Orders of the Day — Insolvency Bill [Lords]

House of Commons, 16 November 2000.

PROHIBITION DURING PERIOD OF DISQUALIFICATION

Christopher Chope (Conservative, Christchurch)

I beg to move, That the clause be read a Second time.

Michael Lord (Deputy Speaker, Central Suffolk and North Ipswich)

With this it will be convenient to discuss the following: New clause 2—Disqualification orders: unfitness of director—

Disqualification orders: unfitness of director

Christopher Chope (Conservative, Christchurch)

New clause 1 would prevent disqualified company directors from setting up and running unincorporated businesses during the period of their disqualification, unless they had obtained the authority of the Director General of Fair Trading. The new clause evolved from a useful debate that we had in Committee during the fourth sitting on 7 November, when I moved what was originally amendment No. 1 to clause 5. There was universal sympathy and support for my amendment in Committee. The Minister said: I have a great deal of sympathy with the hon. Member for Christchurch, as the problem of rogue traders is serious. He said that he would be disappointed if, as pundits predict, there was no Department of Trade and Industry Bill in the Queen's Speech, and he said that he and the Government wanted to clamp down on rogue traders, but that my proposal was "not the appropriate vehicle". In my experience, that form of words is the last desperate line of defence of a Minister who concedes the argument, but has been told by his officials that he cannot agree to the change.

Eric Forth (Conservative, Bromley and Chislehurst)

My hon. Friend must be aware that there may well be a general election in the first half of next year. Were that to be so, even if there were a Bill in the Queen's Speech, does my hon. Friend agree that it is most unlikely that it would reach the statute book? If something is not done now—today—we may face a period of two years before it is possible to deal with the matter.

Christopher Chope (Conservative, Christchurch)

