The UK construction sector is entering 2026 in an unusual predicament: even as numerous construction companies have folded, many firms still struggle to hire the workers they desperately need. Recent years saw multiple contractors going under – from large players like ISG in 2024 to a spate of mid-sized firms through 2025 – yet vacancy levels remain historically high.

For example, construction employment fell to its lowest level in nearly 25 years in late 2025, even as over 140,000 job vacancies remain unfilled across the industry. This paradox of company failures alongside a skills shortage is the focus of our discussion. In this article, we examine why so many UK construction firms have collapsed, what the latest market data reveals about construction labour demand in the UK, and how targeted recruitment strategies can help employers navigate these pressures.

The goal is to turn these market challenges into an opportunity – by adopting smarter hiring practices and tapping into the right talent pools, construction companies can weather the storm.

A Wave of Collapses: What’s Happened and Why

Recent Construction Company Failures in the UK and Their Causes

Construction company insolvencies have surged in 2024–25, with hundreds of firms collapsing under financial strain. Official figures show 3,933 construction companies became insolvent in the 12 months to September 2025, representing 17% of all UK business failures – the highest rate of any sector. High-profile examples abound. Major contractor ISG (one of the UK’s largest builders) fell into administration in September 2024, with 2,200 workers made redundant overnight. In 2025, a string of mid-sized contractors went bust: Ardmore Construction (a 50-year-old London builder) collapsed in August 2025 after facing over £100m in fire-safety liability costs; Breyer Group, a social housing maintenance firm, went under in April 2025 amid cashflow crises and unpaid bills; and J S Wright & Co, a 133-year-old M&E specialist, succumbed to rising costs and chronic payment delays in early 2025. Dozens of smaller subcontractors have also failed – for instance, Caldwell Construction (a regional groundworks contractor with 400 staff) collapsed in January 2026 due to severe cashflow pressure. Even historic names have been hit: the bankruptcy of Buckingham Group in 2023 (known for stadium projects) underscored that these issues are structural, not just one-off events.

Why are so many construction firms failing? A combination of longstanding industry challenges and recent economic headwinds created a “perfect storm” for insolvency. Key underlying causes include:

• Chronic cashflow pressures: Construction’s notorious late payment culture leaves many firms cash-starved. In one survey by Armstrong Watson, 34% of contractors were worried about having funds to meet outgoing payments. Most insolvencies stem from lack of working capital rather than lack of work, as delayed payments, slow client certifications, and withheld retentions squeeze subcontractors.

  
  

• Skyrocketing costs: Building material prices saw double-digit inflation in 2021–2023, and labour costs also jumped. Many contractors locked into fixed-price contracts have been forced to absorb these cost increases, eroding margins. Rising wage bills (e.g. due to skilled labour shortages) further added pressure.

  
  

• Thin margins and risky contracts: To win work, firms often operate on wafer-thin margins. A single loss-making project or contractual dispute can tip a precarious business into the red. For example, Marbank Construction sustained £12.6m of losses in a few months after losing a series of legal disputes with subcontractors, which destroyed its balance sheet.

• Project delays and pipeline gaps: Broader economic uncertainty (high interest rates, policy changes) caused many projects to be delayed or cancelled in 2024–25. Housebuilding in particular slumped. Contractors found new orders drying up, leaving them with less revenue to cover fixed overheads. Insufficient demand was cited as an increasing barrier by 41% of construction firms surveyed in late 2025.

  
  

• Specialist subcontractor vulnerability: Specialist trades and subcontractors have been hardest hit, comprising more than half of construction insolvencies. These smaller firms are often locked into fixed-price deals and reliant on timely payments, making them highly vulnerable to cashflow shocks, cost overruns, skills shortages and project delays. When large contractors fail (like ISG), the ripple effect of unpaid bills can drag down numerous subbies in their supply chain.

In short, late payments, high costs, thin margins, and economic volatility have combined to push insolvency rates to decade highs. Construction insolvencies remained elevated through 2024–25 due to rising material costs, labour shortages, and delayed payments in a low-margin market. Understanding these failure factors is crucial for remaining contractors – and it directly connects to the hiring dilemma, as we’ll explore next.

