Figures from the Insolvency Service show that the construction industry is still showing the highest number of collapses across the UK
There have been 3,841 construction insolvencies in the 12 month to July, making up 17% of all cases where an industry was identified.
While this number has fallen year on year, it is still the highest of any industry.
Only 100 companies fewer than last year
As per analysis by EY Parthenon of Insolvency Service data last year, in the 12 months to July 2025, 3,973 construction companies entered insolvency, meaning that the improvement from last year is by just 132 companies, or 3.3%.
Alex Rogan, Insolvency and Restructuring Partner at law firm Richardson Lissack, said: “While the overall number of construction insolvencies has fallen, the sector continues to account for the highest number of company failures, highlighting the scale of the financial pressures businesses have been navigating.
“Strong order books do not necessarily translate into financial security – contractors can still find themselves under pressure where projects are being delivered on margins that no longer reflect the cost and risk involved. Fixed-price contracts, rising labour and material costs and unattractive payment terms can leave smaller businesses with very little room to absorb further pressure.
“Turnover and workload can mask financial distress – as a company’s position deteriorates, the focus needs to move beyond completing the next project to understanding whether it remains viable. Those best placed to withstand the current environment will be those that understand the financial risks attached to the work they take on, rather than simply how much work they have. For directors, the important point is to recognise when a temporary squeeze is becoming a structural problem and act while there are still realistic options available to maximise value.”
What should subcontractors do in this situation?
Writing for PBC Today in the wake of the collapse of ISG two years ago, Phil Caton, construction law partner at Aaron & Partners, discusses how businesses and subcontractors should go about handling the collapse of their contractor.
Phil wrote: “Contractor’s insolvency situations are fraught with complexity and every decision can have significant financial and legal implications.
“Acting quickly, understanding your rights and seeking early legal advice are crucial steps in protecting your position, whether you are a subcontractor or a project owner.”
Read Phil’s full thoughts and list of suggestions for subcontractors here.
Read more of the Insolvency Service’s releases here.
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