Corporate Insolvency and Governance Bill

Eleanor Laing Excerpts

2nd reading & 2nd reading: House of Commons
Wednesday 3rd June 2020 Commons Chamber

[Jerome Mayhew]

My hon. Friend talks very persuasively about this, and I have found myself nodding along to everything he has been saying for the last several minutes, but he keeps on referring to a conflict of interest, when surely what he is talking about is better named corruption.

[Madam Deputy Speaker (Dame Eleanor Laing)]

Order. Before the hon. Gentleman answers the intervention, although he has not spoken for an inordinately long time—indeed, other Members have spoken for much longer—he has spoken for well over 10 minutes, and I have to ask him to conclude pretty quickly, because it is in the interests of everyone that the Minister is able to answer the debate. Members have asked questions, and we must have time for that.

[Kevin Hollinrake]

Thank you, Madam Deputy Speaker. I will try to move on quickly.

A lot of this information is supplied by the then business owners. Deloitte actually perjured itself in court on many of these issues. All this arises because of the conflict of interest. Deloitte should have sued the bank, but that simply does not happen. This stuff happens because of the unholy alliance of vested financial interest, which we must eliminate.

The moratorium will help tremendously, but we also need to do what the Department has said it is keen to do: move away from self-regulation, which is how the sector is currently regulated. We need to recognise professional bodies and move to a single regulator—an ombudsman. We must put a Chinese wall between the accountancy practices that do the consultancy work and the insolvency practitioner.

We must also give individuals more power. In my view, we should allow the business to challenge the appointment of an insolvency practitioner and the approach of an insolvency practitioner, to effectively recognise creditor misconduct within the insolvency process, and let them take their complaint to a tribunal there and then. In Comet’s case, it was eight years down the line before the situation was resolved. It must happen there and then. We must have an ombudsman supported by a tribunal that can support businesses who feel that the insolvency has been carried out incorrectly.

There is one final thing I would like to say. I completely support the removal of the right of forfeiture from landlords and the suspension of winding-up orders. Some businesses, particularly very big businesses, are abusing that privilege—I would name Boots and WHSmith —by effectively saying to landlords, “We’re not even talking to you.” That is completely inappropriate. Ideally, those measures should come with the condition that a company cannot take dividends if it is benefiting from those measures. With that, I will happily conclude.

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[Chris Bryant (Rhondda) (Lab)]

On a point of order, Madam Deputy Speaker.

[Madam Deputy Speaker (Dame Eleanor Laing)]

I will take the hon. Gentleman’s point of order after the Minister has finished, unless it is immediately urgent to his speech.

[Chris Bryant]

Well, it is timely.

[Madam Deputy Speaker]

I am guessing that it could well be timely, but the Minister has a very limited time in which to speak, and he should finish his speech first. Then I will take the hon. Gentleman’s point of order.

[Paul Scully]

Thank you, Madam Deputy Speaker.

The corporate restructuring package in particular will be of immediate help to companies in financial distress, which need further regulatory tools to help them recover. This Bill provides that. It will enable UK companies undergoing a rescue or restructuring process to continue trading, giving them breathing space that could help them avoid insolvency. I want to reassure right hon. and hon. Members that the temporary changes to insolvency law that are necessary to help businesses get through this unprecedented period will consider very carefully any case for further extensions to these powers, and they will be subject to the full scrutiny of the House.

The temporary prohibition on creditors filing statutory demands and winding-up petitions for covid-19-related debts will support the Government’s programme to help companies survive the covid-19 emergency. It will temporarily remove the threat of statutory demands and winding-up petitions being issued against otherwise viable companies by creditors not following the Government’s advice to show forbearance at this time.

Furthermore, temporarily removing the threat of personal liability for wrongful trading from directors who tried to keep their companies afloat throughout this emergency will encourage directors to continue to use their best efforts to trade during this uncertain time. The governance measures will provide temporary flexibilities on meetings and filings at a time when businesses are coping with reduced resources and restrictions due to social distancing measures.

