The South West has been identified as having sky-high personal insolvency rates, topping other areas of the UK, including London.
Statistics reporting trends from 2000 up to 2017 recently published by The Insolvency Service that look into individual insolvencies by location, age and gender for England & Wales show an adverse reading for the South West, with the area coming out with the second highest total of bankruptcies per region in 2017. Figures show 3.9 per 10,000 adults becoming bankrupt, which is an increase on the previous year and above the national average.
Nationally, figures show that bankruptcies per 10,000 of the adult population have fallen steadily since the recession around ten years ago, but that decline has stalled with 2016 and 2017 both seeing 3.3 per 10,000 adults going bankrupt.
Delving deeper into the statistics and looking at the districts within the South West, West Devon (from Yelverton up to Hatherleigh) tops the table at around double the national average. 30 new bankruptcy cases were seen in 2017 in the sparsely-populated district of around 45,500 people, equating to 6.6 per 10,000 of the adult population.
West Devon exceeds Torbay, formerly known as the ‘bankruptcy capital’ of the country, and is in stark contrast to the district of Chiltern (Buckinghamshire) with a population of around 75,000 and ‘only’ 12 new bankruptcies. Also, contrast the city of Plymouth which saw more than twice as many bankruptcies as the cities of Oxford and Cambridge combined.
Looking at both forms of personal insolvency, bankruptcy and Individual Voluntary Arrangements, the local authority districts of Plymouth and Torbay show very high levels of insolvency, around twice the national average, at 40.4 and 37.1 per 10,000 adults respectively, with a combined 1,258 new insolvencies in 2017. This is contrast to some London boroughs with nine per 10,000 adults entering formal insolvency.
So, why is the South West showing higher insolvency rates than most other UK regions, especially almost a decade after the recession hit? It is thought that more tourist-orientated regions feel the effects of a recession for longer, as they are reliant on the spending habits of those outside the region and it will take some time for people to recover from a recession and start spending money on ‘luxuries’ such as holidays.
Also, despite the weakened pound potentially forcing more holiday makers to stay in the UK as opposed to going abroad, the region as a whole has been struggling to recover from decades of decline in coastal industries with seasonal tourism being hit by ever cheaper flights and package holidays. The combined result of fewer visitors and lower incomes also means that employment has declined, with many jobs being only seasonal and/or low-paid, leading to a downward cycle of debt.
Lucinda Coleman, Business Recovery Partner at PKF Francis Clark said: “These figures are disappointing for the area and for many people, bankruptcy can’t and shouldn’t be avoided. There are however other options which should be explored beforehand. We can advise on the alternative procedures and explain the consequences of bankruptcy. If you or your business need any advice on solvency or cash flow problems generally, please get in touch”.