Corporate Insolvency and Governance Bill

Baroness Neville-Rolfe Excerpts

2nd reading & 2nd reading (Hansard) & 2nd reading (Hansard): House of Lords
Tuesday 9th June 2020 Lords Chamber

[Baroness Neville-Rolfe (Con) [V]]

My Lords, I support my noble friend the Minister on the measures being taken here and elsewhere on business support.

Timeliness is everything in a crisis. I commend the Minister on the speed of the measures that we are debating, although I remain frustrated at the tin-eared refusal elsewhere in government to reduce social distancing from two metres to one metre and the extraordinary introduction of quarantine at our borders, which was needed in February or March but is an act of self-harm today. The problem is that both are decimating businesses. So, I particularly support the emergency arrangements in the Bill. They allow closed annual general meetings, delay filing deadlines for Companies House, and temporarily remove personal liability for wrongful trading and the threat of winding-up petitions. I speak as a director with an interest—I draw your Lordships’ attention to my entry in the register—a chartered secretary and a fellow of the Global Governance Institute.

However, company law has been built up over generations. Rapid changes can alter the balance of our much-admired corporate regulatory framework. The pension funds and insurance companies on which we depend need the opportunity to probe accounts at Companies House, especially in a fast-moving market with the sale of a struggling company sometimes being the right solution. Shareholders need to be able to hold companies to account at annual general meetings. The Bill rightly sunsets these provisions but there are powers of extension. I ask the Minister to promise that he will be sparing in their use. If not, their understandable use retrospectively to help firms from the start of the cliff edge in sales could be questioned.

The main provisions in the Bill bring forward long-planned changes in insolvency law. It is a little cheeky to use what is essentially an emergency measure for these reforms. However, I confess to doing the same many years ago when I led the work on the Food Safety Act. This reforming legislation had been in the famous Whitehall drawer for nearly 10 years when Mrs Edwina Currie precipitated a crisis by wrongly asserting that most eggs had salmonella. Our Bill then secured an immediate slot.

I note that the insolvency provisions have secured good support, having been honed in industry exchanges. They have become urgent because many companies may now be heading for insolvency as a result of our severe Covid controls. The changes give them breathing space now and if they suffer in future, but it is worth reading the impact assessment prepared by BEIS, which it kindly took me through. The net benefit is an impressive £1.92 billion when discounted over 10 years, but that netting-off hides costs of £2.9 billion, which someone must find.

We want to make absolutely sure that the Bill is fit for purpose. I understand that in one of the most difficult areas, discouraging the extraction of ransom payments is precedented in utilities and IT. I ask the Minister for an appraisal and costing of that experience before we reach Committee.

Another issue was raised with me by the British Property Federation. It wants steps taken to reinstate the provision in Section 129 of the small business Act 2015 on pre-packaged administration, which expired unexpectedly, I believe as a result of the Covid emergency. Can we solve that in this Bill?

Finally, I cannot end without commenting on one area in which I have been the most vocal and which was also the subject of legislation that I took through the House: the timely payment of smaller suppliers, and the Small Business Commissioner. Can my noble friend the Minister summarise current expectations on the scale of payment delay and advise on any plans for updated legislation at a future date?