Business and Planning Bill

Debate between Lord Sharma and Kevin Hollinrake

2nd reading & 2nd reading: House of Commons
Monday 29th June 2020 Commons Chamber

[Alok Sharma]

My hon. Friend makes an important point. I know she is working incredibly hard to support businesses in South Ribble, and I am sure she is looking forward to going to the Tesco’s once it is up and running.

We also want to support the transport sector by enabling shorter-term licences for drivers of heavy goods vehicles and passenger carrying vehicles and allowing for the risk-based testing of HGVs and public service vehicles. These measures will allow goods and public transport to keep moving. We want to continue to support small and medium-sized enterprises through the quicker delivery of bounce-back loans, which have provided a financial lifeline for more than 920,000 small businesses so far. This measure is retrospective and will disapply elements of consumer credit law.

[Kevin Hollinrake (Thirsk and Malton) (Con)]

I speak as co-chair of the all-party group on fair business banking and support the suspension of the Consumer Credit Act 1974 with regard to bounce-back loans due to affordability issues, but does the Secretary of State agree that it is vital that lenders still comply with the requirement to treat customers fairly in the collection process or if there are debt issues later on and that forbearance is applied?

[Alok Sharma]

As ever, my hon. Friend raises an incredibly important point. Yes, forbearance is part of these measures, and we would expect that very much to apply.

Before I turn to the detail of the Bill, I want to thank all those across industry and both Houses who have engaged with the Government to help develop the measures in the Bill. I also thank the Local Government Association, the National Police Chiefs’ Council, the Home Builders Federation and the British Property Federation for sharing their expertise. I am pleased to say that the measures in the Bill enjoy wide stakeholder support. The LGA, the Federation of Small Businesses, the British Beer and Pub Association, UKHospitality, the Freight Transport Association, the Road Haulage Association, the Royal Town Planning Institute, the British Property Federation and UK Finance have all expressed their support.

Oral Answers to Questions

Debate between Lord Sharma and Kevin Hollinrake

Tuesday 16th June 2020 Commons Chamber

[Alok Sharma]

We appreciate that announcements about redundancies for British Airways staff have been incredibly distressing for the employees and their families. At the end of the day, the use of the Government’s job retention schemes is preferable to making redundancies. That is why we made them available. What I would say in this case is that it is a commercial decision. We expect British Airways and, indeed, all employers to treat employees fairly and in the spirit of partnership.

[Kevin Hollinrake (Thirsk and Malton) (Con)]

I draw the House’s attention to my declaration in the Register of Members’ Financial Interests. It is right that the Government are requiring landlords to show forbearance to commercial tenants, but that is shifting some of the burden from the tenants to the landlords, many of whom are small and medium-sized enterprises, yet the banks are not providing a full payment holiday as they are for residential and buy-to-let. It is simply a capital repayment holiday, which is a small part of the payment. Will my right hon. Friend see what he can do about that?

[Alok Sharma]

My hon. Friend, as ever, raises an important issue. It is why both the CBILS and the bounce-back loans have a 12-month period during which interest is paid on behalf of the business. I would expect lenders to apply similar forbearance where needed in the case of existing commercial loans.

Corporate Insolvency and Governance Bill

Debate between Lord Sharma and Kevin Hollinrake

2nd reading & 2nd reading: House of Commons
Wednesday 3rd June 2020 Commons Chamber

[Alok Sharma]

When we first launched CBILS there were a lot of concerns about how quickly the process was moving. I have been talking to banks individually and to senior managers in the banks, and I think that we are beginning to see movement. CBILS has had over 40,000 loans out of the door, and over 450,000 bounce-back loans have been made. If there are specific banks about which the hon. Gentleman has concerns—he, like all colleagues, is concerned about retaining employment in his constituency—I would be happy to take up those issues with him individually.

[Kevin Hollinrake (Thirsk and Malton) (Con)]

Because of the success of bounce-back loans—it is a much easier process to get a bounce-back loan than a CBILS loan—lots of businesses that need more than £50,000 have gone for a bounce-back loan as an interim step, but are restricted from taking a CBILS loan, as they can only have one or the other. Would my right hon. Friend consider allowing businesses to apply for a CBILS loan for a larger amount, subject to necessary lending criteria, then paying off the bounce-back loan so that they can get access to the finance that they need?

[Alok Sharma]

My hon. Friend makes an incredibly important point. I am sure that the Under-Secretary of State for Business, Energy and Industrial Strategy, my hon. Friend the Member for Sutton and Cheam (Paul Scully), will correct me if I am wrong, but my understanding is that it is possible to transfer loans between the bounce-back scheme and CBILS. I am happy to discuss that with my hon. Friend the Member for Thirsk and Malton (Kevin Hollinrake), who is absolutely right—people cannot have one of each, so to speak, but I think that it is possible to make a transfer.

The measures set out in the Bill have been welcomed across the board by business representatives’ organisations such as the Federation of Small Businesses, the Institute of Directors, the CBI, the British Chambers of Commerce, R3—the insolvency and restructuring professionals trade association—and the Trades Union Congress. Some of the measures will take retrospective effect to provide as much relief to businesses as possible. To ensure that is the case, we have announced the dates from which the measures will begin.



