CLC demands immediate payment after ISG bankruptcy

The Construction Leadership Council (CLC) has called on contractors to pay immediately as the collapse of ISG threatens to have a devastating impact on supply chains.

In a statement released on Friday (September 20), the organization said it had held an emergency meeting with its sponsor, the Ministry of Economy and Trade, to discuss “how the industry should respond” to the bankruptcy filing by its sixth-largest company.

The CLC called on everyone in the industry to ensure […] that payments to suppliers should be made as soon as possible and further information should be awaited.” It went on to say that the companies should deal with the impact of the collapse of ISG “within the framework of existing contracts”.

The company added that it is currently working on preparing detailed guidelines for affected companies and workers, but noted that companies in “particular financial distress” should “contact their relevant industry association directly”.

“Our condolences go out to everyone in the industry who has been directly or indirectly affected by the administration of ISG,” it added.

“[Our] The aim is to ensure that affected individuals and organisations receive appropriate support and advice and that the impact on the sector as a whole is limited as far as possible.”

The statement comes against the backdrop of concerns that suppliers could face financial difficulties or insolvency due to non-payment by ISG.

ISG is about half the size of Carillion, which, according to figures released in the House of Commons, cost 30,000 small businesses an average of £140,000 and was directly responsible for 380 subsequent bankruptcies.

ISG’s demise comes amid a further rise in insolvencies in the construction industry, with 4,401 construction companies facing bankruptcy in the year to April 2024 as the impact of the Covid pandemic, inflation and fixed-price contracts continue to impact profitability.

The industry association Build UK has also set up a working group to find new jobs for as many ISG apprentices and graduates as possible.

In a statement, Suzannah Nicol, chief executive of Build UK, said: “This will have a significant impact on those just starting their careers in the construction industry. This is where we want to make an immediate impact and encourage any companies who may be able to help one or more ISG apprentices, graduates or interns to move on to another role in the industry to get in touch.”

“We would also like to hear from any trade contractors who employ apprentices and who are at risk of losing their job as a result of ISG’s closure, as well as any ISG apprentices, graduates or trainees who are affected. You can contact us on [email protected].”