Top Service News
UK Insolvency Numbers Edge Down in August—But Construction Still under Pressure
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In August 2025, company insolvencies dipped slightly compared to July, but the numbers remain elevated, and construction remains at the top of the list for all the wrong reasons.
According to the latest government data, there were 2,048 registered company insolvencies in England and Wales during August. That’s 2% lower than July’s 2,083, but still 6% higher than the same month last year (1,933). After eight months of 2025, the picture is clear: insolvencies are running at roughly the same level as 2023, which marked a 30-year high.
Volatility hasn’t gone away. For construction firms in particular, the risks remain high, with cash flow pressures continuing to be the sector’s biggest vulnerability.
Construction: Still the Hardest Hit
Over the 12 months to July 2025, 3,973 construction companies entered insolvency, accounting for 17% of all business failures where the industry was recorded. That puts construction firmly at the top of the insolvency league table, ahead of wholesale & retail, accommodation & food services, and manufacturing.
The challenges remain familiar:
- Tight margins are squeezed further by rising material and labour costs
- Late payment cycles that leave subcontractors dangerously exposed
- Interest rate pressures are weighing on developers and contractors alike
- Ongoing labour shortages, inflating wages and disrupting delivery
These conditions mean even well-run firms with solid order books are at risk. In our conversations with clients, we’re seeing more subcontractors and SMEs struggling to absorb even short delays in payment.
Breaking Down the August Numbers
Looking deeper into the insolvency data:
- Creditors’ Voluntary Liquidations (CVLs): 1,600 cases in August, accounting for 78% of all insolvencies. That’s up 1% from July and 5% higher year-on-year, showing many businesses continue to choose voluntary winding-up as pressures mount.
- Compulsory Liquidations: 311 cases, down 9% from July but still 11% higher than last year—and above the 2024 monthly average. This suggests creditors (including HMRC) are still taking a firmer stance.
- Administrations: 121 cases, down sharply (17% from July) but 6% higher year-on-year. While fewer businesses attempted formal restructuring in August, the longer-term trend since 2022 has been upwards.
- Company Voluntary Arrangements (CVAs): Just 16 cases, but that’s 33% higher than July, even if 20% down on August 2024. Volumes remain very low compared to historic levels.
- Receiverships: Zero recorded in August—these remain rare in the current landscape.
The 12-month rolling insolvency rate now stands at 52.6 per 10,000 companies (1 in 190 businesses). That’s slightly down from 55.5 the year before, but still well above pre-pandemic levels.
Long-Term Picture: Not a Time for Complacency
While the slight dip in August is welcome, insolvency volumes remain stubbornly high, and the construction sector continues to be disproportionately exposed.
The last sustained decline in insolvency levels came during 2016–2019. Since then, the combined effects of the pandemic, inflation, interest rate rises, and tighter lending have kept numbers high. With construction firms often carrying heavy overheads and dependent on prompt client payments, the sector is still walking a fine line.
Our View
At Top Service, we see insolvencies not just as numbers but as early warning signs for credit managers and directors across the construction supply chain.
Our advice:
- Stay proactive with credit control—don’t wait until overdue invoices turn into bad debt.
- Use sector-specific intelligence to spot early warning signs of stress in clients.
- Tighten payment terms and avoid overexposure to risky accounts.
Insolvency numbers may have edged down slightly this month, but the data tells us the sector remains fragile. Now is the time to strengthen cash flow protection, not to relax.
👉 If you’d like to discuss how to safeguard your business in these conditions, contact us on 01527 503 990 or visit www.top-service.co.uk.
