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?

Business and Planning Bill

Baroness Kramer Excerpts

Committee stage & Committee: 2nd sitting (Hansard) & Committee: 2nd sitting (Hansard): House of Lords
Tuesday 14th July 2020 Lords Chamber

[Baroness Kramer (LD) [V]]

My Lords, it was always my intention to speak only to Amendment 73, to which I have added my name. I thank the Minister for coming forward with what we all hope will be a resolution to what was, I am sure, an oversight in the drafting of the Coronavirus Act. We must make sure that those amendments will permit the development corporations and, I hope, Transport for London, to hold their meetings remotely, including remote access for members of the public. I thank the noble Earl, Lord Howe, who wrote to me on this subject, suggesting further discussion and acknowledging the problem. I also thank the noble Baroness, Lady Valentine, who, realising that she would be unable to speak on this occasion, sent me a quick email—knowing that I was going to address the topic—just to say how important it was to her to find a resolution. She was CEO of London First, championing bringing the Olympics to London and helping to find business support. She was particularly keen that it would leave a lasting legacy for that area of London and that the London Legacy Development Corporation would be able to do its job to the full.

Amendment 73 had a weakness in that, although it addressed the problems in the development corporations, it was not clear that it would also cover Transport for London. As a former board member of Transport for London, I was particularly anxious that that should be included. Again, I thank the Minister and look forward to seeing the actual language. I hope that this matter is rapidly coming to a conclusion.

--- Later in debate ---

[Baroness Kramer [V]]

My Lords, as employers bring back employees, even observing all the government guidelines scrupulously only reduces the risk of Covid—it does not eliminate it. That brings me to the issue of employers’ liability insurance and Covid, which I raised at Second Reading. I thank the noble Earl, Lord Howe, for his letter to me, in which he addressed the questions that I raised, but it seems that the problem remains. He wrote:

“Every employer carrying out business in Britain must maintain compulsory employers’ liability insurance, which insures them in relation to bodily injury or disease sustained by employees arising out of and in the course of their employment in that business. There are strict limits on the conditions and exclusions which such policies can contain.”


However, both employers and employees were very taken aback to find that business interruption insurance, which they thought covered them in an instance such as the pandemic, in most cases has not been applicable. Many will look at the terms of employers’ liability insurance and feel very uncertain that, in a case where an employee acquires Covid at the work site, they will be protected by that insurance, and of course employers share that same concern. There is a real worry that insurance companies will find some way out of being responsible for paying compensation or that they will ask the employers to add to and expand their insurance, at some extraordinarily exorbitant price.

I was interested in Amendment 77 because I am being realistic in recognising that the Government will not intervene at the moment to try to make sure that this insurance is adequate—and at the moment, insurers are not feeling a lot of pressure. But the coming together of employees and employers, which in a sense is outlined in Amendment 77, seems to provide a venue to create pressure and to place attention on this issue. I fear that, particularly if we have a second spike, it will become a very significant issue, and I do not want the pressure to try to deal with this matter to go away.

[Baroness Pinnock [V]]

My Lords, Amendment 77 on employee and employer considerations, in the name of the noble Lord, Lord Hain, is a timely reminder that all the elements of the Bill have a consequence on working lives and employer responsibilities, and provide opportunities to develop better working practices and relationships. Liberal Democrats have long proposed employee involvement in businesses as a means for improvements to be gained, both by the employer and those employed. This debate is important, we support the sentiments, and I look forward to the response from the Minister.

Business and Planning Bill

Baroness Kramer Excerpts

Committee stage & Committee: 1st sitting (Hansard) & Committee: 1st sitting (Hansard): House of Lords
Monday 13th July 2020 Lords Chamber

That is why I urge the Government to consider this amendment. It is not costly; it offers regulatory flexibility rather than cash. By its nature it is well targeted—only those breweries that choose to take up the option of on-site licensed premises would benefit. It is time limited, so any unanticipated consequences for other parts of the retail sector would be minimal and short term. As my noble friend Lord Holmes eloquently set out earlier, proprietors are known to regulatory authorities; they have already passed the “fit and proper” test. Overall, from a regulatory point of view the proposal is low-risk and proportionate. In allowing an expansion of the number of venues, it gives more choice to consumers and, as my noble friend Lord Berkeley said, it encourages the small independent sector in the brewing industry to compete in different ways with larger, more established companies. I wholeheartedly support this amendment and I urge the Minister to back it.

