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Contractor Collapse and the Case for Change

Contractor Collapse and the Case for Change

Hussein Ali
April 25, 2025

👋 Welcome to Dwelling On It — housing insight for people who shape what comes next.

Each edition explores the systems, policy shifts, performance trends, and practical realities reshaping social housing and repairs in the UK.

🔍 This Issue: Contractor Collapse and the Case for Change

What happens when the contractor fails — but the housing need doesn’t?

The recent collapse of Breyer Group in April 2025 has exposed the fragility of a delivery model that many social landlords rely on.

A longstanding name in planned maintenance, Breyer’s sudden fall into administration left hundreds of jobs in limbo and disrupted critical housing contracts — underscoring just how vulnerable the sector’s supply chain has become.

Breyer isn’t alone. The failure of ISG Ltd in 2024 and Ilke Homes in 2023 added to a growing list of contractors unable to withstand the mounting pressures facing the industry. For social housing providers, these collapses are more than commercial failures — they are service risks with real implications for tenants.

⚠️ Why Contractors Are Under Strain

Contractors operating in the social housing space are navigating four converging pressures:

1. Rising Costs
Fixed-price contracts — common in frameworks like the Affordable Homes Programme — don’t accommodate inflation. Materials like timber and insulation have surged 20–35% since 2020, while average wages rose 4% in July 2024. Breyer was operating on pre-tax margins of just 0.7%, offering no cushion.

2. Skills Shortages
The sector faces a 300,000-worker gap since 2019. Post-Brexit migration losses, lagging apprenticeships, and CSCS card reforms phasing out older qualifications by the end of 2024 make staffing harder — especially for retrofit-heavy programmes like the Social Housing Decarbonisation Fund.

3. Cash Flow and Credit Access
Subcontractors — who make up 17% of all insolvencies — are squeezed by late payments and retention abuse. In 2024, construction made up 16.2% of all corporate insolvencies. The Procurement Act 2023 adds admin burdens for SMEs, and delays to future funding rounds (like the post-2026 Affordable Homes Programme) deter long-term investment.

4. Policy Uncertainty
Overlapping fire safety and net-zero requirements are stalling projects. The Building Safety Act mandates sprinklers in care homes by March 2025, adding £15,000–£20,000 per unit. Unfinalised Infrastructure and Building Safety Levies mean contractors can’t price risks with confidence.

🛠️ Sector-Specific Solutions

To avoid future disruption, the sector needs proactive, collaborative change. Here are five actionable shifts:

🔁 Inflation-Linked Contracts
Adopt NEC4 contracts with dynamic pricing clauses to shield delivery chains from inflation shocks.

🧑‍🏭 Retrofit Apprenticeships
Fund social housing-specific apprenticeships in retrofit trades (e.g. heat pump installation) to future-proof your workforce.

📦 Procurement Reform
Streamline fragmented DPS systems into regional consortia like Procurement for Housing to cut bid costs and improve access for SMEs.

🧑‍🔧 Shadow Bidders
Pre-qualify reserve contractors for business continuity — like Cardo Group’s rescue of Breyer’s Kingston contract.

💻 Digital Safety Tools
Link housing asset platforms to the Central Digital Platform to streamline Golden Thread data and enhance building safety compliance.

🔍 Final Thought

The system we rely on to repair and maintain homes is under more pressure than ever. Contractor collapse isn’t just a commercial issue — it’s a housing issue, a safety issue, and a trust issue.

But with smarter procurement, stronger pipelines, and digital oversight, we can start building a more resilient system — from the ground up.

🧠 Construction Insolvencies: In the 12 months leading up to January 2025, the UK construction industry experienced 4,031 insolvencies, accounting for 17% of all industry insolvencies during that period.

📚 Articles to Dwell On

Contractor collapse leaves landlord £36m out of pocket

A large housing association lost more than £36m as a result of Henley Construct going into administration in 2023.

www.insidehousing.co.uk/news/contractor-collapse-leaves-landlord-36m-out-of-pocket-and-hundreds-of-homes-delayed-91484

Councils in England face ‘impossible decisions’ to build or repair homes

Exclusive: Financial pressures undermining government’s housebuilding targets, survey of local authorities says

www.theguardian.com/uk-news/2025/mar/20/councils-in-england-face-impossible-decisions-to-build-or-repair-homes

Residents of London apartment block left without running water for 12 days

Housing association L&Q’s contractor shut off water to flats in Sidcup without warning to repair a pipe

www.theguardian.com/society/2025/apr/18/residents-of-london-apartment-block-left-without-running-water-for-12-days

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