Construction News quotes David Savage on the latest round of administration statistics in the construction sector

Construction News reports on a fairly positive round of figures relating to administrations in the construction sector.

According to the latest monthly figures from Creditsafe, administrations halved in October compared with the month before. A total of 15 business failures were logged last month – down sharply on the 32 recorded in September and 44 per cent lower than the October 2024 total of 28.

The latest monthly total was the lowest since January when 10 firms went under, and the lowest October figure since 2020 when Creditsafe recorded seven administrations. And a year-to-date comparison shows barely any change: there were 236 construction administrations from January-October 2024 but just two more in the same period this year.

Commenting in the article, David Savage, Partner in our Construction, Engineering & Projects team, gives his view on the figures. He explains: 

The latest construction insolvency data indicates that the sector is experiencing a similar level of insolvencies to last year. The fact that the figures have not worsened is obviously welcome. However, it contrasts with the data on reported financial distress.

"It remains the case that the sector experiences a persistent and high rate of financial distress, and accounts for the highest number of insolvencies of any industry sector in the UK. The sector makes up around 17% of all company insolvencies in England and Wales, far exceeding its share of the UK's GDP.

"The "domino effect" remains prevalent, with the failure of one firm, particularly any main contractor, often triggering a chain reaction of financial difficulties for subcontractors and suppliers who rely on timely payments, an issue exacerbated by the industry's procurement models and relative lack of consolidation.

"So whilst no obvious deterioration in the insolvency data is welcome, the more forensic examination of the data suggests that pressures on the sector are not alleviating and are likely still building. Hence the opportunity the upcoming Budget on 26 November represents for targeted support to help protect this critical sector for the success of so many of the Government's priorities, especially in housing delivery.

Read the full article in Construction News here (subscription required).