Insolvencies drop in region as business confidence returns

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INDIVIDUAL insolvencies in Yorkshire and the Humber dropped last year, but pockets of the region, namely Hull and Scarborough, ranked among the worst in England and Wales, according to new figures.

However, a spokeswoman for the Hull and Humber Chamber of Commerce said improving business confidence and an indication that more firms in the region have been recruiting could help relieve the strain on those with worrying debts.

Individual insolvencies in Yorkshire and the Humber have decreased from 13,466 in 2010 to 12,255 in 2011, according to analysis by insolvency trade body R3.

But these figures rank Yorkshire and the Humber as the region with the fifth highest rate of insolvencies in the UK and the fourth highest rate of bankruptcies with 4,317 – 10.2 per 10,000 adult population – in 2011.

Two of the ten local authorities with the highest number of total individual insolvency rates in 2011 were in Yorkshire and the Humber.

They were Scarborough with 449 new cases – 50.2 per 10,000 adult population – and Hull with 974 new cases, 45.5 per 10,000 adult population.

They were joined in the list by Blackpool, whose total individual insolvency rate, at 57.7 per 10,000 adult population, was roughly twice that of the rate for England and Wales as a whole, at 27.1 per 10,000 adult popluation. Ryedale was among the ten local authorities with the largest increase in the total of individual insolvency rates 2010 to 2011 with a 3.8 per cent rise year on year.

Hannah Crookes, external affairs manager at Hull and Humber Chamber of Commerce, said the latest figures showed “a mixed picture” for the Yorkshire and Humber region.

She said: “It obviously is a concern, however the Hull and Humber Chamber of Commerce’s recent quarterly economic survey report for the first quarter of 2012 demonstrated that confidence amongst the business community is improving and an increased percentage of businesses operating at full capacity.

“With Hull reporting 974 new cases, and being within the top ten local authorities with the highest rate of total insolvency rates in 2011, we are hopeful that with the improvement of business confidence, and the indication that more businesses have been recruiting, or are looking at recruiting in the forthcoming quarter, this could help relieve some of the strain on those with concerning debts.”

She added: “With Hull having a high unemployment rate, getting people back in to work is key into addressing the issue.”

Andrew Walker, chair of R3 in Yorkshire and partner at law firm Irwin Mitchell, which has offices in Sheffield and Leeds, said: “The decrease in personal insolvencies is encouraging news given the challenging economic environment that individuals are having to deal with, although the level in the region remains relatively high.

“What’s more, an average decrease across the country does not necessarily indicate that individuals are becoming better at dealing with their personal finances, instead we believe it indicates the emergence of habitual debtors who are paying off interest, but failing to make any inroads into reducing the debt itself.

“This suggests that many people are just hanging on, but with wages remaining stagnant and utility bills rising, many may not be able to cope for much longer.”

He added: “We have every reason to believe that 2012 is going to be tougher than 2011, so those who are struggling with their personal finances, should seek advice now to prevent it becoming insurmountable.”

For England and Wales as a whole, the rate of total insolvencies per 10,000 adults fell to 27.1 in 2011, following a generally increasing trend from 7.2 in 2000 to the peak of 31.1 reached in 2009 – some of the increase between 2008 and 2009 was driven by the introduction of debt relief orders from April 2009.

The rapid rise up to 2009 occurred as the number of insolvencies grew faster over this period than the underlying population growth, The Insolvency Service said.

In 2011, the City of London had the lowest individual insolvency rate of all the Government office regions at 17.5 per 10,000 adults.

The rate of total individual insolvencies per 10,000 adults, as measured by the Insolvency Service, takes into account bankruptcy orders, debt relief orders and individual voluntary arrangements.