Accredited official statistics

Methodology and Quality Document - Individual Insolvency Statistics January to March 2021

Published 30 April 2021

The United Kingdom Statistics Authority has designated these statistics as National Statistics, in accordance with the Statistics and Registration Service Act 2007 and signifying compliance with the Code of Practice for Official Statistics.

Designation can be broadly interpreted to mean that the statistics:

• meet identified user needs;
• are well explained and readily accessible;
• are produced according to sound methods; and
• are managed impartially and objectively in the public interest.

Once statistics have been designated as National Statistics it is a statutory requirement that the Code of Practice shall continue to be observed.

1. Data Sources and data validation

Aggregate data for Northern Ireland were sourced from the Department for the Economy. Aggregate data for Scotland were sourced from the Accountant in Bankruptcy (AiB), as published in their quarterly statistical series on the AIB website. The Insolvency Service does not conduct any further validation on these aggregate data.

Individual-level data for England & Wales were sourced from ISCIS. Debt relief orders that are accepted and later revoked are removed from the underlying data. In addition, duplicate records are removed, with specific focus on self-employed bankruptcy data and data on income payment orders (IPOs) and income payment agreements (IPAs).

Population estimates for persons over the age of 18, as published by the Office for National Statistics were used to calculate individual insolvency rates. For 2020 and 2021, for which population estimates were not yet available, the 2018-based population projections were used.

More information on the administrative systems used to compile these insolvency statistics can be found in the Statement of Administrative Sources.

2. Methodology

2.1 Seasonal adjustment of data

Seasonal Adjustment is the process by which patterns in a data series that are due to seasonal or other calendar influences are removed to produce a clearer picture of the underlying behaviour of the data. The process of seasonal adjustment results in a clearer picture of the underlying behaviour of the insolvency data and enables quarter-on-quarter comparisons to be made.

Most data series for England and Wales have been tested for seasonality, as described in the latest review of seasonal adjustment. The series for Scotland and Northern Ireland do not demonstrate consistent seasonality and only the unadjusted series have been presented, as agreed with the appropriate officials in the devolved administrations.

Seasonal adjustment was carried out using the X13-ARIMA-SEATS program (developed by the US Census Bureau), the recommended program for UK National Statistics.

The seasonal adjustment models for England and Wales are typically reviewed on an annual basis, in accordance with the Insolvency Service Official Statistics Revisions Policy.

However, the trend in insolvencies during the 2020/21 financial year has reflected a very different pattern to that seen in previous years, largely a result of the coronavirus (COVID-19 pandemic). Therefore the 2021 review was not conducted and England and Wales data for 2021 will continue to be seasonally adjusted using the 2020 model.

Full details of the 2020 seasonal adjustment review and the models used to adjust these data can be can be found on the Gov.uk website.

2.2 Calculation of rates

Individual insolvency rates were calculated by dividing the total number of individuals becoming insolvent in the previous twelve months by the mean average number of persons aged 18 residing in England and Wales over the corresponding period.

The rates presented for each quarter reflect a 4-quarter rolling rate per 10,000 adults in England and Wales. Therefore, the Q1 2021 rates, for example, were calculated using data covering the period Q2 2020 to Q1 2021. The insolvency rate gives an indication of the probability of an individual becoming insolvent in the previous 4 quarters. As the rates are calculated as a proportion of the total number of adults in England and Wales, they are more comparable over longer time periods than the absolute numbers.

2.3 Tabulating numbers of company insolvencies

The main series of individual insolvency tables present the overall numbers of individual insolvencies in each quarter over the past 10 years, since January 2011, as well as annual totals. Tables 1a and 1b present seasonally adjusted and non-seasonally adjusted tables for England and Wales. The commentary for these statistics refers to the seasonally adjusted figures so that reliable quarter-on-quarter comparisons can be made. Table 6 presents the non-seasonally adjusted numbers for Scotland. Table 7 presents the non-seasonally adjusted numbers for Northern Ireland.

Tables 3a to 5b provide more granular detail on individuals that have been become bankrupt. Bankruptcy and Debt Relief Order (DRO) data for England & Wales were tabulated by insolvency type and calendar month of order or agreement.

Individual voluntary arrangements (IVAs) in England & Wales were counted within these statistics in accordance with the quarter in which they were registered with the Insolvency Service. Note that there is often a time lag between the date on which the IVA is accepted (known as the date of creditor agreement) and date of registration by licensed insolvency practitioners working for firms that specialise in this area. Therefore, these data can be volatile.

Individual insolvency rates for England and Wales are presented in Table 2. Rates are not provided for Scotland and Northern Ireland.

2.4 Tabulating insolvency by industry tables

The additional series of accompanying industry tables presents quarterly numbers of ‘trader bankruptcies’ by industry in accordance with the 2007 Standard Industrial Classification (SIC). Trader bankruptcies are defined as bankrupts who self-declared themselves as self-employed at time of bankruptcy.

Trader bankruptcy data held by the Insolvency Service includes primarily the 2003 Standard Industrial Classification (SIC). These 2003 SIC codes have been converted to 2007 codes using a ‘best match’ approach using weighted tables provided by the Office for National Statistics. Where more than one SIC code is recorded for a trader bankruptcy, only the first listed, or the primary, code is used.

These statistics present trader bankruptcy data for England and Wales to the three-digit SIC 2007 level. Statistics are not presented for Scotland and Northern Ireland since these aggregate data are not supplied to the Insolvency Service. For information on SIC 2007, including its structure and more detailed information on which industries are included, please see the Office for National Statistics website.

