The Ministry of Justice (MoJ) is under pressure after more than 40 suppliers alleged they are owed around £20 million for prison refurbishment works, following the collapse of lead contractor ISG.
The affected firms, both small and medium-sized businesses, say they were assured their payments were protected through ring-fenced Project Bank Accounts (PBAs) for upgrades at HMP Birmingham, HMP Liverpool and HMP Guys Marsh in Dorset.
ISG entered administration in September, leaving suppliers unpaid for work carried out in the final months of the scheme.
The firms, some now facing bankruptcy, argue that PBAs introduced to prevent subcontractors losing money after major contractor failures were not used as promised.
PBAs were adopted after the 2018 collapse of Carillion to ensure money paid by government clients reached suppliers directly, safeguarding them from insolvency shocks in the supply chain.
However, administrators EY-Parthenon said the accounts contained only “nominal funds” when they took control, raising questions about whether the MoJ ever deposited the money.
Dan Henshaw of Lancashire-based European Screeding said his company is owed about £130,000, calling the impact massive for a business with annual gross profits of roughly £300,000.
Former contractor Mark Crumbie, whose firm is owed nearly £185,000, said PBAs had failed to prevent another Carillion-type situation.”
Trade body Finishes & Interiors Sector (FIS) described the situation as “a mystery” and said some affected owners were experiencing severe financial and emotional stress. FIS and law firm Hill Dickinson are now coordinating legal action on behalf of several subcontractors, arguing that PBA funds should have been protected by law.
Meanwhile, the Cabinet Office recently withdrew its guidance on PBAs without explanation. With dozens of companies still unpaid, suppliers say they simply want clarity and the money they were promised.
