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Is there a link between insolvency and Westminster representation?

 The Insolvency Service has published its annual update on personal insolvency rates in English & Welsh Westminster parliamentary constituencies. You can see the data here.

These statistics don’t tell us much that we don’t already know in terms of where insolvencies happen: local authority versions of these stats appeared in the summer and showed the same familiar patterns. Insolvencies are typically highest on the coast and in places linked to docks and ports, or in places where once-dominant industries have declined. Coastal or port constituencies made up 13 of the 20 constituencies with the highest insolvency rates in 2015.

The South West – where more or less everywhere is near the cost – and the ex-industrial North East have reliably high insolvency rates, while London and South East constituencies account for 17 of the 20 constituencies with the lowest rates.

This time around, the South West coastal constituency of Torbay has the highest rate of personal insolvency (40.8 insolvencies per 10,000 adults), taking over from the Vale of Clwyd (another coastal constituency, which has moved out of the ‘bottom-20’ this year having almost halved its insolvency rate from 48.6 to 28.5 insolvencies per 10,000 adults).

There are however, a few notable bits and pieces of information that the summer version of these statistics didn’t tell us.

Same city, different experience

Take Hull and Stoke, for instance. The summer’s local authority statistics showed that these cities had a high overall rate of insolvency: they were, respectively, second and third on the list of local authorities with the highest insolvency rates. The new constituency level statistics show that this high rate of insolvency is present throughout both cities. Stoke and Hull’s local authorities are made up of three Westminster constituencies each and all six of these appear in the list of twenty constituencies with the highest rates of insolvency.

By contrast, Sheffield’s local authority may have had the 162nd highest rate of personal insolvency in 2015, but not all parts of Sheffield see similar personal insolvency rates: Sheffield Hallam in the west of the city has England & Wales’ lowest rate of personal insolvency (5.6 insolvencies per 10,000 adults), while the Sheffield, Brightside and Hillsborough constituency in the city’s north has the 33rd highest (28.7 insolvencies per 10,000 adults).

Insolvency by political party

There is also, obviously, some insight into the political make-up of those places affected most by insolvency (and those that are least affected).

Overall, the twenty constituencies with the highest personal insolvencies are a fairly even mix of Labour and Conservative seats; although given the parties’ different parliamentary sizes, Labour seats are over-represented in this list. 11 of the top-20 are Labour red (4.8% of Labour’s English and Welsh seats), while nine are Conservative blue (2.7%). Before last May’s general election, the top-20 was even more Labour-dominated: 12 seats of these seats were Labour, two had Liberal Democrat MPs, and the remaining six were Conservative. The three seats that switched MP at the election were all won by a Conservative, and were all in the South West and on the coast (Torbay, Plymouth Moor View, and St Austell & Newquay).

At the other end of the scale, the 20 constituencies with the lowest insolvency rates are mostly Conservative: there are just four Labour constituencies (all long-held London seats) and one Liberal Democrat seat (Sheffield Hallam – the five other constituencies covering Sheffield are all Labour held and are all outside the 100 constituencies with the lowest insolvency rates). None of these low-insolvency seats switched party in 2015*.

Blue bankruptcies

The differences are even more pronounced when you look at the different types of insolvency procedure. As we’ve explained before, people enter different insolvency procedures for very different reasons.

A common cause of bankruptcy, for example, is job loss or the failure of someone’s business. Those entering bankruptcy are likely to have more assets and higher debts than those in an Individual Voluntary Arrangement or Debt Relief Order. Those subject to a DRO are likely to be on very low incomes and have few assets to their name; they have low debts, too, but even these are unaffordable. IVAs are often associated with people who have very high consumer debts.

Although bankruptcies are the least common form of personal insolvency nationally, in wealthy constituencies like the Cities of Westminster and London it is the most common (3.8 bankruptcies per 10,000 adults; 2.3 IVAs; 1.6 DROs). At the other end of the scale, in less affluent constituencies like Nottingham North (part of the ‘poorest city in Britain’, according to the BBC), bankruptcies are low (1.9 per 10,000 adults) and DRO (6.6) and IVA (18.4) rates are much higher. Nottingham North has both the 30th lowest bankruptcy rate in England & Wales and the 2nd highest IVA rate.

With this in mind, it’s notable that Conservative constituencies are much more likely to see higher rates of bankruptcy than any other type of insolvency, and that places with low bankruptcy rates are not necessarily Conservative either (especially when compared to places with low DRO or IVA rates).

Of the 20 seats with the highest bankruptcy rates, 11 have a Conservative MP, although this would have been 7 pre-election and Labour seats are still – just – proportionally more likely to feature on this list. Five of these seats changed hands at the election (of which the Conservatives won four), while the constituency with the highest bankruptcy rate is Conservative Torbay.

Of the 20 constituencies with the lowest bankruptcy rates there are 11 Conservative seats, eight Labour seats (Labour’s Tooting in London has the lowest bankruptcy rate), and the Lib Dem Sheffield Hallam. Most of these 20 seats are in London and the South East.

By contrast, the places with the highest rates of DROs and IVAs tend to be Labour seats: 15 of the 20 seats with the highest IVA rates have a Labour MP (the remaining five are Conservative, including four coastal seats), as do 11 of the 20 constituencies with the highest DRO rates (the rest are Conservative seats, six of which are coastal). Despite there being few Conservative seats in either list, the two constituencies with the highest IVA (Plymouth Moor View) and DRO (Scarborough and Whitby) rates have Conservative MPs.

Conversely, the lists of constituencies with the lowest IVA and DRO rates are more likely to feature Conservative MPs: 13 of the 20 constituencies with the lowest IVA rates are Conservative, as are 17 of the 20 constituencies with the lowest DRO rates (although neither of the seats with the lowest DRO (Labour’s Brent North) and IVA (Lib Dem Sheffield Hallam) rates are Conservative).



*Is there a link between a high insolvency rate and being a marginal constituency? Of the 54 unique constituencies that make up the top-20 lists of constituencies with the highest rates of all insolvencies, bankruptcies, IVAs, and DROs, 7 (12.7%) switched hands in 2015; of the 49 constituencies making up the various top-20 lists of the lowest insolvency rates, just 3 (6.1%) changed party.

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.