Corporate Insolvency and Governance Bill

Debate between Viscount Trenchard and Lord Adonis

Committee stage & Committee: 1st sitting (Hansard) & Committee: 1st sitting (Hansard): House of Lords
Tuesday 16th June 2020 Lords Chamber

[Lord Adonis (Lab) [V]]

My Lords, I thought that the noble Lord, Lord Hodgson, made two very powerful remarks earlier in the debate when he said that this Bill seeks to do two separate things. The first is to introduce the emergency provisions in respect of the crisis we are in, and the second is making permanent changes to insolvency law. He also drew attention to the absolutely devastating report on the Bill by the Delegated Powers and Regulatory Reform Committee, which highlights a wider set of Henry VIII clauses than I have ever seen in a Bill of this kind, including the whole definition of which companies are affected by it under new Schedule ZA1, which can be changed by the Government by order, without any primary legislation. I am sure that we will want to return to that.

Even more extraordinary is the Government’s justification for why they have included all these Henry VIII powers, which is

“the undesirability of taking up Parliament’s time unnecessarily.”

Surely it is the job of Parliament to decide whether its time is being taken up unnecessarily, not that of the Government. I draw the particular attention of the Committee to paragraph 8 of the Delegated Powers and Regulatory Reform Committee report, which states:

“In our view, the presumption should be that where something needs changing which Parliament has enacted, Parliament should enact the changes by primary legislation rather than ministers make the changes by secondary legislation.”


That points the way to a number of key amendments that need to be made on Report.

Turning to this group of amendments, it suffers from exactly the same problem that the noble Lord, Lord Hodgson, said the Bill suffers from, which is that it puts together a whole lot of separate things that do not actually go together. Over the past hour and a half, we have debated three completely separate matters: the issue of the independence of the monitor, which is hugely important—my noble friend Lord Stevenson’s amendments in that regard are utterly compelling—along with the issue of wider conflicts of interest in the whole handling of the moratorium arrangements and the people who play a part in them, which again is a wider and separate issue. The third issue, which has been covered comprehensively by my noble friends Lord Hendy and Lord Hain, is the hugely important matter of consultation with the workforce and the priority to be given to employees and workers in these moratorium arrangements and anything that might follow from them. I hope that in his reply, the Minister will be able to pay substantial attention to all three of these areas.

I do not want to go over ground that has already been covered by my noble friends, but I would like to ask the Minister one specific question. In the early stages of the coronavirus crisis, the Government made great virtue of the fact that they were consulting employee organisations, trade unions and the TUC in order to create a consensus on the kinds of measures which would be needed to deal with it. Indeed, in the construction of the furlough scheme, the Chancellor of the Exchequer made great play of the fact that he had been talking to the general secretary of the TUC, Frances O’Grady. It is quite clear that there are concerns among trade unions about the whole way that these provisions will cut across established insolvency provisions and redundancy provisions. Therefore, I want to ask the Minister a specific question—or rather, two related questions.

First, what representations have been made to the Government about the role of employees and their interests in this Bill? Secondly, can he tell us whether he personally or any of his ministerial colleagues have met the TUC general secretary or officials from the TUC to discuss these provisions? I ask that because if we are seeking to proceed by consensus, by the time we get to Report, we will want to know what actual discussions have taken place with representatives of employees and whether we can satisfy ourselves that there has been adequate consultation. If not, the arguments made by my noble friends Lord Hain and Lord Hendy are compelling when it comes to amendments that we will need to make on Report.

[Viscount Trenchard (Con)]

My Lords, as other noble Lords have mentioned, this Bill is an unusual combination of Covid-related measures that clearly need to be fast-tracked, along with measures to implement the long-held belief that we need an equivalent to the Chapter 11 procedures of the United States.

I do not think that a hybrid House is particularly well suited to scrutinising legislation, especially in Committee. I do not think we will be able to say that this is working well. We are making the best of a difficult situation but it only goes to show that in order to scrutinise the Government’s legislation properly, we need to get back to the proper House as soon as we can.