Let me quickly address a couple of points made by the right hon. Member for Doncaster North. First, he is completely correct to say that, although there will be a temporary suspension of wrongful trading liability, directors will still have legal duties under wider company law. Those duties will remain in place, as will measures under insolvency law to penalise directors who abuse their position. I understand the suggestion of the right hon. Gentleman and the hon. Member for Inverness, Nairn, Badenoch and Strathspey that the temporary insolvency measures should be extended to 30 September 2020. At present, all the temporary insolvency measures will automatically sunset a month after Royal Assent. I can reassure them, though, that the Bill contains provisions enabling those temporary measures to be extended by statutory instrument where appropriate. The Government have every intention of making use of those provisions if the protections are needed beyond their present expiry date. It is a truly fluid situation and we do not want provisions to be in place for longer than is necessary.

The temporary measures all have significant impacts on the normal working of the business community, and the case for extending the measures will need to be considered against those impacts. Any extension should rightly be scrutinised by Parliament, but the Government will not hesitate to extend if that is required.

The right hon. Member for Doncaster North also raised a fair point on the need for employees to be protected in regard to restructuring plans. That point was also raised by my hon. Friend the Member for North East Bedfordshire (Richard Fuller). The aim of these measures is to restore the viability of struggling companies, thereby boosting the economy, saving jobs and protecting long-term investment. Yes, employees could find themselves as creditors in a restructuring plan, but in those circumstances, they will benefit from the same protections that are in place for other creditors and members. This will include the provision that they must be no worse off through the plan than they would otherwise be in the next most likely plan, and it will, of course, take into account their entitlement under employment legislation.

Importantly, a court can refuse to sanction a plan if it is not fair and it is equitable to do so. When making this assessment, one would expect the court to be mindful of the interests of employees in any pension schemes affected by that plan. If a restructuring plan is not agreed, it is worth remembering that the company might enter an insolvency proceeding, which would almost certainly produce a worse outcome overall for all involved. The company might stop trading altogether, which would put all employees at risk of losing their jobs. The Government are in the business of protecting jobs.

The right hon. Member for Doncaster North also raised concerns about CBILS and CLBILS, as well as the bounce-back loans. The Government have listened to helpful feedback on the business interruption loan schemes in recent weeks. That feedback has also shown that the smallest SMEs, some of which have perhaps not used finance in the past, are struggling to get their finance applications approved as quickly as they need, as we heard earlier. That is why the bounce-back loan schemes, which are fast for lenders to process and for businesses to access, have been launched.

On 27 April, the Chancellor announced the new bounce-back loan scheme, which will ensure that the smallest businesses can access up to £50,000 of loans in a matter of days. The scheme went live on 4 May. Businesses can complete a short, simple online application in up to a few hours. Under the scheme, there is no need for lenders to ask for complicated cash-flow forecasts or ask difficult questions about the future, which means those applications can be submitted and processed rapidly. Almost 700,000 have been have already been approved.

I thank my hon. Friends the Members for Wimbledon (Stephen Hammond), for Rugby and for Huntingdon (Mr Djanogly) and the hon. Members for Inverness, Nairn, Badenoch and Strathspey, for Bristol North West (Darren Jones), for Aberavon (Stephen Kinnock) and for North Antrim (Ian Paisley) for their contributions. I should say to my hon. Friend the Member for Wimbledon that the Charity Commission has confirmed that it will look favourably on charities that have been unable to hold their AGMs in the normal way, but asks that they write down their decisions to prove that they have done due diligence in holding a virtual AGM or delaying their AGM.

I applaud the passion of my hon. Friend the Member for North East Bedfordshire in standing up for businesses being able to come out of the recovery, as we motor through, changing gears. We will not go back immediately to how things were in January; we have to work with business and listen to business. I am grateful to all other Members who have spoken today.

These new measures complement the Government’s existing far-reaching economic support package for businesses and workers through this emergency. Today’s debate on these measures reinforces the importance of responding to the concerns of UK businesses and providing them with much-needed support during this difficult time. We are in the midst of a global emergency, in which otherwise economically viable businesses are facing the risk of insolvency because of covid-19. We must protect them as best we can. It is imperative that we act now to support our businesses and do what we can to ensure that they survive, preserve jobs and support future growth. Clearly, our first priority is to protect lives, but restoring livelihoods, protecting businesses and getting the economy motoring is also essential. That is why it is imperative that we act now. The measures in the Bill will provide businesses with the flexibility and breathing space they need to continue trading during this difficult time and support the nation’s economic recovery.

