Dr. Gavin Strang (Edinburgh, East) ( by private notice ) asked the Minister of Agriculture, Fisheries and Food if he will make a statement on the fisheries dispute between the European Union and Canada.
The Minister of Agriculture, Fisheries and Food (Mr. William Waldegrave): Our policy is to use our unique position as a member both of the European Union and the Commonwealth to help broker a resolution of this dispute. Canada is right to say that much more effective enforcement is necessary in the disputed fishery, but this will be achieved only through negotiation, and not through unilateral action on the high seas. We must also settle fair catch shares. The need for a settlement is urgent. Both sides should show restraint in order to give the talks a chance of success.
Dr. Strang: Does the Minister accept that the fundamental and paramount need is to conserve fish stocks and prevent over-fishing? Will he acknowledge that fish recognise neither national frontiers nor 200-mile fishing limits? Does he also accept that international agreement and international law are the only way to meet conservation objectives?
As the disagreement between the European Union and Canada on turbot quotas is a major factor, will the Minister confirm that the European Union is prepared to continue to talk to Canada to settle that disagreement? Does he accept that equally important is the question of the small-mesh net? If the small-mesh net which Canada has put on display in New York is Spanish, can he tell us whether that net is illegal, and whether the Canadians were justified in taking action? Given that the European Union is in dispute with Canada, not the UK, may I finally ask three short questions? Is the Minister still in full agreement with the EU position? Is he completely satisfied that it is not legally defective and that the EU account of events is true? In view of the concern expressed last time the Minister of State made a statement to the House on this issue, does he recognise that a substantial number of hon. Members on both sides of the House expressed concern about Spanish fishing practice? Will he report back to the House immediately if the truth is not being fully told and if the EU position is not legally foolproof?
Mr. Waldegrave: The hon. Gentleman has not got it quite right, although some elements are nearly right.
The dispute is not now about the amount of fish that should be caught. That was agreed in September, when the new total allowable catch was set at 27,000 tonnes. The Spanish asked for a higher quota, but, as far as I know, the Canadians did not say that it should be lower. They are happy with the agreement. The dispute is not about the amount of fish that should be caught, but about who should catch the fish. Negotiations have broken down on that matter.
The North-west Atlantic Fisheries Organisation--NAFO--agreed a share-out which seemed to be unfair to the EU. Under the procedures, the EU was allowed to set a unilateral quota for this year and to go on arguing. That sort of thing happens in fisheries around the world, and it should be settled at the negotiating table.
Column 828The real argument is about enforcement. As I said in my answer to the hon. Member for Edinburgh, East (Dr. Strang), we have a great deal of sympathy for the Canadians. The House and other nations know that there are questions about Spanish obedience to the rules in many fisheries. The way to settle that is by establishing a proper regime, which is properly enforced.
We have no difficulty with some of the views that the Canadians are putting forward about that, but cutting the nets off a big trawler is dangerous and illegal. The Canadians are in danger of ruining a good case by that kind of action. I do not think anyone in the House, let alone anyone who represents a fisheries constituency, would want to encourage that kind of action on the high seas.
The argument is about how to enforce a proper regime. We must get people back to the table, and we must get an agreement. Both sides--I say this advisedly--would do well to cool the political rhetoric and get back to talking. If the hon. Gentleman is serious, as many are in the House, about the conservation of fish and reaching a proper agreement in the north Atlantic, what we need is a proper agreement that is properly enforced. That means reaching a legal agreement first.
Mr. David Harris (St. Ives): My right hon. Friend is absolutely right to put the emphasis on enforcement. In that regard, what role have our inspectors played, in conjunction with the EU? Is it correct that they inspected the Spanish vessel that was initially involved in the dispute and, if so, what was the outcome of that inspection? While our sympathies are entirely with the Canadians on the question of enforcement and the need for proper protection, will my right hon. Friend confirm that the Canadians have wrong-footed themselves by arresting that trawler in the first place and cutting nets? Does my right hon. Friend also agree, however, that the European Commissioner has gone completely over the top in her reaction to the situation? We must now direct all our efforts to getting the parties around the table to start talking, so that the problem is settled in accordance with the rule of law.
