Lower income families hit by rising insolvencies

Rising Insolvencies in some areas.

(“Don’t leave it until you are in trouble to take precautions against insolvencies, entrepreneurs and older folk warned by Legacy Protection Trusts.”)

Putney, Chiswick and Richmond also buck UK wide insolvencies decline

New analysis from Experian®, the global information services company, today reveals that the economic downturn continues to hit the poorest sectors of the UK population with a marked rise in insolvencies amongst welfare dependent groups and lower income families.

Figures published today by the Insolvency Service showed there were 10.2 per cent fewerpersonal insolvencies in Q2 2012 compared with the same quarter in 2011.

Demographic insight

Experian’s analysis of insolvency statistics using its Mosaic classification revealed that insolvencies increased most amongst the Claimant Cultures demographic group. This group represents some of the most disadvantaged individuals in the UK and saw insolvencies rise by 83 basis points compared to the same period last year and now accounts for 9.10 per cent of total insolvencies across the UK.

The Ex-Council Community group, consisting of people living on council estates where a large proportion of residents have exercised their right to buy, and the Upper Floor Living segment, people on limited incomes renting small flats from local councils, also saw insolvencies increase in the last quarter. These groups represented 14.64 per cent and 5.50 per cent of insolvencies respectively from April to June this year. The largest share of UK insolvencies continues to be within the Ex-Council Community demographic.

In stark contrast, young professionals experienced the biggest drop in their share of personal insolvencies in the last 12 months.  The Career and Kids group, consisting of young, professional and middle class families saw its proportion of insolvencies decrease by 29 basis points to 5.99 per cent in Q2 2012.  The New Homemakers group, typically young professionals who have recently bought a new home also experienced a fall in its share of insolvencies, from 6.03 per cent in Q2 2011 to 5.73 per cent in Q2 2012.

Geographical analysis

While the total number of individuals being declared insolvent has fallen across the country, some pockets of the UK continue to struggle, including some of Britains wealthiest areas.  Putney saw the biggest increase in insolvencies –111 per cent – with three in every 10,000 households becoming insolvent in Q2 2012, compared to one in every 10,000 this time last year. Richmond, one of London’s most affluent boroughs, and Chiswick also saw rising personal insolvency levels, up by 83 per cent and 100 per cent respectively.

St Albans recorded the UK’s biggest drop in insolvencies, with one in every 10,000 households being declared insolvent, 78 per cent less than in Q2 2011.

Simon Waller, Head of Customer Management and Collections at Experian UK & Ireland, commented:  “In a downturn the least well off are always likely to suffer most as financial pressures lead to the challenge of meeting their repayments. It remains vital for organisations to be able to identify and segment customers by their specific needs and characteristics and for lenders to identify those that are generally struggling to pay their bills.  Lenders can use this insight to gain an overall picture of an individual’s circumstances so that they can treat customers sensitively and put in place measures to help the most vulnerable.”

Consumer groups most prone to personal insolvency
Mosaic Group Description Insolvencies per 10k households Q2 2012 Insolvencies per 10k households Q2 2011 % of Q2 2012 Insolvent Total Change on Q1 2012 (basis  points) Change on Q2 2011 (basis  points)
Ex-Council Community Practical and enterprising people who have created comfortable lifestyles for themselves. Many live on pleasant well-built council estates where a large proportion of residents have exercised their right to buy. 12 15 14.64% 4 14
Suburban Mindsets Mostly married or middle aged people, bringing up children in family houses. Some commute to city jobs from affluent suburbs while others earn good wages from manufacturing jobs close to where they live. 8 9 10.57% -40 -15
Industrial Heritage Traditional people living in communities historically dependent on mines, mills and assembly plants. Typically married and approaching retirement, many work in offices and shops although large proportions still derive incomes from manual and craft skills. 10 12 9.82% 0 -22
Terraced Melting Pot Poorly educated people working in relatively menial, routine occupations. Majority are young, some still single, others living with a partner with young children. Many belong to groups that have recently arrived in the UK. 11 9 8.50% -34 -19
Claimant Cultures Some of the most disadvantaged people in the UK, including significant numbers who have been brought up in welfare dependent families. Common on the periphery of provincial cities which have struggled against declining demand for low skilled labour in docks and maritime industry. 13 14 9.10% 52 83
Small Town Diversity People living in smaller towns inneighbourhoodsof older housing where there is relatively little change in the population. They have friends and family who live nearby and are likely to live the rest of their lives in the same community. 7 9 8.03% 7 -32
Careers and Kids Young couples whose lives are focused on the needs of their growing children and creating a comfortable family home. Well-educated and established in a technical, junior or middle management careers. 8 11 5.99% -30 -30
New Homemakers Mixture of young single professionals, young couples starting a family and older people downsizing into modern accommodation living in homes which are likely to have been built only in the last five years. 10 13 5.73% 34 -29
Liberal Opinions Young, professional, well educated people, cosmopolitan in their tastes, liberal in their views, who enjoy the vibrancy and diversity of inner city living. Popular occupations include jobs in journalism, politics, entertainment and the arts. 5 6 5.33% -5 11
Upper Floor Living People are on limited incomes renting small flats from local councils or housing associations. Typically these people are young single people or young adults sharing a flat. 8 9 5.50% 40 35
Elderly Needs Pensioners who can no longer easily manage a house and garden. This group contains a large number those in their 70s, 80s and even 90s, who are no longer as physically active as they once were. 8 9 5.41% 59 16
Professional Rewards The UK’s executive and managerial classes. Often in their 40s, 50s or 60s, some may be owners of small or medium sized businesses whilst others have risen to senior positions in large multinationalorganisations. 6 4 4.54% -29 -21
Rural Solitude People who live in small villages, isolated farmhouses or cottages where farming and tourism are the mainstays of the economy.Neighbourhoodshave a traditional country way of life with a strong sense of community. 7 6 3.22% -13 -23
Active Retirement Retired people who have decided to live in a community among people of similar ages and incomes. Likely to have an occupational pension accompanied by savings accumulated during their working lives. 4 5 2.34% -36 4
Alpha Territory The most wealthy and influential individuals in the UK. Have risen to positions of power as owners of businesses, bankers, senior managers in industry or as top lawyers, surgeons or civil servants. Includes small but influential cadre of celebrities in sport, the arts and entertainment. 3 3 1.10% -26 13
Source: Experian 2012

 

 

Highest concentrations of personal insolvencies by town/territory

 

Town / Territory

Q2 2012: Insolvencies per 10k households

Q2 2011: Insolvencies per 10k households

Year-on-year change

Kirkaldy

17

22

-22%

Glenrothes

16

19

-17%

Falkirk

17

17

5%

Clydebank

19

15

23%

Source: Experian 2012

 

Top decreases in personal insolvencies by town

 

Town / Territory

Q2 2012: Insolvencies per 10k households

Q2 2011: Insolvencies per 10k households

Year-on-year change

St Albans

5

1

-78%

Bournemouth

10

3

-67%

Cheltenham

8

3

-64%

Shrewsbury

10

4

-61%

Gloucester

9

4

-59%

Source: Experian 2012

 

 

Top increases in personal insolvencies by town

 

Town / Territory

Q2 2012: Insolvencies per 10k households

Q2 2011: Insolvencies per 10k households

Year-on-year change

Newton Abbot

8

11

46%

Newcastle-under-Lyme

8

13

60%

Richmond (London)

1

3

83%

Chiswick

1

3

100%

Putney

1

3

111%

Source: Experian 2012