UK Faces Hefty Bill Due to Insolvencies and High Street Failures

  • Insolvent companies cost taxpayers £250m in the first half of 2020
  • Amount paid to former staff increased by £133.79m compared to the previous year
  • Insolvency Service paid out £244.16m for employees after administration, liquidation or CVA
  • £170.39m was for redundancy pay and £42.67m for notice period payments
  • Holiday pay and outstanding amounts like wages, overtime, and commission also covered
  • In 2019, £110.37m was paid out from the National Insurance Fund
  • Insolvencies at large retailers increased in H1 2020 compared to all of 2019
  • Pandemic used as a reason for rateable value reductions in appeals
  • Appeals must be settled quickly for fairness and targeted support for struggling retail

Insolvent companies in the UK have cost taxpayers nearly £250 million during the first half of 2020, according to Altus Group. The software group found that payments to former employees increased by £133.79 million compared to the previous year, despite the government’s furlough scheme. The Insolvency Service paid out a total of £244.16 million for ex-employees after their employer entered administration, liquidation, CVA, or another form of insolvency. Of this amount, £170.39 million was for redundancy pay and £42.67 million for notice period payments. The remaining funds covered holiday pay and unpaid wages, overtime, and commission. In the same period in 2019, £110.37 million was paid from the National Insurance Fund. With more insolvencies at large retailers like Laura Ashley, Debenhams, and Oasis & Warehouse, Robert Hayton of Altus Group warns that appeals citing pandemic circumstances must be addressed swiftly to ensure fairness for struggling retail businesses.

Factuality Level: 8
Factuality Justification: The article provides accurate and objective information about the increase in insolvencies and costs to taxpayers during the first half of 2020. It cites data from Altus Group and includes relevant details about payments made to former employees and the impact on retail businesses. However, it does include some personal perspective from Robert Hayton regarding rateable values and targeted support for struggling retail businesses.
Noise Level: 4
Noise Justification: The article provides relevant information about the financial impact of insolvencies on British taxpayers and highlights the increase in insolvencies among large retailers due to the pandemic. It also includes insights from an expert on potential solutions for struggling businesses. However, it could benefit from more data or examples to support its claims and delve deeper into the long-term consequences of these trends.
Financial Relevance: Yes
Financial Markets Impacted: Insolvency payments impact the government’s National Insurance Fund and affect companies in the retail sector
Financial Rating Justification: The article discusses insolvent companies, their debts, and the financial impact on taxpayers through the National Insurance Fund. It also mentions specific retail companies that entered insolvency processes due to the pandemic, which affects the financial markets of those companies.
Presence Of Extreme Event: No
Nature Of Extreme Event: No
Impact Rating Of The Extreme Event: No
Extreme Rating Justification: No extreme event mentioned in the article

Reported publicly: www.retailsector.co.uk