Government departments have been forced to activate contingency plans for the delivery of new prison places and schools after one of the nation's largest construction companies fell into administration.
ISG reportedly held around 69 government contracts with a value of at least £1.84bn, the bulk of that work was for the Ministry of Justice. One project – the £300m expansion of HMP Grendon Springhill in Buckinghamshire – was given the go-ahead in January this year.
ISG's collapse resulted in more than 2,000 job losses at the firm. It comes six years and eight months after construction and outsourcing giant Carillion went bust, creating an immediate crisis for the MoJ because of the firm's facilities-management contracts for some prisons. Delivery of two new NHS hospitals was also severely delayed as a result. The £750m Midlands Metropolitan University Hospital in Smethwick, near Birmingham, is due to open to the public next month – six years later than originally expected.
ISG is understood to have had at least 22 contracts with the MoJ, and work on the government's prison-building programme was one of its biggest sources of income. The timing of the firm's collapse, just days after the new government's early-release rules to ease overcrowding pressures at the nation's jails came into effect, will be a further obstacle to increasing capacity in the secure estate.
Construction-industry contracts database Barbour ABI has reported that ISG also held 16 contracts with the Department for Education and 16 contracts with the Department for Work and Pensions.
CSW understands that the DfE contracts were valued at around £190m and related to schools projects, including new builds and the repair of defects.
A government spokesperson said preparations had been made ahead of ISG's collapse into administration on 20 September.
"We have implemented our detailed contingency plans and affected departments are working to ensure sites are safe and secure," they said.
An MoJ spokesperson described the department's contingency plans for the prison and courts estate as "robust".
"We will work with administrators and will find alternative ways to deliver these projects where necessary," they said.
DfE also described its contingency plans as "robust" and said schools would continue to deliver face-to-face education despite ISG's collapse. It added that the department was working to minimise additional costs and would "pursue all forms of redress".
DWP had not responded to CSW's request for comment at the time of publication.