Prescribed Persons (Reports on Disclosures of Information) Regulations 2017
Debate between Lord Palmer of Childs Hill and Baroness Buscombe
Lord Palmer of Childs Hill (LD)
My Lords, I thank the Minister for her detailed explanation. I am slightly fresher because I did not have a late-night assignment in this House last night and I want to try to clear up some confusion in some of the points that she made.
The Minister talked about annual reviews of the list of prescribed persons. As far as I can see, and this is reiterated within the statutory instrument that we are debating today, she was referring to the 111 prescribed persons listed in the Public Interest Disclosure (Prescribed Persons) Order 2014. That does not really tie up with the idea of an annual review, so I find that confusing. Can the Minister also explain how consistency will be maintained, assuming there are still over 100 organisations? It would be so much easier for anyone looking at this to have those 100 or so organisations actually listed in the statutory instrument rather than people having to look back to other legislation for them. As the noble Lord has just said, we are not all lawyers and it should be on the face of the statutory instrument. I find it very sad that it is not. Can the Minister say whether there is going to be any government action to compare these various bodies and how they report? For someone who is a professional it is a fact of life that whatever the regulations say, if you have numerous organisations, they will have different attitudes to how they report.
I also understand that the annual reports will not require the disclosure of any information which could identify the worker who made the disclosure—that is absolutely right. However, I query, and ask the Government to reconsider, that the same anonymity applies to the employer about whom the disclosure is made if it is then found that further action was taken. I can see that there should be anonymity for both employer and employee if there is no further action, but if the employer is found guilty—to use the word in its general sense—why should that person or organisation not be named? I hope that the Minister will be able to answer my queries.
Baroness Buscombe
My Lords, I am rather glad that the noble Lord, Lord Stevenson, referenced our late hour last night, because I am not sure that I will be able to answer all the questions that have been put to me this morning. However, I will do my best to answer at least some of them.
First, on the question about 1 April, the reason for that date is the timing of the reporting period, which is 1 April to 31 March each year. The regulations do not impact on prior business, and prescribed persons whom it impacts on have been advised. I hope that that makes sense.
On Northern Ireland, bodies operating in devolved fields that are prescribed persons for the purposes of Great Britain employment law are included in the reporting duty and will be required to publish reports on their own websites. This does not affect their existing lines of accountability. I can confirm that employment law is devolved in Northern Ireland.
In response to the noble Lord, Lord Palmer, perhaps I will come back to anonymity across the board in a moment. Sorry, I am advised that it is probably better if I write to the noble Lord, Lord Palmer, with respect to whether there is anonymity for the employer if guilty.
It might be helpful, with respect to both noble Lords, if I made some reference to the question of blacklisting, which is important to this. It is important that we address the issue of whistleblowers becoming blacklisted as a result of making disclosures. The Government have taken action to deal with serious offences of blacklisting relating to trade union activity that were uncovered in the past. Among the actions taken, the Government have increased the penalty that the Information Commissioner’s Office can impose for serious breaches of the Data Protection Act 1998 to £500,000. Data protection law is undergoing reform as a result of the general data protection regulation, which takes effect from 25 May 2018. The ICO’s fining powers will substantially increase as a result.
We are also bringing forward regulations in the health service to introduce protections for job applicants who have been whistleblowers, and there is a similar power in the Children and Social Work Bill for the field of children’s social care. We think it is right that those who work with vulnerable people need to be able to report concerns about what is happening in their workplace without fear of reprisals—I think that all noble Lords in this House will know of people who have experienced exactly the situation we are determined to deal with. Importantly, if they make a protected disclosure, they should be protected themselves from being blacklisted and unable to find a new role.
We have seen limited evidence that this is a problem with regard to not protecting whistleblowers and blacklisting in other sectors of the economy. Much of the anecdotal evidence has been concentrated in one or two fields where there is legislation in progress. Any new regulation would have an impact on employers, so we need to take care that it is appropriate and proportionate to the aim that it seeks to achieve.
The Information Commissioner intends to undertake a call for evidence later this year to help develop her understanding of the underlying issues, building on the ICO’s own observations from its investigations of blacklisting complaints. I could go on, but with regard to whether the Government will introduce a new criminal sanction in employment law for the blacklisting of job applicants, most employment law is enforced through civil sanctions. However, if the ICO finds a breach, it can also issue an enforcement or information notice and non-compliance with an ICO enforcement or information notice, where this is in place, is a criminal offence.
