Connaught customer puts plans in place for collapse

By TOM BAWDEN
Updated: 18:43 EST, 19 August 2010

Connaught's biggest customer has drawn up contingency plans to ensure that key services, such as street cleaning and waste removal, will continue to be provided if the troubled company collapses.

Norwich City Council, which in May switched eight key public service contracts worth £250million over ten years to the builder, told the Daily Mail it is preparing for the worst.

It comes as Connaught chief Ian Carlisle told staff in an internal telephone address that there would be an unspecified number of job cuts. Carlisle said he needed to convince long-suffering creditors that the company could slash its costs.

Complaint: Grass in one estate reached 2ft before it was cut

Although Connaught remains solvent, fears for its future have escalated since the company, best known for maintaining council houses across the UK, issued the first of three profits warnings on June 25, which have knocked about 95 per cent off its share price.

The parlous state of Connaught's finances led to the departures of former chief executive Mark Tincknell and finance director Stephen Hill. 

The company is also the subject of two Financial Services Authority inquiries.

Norwich's plans come amid a barrage of complaints by city residents that Connaught wasn't doing its job properly.

Under the massive contract, Connaught's responsibilities include maintaining the city's 17,000 council houses and collecting and recycling waste.

Norwich South MP Simon Wright will today kick off a national campaign to put pressure on Connaught to improve its service.

The Liberal Democrat MP said that he has received ' dozens of complaints' since May and will contact MPs and councillors in many of the 150 UK councils Connaught works for to see if they are experiencing similar difficulties.

'If others report problems I will set up a group to work together highlighting the problems and taking these concerns to Connaught and the local councils,' Wright said, adding that on average he receives a complaint about the company 'every other day'.

The residents of a sheltered housing complex in Norwich city centre said they had to complain several times before Connaught came to cut their grass after it grew to nearly two feet.

The decision by Norwich City Council to switch to Connaught in May has been controversial from the start since many felt that the company's bid for the contracts was far too low to allow it to do the job properly.

Norwich City Council said it stood by Connaught but was 'continuing to monitor the situation carefully'. Connaught (down 0.35p at 14.30p) said it had 'an excellent working relationship with Norwich City Council'.