Consultation outcome

Response to Insolvency Service Official Statistics Consultation, 2023

Updated 28 July 2023

1. Introduction

The Insolvency Service aims to produce high-quality statistics that are trusted and meet the needs of a wide range of users. From May to June 2023 we consulted on proposed changes to Insolvency Service Official Statistics publications to help achieve these aims. These consultation responses have been considered in conjunction with information gathered through a user survey at the end of 2022. We have also reviewed web analytics and assessed ad-hoc queries received over the past three years.

Five organisations responded to the consultation. We thank these organisations for their time on producing considered and detailed responses, which were valuable in making decisions on changes to the statistics publications.

While the formal consultation has ended, the Insolvency Service is committed to continuous improvement of its statistics publications and welcomes feedback and suggestions to [email protected] at any time.

2. Summary

Four proposals were included in the consultation:

Discontinue the monthly and annual Insolvency Service Enforcement Outcomes publications, and instead publish management information tables on a monthly basis.

No responses to the consultation objected to this course of action. We have announced the discontinuation of these Official Statistics following the next monthly tables update on 11 August 2023, with monthly management information tables to be published from September.

Combine monthly and quarterly Insolvency Statistics, maintaining the overall frequency as monthly, but providing additional detailed statistics on a quarterly basis.

Responses to this were positive, with no objections to merging the publications. Therefore, these publications will be merged, with the first combined publication likely to be published in either January or April 2024. Some responses requested that information currently published only quarterly be published monthly instead and we have responded in detail below.

Improve the provision of statistics relating to individual insolvency, including increased focus on individual voluntary arrangements (IVAs) and debt relief orders (DROs)

The proposed changes were largely welcomed, particularly around the provision of increased information relating to IVAs, with some caveats relating to how the information is presented. However, some respondents requested the retention of information relating to income payment orders and agreements. Respondents also requested additional information relating to bankruptcies and DROs. We will proceed with most of the changes to individual insolvency information proposed in the consultation, but with some alterations in light of the consultation responses. We have provided details about this below.

Other methodology and content changes to Insolvency Statistics.

Respondents provided some challenges and some support to proposals in this section. For example, there were varying views on whether liquidation rates or corporate insolvency rates encompassing all forms of corporate insolvencies, not just liquidations, were more appropriate to present. We have outlined our planned course of action in the details section below.

The consultation also asked users whether there were any gaps in the coverage of Insolvency Service Official Statistics. We have summarised user responses to this, as well as our planned course of action, below.

3. Details of planned changes

3.1 Discontinuing Insolvency Service Enforcement Outcomes Official Statistics

The Insolvency Service currently publishes monthly tables and annual commentary relating to the enforcement outcomes it achieves. These include director disqualifications, winding up orders in the public interest, bankruptcy and debt relief order restrictions, and criminal prosecutions.

The Insolvency Service received three responses to the proposal to discontinue these Official Statistics and instead publish management information, including one respondent who stated that their organisation does not use this publication. The other two responses did not object to the discontinuation of the publication, as long as similar information will be presented as management information or on the existing quarterly corporate scorecard. One response requested that numbers of debt relief order restrictions be reported.

The Insolvency Service will therefore discontinue the Enforcement Outcomes Official Statistics publication following the next monthly tables update on 11 August 2023. We have published a notice on the publication page.

The management information to be published on a monthly basis is likely to change over time in response to changes in user demand, legislation and context, but at a minimum it will initially include:

• The total number of director disqualifications in each month in which the Insolvency Service had significant input
• The number of these that relate to COVID-19 financial support scheme abuse
• The number that relate to dissolved companies under the Rating (Coronavirus) and Directors Disqualification (Dissolved Companies) Act 2021
• The average length of director disqualifications in each month
• The total number of bankruptcy and DRO restrictions in each month
• The number of these that relate to COVID-19 financial support scheme abuse
• The average length of bankruptcy and DRO restrictions in each month

DRO restrictions are rare, with only seven in the 2022-23 financial year. Therefore, these will be aggregated with bankruptcy restrictions, as is currently the case in the Official Statistics.

The first publication of this management information will be in early September 2023.

3.2 Combining monthly and quarterly insolvency statistics

In May 2020, the Insolvency Service introduced monthly insolvency statistics in response to the COVID-19 pandemic. In addition, quarterly individual and company insolvency statistics, which are accredited as National Statistics by the Office for Statistics Regulation (OSR), have continued to be published.

