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

Debate between Peter Grant and Paul Scully
Tuesday 6th July 2021

(3 months, 1 week ago)

Public Bill Committees

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Department for Levelling Up, Housing & Communities
Peter Grant Portrait Peter Grant
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Q I have one final question. The legislation as it stands would set a three-year time limit on any application for disqualification, starting from when the company was dissolved. What are your views on that three-year time limit? Is too short, too long, or just about right?

Duncan Swift: I have to say, from experience, it is too short. Rogue directors or individuals who abuse the position of director go to great pains to extract all the asset value out of the companies that they are abusing and to provide a false, or certainly incomplete, trail of their actions as directors of the company. As an office holder coming in after the event, it is like pulling together a 3,000 or 4,000-piece jigsaw puzzle when holding only about five pieces to start with. You are having to make inquiries with multiple stakeholders, as well as interviewing the directors and their associates, to start to get the bits of the jigsaw puzzle necessary for a picture of what actually went on, in order to convince a court that what went on was actually a fraud upon the creditors and that the director had not acted properly. Again, from experience, although a relatively speedy pulling together of the jigsaw puzzle and convincing of the court takes three years, there are many cases where it takes far longer.

Paul Scully Portrait Paul Scully
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Q To expand on a few of those areas, starting with the three-year time limit to file a disqualification application, the Insolvency Service or the Secretary of State can already examine historic conduct, but they have three years to file the application for disqualification. Can you expand a bit on what you meant about the court process, which presumably comes afterwards?

Duncan Swift: What I was explaining about the timeline was that for the office holder—whether it be the Insolvency Service or the official receiver as liquidator, or the Insolvency Service coming in to pull together a picture of the company’s financial dealings and the director’s conduct in the course of those dealings—it takes time. In the first phase in particular, it can take two years to get a reasonably complete picture before one can be confident of putting forward an application to court, either for a recovery of assets or, I would have thought, the disqualification of a director in circumstances where that individual may well be using the proceeds of such activities to defend their position, as well as seeking to confuse it to defend against the likelihood of such claims being brought against them.

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

Debate between Peter Grant and Paul Scully
Tuesday 6th July 2021

(3 months, 1 week ago)

Public Bill Committees

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Department for Business, Energy and Industrial Strategy
Paul Scully Portrait Paul Scully
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Q Finally, what effect do you think there would be on lending if this regime did not come into place or the loophole were not closed? Would there be a chilling effect?

Stephen Pegge: As you say, it is a matter of a chilling effect. It is one other factor that would weigh on finance providers’ minds when making lending decisions. This is a crucial time for lenders to provide finance. If you look at the latest Bank of England figures, for May, which were published last week, some £7 billion of new lending was provided to SMEs.

Latest surveys suggest that high proportions of loan applications are being sanctioned—something like 85%—and we want that to continue. The expectation that this sort of loophole is being closed should build confidence. It will ensure that there is discouragement of bad actors, so that it does not grow out of proportion, which we fear might otherwise be the case.

Peter Grant Portrait Peter Grant
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Q Good morning again, Mr Pegge. I apologise because I think I mispronounced your name earlier because I tried to read it without my glasses on. In an earlier answer, you referred to the retrospective nature of parts of the Bill. You indicated that you supported them. In particular, you referred to the fact that the Government had made it clear since 2018 that the legislation was coming.

Clearly, we are not creating a new offence that was not illegal at the time. We are considering legislation to make it easier for the authorities to act against people who may have committed offences, which I think is an important distinction. Even given that, is there an argument that the retrospective power should apply only to the date when the Government first published their proposals to legislate? Would you still support the Insolvency Service if it wanted to take action in relation to things that had happened in, say, 2015 or 2016? Would you have any concerns about that?

Stephen Pegge: As you say, this is essentially a technical loophole, which the Bill seeks to close. All it does is confer powers of investigation, with significant and rigorous practices in terms of investigation. The risk of miscarriage of justice is relatively limited. I do not have a particular date in mind. The point I was trying to emphasise was that this has widespread support and has had for some time.

--- Later in debate ---
Peter Grant Portrait Peter Grant
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Q You say that you have not heard any such representations from the Insolvency Service. Have you had any such representations from lenders or creditors? They may take a different view from the Insolvency Service if it is their money that is at stake.

