Corporate Insolvency and Governance Bill

Baroness Northover Excerpts

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

[Baroness Northover (LD) [V]]

My Lords, I commend the Government on the range of measures they have taken to try to ensure that viable businesses do not go under in this pandemic, and that individuals are able to retain their jobs. Nevertheless, as my noble friends and others have made plain, these proposals have been put forward at speed, and in such circumstances there can be unintended consequences. The Bill was rushed through the Commons but already in this Second Reading noble Lords have flagged a range of important questions, not least distinguishing proposals which relate to this crisis and those intended to have long-term effect.

One very troubling feature of the pandemic is the evidence that better-off firms are taking advantage of the Government’s crisis measures. These firms may have every legal right to do so, but that does not mean that this was what the schemes were intended for. We can see this in the take-up of loans. Thus, as the Times put it on Friday 5 June, “Billionaires and global giants” have taken almost £17 billion in “cut-priced” loans. JCB, owned by the billionaire Bamford family, has taken £600 million.

Governments and central banks have been quick to provide support across the world. In the United Kingdom, the top 10%, who own 47% of private pension wealth and 66% of financial wealth, look to have been almost entirely protected from the downside of this crisis. Some 120 companies among the FTSE 350 are now higher than they were before the crisis. Asset owners have potentially been bailed out, giving firms an opportunity to lay off employees and make cost savings in a way that would normally be impossible. Inequality looks set to escalate.

The Government may intend the best by schemes such as the proposals being examined here, but the more resilient may be better able to take advantage of such measures. My questions are therefore about accountability. What impact assessment have the Government made of the proposed changes? What scrutiny will be brought to bear on companies? Even AGMs can be online. How will companies be held to account, either by those closely associated with them, or by the Government? What protection can be put in place to ensure that companies do not use these temporary arrangements to sack employees or to reduce their rights, especially their pension rights, as the noble Baroness, Lady Drake, and other noble Lords have emphasised?

Like the noble Lord, Lord Hodgson, I recall the very constructive cross-party debates over what became the Companies Act 2006. My concern as a DfiD spokesperson at that time was in regard to corporate social responsibility, particularly as regards environmental impacts and supply chains in developing countries. Can the Minister tell me what consideration has been given to such aspects of corporate social responsibility? Supply chains in developing countries are under huge pressure, as he will know. Will we see rigorous corporate reporting and a requirement to build environmental, social and governance principles into the decisions made by companies covered in this legislation? I look forward to the Minister’s response.

Corporate Insolvency and Governance Bill

Baroness Northover Excerpts

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

[Lord Leigh of Hurley [V]]

My Lords, this amendment is broadly similar to my earlier amendments—I am not quite sure why it is in a different group, to be honest, but so be it. It applies to the circumstances not of an extension but of an appointment of a monitor, and requires the directors to get the proposed monitor to state that it is likely that the moratorium would result in the rescue of the company as a going concern. The word “would” has been helpfully and sensibly addressed by the noble Lord, Lord Stevenson—it should be “could”—and again, the word “company” should have after it, as my amendment proposes, “or the company’s business”. I would very much like the Minister to specifically address this issue of the difference between company and business; unless I missed it, I do not think it was. If it is not possible to do so in his closing remarks, perhaps he would oblige me with a letter.

I am sure that the Minister will not be able to resist Amendment 62, in the name of the noble Lord, Lord Stevenson, as he is so confident that the courts will be able to cope. I am sure that he will find it most helpful to have a clause that requires a review of how the courts have coped. I beg to move.

[Baroness Northover (LD)]

I will speak to Amendments 71, 76, and 145, which are in my name and that of my noble friend Lord Fox.

These amendments all derive from the conclusions of the Delegated Powers Committee and relate to the often-unchecked powers the Government are seeking to take in the Bill. I thank that committee for its careful scrutiny of this and other Bills. As the noble Lord, Lord Hodgson, said, its report is devastating. There is clearly huge concern about the powers that the Government are proposing to take in the Bill, and most of the amendments in this group address those points. For example, the noble Lord, Lord Stevenson, by seeking to amend numerous places where the Government are taking powers, is challenging the Minister in each instance to justify that, and we will have to see what case the Minister makes. I also look forward to hearing what the noble Lord, Lord Blencathra, who chairs the Delegated Powers Committee, says.

