Construction giant, ISG, has gone into liquidation in a devastating development which could have major implications for the sector.

The company, which holds more than £1bn worth of government contracts, including a number of Department for Education (DfE) schemes, fell into administration last week, with 2,200 workers made redundant with immediate effect.

And its collapse could mean that smaller firms in the supply chain could now not receive money owing to them, putting their future at risk too.

Construction industry contracts database, Barbour ABI, has reported that ISG held 16 contracts with the DfE, including new-build schemes and the repair of defects, including eradication of RAAC.

A government spokesperson said preparations had been made ahead of the collapse, adding: “We have implemented our detailed contingency plans and affected departments are working to ensure sites are safe and secure.”

The DfE also described its contingency plans as ‘robust’ and said schools would continue to deliver face-to-face education despite the news.

And it said the department was working to minimise additional costs and would ‘pursue all forms of redress’ to ensure schools and responsible bodies can find alternative ways to deliver projects.

One of the projects affected is the £7.5m expansion of Millbay Academy in Plymouth, work on which has abruptly stopped following the news.

Talks have now begun between bosses at Reach South Academy Trust, which controls the school, and the DfE over the future of the scheme, which is partly on stilts above a playground and was designed so another 150 pupils could be added to the school’s intake.

Construction has been going on for months to create the vast extension containing 10 classrooms and other facilities.

Watson Batty Architects was working with ISG on several schools and said it was ‘devastated to hear the sad news’, having collaborated with the contractor on many projects in various sectors over the years.

A spokesperson added: “We wish all former colleagues the best of luck in securing alternative employment. Our [own] wide sector spread and broad client base [will] enable the reallocation of our flexible resource to support the many other emerging opportunities that we have across the practice at present.”