Business and Planning Bill

Baroness Altmann Excerpts

Report stage & Report stage (Hansard) & Report stage (Hansard): House of Lords
Monday 20th July 2020 Lords Chamber

The underlying message behind this deliberate and unnecessarily wide disapplication of the law, especially to debt collection, is a dire one. For that reason, I intend to call a vote. I beg to move.

[Baroness Altmann (Con) [V]]

My Lords, I have added my name to this extremely important amendment. However, I congratulate the Government on their introduction of the bounce-back loans and their enormous efforts to try to help businesses survive this crisis, which was not of their making or anybody else’s.

I am sure that my noble friend is sympathetic to the circumstances that could arise, and hope that she can reassure the House that the intention of this measure is not to change the balance of what is fair in circumstances where debts are being recovered by the lenders of these bounce-back loans. I find it difficult to understand why the Government have only really preserved the regulations relating to default and debt recovery for those loans up to £25,000, and only for micro-businesses. I would appreciate it if my noble friend could help the House in this regard. Restaurant owners and hairdressing salons which are limited companies may find that their equipment is subject to seizure when banks try to recover these bounce-back loans.

The banks do not need to recover the loans—indeed, they have expressed reservations and discomfort about being asked to take these borrowers to court. I believe there will be consultation with Ministers over the summer about how this is going to work. If they have a guarantee, they do not need, in theory, to press too hard to recover the loans. But if there are some attractive assets, it may be tempting for them to do so. I hope the Government will be able to state clearly that they want reasonable debt recovery only, and the intention is not to change the balance of fairness in these circumstances.

Forgive me if I am asking too much at this late stage of the Bill and with the emergency nature of the legislation, but I ask my noble friend to consider whether the Government might accept that they could take the power to make regulations, reapplying the Consumer Credit Act to debt recovery should that prove a popular and necessary measure, or whether they can include the range of £25,000-£50,000 in some other way so that we can avoid the reputational damage that may go along with this. Nevertheless, I welcome the bounce-back loans and I encourage my noble friend to give us some clarification.

[Lord Carlile of Berriew [V]]

My Lords, the noble Baroness, Lady Bowles, whose amendment this is—and I am very pleased to be a signatory—is a considerable expert on the subjects under discussion, as is the noble Baroness, Lady Altmann. I have enormous respect for them both, and for their skills in this area. I am but a mere lawyer and feel, to an extent, inadequate to parry on the financial details under discussion.

I have spent a lot of my time in recent decades dealing with fraud cases in which people often got themselves into financial difficulty, through no fault of their own, and were then under huge pressure from the banks. We have recently heard cases in which the Post Office prosecuted people who pleaded guilty to criminal offences which they had not committed. We have heard about the remedial action that is having to be taken, very expensively, to put those wrongs right.

The bounce-back loans are of course very welcome, but they bring a whole new cohort of people into, what is for them, often very substantial borrowing. Many of the businesses we are talking about do not have substantial overdrafts in the ordinary run of things. They are able to live on a cash balance, albeit often small, and they do not have to enter into sophisticated agreements with banks. This applies particularly to family businesses, which have either been created recently or are long established. The debt picture and the debt threats for such companies are frighteningly great compared to the time before coronavirus.

Therefore, over the years, there are plenty of examples, as mentioned by the noble Baroness, Lady Bowles, of banks being sometimes very oppressive towards customers who are put out of business without understanding what redress they may have against those banks. Unfortunately, these provisions remove some of that redress, which they might discover they have against the banks.

In my view, some simple legal remedies with flexibility are needed, so that if, for example, a company defaults on a loan but can demonstrate that, within a couple of years, it can haul itself back to not only profitability but the ability to repay the loan, we would be in a much better position. Surely that would be a far better outcome. The amendment we are considering is one solution to that problem, and that is why I support it.

I am grateful to the noble Baroness, Lady Penn, with whom I have exchanged emails, at her instigation, about this amendment. I said to her yesterday in an email that the Government really should produce some kind of arbitral procedure which would enable loans in the range we are debating to be discussed, a solution to be found that would satisfy the banks in the long term, and the businesses concerned to carry on trading. These loans have of course been introduced in an emergency, but it is actually less of an emergency for the banks than for the people who take out the loans, and about whom we are talking. Unless something better is offered, this amendment would rebalance fairness so that there is a level playing field between the lender and the borrower.