The Government have argued that they need to act with speed because of the urgency of the coronavirus pandemic. However, many measures here will persist indefinitely, as the noble Lord, Lord Hodgson, made clear. We are proposing three specific changes, recommended by the Delegated Powers Committee. As all noble Lords here will know, although it may be less well known should people outside be following these proceedings, the committee’s particular concern is with so-called Henry VIII powers, named for his supposed preference for legislating by proclamation rather than through Parliament. These powers enable Ministers to amend or repeal provisions in an Act of Parliament using secondary legislation, which is subject to very limited parliamentary scrutiny. These powers thus transfer power from Parliament to the Executive: the Government.

Thus, for example, the Delegated Powers Committee notes that Clause 23 confers extremely wide powers on the Secretary of State:

“The powers include the power to make provision amending, or modifying the effect of, any Act of Parliament ever passed—including the Bill itself.”


That is an astonishing statement. The committee describes this as something that

“might be called a ‘super-Henry VIII power’.”

We therefore propose in Amendment 71 the affirmative procedure, where regulations under Clause 23 amend primary legislation, as recommended by the committee.

Amendment 76 addresses Henry VIII powers in Clause 37. The Delegated Powers Committee does not accept the Government’s argument that they need to act with speed and recommends

“that the affirmative procedure should apply where regulations … amend primary legislation.”

It outlines ways in which speed can be delivered, for example through a “made affirmative” instrument, which could come into force pending approval by both Houses within a specified period of time. Our Amendment 76 delivers the affirmative procedure.

In relation to Amendment 145, the Delegated Powers Committee notes:

“Each of paragraphs 2, 4 and 6 of Schedule 14 confer Henry VIII powers.”


It emphasises that the “made affirmative” procedure could be used and points out that the Government acknowledge this in other instances elsewhere. It recommends

“that the affirmative procedure should apply.”

Our Amendment 145 delivers that.

I am sure that, as ever, the Government will pay close attention to what the Delegated Powers Committee said, especially since these powers cause such disquiet across the House. They are also an especial target of those three notable lawyers, the noble and learned Lords, Lord Hope and Lord Judge, and the noble Lord, Lord Pannick, whose names often seem to represent not the stages of grief but the stages through which Governments proceed when they defend, then amend, such powers. I am sure that the Government will pay close attention to the committee’s report; I trust, therefore, that they will find all three of the amendments I have outlined here acceptable.

[Lord Blencathra (Con) [V]]

My Lords, I will move that Clause 1 do not stand part of the Bill but I have no intention of seeking to delete the whole clause. I use this mechanism to draw attention to the Delegated Powers Committee’s recommendations on the excessive Henry VIII powers in the Bill. I am honoured to chair that committee.

Last Wednesday afternoon, we published our report. We drew the House’s attention to a number of concerns about the use of the delegated powers in the Bill. I am grateful to my noble friend Lord Hodgson, who referred to our report with great approbation in speaking to his amendments in the first group. I am also grateful to the noble Lords and noble Baronesses who high- lighted other parts of our report and some of our recommendations.

In our report, we draw attention to

“New Part A1 of the 1986 Act, inserted by clause 1 of the Bill”.


That clause alone contains 10 Henry VIII powers allowing the Bill to be amended when it becomes an Act. I will not list them today; the noble Baroness who just spoke mentioned three of them in particular. There are also further Henry VIII powers in Clauses 23 and 27 and Schedule 1. As we reported, the powers in proposed new Part A1

“are all designed to be permanent changes to insolvency law. The justifications offered by the Government involve: ensuring that the provision remains ‘fit for purpose’; the need to act quickly; the undesirability of taking up Parliament’s time unnecessarily.”

We say in our report:

“Ensuring that something remains ‘fit for purpose’ means little more than that the Government want to be able to change the provision by regulations if their policy changes. In our view”—


it has always been Parliament’s view—

“the presumption should be that where something needs changing which Parliament has enacted”

in an Act of Parliament,

“Parliament should enact the changes by primary legislation”

in another Act of Parliament

“rather than ministers make the changes by secondary legislation … As for legislating quickly, this is often best avoided”,

as we have seen time and again that urgent legislation usually needs amending sooner rather than later to plug gaps or correct mistakes.

The report continues:

“And where legislation is needed quickly, the coronavirus outbreak has shown that Parliament is capable of legislating quickly”


when necessary. It goes on:

“As for not taking up parliamentary time unnecessarily, this is a matter primarily for Parliament. Parliament’s task is to scrutinise the Government, including the scrutiny of major legislation that has been drafted in haste and which confers wide-ranging powers on the Government.”


I have heard the criticism today that our hybrid procedure is not the perfect way to do Committee or Report work, but no one has said that we do not have the time to do some scrutinising. I believe that in our hybrid procedures we still have ample time to do more scrutiny of Bills before Parliament.

