Construction insolvencies reach tipping point ahead of increase to NICs
In April 2025, the number of registered company insolvencies in England and Wales was 2,053, 3% higher than in March 2025 (1,996) but 5% lower than April 2024 (2,163).
The construction industry experienced the highest number of insolvencies in the 12 months to March 2025 at 4,111, making up 17% of all industry cases.
Commenting on the latest construction insolvency statistics, James Hawksworth, restructuring advisory partner at RSM UK, said: “The construction industry continues to experience volatility as a result of a combination of factors, including the impact of the continued shortage of skilled employees driving 7.8% annual wage growth in the quarter to March, regulatory pressures leading to project delays and the general impact of tariffs on supply chain certainty and investor confidence.
“With construction activity remaining in a prolonged period of contraction, the six months to March saw the highest number of winding up petitions in the sector for many years and it’s no surprise it continues to experience the highest number of insolvencies, above any other industry. We’re also yet to see the impact of further cost pressures in April, following increases to employers’ National Insurance contributions (NICs) and National Minimum Wage. Larger players could be particularly squeezed, as with fewer subcontractors, they will have less flexibility to scale their workforce and will feel the brunt of the NIC and minimum wage impact. As these larger firms manage the impact on their cash flow, there will be an inevitable ripple effect through the sector, and this may be a tipping point for some businesses already struggling to manage tight margins and project delays.”
He added: “However, construction has remained an incredibly resilient industry despite navigating regulatory, financial and workforce challenges in recent years. The UK government’s commitment to infrastructure investment and planning reform should help to return the sector to growth, but for sustainable, long-term growth, the government’s Housing Strategy should aim to remove uncertainty and outline incentives for investment, upskilling and technology, to ensure the industry can efficiently meet housebuilding demands and alleviate labour shortages.”