Construction was the worst-hit sector for insolvencies in the year to December 2024, new Insolvency Service figures show.
Some 4,032 building businesses become insolvent, accounting for 17 per cent of all such cases in England and Wales.
The next worst-affected sectors were wholesale and retail (3,572), and accommodation and foodservice (3,464).
Kelly Boorman, head of construction at accountancy firm RSM UK, said the figures reflected the amount of debt burden and distress in the building supply chain.
She said the volume of mergers and acquisitions in the sector jumped as businesses attempted to raise working capital to boost growth.
Boorman added: “The government has recently announced its plans to slash red tape to accelerate the training of workers in key industries like construction to boost economic growth and realise its target of 1.5 million homes [built by the end of the current parliament].
“However, there are concerns that even with government intervention, this isn’t enough to enhance the industry’s skilled workforce and address the 250,000-person labour gap.”
She said delays in project starts were causing further problems.
Month-by-month figures also released by the Insolvency Service today paint a slightly better picture. They show 103 construction insolvencies in December, down from 118 in November.
Aecom’s building and places managing director, Jo Streeten, said this was a positive sign: “While cost pressures have slowly eased, low margins are still posing a risk with the full impact of the Autumn Budget now clearly being felt across the sector as firms work hard to steady the balance sheets.
“Despite the anaemic performance of the wider economy, interest rates are falling, which will help boost order books, and firms can be cautiously optimistic about the year ahead.”
She added: “It’s crucial that careful cost and risk management throughout the contract lifecycle, from pricing to delivery, remains a priority to bring positive growth and deliver on the government’s growth agenda.”
Data exclusively compiled by Creditsafe for Construction News also suggests the picture has eased in recent months for contractors.
A total of 15 firms went into administration in December, compared with 30 the month before. In January, only 10 construction companies went under, the lowest number in three-and-a-half years.
The Insolvency Service figures include administrations but also cover forms of liquidation and receivership.
