Publications that covered this story include the I and the Metro on 8 October 2018.
- Steel towns of Stockton-on-Tees, Torfaen and Neath Port Talbot the top three worst-hit areas for five-year increases in personal insolvencies
The Top three worst areas (out of 174) in the UK for increasing rates of personal insolvencies* over the last five years were all steel towns which saw serious job losses from the Tata steel crisis.
Stockton-on-Tees, Torfaen and Neath Port Talbot – all home to Tata Steel steelworks – saw the biggest increases in personal insolvencies in the UK, rising 25%, 22% and 21% respectively over the five years to 2017.
The steel industry crisis, compounded by Tata Steel’s financial troubles, saw considerable job losses which led to an increase in insolvency rates among ex-steel workers. The steelworks in areas such as Teesside and Port Talbot have traditionally been the biggest employers for the surrounding towns and villages.
The whole local supply chain is likely to be affected by the financial difficulties at a steel works, both upstream and downstream of the steel mills themselves.
Many redundancies which have pushed up levels of personal insolvencies were caused by the serious financial issues Tata Steel’s UK divisions experienced over the last few years. For the top three worst hit areas in the UK, this meant:
- Redcar steelworks in Teesside shut down, causing around 2,200 job losses for those in the surrounding area in October 2015
- Mothballing at Newport Llanwern steelworks in South Wales caused 250 redundancies in January 2016
- Port Talbot in South Wales saw around 750 redundancies in January 2016.
Tata Steel struggled as cheap import costs allowed more product to come in from China, culminating in considerable job losses in 2015 and 2016. The resulting cost cuts meant there were more than 3,000 redundancies in Tata steel works across the UK, contributing to the insolvencies.
Peter Kubik, turnaround and recovery partner in our London office, says: “The knock-on effects of the Tata Steel crisis created pockets of poverty in areas that have traditionally been over-reliant on the steelworks for employment.”
“The impact of the Tata Steel crisis is particularly marked in the small steel towns that rely on these factories for employment. Tata Steel was one of the main employers in these areas, and in one fell swoop insolvencies in these areas considerably worsened when the crisis hit.”