Bust beside the seaside?

When statistics are used to quantify the financial problems people face, they are often listed not just as nationwide figures, but on a geographical basis too.

However, these tend to be based on the standard regions, which may make it easy to compare circumstances between north and south, or between London and the rest of the UK, but does not always tell the full story.

For example, one geographical variation has been uncovered in research by Clear Debt, showing personal insolvency is higher in coastal locations than elsewhere. This is not a matter of north v south, but rather an indication that people are far more likely to fall into such deep strife in Blackpool and Hastings than in Birmingham or Haringey.

Of the ten local authorities where personal insolvency is the highest, six are in coastal areas. Blackpool was worst off in the whole country at a rate of 57.7 per 10,000 people last year. While the second worst was Mansfield at 51.09 per 10,000, the next four highest were also by the sea – Torbay, Scarborough, Denbighshire and Kingston-upon-Hull. Great Yarmouth is also on the list in ninth.

Nor is the torrent of bankruptcy cases and individual voluntary arrangements (IVAs) just a recent phenomenon. In the 12 years covering the period of 2000 to 2011, Kingston-upon-Hull was the only authority in the top ten every time, while second on the list was Torbay on ten. Plymouth was on the list nine times and Blackpool, Eastbourne, Hastings and North East Lincolnshire were all included four times. Of inland authorities, only six times listed Basildon was in the top eight.

Such a list shows there is only one clear pattern with insolvency. The list includes seaside resorts like Torbay, Blackpool and Swansea, but also medium-sized port cities (Hull and Plymouth). It includes largely rural areas (Denbighshire and North East Lincolnshire) and is spread across different regions, with affluent Sussex represented as much as Yorkshire.

The analysis shows these figures are not mere coincidence. The highest level of benefit claimants in any local authority in England and Wales in 2011 was 26.4 per cent in Blackpool, with Kingston-upon-Hull second. Also among the top ten were Great Yarmouth, Torbay, Denbighshire and Scarborough.

Good reasons exist to suggest these factors are linked and it is not just about coastal areas having generally higher unemployment. Not all people out of work sign on, hence the fact that the official figures for joblessness are always much larger than the Jobseeker's Allowance (JSA) claims. For example, in the most recent figures, there were 2.56 million unemployed, but 1.59 million on JSA.

However, for those facing such severe financial problems that they could be set to go bankrupt or opt for an IVA, it clearly makes sense to claim whatever cash could be available from the government.

Another contributory factor could be low earnings, something that will make spiralling debt problems hard to tackle. The study found the same boroughs that suffered the lowest average pay rates corresponded with the highest insolvency rates.

This was true not just in Blackpool (again the worst off) and also other seaside authorities like Torbay, Hull, Scarborough, Denbighshire and Great Yarmouth, but also the inland locations where insolvency rates were highest: Mansfield, Tamworth, Redditch and Swindon.

So the lessons are clear: Where pay rates are low and unemployment high, the ability to cope with debt is inevitably weakest and the need to seek insolvency help is greatest.

By Joe White