Personal insolvencies remain at near-decade highs after latest surge

The number of people going financially insolvent across England and Wales has remained at near-decade highs after a surge in individual voluntary arrangements, official figures show.

The Insolvency Service said personal insolvencies across England and Wales rose by 23% year-on-year to 30,879 in the third quarter.

There were some 19,973 individual voluntary arrangements (IVAs) between July and September – up 43% compared with an “usually low” number a year earlier, according to the Insolvency Service.

But IVAs were also higher than the previous quarter, rising 1.4%.

Compared with the previous three months, the total number of personal insolvencies lifted 0.6% between July and September, according to the data.

The Insolvency Service said personal insolvencies have now remained at the highest quarterly level since the end of 2010 for the past four quarters.

But the number of people going bankrupt eased back, down 2.6% quarter-on-quarter to 4,122, which comes after they reached the highest level in more than four years between April and June.

Bankruptcies were also down year-on-year, by 1.2%.

The number of debt relief orders (DROs) increased by 0.3% in the third quarter to 6,784 compared with the previous three months, but were down 3% year-on-year.

Alec Pillmoor, personal insolvency partner at RSM, said Brexit uncertainty may be a contributing factor at work in pushing up personal insolvencies.

But he added: “Continued access to easy money and the prevalence of a cashless society makes it increasingly difficult for consumers to monitor their spending and maintain a budget effectively.”

He also raised concerns over the rising numbers of 18 to 25-year-olds becoming insolvent – which RSM estimates at more than 7% of total quarterly insolvencies.

“It is entirely feasible that those within the 18-25 age group are without financial experience or understanding, and in the absence of sufficient education from schools or finance providers, it is difficult to see these trends slowing any time soon,” he said.

The figures also showed the number of company insolvencies rose to its highest level for more than five years.

Total company insolvencies hit 4,355 in the third quarter – up 1.6% on a year earlier and 0.4% higher than the previous three months.

This was the highest level since the first quarter of 2014, the Insolvency Service said.

The rise was driven largely by a 27% year-on-year jump in the number of administrations to 484, while company voluntary liquidations rose 2% to 3,115 – the highest level for more than seven years.

But company voluntary arrangements (CVAs) – which have become popular among retailers to slash rents and close loss-making stores – fell to 89 down from 92 the previous quarter.

Duncan Swift, president of insolvency and restructuring trade body R3, said the data is “further evidence that the economic and political turbulence of the last 12 months has taken its toll on businesses”.

He added: “For some businesses, restructuring through an insolvency procedure is the best means of dealing with stalled growth.”