Construction sector faced most Q1 insolvencies

More construction companies faced insolvency in the first quarter of this year than any other sector, according to figures from the Insolvency Service.

Despite a year on year decrease in insolvencies in the sector, 672 construction firms in England and Wales were declared insolvent between January and March this year.

Motor vehicle and motorcycle repair firms were the second most likely to go bust, as 537 faced insolvency in the same three month period.

Administrative services, accommodation and food services and manufacturing completed the top five – which matched up for a fourth consecutive year.

To be declared insolvent, firms are unable to pay debts and enter into administration, liquidation or any number of other company rescue processes.

Construction saw the most insolvencies in the 12 months to the end of Q1, with 2,461 firms going bust – a 0.3 decrease when compared to the 12 month period to the end of Q4 2015.

Specialised construction firms had the most problems in Q1, as 414 went out of business – among these were firms specialising in installations, building completions and demolition.

General builders and civil engineering firms also noted insolvencies, as 216 and 42 businesses in those sectors went bust respectively between January and March.

A total of 156 of the liquidations of construction firms in Q1 were compulsory, with 86 firms that provided specialised construction activities being wound up via the courts, as were 58 builders.

Some 444 firms entered liquidation voluntarily during the first three months of this year, while there was a drop in the number of firms filing for administration, which numbered 54.

The issues surrounding the current state of the UK house-building market are well-known, as figures continue to fall well-below government targets.

An inquiry was launched on July to assess the state of the problem and it aims to find out if the construction/ housing sector has enough capacity to build enough houses.

The constraints facing the industry are also due to be discussed, while representatives from the industry and the financial sector will provide input.

The Government’s role in aiding the house building industry is also set to be placed under the microscope.

By Phil Smith

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