Personal insolvencies at seven-year high

Unmanageable debt has led to a 16.2 per cent rise in personal insolvencies in England and Wales since 2017, according to the latest statistics from the Insolvency Service. Total insolvencies increased for the third consecutive year to 115,229, the highest since 2011.

The 19.9 per cent increase on individual voluntary arrangements (IVAs), which reached their highest annual total on record, has driven this increase.

Commenting on the Q4 statistics, Stuart Frith, president of insolvency and restructuring trade body R3, says:

"While unemployment is low, the nature of employment is much-changed. Working hours can be unpredictable and not necessarily well paid. That said, low unemployment may help explain rising IVA numbers: employment helps give people a platform for the regular debt repayments involved in the procedure.

"Savings levels are painfully thin, exposing people to financial upsets. As an illustration of this, recent research from R3 and ComRes found that one in five British adults (20 per cent) would find it somewhat difficult, very difficult or impossible to immediately pay an unexpected bill for an amount as little as £20, without assistance from an external source.”

He goes on to say that anyone with debt worries – especially if they have recently become more intense – should speak to a regulated and reputable debt advisor as soon as possible for help and support on their next step.

The figures also reveal a rise in corporate insolvency, where the underlying number of company insolvencies increased in 2018 to 16,090, the highest level since 2014. All types of company insolvency (except administrative receivership) increased in 2018 compared with 2017.

Stuart explains:

“The pressure point for businesses most frequently cited by our members is weak consumer demand. People just don’t have much spare cash at the moment, reflected in the rise in the number of personal insolvencies also confirmed today. Although recent government figures showed that the weekly amount spent by households has hit its highest level since 2005, much of that expenditure went on housing and transport, with less left over for consumer outlay. This is having a big impact on consumer-facing businesses, such as retailers and the restaurant sector.”

Read more: BBC Business and The Insolvency Service October to December 2018 release