Personal insolvencies across England and Wales jump to nine-year high

The number of people going financially insolvent across England and Wales reached a nine-year high across 2019.

Total individual insolvencies stood at 122,181 in 2019, a 6% increase compared with 2018 and the highest annual total since 2010.

Personal insolvencies are made up of bankruptcies which are often seen as a last resort, debt relief orders (DROs) which are aimed at people with less than £20,000 of debt, and individual voluntary arrangements (IVAs) – agreements whereby money is shared out between creditors.

The Insolvency Service, which released the figures, said the upswing was largely driven by a 9.8% increase in IVAs to 77,982.

It was the highest annual level of IVAs recorded since their introduction in 1987.

Bankruptcies increased slightly last year compared with 2018, while DROs decreased slightly.

Some 16,702 people went bankrupt last year – well below a peak of 74,670 in 2009.

The upswing in people going insolvent comes despite interest rates remaining at low levels, keeping the cost of borrowing down.

The Insolvency Service also said there were 17,196 underlying company insolvencies in 2019, a 6.8% increase on 2018 and the highest level of underlying insolvencies since 2013.

The underlying figures strip out bulk insolvencies involving large numbers of companies, to make it easier to compare trends over time.

Within the figures, both underlying creditors’ voluntary liquidations (CVLs) and company administrations increased from 2018.

CVLs happen when a company’s shareholders decide voluntarily that a company should be wound up, whereas the aim of administrations is that the company should continue as a going concern.

There were 12,060 underlying CVLs and 1,814 administrations last year.

It was the highest level of underlying CVLs since 2009 and the highest level of administrations since 2013.

Duncan Swift, president of insolvency and restructuring trade body R3 said: “Today’s figures are a reflection of anaemic economic growth throughout 2019.

“A number of factors have fed into this: Political uncertainty, particularly around Brexit, has held back business decisions and investment, but weaker consumer confidence and sector-specific issues can’t be discounted either.”

He continued: “Some sectors have been hit harder than others, although difficulties are increasing across the board.

“The construction sector struggled, traditional retailers were hit by declining footfall and the continued growth of online shopping, and the manufacturing sector had a worse year than 2018. Brexit-inspired stockpiling in 2019 may have added to disruption.”