Oral Answers to Questions

Debate between Kevin Hollinrake and Stephen Hammond

Tuesday 17th January 2023 Commons Chamber

[Stephen Hammond (Wimbledon) (Con)]

16. What steps he is taking to support small and medium-sized businesses.

[The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Kevin Hollinrake)]

It is absolutely right that we direct support where we can to our SME community. We have reversed the national insurance rise, saving SMEs approximately £4,200 a year on average; provided £13.6 billion of business rates support over five years; cut fuel duty for 12 months; and raised the employment allowance to £5,000. The energy bill relief scheme is also protecting SMEs from high energy costs, as will, from April, the energy bills discount scheme.

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[Kevin Hollinrake]

I thank my hon. Friend for raising that point. This is a very significant problem for many businesses, particularly micro-businesses. Our prompt payment and cash flow review will examine business behaviours and small business experience of late payment and long payment terms, to help ensure that the UK has arrangements in place to best support small businesses. It will include looking at the payment reporting obligations and a review of the role of the Small Business Commissioner.

[Stephen Hammond]

Wimbledon’s clubs and pubs are at the heart of our community and, like my hon. Friend the Member for Ruislip, Northwood and Pinner (David Simmonds), several have asked me how the Government will ensure that the scheme meets the needs of hospitality. Will my hon. Friend ensure that Ofgem takes action against suppliers whose actions damage small businesses in my constituency and across London?

[Kevin Hollinrake]

My hon. Friend raises a very important point. My r hon. Friend the Minister for Energy and Climate and I recently had a roundtable with energy suppliers to discuss exactly that point: ensuring that the support the Government are providing is passed on to SMEs. The energy suppliers assure us that that is happening. We have asked Ofgem to take a closer look at that and it will report back to us shortly.

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[Stephen Hammond (Wimbledon) (Con)]

T4.   Wimbledon is one of the best places for young diverse entrepreneurs to start up. The recent London Chamber of Commerce and Industry report suggested that there were problems and additional problems for those entrepreneurs to access finance. What exactly are the Government doing to make sure that access to finance is open to as many people as possible?

[The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Kevin Hollinrake)]

The UK, including Wimbledon, is one of the best places in the world to start a business, as evidenced by the OECD report. My hon. Friend is right to raise the issue of access to finance, particularly for diverse groups. The Start-Up Loans Company has provided £1 billion of loans to around 100,000 businesses, including £2 million of loans to businesses in his constituency, and 40% of those loans go to people from a black, Asian and minority ethnic background.

Corporate Insolvency and Governance Bill

Debate between Kevin Hollinrake and Stephen Hammond

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

[Stephen Hammond (Wimbledon) (Con)]

It is a great pleasure to follow the shadow Secretary of State. During this crisis, many of us have experienced groundhog day, and we have certainly just experienced it now; looking at the right hon. Gentleman at the Dispatch Box took me back to a period before 2015.

I warmly welcome the Bill. As the shadow Secretary of State said, the Secretary of State is right to set this legislation in the context of an extraordinarily impressive set of business measures—regardless of any tinkering around the edges that is needed—that the Government have put in place to tackle the covid crisis. We are right to recognise that in normal circumstances the Bill probably would have been split into two phases. Some of the changes that it contains are permanent, and have been debated and consulted on certainly since 2016, but maybe earlier. Other changes are rightly temporary, as they are urgent measures to address the challenges faced by many in the corporate sector who would not necessarily normally be experiencing such problems with insolvency. The flexibility is therefore clearly right.

As I have said, the Bill sets out a number of permanent and temporary concepts and provisions. I will spend a little bit of time reflecting on one or two of the permanent ones, before finishing with a particular temporary issue that affects my constituency. The Bill outlines the concept of moratorium, and it is quite clear what that is. It gives the challenged business a 20-day opportunity to consider a rescue plan. That can be extended for a further 20 days if the directors ask for it, and can, as I understand it, be extended for a whole year should the creditor or the court consent. The purpose of that is clearly obvious, and all that makes a huge amount of sense. During that period the directors retain control of the company and no legal action can be taken against it without a court decision.

However, the process is overseen by a monitor, a point on which I want to raise a few issues that I hope my Front-Bench colleagues will consider or at least address later. First, my hon. Friend the Member for Thirsk and Malton (Kevin Hollinrake) has already raised with the Secretary of State the potential conflict of interest to do with whether the monitor is sanctioned by an independent regulatory body or is just a normal insolvency practitioner that could be taking work from one group of companies with one hand and, with the other, working against that in looking at insolvency. I hope my right hon. Friends on the Front Bench will carefully consider the point about regulation and bring something back quickly.

The second point concerns the criteria that the monitor has to use for the moratorium, the time it could take to assess whether the definition is met, and whether the criteria are too tightly drawn or could be met more quickly if they were more easily drawn. I recognise the need for the monitor to make a suitable statement about the moratorium. The current threshold is whether

“in the…monitor’s view, it is likely that a moratorium…would result in the rescue of the company”.

