My Lords, as the Minister has said, the statutory instrument introduces new temporary tapering measures that restrict the use of winding-up petitions. From 1 October, this instrument introduced a tapering effect, we are told by government, to protect companies from aggressive creditor enforcement as the economy opens up. The new temporary measures will be in place until 31 March 2022, but, ultimately, it is an extension of some support and a withdrawal of other support in the way it has been tapered.
We believe that it is right to maintain restrictions on serving winding-up petitions under Schedule 10 to the Corporate Insolvency and Governance Act 2020. It is vital that businesses that have sustained so much pressure during the last 18 months be supported right through to the end of the pandemic. This pressure was clearly demonstrated by the recently published annual report from the Insolvency Service, which found that although some measures had mitigated the impact of the pandemic on businesses, the number of people who have accessed the Redundancy Payments Service was up around 20% on normal levels.
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Turning to the SI, we acknowledge and welcome the raised limit. At least there is considerable protection now for small businesses with debts below £10,000. This is important and is in line with the measures we have called for since June, when other support was
withdrawn, to ensure that there are effective ways to deal with debt through the period of recovery. Without it, many more businesses would go bust. We have to remember that the economy is nowhere near out of the woods just yet: Covid is not over, and there is still uncertainty about what might happen going forward and whether there will be further restrictions.
So I hope that the Minister will be able to answer some questions on the specifics of the SI today. How many businesses did the Government speak to before moving forward with this tapering measure? The SI details the process of notice that needs to be given—21 days of consultation, allowing a response from the debtor then to be taken into account. What happens if, unreasonably, the creditor does not wish to accept the proposal? Would it then be for the courts to decide? Could any court fees then be payable? If the debtor does not win the case against them, will they then have to pay court fees as well as, possibly, the creditor? If the 21-day period begins just a few days before the measures are due to end in March next year, what does that mean for any of the disagreements going through between a creditor and a debtor? Will the 21 days that might start with the end of these provisions continue, with those rights secured? What are the Government doing to ensure that those who are concerned about the ending of the temporary insolvency measures seek effective advice early? How will the Government keep the measures under review?
The Joint Committee on Statutory Instruments drew this SI to the special attention of the House because it failed to comply with proper legislative practice. The most serious incident was a drafting error in a previous version, which meant that there would be a brief period during which no restrictions would apply, with the revocation provisions coming into force at the beginning of 28 September, before they were laid before Parliament. Does the Minister accept that the Government’s drafting mistake meant that Parliament was sidelined? With regard to the two-day gap—28 to 30 September—that was created by the initial version of this instrument, how many businesses were issued with winding-up orders on 29 and 30 September?
The Explanatory Memorandum states that the instrument is intended to
“help business get back to normal without facing a ‘cliff edge’”,
but Ministers need to recognise that the tail of recovery is set to continue well into next year and even the year after that. Therefore, I would like to hear from the Minister what assessment has been made of additional support that might be needed to get businesses through the next few months—especially when we place this statutory instrument in the context of the fuel supply, HGV and supply-chain crisis or crises in general. With a tough winter ahead and given the high number of Covid cases, the Government must ensure that support is not removed from businesses prematurely, which would have a catastrophic effect on businesses, high streets and communities across the country.