Let me turn to corporate restructurings, and the package of permanent corporate restructuring measures, which have previously been consulted on. As colleagues know, they were consulted on in 2016, and then formed part of a wider consultation on corporate governance and insolvency published in 2018, so they have been consulted on in some detail. They will have immediate effect in helping companies get through the covid-19 emergency.

A number of time-limited provisions are there to cater for the immediate economic impact of the covid-19 pandemic. They have been added to the package and will be in place for a month after Royal Assent.

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[Alok Sharma]

My hon. Friend is of course right. By the way, I am delighted that he is back in the House, after a short absence. He brings a huge amount of experience in this area, as a result of his work in the private sector. The permanent measures have already been consulted upon, and they enjoy broad support. The temporary measures are of course temporary, and if we were to look to extend any of them, we would have to do so by way of regulation—we would have to come to the House with statutory instruments, and there would be an opportunity, if colleagues in the House felt it was not right to extend them, for them to voice their concerns. So I do think we have managed to get the balance right in this case. We want to ensure that the measures are put in place as quickly as possible, so that we are able to provide support to businesses in difficulty right now. In all the discussions that we have had with the right hon. Member for Doncaster North and his colleagues, we have always had a really constructive approach; I hope that is exactly what we will have today as well.

[Kevin Hollinrake]

I speak as a co-chair of the all-party group on fair business banking, has dealt with a lot of problems in how banks treat SMEs, facilitated by insolvency practitioners. To eliminate those conflicts of interest, the Secretary of State’s Department has committed to bringing forward measures to provide that the conduct of insolvency practitioners is overseen by a single regulator, rather than by recognised professional bodies. Can he commit to bringing forward those measures in the not-too-distant future, so that we can try to eliminate those conflicts of interest?

[Alok Sharma]

My hon. Friend the Under-Secretary of State will elaborate on some of the points that my hon. Friend raised. I would simply say that in July 2019, the Government issued a call for evidence on the insolvency regulatory framework, to determine whether any changes needed to be made. That included questions on whether there should be a single regulator. We expect to publish the Government response to the call for evidence later this year. Perhaps my hon. Friend the Under-Secretary will elaborate later.

Returning to the Bill, the package of measures has three elements. The first is a moratorium. That will give a company that is threatened with insolvency temporary respite from its creditors and a chance to arrange refinancing or a rescue. The moratorium will be for an initial period of 20 days, which can then be extended. There will be a time-limited easing of the eligibility criteria for a company to enter into a moratorium, to make it more accessible during the covid-19 response period.

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[Alok Sharma]

It is intended to apply to all suppliers—I am sure I will be corrected if I am wrong on that. As my hon. Friend has also been keen to point out, although this measure is not restricted to commercial landlords, some landlords will have particular concerns, and I can reassure him that the Government will monitor the impact of the measure and are asking lenders and investors to consider how debt obligations can be met in a way that does not put unnecessary pressure on landlords.

[Kevin Hollinrake]

In respect of commercial loans, currently the banks, when showing forbearance, are providing capital repayment holidays but only on the capital element of the repayment. In respect of residential mortgages and loans, they are giving complete repayment holidays. The monthly capital repayment is a small element of the overall payment. The banks could be much more helpful to landlords by giving a complete holiday across the whole repayment for a period of time while showing forbearance to their tenants.

[Alok Sharma]

Colleagues in the banking sector will I am sure be watching this debate and listening in, and they will have heard what my hon. Friend has said. I would be happy to have a discussion with him after this debate if there are particular points that he wants to raise or if he wants to talk about particular organisations.

The second temporary measure is the suspension of the wrongful trading provisions. This will be retrospective to 1 March and will be in place until one month after Royal Assent, and again it can be extended if that is deemed necessary. Hon. Members will know that wrongful trading is an important deterrent against company directors continuing to trade when the company is insolvent and when doing so increases the losses to creditors. Directors can be made personally liable as a result. However, during this difficult period, many otherwise viable companies may become technically insolvent, particularly if they have been severely affected by a drop in demand caused by covid-19. This measure gives company directors the confidence to use their best efforts to continue trading without the threat of personal liability, should the company ultimately go into insolvency. Since the measure was announced in March, we have received much support for it from stakeholders. The Institute of Directors has welcomed it, saying that it

“will help to avert entirely preventable corporate collapses.”

The Bill also contains the necessary time-limited powers to extend these temporary provisions, should that prove necessary.

The Bill will also allow the Government to make other temporary amendments to insolvency law or the new restructuring plan to deal with the effects of covid-19, where needed. The power to amend corporate insolvency or governance legislation will allow the insolvency and business rescue regime to react quickly to the challenges we face as a result of the impact of covid-19, and that power will expire on 30 April 2021. However, due to the potential unforeseen circumstances relating to covid-19, the expiry date of this power can be extended if it is deemed necessary. If an extension is sought, the House will of course have an opportunity to scrutinise it.

The next group of temporary measures deals with meetings and company filings. These measures enable companies and other bodies, including mutual societies and charitable incorporated organisations, to hold AGMs and other meetings in a safe way, while respecting social distancing rules.