More than 2,700 construction companies have entered insolvency after the collapse of Carillion – a rise of 6%.
A total of 2,764 companies entered insolvency in 2017/18, up from 2,608 the year before, according to analysis of official figures by accountancy firm Moore Stephens.
The increase followed the liquidation of Carillion – at the time the UK’s second biggest construction company – in January 2018, which caused knock-on effects for the whole construction supply chain.
Some 780 construction companies fell into insolvency following Carillion’s collapse in the first quarter of 2018, up 20% from 652 in the fourth quarter of 2017.
More than 2,700 construction firms entered insolvency in the past year
Lee Causer, partner at Moore Stephens says: “The collapse of Carillion sent shockwaves through the construction sector, and we are seeing more insolvencies as a direct result.”
“Large construction companies are infamous for squeezing the profit margins of the contractors and subcontractors who work for them. These contractors often cannot negotiate against the terms set for them by their larger clients.
“SMEs and specialist subcontractors have been hit particularly hard by Carillion’s fall, as many of them will have relied on the giant for significant amounts of their work. It is also likely that these subcontractors would have had to write off virtually everything owed to them by Carillion.
“Payment delays should not be allowed to become any worse for construction companies. High import costs and rising costs of materials, added to the huge disruption caused by Carillion are also exacerbating the difficult climate currently being experienced by the construction sector.”
