Hundreds of construction insolvencies threaten contractors

Hundreds of construction insolvencies threaten contractors

02/01/2022 - 16:49

Contractors working in the construction industry are being urged to exercise caution amid a sharp rise in the number of construction firms going bust in the UK.

According to data from the Insolvency Service, an average of 266 construction businesses collapsed each month in the three months to October 2021.

Experts have blamed rising material costs and a shortage of skilled workers for the closures, which are most likely to affect specialist sub-contractors.

Miles Grady, Director of said: “Construction is an important industry for many contractors and umbrella workers. This news will understandably be cause for concern for many of our clients.

“When a construction firm goes bust it can send seismic impacts down supply chains, pushing many sub-contractors towards the brink.

“Contractors deserve better, and they should start taking extra steps to protect themselves.”

While some material prices have fallen in the last few months, the cost of construction materials in the three months to October was more than 20% higher compared with the previous year.

A shortage of skilled tradespeople including carpenters, bricklayers and plasterers have also pushed wages up by around 6% according to the Department for Business, Energy and Industrial Strategy.

While wage increases have benefited many contractors and umbrella employees working in construction, the rising tide of insolvencies could leave many contractors strapped for cash.

Some things contractors can do to limit their exposure to supply chain shocks include:

  • Working with larger construction firms that are less likely to fold
  • Negotiating weekly payment terms
  • Negotiating some upfront payment on contracts
  • Working through an umbrella company

For more information about contracting support, or working through an umbrella company, speak to a member of our team today. Call: 0800 121 6513.

For more information about business rescue and recovery visit our dedicated insolvency division website at