Leasehold and Freehold Reform Bill

Debate between Barry Gardiner and Bob Blackman

2nd reading
Monday 11th December 2023 Commons Chamber

[Bob Blackman (Harrow East) (Con)]

It is a pleasure to follow the hon. Member for Battersea (Marsha De Cordova). Let me start by paying tribute to the Father of the House, my hon. Friend the Member for Worthing West (Sir Peter Bottomley), who has been campaigning on this issue for many years, to great success, eventually. I also pay tribute to my hon. Friend the Member for Redditch (Rachel Maclean), who is no longer in her place, for all the work she has done in the preparation of this Bill. I welcome the principle of the Bill. Some Opposition Members may say it is too timid, but with 58 pages of detailed legislation and equations, which remind me of my time studying physics and maths at university, it can hardly be said to be less than complex. The key issue is: have the Government gone far enough in what they intended to do?

Our manifesto commitment was clear: to promote fairness and transparency for leaseholders, and ensure that consumers are protected from abuse and poor service. Clearly, that is a fundamental requirement. The Law Commission’s 2017 review of leasehold law represented it, and it is has taken us six years to get to this point in dealing with some of the abuses. We have to remember that 94% of people who have bought leasehold properties regret buying them and 70% of leaseholders are worried that they will not be able to sell their homes because they are leasehold. That is one fundamental thing we need to answer. We also need this leasehold reform to reform and support the housing market, because almost half of leaseholders are first-time buyers and 28% are under 35. At a time when fewer and fewer people are buying their first home at such an age, it is vital that we not only encourage people to buy their first home, but simplify the system.

So I welcome the overarching aims of the Bill to modernise this complex system, but clearly there is still a lot of work to do. Obviously, making it cheaper and easier for existing leaseholders in houses and flats to extend their lease and buy their freehold is a key point. The so-called “marriage rates” make it almost impossible for leaseholders to buy properties with fewer than 80 years left on the lease and to extend that lease to 990 years, which is what we are now going to be looking at. Having that as the standard position for houses and flats has to be the right thing to do. We should remember that the original position on extensions was 90 years for flats and 50 years for houses, so we are introducing a massive change and it is extremely welcome.

[Barry Gardiner]

I thank my constituency neighbour for giving way; if he is fortunate at the next election, he may inherit some more leasehold flats. As he will know, in this country a freeholder holds their freehold for a period of 999 years from the Crown and that may run out before any new leasehold is able to conclude its 999 years. Does he understand what the Government propose to do in that situation?

[Bob Blackman]

Longevity may run in my family, but not to the extent of 1,000 years. The hon. Gentleman makes a good point and I am sure the Minister will seek to answer it in his summing up.

Introducing new rights for long leaseholders to buy out the ground rent without needing to extend the term of the lease is another extremely welcome move, as is removing the requirement for a new leaseholder to have owned their house for two years before they can benefit from the changes. The new right to require the freeholder to take a leaseback of non-participating units when a collective enfranchisement claim is made is also vital. We do not want to get to a position where people are deterred from enfranchisement because they cannot take on those who do not take on enfranchisement.

A new costs regime for enfranchisement and right-to-manage claims so that each party bears their own costs is vital. Far too often, the freeholder has sought to obtain their costs from the purchaser, which is clearly unfair and unjust. Moving jurisdiction for enfranchisement and right-to-manage disputes to the first tier tribunal and the leasehold valuation tribunal in Wales makes it much easier for parties to identify how they can bring about a dispute. I note the point the Chair of the Levelling Up, Housing and Communities Committee, the hon. Member for Sheffield South East (Mr Betts), raised when he said that freeholders often make it as difficult as possible for enfranchisement to take place.

The issue of transparency of service charges is vital. One of the benefits of serving on a Select Committee for a long time is being able to remember the reports the Committee was involved in, and I well remember an inquiry into this issue. We wanted all service charges to be transparent and fixed to the cost of providing that service, as opposed to a figure plucked out of the air and then passed on to the person supposedly receiving the service. It is welcome to see that the Bill contains measures for minimum key financial and non-financial information to be supplied to those receiving the service on a regular basis, including through a standardised service charge and an annual report. That means leaseholders can scrutinise and better challenge costs if they are unreasonable.

