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Dr. Howells: I am pleased that my hon. Friend has raised the vexed question of human rights. However, I can assure him that the Department has studied the matter in depth, and we believe that the Bill is compatible with the European convention on human rights.

Mr. Mitchell: I thank my hon. Friend for that intervention, and I hope that that is the case, but the new procedure makes the Department of Trade and Industry investigator, judge, jury and deal maker in the agreements under which wealthy directors will disqualify themselves. The Bill does not say that the Secretary of State will have to publish a full transcript of any deal struck with such directors. In fact, the convictions in this country of the directors involved in the Guinness affair have been overturned recently by the European Court on the ground that they contravened the convention on human rights in ways similar to those I have described this evening. I am worried about passing a Bill that could be stymied and rendered unenforceable by the appeals that could be generated.

The Bill is a little mouse of a measure. It is welcome--I love small animals. It will bring about an incremental change, but it will not change the insolvency industry's culture, which is loaded far too heavily against small firms and small entrepreneurs, and against survival and in favour of safeguarding the banks and grabbing company assets.

The Bill misses an opportunity in that respect. My hon. Friend accused me, in connection with the Limited Liability Partnerships Bill, of trying to regulate through

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legislation. However, that would not be necessary if the Department of Trade and Industry were to do its job and impose a proper framework of regulation on this benighted industry.

7.6 pm

Mr. Christopher Chope (Christchurch): I am delighted to follow the hon. Member for Great Grimsby (Mr. Mitchell). When I worked for Ernst and Young, partners in that firm made it clear that the hon. Gentleman was held in great esteem. There was respect, if not reverence, for his views and for his ability to get publicity for them in the accountancy press.

I hope that the Minister will respond to one of the questions that the hon. Member for Great Grimsby asked. Why is the Bill not being extended to cover medium-sized and large businesses? One of the rationales for introducing the Bill is that it will save jobs. Only 0.5 per cent. of all businesses have more than 100 employees, but the businesses excluded from the terms of the Bill account for about 55.7 per cent. of business turnover in the United Kingdom, and employ 48.8 per cent. of those employed in this country.

Extending the provisions of the Bill to larger companies would have a very considerable impact. As the hon. Gentleman has outlined, it might be more realistic to apply them to larger businesses than to very small ones. I am grateful to the Federation of Small Businesses for the data on the proportion of people employed in businesses that are much larger than those specified in the Bill as small businesses.

I support what my hon. Friend the Member for South-West Hertfordshire (Mr. Page) said about the Bill being considered so late in the parliamentary Session. It need not have happened that way. In appendix 7 on page 58 of the second report from the Select Committee on Trade and Industry, the evidence given on 20 October 1999 by the permanent secretary at the Department is printed. Trying to justify the fact that there had been a minimum period of consultation and a very small number of consultees, he said:


The Bill was included in the Queen's Speech of 17 November 1999, but it was not introduced into the other place until 3 February this year. The Bill received its Second Reading on 4 April, and was considered by a Committee of the whole House for one day on 15 June. The Report stage took place on 3 July, and Third Reading on 26 July.

The Minister was right to be rather defensive when he began his remarks by referring to the pertinent observations of the right hon. Member for Chesterfield (Mr. Benn) in yesterday's debate. The right hon. Gentleman memorably said that perhaps this should be called the Bankruptcy Bill [Commons] rather than the Insolvency Bill [Lords]. His point was that we should be more inclined to hold the Executive to account for the waste of legislative time, which is precious indeed.

This is an example of the Government saying that they will legislate at speed but instead legislating very slowly and delaying the consultation process. Then, as the right hon. Gentleman pointed out, after a 12-week recess, the

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first full day's debate must be given over to this Bill which, although everyone accepts it is important, is not the most important issue facing the country. Yet we have to spend Tuesday debating it because the Committee of Selection meets on Wednesday, and if the Bill is not given a Second Reading before then, the Committee will not be able to decide on the membership of the Standing Committee to meet next week. For the Government to have created a situation in which this House has to debate the least important legislation at the very beginning of the spill-over Session is an indictment of the Executive. We should not allow it to happen again and it should certainly not go unremarked by the House. I therefore agree with the right hon. Gentleman's remarks.

The Minister has told us that the legislation is proceeding ahead of decisions on two broader reviews, initiated by the Government, on company rescue and personal bankruptcy. It is a pity that the Government seem to be the author of the delay that has resulted in this piecemeal legislation. Let me illustrate my point.

In December 1998, when the right hon. Member for Hartlepool (Mr. Mandelson), was Secretary of State for Trade and Industry, he launched the competitiveness White Paper. He announced reviews into company rescue and the stigma of bankruptcy. Under that White Paper implementation plan, the idea was that the company rescue review would be completed by July 1999. If it had been, the results could have been fed in to the legislation. Needless to say, it was not completed by July 1999, and the resulting delays mean that the results of the review are not available.

On the reform of bankruptcy law, the same White Paper in December 1998 announced by the Secretary of State was re-announced on 2 February 1999. He said that the review would report to him by the end of April 1999. Officials did, indeed, report to Ministers by the end of April 1999. The Secretary of State took rather a long time to consider their views--he did not make an announcement until 2 July. In other words, it took him the whole of May and June to decide what to do in the light of a review which had itself taken only two months.

