Insolvency Act 1986 (Disqualification from Parliament) Order 2012

Lord Shutt of Greetland Excerpts

Tuesday 20th March 2012 Grand Committee

Moved by

[Lord Shutt of Greetland]

That the Grand Committee do report to the House that it has considered the Insolvency Act 1986 (Disqualification from Parliament) Order 2012

Relevant Document: 21st Report from the Joint Committee on Statutory Instruments

[Lord Shutt of Greetland]

My Lords, the purpose of this order is to bring the law as it applies in Northern Ireland into line with England and Wales in relation to parliamentary disqualification resulting from personal insolvency. The law applying in England and Wales was amended by the Enterprise Act 2002. Someone who is bankrupt is no longer disqualified from sitting or voting in Parliament and, in the case of a Member of the House of Commons, will no longer lose his seat after six months. Someone against whom a bankruptcy order has been made will be disqualified from Parliament only if he becomes subject to a further order, termed a bankruptcy restrictions order, or if he gives a bankruptcy restrictions undertaking.

Bankruptcy restrictions orders are made by the courts and bankruptcy restrictions undertakings are given to the Secretary of State or, in the case of Northern Ireland, to the Department of Enterprise, Trade and Investment. They are a means of placing a bankrupt under continuing restrictions following his discharge on the grounds of being culpable. Discharge from bankruptcy normally takes place after one year.

The 2002 Enterprise Act aimed to provide a modern bankruptcy regime, allowing those who have failed honestly to have a second chance. A second objective behind the provisions of the 2002 Act dealing with personal insolvency was to protect the public from the actions of the culpable. That is why there is provision for a regime of bankruptcy restrictions orders and undertakings. It would not be right to allow a person who has been found to be culpable to continue sitting or voting in Parliament or to be elected as a Member of Parliament.

A system of bankruptcy restrictions orders and undertakings equivalent to the one operating in England and Wales was brought in for Northern Ireland by the Insolvency (Northern Ireland) Order 2005. The necessary preconditions are therefore in place to allow the making of the order that noble Lords are being asked to approve.

The order will have the consequential effect of amending the grounds for disqualification from the Northern Ireland Assembly because, under the Northern Ireland Act 1998, a person is disqualified from being a Member of that Assembly if he is disqualified from membership of the House of Commons, other than under the House of Commons Disqualification Act 1975.

This order will extend the benefits of a more liberal disqualification regime to Members of this House, Members of the other place who are from Northern Ireland and Members of the Northern Ireland Assembly. I beg to move.

[Lord Rennard]

My Lords, I shall be very brief because the principle behind the order is without any significant controversy, and I note that the Explanatory Notes say that no consultation is necessary on this order. I would ask whether any consultation with the Electoral Commission was considered, particularly over the issue of making candidates and potential candidates aware of changes in relation to eligibility and disqualification.

I ask partly because of the controversy in Wales last year when two Assembly candidates were subsequently found to be ineligible for membership of the Welsh Assembly. Out-of-date information was provided to them by the Electoral Commission. Every time we change the rules about eligibility to stand for bodies or on disqualification, we need to make sure that candidates and potential candidates are aware of the up-to-date rules. Perhaps the Electoral Commission should be involved in making sure that people know where they stand in relation to matters such as this.

[Baroness Smith of Basildon]

My Lords, I am grateful to the noble Lord, Lord Shutt, for his detailed explanation of the order. As the noble Lord, Lord Rennard, says, it is not controversial and it is one that we would also support, having introduced the original legislation in 2002 for England and Wales. It was a very sensible piece of legislation, which was then introduced by my noble friend Lord Mandelson. Since the Northern Ireland DETI, of which I am a former Minister, brought its own legislation into line in 2005, it is a bit of a shame that it has taken us so long to bring what happens in England and Wales also into line.

I have only one question for the noble Lord. I, too, noticed that there was no consultation. It is highly unusual for Northern Ireland legislation not to be consulted on, but given that the original 2002 legislation and the 2005 order had been consulted on, there was clearly no need. My comment is not unrelated to the information supplied by the noble Lord, Lord Rennard, on the arrangements for sharing information across jurisdictions.

I notice that the Explanatory Notes make it quite clear that the Department of Enterprise, Trade and Investment has to notify the Speaker of the House of Commons or House of Lords if it accepts a bankruptcy restrictions undertaking from a Member of that House or if there is an order. Again, it responds to candidates. It is clear that if somebody was to be appointed to your Lordships’ House, the Appointments Commission would look into their background and would understand if there was a bankruptcy restrictions order or undertaking. However, if somebody was standing for election, how would the information be shared between jurisdictions so that the bodies for which they were standing for election would know the position? Somebody who is subject to an order or an undertaking in Northern Ireland could well wish to stand for a seat in England or Wales, or someone from England or Wales could wish to stand for a seat in Northern Ireland, although that is probably less usual. Therefore, on the point about sharing information between jurisdictions, those standing for election and electoral registration officers who accept nominations for elections should also be aware of this information.

Subject to the satisfactory answers to those questions that I am sure the noble Lord will be able to give, we are entirely content with the order.

[Lord Shutt of Greetland]

My Lords, some of the information is still to be supplied to me. However, let us get this into perspective. We are talking about Northern Ireland. In 2010-11, there were 1,465 bankruptcy orders. That is the number of people who were made bankrupt in that year. I do not have the precise figure but I am told that a handful of people—perhaps two or three dozen—have had bankruptcy restriction orders. Those are the numbers that we are talking about and, of those two or three dozen, we then have to think about how many might think of standing for elected office. Therefore, we are talking about a very restricted number.

There has been a consultation but it has not been carried out generally because at the moment the order affects only Members of the House of Commons and the House of Lords, although I take the point that those who will be seeking election do not presently sit in either of those places. My briefing note says that public consultation on the order has not been carried out as it affects only Members of the House of Commons and the House of Lords, Members of the Northern Ireland Assembly and, should any of them ever have a bankruptcy order made against them by the Northern Ireland High Court, Members of the Scottish Parliament and Welsh Assembly.

However, the Minister of State wrote to the Speakers of the Commons and Lords and of the Northern Ireland Assembly, as well as to the Chief Electoral Officer for Northern Ireland and the Electoral Commission, to inform them of his intention to bring forward this order. Only one substantive response to this exercise was received, and a Member of this House wrote to Hugo Swire, the Minister of State, in March 2011 seeking clarification on whether the order would ensure consistency in the law relating to the Northern Ireland and Welsh Assemblies and the Scottish Parliament.

The response was that disqualification at Westminster in this case has automatic read-across for the Northern Ireland Assembly. The order will bring Northern Ireland into line with both England and Wales, and bringing forward this order in respect of Northern Ireland will not ensure consistency in terms of Scottish legislation at the same time. However, the reply advised that the Northern Ireland Office is liaising with the Insolvency Service, which is part of the Department for Business, Innovation and Skills, and the Scotland Office to ensure that this is rectified when possible.

On shared information, if the High Court in Northern Ireland makes a bankruptcy restriction order in respect of a Member of the Scottish Parliament or the National Assembly for Wales, the court will notify the presiding officer of that body.

I think that I have been able to respond to the questions that have been raised and, with that, I hope that the order can be agreed.

Motion agreed.