Corporate Insolvency and Governance Bill

Debate between Baroness Drake and Lord Callanan

Committee stage & Committee: 1st sitting (Hansard) & Committee: 1st sitting (Hansard): House of Lords
Tuesday 16th June 2020 Lords Chamber

[Lord Callanan]

Without giving a specific commitment about Thursday, because I have a number of things in my diary, not least because I am answering further Questions in this House, I will attempt to ensure that the forum mentioned by the noble Baroness takes place before Report. Noble Lords who take an interest in this matter will get the opportunity to talk to me and the various Bill officials who are handling what is, I am sure she will accept, a complicated area of law.

[Baroness Drake [V]]

I thank the Minister for his reply and I am grateful for the advance notice from him yesterday evening, which I took in the spirit in which he gave it. It allowed us to make our contributions more relevant, so I thank him for that.

As my noble friend Lady Taylor of Bolton observed in the previous debate, the fast-tracking of emergency measures in the light of Covid is combined in the Bill with radical, permanent changes to the status and rights of creditors and stakeholders. This House and indeed Parliament have not had time to address the consequences of that and their significance, and we are beginning to see quite serious consequences—maybe unintended consequences—being revealed.

The moratorium is not an insolvency event, but it is the start of a process that moves towards insolvency or restructuring and it does trigger a change of creditor status. While I completely accept that a strong UK economy needs a strong, functioning financial market, there is also a question of balance. The definition of finance debt in the Bill, which is given superior status, is drafted very widely, way beyond being a simple issue of banks. On the arguments that noble Lords have put today, that balance between protecting the pensioners, on which the insolvency laws were changed back in 2004, as opposed to the interests of the financial markets, is tilted in the Bill against the pensioner and risks us going back to the position that existed in 2004 where pensioners were not protected sufficiently—or in that case, not at all—under UK insolvency laws.

I thank noble Lords who have spoken in this debate. Throughout Second Reading and Committee, we have put our concerns very clearly about how this Bill impacts the framework of protection for pensioners that has been finely crafted and built up over 60 years. I welcome the Minister’s statements because they are a recognition of the concerns that we have all been expressing.

I look forward to seeing the government amendments but hope that the Minister will reflect on the seriously held views expressed today across the House on protecting pension schemes, their members and the lifeboat scheme. If it is possible to have any discussion so that these could be considered further, that would be helpful. In view of the significance of this matter, I may wish to return to it on Report, but I beg leave to withdraw Amendment 20.

Covid-19: Business

Debate between Baroness Drake and Lord Callanan

Wednesday 13th May 2020 Lords Chamber

[Lord Callanan]

I thank my noble friend for her question. We have announced a package of support to help businesses with their ongoing business costs in recognition of the disruption caused. This package includes the small business grant fund, specifically for hereditaments in England that were eligible for relief on 11 March under the small business rates relief fund. The funding is to support small and rural businesses which are ratepayers on a property, as these businesses are more likely to have ongoing fixed costs during this period. Unfortunately, businesses that were not eligible for percentage SBRR relief on 11 March are excluded.

Nevertheless, there are other new measures to provide support to those businesses, including CBILS, deferral of the next quarter of back-payments for firms until the end of June, representing a £30 billion injection into the economy, and a new fast-track finance scheme providing loans with a 100% government guarantee. In addition, there is also the bounce-back loan scheme, which will ensure that the smallest businesses can access loans in a matter of days. We are working currently with local authorities to try to make sure that this support is delivered as fast as possible.

[Baroness Drake (Lab)]

My Lords, the Government have to transition out of lockdown through a precarious route that protects people’s health, rebuilds the economy and phases down the exceptional measures. The manner of that journey and the impact on different communities is of huge national interest and requires consensus within Parliament and across the devolved and local governments, which in turn will drive greater public and business confidence. The transition out of the job retention scheme, for example, could, depending on how it is handled, trigger widespread redundancies and business closures. What further initiatives will the Government take to build and to hold a consensus with Parliament and the devolved and local governments on how these national interests can best be met? Because at points they are currently not. Can we have greater clarity on how and when they will share their plans going forward on the phasing down of current emergency financial measures and their replacement with the second-wave support package so that people can understand the consequences and plan?

Coronavirus Business Interruption Loan Scheme

Debate between Baroness Drake and Lord Callanan

Tuesday 12th May 2020 Lords Chamber

[Lord Callanan]

The noble Lord is right that only a relatively small proportion of the total number of SMEs have applied for or received loans. However, it is important to remember that not all businesses want loans, and of course other government support schemes are also available to help them through the crisis.

[Baroness Drake (Lab)]

My Lords, the Government have to ease people back to work safely, increase the flow of funding to SMEs and avoid scarring unemployment. SMEs employ 60% of private sector workers, and many are now critically dependent on both government-backed loans and job retention schemes. Withdrawing these measures too soon when their very purpose is to keep jobs and businesses going will undermine them. When will the Government publish their road map for phasing out the CBILS and job retention schemes, and what impact will that have on structural employment and the longer-term stimulus package for SMEs?

[Lord Callanan]

The Government will continue to monitor and review all their business support schemes and make changes where necessary. I am sure that the noble Baroness has noticed that this afternoon the Chancellor will be making a Statement in the House of Commons on the job retention scheme and the Government’s wider economic coronavirus support package. I am sure that she will get more information then.