My right hon. Friend is right. Throughout their term of office, the Government have said that they would legislate on rogue traders and introduce legislation to protect consumers. There is every prospect that this Parliament will be concluded before they have done anything effective on that front. The modest measure contained in new clause 1 would enable the Minister to go to the people at the next general election and say, "I delivered in part. I was not able to deliver the whole, but I delivered in part." To develop the Minister's metaphor in Committee that my amendment was not the appropriate vehicle, if Parliament misses this bus, when will the next one come along? That is the point made by my right hon. Friend the Member for Bromley and Chislehurst (Mr. Forth). The Minister told the Committee: Legislation will be properly framed to undertake the tasks that the hon. Gentleman has identified, one of which will be enacted in the new year—[Official Report, Standing Committee B, 7 November 2000; c. 105.] He then referred to the injunctions directive. I do not know whether my right hon. Friend is familiar with that, but if not, he soon will be. The Minister undertook, among other matters, to send all members of the Committee a note about that directive. In accordance with that undertaking, the Minister duly sent us such a note. As a result of reading it, I have modified the argument that I advanced in Committee. The new clause would make the Director General of Fair Trading the key person who could allow a disqualified rogue director to set up as the principal of an unincorporated business. It also makes the measure less absolute than that proposed in Committee and integrates it into the injunctions directive. The injunctions directive is to be implemented in the United Kingdom by regulations. It is clear from the Minister's note that the European Union expects us to introduce that directive so that it has effect before 1 January 2001. That target will be missed by the Government, but in paragraph 6 of the note that the Minister kindly provided, he stated: The implementation regulations will designate the Director General of Fair Trading as the lead independent public body who will he empowered to obtain cease and desist orders in respect of all the legislation covered. It is worth noting that the injunctions directive will be far more limited in application than the issue of rogue traders. The Minister gave us a list of other European directives and areas where the injunctions directive would apply, but from my reading of that list, I do not believe that it would deal with the situation that I recounted to the Committee, involving a person in my constituency, Mr. Gary Turley, who runs a business called Be-Secure Windows. He has been going round to various of my constituents, offering to carry out works on their house and demanding large cash sums up front so that he can buy the windows and other goods and materials. The House will not be surprised to hear that having done that, he never provides the windows or does the work. As a result, he is a good example of a rogue trader. He is ripping off people in my constituency and the surrounding area. I do not know whether Mr. Turley was ever the director of a company, but if he behaved in such a way as a director of a company and he was disqualified as a director of that company, under my new clause he would automatically not be able to carry on business as an unincorporated trader. If the new clause were implemented, it would catch quite a large number, although not all, of rogue traders. The last desperate argument that the Minister may deploy, as he did in Committee, is that new clause 1 would be piecemeal legislation. In that case, as I said in Committee, the new clause should fit in well with the Bill, which is made up of piecemeal legislation. New clause 2 is even more important than new clause 1. It would fill a serious loophole in the current law as it affects the accountability of company directors. It builds on a full debate that we had in Committee. The best way of explaining the matter to the House is to give an example of how the gap in the law came to my notice, and the gravity of what was exposed by that experience. A limited company can be established, it can trade and solicit subscriptions and donations, but after it has achieved its objectives, it can disappear without ever having to file accounts and without the public ever acquiring information about the remuneration of its directors or the value of their shareholdings. Provided that no creditor is dissatisfied, the authorities in general and Companies House in particular have no penalty or sanction to use against the directors. Such sanctions as are available apply to persistent failure to file accounts. A company may be set up in the knowledge that it will trade and remunerate directors with large sums of money. If it dissolves as a result of a failure to produce accounts, the people who are eager to find out what those accounts might reveal—including the remuneration of directors—will be unable to gain access to that information. That serious loophole in company law came to my attention two years ago when I inquired about a company called People's Trust Ltd. Some hon. Members may recall that that company was set up in January 1997 with the avowed aim of championing higher standards in public life. However, the records show that it failed to fulfil its obligations under the Companies Acts at the first hurdle: it failed to file its accounts. Two reminders were sent in 1998 and a notice was then placed in the London Gazette—all with no response. People's Trust Ltd. was then struck off the register for failing to file its accounts. It was thereby dissolved and unable to trade legally as a company with effect from the beginning of September 1998. The founding chairman and main source of funds of that company—to the extent of at least £1 million—is well known to officials at the Department of Trade and Industry and to hon. Members: it is none other than Mr. Fayed. When challenged by The Independent about the failure to file accounts, a spokesman for Mr. Fayed said: It appears that there has been an administrative oversight on the part of our legal representatives. That being the case, we will look to rectify this on Monday morning. It will not surprise hon. Members to hear that nothing at all was rectified. Indeed, that was the last we heard of the company. I complained to Companies House and suggested that some sanction should be introduced to gain access to the accounts. That was when I was told about the gap in the law, which means that the accounts, which must have existed, continue to remain hidden from the public gaze because when a company is dissolved it no longer has an obligation to provide information. I submit that the failure to file accounts, far being an administrative oversight, was a deliberate and calculated exploitation of the loophole in the Companies Acts, which the new clause would close. In an article published in The Sunday Telegraph on 30 March 1997, Mr. Fayed commented on the DTI report into Harrods: Ten years ago, just before the 1987 election, the Thatcher Government commissioned a report that called me a liar…The British Government took away my reputation and good family name after 40 years' hard work. I will not go to my pyramid leaving my children under the shadow of a report that is unfair and untrue. I have seen the arrogance of power at very close quarters. I did not like what I saw. I will campaign for root and branch reform. That is why I gave away £1 million last week to the People's Trust, an independent pressure group dedicated to cleaning up politics. What happened to that £1 million? How much was used to pay the company directors for past services rendered? How much was left when the company was dissolved by default of filing its accounts and what happened to the donations that the company solicited from possibly naive members of the public? A report in The Guardian of March 20 1997 stated that the trust intended to send out 2 million letters to members of the public asking for £5 subscriptions to support its cause.

Eric Forth (Conservative, Bromley and Chislehurst)

Does my hon. Friend know whether that company, or another in a similar position, could make political donations before it was dissolved, which also could not be tracked? Does he not think that that is also an important consideration?