David Kerr: Perhaps some in the creditor community would like it to be a six-year period, but I do not think they have argued strongly for it, and I do not think there is a necessarily a case made for that. From a creditor perspective, in an ideal world, perhaps it would be open ended. That may be unrealistic.

Paul Scully Portrait Paul Scully
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Q Thank you for giving evidence, Mr Kerr. Can you talk a little bit more about the deterrent that you spoke about? How much of an impact do you think the measure, and especially the threat of disqualification, will have on providing the necessary deterrence?

David Kerr: The current disqualification provisions act as a deterrent to some extent, because directors know that, in respect of every company that goes into an insolvent liquidation or administration, there will be some inquiry. There is an obligation on the insolvency practitioner to carry out a certain amount of inquiry into the contacts of the directors of those companies and make a report in each of those cases to the Insolvency Service on their conduct. The provisions do not provide for the same report. It will have to be triggered by something else, whether that is a creditor complaint or other information, but it will provide the opportunity for the service to make the same inquiry.

Oral Answers to Questions

Debate between Peter Grant and Paul Scully
Tuesday 6th July 2021

(3 months, 1 week ago)

Commons Chamber

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Department for Business, Energy and Industrial Strategy
Paul Scully Portrait Paul Scully
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Travel has an impact beyond the sector itself and the impact of reopening our cities. We will continue to work with the sector to offer it support and to flex our support. My hon. Friend mentioned weddings. On 21 June, the restrictions on weddings were eased, which I was pleased to see. The number is now determined by how many a venue can safely accommodate with social distancing measures in place. I am looking forward to the day when those final social distancing measures can melt away.

Peter Grant Portrait Peter Grant (Glenrothes) (SNP)
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This morning the Government tweeted to tell us that about 1.7 million businesses had been allowed to borrow money under the various coronavirus loan schemes. Do they also intend to send out a tweet to tell us how many jobs have been lost and how many businesses have been destroyed by the decision to exclude 3 million business owners from any coronavirus support whatever? (902316)

Paul Scully Portrait Paul Scully
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I have continued to converse, whether in person or on social media, with some of the people leading the campaign in this area. As I have said before, a lot of the schemes we put in place have been reverse engineered so we can deliver them quickly, at pace and at scale. We have not been able to save every business and every job, but clearly, we will look to not only reopen and recover, so that we can bounce back better and protect as many jobs as we can, but create new jobs as well.

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

(2nd reading)
Debate between Peter Grant and Paul Scully
Paul Scully Portrait Paul Scully
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I will not give way, but I will happily come back to the hon. Lady if I have not answered her question. I do want to get through a few areas.

Let me quickly turn to the disqualification of directors of dissolved companies. The issue of insolvency funding came up a few times. Clearly, we will be working with the Insolvency Service to ensure that it has the resources to do its job. It employs its finite resources to the maximum effect by prioritising cases in which there has been most harm to the public and the wider marketplace. Clearly, its resources are not limitless.

The hon. Member for Strangford (Jim Shannon) asked about insolvencies. Actually, the number of insolvencies has been at a 40-year low over the past few months because, effectively, in many areas, the economy has been held in stasis. That is why it is so important that, having put £352 billion-worth of support into the economy, we now have 352 billion reasons why we have to get the next bit right—why we have to help shape the recovery through these mitigations. We need to make sure that we continue to flex and continue to extend the support. That is why furlough carries on until September and why we have ensured that the winding-up proceedings have been extended for another nine months as well, so that we can get conversations going with landlords and tenants. It is so, so important to continue these measures.

I am glad that we have had broad support for the measures. In terms of compensation, directors can obviously be held personally liable for debt, and where there are breaches, there is disqualification.

Peter Grant Portrait Peter Grant
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I note the Minister’s comments that directors can be held personally liable, but does he accept that allowing an individual investor or creditor to sue a director at their own risk is very different from a scheme through which the Government or some other body effectively take that legal action on behalf of a group of aggrieved individuals, who individually cannot afford the risk of taking that action?

