My Lords, it is a pleasure to follow the noble Lord, Lord Sikka, who raised some very interesting points about insolvency law in general which I think are worthy of examination. I thank my noble friend the Minister for introducing these regulations, which are of course relatively familiar to us by now. I also thank my noble friend for what the Government have been doing in many areas to help alleviate the economic pressures that have been caused by the pandemic—I think particularly of the business rates holiday for retail, and I urge the Minister to consider with colleagues its continuation after the end of this financial year.
These regulations form part of a series that we have looked at under the Corporate Insolvency and Governance Act 2020, which was, of course, passed in June of last year—so some time ago now. I note in passing that we are renewing various aspects of the Act but on different timescales. I ask my noble friend why that is. As it seems extremely likely that we will be asked to renew these again, could we not do so on the same timescale and not have to see these things separately, given that they hang together? The provisions here on wrongful trading, which are due to end in April, will, I presume, then be subject to renewal. Can we look at these things in the round together?
Like many others, I welcome these regulations. The Explanatory Memorandum talks of a “breathing space” for business—it actually talks, I think erroneously, of a “briefing” space for business; unless that refers to
communications policy, I think it means breathing space. The regulations are widely welcomed for that reason, and they do indeed provide that breathing space.
However, I am concerned about how temporary these provisions are, a point made by the noble Lord, Lord Sikka. We are coming up now to nine months of these provisions. If, as I suspect, we are asked to renew them again, that will be a year. This is not just a concern about us being asked repeatedly to renew them, because I can see the sense of that, but there is a balance of convenience here. These regulations help some businesses by preventing aggressive creditor action, but there are creditors with quite legitimate debts who are feeling the pressures of the pandemic too, and they are not able to use the normal tools of enforcing those debts while these regulations are in place.
The Explanatory Memorandum says that the Government have assessed the impact of these regulations and whether it is appropriate, because of that balance of convenience, to continue with them. Can my noble friend explain how that impact assessment has been made, so that we can examine it? There is, as I say, a concern for some businesses, which will find life difficult because they are unable to use these tools because of the suspension of some of the rights to enforce those debts.
The regulations refer repeatedly to the point that these are indeed temporary measures, and therefore no full impact assessment needs to be made. I am beginning to question that. If these regulations are going to be repeatedly renewed, then they are not really temporary at all. At what stage does my noble friend think we should regard these as more permanent?
I have one other point to make, relating to the preferential status of HMRC. This was restored in December of last year, giving HMRC, as it were, the right to leap-frog as a creditor. I appreciate that HMRC will be in the same position as other creditors, but R3, the insolvency and restructuring trade body—which I thank for its briefing—notes that HMRC has a key role to play as a creditor in most insolvencies and that it could take proactive measures to help provide assistance. That would be a very sensible move in relation to what is obviously a challenging economic position that is likely to continue for some time. Subject to those considerations, I certainly lend these regulations my support.
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