Christopher Chope (Conservative, Christchurch)

That is an incredibly important consideration. That abuse—I submit that that is what it was—having been uncovered, it is incumbent on the Government to take immediate action to prevent it from happening again. As my right hon. Friend implied, the more we are concerned with transparency in politics and donations to political parties, the more important it is to prevent people from setting up such a company and using it as a means to change public opinion with the support of large sums of money. As I said, £1 million was involved, although some press reports suggest that the sum was larger. 2.45 pm We do not know how many donations were given or what was received, if anything, for the £5 subscriptions. All that we know is that no creditor complained, which meant that the company was able to disappear in the circumstances that I described. It is worth reminding ourselves that People's Trust Ltd. was not a small, insignificant company. It must have had a turnover of more than £1 million, because it had a starting donation of £1 million from Mr. Fayed. It also had prominent public figures on its board. Apart from Mr. Fayed, the board contained Mr. Michael Cole, Mr. Fayed' s then press officer; Mr. Andrew Neil, a former editor of The Sunday Times and still a distinguished journalist; and Mr. Robert Fallowfield, one of Mr. Fayed' s accountants. Lord Alton of Liverpool was also on the board, as was Mr. Alex Carlile, a former hon. and learned Member of the House. Hon. Members will recall that none other than Mr. Carlile was the first to raise in the House the story in The Guardian involving the then hon. Member for Tatton. He did so on a point of order at about 10 pm when he had already been tipped off that The Guardian would run the story the next day, thereby enabling all the other newspapers to carry the story. He provided a service for—

Michael Lord (Deputy Speaker, Central Suffolk and North Ipswich)

Order. The hon. Gentleman is straying wide of the mark. He has given details, at some length, about one company and its director, which is reasonable, but I hope that he will relate his remarks rather more precisely to the new clause.

Christopher Chope (Conservative, Christchurch)

I certainly will, Mr. Deputy Speaker. To conclude the point, the company secretary was a Mr. Christopher Graffius, a former researcher for Lord Alton. Although I have not given examples of other companies, I submit that the case that I have described is sufficient to warrant Government intervention and the incorporation of the new clause in the Bill. One of the main responsibilities of directors, along with the privilege of incorporation, is the duty of full disclosure. Failure to deliver company accounts is a grave breach of directors' duty to make a full disclosure. The Minister for Competition and Consumer Affairs responded to my argument in Standing Committee. He said that section 5 of the Company Directors Disqualification Act 1986 provides that a director who is prosecuted for not filing accounts can be disqualified on the basis of that single offence.—[Official Report, Standing Committee B, 7 November 2000; c. 124.] In fairness to him, it then became apparent that the advice given to him by his officials, which led him to make that statement, was incorrect. He admitted that he was wrong and that, under the present company law, it is not possible to prosecute a director for a single failure to file accounts, however grave or mischievous that failure might be. He agreed that it might be better to table an amendment to section 3 of the 1986 Act. That is what the new clause represents. I hope that the Minister will agree to the new clause in its revised form, because it meets his concerns. There was general concern in Committee that the loophole needs to be closed.

John Burnett (Liberal Democrat, Torridge and West Devon)

Hear, hear.

Christopher Chope (Conservative, Christchurch)

I am glad that the hon. Gentleman agrees. I formulated the new clause in such a precise way largely because of suggestions that he made in Committee. I am grateful for his advice and assistance. Amendment No. 14 arises from debate in Committee—at column 120, on 7 November 2000—on amendments Nos. 5, 7 and 52, which would have made an agreed statement of facts a precondition of acceptance by the Secretary of State of a disqualification undertaking. The Minister, in reply to that debate, said that it was for the Secretary of State to decide to accept the undertaking, and that it would be unduly restrictive and might lead to delay and increased costs if the Secretary of State could accept an undertaking only when there was an agreed statement of facts. Amendment No. 14 deals with all the Minister's concerns, and thereby confines and limits the requirement to the production of a summary statement that will be a matter of public record. I hope that the Minister will agree that that is one way of partly satisfying concerns that have been expressed by the Select Committee on Trade and Industry and many other people. Does the hon. Gentleman also agree that the basis on which a disqualification order is made—or an undertaking for disqualification is accepted—should be set out in reasonably full terms, so that it is available to the public and on the public record should a director subsequently seek a variation in his disqualification undertaking or face disciplinary proceedings in any professional body. I hope that he will accept amendment No. 14, too. Both new clauses and amendment No. 14 are developments from the very useful debate that we had in Committee. I hope that they will find favour with the Government.