Mr. Waldegrave: My hon. Friend speaks for common sense and with a real understanding of the situation on behalf of everyone in the House. He is quite right. He knows far more about the details than I do, but I believe-- [Hon. Members:-- "So do we."] There are Opposition Members who know about them, too. I believe that cutting the wires of a big trawler could have capsized the boat or killed someone. In that case, the entire moral advantage that the Canadians have established would have been lost in one go.
I agree with my hon. Friend that some of the language used by the European Commissioner is intemperate and unwise. It would be advisable for her, and perhaps advisable for some of the Canadian spokesmen, to cool their language.
On my hon. Friend's specific point about British fisheries inspectors, the situation has not been quite correctly reported. A British official working for the Commission was sent by it to inspect the Estai when she returned from the north Atlantic fishery. He was not a British fisheries inspector as such. I believe that he made certain reports to the Commissioner, but we have not seen those in detail.
Column 829I advise the House to be a little careful about endorsing any such reports until we have seen them in detail. It is quite a long way across the Atlantic.
Mr. James Wallace (Orkney and Shetland): The Minister must know that British fishermen have for some time been complaining about Spanish malpractice such as false holds and small-mesh nets. Does he accept that the reason that the Canadians enjoy so much support from the fishing industry is that they have shown a bit more vigour in enforcement than we have witnessed from the European Union? Using those incidents, what steps is he taking in the EU to tighten up the enforcement regime? Does he accept that, if illegal fishing is going on, irrespective of the flag of the vessel that carries it out, the international community should back proper enforcement of fisheries conservation rules?
Mr. Waldegrave: The hon. Gentleman is right. We should back tougher enforcement of proper rules. However, by definition, as soon as one succumbs to the tempting argument in favour of taking unilateral action and, formally, illegal action, all that work is lost. I believe that, from that dispute, we can obtain a tougher enforcement regime in that fishery, which will be a precedent for tougher enforcement in fisheries nearer home, and that is a prize that we should go for.
If we end up weakening international law as a result of all that, our fishermen will be at least as vulnerable as anyone else. Hon. Members should remember the tuna fishery incident last year when there was illegal cutting of our nets by Spaniards. If we were to start endorsing that type of action, we would not do our fishermen any good.
Sir Teddy Taylor (Southend, East): Bearing in mind the fact that Canada is a country that has never let Britain down when we have been in trouble, is the Minister aware that there is some disappointment and a great deal of anger in Canada and Britain that the Government have been presented as having little sympathy with the Canadians, who are in danger of having their fishing eradicated? Will the Minister make it abundantly clear that we are well aware that Spanish fishermen have illegally destroyed fishing grounds in many other regions, and will he stand 100 per cent. behind Canada in trying to solve what is a real problem, from which we cannot run away?
Mr. Waldegrave: No one in the House needs to be reminded of their sympathy for Canada. Newfoundland was discovered from my constituency. [Interruption.] I have to apologise to the hon. Member--it was. The Canadian fisheries protection vessel that cut the lines was named after a relation of mine. There is plenty of sympathy on both sides of the House with the Canadians.
I have to say to the hon. Member for Southend, East (Sir T. Taylor) that, if he reads the wise words of some of the Canadian fishermen, he will discover that they know very well that they largely destroyed their own cod stocks. They are now serious about conservation. They are right to ask the rest of us to join in being more serious about conservation, but the way to do that is to agree total allowable catches and enforce them, not to do things unilaterally. They have made their argument. We should
Column 830continue the negotiations. We should obtain a regime that can be enforced and that will benefit not only those fisheries but other fisheries.
Mr. Peter Shore (Bethnal Green and Stepney): In view of the real danger of an armed clash between Canadian and Spanish warships in the north Atlantic, will the Minister make it plain where Britain stands in the dispute about the fisheries between Canada and the European Union? Specifically, will he make it plain that he dissociates himself entirely from the decision made by the European Union to suspend negotiations--a decision that was announced as recently as today? Will he make further urgent representations to the Spanish Government to withdraw their warships from the area?