Equally, replacing buildings insurance commissions for managing agents, landlords and freeholders with transparent administration fees stops leaseholders from being charged exorbitant, opaque commissions on top of their premiums, an issue that has already been raised in the debate. I welcome scrapping the presumption for leaseholders to pay their freeholders’ legal costs, which in my opinion is outrageous, as well as granting freehold owners on private and mixed-tenure estates the same rights of redress as leaseholders, by extending their equivalent rights to transparency over their estate charges and to challenge the charges they pay by taking a case to a tribunal.

All these measures are welcome, but there are many other areas where we need to go further. The promise to do away with leasehold—or fleecehold—completely was clear in the manifesto; in my view, that promise should be honoured, particularly on the sale of new-build flats. In London, they are now the most common property type; almost all flats are sold on leasehold basis, compared to just 6% of houses.

On the individual building firms, we have heard about Persimmon, but we should also remember Bellway, whose chief executive came in front of our Select Committee and told us—I repeat what they said almost word for word—that it was the company’s policy not to offer the freehold to leaseholders at the first opportunity. Instead, six months after building the properties and selling the leaseholds, it would transfer them to a finance company, which would go through the detail of all the charges it could make and then really leverage up those charges, and the finance company would refuse to allow the leaseholder to even consider buying the freehold. That was the policy of that company. I think Permission admitted that that was its policy too, and other building companies do exactly the same. That is a scandal and it should be stopped, and we should legislate for that.

Clearly, we all want to see the promotion of commonhold. However, as the Chairman of the Committee said, we need more education for individuals, so they understand not only their rights but the responsibilities they would take on with commonhold.

One concern that has been raised with me on several occasions is about what will happen, once this welcome Bill is on the statute book—we look forward to the amendments that are made—to existing leaseholders who bought their leaseholds in good faith but are not being dealt with properly or effectively. We need to ensure that squeezing out the bad practices of freeholders and managing agents, which are unfair to individuals, is part and parcel of the legislation.

There is also the issue of conveyancing. Most people who buy their first property pay the minimum legal costs they can get away with. As a result, they often are not given proper advice about the consequences of their decisions. We need to ensure that individuals are given the opportunity to understand the responsibilities they are taking on and, more importantly, what will happen to them in the future if there are service charges involved.

Local authorities hold a huge number of properties under lease conditions and, if they want to sell the freehold to leaseholders, they are often among the worst sets of people to deal with across the country. I agree that a leaseholder should have the right of first refusal if a freehold is being offered. Will my hon. Friend the Minister give a commitment that, after we have engaged in consultations on service charges, the results of those consultations will be reflected in Committee so that we can strengthen the Bill?

Finally, I want to refer to a particular building in a constituency that neighbours mine. It has 13 floors and still has the old, Grenfell-style cladding. We all know the tragedy of Grenfell, but the owners of the building are refusing point blank to remove the cladding unless and until they are given planning permission to build on top of the building, so that they can sell more property to pay for the cost of remediating the cladding. The self-same company, Ballymore, although it has yet to submit a planning application, wants to build 29 blocks of flats, the tallest of which will be 29 storeys and the majority of which will be more than 20 storeys, at a density greater than Manhattan, Singapore or any other place in the world. That is a scandal. When the Secretary of State named certain building companies, he promised that if they refused to carry out the work that they should do, they would not be given planning permission to enable the development of more leasehold flats. I call on him to ensure that they are not given planning permission until such time as they are putting right what they have put wrong.

I pay tribute to all those who have fought for so long and so hard to achieve this limited reform. I will support the Bill, and I look forward to us taking forward further measures so that we can end the feudal system of leasehold once and for all.

Human Rights: Kashmir

Debate between Barry Gardiner and Bob Blackman

Thursday 23rd September 2021 Commons Chamber

[Barry Gardiner]

Indeed, it is. I will try to ensure that the connections are apparent.

Of course, it is no coincidence that the last hideout of Osama bin Laden was in Abbottabad, scarcely a mile away from—and, some would say, under the protective shield of—the Pakistan Military Academy in Kakul. Abbottabad is just 20 miles as the crow flies from Muzaffarabad, the capital city of Azad Kashmir. As a constitutional entity—constitutional self-determination has been mentioned by my hon. Friends the Members for Birmingham, Hall Green (Tahir Ali) and for Denton and Reddish (Andrew Gwynne)—the so-called Azad Kashmir, which is better known to the world as Pakistan-occupied Kashmir, is not just strange, but unique. It has been given the trappings of a country, with a President, Prime Minister and even a legislative assembly, but it is neither a country with its own sovereignty nor a province with its own clearly-defined devolved authority from the national Government.

