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Construction companies in the UK have gone out of business at the highest rate in a decade as a result of persistent cost inflation, a slowdown in housebuilding and delays to government infrastructure projects.

Figures from the government’s Insolvency Service show about 4,280 operators became insolvent in the 12 months to June, 16.5 per cent more than the same period a year ago.

Last week Buckingham Group, which has worked on the new HS2 railway line and the Anfield football stadium in Liverpool, became one of the largest contractors since the collapse of Carillion in January 2018 to stop trading.

Buckingham, which employed 660 people, attributed its troubles to a “combination of unexpected impacts”, including “extreme inflation”.

Rising material costs, planning delays and skills shortages have all contributed to contractors’ financial difficulties, said Professor Noble Francis, economics director at the Construction Products Association.

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The government has also delayed a series of large road and rail projects as it grapples with rising costs, while housebuilders have announced a slowdown in new building. Crest Nicholson issued a profit warning this week as rising interest rates slowed buyers’ appetite.

The number of failures in the 12 months to June was the highest since the 4,537 recorded in 2012, when construction insolvencies peaked following the effects of the financial crisis.

The worst hit companies were smaller, specialist subcontractors. They accounted for 2,499 insolvencies, or about 60 per cent of the total, in the period.

However, main building contractors were also affected as they were unable to pass their problems on to others in the supply chain, Francis said.

Groundworks specialist Allma Construction and its sister company Centre Plant collapsed into administration last week with the loss of more than 180 jobs. Allma, which specialised in the housebuilding sector, has been hit hard by the residential downturn.

Although construction materials prices have fallen from highs reached after Russia’s invasion of Ukraine pushed up energy and commodity costs, they are still 42.7 per cent higher than before the pandemic in January 2020, according to the Office for National Statistics.

Some materials prices are still rising at double-digit percentage rates. Ready-mixed concrete prices rose 19 per cent in the year to June, while bitumen and precast concrete prices rose 12 per cent.

The government in March announced a two-year delay to phase 2a of the high-speed railway line HS2 between Birmingham and Crewe, citing “significant inflationary pressure and increased project costs”.

It has also stopped work on the HS2 terminal at Euston station in central London.

Some road projects have also been held up. Ministers have delayed by two years work on the £9bn Lower Thames Crossing, a planned 14.3-mile motorway east of the Dartford bridge in London.