John Burnett (Liberal Democrat, Torridge and West Devon)

Liberal Democrat Members give qualified support to new clause 1 and complete support to new clause 2. The hon. Member for Christchurch (Mr. Chope) was right to ask why a person who is unfit to run a limited company should be able, either alone or in partnership, to run a business. There is much force in that argument. I have examined in some detail the Company Directors Disqualification Act 1986, and my view is that, in most cases of disqualification under that Act—especially when they relate to criminal offences and the test of beyond all reasonable doubt has been met—the hon. Gentleman is correct in that assertion. Why should such individuals be able to run a service business either on their own account or in partnership with others? I have nevertheless re-examined in detail section 3 of the 1986 Act. As the hon. Member for Christchurch said, in Committee, we discussed at length section 3, which could be said to be fairly draconian in its treatment of directors. It deals with persistent defaults, which it states can be conclusively proved by showing that in the five years ending with the date of the application he— the director— has been adjudged guilty (whether or not on the same occasion) of three or more defaults in relation to those provisions. I know that there are other tests, but that one is pretty tough on directors—albeit rightly. Nevertheless, I do not think that, as a result of disqualification under section 3 of the 1986 Act, a person should be disabled from, for example, starting his own small business perhaps as a shopkeeper or a window cleaner. As I said, Liberal Democrat Members give qualified support to new clause 1. Although I believe—for the reasons that I have given—that its terms are draconian and go a little too far, the new clause certainly has merit in dealing with those who have been found guilty of a criminal offence. I hope that the Minister will consider that. New clause 2 has been tabled to overcome the problem with the word "persistent" in section 3 of the 1986 Act. I believe that, in some cases, the failure to deliver to the Registrar of Companies just one set of accounts can be extremely important and have far-reaching consequences. I therefore support the new clause, which is drawn wisely and subtly. New clause 2 contains two tests, whereas initially, in Committee, we had only one—which was, as the hon. Member for Christchurch said, draconian. The first of the tests is that a person has been a director of a company which was struck off the register of companies by reason of its failure to deliver company accounts. The second important test which we are now able to debate is whether the person's conduct as a director of that company makes him unfit to be concerned in the management of a company. There are now, correctly, two hurdles. New clause 2 is sensible, and Liberal Democrat Members strongly support it.

John Butterfill (Conservative, Bournemouth West)