Under section 56 of the Azad Jammu and Kashmir interim constitution of 1974, the Pakistan Government can dismiss any elected Government in AJK, irrespective of the support they might have in the legislative assembly. Strangely enough for an entity that purports to be a country, the constitution bars anyone from public office and prohibits them from participating in politics unless they publicly support the principle of Kashmir acceding to Pakistan. Imagine that: a country all of whose politicians can be politicians only if they say they do not want to be a country. It will therefore come as no surprise to colleagues when I say that the major civil and police administrators’ positions in AJK are held by Pakistani civil and military officers. It may also come as no surprise to them to find that the putative country has no representation in the Parliament of Pakistan. The territory’s local representatives are excluded not just from the Pakistan Parliament but from even those Pakistani bodies that negotiate intra-provincial resource allocation and federal taxes. So much for “No taxation without representation”.

[Bob Blackman]

Is it not worse than that, because the minority religions are also excluded from that Government?

[Barry Gardiner]

Indeed; I was about to come on to that.

That there is no taxation without representation is not a principle observed in AJK. It is not a country; it is not a province; it is not a state: it is a satrapy. Were I not a British MP conscious of the fact that much of this mess is a legacy of our colonial past in the region, I might almost describe it as a prize of war—but then, of course, that is precisely what Pakistan-occupied Kashmir is. It was gained by the illegal invasion by Pakistan troops in 1947.

Stringent blasphemy laws mean that many religious groups face the death penalty if they are even accused of denigrating the Prophet. Sadly, the infamous case of Asia Bibi is not unique. The rights of women are governed by the Offence of Zina (Enforcement of Hudood) Ordinance 1979 penal provisions, which prevent women from exercising their marriage choices. The South Asia Terrorism Portal records that of the 42 identified terrorist training camps located in Pakistan, 21 were located in Kashmir and Gilgit-Baltistan. Those camps belong to three main terrorist groups: Lashkar-e-Taiba, Jaish-e-Mohammed, and Hizbul Mujahideen. One of the key areas around which the camps are located is Muzaffarabad, the capital of Pakistan-occupied Kashmir.

According to Human Rights Watch, the Pakistani Government repress democratic freedoms, muzzle the press and practise routine torture within Azad Jammu and Kashmir. According to the world press freedom index prepared by Reporters Without Borders, Pakistan ranks 145th out of the world’s countries, below India. The 2019 Foreign and Commonwealth Office report, “Human Rights and Democracy”, noted that the human rights situation continues to worsen and pointed out that freedom of expression—

Fire Safety Bill

Debate between Barry Gardiner and Bob Blackman

Wednesday 28th April 2021 Commons Chamber

[Bob Blackman (Harrow East) (Con) [V]]

So, here we are again debating the Fire Safety Bill and the Lords amendments to it. The key issue here is not whether we enshrine in law the requirements on fire safety but who ends up paying for them. The reality is, as the Father of the House mentioned, that the £5.1 billion offered by the Government thus far will be insufficient to cover the remediation and fire safety costs identified not only in tall buildings but in lower buildings as well. The key issue, then, is that it is going to take some five years for the work to be carried out, and that leaseholders are receiving bills now of £50,000 or more in order for the work to be carried out. They can ill afford it.

The Government are committed to producing the Building Safety Bill, but we know that it will be announced in the Queen’s Speech and that it will probably take 18 months to two years before it is live and operational. Leaseholders do not have the luxury of that time. They are being charged the money right now. We still do not know the details of the forced loan scheme that the Government are offering for leaseholders in buildings below six storeys. We have been asking to scrutinise it, so we can see whether it is fit for purpose or whether it will even work.

I have had the honour and privilege of serving on the Housing, Communities and Local Government Committee for the past 11 years. We are publishing a report on cladding and the other issues tomorrow. Obviously I am not allowed to pre-disclose the details, but it is fair to say that we are critical of the way in which the Government are approaching this necessary means. I urge the Minister for Housing, who is a good friend for whom I have every respect, to let us have some commitments from the Front Bench in his answer to this debate, and to tell us what he will do to ensure that leaseholders are prevented from having to bear these unnecessary and unacceptable costs. Let us also have some commitments on when we will see the proposed forced loan scheme. Let us have some commitments on when we can expect to see the Building Safety Bill brought into operation, and some overall commitment to ensure that people living in unmortgageable, unsaleable flats are given appropriate comfort, because, frankly, without that, we will have to support the Lords amendment to ensure that the Government come back with these proposals early in the new Session.

