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Spending cuts blamed for Connaught's collapse

Wed, 08 Sep 2010 10:46:56 GMT

As the social housing firm struggles to stay afloat amid speculation it could be placed into administration today, fears grow for the fate of its 10,000 workforce and contracts with other firms

Social housing firm Connaught looked to be on the brink of collapse today after lenders refused to offer additional support to the stricken company.

The Exeter-based repair and maintenance specialist has been in turmoil since its June warning that government spending cuts could blow a £200m hole in revenues over this year and next.

Amid speculation that it could be placed into administration as early as today, Connaught requested the suspension of trading in its shares and said a solution to its funding issues was "increasingly uncertain".

It is in discussions with other parties but added that its lenders were unlikely to provide additional funds.

The firm, which employs 10,000 people and has around 180 multimillion-pound social housing contracts in the UK, has been in talks with its lenders after a review identified an "urgent requirement" for additional funds to meet current and ongoing business, in part due to pressure from suppliers and contractors.

Politicians and union leaders expressed concerns for the hundreds of South Wales workers employed by the firm. It maintains council houses and housing association stock, and has a Caerphilly division where it acquired health and safety compliance firm National Britannia around three years ago.

Connaught also has a training division in Caerphilly, where people can gain qualifications through apprenticeship schemes.

Caerphilly MP Wayne David said he was concerned for workers employed by the firm.

"Connaught is a quality provider of training and has a good reputation and I would be sorry for both people it provides skills training to and people it employs as well," he said.

Royal Bank of Scotland recently provided Connaught with a further £15m in an attempt to keep the group going, the BBC said today.

Until their suspension today, the company's shares had fallen by more than 90% following the warning in June that it had identified 31 projects where spending will be delayed as a result of austerity measures, wiping £80m off revenues and £13m from underlying profits in this financial year.

Sales and profits were also expected to fall by a further £120m and £16m respectively next year, it added. Connaught's debts were estimated to be in region of £220m.

Founder Mark Tincknell left the company earlier this year on health grounds less than six months into his second spell as chief executive.

London to be rebranded

Fri, 27 Nov 2009 15:59:00 GMT

The mayor of London says the capital needs more publicity in advance of the Olympics

Boris Johnson, the mayor of London, has announced that the capital city will be rebranded next year, with a new "Brand for London" to be unveiled in Spring 2010.

But while London may talk the talk, the reality may not always match up. The city sees an increasing need to promote itself to tourists and potential investors, despite recent signs of the capital's popularity.

This, for instance, the Bank of China announced it is setting up an office in a large building it is buying close to the Bank of England. The decision demonstrates that although some of the cachet of being a city dominated by finance and banking may have diminished over the past few years, London can still pull in the corporates.

The same is true for investment. Overseas investors are still keen to buy a slice of London. The third quarter of the year saw £1.602bn invested in central London's main commercial property markets.

Tourist numbers are also up: the capital's museums, galleries and attractions drew 6% more visitors in September 2009 than in the same period of 2008. About 15 million overseas vistors came to London in 2008 and together with the 11 million domestic visitors spent £22bn.

But London still needs a further push, according to Johnson, who announced that £400,000 will be spent on publicity campaigns in the UK and Europe early next year, following a £2m campaign this year.

Speaking at a recent conference, Johnson said a new "Brand for London" will be unveiled in Spring 2010, partly to tie in with the run-up to the 2012 Olympics.

While the extra spending may boost the capital's image as a leading destination for international leisure and business tourism, there are still concerns that the reality may not live up to the hype.

Jackie Sadek, head of regeneration at property consultant CBRE and chair of the British Urban Regeneration Association, said the general approach was eminently sensible and commendable, but does not go far enough. Sadek wants more spending on public spaces in the capital, such as Oxford Street. "We have a very strong offer but are very badly let down by the public realm," she said.

We can work it out

Wed, 04 Nov 2009 13:48:00 GMT

This is arguably the toughest times in recent history the third sector is going through, despite broad support from the two main political parties in valuing its services. However, it can, and needs to do more for itself and pooling resources is the only way forward

Not a day seems to go past without a story of another charity funding crisis and the problems facing the sector.

On these days, the old adage of 'united we stand - divided we fall' has never seemed more true. This is not to say that I have a rose-tinted view of the situation the sector currently finds itself in.

In the 29 years I've been working for charities we've rarely faced tougher times, despite Labour and the Conservatives both having gone on record as valuing the contribution that the sector makes to society. But I fear that if the sector doesn't look to what it can achieve by taking opportunities to work together then it is doomed to fail.

Enough of what I think- what are people in the sector saying about this issue?

We recently undertook a survey to examine the current challenges and possible solutions for the third sector. Our research, based on responses from 175 respondents from charities, revealed that two-thirds (63%) of third sector employees surveyed think that sharing is key to collaborative working within the sector, with sharing of ideas and expertise (20%) being the most important.

Today, a special session has been convened by London Advice Services Alliance (Lasa) on the subject of how the sector can survive the recession and implement more collaborative working.

