Legislative Reform

The House may be aware of my interest in procedural issues. I am a bit of a glutton for punishment and am attending this debate wearing two hats—one as my party's temporary Front-Bench spokesman on these matters, and the second as a member of the Regulatory Reform Committee. I also happen to sit on the Modernisation Committee: interestingly, that Committee does not meet any more, so we are obviously modern now. I am also an enthusiastic member of the Procedure Committee, which means that I turn up to its sittings as well. The House may not be surprised, therefore, to hear that my concerns about how this matter is being handled are procedural, and are about the process by which the Government are driving through a proposal against the recommendation of the Regulatory Reform Committee, and against the concerns expressed in writing by the Chair of the Business and Enterprise Committee. People outside Parliament argue that politics is broken, while a group of parliamentarians are concerned about Parliament being constrained in its ability to represent citizens, and about the fact that the Executive control Parliament. The order before us may be relatively minor, with £3.6 million being taken away from the newspapers and probably given to the Government—I shall say more about that later—but the real question is why the Government have seen fit to use a whipped process to go against two Select Committees of the House. Governments are supposed to work by explanation and by giving information about the decisions that they take. Although it seems clear that this decision was taken outside Parliament, the Government are using the whipped process to make even the Chair of the Regulatory Reform Committee go against his Committee's recommendation. My hon. Friend the Member for Cambridge (David Howarth) has what he calls his "dustbin" theory of decision making—that is, that a dustbin is taken round and everyone chucks a bit in—but what we should really be looking for is evidence-based decision making. It is wrong for the Government to go against the recommendations of the Regulatory Reform Committee and of the Chair of the Business and Enterprise Committee because that decision is not based on evidence. When an insolvency occurs, the business involved normally ends up insolvent, although sometimes it will end up solvent. Not all creditors are the same: there are priority creditors, such as Her Majesty's Revenue and Customs; there are secured creditors, which generally are the banks or the Government, and finally there are the unsecured, smaller creditors. As it is found out what the assets are—perhaps someone will have managed to sell off a going concern—people will go through all those creditors, ending up with a sum of money at the end of the process. If we reduce the costs of the process by saying that the newspapers will not be paid £3.6 million a year, the result will be that, in different insolvencies, that money will go to different people. The likelihood is that it will go to HMRC—the Government—or to the banks. Mainly it will go to the Government, so the effect of the cost of insolvency going down by about £600 will be that the smaller creditors about whom we are all concerned are unlikely to receive much in the way of additional funds from most insolvencies, although they will get some. That is not necessarily the big issue, but we do not know for sure, because we have not been given the evidence that we need to make this decision. Instead, the Government have decided to use their power, as the Executive controlling the legislature, to force the change through. What effect does advertising in local newspapers have? That is an important question. We know that there is an effect, and that one person in 50 who finds out that he or she is a creditor of a firm involved in insolvency does so by that means. Such people may or may not get some money out of the process, but it can be argued that the information could be better communicated by the use of alternative advertising techniques, such as notices placed on the internet or in the London Gazette. The Government's case is that, if people in business know that there is a place online to which they can go to find out where there are insolvencies, it is likely that they will not get caught out by an insolvency that they do not know about. On the Committee, I was relatively sympathetic to that approach, but we have not been given the evidence on which to make the decision. That is why I believe that the Government are going about the matter in the wrong way, from a procedural point of view. This may be connected to the targets for removing administrative burdens from the civil service. It is a good idea to do that, and there is no question but that this order ticks that box, but to make the decision, we do not have the key information that we need. People are to be told that the only place where they can find out about administrations and insolvencies is the London Gazette website, but it is hard to predict what proportion of the 2 per cent. of unsecured creditors who find out about an insolvency that affects them because it has been advertised in the newspaper would fail to find out about it if the information were no longer available from that source. My feeling is that people who have been in business for some time will learn relatively quickly how to go about getting the money that they are owed, and that is why I was sympathetic to the proposal. However, it is important to realise that we do not have the figures to allow us to analyse the different types of insolvency, or to determine where the £3.6 million saving would go. There will be very few circumstances in which the money will go to the insolvency practitioner, although that is obviously possible. Given that this is a £600-per-transaction arrangement, one would expect that in many transactions only the secured creditors—the banks and HMRC, and thus mainly the Government—would get the money. At a time when local newspapers are suffering financially from the loss of advertising, we are going to take £3.6 million away from them and give an indeterminate but substantial amount to the Government.