Mr. Waldegrave: I believe that the discussions continue; they certainly should. We stand for returning two close allies of ours, both members of NATO, to sensible negotiations round the table. They are both big countries. Canada is the seventh biggest economy in the world; Spain is the eighth. That type of dispute should be solved by proper negotiation by serious countries of that type. We stand for telling both to cool the rhetoric. We wish the Spaniards to pull back from the fishing grounds to give the talks a chance and the Canadians not to pursue unilateral action on the high seas.
There is obviously a negotiating position in play between both sides. The type of rhetoric that is being displayed, to some extent in Canada, and in the House from time to time, is not especially helpful in obtaining the type of long-term agreement that will be brokered, I believe, if only people will return to the table.
Mr. Rupert Allason (Torbay): Does my right hon. Friend agree that the key to the issue is enforcement? If he does agree, does he not accept that a useful first step would be to make a comparison between the British Register of Shipping, held by the Marine Safety Agency, and Lloyd's Register of Shipping, which demonstrates a wide use of hidden holds, larger engine sizes and all the rest? It is perfectly clear that the French, the Spanish and some other nationalities in the European Union have been cheating consistently for a long time. We have the opportunity to do something about that. Will he agree to do so?
Mr. Waldegrave: I, too, read the interesting story in The Sunday Telegraph about the comparison between the Lloyd's register engine sizes and the declared engine sizes of the Spanish shipping fleet. There is something to follow through there--it is a useful piece of work.
My hon. Friend is right to say, as I said before, that out of the episode we can obtain a greater worldwide commitment to the enforcement of proper regimes--I believe that our fishermen will gain from that. It will not benefit us to appear to endorse unilateral action on the high seas. What will the House say if the Spanish unilaterally extend out into the tuna waters and say that they have decided to enforce their own regime over tuna on the international high seas and exclude our fishermen? What sort of moral position would the people who are making easy comments today find themselves in then?
Dr. Norman A. Godman (Greenock and Port Glasgow): In the eyes of the international community, the Icelandic Government did not lose the moral case when their coastguard vessels chopped the gear away from British trawlers. I know the industry, and I believe that the
Column 831Canadians will win the moral case. I know of no Scottish fisherman with sympathy for the Minister's position or, especially, the Spanish position.
Surely, in order to deal with international fisheries disputes, we need an international police force, perhaps under the United Nations blue flag. Will the Minister honour the promise that he made to me about Spanish vessels and ensure that United Kingdom waters are policed as toughly as the Canadians and Norwegians police theirs?
Mr. Waldegrave: I do not think that it would be practical for an international police force to operate under the United Nations, as that would take until Doomsday to organise. We have an opportunity to set up an enforcement operation under the NAFO, with observers on the boats. The Canadians have made that proposal, which we support and which can be negotiated.
The hon. Gentleman knows a great deal about the industry. I do not know what he thinks my position is on the Canadians' moral position. I made it clear earlier that I thought that the Canadians were in danger of ruining their strong moral position by taking action that no fisherman on the high seas would support--the hon. Gentleman's constituents no more than anyone else.
Mr. Gary Streeter (Plymouth, Sutton): Given that emotions on the issue are running high in my part of the world, and given our long and important traditional links with Canada, can my right hon. Friend confirm that the Canadian high commissioner has expressed his thanks to the United Kingdom for the way in which we have conducted ourselves throughout the matter?
Mr. Waldegrave: It is true--and I am grateful for it--that the Canadian high commissioner today expressed his gratitude to the British Government for the efforts that we have been making towards a negotiated outcome that will stick.
To return to the previous question, the conservation of the stocks on the Grand Banks clearly needs co-ordinated management. No one would argue about that, but how should it be done? I beg the House to remember that we are not talking about the amount of fish caught, which has already been agreed.
Mrs. Margaret Ewing (Moray): In recognising that recent events have focused clearly on the practices of the Spanish fishing fleet, does the Minister also accept the need to look at the accession agreements pertaining to Spain and Portugal? It seems that, if the accession agreements are not changed, we could have a free-for-all in western waters by 1 January 1996. That matter must be addressed seriously.
In that context, what representations is the Minister making to the Commission to ensure that agreement can be reached before the June Council? Is he looking at the text of the framework regulations that will be discussed? It is important that we sort the matter out before the Spanish take over the presidency on 1 July.