Based on the research, the sector sees working together as important. But there are a number of obstacles which hinder charities from taking this forward. Nearly three in 10 (29%) think that lack of leadership is the key obstacle faced by the sector, while more than a quarter (26%) consider lack of communication among organisations to be the main hurdle.

The charity sector is operating in difficult times, just like everyone else. But, as our survey showed, the sector could (and should) cooperate more.

We need to recognise the importance and availability of support from our own sector, not least the services provided by second and third tier organisations. Our survey also revealed that more than half (54%) of charity workers currently depend on the support services of second and third tier organisations on a weekly basis, and only 3% of the respondents had never benefited from such assistance.

Times are tough in the sector, but let's not forget how we're all working together towards the same ends of helping those in need. We're achieving so much in managing the rapidly increasing demand for our services despite having depleted resources.

It's all too easy to become inwards facing in a crisis, but this is the very time when charities need to keep communicating with each other more and exploring how they can cooperate.

Charities have got to keep talking to each other about how we can tackle the problem of the lack of resources facing the sector. I believe that it is only by working closely together that we will be able to survive the recession- and beyond.

Andy Gregg is chief executive of Lasa

Search

Wed, 21 Oct 2009 11:21:45 GMT

Propping up the country

Thu, 03 Sep 2009 11:45:24 GMT

The importance of the public sector to the construction industry is highlighted with the latest round of figures that show while order books are still thin, the slide has become slower as the government pumps money into new building contracts

The government's "scrappage" scheme may have given the car industry a lift and politicians a public relations boost but there is no way that it is halting the recession single-handed.

Public sector spending on bricks and mortar is doing far more and the signs are that it is starting to pay off – at least for the construction industry.

Of course we –and the builders – are not out of the woods yet. The Chartered Institute of Purchasing and Supply's (CIPS) August survey of the construction business showed that business activity in the UK construction sector has continued to contract but it is now doing so at its slowest pace in 18 months.

A quick flick through the pages of the weekly construction trade press gives anectodal indication of the role of the public sector in slowing the slide.

News of Building Schools for the Future schemes this week include a £180m contract awarded in Birmingham, while a consortium of building contractors has picked up a £230m BSF contract in Bradford. Other types of work are available too. Plymouth city council is looking at a £46m swimming pool while the contenders line up for the £1.75bn portion of the £16bn Crossrail project that will link rail lines on the east and west sides of London.

The importance of the public sector to construction output is likely to be confirmed within the next few days when the Office of National Statistics (ONS) releases construction output figures for the second quarter of the year. ONS figures' for the first quarter showed how the public sector has provided an increasingly important part of construction workload.

In the first quarter of 2007 it accounted for about 29% of all new work. A year later this had grown to 31%. Two years later, in the first quarter of this year, it represented 39% of new work.

The imminent ONS figures are likely to offer further proof that the economy is improving. Simon Rubinsohn, chief economist with the Royal Institution of Chartered Surveyors says they will reflect the construction industry's "less negative mood". Whereas the first quarter showed that output fell by 7% the latest figures are likely to show a contraction of only 2%.

Nevertheless, CIPS's chief executive David Noble describes the construction sector as "the sick man of the UK economy" and says that far from seeing signs of a return to growth the sector remains stuck in an unprecedented 18-month period of contraction.

Thinning order books have made bidding for construction work a fiercely competitive business. Figures from the Building Cost Information Service showed that in the first quarter of 2009 prices of building contracts had fallen by more than 6% from the point 12 months previously at which they peaked. The service expects prices to have fallen almost 15% by the time they bottom out in 2011.

One happy consequence of the current situation it seems is that public sector organisations with access to funding are now able to get more bricks for their bucks.

Prevention is better than cure

Tue, 04 Aug 2009 10:45:37 GMT

Prevention is better than cure when it comes to tackling the health of Britain's drainage infrastructure. Only then will routine surgery make a real difference

Prevention is undoubtedly better and much cheaper than cure when it comes to the National Health Service and indeed the UK's infrastructure.

But without the equivalent of an MRI scan, local authorities cannot see what the problems are or are likely to be, which is why it takes an emergency like the devastating floods of 2007 and 2008 to prompt wide-scale action – when it's largely too late.

Fortunately, that's all going to change. The Pitt Review, which followed the 2007 floods, and the new flooding and water bill, which goes before parliament later this year, provide guidance and advice to local authorities on how to take responsibility for local infrastructure and the implementation of measures that will mitigate risks to public safety.

Specific problems have traditionally been very difficult to diagnose, however – in terms of the infrastructure improvements that need to be made to prevent future disaster and damage.

That's because the major veins that make up the UK's ageing drainage systems remain a deeply buried secret. Decay and blockages aren't visible and worse still, the vast majority of local authorities and the engineers responsible for maintaining underground assets have had no means of getting a closer look.