[Baroness Kramer (LD) [V]]

My Lords, I shall be brief. I just want to pick up on a point made earlier by my noble friend Lady Bowles: that the opening up promoted by this Bill—which I support, particularly given some of the safeguards embedded in amendments —should not extend to supermarkets and convenience stores. When pubs reopened just over a week ago in Richmond, I and others observed that licensed premises managed their customers and alcohol very responsibly. The problems that occurred were caused by people buying discounted alcohol from supermarkets and reading the relaxation of the rules governing pubs as, in effect, a relaxation of the constraints they had been observing during lockdown; therefore, they were out on the streets, frequently exceedingly drunk. As the chair of the Police Federation noted, it is crystal clear that people who are drunk cannot socially distance.

I could not find a way to shoehorn a specific amendment into this Bill, but I hope the Government will take on board that discounted alcohol served or sold by supermarkets and convenience stores late at night is a fundamental cause of problems that, unfortunately, are frequently being attributed to licensed premises. Locally, we find that those with a licence are well embedded in the community, have a strong and well-established relationship with the police and manage their customers exceedingly well. Going out on Richmond Green in the middle of the night, it becomes clear that it is supermarkets providing very cheap alcohol that are fuelling highly risky behaviour.

[Baroness Noakes (Con)]

My Lords, I too shall be brief. I support what my noble friend Lord Balfe said about the House getting back to work. Indeed, I encourage my noble friend to come and join us in the Chamber, where he will find a warm welcome awaiting him.

I hope that he was wrong when he said that he was expecting Divisions on Report. We have to get this Bill on to the statute book as soon as possible. I hope we will not lose sight of the fact that these are temporary relaxations designed to help get the economy working again. Many of the issues raised are problems of normal times; we are not in normal times and we should not judge the relaxation proposals in the Bill by the issues we encounter in normal times. The important thing is to give the benefit of the doubt to premises that want to get going again. There are provisions in the Bill which allow licences to be revoked at a later stage if it does not work out. The most important thing is that we embrace the liberalisation encompassed in the Bill and do not hold it back by trying to make the application process more difficult or by putting more barriers in the way of our economy getting going again.

--- Later in debate ---

[Baroness Uddin [V]]

My Lords, I support Amendment 48 in the name of the noble Lord, Lord Stevenson of Balmacara. I have just a few brief points. I shall speak specifically about data collection and the reporting requirement for the Bounce Back Loan Schemes. Despite the pandemic, we cannot overlook the need for transparency, open government and a robust process of reporting to Parliament. Current data relating to the total number of applications and the number of loans granted does not make allowances for how well the scheme is working to help businesses through the crisis, including SMEs, as the noble Baroness, Lady Altmann, referred to. There is inadequate data on the number of businesses that could not access loan schemes and why they were refused. This should be addressed in the reporting mechanism.

The curry industry, which I referred to earlier, has reported that its members are experiencing a great deal of difficulty in accessing this financial support. I am deeply concerned about eradicating any inequity that they might be experiencing. Therefore, I would like more detailed reporting to include the number of successful applications from SMEs led by BAME communities, particularly in the curry industry, and, more specifically for the curry industry itself, the actual number of applications that have been successful and those that have been rejected.

[Baroness Kramer [V]]

My Lords, I support Amendments 46, 47 and 48 and regard all three as exceedingly important. I will start by picking up on an issue described by my noble friend Lord German. We know now that the major banks, which have been able to participate in the bounce-back scheme because they have been provided with cheap funding from the Bank of England under its term funding scheme, have failed in what I was told was an obligation to also pass that cheap money through to the fintech industry and other alternate lenders, so that a broad and diverse coterie of lending institutions would be involved in bounce-back schemes and a mechanism to ensure that qualifying small companies would be able to find a source, even if it was not from one of the major banks. We now know that that funding process has not taken place and that relatively few bounce-back loans are being provided by alternate lenders because they cannot find cheap enough funding, since they have no direct access to the Bank of England scheme.

The reason I mention this is that it describes to us the culture of major banks today. Many of us had hoped that after the 2008 crisis we would see a dramatic change in culture among the major high street banks. We have certainly seen some changes, and some are better than others, but we are still dealing with a group of institutions that, frankly, if given a loophole will use it. Amendments 46 and 47 are designed to close off two major sets of loopholes to make sure that proper consumer protection continues to be provided to SMEs that use the bounce-back schemes and to make sure that these do not become mechanisms that enable them to be taken advantage of in ways that they never anticipated. Therefore, Amendments 46 and 47 are vital to limit any potential for abuse.

Amendment 48 is important because it will help us track exactly what is happening under the Bounce Back Loan Scheme arrangements. We have all heard anecdotally that the big banks are cherry picking those to whom they make bounce-back loans. Some of them choose only existing customers because they do not want to overexpand their balance sheets; others pick from within those customers. As I understand it, the whole spirit of the bounce-back scheme is anathema to cherry picking, but it is taking place.

