Almost 4,000 construction companies in England and Wales entered insolvency in the 12 months to August, with construction remaining the worst-hit of sectors, government figures show.

The data shows that the 3,934 registered construction companies that went under accounted for 17% of all industry insolvencies during the period.

This meant construction had the highest number of insolvencies in comparison with other industries, followed by wholesale and retail trade, repair of motor vehicles and motorcycles, which had 3,710 insolvencies, making up 16% of cases.

Other industries with high insolvency rates included accommodation and food service activities (3,365), administrative and support service activities (2,396), professional, scientific and technical activities (1,969), and manufacturing (1,965).

Tax audit consultancy RSM said that despite the government’s continued push for growth and infrastructure investment as part of its ‘Get Britain Building’ agenda, the reality on the ground is more complex.

Kelly Boorman, national head of construction at RSM UK, said: “The combination of high inflation, interest rate uncertainty, and fragmented supply chains is creating a perfect storm for overtrading and under-resourcing.”

“Many firms are in limbo as they hold onto larger workforces and absorb additional costs in anticipation of future project mobilisation.

“For main contractors, there is increasing pressure to protect their supply chains, leading to further tensions and challenges around loyalty, competition and continuity. The [lack of] availability of affordable debt is also creating further disparities throughout the supply chain, particularly for smaller subcontractors having to absorb greater financial risk due to its uneven distribution and restrictive lending criteria.

“Without targeted measures to ease funding constraints and support mobilisation, housing and infrastructure delivery will continue to face headwinds, compounding the risk of insolvency in Q4 2025.”

David Savage, partner at Charles Russell Speechlys, added: “The construction sector continues to play a critical role in driving regional growth and supporting thousands of jobs, yet many businesses are facing mounting pressures from rising costs and ongoing uncertainty, including suffering some of the highest industrial energy prices of anywhere in the world.

“At next month’s Budget, the government has a real opportunity to back the construction sector by delivering meaningful business rates reform and targeted support that encourages innovation, sustainability and skills development across the sector”.