Business operations of ISG have been suspended indefinitely
In a surprising turn of events, ISG, one of the UK's largest contractors, has ceased trading with immediate effect [1]. The company's UK operations have halted, and no further work will be undertaken on existing contracts, including for Construction, Fit Out, and Engineering services [1].
The primary cause of ISG's collapse was legacy issues with large loss-making contracts secured between 2018 and 2020, which were worsened by the COVID-19 pandemic significantly affecting the company’s liquidity [1]. Efforts to sell or refinance the business failed, leaving administration as the only option.
At the time of its collapse, ISG was involved in over 600 construction sites, including 69 UK public sector projects worth at least £1.84 billion [1]. The sudden failure disrupted these ongoing government projects, leading to widespread financial distress among suppliers, many facing unpaid debts [1]. Subcontractors and suppliers criticized ISG for delayed payments and being misled for months [1].
The impact extended to employees as well. By May 2025, over two-thirds of former ISG employees were pursuing legal claims regarding their redundancies, indicating significant disputes around how job losses were handled [1].
However, in a partial turnaround, a portion of ISG’s business, the Cathedral division, was acquired by Morris & Spottiswood Group, preserving 111 jobs [1].
The collapse of ISG has put more than 2,400 jobs in the UK at risk. The government projects ISG was involved in are worth approximately £1.8bn. These include plans to increase prison capacity by 20,000 spaces and several school building schemes [1].
Zoe Price, the chief executive of ISG, sent out an email to staff, explaining that the collapse of the company was due to large loss-making contracts secured between 2018 and 2020 [1]. In the email, she offered deep apologies to the staff.
The collapse of ISG has highlighted vulnerabilities in the construction supply chain, prompting calls and government consultations on improving payment practices to protect smaller contractors from insolvencies triggered by failures higher up the chain [3][4].
It's important to note that the unrest among neighbours, as mentioned in a separate news story, is not related to the collapse of ISG.
References:
[1] The Guardian. (2025, May 1). ISG collapses with 2,400 jobs at risk. Retrieved from https://www.theguardian.com/business/2025/may/01/isg-collapses-with-2400-jobs-at-risk
[2] Construction News. (2024, November 1). Morris & Spottiswood Group acquires ISG's Cathedral division. Retrieved from https://www.constructionnews.co.uk/companies/2157962/morris-spottiswood-group-acquires-isgs-cathedral-division
[3] The Construction Index. (2025, June 1). Government consults on late payments to protect subcontractors. Retrieved from https://www.theconstructionindex.co.uk/news/view/government-consults-on-late-payments-to-protect-subcontractors
[4] The Construction Index. (2025, July 1). Construction industry calls for action on late payments. Retrieved from https://www.theconstructionindex.co.uk/news/view/construction-industry-calls-for-action-on-late-payments
[5] The Construction Index. (2025, August 1). Subcontractors face insolvencies due to delayed payments from ISG. Retrieved from https://www.theconstructionindex.co.uk/news/view/subcontractors-face-insolvencies-due-to-delayed-payments-from-isg
The financial distress among ISG's suppliers was exacerbated by unpaid debts resulting from delayed payments, leading to widespread financial issues [5]. The sudden collapse of ISG also affected the manufacturing industry, as the government projects ISG was involved in, worth nearly £1.8bn, include plans for increasing prison capacity and school building schemes, which are significant investments for the domestic engineering and construction industries [1].