Question put and agreed to.

Bill accordingly read a Second time.

[Chris Bryant]

On a point of order, Madam Deputy Speaker. I apologise to the Minister; it was not my intention to be rude to him by interrupting him earlier.

We have gone past seven o’clock, as you will have noticed, Madam Deputy Speaker, which means that the motion in the name of the Leader of the House that pertains to virtual participation in proceedings during the pandemic will—I think this is the Government’s intention—be a “nod or nothing” measure. There can be no debate, and if it is opposed, it therefore falls. I have tabled an amendment and I have no intention of withdrawing it. I would want to contest the motion, and I understand that the amendment would be selected by the Speaker if it were to proceed. It is my understanding that it cannot now proceed. Nobody needs to object; it simply cannot now proceed because it is opposed business. Is that your understanding as well?

[Madam Deputy Speaker (Dame Eleanor Laing)]

I am grateful to the hon. Gentleman for his point of order. He will understand that I did not want to hear it during the Minister’s winding-up speech because it would have taken time away from the Minister, which would not have been fair, as many people had asked questions that required answers from the Minister.

The hon. Gentleman refers to motion No. 4, on virtual participation in proceedings during the pandemic. He has just publicly made me aware that he intends to press his amendment and will not withdraw it. That means that the motion is effectively contested. As it is a contested motion, I will not be able to put the main Question, so the simple answer to the hon. Gentleman’s point is that he is correct in his analysis of the situation. In case other people are confused, I will make this point again when we come to motion No. 4.

[Karen Bradley (Staffordshire Moorlands) (Con)]

On a point of order, Madam Deputy Speaker. I just want to be clear, for the avoidance of doubt, that although I tabled an amendment to the same motion that was also selected, I have withdrawn that amendment and will not be pressing it.

[Madam Deputy Speaker]

I am grateful to the right hon. Lady for informing the House of that matter. As Mr Speaker had selected three amendments, having one amendment that continues to be contested settles the matter.

[Valerie Vaz (Walsall South) (Lab)]

On a point of order, Madam Deputy Speaker. The Opposition do not want to withdraw our amendment.

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[Madam Deputy Speaker]

I am grateful to the right hon. Lady. Arithmetic is my strong point: I had three amendments. One has been withdrawn. That means that I have two amendments left. It does not change the constitutional position.

[Mr Peter Bone (Wellingborough) (Con)]

On a point of order, Madam Deputy Speaker. I was here at 7 o’clock and it did not appear that the Government moved the business of the House motion that was due to be moved at 7 o’clock. It is probably a technical matter, but it now seems to me that if there were to be a Division on the current Bill, it would be a deferred Division. Is that correct?

[Madam Deputy Speaker]

No, it is not correct. There was no need for the 7 o’clock motion to be moved, because of the terms of the business of the House motion relating to today.

[Kevin Brennan (Cardiff West) (Lab)]

On a point of order, Madam Deputy Speaker. Yesterday, I intervened on the Leader of the House to ask about the possibility of introducing proxy voting to enable people to vote remotely during the current way in which Parliament has been organised, and the Leader of the House said that that matter had been referred to the Procedure Committee, chaired by the right hon. Member for Staffordshire Moorlands (Karen Bradley), who is in her place. Today at Prime Minister’s Question Time, the Prime Minister said that the Government were proposing to introduce proxy voting. Have you had any notification from the Government that they intend to table a motion tomorrow introducing proxy voting for Members other than those who are on maternity leave, and to provide time for that matter to be debated and voted on?

[Madam Deputy Speaker]

Now, I thought that we were doing very well, because all the other points of order that I have just taken were real points of order, and it is such a pleasure to have real points of order. I appreciate that the hon. Gentleman raises an interesting point, but it is not a point of order for the Chair. I have a feeling that the hon. Gentleman will be able to ask those questions tomorrow.

