THE collapse of the high street and the demise of other big businesses has cost taxpayers more than £1 billion over the last five years.

The huge sum has been paid out by the UK Government to cover redundancy payments and unpaid wages after several large firms were plunged into insolvency in recent years.

Retail giants such as BHS, Comet, Toy R Us and Maplin have all gone under, prompting the spike in workers forced to claw back money from the Insolvency Service.

In Scotland alone, the payments totalled more than £75m.

The Scottish Retail Consortium (SRC) said the sums were a stark reminder of the hardship faced by workers when businesses collapse.

Ewan MacDonald-Russell, head of policy for SRC, said: “It’s disappointing, but sadly not surprising to hear so many retail workers have had to rely on these payments following the collapse of their employer’s business.

“We all know the challenges facing the retail industry as it grapples with technology, changing consumer behaviour, and ever increasing costs.

“These figures are a vivid reminder of the hardship faced whenever any business falls into administration.

“It should also reaffirm the importance of keeping down the cost of business at a time where trading is difficult.”

When a firm becomes insolvent, its employees can apply to the Insolvency Service for payments for redundancy and unpaid wages because the business is not able to pay.

If bosses fail to properly consult with workers being made redundant, they can also claim for a ‘protective award’ which provides workers with up to 90 days’ pay.

Figures obtained by The Herald under freedom of information show that across the UK, between 2013/14 and 2017/18, £802 million was paid out by the government for redundancies, £138m for pay arrears and £77m for protective awards.

Scottish Labour leader Richard Leonard described the figures as “deeply troubling”.

The Central Scotland MSP said: “While it is absolutely right that the Insolvency Service continues to protect workers’ pay when firms go bust, something is obviously going deeply wrong with our economy to have so many firms closing.

“That points to the abject failure of the both the SNP and the Tories to have any plan for the economy.

“For instance, it is clear that much more needs to be done to support Scottish small businesses and Scotland’s high streets.”

The Scottish Liberal Democrats also called for more measures to support businesses.

Party leader Willie Rennie said: “Our local economies rely on busy high streets.

“Firms are finding it tough to make ends meet, the Government need to do far more to ensure that our high streets remain viable and vibrant.

“That’s why Liberal Democrats have called for comprehensive business rates reform to support our high streets, as well as fresh support for worker retraining to ensure that anyone who loses their job lands on their feet.”

Usdaw, the shopworkers’ trade union, also raised concerns about the protective awards paid out by the government, describing them as a “perverse financial incentive for administrators not to comply with legal obligations on collective redundancy consultation”.

Under trade union legislation, firms and their administrators must give appropriate notice of redundancies and consult workers. If they fail to do this, they can be taken to an employment tribunal and forced to pay out protective awards.

However, when the company is insolvent, it falls to the Government to pay the awards.

Technically, bosses can be prosecuted for failing to consult, but it is understood this rarely happens.

An Usdaw spokesman said: “When a company gets into real difficulties, all too often Administrators wade in, ignore the management’s existing good relationship with trade union representatives and hide behind confidentiality to exclude workers from a meaningful dialogue.

“Administrators frequently disregard their legal obligations because it is taxpayers that pick up the bill when a protective award is made.

“Consultation is necessary because it allows workers to have a say in the future of the business and often we can find ways of helping the company get through a difficult period and save jobs.

“Administrators should also face financial penalties when they fail to comply with the law and properly consult.”

The UK Government said it recognises the struggles the high street is facing and “strives to support all businesses facing challenges”.

A spokesman said: “This is why we have slashed business rates by a 1/3 for the majority of smaller businesses, and created a £675m fund to help high streets adapt for rapid change.”

He added that The Insolvency Service is working on new guidance to help employers meet their responsibilities on collective redundancy consultation “which can be complex and difficult to apply in a real life insolvency situation”.