Bankruptcy figures today cast doubt on the Coalition parties’ claim that the recovery is lifting all parts of the country equally.
Personal insolvency rates in the North-east and the North-west increased between 2008 and 2013, whereas they fell in London and the Home Counties, data collected by the accountancy firm Moore Stephens shows.
“The size of the North-South divide in personal insolvencies is stark,” said Jeremy Willmont of Moore Stephens. “We are all aware the divide exists but it is still a surprise to see how wide that gap is. The data suggests that, as far as personal finances are concerned, this gulf has grown substantially since the recession.”
The national personal insolvency rate fell 10 per cent between 2008 and 2013, from 24.8 per 10,000 people to 22.4. But that masked a strikingly divergent trend across the country. The number of bankruptcies in 2008 per 10,000 was 29.1 in the North-east. That rose to 30.6 in 2013, a 5 per cent increase. Rates in the North-west rose from 24.5 per 10,000 in 2008 to 25.6 in 2013, a 4 per cent increase. By contrast, bankruptcy rates per 10,000 in London fell over the five years from 16.9 per 10,000 to 13.9, an 18 per cent fall. In the Home Counties the rate fell 16 per cent to 19.2 per 10,000.
Wales also saw an increase in the bankruptcy rate over the four years to 2013, and was home to the area with the biggest jump: in Denbighshire rates rose 44 per cent, from 29.8 per 10,000 to 43.
In a report published today Moore Stephens writes: “Though most areas are seeing insolvency levels fall, led by London and the Home Counties, the fact that a significant proportion are still actually seeing them rise, even as the economy strengthens, is a concern.”
The picture of a North/South divide is to some extent reflected in the official unemployment statistics, which show the unemployment rate in the North-east currently at 7.7 per cent, well above the London rate of 6.25 per cent.
However the unemployment rate in the North-west is lower than in the capital, at 5.89 per cent. And research by the Resolution Foundation think-tank recently found that people in the North-east enjoyed the biggest rise in living standards since the start of the recession. A 3.9 per cent rise in incomes in the North-east since 2007-08 – worth £794 a year – was due largely to jobs growth in the region, it said.
Nevertheless, the North-east remains considerably poorer than much of the South of England. Despite its recovery in recent years, typical incomes there are still the third lowest of the 12 UK regions, according to the Resolution Foundation.
Meanwhile, the firm of accountants Baker Tilly predicted that personal insolvency numbers for the first quarter of 2015 will reach their lowest level since 2005. Data from Baker Tilly’s Tracker service suggests that the Insolvency Service will announce that there were just over 21,000 personal insolvencies in England and Wales in the first quarter of 2015.
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