Official figures show that 4,280 construction firms ceased trading in the year to May. But while corporate failures have been declining in recent months, the impact permeates.
A report from construction consultant Gleeds says that contractors still operating continue to take a cautious approach to bidding, with 80% saying they or someone in the supply chain had turned down opportunities to bid for work. As a result, more than a third of respondents reported having struggled to secure an adequate number of tenderers for new projects.
Gleeds chair Richard Steer said: “With scores of contractors and subcontractors collapsing, and interest rates and geopolitical unrest still posing very real threats to growth, there is an undercurrent of caution in the market. While our latest report shows widespread optimism about the new government’s commitment to the industry, timelines for the commencement of big-ticket plans like those to deliver 1.5 million new homes remain unclear and faith in its ability to improve the outlook for construction and real estate in any meaningful way is limited.”
He continued: “Public finances are under considerable pressure, and we’ve already seen announcements that some infrastructure schemes are to be parked by the chancellor. Until we see a more defined plan to support the sector and confidence returns amongst investors, it seems likely that construction insolvencies will remain high.”
The survey was conducted over the two weeks after last month’s general election, which delivered a change in government. Fewer than half of Gleeds’ survey respondents said they thought that the new lot would be demonstrably better for the construction sector than the previous government. There was some support for policies already announced, however, with 57% believing plans to merge the National Infrastructure Commission and Infrastructure & Project Authority will improve project delivery and 43% in favour of building of big infrastructure projects on green belt land.
