Jump in construction firms’ insolvencies

Construction companies going bust rose 8 per cent to 2,633 in the 12 months to end-september, according to analysis of latest data from the Insolvency Service out today.

That compared with 2,447 insolvencies in the previous 12 months, in data that top 10 accountancy firm Moore Stephens said showed “the liquidation of construction giant Carillion is symptomatic of the sector’s tight profit margins and long payment delays”.

Today’s report comes a day ahead of the stricken Carillion’s former top executives, including Scottish acting chief executive Keith Cochran, being grilled by MPS on both the business and work and pensions select committees.

The Insolvency Service figures showed that construction companies had to wait an average time of 69 days for payment in the period under review, up from 52 days five years earlier.

Lee Causer, partner at Moore Stephens, said: “The fall of Carillion could be the trigger for even more construction companies going under.

“Profit margins in construction are already very tight, and late payment of sub-contractors is now standard procedure for far too many in the sector.” l Scotland’s construction industry is expected to grow over the next five years, with housing leading the way, according to a separate report out today from the Construction Industry Training Board (CITB).

A 3.9 per cent growth in public housing each year is expected for the 2018-2022 period, with private housing growing at 2.9 per cent. 0 Keith Cochrane, former Carillion acting CEO