Gender

• There were 22.6 insolvencies per 10,000 women in 2017 compared to 20.2 insolvencies per 10,000 men. There were 21.4 insolvencies per 10,000 for all adults.
• Women were involved in 65.4% of Debt Relief Orders, 53% of Individual Voluntary Arrangements, and 38.6% of bankruptcies.

“The statistics for 2017 carry on the pattern which we have seen over the last few years, of women being persistently more likely to enter an insolvency procedure than men, with the gap widening to become even greater than in 2016.

“Many factors feed into this gender disparity. For example, women are much more likely than men to work part-time, and in sectors and roles with lower pay; women are often paid less than men for performing comparable work, as the gender pay gap shows; they are more likely to be single parents, which has a high correlation with greater poverty levels; and previous Insolvency Service statistics showed women were more likely than men to enter bankruptcy as a result of relationship breakdown.

“A number of factors have increased women’s insolvency rates over the last few years, not least the introduction of Debt Relief Orders [DROs] in 2009 and their subsequent expansion a couple of years ago. DROs are designed to help people with low incomes, debts, and assets, and have been predominantly used by women. DROs have helped those who might not have been able to access an insolvency procedure otherwise.

“Overall, unemployment levels stayed relatively low across 2017, but in the context of zero hours contracts and the gig economy, just having a job can be less of a bulwark against insecurity and insolvency than it used to be.

“Women have a lower participation rate in the economy, with around 26% counted as economically inactive in 2017 compared with around 17% for men. People on fixed incomes, be they pensioners or benefits claimants, are more vulnerable to rises in inflation, as any increases in their incomes will lag behind real-world conditions; price rises across last year will have increased the pressures on household budgets.

The form of insolvency which is most closely linked to consumer spending, an individual voluntary arrangement (IVA), is relatively equally used by men and women.

“Women’s relatively weaker financial position is underlined by the gender split in DROs, which are used when the debt in question is small, and the indebted individual has assets under £1,000. Two thirds (65.4%) of DROs were taken out by women, compared with 34.6% by men.

“Bankruptcy, meanwhile, is the one form of personal insolvency procedure which is more commonly used by men than women (61.4% of bankruptcies are taken out by men and 38.6% by women in the most recent statistics), and is often associated with business failure and higher debts.”

The number of DROs taken out in 2017 fell by around 5% compared with 2016, while the number of bankruptcies was essentially flat, rising by only 0.4% year on year. IVAs jumped by 20% year on year, and overall, individual insolvency numbers rose by 9% in 2017 compared with 2016.

Regional

“As with the gender split, the geographical distribution of individual insolvencies also follows the patterns of recent years. The places which have the highest rate of personal insolvency tend to be seaside towns, in towns affected by the decline of a particular industry, and in the North East – where there is often a combination of both the other two factors. Although it’s not in the North East, Stoke, an area where industry has declined, tops the list of local authority personal insolvency rates.

“The problems facing seaside towns are well-known, and six of the 10 places with the highest rate of personal insolvency are by the sea. Seasonal work dries up over the winter, and when it is available, wages tend to be low. In more heartening news, however, the Government launched a £40 million fund in February to encourage investment and to boost jobs in coastal communities. The vibrant economies of seaside cities like Brighton show that coastal settlements can become prosperous, given the right conditions.

“Areas where industry has receded face significant challenges. High levels of individual insolvencies are often accompanied by other issues, like poorer health and education outcomes. We’re still seeing the impact of industrial decline, decades later. Tackling economic malaise will require significant investment in building skills, resilience, business networks, and better infrastructure. Interestingly, London is the only place where bankruptcies – a procedure associated with higher levels of debts and assets – are more common with DROs – which are associated with low assets and low, but unaffordable debts.

“Regional initiatives, such as the Northern Powerhouse and the Midlands Engine, are one way to bring public and private sectors together to boost investment and to build links, and more of a focus on such projects would be welcome news for people and businesses in post-industrial areas. Projects must also take care to look outside cities and larger towns to places where a spiral of decline has set in – the statistics show that places where levels of personal insolvency are high often exist side by side with much more prosperous areas.

Insolvencies by Local Authority

Local Authority Insolvencies per 10,000 adults

What causes insolvency among men and women?

In 2016, the government also published statistics on the 17 causes of bankruptcy in 2015 as categorised by the Insolvency Service and broken down by gender. The statistics showed that:

• 34% of men’s bankruptcies in 2015 were caused by the bankrupt’s own company running into financial problems, compared to 13% of women’s bankruptcies (26% for all adults).
• The most common single cause of men’s bankruptcies in 2015 was ‘living beyond means’ (approx. 995 bankruptcies), closely followed by ‘management failure’ at their own company (990), and the bankrupt’s loss of their job (920).
• The most common single cause of women’s bankruptcies in 2015 was ‘living beyond means’ (1,110), ‘relationship breakdown’ (1,075), and the loss of or a significant reduction in household income (750).