The right hon. Gentleman then announced that there would be further consultation. The announcement was made at a big event at which the right hon. Gentleman was obviously short of other things to say. He was giving a speech to a joint United States embassy, Department of Trade and Industry and Treasury conference on "Fostering Enterprise--the American Experience". He said:


Fine--but then what happened? We had to wait until 7 April 2000 before he actually issued his consultation document--a further nine-month delay.

The consultation paper was then issued, setting out five options. Consultees were required to respond by 30 June, which they did, yet their responses are apparently still being analysed--or, if they have now been analysed by the Insolvency Service and the information has been given to the current Secretary of State, he has not yet thought fit to divulge the results to the House.

It is vital that we have the benefit of the outcome of that much-delayed consultation to inform the Committee's proceedings on the Bill. I hope that the Minister will be

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able to tell us that the information and documentation will be made available to members of the Committee so that they can use it to inform their detailed scrutiny of the Bill in Committee.

I fear that the whole exercise has been designed to ensure that the results of the consultation are not available until after the legislation has been passed so that the Government can then say that it is too late and nothing can be done. However, the Government have said that they wish to legislate--although they had the opportunity to do so in this Session and wasted it. As the hon. Member for Great Grimsby said, we now have this mouse of a Bill. What a way to run a Government and what a way to treat this legislature--this mother of Parliaments. The problem is that the Government are obsessed with soundbites and do not get down to the substance.

I am concerned about a couple of elements in the Bill. In an intervention, I asked the Minister about directors who undertook to accept a disqualification for whatever period and whether there would be any basis for other people to know the facts underlying those undertakings. If a disqualification takes place, particularly if it does not happen in a court, it is important for outside and third parties to have access to the information on the basis of which the decision was reached. This will be important if a director subsequently applies to have his undertaking altered. For example, having undertaken to be disqualified for five years, he could, after two or three years, ask to be relieved of his undertaking and have the disqualification lifted straight away. The people dealing with the arrangements will need to know the basis and the facts on which the director accepted the undertaking in the first place.

I have an acquaintance who was the subject of proceedings under the Company Directors Disqualification Act 1986. There were implications for him from the consequences of the professional disciplinary hearings that followed. He had a big argument with his professional body because there was no basis on which to agree on the facts on which the disqualification had been based. The abbreviated procedure before the courts had been used in that instance.

It is vital and in the public interest that there should be an agreed statement of facts, behind which the director cannot go subsequently, so that comparisons can be made between the agreed statement of facts in one case and another. We are talking about a very wide discretion being given to allow disqualifications by undertaking lasting from anything between two and 15 years. It is not as if case law can be studied, so how are people to know what the benchmark is for a disqualification for a period of two, three, five or 15 years?

It should not be possible for a director to accept an undertaking to be disqualified for a period of as long as 15 years for a serious offence. Similarly, if people are caught speeding on our roads, they might receive a fixed penalty notice, but the police and prosecuting authorities have the discretion to bring the matter before a court if they think it is sufficiently serious. If an offence is sufficiently serious to warrant a 15-year disqualification, or even a five-year disqualification, surely it should be brought before the courts and be open to public scrutiny.

The Select Committee made that point in its inquiry. It came up with a concise recommendation, on which the

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Government then commented, saying that they were not convinced of the Select Committee's argument. In paragraph 41 of its report the Select Committee said:


In their response the Government said:


I am sure, Mr. Deputy Speaker, that in your wisdom you immediately understand the Government's reasoning. However, the members and Clerk of the Select Committee found the Government's response or justification obscure in the extreme, which relates to the obtuse reply that the Minister gave me earlier. I hope that in Committee the Minister will introduce into the Bill a provision that will permit an agreed statement of fact to underlie the acceptance of undertakings for disqualification, which will introduce a degree of transparency important to this process.

I also wish to express solidarity with the Institute of Directors, which is concerned that undue pressure may be put on directors to accept undertakings rather than go to court, and says:


The institute's concern is genuine and, to avoid such danger it suggests that


The institute continues:


The criteria that apply to whether someone should be disqualified for two, five or 15 years should be made open to all so that a director facing disqualification who is negotiating on his own behalf has access to information that otherwise might not be available. It could be oppressive for him to argue against the authorities, who could say that he might get a much higher sentence if he does not accept the position and goes to court. The Institute of Directors makes a good point, and I hope that the Minister will respond to it.

I deal now with the financial effects of the Bill. More than once in his opening remarks, the Minister said that savings in time and money would result from the accelerated disqualification procedure. However, according to the explanatory notes to the Bill, there are no beneficial financial effects, which leads to concern about whether the savings that the Minister used to justify the procedure will take place. Indeed, the explanatory notes justify the procedures relating to directors on the basis that that will speed up the process and do not state that there will be a saving. Will the Minister explain a conundrum?

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Surely, if fewer cases are referred to the court and each case takes less time, savings will result from that accelerated disqualification procedure. If there are not going to be savings, why is the House being asked to rush the Bill through?

Finally, although some people may feel that these changes will be beneficial, a much larger body of consumers will be concerned about rogues who do not operate within the protection of a company framework. Tomorrow, the hon. Member for Luton, South (Ms Moran) will ask for leave to introduce a Bill on rogue traders under the ten-minute rule motion. Our constituents are genuinely concerned about rogue traders who are not incorporated. The Government are introducing piecemeal legislation and I expect them to confirm that they will not be able to introduce legislation on consumer affairs in the coming Session, as they originally forecast. The result of misuse and waste of parliamentary time is that issues relating to rogue traders who are not incorporated will not be the subject of legislation in this Session or, indeed, during the course of this Parliament, which is to be regretted.


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