Insolvency Act 1986 Part A1 Moratorium (Eligibility of Private Registered Providers) Regulations 2020

Baroness Kramer Excerpts

Friday 24th July 2020 Lords Chamber

[Baroness Kramer (LD) [V]]

My Lords, I first thank the noble Lord, Lord Agnew of Oulton, for alerting me that the Corporate Insolvency and Governance Act 2020 might throw up some problems for the social housing, charitable, mutual and social enterprise sectors and that these would be dealt with through statutory instruments, of which I assume this is one.

We are all concerned to make sure that tenants in social housing are fully shielded from any financial difficulties encountered by their private registered social housing providers; otherwise, they would risk losing their homes or face rent increases to market levels, especially if creditors were able to enforce security on their homes.

The Minister has made it clear that the purpose of this SI is to exempt private registered providers of social housing from the new moratorium provisions of the Corporate Insolvency and Governance Act on the grounds that the existing regime, established under the Housing and Planning Act 2016, ensures superior protection for tenants. In that case I have no objections to the purpose of this SI.

I have just two questions. The first is about cross-contamination; in a sense I am picking up a point partially made by the noble Lord, Lord Wood. As your Lordships will know, the business models for providers of social housing have become much more diverse, and a number are active in other parts of the housing market. In the wake of Covid, we are quite likely to see a number of those companies in financial difficulty. They may well seek the protection of a moratorium under the new corporate insolvency Act. How will the two moratorium regimes under two different pieces of legislation, affecting the same holding company, work out? What happens and who has priority?

In addition, as the Minister will know, my colleagues and I have been concerned that banks are quite likely to manipulate any moratorium under the new Act, both to achieve higher fees and to improve their priority position. HMRC’s provisions in the Finance Bill to give itself super-priority adds another complication. Given all these different factors in play, who will be responsible for co-ordinating and resolving the complexity of all this?

My second question is much briefer. Mutuals, charities and social enterprises are often not suited to the new provisions in the Corporate Insolvency and Governance Act, as the Government have recognised. When will we see the SIs to manage their problems?