'Reckless' Westminster council accused of wasting £27m on doomed building firm

The council, led by Adam Hug, has been accused of an "egregious" waste of taxpayers' money after the construction firm Geoffrey Osborne Ltd was awarded a series of lucrative contracts to build 64 affordable homes - despite a clear warning of the firm’s “poor performance” and bankruptcy risks.

Tory councillor Paul Fisher blasted the decision, saying there had been a failure to "interrogate the advice" and to properly protect taxpayers' money.

Reform UK's leader on Westminster council Laila Cunningham added: "This isn’t an isolated mistake, it’s a pattern. Across Westminster we’re seeing substandard contractual work, poor oversight, and a council that too often ignores warnings until residents are left paying the price. At the same time, the number of senior staff earning six-figure salaries has more than doubled."

In 2022, an internal memo was circulated among councillors detailing the extent of Geoffrey Osborne’s financial woes.

The briefing note, uncovered by LBC, shows councillors were warned the firm was at “risk of ultimate supplier failure”, after recording a loss of nearly £14million in the 18 months leading to September 2020.

It concluded that there were “early warning signs for major concern” which could result in the company’s collapse.

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The Labour-led council argues the decision to award additional contracts to Geoffrey Osborne was in line with the guidance provided by executives at the council.

Despite receiving £40million of contracts from Westminster City Council to build 64 social homes in Maida Vale, Little Venice and Queens Park, Geoffrey Osborne filed for administration in April 2024.

Following the collapse, the council was forced to allocate an additional £22m worth of funding to the new contractor, Wilmott Dixon, to complete the project. The contract was issued without being put up for competitive tender, and the local authority later earmarked a further £5.67million to remedy work carried out by Geoffrey Osborne.

The council blames the firm’s failure for falling behind in its targets for delivering affordable housing units, despite Mr Hug's Labour administration previously promising a "revolution in social housing”.

Opposition councillors argue that the warning signs about Geoffrey Osborne’s financial frailty were laid bare by the internal memo, and that the consequences of the firm’s failure lay with the Labour leadership.

Mr Fisher, who was elected as a Labour councillor in 2022 before crossing the floor to join the Conservatives, said the council lacked political leadership and was bounced into a “reckless” decision by officials.

“As councillors, it's our job to interrogate advice that we receive. And that's even more important when you're in the position of a Cabinet member with responsibility for millions of pounds’ worth of public works contracts,” Mr Fisher told LBC.

“Unfortunately, in this scenario, there was clearly a failure to push back on that advice and to interrogate the advice so as to protect taxpayer money.”

Mr Fisher believes the “egregious” waste could have been spent on other priorities, such as crime reduction, with the £5.6million spent on remedial works being enough to pay for over 130 full-time police officers.

“Every day when I knock on doors in the West End and across Westminster, I hear residents’ concerns about crime,” he added. “People want to see more people on the streets.”

“While it is not the council’s responsibility to fund police officers, there have been instances of council members using ward budgets to fund overtime for officers in our areas - so we could have used that money better than the administration.”

According to data from the Metropolitan Police, Westminster has the highest rates of theft, violence, sexual and drug offences of any London borough.

The Labour-run council has faced significant scrutiny of its spending decisions in recent years.

In 2023, Westminster's six cabinet members received criticism for receiving a 45% increase to their yearly allowances, which was justified on the grounds that it brought their expenses into line with other councils.

According to their latest accounts, 92 members of staff at Westminster City Council earn a salary of over £100,000 - more than twice the number just four years ago.

Ms Cunningham said: "Why was a known sub-par, high-risk contractor given the job? Was it because they knew that when it all went wrong, the taxpayer would be the one picking up the bill?

"There is no accountability and no respect for public money... It’s frivolous, it’s reckless, and it shows a council that spends  with no regard for the taxpayer. If they were spending their own cash, they’d have stopped long ago, but they’re not. They’re spending ours".

A Westminster City Council spokesperson said: "The entire building industry faced significant financial challenges in the wake of the pandemic. Geoffrey Osborne Ltd were one of many firms facing difficulties at that time.

"The council followed a robust process before awarding this contract. Osborne had successfully completed large schemes for Westminster previously, including the initial phase of this project, demonstrating they could deliver on time and on budget.

"All large development projects carry a risk so when Osborne went bust at a critical time, the council acted quickly and responsibly in appointing Wilmott Dixon to complete the work and create much needed council homes in central London.

"Regrettably, this carried additional cost. The alternative was leaving half-built council homes across the city.

"Lessons have been learnt. We’ve invested in our procurement processes to give the council earlier warning signs and ensure this never happens again."