Mr. Waldegrave: An April meeting of the Fisheries Council will seek to reach agreement on those matters in a timely fashion. The hon. Lady knows that the accession agreements were fundamentally settled 10 years ago. There will not be a free-for-all, because we negotiated
Column 832additional protection--although not as much as I would have liked--in our western waters which will prevent that from occurring. The fundamental point remains the enforcement of whatever agreements may be made. That is where there is a prize to be won from this dispute: I believe that the lessons to be learned about enforcement will prove very useful to us in providing a precedent which we can apply elsewhere in the world.
Sir Donald Thompson (Calder Valley): I remind my right hon. Friend that the Table at which he stands is a gift from Canada. Will he ensure that the multiplicity of agreements, negotiated both bilaterally and through the Economic Community, that exist in every ocean of the world are enforced properly? Will he and his Department always react first in support of those people who are trying to enforce those very difficult agreements?
Mr. Waldegrave: My hon. Friend is not quite correct: the Dispatch Box at which I stand was the gift of New Zealand. [Hon. Members:-- "He said the Table."] The Table--I am happy to acknowledge the fundamental support from Canada underneath the Dispatch Box. My hon. Friend is correct, but the Canadians want--and we all need--a legally enforceable agreement to conserve stocks in that fishery and to enforce catch sizes within the allowable limits agreed by the scientists. The Canadians have raised those issues very effectively, but now they are in danger of diminishing respect for the law itself. It is not in their own long-term interests to seek to improve the law unilaterally. We need better laws which are better enforced; we do not want to return to the old days of unilateral action.
Mr. Hugh Bayley (York): Does the Minister agree that the use of small-mesh nets is bad fishing practice as well as bad ecology? Will he inform the House how else the Canadian Government could throw the world spotlight on that unacceptable Spanish fishing practice if they did not seize those nets and show them to the world? When will the Government support Canada in its ecologically based fight to preserve fishing stocks in the north Atlantic?
Mr. Waldegrave: A proper enforcement regime in the north Atlantic fishery, which enables an observer to bring a ship to the nearest port for inspection if there is a serious allegation such as fishing with illegal nets, is the way forward. That is the kind of suggestion that is on the table for negotiation. As I have said several times today, the Canadians have been effective in bringing the issue into the world spotlight, but they should not blow their achievement by doing things which are not only illegal but dangerous.
Mr. John Wilkinson (Ruislip-Northwood): Will my right hon. Friend please save himself a great deal of political embarrassment, and save Her Majesty's Government needless political obloquy, by recommending to his right hon. Friends that the Government should withdraw from the common fisheries policy, under which we find ourselves needlessly embroiled in a dispute which has nothing to do with us? We should concentrate on protecting our fishing communities at home, conserving the fish stocks in our own waters and encouraging our good Canadian friends to do the same.
Mr. Waldegrave: It is paradoxical to suggest that a simple solution to international disputes would be to
Column 833return to unilateral national competition. The Canadians are not asking for what my hon. Friend is arguing: they require an enforceable international regime in that fishery, which would cover the Poles, Cubans, Russians, Bulgarians and others. That is the way forward, and it will not be achieved by countries attempting to police their own zones without international co-operation.
Mr. Tony Banks (Newham, North-West): Is it not a fact that these fish wars are likely to continue as long as so many fishermen seem to be short-sighted, blinkered and selfish, and prepared to carry on destroying fish stocks and, ultimately, their own jobs and the industry as well? European Union ships are fishing illegally off the west coast of Africa. Will the Minister also remind Mr. Tobin, the Canadian Minister, that, having destroyed the cod stocks in Newfoundland, it is ridiculous and unacceptable to talk about a seal cull, because to blame seals for the ridiculous behaviour of fishermen really is the last straw?
Mr. Waldegrave: The hon. Gentleman is ingenious in widening the scope to one of his other great concerns--animal welfare. His fundamental point, however, is right. I do not blame the individual fishermen, but technology has now given such power to the fishermen of the world, and will continue to give even greater power, so that, unless there are proper agreements that are properly policed and a proper share-out, we will see a classic case of what economists call the tragedy of the commons written on a global scale. That is why it must be done by agreement.