Let us make sure that we send the message to leaseholders out there: you should not have to pay a penny piece to rectify the problems that are not your fault in the first place. I shall be supporting the Lords amendment once again today.

[Barry Gardiner (Brent North) (Lab) [V]]

This Bill has been passing backwards and forwards between the Lords and Commons because the Government will not do the right thing and protect leaseholders from the ruinous costs of replacing cladding and remediating internal fire safety defects during construction. By refusing to do so, the Government are making liars out of all the successive Ministers—and, indeed, a Prime Minister—who have told this House that leaseholders should not pay for building defects for which they are not responsible.

Today I want to focus on the impact of the EWS1 regulations and the callous way in which another operator, FirstPort, is treating vulnerable residents in Blackberry Court in my constituency. FirstPort has written to the 27 leaseholders in Blackberry Court, which is a two-storey block of flats, to advise them that the fire safety work will cost more than £20,000. It has not provided a breakdown of costs or issued a section 20 notice, as it is legally obliged to do for any work costing more than £250 per leaseholder. What is most disturbing, however, is that FirstPort has been demanding access to the roof void through the only loft hatch, which is located in the bedroom of my constituent, who is an elderly lady of 94 years of age. FirstPort would brook no objection to this until I intervened to forestall this intrusion and asked it to create new access to the roof void from the common parts of the building. But the fact that it had not yet been able to access the void to survey it means that it must already have been aware that there was no compartmentation in the roof space. Indeed, I have discovered that Blackberry Court, which was built in 2007, never got a completion certificate, despite being covered by the Regulatory Reform (Fire Safety) Order 2005. That prompts the question of why the company had not acted on this fire safety defect before. Some may suspect that the properties were unsaleable and devalued—unless the work was done—because of the EWS1 form. The Government did change the requirements on the form, but the Minister knows that the banks and the mortgage lenders have not changed their stance, nor have the insurers.

Fire Safety Bill

Debate between Barry Gardiner and Bob Blackman

Consideration of Lords message
Tuesday 27th April 2021 Commons Chamber

[Bob Blackman (Harrow East) (Con) [V]]

I start from the principle that successive Secretaries of State and Ministers have said from the Dispatch Box that the leaseholders are the innocent parties in this scandal and that they should not have to pay a penny piece towards the costs of remediation. I applaud the Government for coming forward with £5.1 billion of public money to support the remediation of unsafe cladding, but our problem is that it is not enough. The estimate now is that £15 billion will be required and that the extra £10 billion will have to come from leaseholders as the last resort, because building owners will naturally pass that on to leaseholders wherever they possibly can. They are the ones in situ; they are the ones facing these huge bills.

The Government say that further proposals will come forward on the forced loan scheme. We were promised in the earlier statement in February that the loan scheme would be announced at the Budget. Now, I did make the assumption that that was the Budget in 2021, not the Budget in 2022 or 2023. The reality is that the evidence given to the Housing, Communities and Local Government Committee and other bodies suggests that the forced loan scheme is nowhere near being available. We as Members of Parliament are not even able to scrutinise the proposal, so those who are living in blocks of flats of six floors or less do not even know how that scheme will work. My estimate is that many people will end up with a bill that will last for 100 years, therefore factoring in, almost inevitably, a dramatic reduction in the value of their properties. Equally, we know that the fire safety remediation required in addition to the remediation of unsafe cladding almost dwarfs the costs of remediating the cladding. All those costs will once again be passed on to the innocent leaseholders.

I understand that my right hon. Friend on the Front Bench has to defend this position and clearly wants to get the Fire Safety Bill on the statute book. Let us be clear. I do not think any MP wishes to prevent the progress of the Fire Safety Bill. What we do need, however, is surety and assuredness, because the draft Building Safety Bill will almost certainly take 18 months to two years to bring to fruition. The leaseholders do not have that time to wait. My right hon. Friend the Minister has made it clear on a number of occasions that he finds the amendments defective. Well, there is still time. I agree with my right hon. Friend the Member for North Somerset (Dr Fox) that there is a solution. If the Government reject that solution, let them come forward with their own solution in the House of Lords. Let us agree that the leaseholders do not have to pay a penny and the Fire Safety Bill can go on the statute book, as we would all like to see.