I am conscious that I have not been able to answer all the questions. I hope noble Lords will accept that I will write to them on any other points. In recent years the Government have undertaken significant reforms to the whistleblowing framework, working to improve the environment for whistleblowers. I know that noble Lords have paid close attention to these developments and indeed have shaped them in a number of ways, for which I am grateful. I am very grateful for the full support of the noble Lord, Lord Stevenson, on what we seek to achieve here.
The duty will increase confidence in the actions taken by prescribed persons through greater transparency about how disclosures are handled—of course, the balance between transparency and anonymity is a very difficult one to strike. The measure is also intended to drive up consistency in the way prescribed persons handle whistleblowing disclosures. By making a public interest disclosure to a prescribed person, a worker will qualify for protection from detriment or dismissal from work if the individual reasonably believes that the information disclosed is substantially true and that the matter falls within the remit of the prescribed person’s responsibility.
Once prospective whistleblowers are able to see that action has been taken as a result of previous disclosures to prescribed persons, I hope—and I am sure all noble Lords will too—that more employees who have witnessed malpractice at work will have the confidence to come forward and report it to the relevant authorities. I commend these regulations to the House.
Deregulation Act 2015 and Small Business, Enterprise and Employment Act 2015 (Consequential Amendments) (Savings) Regulations 2017
Debate between Lord Palmer of Childs Hill and Baroness Buscombe
Baroness Buscombe (Con)
My Lords, I hope I have the right speech. If I may, I will take a few moments of your Lordships’ time to set these regulations into context. They make consequential amendments and savings provisions to legislation that refers to the Insolvency Act 1986—as it will be amended by the Deregulation Act 2015 and the Small Business, Enterprise and Employment Act 2015 on 6 April 2017—and to the Insolvency Rules 1986, which have been repealed by the Insolvency (England and Wales) Rules 2016. These amendments will come into force on 6 April 2017.
The insolvency reforms will initially be adopted by the mainstream insolvency processes and it is anticipated that departments responsible for special insolvency regimes will update their legislation in due course.
Regulation 4 is a savings provision. It provides that the Insolvency Act will not be amended and will continue to apply as it does now for certain purposes or certain insolvency regimes. This provision will ensure that these other insolvency regimes remain operational in the interim period.
These regulations make amendments to various pieces of primary and secondary legislation. The most significant changes by volume update the Administration of Insolvent Estates of Deceased Persons Order 1986, which is the procedural framework that deals with the administration of the insolvent estates of deceased debtors, and the Insolvent Partnerships Order 1994, which deals with insolvent partnerships.
Over the last two years, the Government have introduced a series of reforms to modernise and streamline the insolvency process. They have achieved this through the Deregulation Act 2015, the Small Business, Enterprise and Employment Act 2015 and the new Insolvency (England and Wales) Rules 2016. The policy impetus for these measures was to remove unnecessary burdens and enable greater use of technology to reduce the cost of administering insolvency proceedings. It was part of the Government’s Red Tape Challenge, which asked stakeholders for views on how unnecessary regulation could be reduced and how procedures could be modernised, simplified and made more efficient. The responses produced a package of measures aimed at reducing costs and improving returns to creditors. The changes, which commence in April 2017, will deliver a net benefit to business of £22 million per year.
The key policy changes to which these consequential amendments apply include, first, changes to the way in which decisions are made; secondly, the abolition of final meetings; thirdly, the ability for creditors to opt out of receiving correspondence; fourthly, measures to increase the use of electronic communication and websites; and, fifthly, the removal of a requirement to formally file claims for small debts.
With regard to changing the way in which decisions are made, in the past, to begin some insolvency proceedings and make decisions in all insolvency proceedings the officeholder was required to call a physical meeting of the creditors of the insolvent person. Feedback from stakeholders was that this process was more expensive and cumbersome than was really necessary. In response to that feedback, changes have been made to the way in which officeholders will engage with and seek decisions from creditors. Physical meetings will no longer be the default mechanism for making decisions in insolvency proceedings. In fact, an officeholder will not be allowed to hold a physical meeting unless 10% in value of the creditors, 10% of the creditors in number or 10 individual creditors request that a meeting is held. This puts control back into the hands of creditors, and it is anticipated that this move alone will result in savings of more than £6 million per year. In many cases, an officeholder will be able to use a process of “deemed consent”, where they write to creditors with a proposal and, provided they do not receive objections from more than 10% in value of creditors, the proposal will be deemed to have been approved. Alternatively, officeholders can use an online virtual meeting, a telephone meeting or an electronic voting system, or seek decisions by way of correspondence.