Mr. Keith Mans (Wyre): Does my right hon. Friend agree that the present dispute between Canada and Spain shows clearly the cavalier attitude of the Spanish towards fish stocks, be they in the high seas or elsewhere? Does he further agree that the way forward is not only to ensure enforcement of common fishing policies but to ensure that we have efficient sanctions against those who do not abide by the rules, in the form of a reduction in quota year by year until those transgressors are not allowed to fish at all?
Mr. Waldegrave: My hon. Friend is on the right track: on how first to prove the offences, where offences have been committed, and then to have serious penalties to ensure that the policies are properly enforced. The Spanish have created problems in other fisheries in the world. They are not the only ones who break fisheries rules--let us be honest about that--but they do have a huge modern fleet. They are tough fishermen, and they have broken rules in different places in the past. A Spanish-owned, British- flagged ship was fined a considerable sum just a couple of weeks ago in the British courts.
Several hon. Members: On a point of order.
Madam Speaker: Let me see how many hon. Members want to raise points of order, then I shall know where to go first. All those who were not called at Question Time, is that right?
Mr. Gary Streeter (Plymouth, Sutton): On a serious point of order, Madam Speaker. In view of the Representation of the People Act 1983, and in view of the recent decision by the BBC to broadcast four hours of debate from the Labour party conference on clause IV, just before the district council elections, have you received any notification from the BBC that, to balance the situation, it intends to broadcast four hours of Conservative speeches; or do you intend to launch an inquiry into this very serious issue?
Madam Speaker: That is not a point of order for me.
Mr. Terry Lewis (Worsley): Last Thursday, Madam Speaker, you curtailed debate on l'affaire Cantona, under the sub judice rule. Will you look into the sub judice rule, because, since last Thursday and, indeed, before, throughout the case, there were breaches of that rule by the press and the sound media? In fact, over the weekend, journalists have been suggesting what might happen in the Appeal Court on Friday. Surely what is good for the House should be good for the people out there, who I believe have influenced the case more than they should have done.
Madam Speaker: The House has no authority in what the press may report in terms of the sub judice rule. We have our own sub judice rules, which have been imposed on me by the House, and I have to carry out those rules.
Mr. Tony Marlow (Northampton, North): You may well know that the gallant British fishing fleet, out of support for the Canadians, who are seeking to conserve fish stocks on behalf of all of us, has decided to fly on its boats the maple leaf. Would it be in order for the House, in support of the British fishermen, to fly the maple leaf from the Victoria Tower?
Madam Speaker: That question should perhaps be referred to the Administration Committee.
Mrs. Alice Mahon (Halifax): On a point of order, Madam Speaker. You will have seen reports of yet another national health service scandal as a woman giving birth to premature twins had to travel 84 miles to find intensive care incubators. What exactly are the Secretary of State for Health's responsibilities, and does she intend to explain to the House the daily crises in the NHS?
Madam Speaker: To the best of my knowledge, there has been no indication from the Government that they are prepared to make a statement on these matters. The hon. Lady may, of course, try her luck at catching my eye during Health questions and raise those matters in that way.
Mr. D. N. Campbell-Savours (Workington): On a point of order, Madam Speaker. You will have noticed that a number of Conservative Members have been criticising the BBC for the way in which individual
Column 835journalists have been asking questions of Ministers on radio and television. I suggest that they are raising what is an issue of concern to many of us, which is that the BBC has clearly noted that parliamentary replies are such in these times that Parliament itself is being denied information in parliamentary answers, and that we, as Members of Parliament, have become increasingly reliant on journalists to ask questions and secure answers in the national media which we cannot get in Parliament.
In light of that fact, and following the point of order raised by the hon. Member for Plymouth, Sutton (Mr. Streeter), who mentioned an inquiry, may I ask you, while recognising that your powers are limited in respect of answers given by Ministers, to consider the whole issue, given that two of my hon. Friends have now made a complaint--
Madam Speaker: Order. The point of order is whether I am willing to consider the answers given by Ministers to parliamentary questions. It is for Back Benchers to continue to probe and question Ministers to get the answers that they require. It is not a matter for me, as Speaker, as I have no control or authority over the answers given by Ministers. It is part of the cut and thrust of the House and the challenge for hon. Members to pursue matters with Ministers if they feel that they are not receiving satisfactory replies.
