Construction insolvency – a supply chain problem?

Of the 275 construction firms that went out of business in the UK in July this year, 156 were smaller companies, according to recent findings by The Insolvency Service.   

Smaller firms were also overrepresented in the months preceding July, with 222 failing out of a total of 386 companies in June, 279 out of 472 in May, 165 out of 283 in April, 264 out of 446 in March, 192 out of 333 in February, and so on. 

For the past seven recorded months, the number of construction company insolvencies in the UK has fluctuated but remained high, with peak numbers in March and May before coming down slightly in June and July.      

Latest insolvency statistics 

• January: 292 (318 in 2022)  
• February: 333 (308 in 2022)  
• March: 446 (421 in 2022)  
• April: 283 (382 in 2022)  
• May: 472 (352 in 2022) 
• June: 386 (314 in 2022) 
• July: 275 (351 in 2022) 

Company insolvencies in August and September 2022 were recorded at 338 and 308 respectively; comparative 2023 results have yet to be released. 

Construction firms in the UK have gone under at the highest rate in a decade. 

Data revealed about 4,280 construction companies in the UK became insolvent in the year to June, a 16.5% increase on the previous recorded year.  

Contributing factors include a downturn in construction activity, project cancellations or rephasing, an oftentimes sluggish planning system, soaring inflation, high materials costs, a widening skills gap, and reverse charge VAT pressures, to name a few. 

And while it is oftentimes specialist sub-contractors and smaller firms in the supply chain that bear the brunt of these pressures, Tier 1 firms are not entirely immune to these effects either. 

Notable recent cases include Henry Construction, Claritas Group, Garenne Construction Group, J Tomlinson, ilke Homes, Norman & Underwood, Tolent, and Buckingham Group.    

Buckingham, a £700 million turnover business, entered administration after 36 years of trading, resulting in the loss of nearly 450 jobs.  

Kier Group agreed to acquire all the Group’s rail division, and its HS2 contract, for £9.6 million, 

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