The only good point I might mention is that, for the first time since we went to Virtual Proceedings, in this Committee we have no time limits. It is so nice and such a relief that we do not have my noble friend the Minister turning round to scowl at us as soon as we have gone 10 seconds over the prescribed one minute or two minutes.

Amendment 1, in the name of the noble Lord, Lord Stevenson, seeks to narrow the definition of persons entitled to be appointed as monitors from “a qualified person” to qualified accountants. I would not support this narrow definition because it may be too restrictive, especially for small enterprises. A monitor should be someone with a professional qualification, issued by a body whose members are carrying on a relevant regulated activity.

I agree with Amendment 2, in the names of the noble Lord, Lord Stevenson, and my noble friend Lady Altmann. It is important that the monitor should be capable of independence and objectivity. The current IESBA—International Ethics Standards Board for Accountants—code of ethics definition of “independence” explains it as being made up of two elements: independence of mind and independence of appearance. The former is defined to include integrity, objectivity and scepticism. The latter is defined as being free from facts and circumstances that would lead

“a reasonable and informed third party”

to conclude that integrity, objectivity or scepticism was compromised.

I ask the noble Lord, or my noble friend, to confirm which definition of independence they would apply and whether it should be a strict, rules-based one, comprising a list of prohibitions of those related by blood, marriage, shareholding, et cetera, or a looser one, based on principles and objectivity. I hope that a sufficiently robust definition of independence could be included, so as to render unnecessary Amendment 42, in the names of my noble friends Lord Hodgson of Astley Abbotts and Lady Altmann, which seeks to ensure that a monitor should not be exposed to any possible conflicts of interest.

As precise amounts can be difficult to assess, I support Amendment 4, in the name of the noble and learned Lord, Lord Hope of Craighead, rather than Amendment 3, in the name of the noble Lord, Lord Mendelsohn. However, I agree that some kind of document showing the number of a company’s creditors would be useful to the court in making a decision on granting a moratorium. As explained by the noble and learned Lord, Lord Hope, that would assist the monitor in his or her duty to notify every creditor.

The noble Lord, Lord Stevenson, makes a case in Amendment 10 for the extension of the initial period in relation to a moratorium from 20 to 30 business days; this means six weeks, rather than four. I think that 20 days should be enough, even for small companies. Obviously, it will not be enough time for a complex restructuring, but that is not the purpose of a moratorium as introduced in this Bill.

I support Amendments 12, 13, 17, 18, 30 and 31, as proposed by my noble friend Lord Leigh of Hurley. Like my noble friend, I also have spent more than 30 years as an investment banker, much of it doing mergers and acquisition business. Like him, I know just a little bit about this. In the case of companies which have both viable businesses and non-viable businesses, it may be that to rescue one or more of a company’s businesses is sensible in cases where a rescue of a whole company may not be realistic. Does my noble friend not therefore agree that his amendments would be improved further if, after “company”, they sought to insert, “or the whole, or some part, of the company’s business”? I understand that this issue was much discussed at the time of the Enterprise Act 2002. There are of course very many companies which contain only one, or one substantive, business. But surely, in other cases, it is the rescue of a business, as opposed to the rescue of a company as a legal entity, that is important.

I also support Amendment 27 in the name of my noble friend Lady Altmann. Where an asset has been pledged to a company’s defined benefit pension scheme, it should not be within the powers of the court to release it for sale without the consent of the pension protection fund, as well as, surely, the trustees of the pension fund itself.

European Union (Withdrawal) (No. 5) Bill

Debate between Viscount Trenchard and Lord Adonis

Committee: 1st sitting (Hansard): House of Lords
Monday 8th April 2019 Lords Chamber

[Lord Adonis (Lab)]

My Lords, what has just been demonstrated is that the Bill has many parents and very wide support across the House. The point made by the noble Lord, Lord Pannick, is completely conclusive. It is for the House of Commons to decide what the date should be. The Commons have invited us to give them this power, and I think that we should get on with it.