Mr. Campbell-Savours: On that same matter--
Madam Speaker: No. There can be no further point of order on that matter.
Mrs. Helen Liddell (Monklands, East): On a point of order, Madam Speaker. I seek your guidance on a matter reported in The Guardian today. I was shocked to learn from a reply from the Financial Secretary that £136 million of taxpayers' money has been used to advertise privatisation share sales. At no point in any of the debates on the various privatisations was it apparent that sums of that magnitude were to be expended. I seek your guidance as to how I can pursue this matter, as there is legitimate public interest in it.
Madam Speaker: The hon. Lady may like to consider asking parliamentary questions, or to pursue the matter through an Adjournment debate, and use the Order Paper in that way.
Dr. Norman A. Godman (Greenock and Port Glasgow): On a point of order, Madam Speaker. How far along is the procedure regarding the early release of documents on which ministerial statements are made? Are
Column 836you satisfied that the negotiations are gaining ground? Too often, statements are made before the documents to which the statements refer are released from the Vote Office. I do not expect the statement itself to be released, but it would be helpful if the documents were released a couple of hours before the statement was made.
Madam Speaker: Arrangements have been in hand for some time to provide that the documents--not, as the hon. Gentleman understands, the statements themselves--are available in the Vote Office an hour or an hour and a half before a statement is made. It is usually up to the Minister involved to lay down the time when he will put the documents in the Vote Office, but they are there in advance. If the hon. Gentleman has a particular case in mind, he should let me know about it. I shall take it up, and see if I can improve matters.
Mr. Alan Simpson (Nottingham, South): On a point of order, Madam Speaker. Have you received any representations from the Secretary of State for the Environment about making a statement on the report in The Guardian today about the threat to marine life in the Irish sea? The dumping of 25,000 tonnes of toxic waste and chemical weapons, including nerve gas, arsenic bombs and toxic seed coverings, has rightly been described as an "environmental time bomb". Does not the House have a right to a statement about the extent of the threat and the environmental impact?
Madam Speaker: The Government have not informed me that they wish to make a statement today on that matter. May I remind the hon. Gentleman that all hon. Members know of statements ahead of time by means of the annunciators? We all know by 1 o'clock if statements will be made.
Mr. Harry Cohen (Leyton): On a point of order, Madam Speaker. May I draw your attention to a parliamentary answer that was sneaked out last Wednesday? It said that, for the first time, through Government Departments, the intelligence and security services and the nuclear industry would have direct access to the police national computer. That has enormous implications for civil liberties and for an independent and non- centralised police force. Surely that information should not have been sneaked out in a parliamentary answer in that way.
Madam Speaker: If the hon. Gentleman objects to that, he should take it up with the Ministers concerned. That is not a point of order for me. No breach of our procedures or Standing Orders has occurred. The hon. Gentleman may table parliamentary questions, raise the matter in an Adjournment debate, or use an early-day motion to bring the matter to Ministers' attention.
Column 837Insolvency Commission
Mr. Anthony Coombs (Wyre Forest): I beg to move,
That leave be given to bring in a Bill to improve the regulation of insolvency practitioners.
The Bill sets up an insolvency commission. It is supported by hon. Members on both sides of the House. It has two purposes. First, it aims to ensure that the insolvency system protects not only creditors but jobs, and, where possible, that insolvent companies are able to continue trading. Secondly, it restores confidence in the insolvency practitioners industry and outlaws people who, sadly, are found to be either inefficient or unprofessional.
The first I heard of the problems in some parts of the insolvency industry was from a Mr. Carpenter in my constituency. Although he put his company into voluntary liquidation, he found that, on assets realised of £180,000, the insolvency practitioners charged him no less than £50,000 to wind it up. He is still making a complaint through the machinery of the insolvency practitioner industry. That case has been delayed some three years.
