It is a pleasure to follow the hon. Member for Glasgow Central (Alison Thewliss). I agree with much of what she said, particularly about this House wishing her mum a very happy 70th birthday.
I also pay tribute to the Under-Secretary of State for Business, Energy and Industrial Strategy, my hon. Friend the Member for Thirsk and Malton (Kevin Hollinrake). I find it amazing that he has only recently become a Minister, as he has been such a stalwart and incredibly diligent in promoting better performance by the banking and business sectors. It is great to see him in his rightful place at the Dispatch Box.
I rise to speak to new clause 20, in the name of my hon. Friend the Member for Barrow and Furness (Simon Fell), and to the two amendments I tabled that, very annoyingly, have not been selected, which are to do with phoenixing. I agree in general terms with the thrust of the debate: for reform of Companies House to be effective, it needs to be required to do new things. It is not enough to facilitate things; it needs to be given new duties and therefore the resources to be able to fulfil those duties. I can tell the House that in the brief time I spent as the Secretary of State for Business, Energy and Industrial Strategy, I had discussions with the excellent team of civil servants who are looking at company law reform, corporate governance and the Insolvency Service, and it is true to say, I am afraid, that they were not invited to go and talk to Ministers terribly often. They were definitely a bit of a Cinderella out there in BEIS, and this incredibly important area needs much more focus.
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While this excellent Bill will take us much further forward, there are some areas in which we could and should, even at this late stage, do better. One area I am particularly keen to focus on is phoenixing. That is defined by the Insolvency Service as
“the practice of carrying on the same business or trade successively through a series of companies where each becomes insolvent…in turn. Each time this happens, the insolvent company’s business, but not its debts, is transferred to a new, similar ‘phoenix’ company.”
A number of colleagues across the House have raised phoenixing. It is appalling, and I am sure that you, Mr Deputy Speaker, also have constituents who have been to see you about double glazing businesses that come and flog some double glazing, take the deposit and then do not deliver anything. A few weeks later, the person is thinking, “Hang on a minute. Where are they?” They try to get in touch with the company and no one answers the phone. A few months later they start writing furious letters to the company. Perhaps they go and see their MP, as people have with me, and say “What is going on here?” The MP writes on their behalf and they still get nowhere. As things stand, the only recourse that person has is to go to the small claims court or the insolvency practitioner. Unfortunately, if it is a few hundred quid, the chances are that the person will not have the time, inclination or additional money to get satisfaction, so they just write it off. That is its own reward to those phoenix companies, so they just do it again and again. That is what we find time and time again.
Companies House can look at somebody who opens a business in the name of Fred Smith Ltd and then the next day Fred Smith and Sons Ltd, and the next day Fred Smith Incorporated or whatever it might be, in order to steal someone’s money and then set up in a new name. But the reality is that it does not look at it, because it is so commonplace and it does not have the resources. I urge the Minister to listen carefully to what colleagues around the House are saying and to create some new duties.
I certainly agree with my hon. Friends the Members for West Worcestershire (Harriett Baldwin) and for Barrow and Furness that there should be duties on Companies House to investigate directors who start up in one name and then move on to a very similar name. Indeed, the Minister or the House should set a fee to provide Companies House with the resources it needs to carry out those investigations.
In my amendments I have looked at this from the other end of the telescope, saying that there should be a duty on Companies House to investigate and that Companies House should then set out to the Minister what resources it needs. The Minister should then respond to its demand for more resources and set the fee at the appropriate level. We should do it that way round, rather than having this mythical £100 fee, which then provides the resources, but could be used for who knows what.
I am the chairman of the 1922 Back-Bench committee on BEIS, and we had an inquiry recently into how the Government support enterprise. We heard from a number of small business founder-owners. Particularly for young women setting up an online business, a sum of £100 would be quite a problem for them in trying to incorporate their company. It may well be that £100 is in fact too much money and would be a deterrent, particularly to young entrepreneurs and in some cases female entrepreneurs, in getting their company incorporated with Companies House. The amount would be better set by Companies House itself to pay for a new duty to investigate, in particular, scams and phoenixing companies. I am grateful for the opportunity to contribute to the debate, and I urge the Minister to look carefully at things that are quite unanimous across the House.