Corporate Insolvency and Governance Bill

Stephen Doughty Excerpts
Consideration of Lords amendments & Ping Pong & Ping Pong: House of Commons
Thursday 25th June 2020

(4 years ago)

Commons Chamber
Read Full debate Corporate Insolvency and Governance Act 2020 View all Corporate Insolvency and Governance Act 2020 Debates Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: HL Bill 114-I Marshalled list for Report - (18 Jun 2020)
Paul Scully Portrait Paul Scully
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The Corporate Insolvency and Governance Bill has been a demonstration of what can be achieved in the best interests of businesses, jobs and the country’s economic future when there is collaborative work across both sides of the House. I am grateful to hon. and right hon. Members for the constructive way in which the Opposition have engaged with the Bill, both in this House and the other place.

Over the past three months, this country has faced the unprecedented hardship of needing to adhere to stringent social distancing measures due to the covid-19 pandemic, where Government had no choice but to order businesses to close their doors to safeguard the nation’s health. We recognise the huge sacrifices that has entailed, and my right hon. Friend the Chancellor has provided unprecedented economic support to businesses and workers across the country to help them make it through this challenging time.

Some UK businesses have been hit hard, with many unable to trade or facing a significant short-term reduction in demand for goods and services. As a result, many otherwise viable companies face the threat of insolvency.

Stephen Doughty Portrait Stephen Doughty (Cardiff South and Penarth) (Lab/Co-op)
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With regard to Lords amendment 75, which extends the temporary provisions to 30 September, the Minister is absolutely right that a lot of businesses can survive this crisis, but they need these measures in place. They also need the packages of support from the Treasury alongside the legislative changes. The clock is ticking for many, particularly in the theatre and entertainment industry, the steel industry and others affected in my constituency. Does he agree that we need to see financial packages too?

Paul Scully Portrait Paul Scully
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I agree with the hon. Gentleman that it is important that we remain flexible. We continue to work with businesses from all sectors to ensure that we can get to a point where we can work through the gears to get a full economic recovery over time. That will mean support from the Government in all manner of ways, which we are considering.

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Turning to the Lords amendments, we are grateful that Ministers listened to our concerns about the impact of these changes on pension funds and the voice of workers, and have amended the Bill accordingly to provide extra safeguards. There are some lessons to be learned from the passage of the Bill, however, and for the Government to think about as they plan further changes in this area of insolvency and corporate governance.
Stephen Doughty Portrait Stephen Doughty
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I entirely endorse the point my hon. Friend is making, particularly with regard to pension schemes, because we have seen the tragedy of where this has gone wrong, such as the Allied Steel and Wire pensions scandal in my constituency, which is still affecting people today, years afterwards. Does she agree that we need to take some of the lessons from this process into protections for pension schemes and pensioners, who are expecting, having paid in, that they will get out in due course?

Chi Onwurah Portrait Chi Onwurah
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I thank my hon. Friend for that extremely constructive and to-the-point intervention. We absolutely need to learn from this process, and we also need to ensure that not only the mistakes but the injustices of the past are not repeated, particularly now, when the economy and so many workers and pensioners are so vulnerable.

First, I hope that Ministers will learn from the experience of passing this legislation in such a hurried manner, with a mixture of permanent and temporary measures. While we understand the need for speed with this Bill, it is clear that there have been problems in combining temporary changes with permanent reforms that have been a long time coming and the lack of time for proper scrutiny. That point has been strongly voiced in the other place, and we hope that Ministers will bear this in mind when introducing complex permanent changes along with temporary measures.

Secondly, the ranking of priority debts in insolvency cases has not been changed in a number of years and concerns have been raised that this is out of date. There is no mention of FinTech or some of the new complex ways in which firms finance themselves. If further insolvency changes are planned by Ministers, they must be relevant to where the world is now.

Thirdly, the interaction between pension funds and insolvencies is very complicated, particularly around defined pension schemes. That needs to be looked at afresh. Fourthly, the lack of mention of employees in the whole Bill is a complete oversight, which is why we argued for greater recognition of, and voice for, employees during the passage of the Bill. Any further changes to insolvency and corporate governance legislation must consider how workers can be better included. Finally, there are clearly issues, as the Minister has raised, around pre-pack. They will need to be resolved.

We are pleased that we have been able to work so constructively with the Government to pass this important legislation to support business through this crisis. We are grateful for the listening ear of Ministers. We hope that this legislation will save businesses threatened with becoming insolvent through this crisis. We will keep a close eye on how the measures are implemented, and we hope Ministers will do the same.