I am not saying that that case is necessarily typical, but such anecdotal evidence shows that, in a minority of cases, the constructive approach that Kenneth Cork wanted for our insolvency legislation in 1986 is not necessarily being followed through. He said:
"The purpose of bankruptcy is not to punish the debtor, but on the contrary, to protect him from his creditors".
Administrative receivership was introduced to do that and to save jobs and companies. The reason is that legislation is heavily weighted towards the practitioner and away from the company and people who are made insolvent. For instance, insolvency practitioners have a duty of care not to stakeholders but to the creditors for whom they are asked to bring in a petition. They have a statutory monopoly.
In the main, all but 150 of the 1,961 insolvency practitioners have no obligation to be audited in public, as is the case with most companies. When a company goes into liquidation, directors lose the right to have information on what is happening, and thereby the opportunity to comment on the efficiency or otherwise of insolvency practitioners. A recent survey showed that no fewer than 62 per cent. of company directors did not even know that a petition had been brought to wind up the company until the petition had reached the court.
Under section 27 of the Insolvency Act 1986, the powers of creditor committees are more formal than real. The 1990 Charnley-Davies case said that there is no jurisdiction over insolvency practitioners' negligence. The Bankruptcy Association has told me that, when one is made bankrupt during insolvency, one is in a highly emotional state. One often loses one's home. As a result, one is not in a position to ask insolvency practitioners the questions that one might wish to ask.
In the main, the vast majority of companies involved in the insolvency profession do a sensible and proper job, but the actions of a small minority are unacceptable. In 1993, the Select Committee on Social Security commented in relation to the winding up of the Maxwell company that £50 million was paid in fees to insolvency practitioners. As a result, the Committee called for a review of procedures for monitoring the progress of insolvencies.
Column 838Various studies have been made of the failings of the present system. In particular, there is criticism of the practice of banks appointing reporting accountants who subsequently re- emerge as administrators of the company. The dual role means that those accountants' original reports may not have been as objective as they should have been. In other words, people go by the rule but not by the spirit of the code of professional ethics. It is significant that, when the Royal Bank of Scotland decided that nobody would be allowed to act in two capacities, the number of administrations for which it was responsible fell by 60 per cent.
The level of fees, too, is often rightly criticised. In one case, £2.5 million-worth of assets cost £850,000 in fees. Another insolvency practitioner apparently charged £2,500 for six hours' work. In 1992, the Financial Times carried a report about the insolvency service showing that half of all insolvency practitioners failed fairly seriously to meet the statutory requirements. Yet, sadly, that failure has not been met with any great disciplinary action within the industry, which is self- regulating. In the eight years between 1986 and 1994, only five insolvency practitioners were struck off.
In my view, one of the reasons for all that is the inadequacy of the system of self-regulation within the industry. The system is diffuse--there are seven associations responsible for the monitoring and validation of qualifications in the industry--and there is a complicated complaints procedure, which is unwieldy and takes far too long. Although, last year, the joint industry monitoring unit was set up, only the chartered accountants and the Law Society belong to it. The certified accountants refused to join.
The Institute of Insolvency Practitioners has said that the unit has
"no power whatsoever for independent action on any problems it may find during inspection".
So everything goes back to the self-regulating individual bodies that have proved too reluctant to take action against inadequate practice in the past. That is plainly unsatisfactory, and it is disappointing that, in their response to the Social Security Select Committee, the Government said:
"We do not consider it necessary or appropriate to undertake a wider- ranging review of this particular area".
I do consider it necessary to undertake such a review, which would achieve two aims. First, it would improve and promote good practice within the profession. Secondly--to be fair, this is equally important--a review would diminish the credibility gap that too often affects the proper, hard- working, efficient and skilled practitioners who make up the vast majority of those in the profession today. I suggest setting up an independent insolvency commission. It would be paid for by the profession, so it would not be a charge on the taxpayer, and it would have lay members and a lay chairman. The commission would take over the handling of complaints and set up an insolvency ombudsman, as was suggested by the Cork and the Justice committees. It would also carry out inspections, take over the powers of the joint industry monitoring unit and ensure that inspections were consistent, and validate qualifications within the profession--although much progress has been made already in that regard.