Westminster Council Blames Over-Reliance on Collapsed Builder for Affordable Housing Delays
A Central London council has acknowledged that an over-reliance on a now-bankrupt construction firm significantly contributed to delays in delivering new affordable homes. Westminster City Council pointed to the ineffectiveness of financial-checking tools and rushed procurement timelines as key factors in failing to foresee the collapse of Geoffrey Osborne Limited.
Contractor Collapse Leaves Homes Half-Finished
Geoffrey Osborne Limited was contracted in 2022 to build 62 social homes but went bust two years later, leaving properties incomplete. This not only set the council behind on its affordable housing targets but also forced it to spend millions of pounds extra to finish the three developments. Previous reports revealed the council continued awarding contracts to Osborne despite warnings of financial instability.
Flawed Financial Risk Assessment Tools
A lessons learnt report highlighted issues with Creditsafe's business scoring tool, which consistently classified Osborne as very low risk from contract award until its collapse. The council noted that this misclassification was a major factor in failing to anticipate the company's demise. Creditsafe has since been instructed to provide alerts when suppliers fail to submit accounts on time.
The council has now adopted a new analytics tool using real-time financial data. When applied retrospectively, this tool showed Osborne was at high risk of collapse in July 2021, with risk levels fluctuating over time. By November 2023, the risk had returned to high.
Creditsafe's Response and Recommendations
Chris Robertson, Creditsafe's UK chief executive, stated that the company takes the findings seriously and understands the community impact. He explained that a tool measuring COVID-19 disruption indicated Osborne was at very high risk of catastrophic disruption when appointed in 2020. Robertson emphasized that credit scoring is not meant to be viewed in isolation and advised businesses to analyze multiple data points for due diligence.
- Monitor financial health regularly throughout supplier lifecycles.
- Use credit scores as one tool among many in risk assessment.
- Consider factors like payment trends, legal filings, and debt levels.
Robertson noted that Creditsafe can predict approximately 70% of insolvencies up to 12 months in advance, but stressed the importance of comprehensive analysis.
Council's New Procurement Safeguards
In response to the incident, Westminster City Council has committed to several reforms to prevent future failures:
- Avoid over-reliance on single contractors by limiting project awards per contractor.
- Allow more time in procurement processes to pause or withdraw if suitable bids are not found.
- Implement stricter financial monitoring and risk assessment protocols.
The council has already incurred additional costs, including £5.67 million for water damage repairs and £22 million to fund a new contractor, Willmott Dixon, to complete the homes.
Background and Political Context
Westminster City Council entered a commercial partnership with Osborne in 2020, under Conservative leadership, for 134 homes. Osborne was also hired for enabling works at three sites: Queen's Park Court, Adpar Street, and Torridon, totaling 64 social homes. A briefing note from February 2022 warned of ultimate supplier failure after Osborne posted a £13.8 million pre-tax loss and credit score downgrade.
Despite this, the newly-elected Labour administration asked Osborne to continue work in September 2022, claiming they were never shown the warning note. The council stated the note was not shared because Osborne's financial health had improved at the time. Osborne's delayed 2021 accounts later revealed the company was deeply in debt.
The delays mean projects like Queen's Park Court will not be completed until March 2026, highlighting ongoing challenges in meeting affordable housing goals in Central London.
