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Mr. Brian White (Milton Keynes, North-East): I have a great deal of sympathy for the amendments tabled by my hon. Friend the Member for Great Grimsby (Mr. Mitchell). I suspect that I could have a long discussion with him about the things for which his constituents should be thankful to the Government--not least the national minimum wage--but I shall leave that for now.
In Committee an awful lot of examples were cited of the type of problems that the amendments would address and the Minister expressed some sympathy for the points that were raised. We should remember that the Bill deals with small companies, and that the period when discussions are held about whether to impose a moratorium is often traumatic for employees--it is probably the most stressful time of their lives. As the hon. Member for South-West Hertfordshire (Mr. Page) put it, a decision taken early can save jobs.
I shall be interested to hear the Minister's reply, because one thing that concerns me about the Government's unwillingness to accept the amendments is that, as I
understand it, the Minister's argument in Committee was that employees are creditors and so are protected because they are part of the creditors' meeting. He argued that if they are not creditors, they are just normal employees and are protected by the directors. My worry is that the influence of the nominee in overriding the directors' wishes or suggesting to directors that they should go in a slightly different direction will be at variance with the interests of employees and key personnel. It is not unknown for key personnel, especially of small IT companies, to be poached and to move to other companies. There are several such key issues that the creditors' meeting would not address which would be crucial to the nominee's administration and the way in which the directors operate the company during the moratorium.If the nominee does not have a duty of care to employees, I fear that the directors will say, "Of course, we would like to look after you, but this nasty nominee is telling us to do something different." Because of the relationship between the nominee and the directors, the terms and conditions of employees could be directly affected by decisions that they cannot influence.
My hon. Friend the Minister seems to rely greatly on the fact that employees will receive protection as creditors, but there are other concerns that he did not address in Committee.
Mr. Burnett: We considered two particular points in Committee. The first was the duty of nominees to creditors and the second was whether an employee was likely to be a creditor. In fact, he or she will almost certainly be a creditor. Therefore, does the hon. Gentleman agree that new clause 3 at least provides for the interests of a company's employees to be regarded by the nominee during the moratorium?
Mr. White: That is why I have some sympathy for the new clause and shall be interested to hear my hon. Friend's comments. The emphasis in the Committee was on the employees' role as creditors, but the issue goes beyond that. If we do not consider the problem fully, the Bill may not achieve its aims of saving people's jobs and giving them hope by providing a breathing space. If there is a simple duty of care on the nominee, different decisions may be taken and that may secure the employment of the people in the company concerned.
Mr. Butterfill: The House owes a debt of gratitude to the hon. Member for Great Grimsby (Mr. Mitchell) for bringing this matter to its attention. New clause 3 and amendment No. 46 deserve serious consideration. Like the hon. Member for Milton Keynes, North-East (Mr. White), I am minded to support amendment No. 46, but I am not entirely clear about how the new clause will function. I shall listen to the Minister's considered reply before I make up my mind. In principle, the idea that there should be a duty to look after the interests of employees should be accepted by all reasonable people.
Mr. Burnett: I hope that the hon. Gentleman will accept that the provision in new clause 3 is not as strong as that--it is a pretty tame proposal. It would be a requirement not to look after the interests of employees but to have regard to them.
Mr. Butterfill: The hon. Gentleman has an advantage over me on this, because he is a qualified lawyer with experience of the legal niceties. However, I shall listen to the Minister before I finally make up my mind.
Mr. Page: My hon. Friend, who was savaged earlier by the hon. Member for Great Grimsby (Mr. Mitchell), is showing his true colours by considering the matter dispassionately. Does he not agree that employees would be best served by amendment No. 46? If the Registrar of Companies is notified of the fees charged, the basis of the charge and the terms and outcome of the moratorium, there is more chance--if things go wrong--of money being recovered to pay creditors and employees. Will that not give those in the company a better chance of receiving something if, sadly, the moratorium does not work?
Mr. Butterfill: I have already said that I support amendment No. 46. It is admirable and will go a long way to dealing with some of the rare but considerable abuses that take place from time to time when companies go into liquidation.
4.45 pm
I have been nice about the hon. Member for Great Grimsby, but I was a little disappointed when he did not follow the best traditions of the House and did not allow me to intervene when he was rather rude and accused me of defending vested interests. My interests are fully declared in the Register of Members' Interests. I have two small directorships of family companies that do not have any employees other than the directors themselves. Therefore, I have no interest to defend in that respect. I have already talked about my experience as a non-executive director of Maples.
The hon. Gentleman seeks to include in the Bill provisions from the Companies Act 1985, which was passed by a Conservative Administration. If this Bill is passed, in the event of a liquidation, the nominee will have a duty to consider the interests of all those concerned. That is important. The hon. Gentleman referred to vultures, but they may be defending the interests of customers. For example in the case of Maples, our constituents--many of them pensioners--might have put down a £1,000 deposit on a three-piece suite, which would represent a huge purchase for them. Suddenly, the company went bust and they wanted their money back. Customers are also entitled to consideration, and it is always extremely difficult to balance the different interests and to treat everyone even-handedly and fairly, particularly if one knows that not everyone will be paid in full. On reflection, I am sure that the hon. Gentleman would agree with that.
I have just voted for a new clause that would have helped to prevent the abuses that have occurred in some companies. I am disappointed that the hon. Gentleman did not support it, and he may recall that the Insolvency Act 1993 started as a private Member's Bill that I promoted. It protected the innocent purchasers of property that could be seized by a receiver or a liquidator. I changed the law to defend innocent purchasers from those that the hon. Gentleman describes as vultures. I do not apologise for my record on this issue.
The general theme of this group of amendments is the nominee's supervisory activity in relation to the moratorium. Unfortunately, I am the only contributor to the debate who did not serve on the Standing Committee, but I served on the Select Committee that considered the draft Bill. Therefore, I wish to point out the respects in which the Government have failed to meet the concerns that the Select Committee expressed.
One of the dangers is that nominees could face a conflict of interest. They will be invited by the directors to take up a paid position and a few in the profession--I hope not many--might think that it is worth taking such a rewarded post even if they think that a company does not have much chance of surviving. That would be regrettable, but the Government have failed to include in the Bill one of the defences that the Select Committee drew to its attention. If the directors of a company fail to attract the person that they want as nominee because he does not think that the company will survive, they may go to as many as 20 people to trawl for a nominee. Eventually, they may find a person who is sufficiently self-motivated to do the job.
The Select Committee suggested that the Government should include a defence against trawling, but they signally failed to do so. Perhaps the Minister will tell us why. Equally, the Government are changing the requirement for qualifications of nominees. That again exacerbates the danger. Up to now, only qualified insolvency practitioners have been able to fulfil that role, but the Bill will allow anyone with an appropriate qualification or who is a member of a recognised professional body to fulfil the task.
Plenty of people, such as certified accountants and chartered accountants, are members of appropriate professional bodies. Although they might be good accountants and produce good audits, they might have no experience of the specialised subject of insolvency. Again, the Select Committee made it clear that it was concerned that the Government were considering involving such people. A broad spectrum of people made representations to the Committee, and many of them expressed the same concerns. The Select Committee concluded that it might have been better if the Government had left this particular change to the wider review of the whole issue of insolvency.
We are all--I hope--interested in protecting every section of the public, including, as the hon. Member for Great Grimsby said, employees, but that must be even-handed, transparent and above all fair.
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