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Dr. Howells: I am slightly confused as to whether the hon. Gentleman thinks that the Bill or the amendment comes from cloud cuckoo land.
Mr. Page: The Minister will have the opportunity later to tell me that my amendment comes from cloud cuckoo land; I was saying that the balance in this part of the Bill comes from there.
I should like to be able to say that the Bill's provisions for applying to the courts were entirely logical and straightforward. Creditors can apply, as can directors and anyone affected by the moratorium--including the company; so can liquidators, administrators, shareholders and the supervisors of voluntary agreements, but not the nominee.
Nominees will have responsibility for assessing whether voluntary arrangements proposed by a company's directors are likely to be approved and implemented--the kernel of the Bill. Such nominees will also have to come to a view on whether the voluntary arrangements are likely to be improved without modification, or whether they might fail. Those are huge and important responsibilities.
With great respect to the Minister, it is for this House and the other place to decide whether a nominee should have the right to apply to the courts when he or she may need guidance on the performance of his or her duties. If his or her decisions can be challenged in the courts by the parties I mentioned, surely it is fair and equitable to afford the nominee an equal opportunity to exercise that right.
The purpose of the amendment is not to give nominees an escape clause so that they can evade their responsibilities and under which courts would take over
those administrative and commercial decisions. I suspect that the Minister's opposition to the amendment is based on Mr. Justice Neuberger's decision--as though he and not Parliament ran the country. Although I have enormous respect for Mr. Justice Neuberger, it is not for him to decide whether nominees, or any insolvency holder, should have the right to apply to the court when in doubt about the decision that should be made; it is for Parliament to decide whether nominees should have that right. If we decide that they should have such a right, judges should respect that--unless, of course, the matter involves human rights issues.At present, everyone involved in the whole chain of events--except the nominee--can apply to the court. Yet the nominee has to make that crucial decision that will bring the moratorium into effect, or will continue it. At times such a decision can be extremely difficult, especially if the nominee forms the view that the original voluntary arrangement will not be approved, but is likely to be approved with modifications proposed by a creditor.
The proposed procedure is novel--it does not take a tried and trusted path; the company could obtain a moratorium by applying to an authorised person rather than to a judge. The difficult decisions that were made by judges will be made by authorised persons. In Committee, we were all fully aware of how many times the Minister was asked to explain by which route the nominees might appear. In a rare show of comradeship with the hon. Member for Great Grimsby, I acknowledge his excellent and valid point about the number of organisations that could license practitioners. The measure would add yet another one, but in a rather vague and nebulous form--appearing from the ether or through some osmotic process, an organisation would be approved by the Secretary of State and could then approve a nominee.
We should proceed along that route with caution. I must not say that the Minister has been sloppy, but he has only made vague and conciliatory noises about what a future nominee might be like--hard facts and detail are lacking.
Those authorised persons do not have to hold the same qualifications as a licensed insolvency practitioner. We are well aware of the views of the hon. Member for Great Grimsby on those gentlemen. It is important that the Secretary of State should ensure that if he creates even more bodies that can grant approval to carry out such work, they should be of a standard and quality that will be a help rather than a hindrance.
During proceedings on the measure, we frequently made the critical comment that it is half a Bill, or even less than half a Bill. It would have been an ideal measure under which to introduce monitoring or quality control of the operations of insolvency practitioners. But no such provisions were included. The issue certainly occupied the time of one member of the Committee. He made his argument forcibly and we were all made aware of what he was trying to achieve. The House will have gathered that I refer to the hon. Member for Great Grimsby.
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Just as there are rogue directors--although the vast majority of directors are decent people who work hard to the best of their ability--so too there are licensed practitioners who do not behave appropriately, but the majority do a good job.
I was pleased to hear from the new named body of licensed practitioners--the Association of British Recovery Professionals--that its title includes the word "recovery". I recently received, as did every member of the Committee, a letter from that body, saying that the word "recovery" is now very much in the forefront of its thinking. That is a change of emphasis and direction, which I am sure we all welcomed.
If the Bill does nothing more than to introduce the culture of rescue and recovery earlier in the process, it will have achieved something. Too many businesses run right to the wire, when they could have been saved if they had taken decisions earlier. In the United States an eminent gentleman--so eminent that his name escapes me--conducted research and discovered that if a company had taken slightly earlier the measures that it took in the last six months of its existence, it would have been rescued. Too many directors do nothing until the cliff edge is crumbling beneath their feet, and by then it is far too late--too late for moratoriums or any form of rescue. If any message is to be conveyed from this place to company directors, I hope that it will be my strong encouragement to seek advice and help earlier, instead of bottling things up and thinking that they can work their way out of their difficulties. In so many cases, neither success nor rescue comes, and the inevitable pain of bankruptcy follows.
I return to my comments about the fear that the authorised person will not be of sufficient quality. I do worry that a number of authorised persons will be out of their depth, so to my mind it would be bizarre and pointless to deny them the right to appeal to the court. What conceivable advantage can there be in denying the nominee such an opportunity? If he applies to the court unnecessarily, wasting the court's time, the court's displeasure will no doubt be exhibited and reflected in an appropriate order for costs, but it cannot be right to deny the nominee the right to apply to a court when he has a real need for guidance.
I urge the Government to reconsider the amendment.
Mr. Burnett: I shall speak to new clause 3 and amendment No. 46.
I was delighted to hear the speech by the hon. Member for South-West Hertfordshire (Mr. Page) because I believe that there is very significant support in all parts of the House for new clause 3. It is not draconian. We are talking about duties that are already imposed on directors. They are not onerous.
Let us read what the new clause says. It imposes the burden of section 309(1) of the Companies Act 1985 on nominees--and why should nominees not have regard to the interests of the company's employees? The new clause is pretty tame, and not onerous. It merely provides that the nominee should at least consider the interests of the company's employees.
Mr. Burnett: I am happy to give way to the Minister.
Dr. Howells: Will the hon. Gentleman concede that the intent of the Bill is to offer some companies the opportunity
to survive and to continue trading, and therefore to help employment? The whole point of the Bill is to offer support for employees, because without it, they will not have jobs.
Mr. Burnett: I entirely agree that the object of the exercise is to promote the rescue culture. We have in this country a particularly creditor-friendly business culture. I believe that all hon. Members who served on the Committee, from whatever party they came, recognised that. If the moratorium has the effect of keeping a company in existence, that is marvellous, but in taking his or her decisions, the nominee should at least have regard to the interests of the company's employees. That is not an onerous provision. Nominees must consider such matters. They may disregard them, but they must at least consider the number of employees in the company, whether the company should contract and whether people should be sacked. They should at least give those matters some weight. That is all that the new clause would provide. In my view, it is entirely correct. The employees have invested their time and efforts in the company and been loyal to it, and their interests should at least be considered.
Amendment No. 46 is not draconian or onerous in the slightest. At present, insolvency practitioners have almost carte blanche to charge what they like. There is little scope for those fees to be taxed or challenged, and that is deeply unfair to directors, employees and creditors--particularly unsecured creditors.
The hon. Member for Great Grimsby (Mr. Mitchell) is not the only hon. Member who has highlighted that unfairness. Two or three years ago, no less a Member than the right hon. Member for Maidstone and The Weald (Miss Widdecombe) initiated an Adjournment debate on the subject. The amendment is a small step in the right direction. Fees and other matters should be reported to the Registrar of Companies. I hope that when the Minister replies to the debate, he will tell us what he hopes to do and what provision his Department proposes to make to remedy this and other defects in the legislation, which were highlighted from both sides of the Committee.
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