Seema Malhotra (Feltham and Heston) (Lab/Co-op)

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It is a pleasure to serve under your chairship, Dr Huq. May I thank the Minister for his opening remarks? I would be grateful to him if he could respond to some of my questions, either in response today or in writing. I want to know which business organisations the Minister spoke to before deciding to move forward with the tapering as it is and as proposed by the Government. How will he keep the measure under review? It is both an extension of some support and a withdrawal of other support in the way that it has been tapered, and I thank my hon. Friend the Member for Rhondda for the point he made in relation to that.

We believe that it is right to maintain restrictions on serving winding-up petitions under schedule 10 to the Corporate Insolvency and Governance Act 2020. It is vital that businesses that have sustained pressure during the last 18 months are supported right through to the end of the pandemic. We acknowledge and welcome the raised limit, and at least there is considerable protection for small businesses with debts below £10,000. That is important and is in line with the measures that we have called for since June, when other support was withdrawn, to ensure that there are effective ways to deal with debt through the period of recovery, so that we do not see the loss of viable businesses that are allowed to fail because of the impact of covid-19.

Let us face it: covid-19 is not over yet, and there is still uncertainty about what might happen going forward and whether there will be further restrictions. It is important that the Government make it clear to Parliament how there will be flexibility in relation to business support that will be in line with potentially changing health measures. In this context, the pressures facing businesses this winter must be taken into account as the Government keep the measure under review.

The challenges are numerous: rising energy prices, the Government’s supply chain crisis, price inflation and consumer confidence declining to its lowest level since April, compounded further by the Government’s cruel decision to cut universal credit for 6 million families. Why does that matter? Let me take my constituency as an example, with 18,000 households affected and £18 million coming out of the local economy—£18 million that would be spent largely in local shops. There is a relationship between the choices being made on cuts to universal credit and the support that there will be for small businesses as household income reduces, as people are able to spend less on looking after their families, which they do largely in community businesses.

This is a time when businesses should be experiencing their golden quarter—the quarter leading up to Christmas, when they can make the majority of their profits for the year in order to address the debt that they may have accrued during the periods before—but many businesses will still be fighting for their survival and having to respond to one crisis after another. I am sure that the Minister has received representations from affected businesses. I can state one example of a business that told me it had to refund £8,000-worth of customer purchases a month ago because the goods were not going to arrive due to the supply chain crisis.

This is affecting businesses up and down the country. The last two quarters have also seen more than 100,000 business deaths in each quarter—more than in any other subsequent quarters in the recent past. Without a more robust response, quarter 4 of 2021 and quarter 1 of next year will be worse. Against this backdrop, it is no wonder that business groups, including the Federation of Small Businesses, have warned of falling business confidence. The cash liquidity crisis, which is also facing various sectors of the economy, from aviation to retail and leisure, will continue well into 2022. It is important for us not to just assume and want to believe that things were suddenly magically better from July onwards, because a lot of the uncertainty remains.

That brings us to the extension of the restrictions, even with the tapering, which we do support, as we did last month with the extensions that we debated then. First, with regard to the two-day gap that was created by the initial version of this instrument, how many businesses were issued with winding-up orders on 29 and 30 September? Does the Minister have those figures? Will those businesses now benefit from the protections that they should have had?

Last time, we also noted our concern that the Government were legislating for businesses to be protected from eviction but not rent-induced liquidation. The Minister then spoke of legislation being introduced to support the resolution of commercial rent arrears for tenants that were affected by the restrictions during the pandemic. What is the status of that? Rent debt will remain an anvil around the necks of many businesses, particularly those in the hospitality and retail sectors, which have been impacted—sometimes most—by the pandemic.

That can also be the case in areas of tourism that were very significantly impacted. Some of that picked up this summer, but aviation has seen a very stuttering recovery. In relation to the aviation supply chain across the country, which includes hundreds of thousands of businesses, the Minister will know that there is still huge uncertainty as international travel and even domestic travel are still recovering. It is estimated that the hospitality sector alone is facing billions of pounds of rent debt.

Therefore, when it comes to lifting the measure of support, along with the business rate and VAT reductions and the eviction restrictions, much of which will happen in March, this could well lead to a real risk of a cliff-edge scenario for businesses, particularly those that have been hit hardest by the pandemic and are not in those sectors that are recovering more quickly. The tail of the recovery is set to continue well into next year and even the year after, so what assessment is being made of what the additional support might be and how that can be tailored to deal with the slower recovery of particular sectors?

Will the Minister also provide an update on the arbitration process that, I think, has been brought forward? On the detail of that in relation to rent arrears, I would be grateful for an update.

I will express just a few concerns about today’s SI. The legislation note describes the process, which the Minister outlined, of notice needing to be given, 21 days of consultation, and allowing a response from the debtor to then be taken into account. What happens if, unreasonably, the creditor does not wish to accept the proposal? Would that then be for the courts to decide? Could any court fees then be payable? If the debtor does not win the case against them, will they then be having to pay court fees as well? Perhaps the Minister can provide clarification, because I am not sure of the detail of that.

Could the Minister clarify one point? If the 21 days begins just a few days before the measures are due to end in March of next year, what does that mean for any of the disagreements going through between a creditor and a debtor? Will the 21 days that might start before the end of these provisions continue with those rights secured?

People may be concerned about their business, which might otherwise be viable but has been hit by covid and the continuing uncertainty over recovery. What are the Government doing to ensure that those who are concerned about the ending of the temporary insolvency measures seek effective early advice? I agree with R3 that businesses that seek advice early often have the best options open to them and the best advice to make decisions about their next steps. That often results in a more favourable outcome than if those businesses had waited and let problems spiral. What are the Government doing to make businesses aware of such advice? That may mean the involvement of grassroots business organisations.

If the Government are forced to introduce new measures this winter as a result of a health crisis that restricts business operations, will they review those measures and amend them as required? At a time when businesses need us most, the House should focus on how we support businesses not just to survive but to recover and thrive. They will be looking to us to make sure that support is not removed from businesses prematurely. That would have a catastrophic impact on businesses, high streets and communities across the country.

Chris Bryant (Rhondda) (Lab)

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I thought the Minister started admirably with the first half of his first sentence, when he said that it was a delight to sit under your chairmanship, Dr Huq. It then went all horribly wrong.