However, the monitor has a relatively short period in which to make that assessment. In normal circumstances there would be a huge amount of due diligence done on trading, future trading, inspection of management accounts, general financial arrangements and debt arrangements. Not only does that normally take longer than 20 days; it is potentially a costly process to undertake. Particularly given the spirit of what we are trying to do in the Bill, will Ministers consider whether it might be more effective to look at the definition of the criteria and approve a slightly lower threshold for what constitutes a company that could be rescued? That might be as simple as saying that “it is likely” that the moratorium could result in the rescue of the company, as opposed to saying that “it must”. That would be of considerable help in rescuing companies.

[Kevin Hollinrake]

I agree with my hon. Friend and support his point. I think the provision to which he is referring is proposed new section A6(1)(e) in the Insolvency Act 1986, which contains the wording:

“in the…monitor’s view, it is likely that a moratorium for the company would result in the rescue of the company as a going concern.”

Simply changing “would” to “could” would resolve the issues.

[Stephen Hammond]

My hon. Friend drafts the amendment for me. I absolutely agree, and I hope those on the Front Bench will too. That would seriously help with what we are trying to do at this stage.

The permanent measures are designed to allow as many companies as possible to be rescued and to continue trading, but these companies will be creditors of others. In that regard, we must also look at the Bill’s potentially perverse impacts. I have a constituency case, Ms Ravindran, a constituent who runs a design business. It is a small company that is owed £36,000 by an individual, and at least 10 other creditors are owed up to £200,000 in total by that particular individual and company. She is rightly concerned that the Bill will give undue protection to one rather than the other. The issue is that it will be clear to those intending to use the provisions of the Bill to protect themselves, and to enable themselves to trade through and be rescued or restructured, that they should not be undertaking activities. I would like the Minister’s reassurance that the companies seeking to be rescued will not be able to take early advantage of things such as directors loans to take money out of a business that is then likely to apply for a moratorium and thereby impact others who are debtors of that company.

There is also a potential problem that I hope the Minister will be able to reassure me about later. Under the current drafting, ongoing trading costs and scheduled debt repayments that occur during the moratorium do get paid. Those that do not get paid become a super-priority, but nothing prior to that gets paid. The concern is that the potential suppliers to a company in the moratorium period may try to game that period. They may well see a company in difficulty and decide that it is easier to put the payments due to them in the moratorium period, so that they get super priority, not in the normal supply. I suggest to the Minister that the way around that is to have a look again at whether there could be some tweaking of the definition and to consider that the Bill be amended so that only the interest and charges incurred during the moratorium, rather than the scheduled debt repayment, becomes the super priority. That would take away the incentive to game the system.

There is clearly an understanding about why changes are proposed in the Bill to the termination of supply contracts. We all know that currently a supplier could use contractual terms to cease supply. Therefore, ensuring that a company that has entered into a moratorium or a restructuring procedure, as defined by the Bill, is not forced to rely on the usual contractual terms is clearly right, but there are some other circumstances. Again, have we thought clearly enough about the protection to the supplier? My right hon. Friend the Secretary of State rightly talked about some of the protections that are there, but it is clear that the non-payment of those debts to the supplier could put that supplier into insolvency as well, because it may not be able to get the protection from the court fast enough.

I think that the definition of what constitutes hardship to the small or medium-sized supplier or the company in the rescue package might clearly present some—I was going to use the phrase “wriggle room”—legal possibilities that should not be contemplated. Beyond the definition of hardship, should there not at least be a legal obligation in the restructuring plan that requires a supplier’s status to be given legal protection? I think that is quite important, and it inevitably means some reconsideration of the named cross-class clampdown proposals as well.

A lot has been said about the supplier and making sure that it continues to supply, and, hopefully, the company getting those supplies is then rescued. Again, however, in some circumstances not every company entering the restructuring procedures will actually be rescued. It simply will not happen. What happens then? As I understand it, the supplier is given the super priority status, but—and this leads into another point I want to make in a moment—will Her Majesty’s Revenue and Customs, or indeed other financial providers, want to be given super super priority status over and above that of the supplier? The provisions to ensure the continuity of supply are welcome, but I ask my hon. Friend on the Front Bench to reflect on whether he can reassure us about the protections to the suppliers.

That leads directly to my next point, which is that the Bill reintroduces the concept of making HMRC a preferential creditor. I am very concerned that all the good work that my right hon. Friend the Secretary of State is doing in this Bill could be unwound by doing that. It could have a really negative impact on business rescuing and lending across the UK.

Do not take my word for it: R3, the industry insolvency practitioner, directly makes that point. It goes against a policy, which has encouraged lending to small businesses, that has been in place for some 18 years.