I support my hon. Friend the Member for Christchurch (Mr. Chope) on both new clauses. I accept and very much agree with what he said about the spatchcock nature of particular proposals in the Bill. My hon. Friend has been a distinguished member of the Trade and Industry Committee, on which I serve, and which considered the draft Bill in some detail towards the end of last year. In our report issued in December 1999 we broadly welcomed the general thrust of the draft Bill's proposals, but we felt very much that, on some matters, it was somewhat premature to legislate. We particularly felt that, as a general review of insolvency procedures was in progress, it might have been better to leave everything until we could have a more comprehensive Bill. Nevertheless, the Committee felt that the draft Bill raised some important issues and that, on balance, it was probably right to go ahead with some restricted amendments, subject to various safeguards that we suggested. Although I regret to say that some of those safeguards have not appeared in the Bill, if I am able to catch the eye of the occupant of the Chair, I shall deal specifically with some of them in a later debate. Overall, however, it is right to introduce—as my hon. Friend the Member for Christchurch is seeking to do—the new clauses and amendments. It is very important that the public should be protected. I must declare a personal position. I was a director of Maples Group Ltd, which went into liquidation a few years ago. Perhaps my experience as a non-executive director of that company will be helpful to the House. I was invited to join the board of Maples Group Ltd—the parent company of Maples Stores plc, the furniture retailer—by CinVen, which is the venture capital arm of the coal industry nominees who administer the coal industry pension fund. At the time, the directors of CinVen said to me, "We have a company that we backed in a management buy-out and is well-advanced. Although it is not yet profitable, it is very much nearing profit, and it will be near market levels. We want to strengthen the board before the company is floated. Would you join the board, with your experience of general corporate governance and your particular experience of property matters?" I am a chartered surveyor, and the company's main assets were probably the shops that it owned or on which it had leases. On that basis, I agreed to join the board of the company. Within a few months of doing so, I became very concerned about the figures that the executive directors were giving the board, because the cashflow figures did not match the trading figures that they were reporting to us. 3 pm Shortly after I joined the board, Mr. Tom Vyner, the then deputy chairman of Sainsbury's, was also invited to join as chairman, to strengthen the board and to consider its trading activities in greater detail. After four or five months, Tom Vyner and I became increasingly concerned that the company's cashflow did not reflect the sales and turnover figures that the executive team were giving us. After four and a half months, we took the most unusual and rather hostile step, as non-executive directors, of calling in investigating accountants. We did so through a little bit of subterfuge: we said that we wanted the investigating accountants to look at a few individual branches to find out why figures were not entirely matching up and to report to the whole board. As soon as we received the first verbal report of the investigating accountants, we put all the executive directors on gardening leave. When we received the subsequent report, we summarily dismissed them. I have to be careful about what I say, because the executive directors may be subject to legal prosecution and it is important that I do not prejudice that case. Suffice it to say that the duties of directors are paramount and their obligation to protect the public, customers, suppliers and everyone else is their first duty. It is right that the law should be draconian in such matters and that if directors have misbehaved in any way—whether criminally or simply negligently—the protection of the public should come before the possibility of their continuing to trade in another venture and possibly putting the public at risk. The duty of the law must be, first, to protect the public and, secondly, to consider whether those people should be allowed to trade in another venture. For that reason, I strongly support the new clauses proposed by my hon. Friend the Member for Christchurch.

Richard Page (Conservative, South West Hertfordshire)

I very much support what my hon. Friend the Member for Christchurch (Mr. Chope) has said. He has introduced the real world into our debates by speaking about rogue traders and the impact that they can have on the public. He asked why the Bill does not contain measures to deal adequately with those people—why they are being missed out and allowed to continue their activities. As my hon. Friend said, the measure that he proposed in Committee was a little short on certain legal requirements but its thrust and direction were right none the less. We hoped that the Minister would introduce a measure of his own, drafted by the skilled officials who ensure that legislation contains no loophole that can be challenged in the courts. I regret that no such proposal has appeared, but the Minister now has his chance to accept my hon. Friend's proposal, which has been so ably supported by my hon. Friend the Member for Bournemouth, West (Mr. Butterfill) and the hon. Member for Torridge and West Devon (Mr. Burnett). In my own humble and stuttering fashion, I shall return to that a little later if I may. Before the Minister responds, I should like him to consider an article that I read recently in the New Statesman, which has recently run a profile of him. May I say that it is completely relevant to the new clause, Mr. Deputy Speaker, as I can see that you are on the edge of the Chair, waiting to leap in if I go out of order for 30 seconds? This engaging little piece states: It may have escaped many people's notice that we have a Minister for corporate social responsibility— the Minister who will soon be standing at the Dispatch Box. I hope that he will bear in mind the fact that he has that corporate social responsibility, and consider how he can apply it to stop rogue traders regularly ripping off the public. I regret that the Minister has not introduced such a measure in response to the clear and positive suggestion in Committee. I want to speak to amendment No. 22, which my hon. Friend the Member for Hertford and Stortford (Mr. Wells) and I tabled. The proposals for expediting and simplifying processes by which directors can be disqualified must be welcome. I accept the figures produced by the DTI and offered by Ministers in relation to the proportion of disqualification orders that do not proceed to court, and their argument about the advantages of arrangements that permit the Secretary of State to accept undertakings from people whose conduct—let us be delicate—has been faulty. Of course it is important to safeguard the interests of those who fall within the ambit of the new procedure. On the other side of the coin, it is equally important that the interests of the public should be protected against the premature lifting or termination of disqualification undertakings. I always listen carefully to the Minister, but I did so with special care when he argued in Committee that the court should have a discretion as to whether to reduce a period for which an undertaking should be in force or to provide for it to cease to be in force. The hon. Gentleman tantalised me and, I suspect, mystified the rest of the Committee—perhaps that should be the other way round—with his immortal words: a factor other than a material change in circumstance since the person gave the undertaking may be of sufficient importance to persuade the court to make an order …—[0fficial Report, Standing Committee B, 7 November 2000; c. 122.] The hon. Gentleman never explained what he had in mind. He gave no example to support his argument. I am a great believer in the notion that real-life examples make the case and put flesh on the legal bones. I can think of several facetious arguments about those who have given such undertakings being disappointed or even bursting into tears if their disqualification undertakings are not lifted or shortened, but I can think of no serious ones. I hope that the Minister will be more forthcoming. If the Secretary of State has good grounds to seek and accept a disqualification undertaking from an individual, there should be significant material grounds for any application to the courts requesting that undertaking to be shortened or terminated. It is no good simply announcing that the courts will have the power to take into account any relevant factors in determining such an application under new section 8A(2). The Bill should include a clear direction to the courts that they must have material justification to alter or end the period of the disqualification undertaking.