[Barry Gardiner (Brent North) (Lab) [V]]

The Minister should be very careful. The speeches in this debate today are an example of Parliament at its best and Government at their worst. The Minister has heard Members from across the House, and from his own party in particular, criticise what the Government are doing. He would be a very wise Minister to listen to Parliament. If he refuses to listen, I think he should think about his future.

In March this year, leaseholders in Wembley Central apartments in my constituency were told that in response to the publication by the Government of the Building (Amendment) Regulations 2018, a waking watch system would be implemented as soon as possible. The cost of the waking watch patrols would be recovered from leaseholders in the sum of £91,380 a month. The cost of the remedial works to the fire alarm system across Central Apartments, Ramsey House and Metro Apartments is estimated to be in the order of £250,000 to £300,000. The owners said that they were unable to say the total cost of all four recommendations and that they therefore could not advise the liability of each leaseholder.

I find it unacceptable that the Government are imposing billions of pounds of costs on leaseholders retrospectively to remedy misconduct by others, such as the developer, the builder or those producing the Government’s own advisory documents and in particular building regulations control. The fire survey for these particular buildings said:

“There is evidence that the junctions between compartment floors were inadequately fire stopped…as there were gaps at mineral wool fire barriers at steel framing. There were no visible fire barriers at vents or around windows/door frames and it could not be confirmed that the window/door frames themselves formed cavity barriers.”

That indicates that at the time of construction the building regulations then in force were not followed. That means that these people were sold a building that was not fit for habitation, yet the Government are not pursuing the people responsible; they are making sure that it is the innocent parties who will pay. Their lives are being ruined, as Members in all parts of this House have said. It is vital that the Government address this and accept the Lords amendment. In particular, they need to focus on addressing the very real issues in building control regulations that allowed this scandal to happen in the first place.

HEALTH

Debate between Barry Gardiner and Bob Blackman

Thursday 20th December 2012 Commons Chamber

Barry Gardiner (Brent North) (Lab)

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May I take this opportunity, Mr Deputy Speaker, to wish you and, indeed, all the officers and servants of this House the season’s greetings and the very best for Christmas and the new year?

It has been a privilege this year to attend the 25th anniversary of the Brent pensioners forum in my constituency. The forum has been led and championed by Vi Steele.

Bob Blackman (Harrow East) (Con)

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indicated assent.

Barry Gardiner

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The hon. Gentleman knows the forum well from his time in Brent. It has done a fantastic job over the past quarter of a century, fighting for elderly people and ensuring that their voice is heard.

The impact of fuel poverty on people such as members of the Brent pensioners forum has led me to consider the UK’s energy policy, which focuses on three things: first, how to drive investment of £110 billion into our electricity infrastructure and £200 billion into energy as a whole; secondly, how to avoid the cliff edge of 2016 to 2018, which Ofgem has characterised as a period when reserve margins will be dangerously low, or, as other people say, when the lights might go out; and thirdly, how to tackle fuel poverty.

We—the Government and Parliament—have been like industrious phlebotomists transfixed by the diseases of the blood, but ignoring how the blood supply contributes to the health of the whole organism, which is the UK economy. Energy is the lifeblood of industry and manufacturing in this country. It should be seen as an integral part of a wider industrial and economic policy. Where this Government have gone wrong is to treat energy policy as ancillary to—or, if one believes the Treasury’s rhetoric, sometimes even running counter to—our wider economic goals. The key question that we should ask about the Government’s Energy Bill, therefore, is not about the strike price or whence the single counterparty will get its money, but how it will promote sustainable growth and jobs in the UK.

The Committee on Climate Change was established to act as an adviser to Government to present coherent proposals about future energy policy that meet our need for sustainable growth, while respecting the cross-party commitment to reduce CO2 emissions. That was intended to depoliticise energy policy as far as is possible. Earlier this year, the Committee on Climate Change recommended three things in its report to Parliament. It said that

“a carbon objective should be set and a process put in place to ensure that this objective is achieved”.

That target is not in the Bill. It said that

“it is important that technology policy objectives are set to resolve current uncertainties about the future for less mature technologies.”

Those objectives are not articulated in the Bill. It said:

“There should also be a clear statement as part of the Government’s planned Gas Generation Strategy that there will not be a second ‘dash for gas’”.