3. Revisions

These statistics are subject to scheduled revisions, as set out in the published Revisions Policy. Other revisions tend to be made as a result of data being entered onto administrative systems after the cut-off date for data being extracted to produce the statistics. Any future revisions will be marked with an ‘r’ in the relevant tables. In addition to routine revisions, there were additional revisions made to the underlying data used to compile these quarterly statistics. All affected numbers have been marked with an ‘r’ in the relevant tables. In cases where a high volume of small revisions have been made, the entire table has been marked as revised. Details of any additional ‘non-routine’ revisions are discussed below.

An error was discovered in Tables 5a and 5b in previous releases, in which for Q4 2011 to Q4 2016, the values for all columns except the ‘total bankruptcies’ column were assigned to one quarter later than was correct. The error has been corrected for this release.

4. Quality

This section provides information on the quality of these quarterly individual insolvency statistics, to enable users to judge whether the data are of sufficient quality for their intended use.

The section is structured to align with the Quality Assurance Framework of the European Statistical System for statistical outputs.

Relevance: The degree to which the statistical product meets user needs in both coverage and content.

These statistics present individual insolvencies for England & Wales, Scotland and Northern Ireland and are the most comprehensive record of the number of individual insolvencies in the UK.

Key users of insolvency statistics include the Insolvency Service itself, which has policy responsibility for insolvency in England & Wales and for the non-devolved areas within Scotland and Northern Ireland; other government departments; parliament; the insolvency profession; debt advice agencies; media organisations; academics; the financial sector; the business community and the general public. Insolvency statistics are typically widely reported in national, regional and specialist media on the day of release.

The statistical production team welcomes feedback from users of the Insolvency Statistics and can be emailed at [email protected].

Accuracy and Reliability: Accuracy is the proximity between an estimate and the unknown true value. Reliability is the closeness of early estimations to subsequent estimated values.

All formal insolvency procedures entered into by a company, a partnership or an individual are required by law to be reported to the appropriate body, so Insolvency Service statistics should be a complete record of insolvency in the United Kingdom.

Numbers of insolvency cases are typically based on the date they were registered onto the relevant administrative recording system, and so it should be noted when making comparisons of trends over time, that trends can be influenced by late reporting.

The impact of delayed reporting is particularly an issue for IVAs. IVAs are counted within the statistics once they are registered with the Insolvency Service and are reported by month of registration date. There can be a time lag between the date on which the IVA is accepted (known as the date of creditor agreement) and date of registration by licensed insolvency practitioners working for firms that specialise in this area. This time lag can lead to volatility in the data from one month to the next and create difficulty in constituting reliable short-term trends, since changes over time may be partly a result of IVA provider activity. The IVA data are seasonally adjusted but trends over time may still not be reliable due to volatility in the data.

Some checks are in place to identify and remove duplication of cases, to ensure that returns cover all reporting areas, and to check consistency within tables and between related tables.

Note that data are extracted from live administrative systems and therefore subject to routine revisions as systems are updated.

Timeliness and Punctuality: Timeliness refers to the elapsed time between publication and the period to which the data refer. Punctuality refers to the time lag between the actual and planned dates of publication.

Quarterly individual insolvency data were extracted approximately ten working days after latest quarter end. Typically, these statistics are scheduled to be released one month after quarter end. This is to allow time to extract and compile the statistics. Additionally, the quarterly company and individual insolvency cannot be published ahead of the release of quarterly statistics for Scotland published by the Accountant in Bankruptcy (AiB), nor the quarterly release of the official statistics published by Companies House on numbers of companies on the active register.

Top-level AiB statistics to Q1 2021 (published on 28th April) were presented within these individual insolvency statistics, and the Companies House data (published on 29th April) were used to calculate company liquidation rates in the quarterly company insolvency statistics.

Where a scheduled release date falls on a Monday the scheduled release has been pushed forwards by a day, to the Tuesday, to ensure compliance with the Pre-release Access to Official Statistics Order.

The publication schedule for these statistics, and all other Insolvency Service statistics, can be found on the UK National Statistics Publication Hub.

Comparability and Coherence: Comparability is the degree to which data can be compared over time and domain. Coherence is the degree to which data are derived from different sources or methods, but refer to the same topic, are similar.

The Insolvency Service also publishes monthly insolvency statistics. The sum of these quarterly statistics may not equal previously published monthly statistics since the data were extracted at different times from live administrative systems which are subject to amendments.

The Gazette (formally the combination of three publications: The London Gazette, The Belfast Gazette and The Edinburgh Gazette) is an official journal of record consisting of statutory notices, including company and personal insolvency notices. The timings of the publication of Gazette notices and the registration of company insolvencies at Companies House may differ and therefore the numbers of insolvencies in a specified time period may not align.

Individual insolvencies in Scotland are compiled and published separately by the Accountant in Bankruptcy (AiB). The Insolvency Service incorporates individual insolvencies in Scotland into the quarterly individual insolvency statistics for completeness. Therefore, these statistics should align.

Accessibility and Clarity: Accessibility is the ease with which users are able to access the data, also reflecting the format in which the data are available and the availability of supporting information. Clarity refers to the quality and sufficiency of metadata, illustrations and accompanying advice.

Insolvency Statistics are available free of charge to the end user on the They are released via the Publication Hub and they meet the standards required under the Code of Practice for Official Statistics.

Historical insolvency data are also published for the key series, on the National Archives website.

Views on the clarity of the publication are welcomed via email: [email protected].