Gleeds Report Shows Damaging Impact Of Insolvencies

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The latest market report from Gleeds has revealed that, over the last quarter, more than half of UK contractors have been involved with projects which were impacted by insolvency.

Official figures show the number of construction firms going bust nationwide topped 4,280 in the year to May.

 

Despite recent data from the Insolvency Service showing a month-on-month decline in the number of firms going under, the sector remains the worst hit for insolvencies. This is having an increasingly severe impact on projects. Those contractors still operating in the built environment continue to take a cautious approach to bidding, with 80% saying they or someone in the supply chain had declined a tender, representing only a slight fall from the 89% in the previous survey.

As a result, more than a third of respondents reported having struggled to secure an adequate number of tenderers for new projects for the second quarter running.

 

Caution

Commenting on the latest findings, chair of Gleeds, Richard Steer, says: “With scores of contractors and subcontractors collapsing, high 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 1.5m new homes remain unclear and faith in its ability to improve the outlook for construction and real estate in any meaningful way is limited.

 

Staying high

Steer adds: “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.” 

 

Like leadership – lack confidence

At the time of the survey, almost 70% of those questioned were confident that construction and real estate was a priority for the Labour leadership, yet less than half said they thought it would be demonstrably better for the 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 and Project Authority will improve project delivery, and 43% getting behind the building of nationally significant infrastructure projects on green belt land.

 

Picture: Richard Steer, the chairman of Gleeds, the international property and construction consultancy.

www.gleeds.com/en

Article written by Cathryn Ellis
14th August 2024

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