‘One step forward and two steps back’ as administrations rise again

The number of administrations jumped by a third in May compared with April.

The latest monthly data from Creditsafe shows that 28 firms entered into administration in May – a rise of 33 per cent compared with April, which saw 21 failures.

May’s figure is a 17 per cent rise on the same month last year, when 24 administrations were recorded.

In the first five months of 2025, there was a 5 per cent year-on-year increase in construction sector administrations, with 122 compared to 116.

One of the biggest names to go under in May was London groundworks and reinforced concrete frame specialist Corbyn Construction.

The firm posted a £435,000 pre-tax profit from a £32.8m turnover in its most recent accounts, covering the year to 30 June 2023.

It recorded revenue of £46.1m and made a pre-tax loss of £5.1m the year before.

“Difficult contracts from the pandemic period have finished and material prices are now stable and, in most cases, falling,” Corbyn said in the 2023 accounts.

The contractor, based in Gallions Reach in east London, carried out groundworks and delivered concrete frames for jobs in the capital, including for major mixed-use and residential buildings up to 29 storeys high.

Its clients included Galliford Try, Hill, Weston Homes, Telford Homes, Mulalley, Higgins and Taylor Wimpey, according to an overview of projects on its website, which is still live.

Another firm to go under in May was commercial building manufacturer Jans Offsite Solutions.

The Antrim-based firm is a subsidiary of Jans Holdings Ltd, which is still operating.

Its latest accounts, for the year ending 31 December 2023, said the firm had experienced losses but they were part of an overall strategic plan to grow and develop the business, and the directors expected the company to generate a profit in the next 18 months.

The majority of the businesses entering administration in May were based in the South, with 18 firms going under in the region.

Of the others, eight were based in Northern England, one in Northern Ireland and one in Scotland.

Outlook

Gareth Belsham, director of Bloom Building Consultancy, told Construction News that measures to help the industry had come too late.

“It feels like a case of one step forward and two steps back on the insolvency front,” he said.

“Even though May saw some positive news for the construction industry – a cut in the Bank of England base rate and some blockbuster new order figures for Q1 – these came too late for dozens of construction firms that went under during the month.

“In part this is because of the length of time it takes a heavily indebted firm to fall into administration. While lack of cash is likely to have delivered the final blow to most of those that failed in May, many will have been grappling with insufficient orders and dangerously tight margins for some time.”

Peter Vinden, director of advisory services at Leonard Curtis, said the month-on-month rise in the number of administrations in May showed that there were still problems within the construction sector.

“Orders for new commercial buildings are down. It appears that a combination of government policies, principally the rise in employers’ National Insurance contributions, [the] threatened introduction of new employment laws, increased inheritance taxes and the raiding of private pensions is causing investors in the commercial sector to be hesitant,” he said.

“There is a lot of ‘sitting on hands’ at the moment. Contractors are fighting with each other to win work in the commercial sector and having to cut tender prices without being able to pass on these cuts down their supply chains.

“I anticipate UK construction having a tough 2025 and I predict that there will be more failures to come in our sector.”

Atul Kariya, head of real estate and construction at MHA, said the news did not bode well for the UK economy.

“We are increasingly seeing that the combination of a high tax burden and complex and onerous regulation is both disincentivising and delaying companies from investing in new staff and development projects,” he said.

“It is therefore no surprise that we’re seeing stagnant growth and falling confidence across the construction sector. Given that construction often acts as a leading indicator for the wider economy, this does not bode well for the UK’s broader economic outlook for 2025.”

However, Belsham believes the £2.5bn of new orders placed across the construction industry in the first quarter of this year may provide hope.

“While we’re far from turnaround territory, the economic backdrop is becoming a little more benign and this should give some struggling firms a chance to reset and put themselves on a more sustainable footing,” he added.