Paul Scully Portrait Paul Scully
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I take the hon. Gentleman’s point. Let me just answer a couple of his points. He talked about corporate governance and audit reform. That is something that we will legislate on as soon as parliamentary time allows. He referenced a Minister saying that we would adhere to standards that we thought that we could get away with. No, that is absolutely not the case. I did not hear that comment, but I suspect what the Minister said and meant was that we are accountable to the electorate. When I heard about that comment, I thought about my own constituency where I know at least one High Court judge, an insolvency practitioner, lawyers, forensic accountants, civil servants—I have them in my own Department never mind my constituency—and journalists and, boy, will they hold me to account at the ballot box, in my local media and in the national media should it be appropriate to do so. That is that standard to which we expect to work as a Government. I am glad that he also mentioned phoenixing, because this will strengthen the phoenixing legislation as well.

I have noted the helpful contributions made by Members across the House, and I am looking forward to working with colleagues in Committee to make sure that we can get this really important legislation for both of these measures through. The scrutiny that has been provided today is, as always, greatly appreciated. I look forward to discussing this Bill with Members throughout its passage, and I commend it to the House.

Uber: Supreme Court Ruling

Debate between Peter Grant and Paul Scully
Wednesday 24th February 2021

(7 months, 3 weeks ago)

Commons Chamber

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Department for Business, Energy and Industrial Strategy
Paul Scully Portrait Paul Scully
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My hon. Friend is absolutely right to make sure that we continue to look at the number of private hire licences compared with black cab licences in London to ensure that there is no unfair advantage, but, ultimately, there is a market there, as he rightly says.

Peter Grant Portrait Peter Grant (Glenrothes) (SNP) [V]
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We can judge this Government’s sincerity and their claims to care about workers’ rights by the fact that the Secretary of State is on record as saying that British workers are among the worst idlers in the world; of course, her own treatment of her staff would have got her sacked from almost any other job.

Given that in just over two months the Scottish people will, for the sixth time in succession, elect a Scottish Government who care about the rights of workers, is it not time that employment legislation was delegated to the Scottish Parliament and the Scottish Government so that, at the very least, the workers of Scotland can get the government that they vote for?

Paul Scully Portrait Paul Scully
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I am afraid that the question just goes to show that the hon. Member is more interested in votes than jobs and workers’ rights. That is why the employment rights Bill will come before this House in due course.

Coronavirus: Supporting Businesses and Individuals

Debate between Peter Grant and Paul Scully
Tuesday 23rd February 2021

(7 months, 3 weeks ago)

Commons Chamber

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Department for Business, Energy and Industrial Strategy
Paul Scully Portrait Paul Scully
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I have met representatives from ExcludedUK. We continue to talk to them, we continue to flex and we continue to work out what more we can do to help the economy and to help jobs and livelihoods. The Chancellor will set out his position next week.

In addition to the grant schemes, businesses have received £70 billion in loan guarantees as of 24 January. That has provided a lifeline to more than 1.5 million businesses across the nations and regions of the UK. We have extended the application deadline to apply for those loans to the end of March 2021.

Last year, we changed the bounce back loan scheme rules to allow those businesses that had originally borrowed less than their maximum to top up their existing loans. We also announced the pay as you grow measures, which give all businesses that borrowed under the bounce back loans the option to repay their loan over a period of up to 10 years and to access an additional six months repayment holiday as well as interest-only repayment periods.

On 8 February, we announced that these measures will be made more generous, removing the requirement to make six payments before accessing the six months repayment holiday. Businesses can use these options either individually or in combination with each other, and lenders have begun contacting borrowers to let them know how they can access the pay as you grow measures. These flexible repayment options will give businesses the time that they need to recover from the pandemic and the confidence to build back better.

The Chancellor has also announced our intention to allow lenders to extend the repayment for coronavirus business interruption loans where this is needed to a maximum of 10 years, and we have announced that more support will be available beyond March through a successor loan scheme, more details of which will be announced in due course.

From the outset of this pandemic, we have acted decisively to protect jobs and people’s livelihoods. The coronavirus job retention scheme, the first intervention of its kind in UK history, delivers country-wide support to protect millions of British workers. It has already helped 1.2 million employers across the UK furlough 9.9 million jobs. That scheme has been extended until the end of April 2021 for all parts of the UK, but the Chancellor has always been clear that the Government will keep the situation under review, adapting their approach as the context evolves. The Government will set out the next phase of the plan to tackle the virus and to protect jobs at the Budget next week.

