Government needs to improve access to funding to combat rising construction insolvencies
In June 2024, the number of registered company insolvencies in England and Wales was 2,361, 16% higher than in May 2024 (2,040) and 17% higher than the same month in the previous year. Company insolvency numbers also remained much higher than levels seen during the Covid-19 pandemic and between 2014 and 2019.
The construction industry experienced the highest number of insolvencies in the 12 months to May 2024, reaching a total of 4,287.
Commenting on the latest construction insolvency statistics Kelly Boorman, national head of construction at RSM UK, said: “As expected, the construction industry maintained the highest number of insolvencies above any other industry in the 12 months to May 2024. Funding is still tight for construction businesses, with added cost pressures due to geopolitical uncertainty in the run up to the General Election. Although inflation is showing signs of easing, businesses are still facing additional financial challenges including high interest rates, payment terms stretching the supply chain, as well as accumulated debt and falling cashflows from legacy contracts.
“However, with the new government’s commitment to “get Britain building” for economic growth through the reintroduction of mandatory housing targets and planning reform, there needs to be focus on supporting distressed businesses and protecting labour. Government needs to reform payment terms and access to funding, especially for smaller and newer businesses, who would really benefit from continued improvements in payment practices. This would help to create fairer trading environments, with access to funding enabling innovation and efficiency, ensuring government delivers on its plans to accelerate housebuilding with 1.5m new homes over the next five years.”
