Two different questions get conflated in construction insolvency headlines
Headline figures on construction insolvencies (annual totals, year-on-year percentage changes) usually treat "construction" as one sector. It is not. The Insolvency Service's SIC-coded data splits construction into three divisions: Division 41 (building construction), Division 42 (civil engineering), and Division 43 (specialised construction activities, the electrical, plumbing, plastering, joinery, groundworks and demolition trades). Splitting the trailing twelve months and the decade trend by division answers two separate questions that are often run together.[1]
The first question is which sub-sector carries the largest share of insolvencies right now. The second is which sub-sector is deteriorating fastest over time. The answers are different, and the difference matters for anyone assessing risk in a specific part of the supply chain. This article works through the data in our UK Construction Insolvency Index, then explains why the two answers diverge.
The current picture: who carries the biggest share
In the trailing twelve months, construction company insolvencies split across the three SIC divisions as follows.[1]
| SIC division | Share of trailing 12-month insolvencies |
|---|---|
| Division 43, specialised construction activities | 56.3% |
| Division 41, building construction | 38.0% |
| Division 42, civil engineering | 5.6% |
Specialised construction activities, the division that covers electrical, plumbing, heating, plastering, joinery, floor and wall covering, painting, glazing, roofing, scaffolding and groundworks, account for more than half of all construction company insolvencies. This is also the division that captures the large majority of CIS subcontractor trades: the firms that fix, install and finish under a main contractor rather than holding the head contract.
Building construction, which includes main contractors, developers and housebuilders, is the second largest at 38.0%. Civil engineering, which covers infrastructure, roads and utilities work, is a distant third at 5.6%.
On its own, this ranking could be read as "specialised trades are the riskiest part of construction to operate in." That reading is only half right, and the decade trend shows why.
The decade trend: who is deteriorating fastest
Comparing 2025 insolvency counts against 2016 for each division tells a different story from the current share.[1]
| SIC division | Change in insolvency count, 2016 to 2025 |
|---|---|
| Division 41, building construction | +79.9% |
| Division 43, specialised construction activities | +38.0% |
| Division 42, civil engineering | +15.1% |
Building construction, the division with the second-largest current share, has the fastest-rising insolvency trend by a wide margin. Its insolvency count has grown 79.9% over the decade, more than twice the rate of specialised trades (38.0%) and more than five times the rate of civil engineering (15.1%).
Put the two tables together and the picture is this: specialised trades carry the largest number of insolvencies today, because there are far more specialised-trade firms operating than main contractors or civil engineers, and each individual firm is typically smaller and more exposed. But building construction is where the underlying trend is worsening fastest. If the current trajectories continue, the gap between the two divisions' shares should be expected to narrow rather than widen.
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Why the two rankings diverge
Population size drives the current share
There are many more specialist trade businesses registered in the UK than there are main contractors or civil engineering firms. A large population of smaller, thinner-margined firms, each individually exposed to non-payment by a single client, produces a larger absolute number of insolvencies even before any change in the underlying failure rate. Division 43's 56.3% share is consistent with it being the largest division by firm count, not necessarily the highest-risk division per firm.
Building construction is more exposed to specific shocks
Building construction firms, particularly main contractors and housebuilders, tend to operate on larger, longer-duration, fixed-price contracts with more exposure to material cost inflation, financing costs and demand cycles in the housing and commercial development markets. A downturn in housebuilding demand, a spike in build costs, or a tightening in development finance hits this division's margins directly and quickly. The 79.9% rise over the decade is consistent with the sector absorbing the post-pandemic cost and interest rate cycle described in our broader construction insolvency decade-trend analysis.
Civil engineering is structurally more insulated
Civil engineering's 15.1% rise, the slowest of the three divisions, is consistent with a sector dominated by fewer, larger and generally better-capitalised firms working on longer-cycle infrastructure and public-sector contracts. Public-sector and major-infrastructure clients typically operate more formal payment and contract-management processes than a private developer or a smaller building contractor, which reduces (without eliminating) the cash-flow shocks that drive insolvency in the other two divisions.
What this means if you work in, or supply, one of these divisions
If you are a specialised trade subcontractor
You operate in the division with the largest current share of insolvencies, both among your peers and among the main contractors you are commonly engaged by. The practical risk is less about your own division's insolvency rate directly and more about the main-contractor failures described in Division 41 cascading down to you as unpaid invoices and trapped retentions. Credit control on every contract, regardless of size, is not optional. Our guide to what construction insolvency means for CIS subcontractors sets out the practical steps: short payment terms, staged invoicing, checking a contractor's Companies House filings before starting work, and keeping a clear paper trail on every retention.
If you are a main contractor or housebuilder
Your division carries the fastest-rising insolvency trend of the three. If your business has weathered the 2022 to 2023 peak, the data does not support assuming the risk has normalised. Margin discipline on fixed-price contracts, realistic cost-inflation allowances, and close monitoring of your own subcontractor chain (since your suppliers failing creates its own delay and cost exposure) remain the highest-value defensive measures.
If you supply or subcontract into civil engineering
This division has the lowest insolvency share and the slowest-rising trend, which is a genuinely more stable risk profile than the other two. It is not risk-free: 15.1% growth over a decade is still a material deterioration, and the smaller number of firms in this division means each individual failure can have an outsized effect on its immediate supply chain.
Reading share and trend together, not separately
The single most useful takeaway from splitting construction insolvencies by SIC division is that "which sub-sector is riskiest" does not have one answer. If the question is "where do most insolvencies happen today," specialised trades are the answer, driven substantially by how many firms operate in that space. If the question is "where is the risk getting worse fastest," building construction is the answer, and by a wide margin over the other two divisions.
Both figures, and the full monthly series behind them from 2016 to the present, are published and updated on our UK Construction Insolvency Index. Company formation activity by the same SIC divisions, useful context for understanding how many firms are entering each part of the sector as others fail, is tracked on our UK Construction Index.
- The Insolvency Service, "Company Insolvency Statistics -- Record-Level Data for England, Wales and Scotland," data through May 2026, published 19 June 2026. gov.uk/government/statistics/company-insolvencies-may-2026. Figures compiled by SIC division in our UK Construction Insolvency Index. Data sourced under the Open Government Licence v3.0.