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

Lord German Excerpts

Friday 24th July 2020 Lords Chamber

[Lord German (LD) [V]]

My Lords, in supporting these regulations I would like to explore some of the issues surrounding the remaining procedure, which derives from the 2008 Act, as amended. This remaining procedure provides, as we have heard, a 28-day or four-week moratorium for the regulator to establish and agree a proposal for ensuring that the homes remain within the social housing sector, and that tenants’ security is not affected by such a proposal.

The regulations before us apply only to England, so I would be grateful if the Minister could tell the House what the position is in respect of moratoriums in Scotland and Wales, where the duality of approach is still in place, given that the 2020 insolvency Act approach to moratoriums still applies across the United Kingdom.

These regulations put beyond doubt how special administration schemes for the 322 social housing providers in England will be approached, but I must comment on paragraph 10.1 of the Explanatory Memorandum. It says that ignoring those providers in the consultation which led to the 2020 insolvency legislation was because they were so few. That totally ignores the scale of the impact that these 322 providers have on the lives of millions of people. For those living in, or seeking to live in, the homes they provide and for their families, having a roof over their head is a fundamental part of their lives. I am sure that the Minister appreciates this, but I would be grateful if he could tell the House what steps the department has taken to ensure that they are not forgotten again.

The 28-day—four-week—moratorium provided through the earlier Act, which these regulations now confirm, is where I would like to explore a few issues. The clock starts on this moratorium, or space to work out a solution period, when one of a number of things occur, but, as the regulator states in its guidance, social housing providers should give it early warning. The guidance says it

“expects the PRP to notify the regulator”

where it has a potential problem or threat to its viability. I would be grateful if the Minister would reflect on whether an expectation is sufficient. Clearly, if it were a requirement, the regulator could step in earlier to assist. In that way, the danger of falling into housing administration, or even a moratorium, could be averted. It is this crucial relationship between the provider and the regulator that matters so much here.

The regulator has, by law, to see if it can rescue the housing provider, get a better result than it going into administration, sell the property in a portfolio or ensure that the housing remains in the regulated housing sector. I must add that I think these last two are somewhat contradictory and I would value some explanation from the Minister, but these are significant challenges if the regulator has only four weeks to complete this work. Of course, it can extend the moratorium if all the secured creditors agree. These creditors are, fundamentally, banks—the lenders which lend against the security of the property—and experience tells me that they are not always patient in seeking to get their funds returned. This will especially be the case with those housing associations which are highly geared. In that respect, I notice that the Minister, in his outline at the beginning, said that there was £80 billion of private sector money in the sector in 2020, whereas his colleague in the other place said that there was £100 billion in 2020. Can the Minister explain the difference of £20 billion between what he and his colleague told each House of Parliament? More than anything, will the Minister consider making the early warning a requirement, rather than an expectation?

The second issue is about the financial support that may be made available by the regulator to achieve its objectives, which are set out in statute. The guidance says that these funds are not a guarantee but, clearly, financial support would be very useful in retaining properties within the social fold, rather than selling them to realise an asset for repayment for secured creditors. Will the Minister indicate the level of financial support that has been provided by the Secretary of State in recent years upon an application by the regulator, and how often the Secretary of State has refused such an application?

Finally, and most importantly, these moratorium periods are very worrying for those occupying the homes. Tenants will understandably be concerned that their home can no longer be as secure as it was, with no guarantee that a second moratorium can occur, since that would require all secured creditors to agree. Providing comfort for tenants is critical at a time of great uncertainty. Emails and notes through the door might be welcome, but, in themselves, they are not as comforting as a face-to-face discussion with these home occupiers. Can the Minister reassure the House that face-to-face discussion is the required approach?

Business and Planning Bill

Lord German Excerpts

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

[Baroness Sheehan (LD) [V]]

My Lords, I will speak in support of Amendment 18 in the name of my noble friend Lady Northover, which I am pleased to say enjoys support across the House. Before I do so, I apologise for not being able to speak at Second Reading last week. I thank my noble friend Lady Northover for the comprehensive way in which she introduced her amendment, and her co-signatories the noble Lords, Lord Young and Lord Faulkner, and the noble Baroness, Lady Finlay of Llandaff, for their support.