What the Market Data Tells Us Now

Construction Activity and Workforce Stats That Explain the Recruitment Dilemma

By late 2025, UK construction activity had weakened in many areas, yet paradoxically the demand for skilled labour remains robust. This imbalance is evident in key data on workloads, workforce size, and vacancies. Below is a snapshot of recent construction market statistics:

Several trends emerge from these figures. Construction output has cooled – surveys show overall activity turning negative in late 2025, especially in private housing and commercial building. Contractor order books have been thinning in some sectors. This contributes to the wave of insolvencies as noted. At the same time, the industry’s workforce has shrunk dramatically, hitting a ~24-year low. Factors like retirements, workers leaving the industry (or country), and reduced hiring during the pandemic have led to a smaller labor pool.

Yet demand for certain skills remains persistent and unmet. Vacancy levels in construction, while slightly down from 2022 peaks, are still extremely high – on the order of tens of thousands of open positions. Industry reports highlighted over 140k roles sitting unfilled because employers cannot find suitable candidates. Insolvency rates remain well above pre-2020 norms, meaning surviving firms often have more work available (especially on public infrastructure and retrofit projects) but fewer competitors and workers to execute it.

The paradox is clear: construction labour demand in the UK outstrips supply even as parts of the market slow. This skills shortage – outlined by organisations like RICS, CITB, and others – creates a recruitment dilemma that we discuss next. Essentially, many companies cannot capitalise on projects or government initiatives (e.g. housing targets, infrastructure programs) because they lack the necessary manpower, a problem that only worsens as the workforce ages and attrition continues.

Why Firms Still Struggle to Hire Key Roles

Critical Talent Gaps in UK Construction - Despite a Tough Market

If construction workloads are softening, one might expect hiring to be easier – but the reality is the opposite. Construction recruitment challenges persist across the board, with employers reporting acute shortages in both trades and management roles. Several key factors explain why firms still struggle to hire, even amid a market downturn:

• Persistent skills shortages in core roles: Many trades and specialist positions remain in short supply. Skilled construction labourers – bricklayers, electricians, plumbers, HVAC technicians, welders, scaffolders, etc. – are highly sought-after and scarce. Site managers, project managers, and quantity surveyors are likewise continuously advertised due to a dearth of qualified candidates. The industry faces an ongoing construction skills shortage in the UK, despite unemployment in other sectors. A late-2025 survey found two-thirds of construction businesses struggled to recruit new employees, with 46% citing a lack of skilled or suitable candidates as the main barrier. This shortage is effectively a structural issue that predates the recent slowdown – and is not resolved by it.

  
  

• Duplication of demand across projects: When a few large clients or contractors launch projects, they often end up competing for the same limited talent pool. For instance, multiple infrastructure projects starting simultaneously can each be fishing for quantity surveyors or steel fixers from a small pond of available workers. This overlapping demand keeps certain job vacancies open for months. Even as some firms lay off staff in weak subsectors (e.g. residential developers downsizing), other firms are actively hiring for infrastructure, retrofit, and energy-efficiency projects. The net effect is many roles remain hard to fill because the skills aren’t easily transferable or geographically mobile to where the demand is.

  
  

• Aging workforce and attrition: The construction workforce is rapidly aging out. Over one-third of UK construction workers will retire by 2035, according to industry studies. Currently, 35% of workers are over 50, while only ~20% are under 30 – an imbalance that portends a wave of retirements and insufficient young entrants to replace them. This is already being felt in trades like plumbing and roofing that have an older age profile. Moreover, many experienced workers left the industry during COVID-19 or Brexit and have not returned. Brexit in particular reduced the labour pool: for example, the proportion of EU-born construction workers in London dropped from 42% in 2018 to just 8% by 2021, leaving a huge gap in a region heavily reliant on migrant skilled labour. This legacy attrition means that even if construction hiring demand cools slightly, the supply of workers is shrinking faster. Every quarter, more veteran tradespeople hang up their hard hats, and not enough apprentices are coming through to replace them.

  
  

• Regional and sector imbalances: Construction activity is not uniform across the UK. Some regions (such as parts of the Southeast and major cities) are facing very tight labour markets for construction skills due to large ongoing projects (think HS2, major housing regen schemes, etc.), whereas other regions have idle workers but perhaps with different skill sets. This mismatch means a contractor in one area might struggle to hire a bricklayer while, in another area, bricklayers are out of work due to a local slowdown. Specialist skills (for example, heritage restoration, ground engineering, or BIM expertise) might be in acute shortage nationally, so firms needing those either pay a premium or poach from competitors. All these micro-level imbalances feed into a national picture of unmet hiring needs.

