European Union (Withdrawal) Bill

Baroness Hayter of Kentish Town Excerpts

Monday 19th March 2018 Lords Chamber

Moved by

[Baroness Hayter of Kentish Town]

220: After Clause 9, insert the following new Clause—
“Maintenance of rights in the area of insolvency and restructuring law
(1) Within the period of six months of the passing of this Act, a Minister of the Crown must publish a report outlining the extent to which the benefits afforded by EU insolvency and restructuring law will continue to exist in domestic law after exit day.(2) The report provided for under subsection (1) must include—(a) the steps, if any, taken by Ministers of the Crown to negotiate the continuation of reciprocal arrangements between the United Kingdom and member States in the field of insolvency and restructuring law;(b) the nature and duration of these reciprocal arrangements, if such arrangements have been negotiated; and(c) a declaration from the Minister of the Crown outlining whether, in their view, the UK’s insolvency and restructuring framework has been weakened.(3) The Minister of the Crown must lay the report before both Houses of Parliament.”

[Baroness Hayter of Kentish Town (Lab)]

My Lords, Amendment 220 seeks to draw the Minister’s attention to what we risk losing if the Government fail to negotiate the reciprocal arrangements we currently have in place by virtue of the EU insolvency regulation and the recast Brussels regulation. They provide a speedy and efficient procedure that determines which member state has jurisdiction to open insolvency proceedings as well as ensuring appropriate recognition of proceedings within the Union. Of course, I am referring to our long-term relationship with the EU, not just the transition period. However, I welcome today’s progress in that, in particular the realistic replacement at last of implementation with transition. I am also grateful for article, clause or paragraph 63 in the report released today—I do not yet know which it is—because it provides for the regulations to continue to apply to insolvency proceedings where these commence before the end of the transition period, but that is not enough. We are looking to the future.

The current rules allow for judgments made in the UK to be enforced across other member states. This recognition, whether of appointments or judgments, is key to investors, pensioners, employees, consumers, creditors and businesses. Without the rules, a liquidator or receiver here could lose the ability to freeze and ultimately return to the UK assets that have been squirrelled away across the EU but which rightfully belong to the bankrupt firm’s creditors, be they the staff, consumers who have paid for yet undelivered goods, investors, a pension scheme, landlords or even our blessed HMRC.

The UK has a renowned insolvency regime with one of the highest rates of return to creditors in the world. It gives confidence to investors and traders that their money will not disappear offshore because it enables a receiver to rapidly get hold of that Lamborghini, hidden away in an Italian garage, houses in sunny European climes, bank accounts in Frankfurt or even paintings in Paris, if they are rightly due to creditors here.

There are many examples; I will not go into detail. The purpose of the amendment is to ensure that the Government prioritise this in negotiating our long-term relationship with the EU. The Minister is well aware of my concerns; I set them out last year in writing to the then Minister, the noble Baroness, Lady Anelay. She replied to me on 26 October last year, offering a meeting with the BEIS Minister, Margot James. However, I got a letter from Margot James on 9 January saying that she could not meet me, but Insolvency Service officials could. The problem is, I know that various bodies, such as R3 or the City of London Law Society, who feel that the Government are not taking this seriously enough, have met with the IS and feel that they are not getting traction in the Brexit negotiations. Hence, I would argue the need for a political meeting.

My ask today is a very easy one: will the Government agree to meet me and representatives from the field—perhaps the noble Baroness, Lady Burt, as well—so that we do not have to bring this back on Report but can make progress? I beg to move.

[Baroness Burt of Solihull (LD)]

My Lords, I support the amendment of the noble Baroness, Lady Hayter, from these Benches. I would very much appreciate it if such a meeting could be arranged; I would love to be included.

I want to emphasise the importance of the UK’s insolvency framework to British trade and investment, especially where cross-border insolvencies between the UK and EU are concerned. We need to ensure that the benefits of our existing arrangements can continue, post Brexit, and we need an agreement in place before we exit the EU. We have a strong insolvency framework in the UK, as the noble Baroness, Lady Hayter, mentioned, and some good reforms to corporate insolvency in the pipeline. They would make our rules fit for purpose for both domestic and international markets, as well as underpin the UK’s attractiveness as a place to do business by supporting trade, investment, lending, productivity and entrepreneurship.

