Draft Corporate Insolvency and Governance Act 2020 (Coronavirus) (Change of Expiry Date) Regulations 2021

Lucy Powell Excerpts

Thursday 11th March 2021 General Committees

[Lucy Powell (Manchester Central) (Lab/Co-op)]

It is a pleasure to serve under your chairmanship for the first time, Mr Efford.

As we repeatedly said about the business support measures in the Corporate Insolvency and Governance Act 2020, we support the change that the Government are making. We have called many times for the ending of the provisions to be delayed, and we have called consistently on the Government to give themselves a bit more wriggle room. I repeat those calls today.

It is clear that even though the vaccination programme is going great guns—I know the Chair is having his jab later today—businesses are still in distress and the lockdown and business disruption will continue past the original date in the provisions. As I have said previously, a system of business support that was set up for three months has not really been adequate for the 12 to 18 months that this crisis is going on for. In truth, we do not yet know whether all the restrictions will be lifted after 21 June, when social restrictions are due to be lifted. The explanatory notes for the change state that

“the future impact of the pandemic on business and the insolvency regime remains uncertain.”

As such, it is only sensible to maintain the option of further extending the measures in the Act in this way. Indeed, the economy is in dire straits. Although the covid support measures that the Government have put in place have given businesses a stay of execution, we are concerned that we could still see a wave of insolvencies as support is withdrawn and the safety net dissolves.

A number of measures in the Bill are due to expire at the end of March, including the temporary suspension of the use of statutory demands and winding-up petitions, and the flexibility for companies to hold annual general meetings. The temporary removal from directors of the threat of personal liability for wrongful trading is due to expire on 30 April this year. Can the Minister tell me whether the measures will now be extended, as they should be? Will he ensure that businesses will have a smooth landing out of this crisis? I met the big five business organisations this morning, and this issue was raised with me. The Institute of Directors was extremely concerned that the provisions should be extended beyond their expiry in March and April this year.

I expect to see the Minister again soon, when the Government lay further statutory instruments to extend the provisions. As I have before, I advise him to go longer than he thinks will be needed, and then we can have fewer SIs.