Enterprise Bill

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Mr. McWalter: Does the hon. Gentleman not agree that people can end up bankrupt through circumstances outside their control? They may not have been profligate or behaved unwisely, but may have been badly let down by people whom they had every right to trust. They may have become subject to legal proceedings, as has happened in the House, and, through no will or fault of their own, become drawn into a process that results in the haemorrhaging of their resources. I hope that the hon. Gentleman would be rather more sympathetic to such cases.

Mr. Waterson: I do not mean to be unsympathetic, although it may come across that way, because, but for the grace of God, it could happen to any of us. However, I wonder if we should ask a little more than that of people who want to be Members of Parliament.

The hon. Gentleman is touching upon what, in another context, the Under-Secretary called bad-luck bankrupts. I remind the Committee that the Opposition do not accept that we should use neat little boxes to contain culpable and non-culpable bankrupts; the totally innocent bankrupts, and the rogues, the villains and the reckless, who should be pilloried and subject to the stigma of bankruptcy restrictions orders. As I said before, some people are pathological optimists. Do we really want as our Member of Parliament—or even as our neighbouring Member of Parliament—someone who may be a rogue? We have had our share of those; the name Maxwell, the former Member for Buckingham, comes to mind, as do John Stonehouse and others. It has happened reasonably regularly for 200 years or more, so we are not discussing the subject in a vacuum.

Mr. Barnes: The argument is about existing Members being removed because they have brought the House into disrepute, but it is a bit difficult to have a provision that applies only to people who are already Members. The question is about those who wish to become Members, and whether the electorate should have the right, even when they know about a person's bankruptcy and other factors, freely to elect them. We might have to put up with those who could bring the place into disrepute in order to protect the electorate's right to elect someone whom we might judge to be unsuitable.

Mr. Waterson: I am not sure that I wholly follow that intervention. It was way over my head. As the hon. Gentleman pointed out, we are talking people who are already Members, who can be excluded from the House if they become bankrupt, and about those who stand for election and become Members who, it subsequently emerges, are already bankrupt and cannot be allowed to sit, in which case the election would be void. I hope that any remotely competent party would try to ensure that its candidates were checked beforehand, particularly if they thought there was a chance of them winning.

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It occurs to me that there is a third category. Even if someone were discharged from bankruptcy, having satisfied all his creditors, it would be difficult for the fact not to end up in the public domain; it is bound to come out sooner or later. Again, it is one of the judgments that voters have to make about the candidates standing in the election.

I return to the central issue. We have a problem with the stigma argument. First, is it Parliament's business to tell people that there should not be a stigma attached to being bankrupt for any reason, except in certain circumstances and if there is a bankruptcy restrictions order? Whatever the arguments in favour of that for the ordinary citizen, should we not apply a slightly stiffer test for Members of Parliament or potential Members? I am slightly troubled by that, because I believe that even if a bankruptcy is wholly innocent—it may be due to optimism, world trends or whatever—for a Member to be bankrupt is a pretty serious business. Whatever the motives or reasons, there are victims. It is not a victimless crime—it is not a crime at all—but it is not victimless because creditors are left behind who will not get their money.

If an MP has been judicious enough to run up debts elsewhere than in his constituency, I can understand the argument that has been made, but if he is leaving a lot of his constituents out of pocket, everything becomes very messy. That is why we would be unwise, without proper debate, simply to change the position for Members of Parliament—for ourselves—without due consideration.

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Mr. Field: I endorse entirely what my hon. Friend the Member for Eastbourne said about not trying to address such things in this Bill. There is a good case to be made for, if not exempting Members of Parliament from bankruptcy rules, not automatically disqualifying them on the basis of bankruptcy. The hon. Member for North-East Derbyshire (Mr. Barnes) went into great detail about that and the hon. Member for Hemel Hempstead (Mr. McWalter) made similar comments. Although the matter should perhaps be discussed in great detail, it would be wholly inappropriate to reach any conclusion in debate of this Bill alone.