Brexit risks creating barriers to resolving cross-border insolvencies between the UK and the EU. We cannot allow that to happen. We need to ensure automatic reciprocal recognition for insolvency judgments and appointments, post Brexit. Unfortunately, we have slipped down the World Bank rankings in resolving insolvency from 13th to 14th; frankly, now is the worst time to be heading in the wrong direction. Life will be tough enough, post Brexit, so let us not risk losing out on the international investment our robust insolvency framework currently attracts. The amendment’s reporting requirements would ensure that no one is allowed to take their eye off the ball.

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[Baroness Hayter of Kentish Town]

My Lords, I do not think that I have ever called the noble and learned Lord “not the appropriate individual”. Actually, that was a very appropriate and helpful response. I thank the noble Baronesses, Lady Kramer and Lady Burt, for their support. The Minister’s emphasis on it being in everyone’s interest that co-operation be maintained is the right way forward. Despite his warm words, a meeting with the relevant sponsoring department, BEIS, would nevertheless be of use. If he can set that up, I am more than content to withdraw the amendment.

Amendment 220 withdrawn.

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[Baroness Altmann (Con)]

My Lords—

[Baroness Hayter of Kentish Town]

My Lords, I think the House wants the Minister to reply, so I was thinking that we are probably ready to end this debate.

I have just heard the first case against referendums, which is that a referendum made my country of Wales dry—and that argument was in support of them. It was certainly dry on a Sunday when I was growing up; and this is the ex-director of Alcohol Concern confessing this.

We have considerable sympathy with one part of these amendments: that the Government cannot be allowed to mark their own homework regarding the outcome of the withdrawal negotiations, be that on Gibraltar, which is mentioned in one of them, our future relations with the EU or the withdrawal deal itself. We discussed last week, as a number of noble Lords have said, the need for a meaningful vote by Parliament on the deal and indeed on what should happen if the deal fails to win approval by the British Parliament. We also considered then the desire of some for a future referendum on the terms of the deal.

As the Committee knows, and as the noble Lords, Lord Wigley and Lord Newby, have said, we see it as essential that there is a proper, meaningful vote on the terms of our withdrawal. We trust that the amendment we will table on Report will find favour in this House and later, we hope, at the other end. As to what should happen if that deal is rejected, surely that must be decided at the time, in the full knowledge of the situation, by the House of Commons. It could be, as in a later amendment in the name of my noble friend Lord Campbell-Savours, by extending the Article 50 period. It might be by revoking the Article 50 notification. It could indeed be by a referendum, though perhaps the wording would be a matter for then, rather than by amendment today. But the first judgment on the terms must surely be for this sovereign Parliament and, if it says no, it must then be Parliament that takes responsibility for what should be the next step. That means nothing is ruled out, which therefore means nothing is set in stone at this moment.

[The Minister of State, Department for Exiting the European Union (Lord Callanan) (Con)]

My Lords, this has again been an excellent debate and let me say at the outset that I note that support for the amendments comes from noble Lords on all sides of the House. I am not trying to imply that this is a partisan issue, but it is one of principle. I hope that the noble Lord, Lord Butler, the noble Baroness, Lady Wheatcroft, and the noble Lords, Lord Newby, Lord Wigley and Lord Foulkes, who have tabled Amendments 226, 227BH and 357, will believe me when I say that I respect their positions. But this debate has been held many times before, and I therefore hope that noble Lords will forgive me if my argument sounds familiar. The referendum question, agreed by Parliament and presented to the people, was whether we wished to leave or remain in the European Union. Parliament attached no conditions or caveats to that vote.

It was clear in the campaign that a leave vote could lead to a range of outcomes and that not all of us advocating leave agreed about the way to do so. People knew this at the time, it was extensively debated and, in the biggest democratic mandate for a course of action ever directed at any UK Government, voters instructed the Government to leave the European Union.

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[Lord Callanan]

I am not an expert on the proceedings of the other place—I have never been a Member of the House of Commons—but of course the Government will listen to decisions by the House of Commons.

[Baroness Hayter of Kentish Town]

My Lords, this is a crucial moment. The whole issue here is whether it is a mere Motion or whether there is any legislative oomph—sorry, Hansard—behind the vote that Parliament is to have. Am I absolutely correct that the Minister has just said that even if it is a mere Motion, which is what the Government have offered so far, if the deal was rejected they would still take us out of the European Union at the cliff edge, without a deal?