The amendment seeks to ensure that in our attempt to find new and different ways of allowing our cafés, pubs and restaurants to survive, we do so in a way that is sustainable and safe for as many members of the public as possible, including staff. It will also make family-friendly areas safer for young children, who are particularly susceptible to toxic second-hand smoke.

I heard a few people say that extending non-smoking areas to licensed pavements should be left to local authorities to decide on an ad hoc basis, but, as in 2016, most proprietors of pubs, restaurants and cafés support extending the non-smoking area to licensed pavements. They know they will be on the front line when it comes to enforcing rules and, not surprisingly, they want the clarity and the safety from disappointed and sometime aggressive members of the public. They want the clarity that comes from everybody having to adhere to the same rules. Anything other than a national regime, underpinned by legislation, would cause confusion and, I fear, sometimes conflict.

I agree what other noble Lords have said in support of the amendment and I do not want to repeat what has already been said. However, there is one last point I would like to make. To introduce pavement licensing without the attendant safeguards from exposure to second-hand smoke would fly in the face of the Government’s own rationale for reducing the two-metre safety distance to one metre-plus. The plus refers to a physical barrier such as a screen or a face covering. Allowing smoking outdoors will mean the removal of face coverings and masks, therefore more exposure for the smoker and for anyone sharing his or her airspace. If only for the sake of consistency with their own policies, the Government should accept this amendment tabled by my noble friend Lady Northover.

[Lord German (LD) [V]]

My Lords, when the smoking ban was first introduced in 2007, it had followed years of campaigning and research to demonstrate the negative effects. Second-hand smoke affects everyone. The research studies then showed breathing in second-hand smoke increased an adult non-smoker’s risk of lung cancer and heart disease by a quarter, and of a stroke by 30%. I had been chair of a committee in the then National Assembly, which is now the Welsh Parliament, investigating the case for and the effects of a smoking ban in public and workplaces, and it was introduced before the ban in England. But that case is now well established and agreed across all parts of the United Kingdom, and 10 years after the 2007 Act, in 2017, the Welsh Parliament went even further, introducing restrictions on smoking in outdoor care settings for children, school grounds, hospital grounds and public playgrounds.

The current smoking ban in England is meant to be one of a series of moves to discourage smoking. The ban is part of a trend towards policies that de-normalise smoking and it has helped create a shift in culture. Around the world, Governments are considering or instituting bans on outdoor smoking. Just last summer, Sweden banned smoking in many outdoor places, including playgrounds, train platforms and restaurant patios. Following the Welsh example, smoking has been banned in the grounds of most NHS hospitals in England. The case for preventing the breathing in of other people’s smoke is proven. It is beyond doubt; it is harmful. Given there is a ban in workplaces, moving the workplace outside on to the pavement extends the boundary of the workplace, and thereby extends the need for banning smoking within that boundary if for no other reason than for those who work within those establishments.

One of the arguments used in 2007 was that a smoking ban would damage the business of pubs, but there has been no direct negative effect on pubs. People, as has already been commented, just go outside to smoke. Therefore, if the experience of 2007 is anything to go by, and the smoking ban is introduced on the pavement facility provided by the Bill, the new and temporary outside for smokers will be an outside space away from others who are eating and drinking. In reality, not having a smoking ban may well be the bigger deterrent here. Not being able to eat or drink in a non-smoking environment, to which the public have been accustomed, may well keep them away from eating out.

Breathing in other people’s smoke is harmful. The Government have indicated that they want to go further. The experience thus far is that a ban on the pavement facility will not damage business; smokers will move away from those eating and drinking. So why not use this limited opportunity to provide an environment which is not just smoke free but is healthy for diners and staff alike? The Government can demonstrate that they mean business in the challenge to tackle the harm that smoking does to the health of the nation. I am pleased to support the amendment.

--- Later in debate ---

[Baroness Altmann (Con) [V]]

My Lords, I support Amendment 46, to which I have added my name, and congratulate the noble Baroness, Lady Bowles, on her vigilance with respect to small businesses that are in a weakened financial state due to the Covid-19 restrictions; and her efforts to assist them in facing the large banks that may be trying to recover bounce-back loans, or penalise struggling firms in ways that were never intended by emergency legislation. I also congratulate the Government on their bounce-back loans initiative. However, I believe that this amendment is necessary to potentially address the asymmetry of power, which is a significant potential threat to the future of many hard-hit SMEs.

