Government’s Insolvency Service pays out highest amount for seven years
Following a number of high-profile failures, the government’s Insolvency Service has paid out the highest level of redundancy payments for seven years.
Across 2019, the Insolvency Service paid out £364 million, 16 per cent higher than in 2018.
Of this £364 million, £223 million covered redundancy payments, with £64 million allocated for payments to staff who were not given a notice period. The rest of the bill covered unpaid holiday and outstanding payments for wages.
The high redundancy bill was driven by a historically poor year for the retail sector.
With high-profile companies, such as Mothercare and Thomas Cook, folding, a higher than average number of staff were made redundant.
According to the Centre for Retail Research, 16,000 stores closed last year, leading to the loss of 143,000 jobs.
If the Insolvency Service becomes involved, tax payers initially cover the cost of redundancy and insolvency payments. The money itself comes from the National Insurance Fund, supported by the Insolvency Service.
This is only designed to be temporary however, with attempts made to recover as much as possible from the company’s assets, although this can often be a long process.