care-home providers on the edge and the Con-Dem coalition cuts plans.

Construction union Ucatt also urged local authorities to bring Connaught's services in-house now that the fim's demise was being formalised.

General secretary Alan Ritchie 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."