My committee concluded that

“the Government have not demonstrated the need for the Henry VIII powers”

we identified, adding:

“We recommend that they be removed from the Bill.”


But we did not stop there. We also recognised the need for speed and flexibility and recommended that many of the regulations the Government may need to make should be done using the “made affirmative” procedure. We all know that all Governments under all Administrations prefer to bash things through on the negative procedure with no scrutiny; it is great if you can get away with it, and I did it myself when I was a Minister. The justification is always speed and that they cannot wait for an affirmative resolution. That is sometimes true, but the “made affirmative” procedure allows for exactly the same speed as the negative procedure but also allows parliamentary scrutiny afterwards.

We said in paragraph 22 of our report:

“However, another procedure exists under which an affirmative instrument may be made and come into force before it is approved by both Houses. This is known as the ‘made affirmative’ procedure. Under this procedure, the instrument is able to come into force as soon as it is made, but it will automatically cease to have effect if it is not approved by both Houses within a specified period of time. The period specified for approval is usually 28 days or 40 days, subject to extension for periods of dissolution, prorogation or adjournment for more than four days.”


We said in paragraph 23:

“Regulations under the ‘made affirmative’ procedure can be made and laid as expeditiously as regulations subject to the negative procedure.”


I suspect that many government departments are simply fixated on affirmative and negative and do not know that the “made affirmative” procedure exists. If they know it exists, they will still try to get away with the negative procedure.

None of these are a proper substitute for a real Act of Parliament to amend another Act of Parliament, but at least the “made affirmative” procedure is far better than changing any Act of Parliament without any parliamentary scrutiny at all. I therefore conclude by asking my noble friend to remove these excessive Henry VIII powers from the Bill.

--- Later in debate ---

[The Deputy Chairman of Committees (Lord McNicol of West Kilbride) (Lab)]

I have received a request to speak after the Minister.

[Baroness Northover]

My Lords, I thank the Minister for that reply. He is saying two things: one, that he will be listening to the Delegated Powers Committee and the Constitution Committee; and two, that he has rebutted the various amendments. So it would be very helpful if he would consider those reports and the various amendments in this group and come forward with his own proposals well before the deadline for amendments for Report, so that noble Lords can see the extent to which he has, as he has promised, taken into consideration what those two very significant reports say.

[Lord Callanan]

We will, of course, issue a formal response to the DPRRC report, hopefully by Friday—but, since Report is next Tuesday, we will need to act more swiftly than that in terms of considering amendments. However, as I have said, I have listened carefully to the points that have been made.

Corporate Insolvency and Governance Bill

Baroness Northover Excerpts

Report stage & Report stage (Hansard) & Report stage (Hansard): House of Lords
Tuesday 23rd June 2020 Lords Chamber

[Lord Wallace of Tankerness (LD) [V]]

My Lords, my colleagues on the Constitution Committee, the noble Baronesses, Lady Taylor and Lady Fookes, have made their points very clearly, so I am very happy to rest behind their submissions.

[Baroness Northover (LD) [V]]

My Lords, I raised in Committee that there were numerous Henry VIII powers in the Bill, as the Delegated Powers Committee flagged in its devastating report. I am very glad that the Government have responded to the criticisms of the Delegated Powers Committee and the Constitution Committee by bringing forward these amendments, even if they are not comprehensive.

I am glad that we have been able to scrutinise the Bill in this House in a way that simply did not happen in the Commons. This Bill is indeed a mixture of emergency and permanent changes. I note particularly that the Government propose affirmative procedures in Amendments 58, 66 and 67, and “made affirmative” procedures in Amendments 68, 69, 72 and 73. The notes say that it is either affirmative or “made affirmative”—although I note what the Minister, said—in Amendment 109. I welcome these amendments. Those serving on the Constitution Committee have tabled Amendments 48 and 50, which bring more precision to this, and I hear what they have to say. Although I welcome what the Government have brought forward, I hope that the Minister can give further assurances.

[Baroness Anelay of St Johns (Con) [V]]

My Lords, last week in Committee I expressed my concern about the Government’s extensive use of Henry VIII powers and I was one voice among many. Today, I welcome the Government’s amendments in this group, most of which respond positively to the concerns expressed in Committee. For example, in Clause 1, Amendments 5, 8 and 11, and Amendment 76 to Schedule 1, narrow or remove the Henry VIII power. Another couple of examples of changes can be found in Amendment 69 to Clause 42 and Amendment 72 to Clause 43. They convert the negative procedure for regulations into the “made affirmative” or—as the noble Baroness, Lady Northover, has just said—affirmative procedure.