Legislative Reform

It is always a pleasure to follow the Minister, who took such pains to be careful and reasonable in his exposition of the Government's position and took time to try to anticipate many of the questions that will be raised in this debate. It is vital that any modern economy such as Britain's has an efficient and effectively functioning insolvency process, if only because at a time of pretty much unparalleled economic problems—this is one of the worst recessions for a generation or perhaps more—everybody involved in business needs to know that the insolvency process works as quickly, efficiently and effectively as possible and does not soak up in fees as many of the available assets in an insolvency as it might. It is to everyone's advantage that as many as possible of a failing company's assets find their way to its creditors, rather than being taken up in fees. I mean no disrespect to insolvency practitioners—I am sure that they are all stout and wonderful men and women, who are doing their work terribly carefully. None the less, it is clearly macro-economically to everyone's advantage to ensure that as much money as possible reaches the creditors of a company that is going bust. As I believe everybody here understands, when a company goes under there is not just the tragedy of the lost jobs and the destroyed hopes of its workers; the huge danger is the knock-on effect of the company's suppliers being dragged down too. Any money that can be spared to pay creditors at a higher rate of pennies in the pound has to be to Britain's overall economic advantage. Taking the temperature of the interventions made, I would say that there is a great deal of sympathy on both sides of the House for the principles behind this measure. There are some specific questions and details on which I shall press the Minister for further answers—I am sure that such matters will dictate how Members react at the end of this debate in deciding how to vote. The Minister has admitted that this is a relatively small step down an important road. This measure produces some £3.6 million worth of benefits, although it is part of a larger package that is worth roughly £17 million. Given the total number of likely insolvencies this year, that is a relatively tiny drop in the large ocean of Britain's economy, but the best should not be the enemy of the good. Put another way, it is better to have half a loaf than none. If we can take a small step as a start on an important journey, we should do so. The Minister said that other measures are in the pipeline, which might stem from a process that began in July 2005 as a larger scale project to consolidate and modernise the insolvency rules introduced in 1986. Paragraph 9 of annexe C to the regulatory impact assessment, which I am sure every Member here has read assiduously, states:""It was originally intended that all the remaining proposals would be taken forward by means of one draft Order. However, in order to meet Ministerial priorities"—" I would be interested to learn what those priorities were—""the advertising changes…will proceed within a separate draft Order"—" which is this one. It continues:""The remaining proposals will continue to be taken forward within a subsequent draft Order that is likely to be laid early in 2009."" We are in mid-March 2009, and it is important that Members and the public understand the Government's intentions. The Minister has already said that he has plans to introduce more substantive cost-saving measures in due course, but we need to know precisely when. The Government were considering some seven or eight other proposals, and we need to know which will be introduced and when. The advertising market is suffering badly, so the local newspaper industry is unimpressed by this proposal. The Minister's timing could have been better, and people would accept this measure more readily if they knew that it was part of a wider package rather than something that picked on the local newspaper industry in particular. I hope that the Minister will be able to provide a timetable when he replies to the debate. The Minister also mentioned the concern about whether the savings will get through to the creditors, and it is important that we have certainty on that point. If the local newspaper industry feels that it is being picked on, the strongest counter-argument would be for the Minister to look the editors of those newspapers in the eye and say, "This is part of a package of measures that will help the wider economy and potentially save many companies from going bust." It is therefore essential that the money gets through and achieves the outcomes that the Minister promises. He has already made several comments that will reassure many people that the Government are serious about ensuring that the money reaches the intended recipients. Are the Government willing to consider post-legislative review of the success of this measure, in a year or two's time, to ensure that it—and the others that the Government have promised—has had the intended impact, and that the money has not been swallowed up by the addition of a couple of extra hours to the insolvency practitioner's bill? If the Minister can provide some reassurance on that point, the insolvency profession will also know that the Government will remain vigilant on the matter. The crucial issue is the protection of creditors. The Minister has already pointed out that in roughly one in 50 cases—not a large number, but none the less an important proportion of cases—if a newspaper advertisement is not placed in the local press, some creditors do not know that a creditors' meeting is taking place. If they do not know, they cannot attend and represent their interests, which may mean that they lose out in the eventual insolvency procedure. They may not get as much money as they might have done if they attended the meeting to ensure that their interests were properly put forward. The Minister pointed out that the order is not intended to stop advertising entirely, but to provide greater freedom and flexibility to the insolvency profession to decide whether to place advertisements in local press or, in the case of larger companies that do not operate in only one newspaper's area, in alternative sources of media—perhaps on the web or in the trade press—to ensure that the job of informing creditors is done more effectively. The Minister also said that the Government will not suggest to insolvency practitioners that, in the right circumstances, they should not continue to advertise in the local press. For many companies, especially small ones that trade locally, advertising in the local press will be the right approach, and if the insolvency profession exercises its discretion intelligently—as I am sure it will—the advertisements will continue to be placed as at present. Will the Minister confirm that the basic duty on the insolvency profession to ensure that creditors are properly informed will not be weakened by this measure? If that fundamental legal duty is not eroded by this measure, it will further underpin his case that this is about greater flexibility and efficiency rather than removing an essential protection for potentially important groups of creditors in the local economy. We will listen carefully and with great hope to the Minister's responses on those points before we decide how to respond.