Corporate Insolvency and Governance Bill — House of Commons, 2020-06-25
Topic: Macroeconomics
Paul Stuart Scully (Conservative, Centre-right): I agree with the hon. Gentleman that it is so important that we work with all parts of the nation and all the devolved Administrations, which we do regularly. My colleague my hon. Friend the Member for Stratford-on-Avon (Nadhim Zahawi) has regular conversations from our Department, and other Departments liaise closely with the devolved Administrations to ensure that local economies are protected, as well as looking at the overall national picture The measures that the Bill introduces will give our businesses the vital support they need to keep afloat, preserving jobs, maintaining productive capacity and enabling the foundations to be laid for the country’s economic recovery. Saving lives and livelihoods is at the heart of what we are seeking to achieve. Measures such as the new moratorium and restructuring plan, together with a prohibition on contractual termination clauses, will help more businesses in future to survive rather than become insolvent. Many of the permanent measures have been improved through scrutiny in the other place, and I will set out some details of the amendments that the Government have brought forward to ensure that the measures work as intended I turn first to the financial services super priority amendments. The Government want to prevent firms gaming the system through a moratorium. Our amendments seek to disincentivise financial services creditors from seeking to accelerate their pre-moratorium debt solely to benefit from super priority should the company fail, or to obtain protection from compromise if a restructuring proposal was put to them. The amendments exclude pre-moratorium financial services debts from having super priority status in a subsequent administration or liquidation where the financial services debt has been accelerated for payment during the moratorium. That ensures that the correct incentives are in place for the moratorium to work effectively and not be brought to an end prematurely. On amendments relating to pensions, the aim of the measures in the Bill is to rescue a company, which is ultimately the best outcome for its pension scheme. Nevertheless, the Government have been alive to the concern that the new procedures could result in a pension scheme being disadvantaged as an unsecured creditor of the company. As a result, we agreed that there is a need to build in specific protections. Amendments made in the other place ensure that the pensions regulator and the Pension Protection Fund get appropriate information in the case of both a moratorium and a restructuring plan and that the PPF can challenge through the courts, the directors and the monitor of a company in a moratorium. There is also a regulation-making power, which will allow the PPF to be given creditor rights in both procedures in certain circumstances. I hope that hon. and right hon. Members will agree that these are important and fair amendments to the Bill We have also made amendments to the temporary measures in the Bill. These temporary measures allow businesses to focus on what is important for their survival through this extraordinary period, rather than having to respond to aggressive creditor actions, or struggle with statutory filing or meeting requirements during the disruption. The amendments to the temporary insolvency provisions in the Bill extend the life of those provisions beyond what was proposed when the Bill first came to the House. They will now expire, as I have said, on 30 September It is already clear that businesses will need these measures in place for longer than we first anticipated, and we brought forward amendments in the other place to take account of that. The provisions retain the capacity to be extended further through a regulation-making power should it be required, and the affirmative procedure will apply to such regulations Amendments have been made in the Bill in relation to pre-pack sales in administrations. Pre-packs are a valuable tool for saving businesses and jobs. However, concerns have been raised about the lack of scrutiny of them. The amendments reinstate a power that had elapsed earlier this year for the Government to regulate pre-pack sales in administrations to connected parties. The Government will look carefully at pre-packs and I can inform the House that a commitment was made by my ministerial colleague, Lord Callanan, to review current practices in the summer before making any decision on regulatory changes Finally, a number of technical amendments have been made to the Bill where it was judged necessary. These include changes that will restrict the period for which certain powers have been given in the Bill that will be available to Ministers, changes to clarify the intended effect of the legislation, and changes which place a condition on the use of some powers. We have ensured that there is appropriate parliamentary scrutiny of any regulation made under the Bill, as well as appropriate safeguards on these powers. Where they relate to powers for a Scottish or Welsh Minister or a Northern Ireland Department, the corresponding change has been made to ensure equal scrutiny for all the Parliaments of the UK This Bill has been improved by the scrutiny of the House of Lords Delegated Powers and Regulatory Reform Committee, as well as by the incredible work of the Government’s own parliamentary counsel and their legal advisers. I hope that the House will agree that making good, accurate, appropriately balanced and clear legislation is very much in the interests of all, not least of businesses that rely on this legal clarity. I am confident that we have now achieved that in this package, which we have, nevertheless, brought forward as quickly as possible to respond to the covid emergency. Taken together, these amendments improve this important and much-needed Bill. The debates and discussions in this House, as well as in the other place, have shown quite what this Parliament can achieve, even if socially distanced, when we share that common aim to save and support businesses in this emergency context. I therefore call on Members to support all the Lords amendments.