Insolvency service payouts hit new levels

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small business insolvencies

The Insolvency Service paid out £453.4 million in missing wages and benefits to workers at firms that went bust last year. This is according to new data obtained.

The payments made by the agency, which is part of the Department for Business, Energy and Industrial Strategy (BEIS), were at the highest levels in a decade although the various company lifelines provided by the Chancellor meant the number of firms going insolvent fell.

A total of £297.5 million was paid out in redundancy pay, whilst £93.3 million was for months that would have been earned working a notice period, according to numbers obtained under the Freedom of Information Act by real estate adviser Altus Group and seen by the PA news agency.

A further £28.4 million went on unpaid holiday pay and £34.2 million on outstanding payments for wages, overtime and commission owed.

The money comes from the National Insurance Fund, going to former members of staff as a result of their employer entering into either administration, liquidation, a CVA or another form of corporate insolvency

The amount paid was up by 31% on the previous year – £107.3 million higher than the £346.1 million paid during 2019.

This was the highest amount paid out of the National Insurance Fund at any time during the last decade driven by the high street crisis taking total payments from the fund to more than £3 billion during the last decade.

However, the £280 billion of Government support for businesses to survive during the pandemic is believed to have helped keep the actual number of underlying company insolvencies down – falling 27% on 2019.

Despite the Government funds, several big-name retailers went bust in 2020, leading to significant redundancies across the high street.

A further £28.4 million went on unpaid holiday pay and £34.2 million on outstanding payments for wages, overtime and commission owed.

The money comes from the National Insurance Fund, going to former members of staff as a result of their employer entering into either administration, liquidation, a CVA or another form of corporate insolvency

The amount paid was up by 31% on the previous year – £107.3 million higher than the £346.1 million paid during 2019.

This was the highest amount paid out of the National Insurance Fund at any time during the last decade driven by the high street crisis taking total payments from the fund to more than £3 billion during the last decade.

However, the £280 billion of Government support for businesses to survive during the pandemic is believed to have helped keep the actual number of underlying company insolvencies down – falling 27% on 2019.

Despite the Government funds, several big-name retailers went bust in 2020, leading to significant redundancies across the high street.

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