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Questions raised over Ealing Council’s decision to award £40m contract to Henry Construction as firm collapses while sites are being developed

Hundreds of new homes being built for Ealing Council as well as for private developers in the borough are set to be delayed following the collapse of building contractor Henry Construction which has gone into administration.

In February 2022, Labour-run Ealing Council announced it had awarded Hounslow-based Henry Construction a £40m contract to build 145 new homes on six sites for its council owned Broadway Living. As well Ealing Council, Henry was also building for private companies in Ealing and across London and South East England.

At the time of the announcement of Henry winning the contract, it was expected the homes would be ready by the following year. In a statement, the council said: “Delivery of the new homes is targeted for mid-2023.”

The locations being developed are: Dean Gardens and Maitland Yard, West Ealing, Chesterton Close and Evesham Close, Greenford, Norwood Road, Southall, Shackleton Road, Southall, Wood End, Northolt and Buckingham Avenue in Perivale.

In a statement issued on Monday (19 June 2023), more than a week after Henry Construction went into administration on 8 June 2023, a council spokesperson confirmed all work on the sites has halted and revealed “some of the financial impact to the council will be offset by insurances we have in place.”

In the statement, a council spokesperson said: “We understand unexpected labour and material cost increases have impacted their ability to deliver the new schemes. Ealing Council deeply values our suppliers and others affected by Henry Construction entering administration.

“The council contracted Henry Construction to build new homes at Shackleton Road, Dean Gardens, Chesterton and Evesham Close, Wood End Library and Norwood Road. While these schemes will experience delays, the homes will be built.

“We are committed to delivering new and affordable homes across the borough. While this outcome is disappointing for all parties, we will find a new contractor.

“Therefore, we have terminated the existing building contracts with Henry Construction and secured the sites.

“We have engaged with our legal advisors to help secure a different contractor to bring these schemes to completion.  Some of the financial impact to the council will be offset by insurances we have in place and there will regrettably be a delay to the completion of the new homes.

“We work closely with the GLA (Greater London Authority) as our funding partner for new genuinely affordable homes and have kept them fully informed as the situation has developed.

“We will continue to provide updates on the administration proceedings, and we remain committed to transparency throughout the process. We value the understanding and patience of all those affected by this situation, and we remain committed to transparency throughout the process.”

Ealing Council leader Councillor Peter Mason and Councillor Lauren Wall outside Henry Construction site
Ealing Council leader Councillor Peter Mason and Councillor Lauren Wall outside Henry Construction site. Photo: Ealing Council

Councillor Lauren Wall, the then Ealing Council lead member for genuinely affordable homes said: “These fantastic new homes will offer more local families a safe, comfortable roof over their heads.

Last month Henry Construction was also fined £234,000 by the  Health and Safety Executive (HSE) after a demolition worker suffered serious injuries after falling from a platform in Kensington in West London.

Henry, which had a turnover of £400m a year, is said to have been having financial difficulties paying suppliers and workers for several months with work coming to a halt on a number of its sites.

Ealing Liberal Democrats planning and housing spokesperson Jon Ball told EALING.NEWS: “This is a symptom of the lowest bidder approach taken by Ealing Council. The Council’s financial assessment should have detected that Henry underbid to secure contracts, especially as Henry failed to publish supplier payment data two years ago and with the background that Mark Henry’s previous company collapsed owing £23m in 2009.”

Mr Ball added: “The Labour administration needs to urgently reveal how Henry passed their financial tests, how soon replacement developers will be procured and how local contractors can be saved from being dragged under.”

Neil Reynolds, chair of Ealing Green Party told EALING.NEWS: “The Labour council’s decision to sign these contracts should be scrutinised closely. The collapse of Henry Construction begs the question what due diligence did the council undertake? With interest rates now likely to continue to rise there could be more bad news to come.”

Julian Gallant, leader of Ealing Conservatives told EALING.NEWS: “This is a very worrying development and indicative of an approach that will need to be investigated across the Borough. It appears that Ealing Council has been seduced by Henry’s low bids, and has overlooked Henry’s failure to publish supplier payment data. Ealing Council is fully aware of the cost crisis in the building industry.”

Speaking to Construction News, Kathryn Kligerman, a construction, engineering and procurement partner at law firm Devonshires said: “Employers have, over the past few weeks and months, already been grappling with the difficult side effects of Henry’s downward trajectory, such as a lack of labour on site, slow and intermittent progress and an unpaid supply chain.”

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