21st September 2026
A 23% fall in Scottish company insolvencies in August sounds like good news for business. But one month's figures can sometimes tell only part of the story.
The latest figures from the Insolvency Service show 73 company insolvencies in Scotland in August, compared with 95 in August last year. That is a substantial year-on-year fall, but it is worth looking beyond the headline before concluding that business failures are now falling sharply.
Construction provides a particularly interesting example because Scotland needs the industry to deliver a large number of new homes over the coming years.
The Scottish Government's own housing review records 191 construction companies entering insolvency during 2025-26, compared with 194 in 2024-25. That is only a 1.5% reduction. The figure was also 5.9% below 2023-24, and the Government says construction insolvencies among Scottish-registered companies have now returned to their pre-Covid level.
So August's 23% fall should not be taken as evidence that the pressures on construction companies have suddenly disappeared.
There is another side to the story. Scotland actually has a large and growing population of construction businesses. At March 2025 there were 22,930 registered construction businesses, an increase of 435, or 1.9%, over the previous year.
That raises an interesting question.
If construction companies are continuing to fail while the number of registered construction businesses is increasing, are new firms replacing those that disappear?
The answer matters because a business number is not the same thing as construction capacity.
A new small contractor employing a couple of people cannot necessarily replace an established company employing dozens of workers, owning equipment and carrying several housing projects. Equally, an insolvent company does not necessarily mean that its projects disappear. Its work, employees, land or unfinished developments may be taken over by another company.
In other words, the number of businesses going bust does not tell us by itself whether Scotland is gaining or losing the capacity to build.
Housebuilding adds another concern
The latest Scottish housing statistics show that 17,268 new homes were completed during 2025-26. That was 10% fewer than the previous year and, apart from the Covid-affected year of 2020-21, the lowest number of completions since 2016-17.
Starts were also down, with 14,955 new homes beginning construction during the year, a fall of 4%.
The private sector was particularly weak. Private-sector starts fell by 12% to 11,018, while private-sector completions fell by 8%.
That is important because Scotland's housing ambitions depend upon a construction industry capable of turning planning permissions, land and finance into completed homes.
There is some more encouraging news in the affordable housing figures. Social-sector starts increased by 25% during 2025-26, reaching 3,937. But completions fell by 16% to 3,774.
This illustrates one of the difficulties with housebuilding statistics. A rise in starts today does not produce completed houses tomorrow. There can be a considerable gap between a project being approved, construction beginning and the keys being handed over.
Scotland's housing target is a sizeable challenge
The Scottish Government has a target to deliver 110,000 affordable homes by 2032.
That makes construction capacity an important part of the equation.
It would be wrong to claim that construction insolvencies mean the target cannot be achieved. There are more than 22,000 registered construction businesses in Scotland and the number was increasing in the latest business statistics.
Nor should the August insolvency figures be ignored. They show that the number of companies entering formal insolvency can move considerably from one month to another, while the longer-term construction figures suggest that business failures remain a feature of the industry.
The more useful question is therefore not simply how many construction companies are going bust?
It is what sort of companies are disappearing, what sort of companies are replacing them, and is the industry's overall capacity increasing or decreasing?
That distinction could become increasingly important if Scotland wants to accelerate housebuilding.
Small businesses matter
Construction is dominated by relatively small businesses. Of Scotland's 22,930 registered construction businesses, the overwhelming majority are small.
That is particularly relevant outside the central belt.
In places such as Caithness and the wider Highlands, the construction industry operates with a much smaller pool of firms and skilled workers. Losing one established contractor can therefore have a greater local effect than the national figures suggest.
There can also be knock-on effects. A shortage of builders can affect housebuilding, repairs, extensions, public-sector projects and the ability of developers to bring forward new schemes.
For rural Scotland, construction capacity is not simply about the number of companies registered on a database. It is about whether there are enough people, skills, equipment and financially viable firms available when work needs to be done.
Look beyond the 23%
The August insolvency figure is therefore worth reporting, but it needs some context.
A 23% fall from 95 to 73 companies is certainly better than an increase. But the annual construction insolvency figure has barely changed, while Scotland's overall housebuilding output has fallen significantly.
At the same time, the number of registered construction businesses has increased.
That leaves us with a rather more complicated picture than the headline suggests.
Scotland may not be losing construction businesses overall. It may instead be experiencing change within the industry, with some companies failing, others being created and existing firms changing size or taking over work.
For anyone concerned about Scotland's housing shortage, that may be the more important story.
The real test will not be how many companies are registered or whether one month's insolvency figures are lower.
It will be whether Scotland has enough construction capacity to turn its housing ambitions into completed homes.