[Viscount Trenchard (Con)]

My Lords, I apologise for having failed to speak in the debate on Second Reading. I had to leave London early on Friday to attend a memorial service the following day. I was pleased to see that the normal operation of the usual channels was restored on Thursday, although I deplore the fact that the closure Motion procedure was excessively and improperly used. Indeed, I would guess that it was used more times than in the previous decade or more—I would like to know. The result was that I was unable to speak either in the debate on the amendment to the business Motion moved by my noble friend Lord Forsyth or in the debate on that tabled by my noble friend Lord True. Of rather more significance than my ability to speak, however, is the fact that the use of the closure procedure denied both my noble friends the right to reply to the debates on the amendments that they had moved.

As my noble friend Lady Neville-Rolfe illustrated so well at Second Reading, the nature of business in the UK Parliament and the UK Government seems to be increasingly last minute. It is simply unacceptable to try to rush through a Bill of such huge importance without proper time to consider its implications. It makes a mockery of our parliamentary democracy. The Bill received a Second Reading in the other place by the narrowest of majorities: just one vote. It is deplorable that many noble Lords thought it was nevertheless appropriate to suspend the normal procedural rules of this House—

--- Later in debate ---

[Viscount Trenchard]

I hear that the noble Lord thinks that, but I regret that I take a different opinion. I have apologised for not having been present at the debate on Second Reading for the reason I have given, but this morning I took the trouble to read virtually the whole of the debate.

[Lord Adonis]

My Lords—

[Viscount Trenchard]

No, I would like to finish so I will not give way to the noble Lord again. It is therefore strange—

European Union (Withdrawal) Bill

Debate between Viscount Trenchard and Lord Adonis

Report: 1st sitting: House of Lords
Wednesday 18th April 2018 Lords Chamber

[Lord Adonis (Lab)]

I defer to the noble Viscount in his knowledge of millionaires. Maybe he is right, maybe he is wrong, but I do not think that they particularly enter into it. It is ordinary, hard-working people who will, of course, suffer the consequences if our trade collapses, and they are the people we should have at the front of our minds. However, on the point about trade with the wider world, almost two years ago a very thorough analysis of our trade and trade policy was made by a prominent politician in a speech. This is what she said:

“It is tempting to look at developing countries’ economies, with their high growth rates, and see them as an alternative to trade with Europe. But just look at the reality of our trading partnership with China—with its dumping policies, protective tariffs and industrial-scale industrial espionage. And look at the figures. We export more to Ireland than we do to China, almost twice as much to Belgium as we do to India, and nearly three times as much to Sweden as we do to Brazil. It is not realistic to think that we could just replace European trade with these new markets”.


That was the current Prime Minister speaking on 25 April 2016, and I do not think anything has changed since.

[Viscount Trenchard (Con)]

My Lords, I am not quite sure exactly what this amendment means, in spite of the eloquent speeches by the noble Lord, Lord Kerr, and my noble friend Lord Patten. It would require the Government to lay before Parliament a statement outlining the steps taken to negotiate an arrangement which enables the UK,

“to continue participating in a customs union”.

I do not think this is at all helpful to our negotiators. Even if remaining in a customs union were one of the Government’s possible objectives, which it is not, the amendment does not even set a condition that such negotiations must be successful. I expect that those of your Lordships who believe that we should remain in a customs union, which I believe is now the policy of the Labour Party, will not wish to support this amendment in its present form.

I believe that noble Lords who think that we should stay in a customs union are misguided because it would prevent us establishing our own tariff schedules at the WTO. As my noble friend Lord Lawson mentioned, we would be in an unenviable position similar to that of Turkey, which is bound to accept imports from third countries, agreed to by the EU at similar tariffs to those decided on by the EU. Turkey, however, does not even benefit from any preferential tariff rates for its own exports to such third countries which become available to EU countries through agreements made by the EU with third countries.

It is essential that the UK, after the end of the implementation period, should be free to implement bilateral and multilateral free trade agreements with third countries. Failure to be able to do this would negate the whole upside potential of recovering our sovereignty in international trade matters and it would be pointless for the UK to leave the EU on such a basis. A major benefit of leaving the EU will be acquiring the freedom to reduce and ultimately eliminate tariffs on essential products, which represent a high proportion of the budget of poorer people, as mentioned by the noble Lord, Lord Howarth, my noble friend Lord Ridley and others.

