RESIDENTS of coastal areas are more vulnerable to economic shocks that can trigger insolvency, a leading Yorkshire lawyer has warned.
Scarborough and Hull were again among the top 10 hotspots in England and Wales for personal insolvency in 2018, with Barnsley also ranked highly, according to the insolvency trade body R3.
Analysts from R3 were commenting on the latest annual personal insolvency statistics from the Insolvency Service.
A spokesman said: “Looking at the geographical spread in the statistics, coastal towns throughout England and Wales typically had the highest concentrations of personal insolvencies, following the pattern established in recent years. “
In 2018, Scarborough had the second highest number of personal insolvencies of any local authority, with 47.8 insolvencies per 10,000 adults, an increase from 38.5 per 10,000 the previous year when it was the fourth highest.
Hull, which in 2017 was ranked at number three with 39.5 insolvencies per 10,000 adults, dropped to fifth place despite its rate rising year on year to 44.9.
Barnsley, in ninth place, also experienced rising levels of personal insolvency in 2018, increasing to 39.9 per 10,000 adults in 2018 from 30.1 in 2017.
During 2018, Scarborough saw 426 new cases of personal insolvency, Hull had 915, and Barnsley experienced 776.
York had the region’s lowest personal insolvency rate in 2018, at 18.5 per 10,000, followed by Harrogate with 19.3 and Sheffield with 21.3. The overall rate for England and Wales was 25 per 10,000 adult population.
Eleanor Temple, the chairman of R3 in Yorkshire and a barrister at Kings Chambers in Leeds, commented: “While the areas with the highest levels of personal insolvency are largely unchanged from last year, it’s disappointing to see three towns in our region now in the top ten areas with the highest rates in England and Wales.
“A higher personal insolvency rate is a symptom of wider deprivation, and highlights the need for debt advice services to be targeted and tailored for people living in less affluent areas.
“The historical retreat of the industrial sector caused decades of hardship in many places, as well-paying jobs disappeared which were replaced, at best, by more precarious and worse-paid employment.
“Coastal areas often have higher rates of personal insolvency than inland areas and Scarborough is obviously a prime example of this trend.
As places which often depend on an influx of tourists in the summer months for income, they are dependent on the consumer pound, which has been in shorter supply, Ms Temple said.
She added: “The seasonal nature of tourism-related work makes it hard for many residents to build up savings to last them in leaner times, leaving them vulnerable to the type of economic shock that can often trigger insolvency.”
Ms Temple continued: “Although the rate of growth of consumer debt has slowed, the amount owed by individuals is still rising, while inflation-adjusted employees’ earnings are still lower than before the 2008-2009 recession, according to the ONS.
“Ensuring that people in problem debt are aware of their options, and that they can access a suitable form of personal insolvency if that is the best option for them, should be a priority for the Government.”
R3, the Association of Business Recovery Professionals, is the trad association for insolvency, restructuring and turnaround specialists in the UK.