Discretion might be the better part of valour; I am perhaps a more sympathetic soul than my hon. Friend the Member for Eastbourne, who is now absent. Although on many occasions a Member of Parliament would be ill advised to get himself into a position to go bankrupt, there are certain circumstances in which he or she could spiral quickly into enormous financial problems. The hon. Member for Hemel Hempstead brought that up earlier. Although it would not be a Government's first priority to look at that, it would be sensible for Parliament to consider at some point whether MPs who go bankrupt should automatically be disqualified.

The hon. Member for North-East Derbyshire offered an important historical analysis. Restrictions

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may well have been put into place 200 years ago with property aspects and considerations in mind. It might therefore be that that somewhat dated concept should be reconsidered. Equally, however, here and now is not quite the place and time for such a full and important debate.

Mr. McWalter: I want to comment briefly on a matter that goes to the heart of the Bill, although it might appear peripheral and tangential. It comes down to whether we agree with the hon. Member for Eastbourne in not making a distinction, among bankrupt people, between those who are malign and those who are benign. It seems clear to me that in some cases the bankruptcy is malign—a person has deliberately run up a series of debts, let lots of people down, cheated, lied and dissimulated their way into a lifestyle way beyond their resources, and made many other people suffer for it.

I understand that such people are likely to be made subject to a bankruptcy restrictions order, and I think it quite right, because they have failed to co-operate or have evaded their responsibility, to make the judgment that they will have the weight of bankruptcy around their neck for a considerable time and have their behaviour made subject to various kinds of restriction. It is entirely appropriate that we call the people at that end of the spectrum malign bankrupts.

There is another set of people, who get into the same financial predicament, but who have fully co-operated, tried their level best to discharge their responsibilities to the victims of their straitened economic circumstances, and done everything that they can to co-operate with the authorities, whether that results in the winding up of their business or in other inconveniences for them. They have tried hard to discharge their responsibilities, and I call them benign—for want of a better word—bankrupts.

That distinction is at the core of the Bill. Those in the benign category will not be tarred and feathered in the same way as the other lot. On any spectrum, there will be intermediate and difficult cases. We know those at one end of the spectrum when we meet them, which, luckily, we do so often. We know those at the other end, too. Then there are the difficult cases in the middle—there always are—when the law requires judgments to be made. However it turns out, I hope that my hon. Friend the Under-Secretary will stick to her guns and say that the distinction will be made in all cases and that the clause will remain as drafted. It removes the odium that has always been visited on benign bankrupts, and I welcome the fact that the matter has been thought through in that regard as well as others.

Miss Johnson: I should put on record my thanks to my hon. Friend the Member for North-East Derbyshire for provoking such an interesting debate and for giving such an interesting set of historical perspectives. The issue is of interest to us because we are Members of Parliament, and of interest to the House and society more generally because it concerns the standing of Members and their credibility as and appropriateness to be MPs.

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We made clear in the White Paper on insolvency our intention to review the mandatory restrictions on bankrupts and cited the restrictions placed on Members of Parliament as examples. They include a restriction on being elected to the House and sitting or voting in either House or in a Committee of either House in the event of becoming subject to section 427 of the Insolvency Act 1986, which provides that a person who becomes bankrupt in England and Wales or Northern Ireland, or has their estate sequestrated in Scotland, is disqualified. A Member of this House could continue to undertake constituency work, but if after six months they remained bankrupt or sequestrated, their seat would be vacated. Those are the current arrangements.

We recognise that the arrangements are a matter for Parliament and not for the Government alone. In drawing up the proposals in the Bill, my right hon. Friend the President of the Council consulted the Chairman of the Standards and Privileges Committee.

Mr. Waterson: If the Under-Secretary is conceding—rightly—that this is a matter for the House and not the Government, will the Committee have a free vote on the clause?

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