[Kevin Hollinrake]

That is a very important point. I think the legislation is covered under clause 95 of the Finance Bill, which makes HMRC a preferred creditor once again. The real concern is not just that lenders will be less willing to lend on that basis—that is a concern because you go above lenders with a floating charge—but that HMRC may be less willing to show forbearance to businesses that are seeking protection and time to get through these problems.

Oral Answers to Questions

Debate between Kevin Hollinrake and Stephen Hammond

Tuesday 7th January 2020 Commons Chamber

[Kevin Hollinrake (Thirsk and Malton) (Con)]

3. What fiscal steps he is taking to increase productivity throughout the UK economy.

[Stephen Hammond (Wimbledon) (Con)]

7. What fiscal steps he is taking to increase productivity throughout the UK economy.

Oral Answers to Questions

Debate between Kevin Hollinrake and Stephen Hammond

Tuesday 23rd July 2019 Commons Chamber

[Kevin Hollinrake (Thirsk and Malton) (Con)]

T7. Has the Secretary of State given further consideration to providing extra funds to meet the challenges of running unavoidably small hospitals, such as Scarborough and the Friarage in Northallerton?

[The Minister for Health (Stephen Hammond)]

My hon. Friend has campaigned on this matter for a while, and I was pleased to meet him to discuss it earlier in the year. We absolutely recognise the challenge that small acute providers face, and over the past two years the Advisory Committee on Resource Allocation has been considering how we might meet that challenge. The committee has endorsed a new community services formula to reflect the pressure in remote areas, which may help the two hospitals mentioned by my hon. Friend.

Oral Answers to Questions

Debate between Kevin Hollinrake and Stephen Hammond

Tuesday 26th March 2019 Commons Chamber

[Kevin Hollinrake (Thirsk and Malton) (Con)]

T9. Breast cancer oncology is the most recent service to be closed at Scarborough Hospital. It follows the closure of the pain clinic, dermatology, the eye clinic and physiotherapy. These are not cuts, but a contrived centralisation by the trust in York. Will the Secretary of State intervene to ensure that there is a full range of service right across my constituency?

[The Minister for Health (Stephen Hammond)]

I commend my hon. Friend for his commitment to raising the local priorities of his constituents and for the campaigning he does on behalf of the local NHS. I think that these plans are best worked through by the local NHS. However, if he would like, I would be happy to meet him to discuss the concerns that he has on behalf of his constituents.

European Free Trade Association

Debate between Kevin Hollinrake and Stephen Hammond

Wednesday 7th February 2018 Westminster Hall

[Stephen Hammond]

I apologise if I, with a sweeping hand gesture, put the hon. Gentleman into the Brexit camp, which he does not wish to be in; that was certainly not my intention. I have had lunch with the president of the EFTA court, and I had lunch with the ambassador to the United Kingdom of one of those countries yesterday, but let me quote the Norwegian ambassador to the EU:

“We would maintain an open-minded stance in the event of an application for EFTA membership. Overall, it is in Norway’s interest to maintain as close trade policy cooperation with the U.K. as possible”.

There is a lot of scaremongering about this point, yet it is clear from speaking to any of the ambassadors that the reality is that they would welcome our application.

[Kevin Hollinrake (Thirsk and Malton) (Con)]

My hon. Friend is making an excellent speech. Does he propose EFTA membership as a transitional or a permanent state?

[Stephen Hammond]

I certainly see EFTA more as a potentially permanent state, rather than transitional. I know a number of my Brexiteer friends would probably see it as more of a transitional arrangement, but I see it as potentially long term, partly because of the point I have been making—that membership in no way undermines the Government’s ambition to secure a long-term, bespoke deal with the European Union. There is nothing within the EFTA structure that would prevent that. Given that our ambition is to be global Britain, we should take every opportunity we can to be so, and EFTA will fulfil those ambitions and objectives.

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[Stephen Hammond]

The hon. Gentleman has clearly read the EFTA arrangements correctly. I concur with him.

[Kevin Hollinrake]

Can my hon. Friend also confirm that EFTA/EEA does not cover taxation, so we would have an independent VAT policy, for example, if we joined EFTA/EEA?

[Stephen Hammond]

My hon. Friend has clearly also read the EFTA agreement and arrangements, and he is of course correct. There is no principle of direct effect with EEA-EFTA membership. As he has pointed out, that means that all laws must be approved by domestic legislatures. The UK would participate in drawing up proposed EEA legislation by serving on relevant committees. That is more of an input than is currently planned by the Government for their transition or implementation period—call it what you will. And certainly EFTA would have more of an influence collectively over the process with the United Kingdom as a member. We would regain our seats on global regulatory standard-setting organisations, on which much of EEA law is based, and ultimately we would retain a right of reservation.

This would all be supervised by the EFTA Surveillance Authority and the EFTA court, not the EU institutions. That would preserve for the Government the red line of avoiding ECJ jurisdiction.