Restaurant and pub closures drive rise in insolvency costs

By Sophie Witts contact

- Last updated on GMT

Restaurant and pub closures drive rise in insolvency costs

Related tags: Insolvency, Restaurant, Public house

A rise in restaurant and pub groups entering insolvency drove a 31% increase in Government payouts to laid off staff last year.

The number of food and beverage companies entering insolvency rose 17.9% in 2018, according to analysis from real estate adviser Altus Group.

Last year The Insolvency Service paid out £298.07m to former members of staff whose employers, from all sectors, had either entered administration, liquidation a CVA or another form of corporate insolvency.

This included £198.36m in redundancy pay and £59.85m on money that would have been earned working a notice period.

Altus says this is the highest amount paid out of the National Insurance Fund since 2013, driven by a “crisis” on the high street.

It blamed a “perfect storm of rising costs from business rates, rents and minimum wage rules at a time of falling sales amid uncertainty over Brexit”.

“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.,” says Robert Hayton, head of UK business rates at Altus Group.

A total of 17,439 companies in England and Wales collapsed last year, with the number of insolvencies at retail groups rising 9.5%.

Related topics: Business

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