More than 2,000 jobs have been lost following the collapse of ISG, one of the UK’s largest construction contractors, which has entered administration. This marks the most significant failure in the UK construction sector since the infamous collapse of Carillion in 2018.
The announcement was confirmed by administrators from Ernst & Young (EY) who stated that ISG has ceased all trading activities with immediate effect, resulting in the closure of all its construction sites across the country.
ISG employed approximately 2,400 individuals, with the majority being made redundant immediately. Only about 200 staff members will remain to assist the administrators during the wind-down process. The company’s sudden downfall has raised alarms across the construction industry, particularly given its involvement in 69 live central government projects, including critical initiatives under the Ministry of Justice aimed at increasing prison capacity by 20,000 spaces.
The Cabinet Office has activated “detailed contingency plans” to ensure that ongoing projects are secured and that safety measures are in place at construction sites affected by ISG’s closure.
The financial difficulties faced by ISG have been attributed to a series of unprofitable contracts secured between 2018 and 2020, which severely impacted its cash flow. In an email to employees, ISG’s CEO Zoe Price expressed regret over the situation, stating that while the company had been profitable in recent months, legacy issues from past contracts had led to insurmountable liquidity challenges.
Reports earlier this year indicated that ISG was grappling with cash flow problems, prompting leadership changes including the departure of CEO Matt Blowers and Finance Director Karen Booth earlier in 2024. In July, ISG announced it was in talks with potential buyers, including Antipodean Holdings, but discussions fell through when the firm could not demonstrate adequate funding to recapitalize the business.
Data from construction analysts Barbour ABI indicates that ISG was involved in £1.8 billion worth of live government projects. This includes significant contracts such as a £300 million expansion of Spring Hill Prison in Buckinghamshire and various school construction schemes.
The collapse of ISG raises concerns about delays or halts in these critical projects, which are essential for addressing issues like prison overcrowding—an issue highlighted by the recent decision to release 1,700 offenders early to alleviate pressure on facilities.
In light of this crisis, stakeholders within the construction sector are calling for immediate action to mitigate the fallout from ISG’s collapse. The government is under pressure to ensure continuity in public infrastructure projects and protect jobs within the sector. The Cabinet Office has stated that it will work closely with other departments to manage the implications of this significant disruption.
The collapse of ISG represents a major blow to the UK construction industry, affecting thousands of workers and jeopardizing numerous government projects.