Before we move on to the next item of business, which is the Committee stage of the Bill, in order to allow the safe exit of Members participating in this item of business and the safe arrival of those participating in the next item of business, I am now suspending the House for five minutes. I would be grateful if hon. Members would leave the Chamber.

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[Madam Deputy Speaker (Dame Eleanor Laing)]

I am grateful for the right hon. Lady’s point of order and for her clarification. I will do my arithmetic again. Having started with three amendments, I now have two withdrawn, so there is one amendment left. I am grateful to the right hon. Lady.

Budget Resolutions

Eleanor Laing Excerpts

Thursday 12th March 2020 Commons Chamber

[Several hon. Members rose—]

[Madam Deputy Speaker (Dame Eleanor Laing)]

I am very pleased to call Andy Carter to make his maiden speech.

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[Stephen Timms (East Ham) (Lab)]

It is a privilege to follow the hon. Member for Warrington South (Andy Carter) and to congratulate him on a warm and confident maiden speech. I welcome his generous tribute to Faisal Rashid, not only for his brief period in the House but his work as mayor and local councillor before that. The hon. Gentleman is right to highlight the potential of Daresbury science park in particular. The House will look forward to hearing much more from him in the years ahead.

The Financial Times pointed out this morning that yesterday marked the end of the Tory promise to eliminate the deficit. For a large part of the past decade, ending the deficit appeared to be the Tories’ raison d’être, but we cannot blame the current Chancellor for concluding yesterday that his Tory predecessors’ policies on the deficit had comprehensively failed and that the result has been, to quote the Chancellor yesterday,

“a decade-long slowdown in productivity.”—[Official Report, 11 March 2020; Vol. 673, c. 282.]

In what was a remarkable phrase, the Chancellor told us yesterday that his was a plan to “fund…our future prosperity.” I have never heard any Chancellor previously claim that we could spend our way to prosperity, but that is precisely what many Members on the Conservative Benches used to accuse Members on the Labour Benches of believing. It is now apparently official Tory policy. Repudiating past Tory policy is no bad thing, though, and I wish to welcome a number of the measures in the policy area of the Work and Pensions Committee, which I chair.

I warmly welcome the wider availability of statutory sick pay; the faster access to employment and support allowance; and the £500 million hardship fund for disbursement by local authorities, which recognises, as I suggested in my intervention earlier during the excellent speech of my right hon. Friend the Member for Hayes and Harlington (John McDonnell), the need for central Government funding to replicate what the old social fund used to do until it was abolished by the coalition.

I welcome the changes on universal credit. The suspension of the minimum income floor means that self-employed people whose income takes a hit will get at least some extra help from universal credit. The truth is, though, that the minimum income floor should not be there, and there is a strong case for making its suspension permanent.

I also welcome the reduction in the maximum rate of repayment of advances, and the longer period of repayment, although those measure will take effect only from October next year.

As my hon. Friend the Member for Croydon North (Steve Reed) said, the Budget did not address the fundamental problems with universal credit. Research by the Trussell Trust has found that people on universal credit are two and a half times more likely to need help from a food bank than people in otherwise similar circumstances who are still on the legacy benefits. That is a remarkable statistic that underlines the scale of the problems that universal credit is causing.

Even more startling is the article this month in The Lancet. I do hope that Ministers will weigh very carefully the dry academic prose in that article, which concludes that up to the end of 2018:

“An additional 63,674 unemployed people will have experienced levels of psychological distress that are clinically significant due to the introduction of Universal Credit”.

It goes on to suggest that over one third of them

“might reach the diagnostic threshold for depression.”

About one quarter of those ultimately expected to be on universal credit are on it at the moment. The Government say that the rest will be on it by the end of 2024. The Office for Budget Responsibility yesterday expressed its traditional and well-founded scepticism about that timetable, and suggested it is likely to take two years longer than the Department for Work and Pensions says. Given that the harm being caused by universal credit is so well documented, I do not think it is viable for the Government simply to press on.

What is it about universal credit that is causing such hardship? I think it is the delay—never before a feature of the social security system—of five weeks between applying for benefit and being entitled to payment. That is why the Select Committee has made it the subject of our first major inquiry. We want to work closely and constructively with Ministers and the Department to identify workable and affordable solutions to what is, incontrovertibly, a very serious problem.

