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R3 comments on the Scottish Insolvency Statistics, Q2 2017-­18

Commenting on the Scottish Insolvency Statistics, July to September 2017 (Q2 2017­18), Eileen Blackburn, chair of the technical committee of R3 in Scotland, the insolvency trade body says:

Personal insolvencies:

  • The number of personal insolvencies (bankruptcies and protected trust deeds) in Scotland fell by 12.9% in Q2 2017-18 compared with Q1 2017-18, and rose by 0.5% compared with Q2 2016-17.

“Personal insolvencies in Q2 2017-18 fell in comparison to Q1, and are pretty much flat when measured against the number recorded in the same quarter a year ago, bucking the upward trend of recent years. Debt Payment Programmes under the Debt Arrangement Scheme are slightly up though.

“It’s important not to read too much into one quarter’s insolvencies though: the recent trend has been for increasing insolvency numbers. Although unemployment keeps falling, with the latest ONS figures showing Scotland’s unemployment rate of 4.1% is even lower than the UK overall at 4.3%, this has not led to an increase in wages. Indeed, R3’s research found that, of the 42% of Scottish adults who say they often or sometimes struggle to payday, 24% list wage freezes as a cause, while for Britain as a whole the equivalent figure is 16%.

“The relative availability of consumer credit is could be helping keep insolvency numbers lower than they might be, although it could be stocking up problems for later on. Inflation is rising and people’s incomes are not keeping pace, with credit products filling the gap to pay for everyday essentials – an unsustainable position, at least until we see wages grow in real terms once again.

“It isn’t clear how long people will be able to plug holes in their finances with easily available credit. The Bank of England has warned that more individuals are defaulting on debt payments, and that – at the same time – unsecured forms of credit are becoming harder to access as lenders tighten their standards. If the Bank increases the base rate at its November meeting, this will start to further increase the pressure on people’s finances. For people with very low incomes, income shocks can have a disproportionate impact given they are already so close to the edge. Delays to receiving benefits payments, for example, or redundancies are difficult to deal with if you have no savings to fall back on or if you’re already in debt.

“Seeking appropriate personal finance advice in a timely fashion is vital, even or perhaps especially for those who consider themselves to be ‘just about managing’; talking things over with a professional who is qualified and able to set out the options which are open can help individuals to get on top of their situation, and to plan a way forward.”

Corporate insolvencies:

  • The number of corporate insolvencies in Scotland rose by 12.5% in Q2 2017-18 compared with Q1 2017-18, and rose by 4.2% compared with Q2 2016-17.

“Following on from last quarter, once again we see that corporate insolvencies have risen over the course of Q2 2017-18, and they are higher than in the same quarter last year.

“The overall business environment is unsettled, and the proportion of firms at greater than average risk of insolvency has risen every month since January of this year, according to R3’s research.

“Scotland’s GDP growth in April-June 2017 was just 0.1%, the Scottish Government found, which is a reflection of the tricky circumstances many firms face, with higher input costs and weakening demand from overstretched consumers.

“Business rates could be one factor causing problems for many companies which are only just keeping their heads above water, with the Scottish Retail Consortium estimating that Scottish businesses could find themselves needing to pay an extra £100 million in rates next year.

“Looking to invest in advances in technology could prove wise: those firms in any sector which are likeliest to weather any future storms will be those which embrace coming changes in processes, operations or routes to market, and which keep up with consumers’ evolving tastes and habits.

“Any business which is struggling needs to make a realistic assessment of its position. Creditors are still offering relatively ‘soft’ terms to business debtors, but if the Scottish economy contracts, cash flows could rapidly dry up – a scenario that companies should prepare themselves for.

“Our message to any company looking at its position would be not to delay seeking expert help and advice, from a qualified professional as the sooner a problem is diagnosed, the sooner it can be handled, leading to the best possible outcomes for directors, employees, creditors, and the economy as a whole.”

The Scottish Insolvency Statistics, via the Accountant in Bankruptcy (25 October 2017):

ONS employment figures (18 October 2017):

Scotland’s GDP in Q2 2017 (4 October 2017):

Notes to editors:

  • R3 is the trade body for Insolvency Professionals and represents the UK’s Insolvency Practitioners.

  • R3 comments on a wide variety of personal and corporate insolvency issues. Contact the press office, or see for further information.

  • R3 promotes best practice for professionals working with financially troubled individuals and businesses; all R3 members are regulated by recognised professional bodies
  • R3 stands for 'Rescue, Recovery, and Renewal' and is also known as the Association of Business Recovery Professionals.