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Breathing space scheme: Two years in

Breathing space scheme: Two years in

08 November 2023

As more and more people in England and Wales struggle with money worries, in this blog we look at how the breathing space scheme helped people stay afloat in 2022…

A temporary shield

In May 2021, the Government introduced the Breathing Space scheme in England and Wales, to support individuals tackling debt.

Allowing debtors a 60-day respite from creditor pressure, the scheme offers legal protections such as freezing interest and penalty charges, and halting enforcement actions. These protections extend to individuals in mental health crisis treatment, covering the full duration of their treatment plus an additional 30 days.

While there are limits to how many times or how often you can apply for other personal insolvency processes, there is no limit on the amount of mental health crisis breathing spaces a person can have.

Increasing in popularity

In the first year of the scheme, from May 4th 2021 to April 30th 2022, one in 736 adults in England and Wales entered a breathing space – a total of 63,864 registrations.

Fast forward to 2022, the first full calendar year of the scheme (January 1st 2022 – 31st December 2022), this has risen to one in 668 adults (a rate of 15.0 per 10,000) entering a breathing space, with a total of 70,546 registered in 2022. This was made up of 69,334 standard breathing space registrations and 1,212 mental health breathing space registrations.

Average quarterly breathing space numbers in 2022 were 14% higher than in the scheme's inaugural year and since its launch in May 2021, over 110,000 breathing spaces have been registered, highlighting the scheme's importance in helping individuals who are struggling financially.

Regional disparities

In 2022, the North West and North East had the highest breathing space registration rates, at 19.3 and 19.2 per 10,000 adults, respectively. On the opposite side of the coin, London recorded the lowest rate, with just 10.8 per 10,000. This pattern mirrors the trends seen in the first year of the scheme (May 2021-April 2022), with the North East topping the list and London at the bottom.

These trends line up with general personal insolvency statistics, with personal insolvency levels usually sitting higher in the north than in the south. One reason for this could be lower average regional salaries, which have made people in the North vulnerable to the cost-of-living crisis and the increases in the cost of food, fuel and energy.

The age divide

When it comes to age, in both 2022 and the scheme’s first year 2021-2022, breathing space rates were highest amongst those aged 25 to 44 and lowest for individuals over 65. Younger adults (18 to 24 years old) were slightly more likely to enter a breathing space compared to those aged 55 to 64.

People in their early 20s-40s may also be more susceptible to financial instability, with high rental costs, the cost of home buying preventing many young people from getting a foot on the property ladder, greater job instability, and have had to contend with the cost-of-living crisis and its effect on their expenses, all of which could contribute to an increased use of the scheme.

An essential lifeline

Two years on from its inception, the breathing space scheme has clearly made an impact on people in England and Wales. As the cost-of-living crisis and aftereffects of the pandemic continue, we expect the numbers of individuals taking-up the scheme is likely to rise over the coming year. With the impact of sustained inflation, as well as a succession of interest rate rises, pressure on household finances remains high.

What will be interesting to ascertain over the coming years, is how the scheme settles and what a normal rate of uptake looks like in the longer term. This could provide a useful indicator warning of future crunch points on consumer finances in the years ahead. Furthermore, the scheme will remain a vital resource in providing respite from money worries and the accompanying mental health pressures that often follow.

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Stuart McBrideStuart McBride
Senior Communications Manager
020 7566 4214
Amelia FranklinAmelia Franklin
Campaigns and Communications Executive
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Pim UngphakornPim Ungphakorn
Public Affairs Manager
020 7566 4202
Thomas ChiversThomas Chivers
Public Affairs & Policy Officer
0207 566 4227
Anthony WaltersAnthony Walters
Head of External Affairs
020 7566 4220

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