Amendment 48, in the name of the noble Lord, Lord Stevenson, would very rapidly make clear how many people are applying and who is rejected, and it would give us the ability to try to track exactly what is happening under this scheme. I know that something like £30 billion has already been lent through bounce-back loans but, frankly, that is well below the level that the Government expected. Those loans are a lifeline for many companies and we really cannot allow this scheme to be abused. If we are not careful, by the time we intervene, many businesses will already have closed their doors.

[Lord Stevenson of Balmacara (Lab) [V]]

My Lords, I have added my name to Amendments 46 and 47, moved and spoken to respectively by the noble Baroness, Lady Bowles of Berkhamsted, and I support the points that she has made. I also welcome the expert contributions from the noble Baroness, Lady Altmann, the noble Lord, Lord German, and the noble Baroness, Lady Kramer.

The Consumer Credit Act 1974 has long been criticised because of its extensive, complex information disclosure requirements. These are a problem in their own right but they can make it problematic for lenders to be flexible in cases where they might, for example, wish to offer forbearance to consumers experiencing difficulties in making repayments or to those suffering from unmanageable personal debts, as many do. Clearly, if small businesses are being affected by Covid-19 issues, it makes sense to ensure that their access to bounce-back loans is not hampered by requests for unnecessary evidence and detail or by extensive time delays in processing such data.

However, as the Explanatory Notes make clear, SI 2020/480 changed the rules for small loans to individuals and small partnerships so that they are no longer regulated credit agreements. However, as the noble Baroness, Lady Bowles, pointed out, the SI does not affect Sections 140A to 140C of the Consumer Credit Act 1974—the so-called unfair relationship provisions. The problem identified by the noble Baroness seems to be important. In a laudable attempt to simplify the processes, the Government might, perhaps inadvertently, have removed the statutory underpinning of Sections 140A to 140C, which, for example, through the courts protect borrowers from any subsequent attempts by lenders to act unfairly. That can often be the case, as we have heard this evening.

I believe that this issue might need to be reviewed separately once we are through the pandemic. Perhaps when she comes to respond, the Minister will agree that it needs further work. I hope that she will also be able to reassure us that our concerns are unfounded. I have my doubts but am willing to be convinced. The change in law needs to be securely attached only to bounce-back loans and the Covid-19 pandemic. We also need to know that the application of this disregard is proportionate and appropriate to lenders.

Turning to Amendment 48 in my name, I am grateful for the support of my noble friend Lady Uddin and the noble Baroness, Lady Kramer. I hope that the Minister recognises that the amendment covers ground raised in the powerful comments made at Second Reading by the noble Earl, Lord Shrewsbury, who shared his personal experience of the wide variability of responsiveness by the individual banks and lending institutions authorised by the British Business Bank to issue bounce-back loans.

My amendment calls for regular reports. I appreciate that there are confidentiality issues here, but this is also about transparency. If a private company such as MoneySavingExpert can do a survey which reveals that a substantial number of bounce-back applicants suffer delays, rejections and unrelated credit checks, surely the Government can do better. It is true that the MSE report is based on a sample, albeit a large one, but it shows that consumers have had variable responses from the major banks, and some of the smaller challenger banks had very high rejection rates. The transparency which the amendment looks for may improve that situation. I hope that the Minister can offer some movement on this issue, which would help with the task of getting bounce-back loans out to those who can use them. She said in her response to an earlier group of amendments that the Government were constantly reviewing and improving the Bounce Back Loan Scheme. I hope that she recognises that to do that without the sort of information that my amendment proposes might be otiose.

--- Later in debate ---

[The Deputy Chairman of Committees]

I call the noble Earl, Lord Attlee. We cannot hear the noble Earl. We will move on to the noble Baroness, Lady Kramer, and come back to the noble Earl later.

[Baroness Kramer [V]]

My Lords, I will be exceedingly brief. I only wanted to address Clause 14(2)(b), which is basically about HGV licence applications. The Government have, in effect, temporarily waived the requirement for medical certificates, which I find entirely appropriate in light of the pandemic and the difficulty of requiring the medical profession—distracting them, if you like—to carry out the various tests and fill out the various forms that would provide those certificates.

My question is this: having made the decision that it is possible to grant HGV licences on this basis, are the Government willing to agree to do the same for other applicants for drivers licences? I am particularly concerned about others who, like me, are about to turn 70. We, of course, have to obtain new licences as we reach 70. I have been able to do it very easily online because I have the right sort of picture-based identity and passport, and because I did not require a medical certificate.

However, I have received a number of letters from various people who have not been in that position and are now finding that their licences are expiring at a time when they really do need to be able to use their cars. Being over 70, they are quite anxious about going on public transport; I think most people would think that that was entirely appropriate. Having made a decision that it is going to temporarily waive that medical requirement for HGV drivers, will the Government now consider doing it particularly for the over-70s?

[The Deputy Chairman of Committees]

Have we got the noble Earl, Lord Attlee, back?