Despite hopes to the contrary, the construction sector’s difficulties show little sign of easing as we start the new year. 2026 opened with the administration of Caldwell Construction Limited, a long‑established contractor employing more than 400 staff and supplying groundworks services to several national housebuilders. Administrators appointed from PKF Littlejohn Advisory reported that the business had been operating against the backdrop of sustained pressure across the construction industry, including rising input costs, project delays and wider market uncertainty. We have previously reported here on the sector-specific pressures facing the construction industry and how these looked likely to persist into 2026. Areas which had been identified as the potential engines to drive the sector, seem to be faltering, with reports (here) that housebuilders are facing a subdued market, with some saying 2025 was the lowest output since 2008. These sector‑wide challenges had intensified for Caldwell in recent weeks, creating acute cash‑flow strain and operational disruption that ultimately led to the appointment of administrators.
The latest Insolvency Service statistics for December 2025 highlight that these pressures are not isolated. While the insolvency figures confirm that the number of construction company insolvencies recorded in November 2025 was in fact marginally lower than for October of that year, the broader picture for construction remains challenging. For the 12-month period to November 2025, insolvency levels in the sector remained persistently high, with construction continuing to account for approximately 17% of all company insolvencies - the highest figure recorded for any single sector. This sustained level of distress underscores the structural financial pressures facing construction businesses, despite short‑term month‑on‑month fluctuations.
There are however some signs for a more cautiously optimistic outlook. Despite the general slowdown, there is a healthy stream of work in the pipeline for those contractors who are successfully navigating the new regulatory and commercial landscape, although this trend seems to favour a narrow group of larger contractors who can take on higher risk work. The new Building Safety Regulator and those who engage with it appear to be getting a better handle on the Gateway process for higher risk buildings, with reports at the end of last year that the number of approvals to build stage had overtaken the number of new applications. The regulator, under new and independent management, has acknowledged the need to improve after its somewhat rocky start. With no budgets looming, developers should be able to make those decisions that were left in abeyance last year. Certain sub-sectors such as fit out are performing well, as property owners and occupiers seek to improve their existing stock - the office environment is continuing to prove a key factor in attracting and retaining talent, especially with the competition of working from home. Lastly, we may begin to see the practical impact of the planning reforms that are due to be implemented this year. Only time will tell whether a more streamlined planning regime and the government’s plans for more housebuilding provide any meaningful support to help construction companies navigate the significant economic headwinds they face heading into 2026.
