Are better morals the key to slowing construction insolvencies?


Construction saw the highest number of insolvencies in the year to April 2024, Insolvency Service data shows.

The industry continues to be the worst-hit in England and Wales, with 12.67 per cent more companies folding than the next highest sector: wholesale and retail trade; repair of motor vehicles and motorcycles. 

Construction accounts for 18 per cent of insolvency cases, with 4,401 in the 12 months to April 2024, according to the most recent findings.

The last time construction fell below the highest number of insolvencies was the year ending Q3 2017. 

The number of construction insolvencies has fluctuated over the 12-month period but continues to remain high:

  • APR 2023: 283
  • MAY 2023: 471
  • JUN 2023: 387
  • JUL 2023: 275
  • AUG 2023: 396
  • SEP 2023: 337
  • OCT 2023: 378
  • NOV 2023: 421
  • DEC 2023: 367
  • JAN 2024: 301
  • FEB 2024: 354
  • MAR 2024: 315
  • APR 2024: 399

Of the 275 construction firms that went out of business in the UK in July last year, 156 were smaller companies, while 222 collapsed out of a total of 387 in June and 279 out of 471 in May.

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

While the insolvency rate has increased since 2020 and 2021 lows, it remains much lower than the peak of 113.1 per 10,000 companies seen during the 2008-09 recession.

What the industry is saying about it

Crissie Gizzi, senior business development manager at Morgan Sindall, said on social media: “It’s disappointing and sad, but not surprising. Various factors contribute to these outcomes, but recently, I’ve noticed a trend of increasing project opportunities in the market featuring problematic and non-collaborative procurement methods.”

Saible CEO, Jarvey Moss, said on social media: “The tragic mental health consequences of this scandalous situation are well documented.

“We talk about ESG, we talk about sustainability, what is sustainable about this situation? 

“It is a matter of good morals and of good business sense to change this.

“All insolvencies result from problems with cash flow. Of course not all cash flow problems in construction result from poor payment culture, but a great many do. We can change this for the better.”

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