A healthy hospitality sector is critical for the UK economy. It not only accounts for 2.4 million jobs and generates more than £59 billion of economic benefit, but underpins other economic sectors, including tourism and, indeed, our high streets. It is also an important part of our society, supporting social cohesion, cultural integration and mental health. It is a gathering place for communities, and we must continue to support it. The pandemic has hit the hospitality sector hard. I have worked extremely closely with the sector since March 2020 to understand the issues as far as possible so that we can strike the right balance between restrictions and business support.

Not only have the Government provided over £280 billion to support businesses, including hospitality, but we have provided support for commercial rents and deregulated to allow the better use of public spaces for outdoor hospitality. We will continue to keep all that support under review. I want the sector to open up. I want businesses to start to recover and thrive, but it must be done safely, led by the data, as the Prime Minister outlined yesterday.

The retail sector is vital not only to the UK economy, but to the communities that it serves, and I am grateful for the continued efforts of those retail staff who have kept this crucial service going throughout. I recognise that the pandemic has impacted on the sector in different ways and brought significant challenges, but while we have seen a welcome boost in the food sector and online sales, we have also witnessed a more challenging outlook for those not permitted to open, and I appreciate that it has been a really uncertain time for many retail staff. Regrettably, we have seen the closure of some well-known household retail brands, with resulting job losses, impacting on young people and women in particular.

The Government have acted to support as many businesses and employees as possible with that economic package worth over £280 billion, and those measures are carefully designed to complement one another to ensure that we protect jobs and livelihoods. However, as I said, we cannot save every business or job and the support can in no way fully compensate businesses for the loss of trade as a result of the restrictions. Retailers, pubs and hotels have been able to benefit from 100% business rates relief, worth about £10 billion in total, and we have frozen the business rates multiplier for 2021-22, saving businesses in England £575 million over the next five years.

I know that many businesses are eager for an extension to the rates relief beyond the current financial year. The next round of covid-19 support measures will be set out in the Budget next week, but the Prime Minister has written to local authorities in the meantime advising them to delay issuing business rates bills until after the Budget, which, hopefully is good news for businesses.

I know that businesses may be disappointed by the decision to delay publication of the final report into the fundamental review of business rates until the autumn, but an interim report will be published on 23 March, and the final report will be published once there is more clarity on the long-term state of the economy and public finances. I encourage the sector to continue engaging with Government on these important issues.

Supporting people back into employment is also a key priority. Our plan for jobs includes a series of measures to protect, support and create jobs, and we are helping those who have lost jobs in the pandemic back into employment through our job entry targeted support programme. A £2 billion kickstart scheme has also been launched to create opportunities for young people, and we are taking action to help the high street to evolve. In September 2020, we brought forward over £80 million-worth of investment to support immediate improvements in 101 towns selected for deals to build back better in the wake of covid-19.

On 26 December 2020, the Secretary of State for Housing, Communities and Local Government confirmed £255 million for 15 areas for the future high streets fund, with a further 57 areas receiving provisional funding offers totalling up to £576 million. We are also launching a £4 billion levelling-up fund, investing in local infrastructure that has a visible impact on people and their communities and supporting economic recovery. We will publish a prospectus for that fund soon.

To date, we have provided the largest package of emergency support in post-war history. As highlighted by the Office for Budget Responsibility and the Bank of England, without the action taken by the Government, the outlook could be so much worse. The co-ordinated approach of the UK’s authorities has also been praised internationally by the International Monetary Fund as one of the best examples of co-ordinated action globally that has helped to mitigate the damage, holding down unemployment and insolvencies. Given the current climate, it is right that we focus on supporting individuals and businesses through the pandemic. In the past, the Government have ensured that businesses and people have that certainty by extending the furlough and business grants. The announcements at the Budget will reflect the steps set out in the Prime Minister’s road map, ensuring that the next phase of our economic support package continues to deliver tailored support for individuals and businesses.

What businesses want now is that road map. They want to able to give a safe and warm welcome back to their customers, clients and people using their services, but in the meantime, as the Chancellor will set out next week, we will continue to work with businesses and individuals to protect jobs and livelihoods as we see the light at the end of the tunnel in this pandemic.

Peter Grant Portrait Peter Grant (Glenrothes) (SNP) [V]
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I am pleased to speak in this debate and to confirm that the Scottish National party will support the motion if it comes to a vote. I do not want to eat too much into the time available for the large number of Back Benchers who wish to speak, so I shall look in detail at only a small number of the items in the Labour motion. Given that so many of the main asks in the motion have been publicly supported by some highly influential Tory MPs, including a number of members of the Treasury Committee, I look forward to the Government’s supporting the motion if a vote is called later.