John Butterfill (Conservative, Bournemouth West)

Does my hon. Friend agree that one of the problems is that the prosecution case may take some years to come before the courts? Although the Secretary of State and the Department may be convinced that wrongdoing has occurred, it may not be possible to rely on a conviction in the courts until quite a lot of damage is done in other companies.

Richard Page (Conservative, South West Hertfordshire)

My hon. Friend is correct, but the purpose behind the Bill is to bring about such disqualifications more quickly. That is one of the reasons why we have given it qualified support. The difficulty is that we see written into it the means whereby disqualification could become quicker, which can be to the advantage of a director, obviating the need for huge legal costs. Written into the Bill is a way for the director to get out of the disqualification period under the standard time and for no material reason. I am trying to persuade the Minister to come up with reasons. I do not share the Minister's rose-tinted view of life; he thinks that the courts will see through all the old lags who are trying to put one over on them. Anyone with business experience, or even experience of dealing with politicians, will know how persuasive and plausible such people can be. It is better that we take specific precautions now than that we find ourselves obliged to take them later. It is proposed to give the director a second bite of the cherry. Under the new procedures envisaged in the clause, the Secretary of State may accept a disqualification undertaking, which has the same effect as a disqualification order. So far, so good. There is a new procedure for compromising disqualification proceedings without their even being commenced. The present way of compromising such proceedings is by way of a carecraft order. If such an order were made, the director would be bound by it. If he wants to be a director of another company, he has the right, under section 17, to apply for leave to do so. Under the new procedure, the director would still be able to apply for leave to be a director of another company. However, he is given an additional right by the proposed new section, under which he can apply to the court for the disqualification undertaking to cease to be in force or for the period of disqualification to be reduced. Does this give the director the right to backtrack or to welsh on the bargain previously made by the Secretary of State? [Interruption.] I am sorry to use the word "welsh" like that; I saw the Minister shudder and I wish to withdraw that word. Any director with any sense will agree to a disqualification undertaking. Having fixed the maximum period for disqualification, he can then can apply, under the new section, to see whether he can reduce the period or get out of it altogether. We know that the period cannot be increased, so he has nothing to lose except the cost of court proceedings. New section 8 is a difficult luxury to justify. I am realistic and I know that if we tabled an amendment to remove the section, the Minister would more than likely reject it. I have tabled an amendment which could be regarded as a compromise and which may be acceptable to the Minister and the Government. I propose to limit the second bite of the cherry to where there is a material change of circumstances only. The proposal does not go as far as I would like it to but, at the very least, it means that the director will not be able to give a disqualification undertaking and then apply immediately to have it cease or have it reduced. That would prevent a fairly obvious abuse and it would be difficult for the House to object. To those who are unconvinced, I would say this: why should a director who has freely given a disqualification undertaking have the right to apply to the court to get out of it without there having been a change of circumstance—particularly when he has the right to apply for leave to act as a director of a specific company? If it remains unamended, that is the way in which the measure will operate in more cases than I would care to imagine. From my business experience, I have seen company directors reappear like phoenixes, using the same modus operandi. They have appeared to be almost untouchable. The new clause would give a specific protection to the public which does not exist at the moment. 3.15 pm Perhaps I would be less sympathetic towards the new clause if I knew that there was to be a consumers Bill in the Queen's Speech. However, the word on the street is that there is to be no such Bill. The Minister can look me in the eye and tell me if I am wrong and, if so, I will withdraw these remarks. A specific promise was given that, in the lifetime of the Parliament, there would be a consumers Bill. One of the areas that such a Bill would tackle is the problem of rogue traders.

