Pub, restaurant and shop closures drove a 31% increase in insolvency costs in 2018 with more than £298m paid out to affected employees.
Payments made by the insolvency service to staff whose employers had entered administration, liquidation or a CVA reached their highest level in five years according to research by real estate advisor Atlus Group.
A total of £196m was paid out in redundancy pay while £59.8m was paid out for money that would have been earned by working a notice period. Additional payments included holiday pay, overtime and unpaid wages.
Last year saw insolvencies among food and beverage companies increase by 17.9% while retail insolvencies increased by 9.5%.
Robert Hayton, head of UK business rates at Altus Group, said: "While 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. Could lowering the level of business rates actually reduce insolvencies negating these associated costs and the distress caused?"Get The Caterer every week on your smartphone, tablet, or even in good old-fashioned hard copy (or all three!).