Deregulation Bill

Debate between Lord Sharkey and Lord Rooker

Tuesday 28th October 2014 Grand Committee

[Lord Rooker]

My Lords, having listened to the Minister, I should like to raise a couple of minor issues. Before Report, it would be extremely helpful for the House to have a list of insolvency practitioners who support this proposal. Paragraph 214 of the Joint Committee on the Draft Deregulation Bill’s report states that it was told,

“that there was ‘broad support’ for the clause from a range of stakeholders, including some practitioners themselves”.

We did not receive evidence to reflect that view. In a way, part of our problem was that we had only one side of the story. I am not out to cause trouble by saying that it is clear that this clause started life under the previous Labour Government. No one ever says that, but it is true. In March 2010, before the general election, the Insolvency Service sent a consultation letter to all key stakeholders inviting views on the specialist authorisation proposals. Indeed, there was a consultation meeting in April 2010. We did not explore this in the committee and it is a big issue. We had information from the Law Society and I think that we had information from Scotland as well, but the fact is that we did not delve too deeply into where this came from. The minute I see red tape challenged these days I dismiss it because I think it is a farce. However, given that this started life under the previous Labour Government, it might have had some merit. While the papers are not available to the present Administration, it would be useful to ask the then Ministers—I do not know who they were—why they started on this journey before 2010. There must have been a reason to trigger this thing so long ago. It has not just turned up in the Bill after trawling around Whitehall; it started life before the general election. We failed to ask why in the Joint Committee but I am asking that question now.

[Lord Sharkey (LD)]

My Lords, to take up some of the points made by the noble Lord, Lord Rooker, the Joint Committee noted that there appeared to be some confusion about the extent of consultation on this clause. We recommended that there be further consultation on what was then Clause 9. In their response to the Joint Committee’s report in January this year, the Government took the opportunity to repeat the arguments in favour of the clause in some detail. They also stated in paragraph 116 that,

“following the Committee’s recommendation, the Government is inviting any further views on this Clause during the passage of the Bill”.

How did the Government go about soliciting these further views? Who did they invite to give those views and what was the general burden of any of those responses that were made after the Government’s response?

As things stood when the Joint Committee reported, we did not feel that there had been sufficient consultation, as the noble Lord, Lord Rooker, was saying, to enable us to express a firm view on the merits of the clause. I note what the Government have said, but I also note the case put forward by R3. In particular, I note R3’s view that partial licences are not being introduced to fix a problem. It claims that there is insufficient evidence of undercapacity in the market and no evidence that the current regime causes concerns about the quality of the advice given. Essentially, it asserts that the system is not broken and asks why the Government are trying to fix it.

The Government, in their turn, advance two reasons for reform. The first is that the partial licences will benefit insolvency practices of all sizes and the personal insolvency market as a whole. R3 has advanced survey data that it says refutes these claims. Secondly, the Government say that partial licences will increase competition, decrease training costs, lower fees and deregulate access to the IP profession. R3 maintains that there is no evidence of the need for more IPs; in fact, it claims that the market is oversupplied. It also challenges the Government’s other assertions.

All this illustrates the position that the Joint Committee found itself in during December. There are competing claims, somewhat unevidenced, and a narrow consultation base, while the Government have not provided an impact assessment on this clause. It would be easier to make a judgment on the merits of the clause if we knew more and had more evidence. There is a strong case for the Government to agree to further substantive consultation on this issue before we reach a conclusion.