In summary, critical talent gaps persist in UK construction, affecting roles from trades to technical and managerial positions. Companies find themselves unable to fill key roles necessary to deliver projects – a frustrating reality when work is on the line. Until these skill shortages are addressed, vacancies will remain high and wage pressures will grow, regardless of short-term economic swings. This is why many firms are turning to specialist recruitment support. (Indeed, MostonRECRUIT’s Construction division has been actively helping clients fill roles in this challenging market.) In the next sections, we’ll explore common pitfalls in construction recruitment and how to overcome them.

Learning from the Pressure Points: What Employers Are Getting Wrong

Common Strategic Gaps in Construction Recruitment

Given the talent scarcity, one would expect construction employers to adapt – yet many firms undermine their own hiring efforts through outdated or reactive practices. Recognising these common strategic gaps is the first step to improvement. Based on industry observations, here are several recruitment shortcomings often seen in the construction sector:

• Hiring is reactive and project-driven: Many contractors only recruit when a new project is won or when a vacancy must be filled urgently. This ad-hoc approach (rather than building a pipeline of candidates in advance) leads to frantic scrambles and unfilled roles. A more proactive strategy would be maintaining a warm bench of talent and engaging potential hires before the last minute. Unfortunately, workforce planning is often lacking – leaving firms flat-footed when work picks up.

  
  

• Poor role definition and pay benchmarking: Some construction job ads are vague or offer below-market salaries, yielding few quality applicants. Employers that haven’t benchmarked their pay rates to current market levels struggle to attract talent (especially given how wage expectations have risen amid the skills shortage). Similarly, unclear job descriptions or unrealistic skill requirements can turn candidates off. Companies get it wrong by not tailoring roles and compensation to what the talent pool is looking for.

  
  

• Over-reliance on traditional job boards: It’s common to see firms post vacancies on generic job sites or local papers and simply wait. This passive approach misses out on the “hidden” candidate market. As we usually find many of the best prospects are passive candidates – already employed, not actively browsing job ads - partnering with a Construction Recruitment Agency like MostonRECRUIT, is essential for bridging the gap for top talent. Over-relying on incoming applications means you only reach a fraction of available talent. Firms often under-utilise targeted headhunting, networking, and social recruiting that could tap into skilled tradespeople and managers who aren’t actively applying.

  
  

• Weak candidate experience: Construction companies can lose out on hires due to a slow or negative recruitment process. Examples include not responding to applicants for weeks, cumbersome multi-stage interviews for site-level roles, or failing to sell the benefits of working for the company. Skilled candidates often have multiple options; if one firm drags its feet or treats them poorly, they’ll choose another. A frequent mistake is insufficient communication and engagement with candidates during the hiring journey – leading to drop-outs and offer declines.

  
  

• Lack of training and retention initiatives: Many construction employers have neglected developing talent internally, which contributes to the wider skills shortage. Cutting back on apprenticeships, training programs, or mentorship means fewer home-grown skilled workers. It also sends a message to ambitious employees that they have limited growth opportunities, fueling higher turnover. The result is a vicious cycle: firms then try to hire from a shallow external pool for experienced roles, rather than promoting from within. For instance, fewer than 50% of construction apprentices currently complete their training – a major retention problem that employers can help fix. By not investing in upskilling and career progression, companies end up scrambling to recruit for every vacancy instead of building loyalty and capability in-house.

These strategic gaps in construction recruitment are common pitfalls that can be addressed. Recognising that hiring challenges are not only due to external market forces, but also internal decisions, is important. The good news is that by learning from these pressure points, construction firms can change course. In the next section, we discuss solutions – how refining your recruitment approach (potentially with the help of specialists) can turn these challenges around.

How Specialist Construction Recruitment Can Address These Market Challenges

Why Construction Recruitment Expertise Matters More Than Ever

In today’s climate, partnering with a specialist construction recruitment agency can be a game-changer for employers. Generalist hiring methods often fall short in this competitive market. A firm like MostonRECRUIT, with deep industry knowledge, offers strategic value beyond just CV-matching. Here’s how construction recruitment experts can help companies overcome the challenges discussed:

• Access to passive talent: The majority of qualified construction professionals are not actively job-hunting at any given time – an estimated 70% of the workforce is “passive” talent. Specialist recruiters maintain extensive networks of these passive candidates. They know where to find seasoned site managers who aren’t on job boards, or skilled tradespeople who might switch for the right opportunity. By proactively reaching out and engaging this hidden talent pool, agencies can connect employers with high-caliber candidates who would never apply cold. This vastly expands the recruiting reach beyond what an in-house HR team or job ad could achieve.

