Construction insolvencies increased slightly in July compared with June, although the rate was lower than 12 months ago, according to the latest official statistics.
Insolvency Service figures show 332 construction companies went into administration or liquidation in July – up 2.5 per cent on the previous month’s total of 324 but down 3.5 per cent on July last year.
The data, released this morning (19 September), covers company insolvencies for August, but sector-specific data lags by one month, so the construction data was only updated for July.
The figures reveal that the construction sector lost 3,973 firms to insolvency in England and Wales during the 12 months to August 2025.
This tally is more than any other sector, accounting for 17 per cent of all business failures during the year-long period.
The Insolvency Service reported that, across all sectors, total company insolvencies were up by 6 per cent in August compared with August 2024, but down 2 per cent on July this year.
Kelly Boorman, national head of construction at insolvency specialists RSM UK, said: “Interest rates and inflation remained persistently high in August at 4 per cent and 3.8 per cent respectively, so it is likely that businesses will continue to grapple with servicing high levels of debt costs and access to affordable funding.
“As market activity ramps up in line with housing targets and major infrastructure projects, labour shortages will bring further pressure for businesses as wage rates increase, particularly those already operating on tight margins.”
She added: “Competition for labour is growing, which is driving up employment costs and compounding inflationary pressures. For businesses tied into long-term contracts or legacy debt, the squeeze on cashflow is unsustainable.”
Jo Streeten, managing director at consultancy Aecom’s Buildings + Places, said: “Despite a slight month-on-month uptick in construction insolvencies, levels are still below those recorded last year, pointing to an overall improvement in sector resilience.
“Growth in construction output this July suggests some much needed stability is on the horizon and while there remains pressure on individual firms, the sector itself looks to be better placed to weather ongoing uncertainty.
“The hope is that firms now begin to see the benefits of the policy shift implemented by the government in its first year. Changes within the planning system and new mechanisms for public-private partnerships to flourish hold the key to fresh infrastructure investment and the sector delivering significant growth in the future.”
Mark Supperstone, partner at accounting and advisory firm S&W, commented: “We are seeing varying levels of distress across the sector, particularly among SMEs, [which] are most vulnerable to cashflow disruption, delayed payments and planning bottlenecks.
“Looking ahead to the Autumn Budget [26 November], there is concern across the industry about further tax rises and reduced reliefs.
“Employers’ national insurance contributions have already increased to 15 per cent, and speculation is mounting around additional employer liabilities and freezes to tax thresholds.
“These changes are expected to hit construction firms hard, particularly those already facing rising wage bills and acute labour shortages.”
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Will Ing