It seems like a lifetime ago. But do you remember the COVID-19 pandemic. The masks, the social distancing and the baking?
With the benefit of hindsight, it now seems that, while the majority endured the pandemic and the resulting lock-down, some exploited it instead. And, as you will hear, it is all of us that will ultimately foot the bill.
We already know that while we kept in touch with relatives via Zoom, Boris Johnson and his cronies held parties at 10 Downing Street.
We know also that while we all clapped for the NHS workers, others were consorting to profit from cheap and unusable PPE for nurses and doctors.
And we know that while for many of us, it was a time of sharing and of helping out those less fortunate or able; others saw it as an opportunity to hoard and to profiteer.
Sadly, it transpires that many here in the field of demolition and construction chose to exploit the situation for personal gain.
Despite being granted key worker status, the COVID lockdown made life tough for construction workers. Ours is not an industry that can social distance easily.
So, despite warnings to the contrary for the rest of the country, demolition and construction workers continued to travel; continued to work; and continued to keep the wheels of the economy turning. But, even as they did so, some were rubbing their hands together and eyeing a personal financial gain.
It all goes back to those loans—those lifelines, we thought, that were thrown to us during the chaos of Covid. The Bounce Back Loans, the Coronavirus Business Interruption Loan Scheme (CBILS)—they were supposed to keep construction firms afloat.
And for a while, they did.
For many demolition and construction companies, those loans were just what they needed to keep going, to pay our workers, cover the rent on equipment, and ride out the storm.
But now? Now it feels like the industry is being drowned by that very same lifeline.
Nearly 40,000 construction companies have defaulted on their Covid loans—that’s 15% of the entire industry. And let’s not forget what “government-backed” actually means. It actually means “public-backed”. Yes, us – the British public – will ultimately foot the bill either through increased taxation or through cuts in public services to make up the shortfall.
Even with all that government backing - £7.68 billion worth of loans handed out across the sector - we’re still seeing companies crumble.
Winter’s coming again, and there’s a cold, hard reality setting in across the industry, and it feels like the debts are hardening just as much as the ground does in December.
Demolition and construction companies are folding at an unprecedented rate. And the sad part? No one’s really surprised. It’s almost like we’ve come to expect it.
Just like we became attuned to multiple deaths during COVID, we have become attuned to multiple construction company failures each month.
This is the new normal.
Every day feels like we’re just waiting for the next domino to fall. The cost of everything keeps going up. Interest rates remain high, and any loans or credit facilities we could potentially access are just more expensive to repay. If you can get a loan at all.
That’s the bitter irony. Before Covid, banks didn’t want to touch construction companies with a ten-foot pole. Construction was considered too risky. It was only the government guarantees that made banks lend to the sector during the pandemic. But now? The industry is stuck paying back those same loans and being crushed by them. And there’s no safety net anymore.
For so many companies, it’s simply too much. The loans, the back payments, the increased cost of everything—it’s unsustainable. And then there’s the fraud.
Hundreds and possibly thousands of directors who took out loans for companies that weren’t even trading or inflated their earnings to get bigger loans than they should have.
But here’s the thing—fraud or no fraud, those loans weren’t enough. Sure, some people abused the system, but even the ones who didn’t are going under. We needed more than a quick fix. We needed long-term support, a real strategy to help us survive once the pandemic was over. Instead, we were handed a ticking time bomb of debt, and that bomb is now exploding.
It’s a strange feeling, watching the industry starting to implode.
You look around and realise that the COVID loan schemes and the inability or refusal to pay them back casts a light upon a deeper problem within the UK demolition and construction industry.
Margins are wafer thin and costs fluctuate wildly, often for no good reason. The industry is trapped in a cycle of inexorable decline. Contractors find themselves locked into fixed cost contracts that bleed them dry and from which they cannot escape.
By propping up failing companies during the COVID pandemic, we merely delayed the inevitable. And this isn’t just about businesses failing.
It’s about people losing their jobs, their homes, their sense of security. It’s about communities being hollowed out.
Every job lost isn’t just a number, it’s someone who’s going to struggle to put food on the table this winter.
And what’s worse is that for many, the decision to take those loans felt like a no-brainer at the time. They had to take them. Without them, businesses would’ve gone under during the lockdowns.
But now, it feels like those loans were a trap. Companies took them to survive, but never really recovered. And now they’re drowning in debt they can’t repay.
And the government? They’re cracking down hard, issuing bans and arrests for fraud. But, with the benefit of hindsight, were their checks and balances sufficiently robust?
The collapse of ISG, the UK’s sixth biggest contractor, should serve as a warning. Their demise was NOT caused by COVID or by a failure to pay back COVID loans. Their problems ran much deeper than that. But those problems are not peculiar to ISG. They are widespread. Endemic.
And if a company the size of ISG can collapse and fall, what hope is there for the countless smaller companies that make up the lion’s share of the UK construction industry.
Many, I fear, are living on borrowed time. And for them, it is going to be a long, hard winter.