SMEs could face draconian recovery tactics, such as were employed by the infamous Global Recovery Group after the 2008 financial crisis, whether in the form of excessive fees or the taking over of business assets. The noble Baroness, Lady Bowles, is right that a court remedy is essential, not least to avoid giving a potential carte blanche to some of the less scrupulous bank executives.

Many banks wish to behave well, but this amendment is aimed at those who may not do so and is trying to anticipate and deter some of the practices that we have seen before. Bounce-bank loans are surely intended to help as many businesses as possible bounce bank, especially SMEs, rather than to offer a heads-you-win, tails-you-lose opportunity to lenders at the expense of business owners who were forced by the Government to suspend or curtail their business’s activity.

I also support the aims of Amendments 47 and 48 and hope that the Minister will listen carefully and agree to bring back amendments on Report that address this potential issue.

[Lord German [V]]

My Lords, I, too, support these amendments and have added my name to them. Section 140A of the Consumer Credit Act provides protections for borrowers in loans except where they are regulated mortgages or home purchase matters. The Act protects borrowers in connection with any credit agreement, except those related to home purchases, through court orders which may be awarded where the lender has gone beyond the terms of an agreement, applied the rules inappropriately or otherwise behaved inappropriately. The powers of the courts in this Act are drawn very widely and are designed to ensure that loopholes and lacunas which lenders might use to secure repayment have been covered off.

In their amendments to that Act in this Bill, the Government seek to remove the protections provided by the Consumer Credit Act where bounce-back loans have been provided. The Act provides broad powers to the court to bring lenders into line, including requiring lenders to repay moneys to a borrower, stopping lenders undertaking actions against the borrower in relation to their loan, requiring lenders to set aside any measures the court thinks are inappropriate and enforcing changes on the lender. This Bill, if unamended, would remove those protections in their entirety, except for in two circumstances.

Amendment 46, in the name of my noble friend Lady Bowles, limits the powers of these protections to the strict terms of the bounce-back loan and removes lenders’ ability to weave in other conditions, which the borrower has in respect of other loans and credit facilities, into the bounce-back loan arrangement. Adding such additional conditions is precisely the sort of hurdle which the Consumer Credit Act is designed to avoid—for example, using the terms of an existing loan with the bank to apply to the bounce-back loan, such as the level of security needed, the number of signatories required, the applicability of the borrower and so on. My noble friend has outlined the consequences of enacting this clause in the Business and Planning Bill and, in supporting her, I wish in particular to emphasise the need for Amendment 47.

At Second Reading, I spoke of the problems that many small and medium-sized enterprises are having in securing bounce-back loans with major lenders where hurdles which are not part of the bounce-back scheme are being placed in the way of companies seeking a loan. These loans may not save every company from going out of businesses, but they are certainly going to be a lifeline for some, and let us hope many.

Add to this the difficulties which challenger banks have in being able to find the cash to provide bounce-back loans, in part caused by the reluctance of high street banks to funnel funds through them at the Bank of England’s near 0.1% interest rate, and companies—particularly small and medium-sized enterprises seeking these loans—are facing increased difficulty. The Bank of England’s most recent snapshot of financial conditions in the UK raised particular concerns about the availability of non-bank finance, partly due to tight funding conditions for providers, so with high street banks giving priority to their own customers and the availability of funding making it difficult for challengers to lend, we have factors which make protection of the borrower all the more important. We have to remember that many small and medium-sized enterprises are surviving on a thread.

UK Shared Prosperity Fund

Lord German Excerpts

Thursday 21st May 2020 Lords Chamber

[Lord Greenhalgh]

I refer the noble Baroness to my previous answer. I cannot make a specific commitment on the timing but we obviously realise that, with the pandemic, it is important to proceed as fast as possible.

[Lord German (LD)]

Will the Government not only replace the money for Wales from the European funds pound for pound but match the powers that the Welsh Government currently have over those funds?

[Lord Greenhalgh]

The noble Lord will recognise that Wales receives more per capita than any of the four nations. I have made a commitment that the overall level of the funds will, at the minimum, remain the same, but I cannot go any further on the specific funding for the various nations.