The Chancellor has given what amounts to a clear statement to the contrary and the Department of Energy and Climate Change is banking on 27 GW of new gas capacity. The Energy Bill is an unprecedented and wholesale rejection of the recommendations of the Committee on Climate Change. Politics has been given primacy over evidence.

This year, hopes ran high that we would see the go-ahead for the Don Valley carbon capture and storage for coal scheme. The European Commission had rated it one of the top 10 most attractive schemes in Europe. Even though £3 billion of the original £4 billion budget was cut, the Government still had £1 billion earmarked for a coal-fired CCS pilot. The other day, when the Minister of State, Department of Energy and Climate Change, the right hon. Member for Bexhill and Battle (Gregory Barker) was asked why his project had been ditched by the Government, he replied that what the UK really needs is CCS for gas, because it fits better with our future power mix. Insanity! The International Energy Agency projects that at current rates, the world will be burning 59% more coal in 2035 than it is today. Even if every country were to fulfil its mitigation pledges, the rise in coal burning would still take it to 21% above current levels. Gas CCS might help the UK to reduce its emissions during the dash for gas that the Chancellor wants to foist upon us, but the future of the UK economy lies in developing the technology for coal CCS that we can export around the world.

I am an environmentalist. I believe that the world must move to decouple growth from carbon emissions. However, I understand that coal is the major world fuel and will continue to be so for many decades to come. To have a sustainable future, therefore, we must sequester the emissions from coal in the medium term. It must be part of our integrated energy, climate and industrial strategy to develop CCS for coal. Was the £1 billion ever really there? I do not know. Was this a project that we should have prioritised? The answer is clear: yes it was.

The recent report from Cambridge Econometrics has tried to link energy policy with wider industrial strategy. Its findings are significant for a Government who appear to be determined to move us away from renewables and into gas. The report shows that although offshore wind currently costs more than gas, it also creates more jobs in the UK and has a bigger beneficial impact on the UK economy. The trouble with the new dash for gas is that it will limit the capacity for investment in other technologies that ultimately may be more important for both our energy policy and our industrial policy.

It is important to recognise two things. Gas is an essential part of the energy mix in the UK, as it has the flexibility to cope with intermittent peaks and troughs in the supply from renewables, and the peaks in demand from industry and the public. Gas is being proffered as a solution to the 2016-18 cliff edge, when electricity demand could exceed supply. But it is not a solution. Even the gas stations that already have consent will not come on stream quickly enough to meet that potential shortfall. A possible solution is to make the capacity mechanism available to coal-fired power stations in the short term and use them to provide the load that we need. That might also help to stop the loss of jobs and the closure of pits, and avoid the building of numerous new gas-fired power stations that will lock us into much higher levels of fossil fuel emissions in the long term, while making us feel virtuous in the short term as coal emissions fall.

The recommendation by the Committee on Climate Change to include carbon targets in the Bill is important because this is about the long-term certainty and stability that business and investors need. The Government argue that the legally binding targets for 2050 are still in place, but few of us in Parliament or business will be in our current positions in 2050. Business needs not just a 40-year aspiration, but clear staging points and standards in 2020, 2030 and beyond, to ensure that our energy infrastructure is invested in and properly structured so that it can deliver our emissions reduction targets by 2050.

Bob Blackman (Harrow East) (Con)

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It is a pleasure to follow my near neighbour and constituency MP, the hon. Member for Brent North (Barry Gardiner), in this debate, and I join him in celebrating the 25th anniversary of Brent pensioners forum, and that of St Luke’s hospice, which is on the border of our two constituencies.

May I pay tribute to the late Betty Geller who sadly died in the early hours of Sunday morning? Betty was a leading light of the Conservative Friends of Israel, Harrow East Conservative association and, most particularly, the campaign for a fitting tribute for Bomber Command and its veterans. Sadly, her husband died some 30 years ago—a premature death that was probably as a result of strain put on him during the war. I was privileged to attend Betty’s funeral on Monday morning, and it is fitting to pay tribute to her in the House. Sadly, she did not live to hear the Prime Minister’s announcement that, at last, her husband and all those who put their lives on the line to allow this country to be free from fascism are to be honoured.

