Westminster Council – lessons learnt from contract with building firm that went bust

Westminster City Council has said an “over-reliance” on a collapsed building firm is partly to blame for delays in delivering new affordable homes.

The City Council also questioned the “effectiveness” of financial-checking tools and blamed rushed procurement time frames for not earlier spotting the demise of Geoffrey Osborne Limited, which it contracted to build 62 social homes in 2022, a lessons learnt report shows.

Osborne went bust two years later leaving properties half-finished, causing not only the council to fall behind on its affordable housing target but also force it to spend millions of pounds more to complete the three developments.

Previous reporting by the Local Democracy Reporting Service (LDRS) showed the council continued to hand building contracts to Osborne despite warnings it was financially unstable. A new report before the council’s overview and scrutiny committee this month showed risks identified during the procurement stage were not reflected in later reports.

The report also said it had issues with the Creditsafe’s business scoring tool. The report read: “Managing supply chain financial risk relies on data from trusted external agencies commonly used across contracting bodies. In this case, the continued classification of [Osborne] as very low risk by Creditsafe was a contributing factor in the failure to anticipate the company’s collapse.”

Osborne’s score remained in the very low risk percentile from the award of the contract to its collapse two years later, the report read. It said Creditsafe was subsequently told to provide alerts when suppliers fail to submit accounts within the required time frame.

The council is now using a new analytics tool which assesses failure and delinquency using real-time financial data. The new tool was applied retrospectively and showed Osborne was at high risk of collapse in July 2021. That eased to lower than average risk when work contracts were handed out in 2022. By November 2023, Osborne’s chance of going into administration returned to high risk.

Creditsafe’s UK chief executive, Chris Robertson, told the LDRS the company took Westminster City’s findings seriously and understands the significant impact of Osborne’s collapse on the community. He said a tool measuring the disruption of Covid-19 on businesses, which is intended to be used alongside Creditsafe’s original risk score, showed Osborne was at a very high risk of catastrophic disruption at the time of its appointment by the council in 2020.

He said Osborne was moved to a “financial statements too old” status more than three weeks prior to the administration order being filed and its credit scored removed in line with the Creditsafe’s standard methodology. Its previous score reflected the information that was publicly filed and available at that time from the data sources that were available to the company.

Robertson said Creditscore’s scoring algorithm uses a wide range of factors beyond headline financials, including the filing of financial statements, payment data as well as structural and legal indicators. Its model is designed to identify risk signals across thousands of assessments annually. In this case, once financial information became outdated, the score was removed rather than maintained to avoid providing an assessment based on stale data.

Robertson said credit scoring is one tool among many in due diligence processes and is not meant to be viewed in isolation in relation to financial stability. He said: “That’s why it’s so important to regularly monitor the financial health of customers and suppliers throughout their lifecycle.

“No company’s financial health will stay the same throughout its operations. Circumstances change — customers may terminate contracts, customers may pay late, revenue may have declined for a considerable period of time, or they may have taken out loans during Covid-19 [restrictions] to keep cash flowing and operations running smoothly.

“We strongly advise businesses not to look at a company’s risk score as the end-all, be-all. Instead, companies should analyse multiple data points in a business credit report, including how late they pay bills (DBT trends over the last 12 months), ageing invoices, legal filings, debt, credit usage and other publicly available information.

“We recognise that in this case, the aftermath of Geoffrey Osborne Limited’s financial distress was not what anyone would have wanted. However, it’s worth noting that Creditsafe can accurately predict approximately 70pc of insolvencies or business failures up to 12 months in advance.”

The council also promised to be more cautious when bundling projects together and to avoid over-reliance on one contractor. They are suggesting restrictions on the number of projects any one contractor is awarded within a development.

The council said it will also build in enough time to pause or withdraw procurement if suitable bids or contractors are not found.

The council has since spent an extra £5.67mn repairing homes after they suffered water damage. Another £22mn was spent funding the new contractor, Willmott Dixon, council reports shows.

Westminster City entered into a commercial partnership with Osborne in 2020. The council, at the time run by the Conservatives, contracted Osborne to build 134 homes. The company was also hired for enabling works at another three sites — Queen’s Park Court (Queen’s Park), Adpar Street (Little Venice) and Torridon (Maida Vale) — for 64 social homes.

A council briefing note seen by the LDRS, dated 11 February 2022, said Osborne risked “ultimate supplier failure” after posting a £13.8mn pre-tax loss and a credit score downgrade.

Despite this, in September 2022, the newly-elected Labour administration asked Osborne to continue building the homes. Labour claims they were never shown the briefing note. Westminster City said the note was not shared with the incoming administration because Osborne’s financial health had improved.

Osborne delayed publishing their annual accounts in 2021. When they were finally released, they showed the company was “landed heavily in the red,” the memo said.

Westminster City Council Overview and Scrutiny Committee, 12 February 2026. Report: Geoffrey Osborne Insolvency Lessons Learned.

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