  
  

• Insight-led salary and offer benchmarking: Construction recruiters track real-time market data on salaries, day-rates, and benefits across roles and regions. This is crucial when wage pressures are rapidly shifting due to skill shortages. For example, some skilled trades have seen pay increases as firms compete for a limited supply. A recruitment partner can advise on competitive compensation (and realistic job requirements), so that your offers attract interest and don’t get rejected. They help set expectations on both sides, aligning what candidates seek with what employers can offer – avoiding the stalemate of unfilled roles due to mismatched salary ideas.

  
  

• Flexible hiring solutions (perm, contract, interim): A good construction recruitment agency provides access to all types of workers – permanent hires, contract staff for projects, or interim specialists for short-term needs. This flexibility is invaluable in a cyclical industry. If there’s uncertainty about workload, a recruiter can source high-quality contractors or temp professionals to fill immediate gaps without long-term commitment. Conversely, when a critical permanent position opens, they can headhunt a proven performer for the role. By mirroring the market’s ups and downs with agile staffing, agencies help firms scale their workforce efficiently. This includes advising on when to use subcontract labor vs. direct hires, and ensuring compliance (right to work, IR35 rules, etc.) when bringing people on board quickly.

  
  

• Strategic workforce planning support: Beyond filling individual vacancies, specialist recruiters can act as talent consultants. They understand construction business cycles, the lead times for skilled hires, and upcoming industry trends (like the push for green construction skills). This allows them to work with employers on workforce planning – identifying what skills will likely be needed in 6–12 months, building talent pipelines (e.g. lining up candidates with certain certifications), and succession planning for aging teams. In an uncertain economic environment, having this foresight is invaluable. It means a company can avoid being caught short when a project is approved or when senior staff retire. Essentially, recruitment experts help construction firms be proactive rather than reactive with talent, adding resilience to the business.

In short, construction recruitment expertise matters more than ever in 2026. With so many challenges – from finding rare skillsets to retaining talent – a specialist partner like MostonRECRUIT can provide the extra edge. They bring market intelligence, a broad candidate reach, and adaptive hiring strategies that generalist approaches often lack. Many firms that have struggled on their own are now turning to such agencies to secure the people they need, when they need them. The result is not just faster hiring, but smarter hiring that addresses long-term needs.

Forward-Looking

Navigating Uncertainty: Recruitment Resilience in UK Construction

The UK construction industry stands at a crossroads in 2026. On one side, a trail of company collapses highlights the fragility of firms facing economic headwinds. On the other, a persistent shortage of skilled workers threatens those companies that are growing or trying to deliver on new projects.

This paradox – business failures co-existing with talent scarcity – underscores a crucial lesson: building resilience in recruitment is as important as managing cashflow. Firms that survived the recent turmoil did so, in part, by keeping their best people and planning for future skills needs, not just cutting costs. Going forward, success in the sector will hinge on a proactive approach to talent. That means investing in your workforce, shoring up skills through training, and engaging recruitment expertise to fill gaps before they become crises.

While the market will always have uncertainties (interest rates, material prices, political changes), one certainty is that construction will always need talented people – and those people are an increasingly limited resource. Employers who recognise this and adapt their hiring strategies accordingly will be better placed to weather whatever comes next. By treating recruitment as a strategic priority (rather than a backburner issue), construction businesses can ensure they have the right teams in place to capitalise on opportunities when they arise. 2026 promises government initiatives in infrastructure, housing and retrofitting; those companies that have navigated the skills challenge will reap the benefits, while those that ignore it may falter.

In conclusion, the state of UK construction is challenging but not without hope. The combination of market pressures and talent gaps we’ve discussed can be managed with foresight and the right support. Whether it’s refining your recruitment process or partnering with experts to secure key hires, taking action on the people front will pay. As the saying goes, “hire hard, manage easy.” By doing the hard work now to attract, develop, and retain skilled professionals, construction firms can build a foundation of strength that carries them through uncertain times and beyond.