The Insolvency Service received four responses to the proposal to combine the monthly and quarterly publications, while retaining monthly frequency. All four responses either agreed with or had no objection to this proposal. Responses indicated a continued need for monthly data and two requested monthly publication of some information that is currently published only quarterly.

We will therefore combine the monthly and quarterly insolvency statistics publications. The combined publication will be released once a month, with an additional supplement published quarterly. The first release is likely to be in either January or April 2024, subject to the completion of work to produce a back series of historical monthly information. We will also determine whether seasonal adjustment on a monthly basis is appropriate and implement it if so. We will create as long a historical series of monthly statistics as is practicable and continue to provide a longer time series of quarterly statistics back to 1984 (where available) in column separated variables (CSV) format.

The insolvency statistics in January, April, July and October will be published later in the month than the current monthly insolvency statistics publications. Publication dates will initially be towards the end of these months as is currently the case for the quarterly insolvency statistics. This is because data used to produce some of the extra information published quarterly are not available until more than two weeks after the end of the month. However, through increased automation and other process changes, we will aim to publish these earlier in the month in due course.

One respondent requested record-level data on company insolvency on a monthly basis instead of quarterly. However, given that up to date information on companies currently in an insolvency procedure can be found using the Companies House Advanced Register Search, we do not believe that the benefits of increased timeliness and frequency outweigh the extra resources required to do so. The respondent also requested that each company be listed with the month of the insolvency, as currently only the quarter is provided. We will seek to provide this, subject to availability of the necessary data.

Another respondent made a more general request that the additional information in the quarterly publication be provided monthly. When we combine the publications, we will assess on a case-by-case basis whether information currently provided in the quarterly publication can be provided monthly and if so, whether the benefits of providing it monthly outweigh the extra resources required to do so.

3.3 Improving the provision of information relating to individual insolvency

Our monthly and quarterly individual insolvency statistics publications currently have a greater focus on total individual insolvencies, and on bankruptcy, with limited information on debt relief orders (DROs) and individual voluntary arrangements (IVAs). However, user feedback shows more interest in statistics in relation to IVAs and DROs. Currently, the Insolvency Service publishes statistics on IVA Outcomes and Providers and Individual Insolvencies by Location, Age and Gender, on an annual basis.

Consultation responses generally welcomed the addition of information about IVAs, subject to some concerns about interpretation of IVA termination rates. However, two respondents requested that information about bankruptcies, including income payment orders and agreements, be maintained or enhanced.

In relation to specific proposals, we will implement the following, which received no objections and were generally welcomed:

• Increase the frequency of IVA Outcomes and Providers tables from annual to quarterly.
• Simplify the publication of monthly IVA statistics by removing the three-month rolling average calculation, as statistics are now less volatile than when the monthly statistics were introduced.
• Include monthly statistics to show IVAs by approval month, as well as by registration month. Statistics by approval month will be presented with a one-month lag.
• Publish statistics on DROs by competent authority on a quarterly basis.
• Publish statistics on Breathing Space by money adviser group on a quarterly basis.

These changes will be implemented during the remainder of the 2023/24 financial year.

We also intend to include information on IVA termination rates by provider in quarterly tables. However, we recognise the concerns of two respondents relating to the interpretation of termination rates, particularly by firm. These are complex to calculate given that IVAs are often transferred between providers, so it is not always clear which firm an IVA termination should be attributed to. Breakage volumes can be volatile given cleansing activity and other factors. Both respondents also indicated a preference for publishing completion rates as well as, or instead of, termination rates. While we still intend to publish statistics relating to completion or termination rates, we will consider further the methodology and interpretation, and will work with stakeholders to develop these statistics.

We proposed to discontinue statistics relating to income payment orders and agreements for bankrupts. However, two respondents objected to this. We will retain a table on numbers of income payments and agreements, however we will cease seasonally adjusting these statistics and publish only numbers by agreement or order date, rather than bankruptcy date.

Two respondents requested additional information on individual insolvency, including additional information relating to levels of contribution in income payment orders and agreements, as well as repayments, fees and returns to creditors in bankruptcy. We intend to prioritise the expansion of data on DROs and IVAs, so will not include this in the Official Statistics improvement work to be conducted in the 2023-24 financial year.

One respondent requested information on bankruptcy and DRO restrictions, which is already included in the quarterly corporate scorecard.

