Housing company wields axe on 700 jobs

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

The losses came 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 which employs around 4,400 staff across the country. The fate of the remaining 1,000-plus jobs remains uncertain.

A spokesman said: "We can't give a number on how many jobs have been lost in Yorkshire at this stage, due to the mobile nature of the staff."

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

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

When Connaught's main division went into administration it left around 280 contracts for council and public sector bodies up in the air, causing uncertainty for suppliers and contractors.

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

It had held talks with its lenders, led by Royal Bank of Scotland, and other potential financiers in a bid to keep the company afloat but told investors late on Tuesday that it was left with no option other than to start the process of administration after failing to secure further financing.

More than 4,500 staff work at its other subsidiaries that 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.

Joint administrator Richard Heis said he "remained hopeful" more staff would be transferred as the firm searched for buyers for Connaught's remaining contracts.

Construction union UCATT's general secretary, Alan Ritchie, said: "The quick sale of many existing Connaught contracts to Morgan Sindall is good news for those workers and the tenants covered by these services. In the short term, jobs and services have been protected."