DROWNING IN A SEA OF DEBT
Personal and business bankruptcies soar to pre-crash levels
SOARING numbers of Scots are now drowning in a sea of debt and losing the battle to stay afloat.
Gloomy figures reveal that 35 people are being declared bankrupt every day as Scotland’s economy remains in the doldrums.
More than 20 businesses a week are also going to the wall, which threatens to cause further financial misery for the staff who lose their jobs.
Opponents say that the SNP’s decision to make Scotland the highest taxed part of the UK has played a part in forcing more families into ruin.
Ministers are being urged to do more to support businesses and revive the economy in order to prevent more people plunging into financial meltdown.
The official data, published yesterday, shows that personal insolvencies increased by 11.8 per cent between april and June compared with the same period last year.
Business insolvencies, mainly made up of liquidations, rose by 22.5 per cent.
It is the first set of figures since the SNP’s income tax reforms – which mean all those earning more than £26,000 face higher bills than those in other parts of the UK – came into effect in april.
Scottish Conservatives economy spokesman Dean Lockhart said: ‘These figures make worrying reading and show that more and
more Scots are struggling with debt. Yet, despite the problems they are facing, the SNP has chosen to hammer families with higher income taxes.
‘Rather than making Scotland the highest taxed part of the UK, we need to be doing what we can to help these individuals stay afloat.
‘It’s time the SNP realised the damage the high-tax, antibusiness approach is doing and had a rethink.’
The figures, published by the Government’s Accountant in Bankruptcy (AiB) quango, show that personal insolvencies – including protected trust deeds, which are a form of voluntary bankruptcy – rose by 11.8 per cent from 2,869 in the first quarter of 2017-18 to 3,208 in the first three months of 2018-19.
It means more people are suffering bankruptcy than at any point since the end of 2013, with numbers now close to the levels reported at the start of the financial crash in 2008.
Over the same period, corporate insolvencies increased from 200 to 245. Among the major firms to have plunged into administration or liquidation in recent months is construction giant Carillion, which works on projects across the public sector, and the global children’s retailer Toys R Us.
David Lonsdale, director of the Scottish Retail Consortium, said: ‘Companies are having to fork out more and more for things like business rates, the apprenticeship levy, pension contributions and the national living wage, and this is chipping away at profitability and cash flow.
‘Coupled with a Scottish economy which lacks vigour and squeezed consumer spending, this is undoubtedly a challenging period for firms, especially consumer-facing ones like retailers who operate on thin margins.’
The Scottish Government pointed out that its pioneering Debt Arrangement Scheme (DAS), which allows people to take control of their finances and repay their debts without facing insolvency or further action being taken against them, recorded an 8.5 per cent rise compared with the same quarter a year ago.
Business Minister Jamie Hepburn said: ‘The UK Government’s cruel and unnecessary austerity agenda continues to impact on Scotland’s most financially vulnerable families, leading to an unmanageable burden of debt for too many households.
‘Here in Scotland, we are working hard to be at the forefront of debt relief policy and we will shortly be taking steps to widen access to Scotland’s successful Debt Arrangement Scheme. DAS has already helped repay over £200million of owed debts without individuals having to become insolvent.
‘The Scottish Government continues to do all it can to safeguard key industries in Scotland and lessen the impact on communities when employers close. Corporate insolvencies are in line with the trend in recent years.’
AiB chief executive Richard Dennis said: ‘While the number of individuals entering insolvency continues to be very much lower than ten years ago, these figures illustrate personal insolvencies remain on an upward trend from the first quarter of 2015-16.
‘With consumer borrowing now surpassing the levels seen before the 2008 crash, we are leading an ambitious programme of reform to make sure the debt solutions offered by the Scottish Government remain relevant.
‘Changes expected to come into force this October will make the DAS a much more accessible and flexible option for some people who otherwise may see no alternative other than insolvency.’
‘The economy lacks vigour’