I want to make one final point. One of yesterday’s Budget’s few revenue-raising measures was the increase in the immigration health surcharge. One might think that this is about increasing the charge to tourists coming to the UK to take advantage of the NHS, but it is not. It is a major burden being imposed on a large number of modestly paid working families, a large number of them in my constituency, and I cannot see how it can be justified. These are families who are settled in the UK, often with children who have been born in the UK, and who are on the 10-year pathway to indefinite leave. They are given leave to remain for two and a half years at a time. They are paying their taxes, like everybody else who uses public services, but every two and a half years they have to pay thousands, on top of their taxes, in visa charges, and now they will have to pay even more through this immigration health surcharge. They have already paid tax and national insurance. How can these swingeing additional charges be justified?

[Madam Deputy Speaker (Dame Eleanor Laing)]

It is a great pleasure to call, to make his maiden speech, Mr James Grundy.

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[Several hon. Members rose—]

[Madam Deputy Speaker (Dame Eleanor Laing)]

Order. After the next speaker, I will reduce the time limit to six minutes.

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[Sarah Olney (Richmond Park) (LD)]

Of course the big topic of this Budget had to be the coronavirus. We are facing the gravest health crisis in a century, and the Government have no greater responsibility at this time than to plan their response. I am aware that at this very moment we could be standing on the edge of an escalation in our response to this crisis. I am conscious that some people think that even to address other topics at this time might be seen as an indulgence, so I welcome yesterday’s news that the Government have immediate and effective plans to re-fund the response to the coronavirus. I particularly welcome the news that statutory sick pay will be available to help people who would not otherwise be eligible. Supporting people who are required to self-isolate during this crisis is as essential to dealing with the social impacts of the virus as the additional funding available to the NHS will be to dealing with the health impacts.

However, while a short-term injection of funds to address the immediate crisis might be an appropriate response to the coronavirus, the Chancellor appears to have extended this approach to the whole of his Budget. It was a litany of short-term emergency measures. His speech yesterday left a whole wasteland of ungrasped nettles. If this Conservative Government, at the beginning of a five-year Parliament with a majority of 80, cannot bring themselves to make some tough choices to re-programme our economy to meet the challenges of climate change, and to reset the course of this nation’s economic journey as we leave the European Union, when on earth will they?

The impact of business rates on town centre businesses is a matter of enormous concern in my constituency. We are seeing increasing numbers of empty shops and shopping parades across Richmond and Kingston. Town-centre shops are not on a level playing field with online retailers, who are taking increasing market share with goods that are routinely sold at below cost price. Bricks-and-mortar retailers are further disadvantaged by having to pay punitive levels of business rates calculated on the value of property that they operate out of, with no regard to their level of turnover. Major reform of business rates to maintain our town centres at the heart of our communities is long overdue and has been called for on many occasions by Members from all parts of this House. In our 2019 manifesto, the Liberal Democrats called for a landlord tax to be paid by those who receive the proceeds from the underlying value of the property. This would relieve small businesses of the burden of taxation altogether. It is precisely the kind of radical reform that is urgently required to save our town centres. There was much press speculation that the Chancellor might announce a measure of that kind in the Budget. It is therefore a huge disappointment to find that he has once again ducked the issue.

While the scrapping of business rates for the coming year to mitigate the effects of the coronavirus is surely welcome, it does nothing to resolve the long-term problem. The bills will return again in 2021, when businesses will face not only the after-effects of the coronavirus but the expiry of the transition period in our exit from the European Union. A short-term crisis measure does nothing to help businesses plan for the long-term or to build up resilience for the mixture of unexpected and self-inflicted shocks to the economy. I welcome news of a review of business rates and look forward to hearing its outcome, but it is disappointing that more was not done to grasp this opportunity now.

I have read the forecasts from the Office for Budget Responsibility, and I note that its economic outlook is informed by the assumption that the UK will make an orderly transition to a new trading arrangement with the European Union. Its forecast under those conditions is for a 4% downturn in GDP over 15 years. I was therefore surprised to hear so little mention of Brexit in the Chancellor’s speech. I know that the Prime Minister’s éminence grise has banned the use of the word, but to have so little reference to the major economic upheaval of our time in the first Budget after our departure from the European Union is nothing short of astonishing.

