Corporate Insolvency and Governance Bill

Lord Mann Excerpts

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

[Lord Mann (Non-Afl)]

My Lords, in any major economic crisis—and this is part of the current world crisis—there will be winners and losers. I was quite amused but not surprised to hear that the hot tub industry is doing incredibly well as people with sufficient money are installing them in their garden—in lieu perhaps of holidays to hotter climates. There will be winners, and entrepreneurs will be critical in coming out of any economic recession. There has been some fascinating research into how new entrepreneurs were critical to economic regeneration in the southern states of the US after some of their climatic disasters.

Some of them will be winners. There will also be losers, some of which may be big and well known. I do not wish to pour gloom by suggesting which kinds of companies, but household names may not survive the next six months, because of how shopping is changing and may permanently change as a result of consumer behaviour.

Therefore, this Bill has many importances—some perhaps beyond its initial worthy impetus. One area that has less accountability and is more poorly regulated than elsewhere is that of insolvency practitioners. From my experience, they always seem capable of charging the fees they are entitled to charge but sometimes, in cases where I have assisted companies, they do not seem to do a great deal more than that. That is a small sector that needs stronger regulation.

There are also landlords exploiting the situation, some of them offshoring, doubtless often for tax purposes, and in receipt of taxpayer support, and endangering the small, emerging businesses—which are sometimes well located and paying higher rents—which are precisely the businesses that will be the engine of recovery and which could be killed by cash flow. The invidious position of those offshoring is not addressed here and could be considered.

Pension funds have been raised already. If major, traditional, long-standing companies end up being the losers, some of them will have major pension funds. It is not just the social justice question, which is of significance in itself, but the economic repercussions for both the local economy and the UK economy if a group of pensioners or soon-to-be pensioners have a significantly lower purchasing power when they have a higher propensity to spend. So the protection of pension funds deserves more attention in the progress of this Bill.

There is also the question of employees. I have assisted people going to employment tribunals where the assets of the company and the directors remain; they start trading again on the same premises, doing the same work the next day, having got rid of a lot of people who then find that, even if they win in a tribunal, there is nothing to claim from. That is not a sensible way to run any economy. The Minister may wish to comment on whether this Bill will have any impact on strengthening that position.

Finally, there is the question of football clubs. That will be a big one that we should be very aware of, in terms of some of the names that may go under.