Rating (Coronavirus) and Directors Disqualification (Dissolved Companies) Bill

Nigel Evans Excerpts

Report stage & 3rd reading
Thursday 9th September 2021 Commons Chamber

[Jeff Smith (Manchester, Withington) (Lab)]

I beg to move, That the clause be read a Second time.

[Mr Deputy Speaker (Mr Nigel Evans)]

With this it will be convenient to discuss the following:

New clause 2—Guidance on non-domestic rating and coronavirus—

‘(1) The Secretary of State must, no later than three months from the day on which this Act is passed, publish guidance for local government bodies on the application of—

(a) the provisions of section 1 of this Act, and

(b) the wider local business support policy framework associated with that section.

(2) In preparing the guidance the Secretary of State must consult—

(a) independent experts, and

(b) representatives of companies whose non-domestic ratings determinations are affected by section 1.’

This new clause would require the Secretary of State to publish guidance to local government bodies on the application of the provisions of section 1 of this act. This guidance must be prepared following consultation of independent experts and businesses whose business rates appeals are affected by section 1.

Government amendments 1 to 6.

[Jeff Smith]

I am conscious that we have an important debate to follow and that time is pressing, so I shall be relatively brief. Labour’s broad support for this Bill has not changed. We recognise the urgent need to support businesses, as well as the Valuation Office Agency, and the need to close a legislative gap exploited by unscrupulous directors. The Bill remains lacking in some safeguards. Labour attempted to correct that in Committee, but we were unsuccessful. The new clause is concerned with the resourcing and capacity of the Insolvency Service to deal with the new measures relating to directors of dissolved companies.

As we heard from witnesses in July at the evidence sessions, unscrupulous directors can cause significant suffering to those who have invested in or loaned to their companies. Too often, these directors are able to absolve themselves of their financial responsibilities by dissolving their companies and creating a financial and time barrier to holding them to account. So clauses 2 and 3 of the Bill allow for a director to be investigated and disqualified before their company is restored. That plugs the important gap and is a welcome measure; it removes a costly barrier, both in monetary and time terms, to accountability and financial responsibility.

However, as Duncan Swift, the former president of R3 highlighted in the Bill’s evidence sessions, these provisions could see the Insolvency Service take on 10 to 15 times the number of investigations it currently undertakes. Despite that potential increase in workload, there is no indication in the Bill that the Government plan to increase funding and resources at all for the Insolvency Service, let alone to do so by the significant amount it might need to allow it to cope with the extra investigations. So Labour is calling for new clause 1 to be added to the Bill to ensure that there is appropriate, regular oversight and scrutiny of the Insolvency Service’s ability to carry out this increased workload. If it is not given the resources to carry out its increased responsibilities, clauses 2 and 3 of the Bill become, in effect, redundant. New clause 1 would ensure that parliamentarians and others are kept updated on the Insolvency Service’s ability to carry out its tasks and on any need it has for extra resources. We do not intend to press the new clause to a vote, but we think it is important to make this point, particularly given that the Insolvency Service cannot apply to court for the disqualification of a director whose company has been dissolved for more than three years. That means that the Insolvency Service does not just need extra resources to carry out the additional investigations; it needs them to carry out those investigations promptly, within that three-year timeframe.

As Dr Tribe summarised:

“The Insolvency Service needs to be properly funded to ensure that this additional disqualification work can happen.”––[Official Report, Rating (Coronavirus) and Directors Disqualification (Dissolved Companies) Public Bill Committee, 6 July 2021; c. 18, Q29.]

Although this Bill goes some way to helping tackle financial corruption, the Government could and should go further. The Bill is too narrowly defined for any financial amendments, but the Government could provide a stronger deterrent, beyond disqualification, for unscrupulous directors.

Let me briefly turn to the other new clause and amendments. New clause 2 stands in the name of the hon. Member for Richmond Park (Sarah Olney) and we do not disagree with it. However, we think we do not have to wait for this until the day the Act is passed. It is clear that there is cross-party support for the Bill, that it will pass and that businesses are desperate for support in the current circumstances. So we see no reason why indicative guidance cannot be published and sent to local authorities, as well as possibly indicative amounts for the grants that local authorities will receive, so that they can get on quickly with designing their schemes, ready for when the Act passes. I make the point that we made in Committee that this should not be on a per-head basis; it should take into account the effect of the pandemic on different regions and on different sectors of the economy. I also note the Government’s technical solution, which allowed the backdating of these grants so they effectively apply this financial year.

--- Later in debate ---

[Peter Grant (Glenrothes) (SNP)]

rose—

[Mr Deputy Speaker (Mr Nigel Evans)]

I call Peter Grant.

[Peter Grant]

I beg your pardon, Mr Deputy Speaker. I am standing to speak to the wrong provision.

--- Later in debate ---

[Peter Grant]

That would certainly be many people’s interpretation of how long it has taken the Government to take any firm action. We keep being promised a comprehensive review of company legislation; it cannot come quickly enough. I hope that we will finally see an end to the scandal of the creatures called Scottish limited partnerships, which are too often set up purely as a means to fund organised crime.

Companies House needs to be reformed and probably better resourced. As the Opposition spokesperson—the hon. Member for Manchester, Withington (Jeff Smith)—mentioned, the Bill may place additional demands on the resources of the Insolvency Service. We know that the Financial Conduct Authority needs another complete sorting out. Either it is not doing its job or it has not been asked to do the right job; it probably does not have the resources to deal with fraud on the scale that is now going on right under our nose.

Although I welcome the Bill and we will certainly not oppose it—we have supported it all the way through—we look for assurances from the Government that it is not the end of the road. It can only be allowed to be one tiny step towards finally stopping these people. I remember one of the witnesses who gave evidence to the Bill Committee describing the United Kingdom as becoming one of the go-to places of choice for international fraudsters. That is not a badge that any of us should bear with honour. If that badge is applied to the financial services industry, and to the business community in the United Kingdom generally, it will take years—decades—to get rid of and honest businesses will suffer desperately.

The Government have to start to act now. I do not know whether the Minister is in a position to tell us today when the comprehensive review of company regulation will come forward, but I certainly hope that we will see it very soon. As DialADeal’s example makes clear, even since we started our consideration of the Bill, further scams have been inflicted on innocent people throughout these islands.

Question put and agreed to.

Bill accordingly read the Third time and passed.

[Mr Deputy Speaker (Mr Nigel Evans)]

Dame Rosie Winterton will now take the Chair for our important debate on the legacy of Jo Cox.