Eric Forth (Conservative, Bromley and Chislehurst)

My hon. Friend is being far too charitable. Even if the Minister felt able today to anticipate the Queen's Speech and assure my hon. Friend that there would be a consumers Bill in the Government's programme, the Minister could not guarantee that that Bill would reach the statute book because the Prime Minister might intervene and call the election ahead of the time at which he needed to. My hon. Friend would be left in a position where an undertaking would have been given—perhaps in good faith by the Minister—which could not be fulfilled. I hope that my hon. Friend will not feel obliged to back off even if the Minister gives an undertaking about the Bill today.

Richard Page (Conservative, South West Hertfordshire)

I am frequently accused of being too charitable but that's the way it is: I am one of those creatures who go through life being charitable.

Eric Forth (Conservative, Bromley and Chislehurst)

Well, I am not.

Richard Page (Conservative, South West Hertfordshire)

I well know that my right hon. Friend is not charitable. He is a very hard man. I realise that any political party needs a balance of the soft and the hard. The soft version is at the Dispatch Box; the hard version is one or two rows behind. The matter raised by my hon. Friend the Member for Christchurch is serious. If the Minister can assure us that there will be a consumer Bill, we will look at it and give it whatever support we can to ensure that the public are protected from rogue directors. We will see what we can do to get the Bill on the statute book as quickly as possible—subject to a reading of the small print. I would hate to give a carte blanche undertaking here without seeing the specifics of the Bill. I am given to understand that a section in a consumers Bill could deal with these matters. I draw my remarks to a close by thanking the Minister for sending to every member of the Committee the injunction directive and the directives that will be covered by the measure. According to his letter, there are 11, although I have not counted them to see whether that is so. The notice sent with the letter states: Further directives, including the proposed directive on distance selling of financial services will be added in due course. That may prevent a certain amount of distress to members of the public caused by directors not acting correctly in that area. However, measures are already in place that make it difficult for rogue traders to operate in limbo in that area. I thank the Minister for his letter and look forward very much to what he has to say, bearing in mind the fact that, according to the article in the New Statesman he is in a position of "corporate social responsibility". I hope that he can find it in his heart to accept amendment No. 22 and give serious consideration to new clause 2, tabled by my hon. Friend the Member for Christchurch.

Kim Howells (Labour, Pontypridd)

