We asked Coventry Council 5 questions over Ikea contractor collapse and this is what they said
Huge plans by the council to turn Coventry's old IKEA store into a "cultural hub" are up in the air. Work has stopped at the site after the main contractor's UK operations collapsed on Friday, 20 September.
Constructors ISG had been appointed to take on the work in July after a reported £44 million bid. The council bought the building in 2021 and is working with national groups to store cultural collections there.
It also aims to rent out floors of the seven-storey building at Croft Road, and borrowed money for the scheme after a decision in March 2023. But earlier this year, just a month after huge cuts to public services, councillors were asked to agree more funding for the work.
READ MORE:
Work on huge Coventry IKEA project stops after construction firm collapse
IKEA building decision as Coventry council borrows more money for project
Reports by officers claimed without the extra money the scheme would be scrapped. Papers revealed just one contractor out of 14 approached wanted to take on the work due to market conditions.
They said work had been done to reduce costs but more funding was needed to cover higher construction costs. Reports also admitted the borrowing would present a yearly pressure to the council's revenue budget but claimed this could be offset by renting out floors earlier.
Following news of ISG's collapse,, the Local Democracy Reporting Service (LDRS) put five key questions to the council on Monday. Here's what we asked Coventry City Council and what they said yesterday, 24 September.
1) What does this news mean for the IKEA project? Could it be scrapped? Is it possible to transfer/retender contracts?
"The sudden and unexpected news of the contractor entering into administration has meant that work has stopped on site. We are in contact with our partners on this project and the Council is currently considering its options and next steps."
2) How much extra money did the council borrow to cover the higher costs for the project's construction earlier this year?
"This information is commercially sensitive and was not released in the public committee papers on this subject."
3) How much money has been paid to ISG by the council for the project and how much of this money will the council be seeking to recover?
"ISG have been paid for the value of works undertaken to date, which amounts to less than 4% of the total contract as work was in the very early stages. The extent of any recoverability of additional costs incurred by the City Council will be determined by the administration process."
4) What amount of revenue pressure will the council face in its next budget due to extra borrowing for the scheme's construction?
"The scheme has already been factored into the Council’s future budget. Any future external pressures beyond our control will be considered once they are known."
5) Was the possibility of ISG's collapse assessed by council officers before the decision was made to award the contract?
"The City Council has procurement policy and processes that ensure the undertaking of due diligence when awarding any contracts. For contracts of this scale the due diligence is robust."
Sign up for our daily newsletter here for all the latest news about Coventry.