Deal saves 2,500 Connaught jobs - but 700 to go in Leeds

The cuts were announced shortly after construction group Morgan Sindall unveiled a 28 million deal to take on the "majority" of the collapsed firm's social housing contracts, saving some 2,500 jobs.

The jobs upheaval comes two days after the appointment of KPMG as administrators for the main company and its subsidiaries, Connaught Partnerships and Connaught Technical Solutions.

KPMG said the redundancies were made at Connaught Partnerships, the Leeds-based social housing arm with contracts across the UK, but could not give further details on the locations of affected staff.

The division employed 4,400 staff across the country, so the future for some 1,000 jobs still remains uncertain.

Earlier, Morgan Sindall said its affordable housing division, Lovell Partnerships, had acquired the bulk of Connaught Partnerships' contracts.

John Morgan, executive chairman of Morgan Sindall, said: "Our focus now will be to ensure a smooth handover of the contracts and to minimise disruption to essential maintenance services."

Staffordshire-based Lovell said its newly-acquired contracts would generate around 200 million in additional annual revenues.

The firm, which posted operating profits of 14.9 million in 2009, said the type of contracts it had taken on involved both response and planned maintenance work.

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.