One of the two possible customs arrangements the Government have said they are considering is a customs partnership with the EU, under which the UK would mirror the EU’s requirements for imports from third countries where their final destination is the EU. It seems to me that if such a customs partnership required the UK to retain a high degree of regulatory alignment with the EU, it would make the UK unattractive as a potential trade partner for third countries and prevent us becoming a powerful advocate for free trade around the world and exercising our considerable influence on ensuring that developing global—rather than European—standards represent best practice in consumer protection in a way that does not inhibit innovation, as excessively bureaucratic regulatory regimes tend to do. I look forward with interest to hearing what my noble friend the Minister has to say about the Government’s current thinking on the option of customs partnership. In any case, the inclusion of any of these amendments in this Bill, which is largely technical in nature, would unnecessarily tie the hands of our negotiators in a manner detrimental to the UK’s interests.

European Union (Withdrawal) Bill

Debate between Viscount Trenchard and Lord Adonis

Committee: 1st sitting (Hansard - continued): House of Lords
Wednesday 21st February 2018 Lords Chamber

[Lord Adonis]

My Lords, there are 101 reasons why people voted for or against leaving the European Union. As the great Lord Salisbury, the last Prime Minister to serve in this House, famously said after a general election, the problem is:

“When the great oracle speaks, we are never quite certain what the great oracle said”.


However, I have not yet met a single person in any walk of life anywhere who told me that they voted to leave the European Union so that they could leave Euratom. Indeed, I imagine that there were not many people outside the confines of your Lordships’ House and the nuclear industry who were even aware that there was this organisation called Euratom, where the final court of appeal was—wait for it—the European Court of Justice.

There is always a problem about loss of face. I have sat on that Bench, too. I know that Ministers do not like having to change their mind. But I do not think the Minister will have any problem with any loss of face with anyone, including those who have been so keen to see that we leave the European Union because of the instruction from the British people, if he were to announce that the Government intend to withdraw the notice under Article 106a of the Euratom treaty and put this complete nonsense behind them. I do not mind what hour of the night he announces it. I would be perfectly happy for him to announce it at 2.30 am if that ensures that it gets less coverage.

The Minister will have noticed that there has been no support at all from behind him. The noble Earl, who is not given to criticising the Government, made a devastating speech. Although the noble Viscount said that he thought the consequences might not be as bad as people had said, I did not detect him saying there would be any positive advantages from leaving Euratom. The noble Baroness gave an equally devastating speech.

[Viscount Trenchard]

I certainly said that Euratom was not the marvellous organisation that it is made out to be. I actually think it would be very good if we can find a way to continue the current arrangements until such time as we put in place the necessary independent arrangements with IAEA accreditation. But I did not say that I thought Euratom was marvellous. I know of one senior officer in the nuclear industry who thinks we should remain in the EU but leave Euratom.

[Lord Adonis]

My Lords, it is not part of the human condition to think that institutions are marvellous. They can always be improved. But I did not take the noble Viscount’s clarification to be raising the banner for abolishing Euratom because there were going to be such great advantages to the public from us—in the words of the noble Lord, Lord Bridges, to the House a few weeks ago—walking the “gangplank into thin air”.

However, I have a specific question for the Minister. Can he confirm to the Committee that Her Majesty’s Government can withdraw the notice of withdrawal from Euratom under Article 106a of the Euratom treaty and that they can do that unilaterally? As he knows, I am slightly persistent in these matters. I always thought that part of the argument from those who were in favour of Brexit was that we were going to restore the sovereignty of Parliament. It is not too much to expect that Parliament should be able to see and study the legal advice on which Ministers make decisions. I ask him yet again whether he will make available to the House before Report the legal advice which his department has on the legal basis on which the Government can act in withdrawing the notice of withdrawal under Article 106a of the Euratom treaty.