More insolvencies hit construction than any other sector in the year to November, according to new official figures.
The latest data from the Insolvency Service revealed that 4,208 construction firms became insolvent in the year to November 2024.
It means the sector represented 17 per cent of liquidations, administrations and company voluntary arrangements across England and Wales this year.
The data published today (17 December), revealed construction was well ahead of the next largest sector for insolvencies – wholesale and retail trade – which reported 3,710 insolvencies, making up 15 per cent of the total.
The year total is lower than the prior year though – when 4,388 construction firms went into administration. It is the third year running that more than 4,000 construction firms went under, after a spike from the 2,580 in 2021.
In November, 1,966 companies went into insolvency across all sectors, 13 per cent up on the figure of 1,743 in October. However, the total figure is 12 per cent lower than November 2023.
Everlyn Partners partner Mark Supperstone said construction firms had been “amongst the worst affected by the wave of insolvencies seen in recent years”.
Supperstone also warned government plans to increase employer’s national insurance (NI) contributions by 1.2 per cent from April 2025 would “add further strain at a time when it’s already difficult to find and retain skilled staff”.
Last month, two major CN100 firms said the changes to employers’ NI contributions – which were announced in October’s budget – would hit the construction sector hard.
Earlier this month, experts warned the changes to NI, coupled with changes to the living wage, would “strain cashflow” for small and mid-sized contractors especially.
But Supperstone added he expects recent output figures in the construction sector to increase soon, despite recent flat figures. “I think we might start to see some green shoots in the sector which will benefit construction firms, likely in the latter part of Q1 2025,” he said in a statement.
The construction sector was rocked in September, when the sixth biggest contractor, ISG, went under.
The £2.2bn turnover contractor owed more than £300m to the supply chain when it appointed administrators, prompting fears that repercussions would be felt across the sector for a long time.
Some firms, including SeventyNine Lighting, have blamed ISG’s demise for their own collapses.
In the wake of ISG’s collapse, sector leaders called for long-awaited reforms to construction, especially around the allocation of risk.
David Frise, chief executive of trade body the Building Engineering Services Association, also criticised a “broken contractual process”. As a result, he said, even well-run firms are left “scrambling around for money just to keep projects and their companies alive”.
