R3, the insolvency trade body, has published a ‘bankruptcy map’ revealing the regions and local authorities that have seen the highest proportion of new personal insolvency cases.
The bankruptcy map which looks at the number of new bankruptcies and Individual Voluntary Arrangements (IVAs) that occurred in England and Wales shows that the likelihood of becoming insolvent was almost seventy percent (69.5%) higher in the North East than in London. There were almost six thousand (5,923) new personal insolvency cases in the North East which means that for every ten thousand people, 29 of them became insolvent. The figures indicate that people who live in London are least likely to go into a formal insolvency procedure. The average number of new cases in England is 24.3 per ten thousand - in London there were 17.1 new personal insolvency cases for every ten thousand people.
R3’s President, Steven Law commented:
“Prior to the recession, the North East had a higher than average unemployment rate and the region’s construction industry was badly hit during the economic downturn so it is understandable that personal insolvencies are more common there. Londoners are least likely to become insolvent as there are more employment opportunities in the region. Unfortunately, with the announcement of public sector job cuts, it is likely that the figures will worsen, especially in areas such as the North East where public sector employment is high.”
The top ten insolvency hot spots (new personal insolvency cases per 10,000):
Torbay, South West (45.8)
Kingston upon Hull, Yorkshire and the Humber (40.7)
Lincoln, East Midlands (39)
Plymouth, South West (38.8)
North Tyneside, North East (37.4)
Gateshead, North East (37.1)
Corby, East Midlands (37)
Hastings, South East (36.9)
West Devon, South West (36.9)
Thurrock, East Anglia (36.7)
“It is unsurprising that many of the top ten insolvency hotspots are coastal towns. Tourism and leisure services businesses are often the main employer in these areas and, when people are reining in their spending, these services tend to be the first affected which means businesses reduce staff hours or cut jobs; or replace permanent jobs with temporary positions.
“A low percentage of formal personal insolvencies does not equal good news, especially as the insolvency industry estimates that 500,000 people are in informal insolvency procedures and R3 research shows that nearly 1 million people are struggling with debt and have not yet sought help. R3 advises anyone who is in financial difficulty to seek advice sooner rather than later.”