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Finito World
What began as routine upgrades to three English prisons has escalated into a financial crisis, with dozens of small businesses left in limbo — and the government under growing pressure to explain how supposedly ring-fenced funds vanished.
Up to 40 contractors working on refurbishment projects at HMP Birmingham, HMP Liverpool and HMP Guys Marsh are believed to be owed around £20 million. Many were subcontracted by ISG, the lead contractor, which went into administration in September 2024. The Ministry of Justice had assured firms their payments would be protected via Project Bank Accounts (PBAs) — a system specifically designed to safeguard suppliers in the event of insolvency. But the money never came.
Firms say they are facing ruin. Lancashire-based European Screeding is owed £130,000 — nearly half its usual annual profit. Raven Project Metals, once run by Leicester businessman Mark Crumbie, is owed £185,000. For Crumbie, the prison project was supposed to be his professional swansong. “We were clearly told the money was safe,” he said. “But that’s exactly what’s not happened. It’s just like Carillion all over again.”
PBAs were introduced after Carillion’s 2018 collapse to prevent this exact scenario. Payments are meant to be deposited into dedicated trust accounts and automatically distributed to suppliers, regardless of what happens to the main contractor. But administrators say the accounts held only “nominal funds” when they were appointed. That revelation raises serious questions about whether the Ministry of Justice ever transferred the money at all — or if the safeguards were, as some firms put it, “not worth the paper they were written on.”
Trade bodies and law firms are now rallying behind affected suppliers. The Finishes & Interiors Sector (FIS) is coordinating a potential legal challenge, and Hill Dickinson is in pre-action correspondence with the MoJ on behalf of seven companies. “PBAs are not just policy — they are legal trust mechanisms,” said Hill Dickinson partner Sarah Emerson. “The funds in them belong to the suppliers. It’s that simple.”
The case is drawing comparisons to past procurement scandals — but with one key difference. This time, the government had an insurance mechanism in place and simply appears to have failed to use it. “They were told this system would protect them,” said FIS’s Iain McIlwee. “But instead they’re fighting to get paid for work they completed a year ago. These are not faceless firms. These are people with staff, bills, mortgages — some are facing bankruptcy. Others are just exhausted.”
The Ministry of Justice has declined to comment, citing legal proceedings. But the silence has only added to the sense of betrayal among contractors who trusted the system. Making matters worse, the Cabinet Office quietly withdrew its official guidance on PBAs in July — despite previously describing them as a pioneering tool for protecting the construction supply chain. No new guidance has yet been issued.
Whatever happens in court, the case is likely to trigger wider scrutiny of government construction contracts. If trust mechanisms like PBAs can’t be relied upon, the government may find it harder to attract small suppliers for future projects — particularly at a time when it is under pressure to deliver new prisons, schools and hospitals.
For the firms involved, however, the bigger concern is survival. “We’ve taken the hit,” said European Screeding’s Dan Henshaw. “We’re still afloat — just. But it’s hurt us badly. And we were told this couldn’t happen.”
If the courts agree that the government failed to honour its obligations, it could mark a turning point in public procurement. Until then, the message to small firms is clear: trust, even in ring-fenced accounts, can be a risk of its own.
