The UK government is under scrutiny for potentially owing tens of millions of pounds to suppliers involved in upgrades to three prisons—HMP Birmingham, HMP Liverpool, and HMP Guys Marsh. The lead contractor, ISG, entered administration in September, leaving at least 40 companies reportedly awaiting payment for their services. These companies argue that they should have been safeguarded by Project Bank Accounts (PBAs), which were intended to protect payments through ring-fencing.
However, some firms are on the brink of bankruptcy, while others are considering legal action against government officials. The Ministry of Justice (MoJ) has not provided comments on the ongoing situation.
European Screeding, a Lancashire-based company, worked on cell flooring and claims it is owed approximately £130,000 after receiving regular payments until August 2024. The firm’s sales director expressed that the unpaid sum represents a significant hit to their small business’s cash flow.
Similarly, Mark Crumbie, a semi-retired contractor, stated his former company is owed nearly £185,000 for work on pathways at HMP Birmingham. He noted that the expectation of financial safety through PBAs was contradicted by the current circumstances, raising concerns about the effectiveness of these accounts.
Administrators from EY-Parthenon revealed that the PBAs contained nominal funds when they took over, suggesting that the MoJ may not have deposited the funds as required. Iain McIlwee from the Finishes & Interiors Sector trade body highlighted the dire implications for small businesses facing financial distress.
Legal representation from Hill Dickinson is currently in communication with the MoJ for several affected firms. The Cabinet Office has recently retracted its guidance on PBAs, which raises additional questions regarding the future of this payment protection mechanism. The MoJ did not comment due to possible impending legal actions.
Source: https://www.bbc.com/news/articles/c4gwz8gg6plo?at_medium=RSS&at_campaign=rss