{"id":227496,"date":"2025-10-27T03:32:12","date_gmt":"2025-10-27T03:32:12","guid":{"rendered":"https:\/\/www.newsbeep.com\/uk\/227496\/"},"modified":"2025-10-27T03:32:12","modified_gmt":"2025-10-27T03:32:12","slug":"moj-owes-us-20m-after-contractor-isgs-collapse-say-suppliers","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/uk\/227496\/","title":{"rendered":"MoJ owes us \u00a320m after contractor ISG’s collapse, say suppliers"},"content":{"rendered":"

Josh Sandifordin Birmingham<\/p>\n

\"GettyGetty Images<\/p>\n

Suppliers who worked on HMP Birmingham say they are owed hundreds of thousands of pounds<\/p>\n

The government is facing questions over tens of millions of pounds owed to suppliers who worked on upgrades to three prisons in England.<\/p>\n

At least 40 companies are believed to be owed the money for work they carried out in Birmingham, Liverpool and Dorset, before lead contractor ISG entered administration in September.<\/p>\n

The small and medium-sized firms say they should have been protected because the Ministry of Justice (MoJ) promised to pay for the projects through ring-fenced Project Bank Accounts (PBAs).<\/p>\n

But some businesses are now facing bankruptcy while others are threatening to take ministers to court. The MoJ declined to comment.<\/p>\n

\"GettyGetty Images<\/p>\n

Upgrades were also carried out at HMP Liverpool and HMP Guys Marsh<\/p>\n

European Screeding, based in Lancashire, worked on the flooring of refurbished cells from early 2024. <\/p>\n

Sales director Dan Henshaw said the firm received payments until August 2024 but was currently owed for a month’s work, worth about \u00a3130,000.<\/p>\n

He explained it was a “massive hit” when their gross profits were usually around \u00a3300,000. <\/p>\n

“It’s had a huge impact,” he said. “We’ve got overheads and staff wages to pay. <\/p>\n

“We’re still feeling the repercussions now and it’s affected cash flow massively. <\/p>\n

“We’ve managed to stay afloat because we’re a relatively successful business but we don’t walk away with net profit every year.” <\/p>\n

\"DanDan Henshaw<\/p>\n

Dan Henshaw said his firm was owed \u00a3130,000<\/p>\n

Mark Crumbie is now semi-retired but used to run Raven Project Metals based in Leicester. <\/p>\n

A project working on the walkways at HMP Birmingham represented his biggest contract ever, and the 64-year-old hoped it would be his swansong. <\/p>\n

But he said his former firm was still owed nearly \u00a3185,000 for about two months of work, having expected to make \u00a375,000 in gross profit from the entire job. <\/p>\n

Mr Crumbie said he felt “very bitter” not to have been given the protection PBAs promised. <\/p>\n

“We were quite clearly told the money was safe,” he said. <\/p>\n

“It was to stop another Carillion-type situation where a main contractor goes bust and takes down everyone else involved, but that’s exactly what’s happening.” <\/p>\n

\"Mark<\/p>\n

Mark Crumbie hoped working on HMP Birmingham would be his swansong<\/p>\n

Money paid into PBAs should be handed out to suppliers almost automatically. <\/p>\n

But administrators EY-Parthenon insisted the accounts had “nominal funds” in them when they were appointed. <\/p>\n

It means the money was probably never paid in by the MoJ, with Iain McIlwee, from trade body Finishes & Interiors Sector (FIS), describing the situation as a “mystery”. <\/p>\n

He said it was having a huge impact on small business owners, with some facing bankruptcy themselves and others struggling with “significant mental stress and heartache”. <\/p>\n

“They are fighting to get back what they should have been paid 12 months ago,” he said. <\/p>\n

“Companies are people and these are people in trouble that need the support of our government.”<\/p>\n

\"Ian<\/p>\n

Mr McIlwee estimated about 40 suppliers working across three projects were owed more than \u00a320m<\/p>\n

FIS is supporting some of the firms owed money and helping to co-ordinate legal action alongside law firm Hill Dickson. <\/p>\n

Sarah Emerson, a partner at Hill Dickson, said they were engaged in pre-action correspondence with the MoJ on behalf of seven firms who worked on the projects.<\/p>\n

She said her clients were small companies who felt let down and could not understand what had happened to the money they were owed.<\/p>\n

“They were told this was a positive thing because [PBAs] would protect them from an insolvency event,” she said. <\/p>\n

“They are set up as a trust mechanism which means funds are ring-fenced. <\/p>\n

“That means money in those Project Bank Accounts legally belongs to those that are due to be paid.” <\/p>\n

\"HillHill Dickinson<\/p>\n

Sarah Emerson said her firm could take the MoJ to court over the dispute<\/p>\n

The Cabinet Office withdrew its guidance on PBAs in July, despite describing them as a “pioneering new way of paying supply chain members in construction”. <\/p>\n

The BBC asked why this had happened and when new guidance could be expected but has not received a response. <\/p>\n

A spokesperson for the MoJ said they could not comment due to the possible legal action. <\/p>\n

EY-Parthenon’s spokesperson said: “Joint administrators were appointed by the High Court of Justice to eight companies within the ISG Group on 20 September 2024.<\/p>\n

“The administrators are officers of the court and act in the interests of all creditors of the companies.<\/p>\n

“The Project Bank Accounts (PBAs) had nominal funds in them when administrators were appointed and claims that funds were diverted into ISG’s insolvency estate are factually incorrect.”<\/p>\n","protected":false},"excerpt":{"rendered":"Josh Sandifordin Birmingham Getty Images Suppliers who worked on HMP Birmingham say they are owed hundreds of thousands…\n","protected":false},"author":2,"featured_media":227497,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2],"tags":[49,50,51,47,52,48],"class_list":{"0":"post-227496","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-headlines","8":"tag-headlines","9":"tag-news","10":"tag-top-news","11":"tag-top-stories","12":"tag-topnews","13":"tag-topstories"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/227496","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/comments?post=227496"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/227496\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media\/227497"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media?parent=227496"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/categories?post=227496"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/tags?post=227496"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}