Construction Joins All Sector Insolvency Decrease

COMPANIES becoming insolvent decreased to 1,747 in October 2024.

It represents a 10% reduction on the previous month and is 24% lower than in October 2023.

In the construction sector, the number of registered company insolvencies for September 2024 was 292, down from 328 in August 2024 and down from 339 in September 2023.

However, the number remains much higher than during the COVID-19 pandemic and in the five years before it.

All types of company insolvency – apart from receivership appointments, which are now rare – were lower than in September 2024.

Insolvency Decrease

Company insolvencies in October 2024 consisted of 188 compulsory liquidations, 1,445 creditors’ voluntary liquidations (CVLs), 100 administrations and 12 company voluntary arrangements (CVAs).

One in 186 companies on the Companies House register became insolvent in the year to October 2024. This was down on the previous 12 months.

The number of registered company insolvencies in October 2024 was 1747, 10% lower than in September 2024 and 24% lower than the same month in the previous year (2,293 in October 2023).

• There were 1445 creditors’ voluntary liquidations (CVLs), 24% lower than October 2023
• 188 were compulsory liquidations, 20% lower than in October 2023
• There were 100 administrations, 28% lower than in October 2023
• And there were 12 company voluntary arrangements (CVAs), 48% lower than October 2023

INDUSTRY COMMENT

Construction Relief

Mark Supperstone, Partner at Evelyn Partners, said: “Much of the discussion surrounding the construction sector this year has centred on the significantly high levels of company insolvencies with which the sector has had to contend. In 2024, construction has seen higher rates of insolvency than any other sector, largely attributed to sector-specific issues such as lower rates of house building and higher rates of material costs in order to deliver projects. These numbers have been steadily decreasing since June 2024 which will naturally come as a relief to the sector.

“Core to the new Labour government’s manifesto was its commitment to delivering 1.5 million new homes. The Autumn Budget appears to be the first step in making good on that promise, with £5 billion government investment to be delivered to various sites across the UK. This should provide new opportunities for local contractors, which should help continue to ease the high rates of insolvencies seen across the sector.

“The Budget news about increased spending on transport, education and health should also be good news for civil engineers. However, the increase in employers’ national insurance will significantly challenge the cost base for this labour-intensive industry, which is already in fierce competition to attract and retain valued skillsets. Additionally, the prospect of interest rates being higher for longer does take the shine off the private housebuilding sector and secondary housing market, which may be a problem for builders who are already feeling the strain of stretched balance sheets.”

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