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Questions are arising over tens of millions of pounds left unpaid to suppliers involved in upgrades to three English prisons. As of now, around 40 companies are reportedly owed money for work done in Birmingham, Liverpool, and Dorset before the primary contractor, ISG, went into administration back in September. These small and medium-sized enterprises assert that they should have been safeguarded as the Ministry of Justice had pledged to pay for the projects through ring-fenced Project Bank Accounts (PBAs).
One such company, European Screeding from Lancashire, focused on refurbishing cell flooring starting early in 2024. Even though they were compensated until August 2024, the firm is currently owed approximately £130,000 for a month’s worth of work. This financial blow significantly affected their operations, particularly cash flow, considering their gross profits usually amount to around £300,000 annually.
The disappointment is tangible for Mark Crumbie, a former proprietor of Raven Project Metals based in Leicester, as his foray into the walkways project at HMP Birmingham, envisioned as a career highlight, left his former company owed nearly £185,000 for roughly two months of work. The promise of financial security provided through PBAs was not materialized, leaving Mr. Crumbie feeling deeply embittered by the evolving situation that unfolds akin to what the PBAs were designed to prevent, resembling the collapse of Carillion.
Many of the affected businesses are now on the brink of collapse or experiencing considerable financial strain, having expected the PBA mechanism to safeguard them against a contractor’s insolvency event. Despite the administration’s claim of nominal funds in existence within the PBAs upon their engagement, this revelation has left many businesses reeling from the financial repercussions of unpaid dues. Legal action is being marshaled by trade body Finishes & Interiors Sector (FIS) in concert with law firm Hill Dickson to address these grievances on behalf of several embattled enterprises involved in various projects
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