Better off living in Middlesbrough than Newcastle?

The North East has the country’s highest rate of bankruptcies and IVAs.

The Insolvency Service has released regional individual insolvency figures showing that bankruptcies, Individual Voluntary Arrangements and Debt Relief Orders have shot up nationwide within the last eight years.


The total rate of insolvencies leapt from 7.2 per 10,000 people in 2000 to 30.9 in 2009, a four-fold increase, before falling back to 24.5 in 2012.


Worryingly for the North East, it’s been the region with the highest rate of bankruptcies and IVAs in the UK every year, for the past five years.


By the end of 2012, 0.33% of the region entered into a bankruptcy, IVA or a debt relief order, which was 35% higher than the average of the rest of the country.


The inside story


In 2012, the highest level of insolvency within the region was in Gateshead with 36.5 insolvent people per every 10,000, followed by 36.3 in Sunderland and Northumberland.


At the other end of the scale, if you lived in Stockton in 2012 you were 72% less likely to go through a personal insolvency than those in Gateshead. Hartlepool’s figures were similar to those in the region’s north, whilst Newcastle’s rate of 33.8, was much higher than Redcar’s rate of 25.6.


It seems evident from the figures that in terms of the chances of entering bankruptcy or an Individual voluntary arrangement, there is a North/South divide within the region. 


Most surprisingly, Tyne and Wear and Northumberland have a much higher rate than Teesside.


The rate of insolvency around Teesside is pretty much in line with the national average whilst it’s the northern regions of the North East that have such alarming figures.


There’s no obvious reason for this divide, and it’s even more surprising taking into account the unemployment data over the last five years, which shows Teesside having significantly more in this area than Newcastle.


One idea that might explain this disparity is to remember what happened in the lead up to the recession. Newcastle and its surrounding areas enjoyed a wealth creating boom much more significant than Teesside’s.


The popping of any economic bubble will usually create a corresponding spike in personal insolvencies, and that may be the case here. 


If so, we’d expect to see the level of personal insolvencies align between the regions over the next couple of years


It’s not all doom and gloom for the North East


Despite these figures, there’s been a real lift in the regions’ business communities and their outlook. If this continues, we’d hope it will translate into higher employment rates, better paid jobs, and a long, real sustainable improvement in the region’s economies.


Personal insolvency rates have fallen across the region over the last three years, and although we think they are still too high, the direction they’re going in is the right one, and there’s a feeling that we’ve already turned the corner.