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7.27 pm

Mr. Page: With the leave of the House, Mr. Deputy Speaker. I began my earlier contribution to this debate by speculating on the equine parentage of the Bill. You were not in the Chair then, and did not have the privilege of hearing my introduction, but many right hon. and hon. Members know that I have an interest in the horse-racing industry. Having listened carefully to the Minister's arguments and hon. Members' comments, I have no doubt that the Bill reflects sound ideas and good intentions. However, I am not fully convinced of its chances of remedying the problems that it aims to address. It seems less of a thoroughbred than I would have hoped and more of a slightly battered carthorse.

Dr. Howells: Is that me or the Bill?

Mr. Page: The Minister can relax, as I shall come to him in a moment or two.

Generally, the Opposition welcome the Bill, with the proviso that we shall try to improve it in Committee. I very much welcome the observations of the hon. Member for Ochil (Mr. O'Neill), who said that, unavoidably, he has to go away. I took great pleasure in his railing against the closed shop of insolvency practitioners. There is great joy in heaven over a sinner who repenteth. I accept the hon. Gentleman's reservation that, if we are going to open up that closed shop, we must make sure that the authorised person is qualified to undertake the work.

The hon. Member for Twickenham (Dr. Cable) very much agreed with me that the review processes should have taken place before the Bill was introduced. I believe that the House generally is of that opinion.

The hon. Member for Great Grimsby (Mr. Mitchell) started loyally by saying that he could not understand any of my doubts about the Bill, but spent the next 20 minutes outlining his own doubts and worries about how it would work, and if it would work at all. I share many of the hon. Gentleman's concerns, and he can do no harm in my eyes since he has endorsed the principle of my ten-minute Bill under which the role of the insolvency practitioner in recommending administrative receivership should be

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taken away from those asked to undertake that receivership. The situation is similar to having a judge and jury who would be paid £10 for letting a defendant off but £100 for finding the accused guilty.

My hon. Friend the Member for Christchurch (Mr. Chope), having heard the rumour that there will be no Department of Trade and Industry Bills in the forthcoming Queen's Speech, outlined in his efficient and effective manner the chaos of the Government's timetable management. His every word was a hammer blow against the incompetence and inefficiency that the DTI displayed in handling its affairs this year. Normally, I would blame the Minister for that, but he is just the fall guy. The Secretary of State should have taken a grip to prevent the year of confusion that the DTI has gone through. I shall not spend the time of the House going through the various Bills that had to be curtailed or cut in half or the record number of amendments that had to be tabled, as that would take me out of order, Mr. Deputy Speaker.

My hon. Friend was right to discuss the principles involved in the process of disqualification of a director. They must be clearly understood, and we look to the Minister to expand on what is written in the Bill and to tell us exactly how it will work to prevent future problems.

One of the Bill's basic problems is that it fails fully to reflect the realities of the business world. The hon. Member for Great Grimsby touched on much of that problem. It is all very well to place a moratorium on the shoulders of a small company facing difficulties. The merits of requiring it to seek the views of an insolvency practitioner on the practicality of proposals for a voluntary agreement with creditors have been rehearsed in the other place, and by me and others today.

Any creditor of sense will approve arrangements that will ensure the payment of what is owed. I do not dispute that. In real life, however, the slightest hint that a small company is in trouble and may be unable to meet its obligations will almost certainly cause banks or trade creditors to act before the firm's directors can even begin to seek a moratorium. I hope that I am wrong, but I fear that the Bill may prove counter-productive. Often, only the threat that creditors will lose everything allows companies in trouble to recover, as I know from my business experience. However, banks, which are so often the instigators of proceedings, are also often in a protected position, and are therefore released from that pressure.

I am greatly concerned about the Government's apparent belief--contained in the words of Lord McIntosh in the other place--that the directors of a small company

That is hardly compatible with the powers to monitor the company's activities which are to be granted to nominees during the moratorium, or with extensive restrictions on the capacity of such companies to enter into market contracts. We all know the difficulties that will be placed on a small business that is trying to operate during a moratorium and trying to gain money to buy and sell stock.

It is not surprising that the Minister takes such a relaxed attitude towards allowing the decisions of a nominee to be challenged in the courts by the creditors, directors or

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members of a company or any other persons who are affected by the moratorium. Whether we like it or not, such a provision is a standing invitation for aggrieved parties to hamstring the aims of the Bill. Nominees are unlikely to be willing to place themselves in situations in which their decisions might be subject to such challenges. Exactly what supervisors and nominees would gain from the new procedures envisaged in the Bill remains to be explained.

These practical issues must be explored in Committee. The Conservatives will seek more convincing arguments than have come from the other place or, dare I say it, from the Minister today. We shall, however, go into Committee willingly and positively, and try to make the Bill work. We shall do what we can to help small businesses to survive and live longer in a difficult world.

7.35 pm

Dr. Howells: I thank the hon. Member for South-West Hertfordshire (Mr. Page)--

Mr. Deputy Speaker: Order. I am sure that the Minister would wish to seek the leave of the House if he wants to speak a second time.

Dr. Howells: With the leave of the House, Mr. Deputy Speaker, I should like to reply to some of the points raised. I am afraid that the new regime seems to have gone to my head.

I welcome the partial support offered by the hon. Member for South-West Hertfordshire, but I am at a loss to understand why the Government are being pressed to hold off. For years, we have been urged to provide for a moratorium in the company voluntary arrangement procedure, and we have been told that that is necessary to make the procedure more effective. Yet the moment that we act to put the first building block in place, we find ourselves urged not to act, but to delay so that there can be time for further consideration. Where does that leave companies that need a breathing space now? Are they to be allowed to go under because the Bill is not sufficiently elegant to draw entirely on the two reviews mentioned by the hon. Gentleman?