I am more sceptical than most about the Conservative Government’s promises of a bright new rainbow-filled future, but I nevertheless thought that there would be some opportunity that they would wish to take advantage of. We have thrown off the shackles, we are free to determine our own future—and we are going to stop charging VAT on tampons! Grateful as I am—and I am sure I speak for the rest of the female population—to save on average about £1 every year on the cost of my sanitary protection, I am somewhat surprised to find that this is the limit of the Government’s plans for our post-Brexit future. Is that really it? If I sound incredulous, it is partly because legislation to cut VAT on sanitary products was agreed by the European Parliament in 2018 and would have come into effect in 2022.

I accept that negotiations are ongoing, but I would be grateful if the Government gave the House an update at the earliest opportunity of their plans for the talks next week in the light of the coronavirus and an estimate of how that will affect their plans to conclude the negotiations for the new free trade deal by the end of the year. I repeat the call that the Liberal Democrats have previously made: the negotiations should be halted and an extension to the transition period agreed, to account for the time that will surely be lost over the spring and into the summer in the efforts to manage the virus.

The OBR report references the fact that the major boost to Government income from this Budget is the reversal of the planned cut to corporation tax that was due to be implemented this year. The Liberal Democrats called for that reversal in their 2019 manifesto, and I am pleased to see that the Chancellor took up our suggestion. While we would not wish to see taxes on business set at a punitive or discouraging level, we believe that businesses should pay their fair share towards an equal society.

For the self-employed, the biggest missed opportunity of this Budget was the failure to address the enormous issues presented by the planned implementation of the IR35 legislation in the private sector. An uplift in the minimum income level for class 4 national insurance contributions is no consolation to those who face losing their livelihoods as organisations refuse to take on contractors or source their contracts from overseas, to avoid the unnecessary burden that the legislation will impose. It is not too late to halt the implementation and conduct a thorough review of the costs and benefits of this legislation.

For all of us, the largest nettle that goes ungrasped is our response to the climate emergency. The Chancellor announced funding for many new road schemes across the country but little for mitigating measures to reduce carbon emissions. The plans announced for carbon capture and storage are pitifully inadequate, and not enough is being done to invest in electrical vehicle charging infrastructure.

It is a particular shame that the issue of carbon emissions from domestic homes was not addressed, as the barrier to real change on that is the lack of funding. If we are to meet the Government’s net zero target by 2050, we need to start a comprehensive programme of retrofitting insulation to domestic homes and to install more efficient forms of domestic heating. Such a move would have a beneficial impact on domestic energy bills everywhere and, in particular, would alleviate fuel poverty in many homes. I want to reiterate the Liberal Democrats’ support for the Government in dealing with the coronavirus challenge in the months to come—[Interruption.]

[Madam Deputy Speaker (Dame Eleanor Laing)]

Order. The hon. Lady can finish her sentence.

[Sarah Olney]

Thank you. I appreciate that I have gone over my time, but I have waited a long time to speak.

In applying a crisis response to our longer-term issues, the Government are leaving a field of ungrasped nettles that will come back to sting us all when we are able, as we hope, to continue life as normal.

[Madam Deputy Speaker]

For the sake of clarity, all the Deputy Speakers have been very lenient with Members making maiden speeches. That leniency does not extend to others.

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[Several hon. Members rose—]

[Madam Deputy Speaker (Dame Eleanor Laing)]

Order. I am afraid I must reduce the time limit to five minutes.

A Green Industrial Revolution

Eleanor Laing Excerpts

Wednesday 15th January 2020 Commons Chamber

[Gavin Newlands]

What the shadow Secretary of State said—Hansard can ask him later what he said. If the Government want to be serious about the revolution, that short-termism has to stop. Spending seven times more per person on transport investment in London than in north-east England is not the answer to anything. Learn the lessons from Scotland, make decarbonisation a priority, and the economic rewards of the transition can be spread across the UK.

[Madam Deputy Speaker (Dame Eleanor Laing)]

It is a great pleasure to call, to make her maiden speech, Olivia Blake.