I want to take this opportunity to mention some of the problems caused by the use of pre-packed sales when companies enter administration, and the related pre-packed phoenix companies that can be created. It is right to encourage and promote entrepreneurship in this country. Indeed, in this tough economic climate we desperately need entrepreneurs who will put their spirit and creativity into protecting jobs that the UK needs. In some cases, however, it appears that the law is being abused by unscrupulous company directors for their own purposes at the expense of hard-working employees. I have heard of a number of examples of that, and it gives me no pleasure to note that one such case comes from my own constituency.

On 16 June 1997, Medi-Vial Ltd was founded. By 2008, because of the financial crisis, the company had fallen into difficulties and sought to manipulate its employees into working for a period of time without pay. The 55 members of staff, who were naturally desperate to protect their employment, took the directors at their word in the hope of securing the company’s long-term future and ultimately obtaining the money they were owed. On 3 August 2008, Medi-Vial was liquidated and the entire work force was left without work—except for the directors, Mr and Mrs O’Connor.

I am able to say that with confidence because on 2 September 2008, Mr and Mrs O’Connor established Vial Manufacturing Ltd in what one presumes was a pre-packed sale. They were able to secure all the assets for the phoenix company, without the liabilities of the debts such as the money owed to the employees. So well did that work and so easy was it to achieve that they went on to establish Glass Vials and Closures Ltd on 27 October 2011. Once again, that was preceded by the liquidation of their previous company.

Although I have no details about the second and third companies, I can provide greater insight into the first. Many of its 55 employees spoke English as a second language, and that lack of proficiency in English made it easier for the directors to make excuses and avoid explaining why wages were not being paid. My constituent, Mr Pacey, was an employee of Medi-Vial who went to great efforts both during and after its liquidation to obtain justice for him and his colleagues. It is worth noting that he went to a list of agencies and individuals as part of his campaign. He won an employment tribunal relating to the compensation of his earnings. He also took the matter to the police, the Insolvency Service, my predecessor as MP, the Serious Fraud Office and others.

None of those institutions could offer any remedy whatever—hon. Members can imagine how frustrating that was to Mr Pacey and the other employees, who obviously had a problem seeing their previous employers go on to operate a new business just one month later, in the same practice, on the same premises, using the same equipment, employing the same management, using the same suppliers and having the same customers. The only difference was that the employees had all lost their jobs.

I have previously brought the matter to Ministers’ attention. In January, the then Minister with responsibility for employment relations, consumers and postal affairs, now Secretary of State for Energy and Climate Change, informed the House:

“Having taken account of all the issues…the Government will not be seeking to introduce new…controls on pre-packs at this time”.

He continued by assuring the House that:

“The Insolvency Service, an Executive agency of BIS, already monitors compliance by insolvency practitioners”.—[Official Report, 26 January 2012; Vol. 539, c. 23WS.]

The overall benefits of pre-pack sales are doubtless genuine and substantial. Statistics show that all employees are transferred to the new company in 92% of pre-pack cases, compared with 65% of employee transfers in a business sale. That is to be welcomed, but we must not turn a blind eye to cases in which directors deliberately abuse the process.

In those circumstances, insolvency practitioners are required to report the directors’ conduct to the Insolvency Service and suggest that they should be disqualified from being involved in the management of the company, but that system does not appear to be working, as is suggested by declining disqualification rates in the past decade. In 2002, 45% of reports from insolvency practitioners resulted in a disqualification, but by 2011, only 21% did.

The Department for Business, Innovation and Skills has said that legislation is not the right option for solving the problem, but will the Secretary of State for Business, Innovation and Skills explore other measures? It is largely a matter of ensuring that we prevent those who abuse their position from doing so, but in order to protect the benefits to the system, I suggest that extra resources are needed so that the Insolvency Service can concentrate its efforts on disqualification. It could introduce an electronic system so that insolvency practitioners can submit reports online. In making those recommendations, I am conscious that we should not attack those who, through no fault of their own, place their companies into administration and wish to carry on their business—on the contrary, I have every sympathy for people who seek to create wealth and jobs—but the key point is that we cannot allow people to abuse their position and their employees.

I conclude, Mr Deputy Speaker, by wishing you, the staff of the House, all colleagues, the staff of my office, and Members who have given me support in the past few days, and, in particular, my wife, who has been long-suffering for many years, a very happy Christmas. I wish everyone a happy, peaceful, prosperous and healthy new year, and trust we can look forward to returning to the House and enjoying many such debates in future.