319 registered construction businesses became insolvent in October 2024
In the year to October 2024, there were 4,208 construction insolvencies, a mere 2.7% decrease from the previous year’s 4,324.
The year to October 2019 saw 3,217 insolvencies in construction, meaning this year has been 30.8% on pre-pandemic levels.
The number of companies on the effective register has doubled since 2009
The peak of insolvencies has remained the rate seen in the financial recession in 2008-2009, at 113.1 per 10,000 companies.
The current rate, while increased from the previous periods in 2020 and 2021, are still much lower than those seen in the recession, with the period from 01 December 2023 to 30 November 2024 having a rate of 52.9 per 10,000 companies.
Scotland saw 13 insolvencies in November 2024, 11.4% of all insolvencies in the country. In October 2024, the country saw 22 insolvencies, and 11 in November 2023.
The year to November 2024 saw 212 insolvencies, a 6.5% increase from the same period in 2023 at 199 insolvencies, and an increase of 2.4% on 2019’s pre-pandemic levels of 207.
In 2023, construction firms made up 13.8% of all the registered businesses in the UK, highlighting how the industry is disproportionately affected by insolvency.
The most affected firms tend to be those that provide specialised construction services, such as subcontractors, demolitions, site preparation, electrical, plumbing installation, plastering, painting, and glazing.
EY-Parthenon analysed profit warnings to show industry vulnerabilities
The report states: “An increasing focus on risk management throughout the contract lifecycle, from pricing to delivery, on internal controls, and on forecasting to limit risk should allow companies to identify and address problems earlier.
“Nevertheless, contractors remain vulnerable to any slippage in these disciplines, which can, in turn, create a snowball effect as clients and trade and financial creditors lose confidence.”
The Insolvency Service released more data showing that 361 self-employed or trader bankruptcies in the year to September 2024 took place in construction in England and Wales.
It is likely that financial difficulties thanks to contract cycles and cash flow management challenges are a key cause of insolvencies.
Earlier this year, UK construction giant ISG fell into administration, with the insolvency causing ripples and problems for other firms months later.