Gathering the data necessary to build up comprehensive and accurate maps of the existing drainage infrastructure has been almost impossible, relying on astronomically expensive and highly laborious manual techniques.

But this is changing too. In addition to the range of specialist highways management information solutions available from suppliers such as Exor (who have worked closely with Gloucestershire county council for over a decade now) that help record and monitor information about roads, their component parts and all associated surveys and works, there are also significant technological developments in the field.

Self-propelling gyroscopic guidance techniques are among the newer solutions being rolled out to enable the authorities to gather the data that is so badly lacking - where their assets are and how bad a state they're in. Radio-frequency identification (RFID) tagging is also being introduced to permanently mark underground assets so that they can be monitored more effectively.

Gloucestershire, so badly hit by the 2007 floods, has received a grant to use such techniques so it can collect the missing data and implement cost-effective measures that will help lessen the impact of future storms.

The key to prioritising and focusing cost-efficient spending is to know exactly where the problems will emerge and the causes beneath the symptoms. Currently, the Highways Agency spends a fortune each year repeatedly patching up road surfaces when often the real problem has been compounded by poor drainage.

In order to tackle problems effectively, authorities need a holistic approach to the entire infrastructure – from the roads to the hidden assets underneath, including utility pipes and cables as well as drains. Only with complete information about the concition of these assets and where these coincide can authorities hope to be in a position to implement effective, cost-efficient plans that will last.

With renewed responsibility for the safety of citizens relating to the maintenance of highways infrastructure, this is something councils can no longer afford to duck out of. Grants will be made available only to those who are proactive and show initiative. Those who drag their feet risk huge insurance bills, escalating premiums and increased risk of central government intervention in Comprehensive Area Assessments (CAA).

Doing nothing is clearly not an option – one decrepit part of a body can affect everything else.

If other authorities want to add years to an infrastructure network's life so that their budgets go further and invasive procedures are required less frequently, their first priority must be to secure a clear picture of what they are dealing with.

Only then can they hope to schedule routine surgery that will make a real difference in keeping longer-term problems at bay, buying even the sickliest cases a few more years.

Scott Tompkins is the asset manager for Gloucestershire Highways

Imitating the private sector

Jane Dudman — Thu, 30 Jul 2009 13:00:00 GMT

A business-led approach to public services may deliver benefits but some remain sceptical that wholeheartedly imitating the private sector is the best way forward

This week's report from the Commons' Treasury select sub-committee calls for a more "business-led" approach to making savings.

On the surface, this is sensible and many of the report's recommendations are no more than common-sense for both private and public sectors: don't set arbitrary targets without consultation; measure figures accurately to assess savings and compare savings in different areas; ensure different parts of government cooperate more closely to avoid duplication and waste.

But many in the public sector may be dismayed by a blanket call for a "business-led" approach, without careful consideration of how, exactly, this should apply to the inevitably complex world of public services.

A couple of recent publications illustrate some of the difficulties in importing business ideas into public services, particularly to healthcare. The rightwing thinktank Civitas this week published a book that argues that many of the business reforms imported into the NHS have backfired, because the changes have led to businesses "set up to serve the state rather than patients".

Authors Peter Davies and James Gubb do argue for a "more business-like framework", but only aligned with a greater focus on what is required in frontline services. This is a familiar rightwing theme - the need to enable professionals to run things with greater autonomy, and to be freed up from regulatory bodies - but has resonance because it does tackle some of the problems that are created when commercial ideas are not adapted with great caution to the needs of the public sector. The authors blame an inflexible top-down approach, a lack of risk-taking and a lack of space in which senior managers are able to display leadership for some of the problems in the NHS; but none of those are unique to public services.

There's a similar theme in a report from HayGroup on what foundation trusts can learn from success and failure in the FTSE 100. It says many businesses in the FTSE 100 have dropped out or failed in the past 10 years and highlights the main reasons:

• taking too many risks and losing focus on core business
• failing to adapt to changing circumstances
• making poor acquisitions
• over-expanding
• brutal cost-cutting
• failed collaboration

Hay concludes that there are critical lessons for foundation trusts from this:

• understand what you're good at
• be highly sceptical of potential takeovers
• respond thoughtfully to policy changes and problems - don't just restructure
• keep up staff morale
• keep in touch with what's going on inside and outside the organisation
• strategic vision is good - but delivery is better
• live within your means

Jane Dudman

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Thu, 07 May 2009 08:26:38 GMT

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Some useful links for further reading

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Mon, 27 Apr 2009 08:53:59 GMT

Public, which is edited by Jane Dudman, builds on the Guardian's strengths in covering public services, in news and comment columns of the main paper and weekly in SocietyGuardian and on our award-winning website.

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Wed, 22 Apr 2009 15:32:08 GMT

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Wed, 22 Apr 2009 14:33:08 GMT

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About Public

Wed, 22 Apr 2009 14:32:58 GMT

Public is now online, enabling it to provide more timely insight on public sector trends and to engage directly in debate with its readers about all the issues that affect them, particularly in public management, leadership and policy.

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