Mr. Page: The Minister is, if I may put it delicately, being disingenuous. He well knows that the complaint that we are making against the Government is that the reviews were not started earlier so that they could have been combined with the Bill. No one wants to hold the Bill up. Indeed, I am complaining that it was not enacted with greater expedition and much sooner.

Dr. Howells: I accept that there has been some congestion, and that it has been caused mostly by DTI Bills: I know, because I have presented most of them. However, I am staggered to hear the Opposition react as they have. Much of what we are doing is based on a draft Bill drawn up by the Conservative Government of the mid-1990s. For whatever reason--no time or no political will--they could not get their act together to put the Bill on to the statute book. We are trying to enact, but we are hearing grudging delaying tactics from the hon. Member for Christchurch (Mr. Chope). It was pretty rich of him to talk about delays when it was all I could do to stay awake

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as he went through his catalogue of imagined delays that he presumed the Government to be applying on purpose. That is, of course, complete nonsense.

Mr. Chope: Will the Minister give way?

Dr. Howells: No.

The consultation paper, "Bankruptcy: A Fresh Start", touches on individual voluntary arrangements under the Insolvency Act 1986. Again, however, its scope is much broader than that limited area. I admit that we are a long way from reaching conclusions on those matters, but the changes that we propose through the Bill to the individual voluntary arrangement procedure are needed now if we are to make it more efficient and effective.

The Bill includes proposals on other important matters, all of which have received a broad measure of support both in and out of Parliament. Those issues are needed now, not at some indeterminate time in future. I hope that we shall hear no more suggestions that the Bill should be delayed.

Unfortunately, because of lengthy speeches--by me as well as by the hon. Member for Christchurch--some prime contributors to this debate have left the Chamber, for unavoidable reasons.

I welcome the important contribution made by my hon. Friend the Member for Ochil (Mr. O'Neill), which was the only one to set the issue in a broader context. He reminded us that we should have a different attitude towards honest business failure, which should not carry the stigma that it so often does. The Unites States has a different attitude--that that experience goes under the belt of the business man or woman who suffered it. It is often seen as an asset.

My hon. Friend also mentioned--as did others--the time allowed for consultation. There is no question about the fact that we were pushed for time. I will not try to excuse it. We tried hard to consult as widely as we could. In response to my hon. Friend the Member for Great Grimsby (Mr. Mitchell), who is also pressed for time, let me say that we talked to some of the "victims"--as he put it--as well as the vested interests that he also mentioned.

My hon. Friend the Member for Ochil was concerned, as was the hon. Member for South-West Hertfordshire, with the important matter of how to prevent a landlord or a utility company closing in during a moratorium on a company. Paragraphs 5 to 12 of schedule 1 make consequential amendments to the Insolvency Act 1986. For example, the amendments to section 233 will not permit suppliers of gas, water and electricity to require a nominee to pay outstanding debts for supply as a condition of supply during the moratorium. I hope that that is helpful.

I am glad that the hon. Member for Carshalton and Wallington (Mr. Brake) is present on the Liberal Democrat Benches because his hon. Friend the Member for Twickenham (Dr. Cable) made a constructive contribution. He asked about international issues, which are difficult. The UNCITRAL measures--I cannot think of another way of pronouncing that hideous acronym--cannot apply if the European Community regulation applies. The hon. Gentleman asked whether the power would impact on the EC regulation on insolvency proceedings. I hope that the hon. Member for Carshalton and Wallington will tell him that the answer is no. Where

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the EC regulation applies, it will do so to the exclusion of any other provision. That EC regulation comes into force on 31 May 2002.

My hon. Friend the Member for Great Grimsby, who has now left the Chamber--he was here when I looked round just now--warned us not to be lured on to the rocks by the siren voices of vested interests. He repeated some of the criticisms about the restricted nature of the consultation process. As I have said, there has been extensive consultation. Much of what my hon. Friend had to say went beyond the measures in the Bill. You were right, Mr. Deputy Speaker, to let him run with that theme, which I have heard a number of times. It is a healthy route for him to follow. We sometimes need to be reminded that some powerful vested interests might be strengthened by aspects of the Bill if it were not drafted so expertly.

The hon. Member for Christchurch seemed to do his level best to add to the delay--which may or may not have taken place--in the process of this legislation. However, his argument about introducing transparency into the disqualification undertaking is important. I told him that I would try to answer some of his questions. He seems more concerned with form than substance. The purpose of the disqualification process is to get the director out of the corporate sphere as quickly as possible. That is what concerns me most. The hon. Gentleman questioned how we can guarantee that costs will be less, which is an interesting issue. That is substantially a matter not for the Department but for the courts and defendants. However, I shall try to supply him with up-to-date figures on impact assessment before the Bill goes into Standing Committee--I hope that he will be a member of that Committee because he inevitably graces such Committees with his erudite comments and criticisms.

The intention is that the case against each director will be prepared up to the point at which proceedings could be issued. At that juncture, the Secretary of State will contact the director concerned, who will be invited to say whether he wishes to consent to a specified period of disqualification by way of giving an undertaking. The intention is not to pressurise. If a director does not take up that opportunity, proceedings will be issued in the normal way. It will remain for the director to decide whether he wants to contest the disqualification application in the courts.

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