Insolvencies among construction firms rose last year – and Carillion collapse could spell end for many more

PUBLISHED: 08:57 05 February 2018 | UPDATED: 08:57 05 February 2018

Insolvencies among construction companies rose last year. Picture: DENISE BRADLEY

Insolvencies among construction companies rose last year. Picture: DENISE BRADLEY


The number of construction companies going insolvent rose by almost 10% last year, with more facing problems in the aftermath of Carillion’s collapse.

More than 2,600 firms went insolvent in 2016/17, a rise of 8% compared with the previous year, according to a study by accountants Moore Stephens.

Companies waited an average of 69 days for payment last year, up from 52 days five years earlier, the report said, adding that Carillion had been subject to criticism over the extension of its standard payment terms to 120 days.

The construction and outsourcing giant’s liquidation has put the future of businesses in its supply chain at risk, as many will only receive a fraction of what they were owed, said the report.

Lee Causer, of Moore Stephens, said construction consistently has the highest number of insolvencies of all industries in the UK, adding that the fall of Carillion could be the “trigger” for even more construction companies going under.

“Carillion has left a huge number of subcontractors out of pocket, when they are already facing enormous financial pressures,” he said.

“Profit margins in construction are already very tight and late payment of subcontractors is now standard procedure for far too many in the sector.”

The Construction Industry Training Board (CITB), which is looking to move its headquarters and training operations out of Norfolk, said more than 150,000 jobs are set to be created in the industry over the next five years despite Carillion’s collapse and uncertainty over Brexit.

Some 15,000 carpenters and 9,300 labourers will be needed, as well as more mangers, as housebuilding increases, it was predicted.

CITB policy director Steve Radley said: “Despite all the gloom around Carillion and uncertainty from Brexit, our report’s message is that construction will continue to grow and create more jobs.

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