The number of company insolvencies across Staffordshire over the past four years has jumped by more than two thirds.
Figures released through the BBC Shared Data Unit reveal that across the county, 209 companies were liquidated in 2022 compared with 124 in 2019 – an increase of just under 69%.
The national picture saw eight out of ten local authority areas see a rise compared to the last year before the Covid pandemic.
The withdrawal of government support and soaring energy costs have been blamed for the rise.
The data is based on creditors’ voluntary liquidation insolvencies listed in The Gazette, where company owners have taken the step rather than waiting for it to be wound up.
The figures for Staffordshire show that an initial decline in the numbers of businesses taking the step during the pandemic period has since become a sharp rise as the country has ended restrictions associated to the coronavirus crisis.
A number of measures were introduced during the pandemic to support companies, including allowing them to defer VAT payments and receive relief on business rates, as well as the furlough scheme which covered up to 80% of wages for employees.
There was also a temporary pause in the strike off process to give firms time to update records filed with Companies House.
Julie Palmer, from insolvency experts Begbies Traynor, said the removal of support mechanisms had proven challenging for some companies.
“It was a really unusual time because of the pandemic, which sort of kept a very strong guard rail on that cliff edge – the courts were effectively closed for business and businesses were given lots of support to try and get them through the pandemic.
“Some of those have emerged from the pandemic doing well, but for many others trading is very difficult, particularly those that are in consumer-facing sectors.
“There’s a lot of nervousness in the economy at the moment due to macro-economic pressures. Interest rates are still not high in relative terms, but high in terms of how this generation perceives them, together with inflation that until recently seemed to be galloping out of control.
“This has caused a real cost of living crisis, which is really hitting consumer confidence. People are tightening their belts and it’s particularly those consumer-facing sectors, that we’re really beginning to see struggle at the moment.
“In insolvency rates, we haven’t seen that massive falling off the cliff edge yet, but I think some factors will speed up that process a little bit.
“The courts are progressively beginning to push through some of the credit applications to take recovery action and HMRC is definitely getting a lot more aggressive in terms of chasing statutory debts.”
Julie Palmer, Begbies Traynor
“There was a risk we’d see companies disappearing”
The national statistics showed some sectors have been hit harder than others in England and Wales, with construction and retail seeing the largest numbers of businesses facing insolvency during the four year period.
Michael Weedon, who leads for retail and high street issues at the Federation of Small Businesses said he was not surprised to see a spike in the sector.
“We knew during the first year of pandemic there was deliberate business support from the government – we knew when that tailed away, particularly in terms of finance, there was a risk we’d see companies disappearing.”
Michael Weedon, Federation of Small Businesses
Mr Weedon said challenges remained in getting customers back into the sector.
“Footfall is one of the key things. Obviously, during actual lockdowns there was virtually no footfall at all – apart from people queuing outside supermarkets.
“One really interesting thing we’ve seen since looking at figures produced commercially is that footfall has not yet returned to pre-pandemic levels.
“Last year, it was down more than 14% from what it was pre-pandemic in 2019. Now, for retailers who depend on people actually walking through a door, that has not rebuilt to the level it was even pre-pandemic.
“All the medium-sized businesses and the small retail businesses need people to shop on the high street – they need people to walk through the front door.
“They need our business. All we’ve got to do is go to our high streets, say hello to our retailers, and really help them out in a way which is very practical by buying things from them.
“They need your support – and they will give an awful lot back to their communities if you do.”
Michael Weedon, Federation of Small Businesses
A government spokesperson said that while numbers of creditors’ voluntary liquidations reached a record high in 2022, numbers of other insolvency types, such as compulsory liquidations and administrations, were lower than in 2019.
They added that pressure was being applied to support companies facing high energy bills.
“We have already provided around £400 billion of direct support to businesses, including grants, coronavirus loan schemes, the Coronavirus Job Retention Scheme, plus income tax payment deferral.
“This is alongside a new arbitration scheme to help resolve pandemic related rent debt.”
Government spokesperson