With regard to the abolition of final meetings, currently an officeholder must hold a face-to-face meeting with creditors in order to lay his or her final report on the outcome of the case. These meetings were in fact rarely attended by creditors. Going forward, the officeholder will simply send a final account of the case to creditors, but this will not reduce the creditors’ rights to challenge any actions of the officeholder.
With regard to opting out of correspondence, previously in insolvency proceedings the officeholder was required to send all notices, all reports and all other documents and communications required by legislation to all known creditors, even where a creditor did not want to receive such information. It is inefficient for an officeholder to have to send such documents where they are not wanted. Under the new regime, creditors with no further interest in an insolvency process will be able to opt out of receiving further routine correspondence and reports from the officeholder. This will not include correspondence about the payment of a dividend, as the officeholder will still have to notify all creditors if a dividend is proposed.
With regard to the increased use of electronic communication, where, before the commencement of insolvency proceedings, parties have customarily corresponded electronically with one another, it is government policy that this should be allowed to continue without onerous regulatory burdens as to the means of communication. The reforms remove the need for the officeholder to obtain permission from each creditor to communicate electronically after the commencement of the insolvency proceedings. This will encourage e-communication, which is generally cheaper and speedier than traditional post. With regard to the use of websites, under the current rules an officeholder must obtain a court order if he or she wants to put all future communications with creditors on a website. This considerably restricts the use of technology. The requirement for a court order has therefore been removed.
With regard to no need to formally file claims for small debts, where a creditor is owed up to £1,000, new provisions will allow an officeholder to rely on information contained in a company’s or bankrupt’s records and to pay a dividend without the need for the creditor to submit a formal claim.
It is fair to say that as business practice has developed, particularly through new technologies, corresponding changes to insolvency law have been slow to follow. Users have not always been able to take advantage of the quickest, most cost-effective or most convenient methods of engaging with the insolvency process. The changes coming into force on 6 April modernise the insolvency process by encouraging the use of electronic communication and decision-making processes fit for the 21st century. These changes will increase creditor engagement through more convenient methods of interaction, as well as reducing the costs of seeking decisions. In particular, amendments enabling modern methods of communication and decision-making to be used in place of paper communications and physical meetings will be introduced. This will increase creditors’ engagement in insolvency cases by encouraging the use of decision-making processes fit for the 21st century.
The insolvency reforms have been informed by extensive consultation and engagement with a range of parties affected by insolvency, including the insolvency profession, creditor representatives, insolvency regulators and public bodies. I hope that gives a full explanation of these regulations and I commend them to the House. I beg to move.
Lord Palmer of Childs Hill (LD)
My Lords, I thank the Minister very much for that detailed explanation. I welcome the streamlining and digitising of the system, which is well overdue.
I raise two points, which I hope the Minister can answer. On the European Convention on Human Rights, the Minister for Small Business says:
“In my view, the provisions of the”,
various regulations,
“are compatible with the Convention rights”.
Can the Minister be a little more definite on what legal opinions the Government have taken on these regulations post-Brexit, which is around the corner? The Minister for Small Business just gives her view rather than the legal view, which the House is entitled to hear.
The other points I take up with the Minister are the non-requirement of creditors meetings and the streamlining of methods. That is absolutely ideal and it is the way to reduce the costs, but there is no mention in this legislation or the Minister’s introduction of the statutory instrument of the not insubstantial insolvency fees coming out of the carcass of an insolvency. I am a registered chartered accountant, though I have never been an insolvency practitioner, but I have seen, sadly, many of my clients being subject to bankruptcy and insolvency. The one thing that I have always thought a little worrying was that the insolvency practitioners’ fees—with all insolvency practitioners—come out of the carcass of that insolvency before anybody else gets a dip into it. By streamlining it in the way we have, I wonder whether the Minister and the Government’s civil servants have looked at the attitude of creditors to the size of and, sometimes, lack of change in the level of insolvency fees. It tends to happen in smaller bankruptcies that, after the insolvency practitioner has charged their fees—at a not insubstantial hourly rate, particularly in London—there is not much left.