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Compliance division would have been more attractive than social housing

Connaught’s social housing arm is likely to be less attractive to rival firms than its smaller compliance division would have been, according to one expert.

Connaught is organised into three divisions: social housing, compliance and environmental services. The company had been working to integrate its two primary market sectors social housing and compliance.

Mr Heis, Mark Firmin, Brian Green and David Costley-Wood were this week appointed joint administrators to Connaught Partnerships Limited, headquartered in Leeds. Connaught Environmental and Connaught Compliance are not in administration and continue to trade normally.

However, the firm’s struggle in the social housing market has called into question the profitability of its work in the sector.

James Gilbert, analyst at Collins Stewart, said: “It is difficult to see the value of the social housing contracts given questions about their profitability. More valuable will be the compliance contracts.”

Connaught values the social housing market at £10 billion per year. It currently commands only 5 per cent of this and had regarded it as a big area of potential growth.

A number of local authorities are known to be keeping Connaught’s contracts under close scrutiny.

Norwich City Council chiefs had said at the end of August that it was monitoring its contract with the firm, and had contingency plans in place.

Procurement officers in Barnet Council, in London, and Sandwell in the West Midlands, were both looking for new maintenance suppliers for their social housing stock as contracts with Connaught came to an end.

Connaught’s compliance arm, meanwhile, was established after the acquisition of Gasforce in 2002. It operates throughout the UK and provides health and safety consultancy and training among other services to both public and private sector businesses.

Several contractors have expressed an interest in taking on Connaught’s social housing work, but it is thought unlikely they will buy them in their current form from the administrators.