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Insolvency costs hit a seven year high following a number of high-profile failures

Written by Robert Moore Marketing Manager 25 February 2020

Insolvency costs hit a seven year high following a number of high-profile failures

New statistics from property advisor, Altus Group, show that during 2019, the Insolvency Service paid out £364 million from the National Insurance Fund to members of staff as a result of their employer entering into a form of corporate insolvency i.e. administration, liquidation or a company voluntary arrangement. Of the total, £223 million covered redundancy payments and £64 million was allocated to staff who were not given a notice period. The remaining amount covered up unpaid holiday, overtime, commission owed and outstanding payments for wages.

The total was 16 per cent higher than the amount paid in 2018 and the highest amount paid out overall since 2012.

The retail crisis and its historically poor performing year is said to blame.

The Centre for Retail Research published figures to show that 16,000 stores closed last year with the loss of around 143,000 jobs.  For example, the struggles seen by Mothercare, Thomas Cook and Debenhams.

Robert Hayton, head of UK business rates at Altus Group, explained that although business rates are rarely the sole driver for insolvencies, they definitely are a contributing factor.

‘’ A fair and reformed [business rates] system is within our grasp. If we are serious about ‘levelling up’ the economy to help struggling towns, rates bills must fall in line with declining rates while speeding up meritorious business rates appeals has to be a government priority. Bringing some respite to the financial burden of rates through ending annual inflationary rises whilst incentivising, rather than penalising, investment will all deliver long term lasting benefit to the economy as a whole.’’

Pressure is looming from retailers and business groups towards pushing for a reform to the business rate system, blamed for the turmoil environment on the high street.

Category: Retail

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