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CN Briefing: Lakehouse profit warning; social housing rents; growing problem areas

Bad news for Lakehouse today, which has joined the growing number of contractors to issue a profit warning in recent months.

The company’s regeneration and energy services divisions have taken a hit, in the wake of the government’s decision to slash social housing rents by 1 per cent for the next four years.

Just how significant this hit will be is currently unknown, although Lakehouse chairman Stuart Black insists the company is well placed to overcome the challenges.

The question now is which company could be next?

Lakehouse is certainly not the only contractor heavily active in the social housing arena, with the likes of Lovell, Osborne, Higgins and Kier often appearing alongside it on frameworks.

On its own, a reduction in spend among their social housing clients might not be disastrous, but these contractors - along with everyone else - are feeling the squeeze elsewhere already.

With supply chain pressures continuing to cause pain, there’s every chance of more bad news around the corner.

Furthermore, with social landlords having to find new ways to make ends meet, their external spending budgets could be one of the first victims.

There have already been a number of sizeable mergers in the sector, and, as a result, one major HA has taken on a contractor role to reduce construction costs.

Local authorities are also feeling the pressure, with central government cuts trickling down to be felt in councils’ budgets: we’ve already witnessed spending tailing off in areas such as repairs and maintenance as LAs start to bring skills in-house.

Added together, the list of areas where contractors could lose is suddenly beginning to look rather long.

In other news (and there’s been plenty of it today)

Bouygues UK chairman and CEO Madani Sow has stepped down from his role after 8 years with the company. I understand he is in talks to take on a wider role with the global business, however.

Meanwhile, Tidal Lagoon Power’s Swansea Bay project has received a timely boost with the announcement of a £10m investment in its parent company.

And Irvine Sellar will have to return to a smaller drawing board for his propsed 72-storey Paddington Place tower - the developer has agreed to revise plans for the building, which will likely see the height reduced.

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