The Building Engineering Services Association (BESA) says ISG’s collapse is “just the latest“ in a series of company administrations that “had been undermining UK supply chains in recent years”.
ISG filed for administration last week, leaving more than 2,000 workers unemployed and projects paralysed across the country. The company was among the top four UK main contractors. Its collapse is the biggest in construction since Carillion’s demise in 2018.
BESA chief executive David Frise said: “Sadly, the lessons of Carillion have not been learned and our members and hundreds of other subcontractors are left to pick up the pieces yet again. Profit margins in construction are wafer thin and the fragile basis of many contracts means SMEs are particularly exposed.
“Suppliers will feel hugely betrayed, and we know that many were lied to about the status of the business following the sudden departure of senior directors back in February. Several excellent, financially sound firms could go under with significant job losses through no fault of their own because of this.”
‘Government must help us’
The trade body urged the government to act quickly in response to this situation.
Construction data firm Barbour ABI estimates that ISG has unfinished projects worth £1.7bn, including the £150m fit-out of Google’s new headquarters building at King’s Cross.
M&E firms are expected to be among the hardest hit by the collapse, with building services firms likely to face millions of pounds of unpaid bills.
BESA said the government should recognise that the “ISG debacle and the wider woes of the sector” represent a significant threat to its ambitions to grow the UK economy and urged it to speed up a consultation on new laws to address the ongoing late payment crisis.
Frise added: “The collapse of ISG came just two weeks after the publication of the Grenfell Tower public inquiry report, which highlighted the dysfunctional nature of many construction contracts. People’s safety and wellbeing, along with economic growth, depend on a robust, well-financed construction sector, which we manifestly do not have.
“ISG needs to be construction’s last major financial collapse that threatens entire supply chains, and the government must help us put a more robust and fit-for-purpose industry in place.”
