The cost of insolvencies for the government has been halved in 2021

The amount paid by the government to workers because their employers went bankrupt was halved last year, according to a new analysis.

The Insolvency Service paid out £228.28million from the National Fund for Industry to people who lost their jobs as a result of administrations, liquidations or other insolvencies.

The figures, released following a Freedom of Information Act by property consultancy Altus Group, showed a sharp drop in payments from 2020 as financial support from the Treasury helped many businesses avoid the collapse.

Payments in 2021 showed a decline of £225.09m, or around 49.6%, from the £453.37m paid in 2020.

A total of £146.19million was paid out in severance pay while £46.53million was money allegedly earned from working on a notice, the data showed.

He also said £18.65million had been paid for paid leave and £16.91million for unpaid wages, overtime and commission due.

The crisis reflects a 65% drop in court-ordered liquidations in 2021 from the previous year, while administrations fell 48% to the lowest figure in nearly 20 years.

The annual number of CVAs (Company Voluntary Arrangements), a controversial restructuring tool, was also at its lowest level since 1993.

Experts said this sharp reduction in the number of insolvencies, and workers affected as a result, was driven by support measures such as furloughs and Covid loan schemes.

Robert Hayton, UK Chairman of Altus Group, said: “The tax and other support measures that have been put in place by the government, including temporary restrictions on the use of legal claims and certain liquidation petitions, have all played their part in getting businesses through the pandemic.”

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