3.4 Other proposed methodology and content changes to insolvency statistics

Three responses were received relating to the three additional changes.

Machine readability

We will improve the machine readability of publication tables by use of a ‘notes’ column at the end of each publication table to indicate revisions in each row, rather than the current policy where revised statistics are marked with an [r] within the publication table. This has already been trialled in the Individual Insolvency by Location, Age and Gender, 2022 statistics. There were no objections to this proposal and it was welcomed by one respondent.

Corporate insolvency rates

There were two responses to replacing the liquidation rates currently published in the quarterly company insolvency statistics with corporate insolvency rates, so as to also include administrations and company voluntary arrangements, but omit creditors’ voluntary liquidations following administration. One welcomed this, as long as the number of creditors’ voluntary liquidations following administration remains small. The other raised concerns regarding double-counting resulting from including procedures such as company voluntary arrangements (CVAs), which may result in a subsequent insolvency procedure. We will perform analysis to understand the likely scale of this issue and consider mitigations accordingly. We will then confirm whether the metric will be changed to the overall corporate insolvency rate. If we make this change, we will continue to make the rate of administration to CVLs available in the relevant data table.

Industry breakdowns

We proposed to reduce the number of tables showing industry breakdowns for companies in insolvency. One respondent disagreed with this proposal, because although users can use record-level data provided as part of the quarterly statistics to calculate the numbers themselves, the current provision of information ensures a single source of truth and requires extra work for users. We accept this view and will retain the tables by insolvency type at 3-digit SIC level, while removing the separate breakdowns for 1-digit and 2-digit SIC, which are currently duplicated in the 3-digit table. For ease of use, we will also provide a 1-digit SIC table for total company insolvencies only in England & Wales.

In addition to these changes, the Insolvency Service will continue to engage with Companies House and other government departments to investigate the possibility of publishing further commonly requested information on company insolvency where we do not currently hold the required data, such as insolvency rates by industry sector and location.

3.5 Gaps in coverage not covered elsewhere

Three respondents identified additional items which they felt would enhance the publications.

One respondent suggested that moratoriums and restructuring plans should be included in tables, as well as an additional chart covering ‘other insolvencies’, making trends for administrations, CVAs, restructuring plans and moratoriums clearer. We intend to include this chart in the new combined publication and will also provide numbers in the tables to ensure the underlying numbers for the chart are accessible. The respondent also requested the inclusion of pre-pack administrations, however we do not hold the necessary data to provide this.

This respondent also requested the retention of statistics on CVLs following administration, and inclusion of statistics on compulsory liquidation numbers following administration. We intend to retain the numbers of CVLs following administration. These can be easily calculated because such cases require the submission of a specific form to Companies House. The identification of compulsory liquidations following administration is less straightforward, as are other cases where a company undergoes multiple insolvency procedures. We are prioritising other changes to the statistics, so will not include this in the Official Statistics improvement work to be conducted in the 2023-24 financial year.

Two respondents requested additional information relating to individual insolvency. Both requested information on providers and termination rates relating to bankruptcies, DROs and debt management plans that is currently provided for IVAs. The Insolvency Service does not hold information on debt management plans. For DROs, we intend to provide some additional, including numbers by competent authority.

In terms of outcomes by debt solution, delayed discharge (for bankruptcy) and revocation (for DROs) are rare compared to terminated IVAs. The differing requirements of these debt solutions means that direct comparisons between completion rates should not be made. We have no current plans to publish this metric.

One respondent requested information relating to total debt and amount returned to creditors for each individual insolvency type. We do not hold this information for IVAs and information for DROs is incomplete. We are prioritising other changes to the statistics, so will not include this in the Official Statistics improvement work to be conducted in the 2023-24 financial year.

A respondent also requested more interactive charts to enable access to the underlying data. Due to technical limitations, we are currently unable to provide this, but we will keep this under review. Currently, underlying data for all charts are provided in the accompanying data tables.

4. What happens next?

Throughout the remainder of 2023-24 we will be implementing the changes to Official Statistics publications described above. Key dates are listed below:

11 August 2023 – Final publication of Insolvency Service Enforcement Outcomes monthly tables

Early September 2023 – First publication of new monthly management information on Insolvency Service Enforcement Outcomes

31 October 2023 – Publication of July to September quarterly insolvency statistics, incorporating some of the changes and additional information described above

End of January 2024 or April 2024 – Publication of the first combined monthly and quarterly Insolvency Statistics publication