We support the call for business rates relief to be extended. Scotland’s Finance Secretary, Kate Forbes, made a similar request in a letter to the Chancellor on 27 January, ahead of the Scottish Budget. The SNP Scottish Government have led the way in reducing the rates bills of businesses in key sectors and of small businesses in particular. For example, the small business bonus scheme meant that last year 117,000 business properties in Scotland were paying no rates at all. Some 95% of all Scottish business properties have a lower rate poundage than they would have anywhere else in the United Kingdom. In addition, the businesses worst affected by covid restrictions—those in retail, tourism, hospitality and aviation—will pay no rates at all during the next financial year.

Given that the leader of the Tory party in Scotland and his colleagues demanded, ahead of the Scottish Budget, that

“retail, hospitality and leisure businesses”

be given

“certainty that they will not face full business rates in the next financial year”,

it is a wee bit disappointing that they do not seem so keen to speak up in this debate for hard-pressed businesses in other parts of this precious Union of theirs. I am sure they will do the decent thing and support the motion later.

We fully support the call to extend the 5% VAT rate, but I do not think it goes far enough, because if the sectors we are talking about currently have a 5% VAT rate, for all they know, their VAT bill could increase by 300% in just five weeks’ time. Nobody can run a business with that degree of uncertainty, so the Government need to make it clear tonight—not next week or in two or three weeks’ time—that that 5% VAT rate will be extended.

We need to start to take decisions now, based on the long-term interests of the economy, about the unprecedented levels of debt with which millions of businesses are saddled. They have had to borrow heavily, often through Government-backed schemes, to survive the first year of lockdown; they are not going to be in a position to repay those debts next year, or any time in the next two years.

In addition to supporting the call for small businesses to be allowed to defer the repayments on their loans, the SNP wants to go further. In the previous economic crisis, the Government spent huge amounts of our money on bailing out the self-same banks that were responsible for the problem; surely, it is not too much to ask that we should now give the same kind of support to the more than 5 million small businesses that have done nothing wrong and could play a vital part in our post-covid recovery. We therefore call on the Government to agree to write off the bounce back loan debts of small and medium-sized businesses and to look carefully at proposals from organisations such as TheCityUK that covid debts should be converted into equity or contingent tax liability, so that the public sector retains an interest in the business and the business is not forced to go to the wall because of a lack of cash.

My support, and that of my party, for the excluded 3 million is well documented, so I will not go into it in detail. All I will say is that, when I have raised the exclusion of those people with representatives of Her Majesty’s Revenue and Customs through the Public Accounts Committee, I have been given the excuse that it was not possible to set up a scheme quickly. It is now almost a year since the first lockdown was announced. The reason so many self-employed people and owners of small businesses are still excluded is nothing to do with the Government’s not being able to help them; it is to do with the Government’s not being prepared to help them. For the party that claims to be the party of small business, that is an absolute disgrace.

In the interests of brevity, I bring my remarks to a close with a final observation: the British Government are the only one of the four UK national Governments who have the full range of taxation and borrowing powers necessary to deliver on what the motion asks for. I cannot speak for the people of Wales or Northern Ireland, but I know that as far as my constituents and the people of Scotland are concerned, if the British Government are not prepared to use their powers to get Scotland’s businesses back on track and back into business, they should devolve those powers to a national Government who will.

Oral Answers to Questions

Debate between Peter Grant and Paul Scully
Wednesday 21st October 2020

(12 months ago)

Commons Chamber

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Cabinet Office
Paul Scully Portrait Paul Scully
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I thank my hon. Friend for her concern, especially about childcare. We have already introduced 30 hours of free childcare for eligible working parents of three and four-year-olds. We have ensured that wraparound childcare remains open, to support parents to continue to work under all three covid levels. As set out in our manifesto, the Department for Education will be investing £1 billion from 2021 to help create more high-quality wraparound and holiday childcare places, including before and after school and during the school holidays.

Peter Grant Portrait Peter Grant (Glenrothes) (SNP)
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What steps her Department is taking to support older people during the covid-19 outbreak. [907851]