Latest construction firm insolvency figures

Construction firms accounted for 16% of all insolvencies in England and Wales in September 2026, according to The Insolvency Service⁽¹⁾, with 285 registered construction businesses becoming insolvent.

This was 20 fewer than the 305 recorded in August 2026 and seven less than in September 2025.

By comparison, construction firms accounted for 14%⁽²⁾ of all registered businesses in the UK as of September 2026.

The largest proportion of construction insolvencies were among firms providing specialised construction activities with 168 recorded in September.

The total number of construction firms becoming insolvent in the 12 months to September 2026 was 3,873. This was a 2% decrease on the 3,939 insolvencies recorded in the year ending in September 2025 but a 20% increase on the 3,221 in pre-pandemic 2019.

^{Source: The Insolvency Service – Company Insolvency Statistics September 2026, Table 1c}

Sam Parkin, senior economist at BCIS, said: ‘While the overall decline in construction insolvencies is welcome, the headline figure masks significant differences across the industry.

‘For example, insolvencies among firms involved in road and railway construction rose by 24.4% in the 12 months to September 2026 compared with the previous 12-month period. Insolvencies among demolition and site preparation firms increased by 15.6%, while businesses constructing residential and non-residential buildings saw a 5.7% rise.

‘In fact, when we break the figures down by type of construction activity, more categories recorded an increase in insolvencies than a decrease over the past year.

‘There are some encouraging signs, particularly among specialist contractors, which typically account for the largest share of construction insolvencies. However, as the government prepares for the Autumn Budget, these figures provide another important indication of the challenges facing the industry.

‘Insolvencies don’t necessarily translate directly into lost labour or capacity, but they do highlight the need for more favourable conditions to help construction businesses be able to deliver viable work.’

Across all industry sectors, construction experienced the highest number of insolvencies in the year to September 2026.

The Insolvency Service said that while the insolvency rate has increased since the lows seen in 2020 and 2021, it remains much lower than the peak of 113.1 per 10,000 companies seen during the 2008-09 recession. This is because the number of companies on the effective register has more than doubled over this period. The rate in the year to the end of September 2026 was 49.9 per 10,000 companies⁽³⁾.

In Scotland, there were 21 construction company insolvencies in September 2026, eight more than in August 2026, accounting for 18% of all insolvencies in the country.

The number of Scottish construction insolvencies for the 12-month period ending in September 2026 was 191, two less than the 193 recorded in the year to September 2025, and an 8% decrease on the 207 in pre-pandemic 2019.

^{Source: The Insolvency Service – Company Insolvency Statistics September 2026, Table 4b}

Within the industry, firms classified as providing specialised construction activities are consistently the most affected across Great Britain. However, analysis shows that their numbers are proportional to their overall share within the construction sector.

This category includes companies providing a range of work, typically on a subcontract basis, from demolition and site preparation to electrical and plumbing installation, and finishing work like plastering, painting and glazing.

The Insolvency Service also publishes figures for Northern Ireland, but not with sector breakdowns.

The latest analysis of profit warnings issued by listed construction companies by EY-Parthenon suggests that housebuilders in particular are facing difficult trading conditions.

FTSE Household Goods and Home Construction firms issued eight warnings in 3Q2026, six of which came from housebuilders. This brought the total of warnings issued by housebuilders in 20262 so far to 14, higher than the 10 recorded during the 2008 global financial crisis.

Commentary pointed to structural pressures facing housebuilders. Despite the introduction of the Your First Home scheme, further interest rate increases are expected to prolong affordability challenges, with elevated mortgage rates continuing to weigh on buyer demand.

The report also highlighted the growing burden of long-term liabilities, including regulatory and remediation costs, which are adding to existing development cost pressures. Combined with slower sales rates and increased investor scrutiny, these factors could make it more difficult for developers to access finance on favourable terms.

A multitude of factors feed into company insolvency, though analysis of profit warning data by EY suggests the construction industry is particularly exposed to financial difficulty.

This is in part due to the nature of contract cycles and the challenges of cash flow management that contractors and subcontractors are subject to.

An effective way of mitigating the risks associated with fixed-price contracts when costs are so changeable is to use fluctuation clauses linked to work category and resource-specific inflation indices, such as those available in BCIS CapX.

BCIS Price Adjustment Formulae Indices (PAFI), covering more than 200 work activities across building, civil engineering, specialist engineering and highways maintenance, can also be used throughout the budgeting and procurement stages to plan cash flow more effectively.

To keep up to date with the latest industry news and insights from BCIS, register for our newsletter here.

^{(1) GOV.UK – Company insolvencies, September 2026 – here}

^{(2) Office for National Statistics – UK business; activity, size and location: 2026  - here}

^{(3) GOV.UK – Commentary – Company Insolvency Statistics September 2026  - here}