According to new data released by the government agency, the payments were at the highest levels in a decade, although the various financial lifelines provided by the chancellor meant the number of firms going insolvent dropped.

The Insolvency Service paid out a total of £297.5m in redundancy pay, while £93.3m was for months that would have been earned working a notice period, according to numbers obtained through a Freedom of Information Act request by real estate adviser Altus Group.

A further £28.4m went on unpaid holiday pay and £34.2m on outstanding payments for wages, overtime and commission.

The funds come from the National Insurance Fund, going to former members of staff as a result of their employer entering into administration, liquidation, a company voluntary arrangement or another form of corporate insolvency.

The amount paid was 31% higher on the previous year – £107.3m more than the £346.1m paid during 2019, The Press and Journal reports. 

This was the highest amount paid out of the National Insurance Fund at any time during the last ten years, driven by the high street crisis, taking total payments from the fund to more than £3 billion during the last decade.

However, the £280bn of government support for businesses to survive during the pandemic is believed to have helped keep the actual number of underlying company insolvencies down – falling 27% on 2019.

Despite the government funds, several renowned retailers went under in 2020, leading to significant redundancies across the high street.

Laura Ashley saw 155 stores close, with 2,300 job losses; BrightHouse closed 240 stores with 2,700 redundancies and Debenhams lost 7,000 staff last year. More job losses are expected in 2021 as Debenhams goes into liquidation and Arcadia stores close for good.

Around 109,407 positions in the sector were affected last year, with 47% of those employees losing their jobs compared with around one third during the previous recession in 2008, according to the Centre for Retail Research.

The research group said this demonstrated that retailers going bust are now much larger and the effects on staff more pronounced than during the global financial crisis with lockdowns and restrictions leading to permanent shifts in shopping habits. It is calling on Chancellor Rishi Sunak to ensure the current rates holiday on retailers, leisure and hospitality services is extended to keep viable firms afloat.

Robert Hayton, UK president of property tax at Altus Group, said: “Ending the holiday too early is one material pressure on company finances that risks affecting the recovery from the pandemic now the end is in sight.

“The Chancellor must use his upcoming Budget to ensure viable businesses are adequately supported through a discerning targeted extension.”