Redundancy payouts are at their highest in five years, with taxpayers picking up the bill for a wave of insolvencies that occurred in 2018.
A total of £298.17 million was paid out by The Insolvency Service in a bid to cover employees’ lost wages and other costs.
The number of retail insolvencies rose by 9.5% last year and insolvencies within food and beverage establishments increased by 17.9%.
In total, the Insolvency Service paid £196 million in redundancy pay and £59.8 million in wages earned within the notice period. The rest of the money was spent covering holiday pay, overtime, commission and unpaid wages from before the notice period.
The companies included those that had entered administration; Creditors’ Voluntary Liquidation (CVL); had taken out a Company Voluntary Arrangement (CVA); or another form of corporate insolvency.
However, despite a number of high-profile CVAs taking place last year, including Prezzo and New Look, the amount paid out to staff was similar to the amount paid during the previous year (£10.6 million).
Robert Hayton, head of UK business rates at Altus Group said:
“Whilst business rates are rarely the sole driver for insolvencies, they certainly are a contributory factor and government needs to fully understand the impact of the actual level of this tax on businesses, not just for those on the high street but across all sectors.
“Could lowering the level of business rates actually reduce insolvencies, negating these associated costs and the distress caused?”