Asked by: Lord Aberdare (Crossbench - Excepted Hereditary)
Question to the Ministry of Justice:
To ask His Majesty's Government, following the Written Answer by Lord Timpson on 30 October 2024 (HL1966), what actions they have considered to compensate contractors who have not received payments due to them as a result of failures in the procurement process.
Answered by Lord Timpson - Minister of State (Ministry of Justice)
ISG Construction Limited entered administration on 20 September 2024 and was caused by the financial health of the overall ISG group. The Ministry of Justice awards contracts in line with the relevant procurement regulations including undertaking appropriate due diligence.
Subcontractors have been made aware that the Department is not able to underwrite debt owed by ISG as a result of their administration, and that they should engage with the Joint Administrators (Ernst & Young) with regard to any claims arising from their contracts with ISG.
Asked by: Lord Aberdare (Crossbench - Excepted Hereditary)
Question to the Ministry of Justice:
To ask His Majesty's Government, following the Written Answer by Lord Timpson on 30 October 2024 (HL1966), how many subcontractors to ISG Limited the Ministry of Justice has been in contact with; what assistance the department has provided or may be able to provide to subcontractors whose payments were not available in the relevant project bank account; and what has been the outcome of the department's work with EY to establish whether the sums remaining in project bank accounts were correct.
Answered by Lord Timpson - Minister of State (Ministry of Justice)
The Ministry of Justice has been in contact with c.350 subcontractors of ISG Construction Limited. The Department has used a dedicated mailbox for this purpose and issued an update letter to subcontractors on 6 March 2025.
Since ISG entered administration, the Department has worked to minimise the impact on subcontractors. We enabled the swift return of subcontractor’s tools and equipment from affected sites and are supporting subcontractors to retrieve any materials that were on site with the cooperation of the Administrator.
The Ministry of Justice did not have a direct contractual relationship with ISG’s subcontractors and the Department’s assessment to date is that there is no obligation to act as the guarantor of all of ISG’s payments to its subcontractors. Payment by the Ministry of Justice into the project bank account does not create a direct contractual relationship between the Department and subcontractors.
Due to ongoing legal and commercial sensitivities, we are unable to comment on the final part of the question regarding the outcome of our engagement with EY.
Asked by: Lord Aberdare (Crossbench - Excepted Hereditary)
Question to the Ministry of Justice:
To ask His Majesty's Government what plans they have to pay for works completed on Ministry of Justice projects undertaken by ISG Limited, before it went into administration, to companies in the supply chain working on projects for which project bank accounts (PBAs) were in place; when and why the Ministry of Justice stopped paying the sums due into these PBAs; and whether this cessation of payment took place before the formal announcement of ISG administration.
Answered by Lord Timpson - Minister of State (Ministry of Justice)
Since ISG Construction Limited entered administration on 20 September, the Ministry of Justice (MoJ) has undertaken a range of activity to understand the full impact on the Department and the supply chain in the construction sector. This has included working with EY, the appointed Administrator, to ensure the sums remaining within Project Bank Accounts are correct. The Department is in contact with a large number of subcontractors to ISG to determine what, if any, direct assistance the MoJ is able to provide. The Department remains committed to the timely payment of invoices in line with our obligations to do so.
The MoJ is undertaking a review of all potential payments arising from ISG entering administration, but given the scale and complexity of the task, this work is not yet complete.
Asked by: Lord Aberdare (Crossbench - Excepted Hereditary)
Question to the Ministry of Justice:
To ask His Majesty's Government whether certified payments owed to suppliers of ISG Limited for contracts undertaken on behalf of the Ministry of Justice will be paid directly to those suppliers when expected monies have not been deposited into project bank accounts; how many suppliers have not yet received certified payments owed to them by the Ministry of Justice; and what is the estimated amount of these certified payments.
Answered by Lord Timpson - Minister of State (Ministry of Justice)
Since ISG Construction Limited entered administration on 20 September, the Ministry of Justice (MoJ) has undertaken a range of activity to understand the full impact on the Department and the supply chain in the construction sector. This has included working with EY, the appointed Administrator, to ensure the sums remaining within Project Bank Accounts are correct. The Department is in contact with a large number of subcontractors to ISG to determine what, if any, direct assistance the MoJ is able to provide. The Department remains committed to the timely payment of invoices in line with our obligations to do so.
The MoJ is undertaking a review of all potential payments arising from ISG entering administration, but given the scale and complexity of the task, this work is not yet complete.
Asked by: Lord Aberdare (Crossbench - Excepted Hereditary)
Question to the Ministry of Justice:
To ask His Majesty's Government whether certified payments will be paid to companies who have worked on projects run by ISG Limited on behalf of the Ministry of Justice where there are no funds in the project bank account (PBA); and whether there is a risk that PBAs will have failed to shield some parts of the supply chain from this insolvency event.
Answered by Lord Timpson - Minister of State (Ministry of Justice)
Since ISG Construction Limited entered administration on 20 September, the Ministry of Justice (MoJ) has undertaken a range of activity to understand the full impact on the Department and the supply chain in the construction sector. This has included working with EY, the appointed Administrator, to ensure the sums remaining within Project Bank Accounts are correct. The Department is in contact with a large number of subcontractors to ISG to determine what, if any, direct assistance the MoJ is able to provide. The Department remains committed to the timely payment of invoices in line with our obligations to do so.
The MoJ is undertaking a review of all potential payments arising from ISG entering administration, but given the scale and complexity of the task, this work is not yet complete.
Asked by: Lord Aberdare (Crossbench - Excepted Hereditary)
Question to the Ministry of Justice:
To ask His Majesty's Government what assessment they have made of the value of retention payments which (1) have been withheld, (2) have been released to suppliers, and (3) are still being held in relation to completed projects undertaken by ISG Limited for the Ministry of Justice.
Answered by Lord Timpson - Minister of State (Ministry of Justice)
Since ISG Construction Limited entered administration on 20 September, the Ministry of Justice (MoJ) has undertaken a range of activity to understand the full impact on the Department and the supply chain in the construction sector. This has included working with EY, the appointed Administrator, to ensure the sums remaining within Project Bank Accounts are correct. The Department is in contact with a large number of subcontractors to ISG to determine what, if any, direct assistance the MoJ is able to provide. The Department remains committed to the timely payment of invoices in line with our obligations to do so.
The MoJ is undertaking a review of all potential payments arising from ISG entering administration, but given the scale and complexity of the task, this work is not yet complete.