By my standards, we have had a lengthy debate on this group of amendments. May I congratulate the hon. Member for South-West Hertfordshire (Mr. Page) on the superb intelligence that he gets from my Department or wherever the Queen's Speech is being drafted? He knows what is in the Queen's Speech, although I do not. I am sure that my hon. Friend the Member for Coventry, North-West (Mr. Robinson) will be delighted to know that the hon. Member for South-West Hertfordshire has helped to boost the circulation of the New Statesman by purchasing a copy of that estimable organ. I have seen my portrait in the magazine and, if the hon. Gentleman was using a Library copy, I shall report him. At the beginning of his speech, the hon. Member for Christchurch (Mr. Chope) said that I am in danger of missing the bus in relation to implementing enforcement measures against rogue traders. However, I fear that the hon. Gentleman has missed the point of the legislation. For the benefit of those who were not present in Committee when amendments similar to the hon. Gentleman's were debated, I shall reiterate that the main purpose of the Company Directors Disqualification Act 1986 is to provide the public with protection against those who abuse the privilege of limited liability. Sections 6 and 7 of the Act allow the Secretary of State to apply to court for a disqualification order against a director of an insolvent company whose conduct in relation to the company is such as to make him unfit to be involved in the management of a limited company. In response to the hon. Member for Bournemouth, West (Mr. Butterfill), I was glad to press ahead with the provisions in the Bill—limited though they are, according to him—and am pleased that he gave us the benefit of his experience of a company that found itself slipping into insolvency and receivership. The hon. Gentleman illustrated clearly why the relevant laws should be tough in relation to the honesty and probity of company directors. Section 8 of the Company Directors Disqualification Act enables the Secretary of State to apply for a disqualification order against a person who has been the subject of a statutory investigation, as provided for in that section, and in the case of whom it appears to be expedient in the public interest that the person should be disqualified. Similarly, clause 6 of the Bill will allow the Secretary of State to accept a disqualification undertaking in such circumstances under sections 7 and 8 of the 1986 Act. I repeat that I have some sympathy with the concerns of the hon. Member for Christchurch, but the 1986 Act is not the appropriate measure with which to try and address the issue of rogue traders. Those concerns need to be dealt with in other ways, and we are doing that through, for example, the useful directive that the hon. Gentleman told us about; better enforcement of consumer legislation, including measures on e-commerce; pursuing issues that cause particular concern, such as the servicing and repairs of cars; as well as the scheme that the hon. Gentleman mentioned, in which someone purporting to sell windows in his constituency is just operating a scam. We shall also deal with rogue traders through an important series of measures to modernise consumer advice networks. As I indicated in Committee, the impending EC injunctions directive should be of some help in that area too. Whatever the hon. Member for Christchurch thinks about disqualified directors being able to trade as sole traders, it would be inappropriate for the 1986 Act to go any further by restricting a person's right to do so. Such restrictions need to be dealt with in other ways. New clause 2 deals with issues relating to that and, as the hon. Gentleman said, is similar to the amendment that he tabled in Committee, although he revised the amendment's drafting in the light of our debate there. New clause 2 would introduce a new clause into the 1986 Act and would allow the court to make a disqualification order against someone when the court considers that he or she has been a director of a company which was struck off the register of companies because it failed to deliver company accounts, and it considers that the person's conduct as a director of that company makes him or her unfit to be involved in the management of a company. As I explained in Committee, directors can be disqualified for failure to file their company's accounts under sections 3 and 5 of the 1986 Act for defaults in relation to various provisions of company legislation, including failure to file accounts at Companies House.

John Burnett (Liberal Democrat, Torridge and West Devon)

Will the Minister give way?

Kim Howells (Labour, Pontypridd)

In a moment. I accept that neither provision would allow for disqualification following only one default, as the hon. Member for Christchurch said.

John Burnett (Liberal Democrat, Torridge and West Devon)

Will the Minister give way?

Kim Howells (Labour, Pontypridd)

If the hon. Gentleman can contain himself, I will give way in a second. It is not clear how the amendment would allow for a disqualification after one default, either. Nevertheless, disqualification on default would be going too far in any event.

John Burnett (Liberal Democrat, Torridge and West Devon)

Does the Minister agree that, in some cases, the failure to deliver just one set of accounts can be of the greatest importance? Surely, a person who fails to do so on being given notice or who is judged guilty of conduct that makes him unfit should be disqualified.

Kim Howells (Labour, Pontypridd)

I shall try to deal with that in a moment. The two matters are not directly related and I shall try to make it clear why that is so in relation to the legislation. It is not our intention to revisit in the Bill what constitutes unfit conduct for the purposes of achieving a disqualification. Where there are concerns about the failure of a company to file accounts, another remedy exists. A complaint made to the Registrar of Companies, who has enforcement responsibility in this area, will result in him taking appropriate action against the company. If the company is carrying on business or is in operation, the registrar will take enforcement action to secure delivery of the documents, up to and including prosecuting the directors in the magistrates court or, in Scotland, referring the matter to the prosecuting authorities. In addition, the late filing of accounts attracts an automatic civil penalty. If, in the registrar's opinion, the company is not carrying on business or is not in operation and is defunct, he can initiate statutory action to dissolve it and strike it off the register. In Committee, the hon. Gentleman raised the fascinating case of the People's Trust, and he may wish to know that it is currently up to date with all its filing requirements at Companies House. Indeed, I started to dig around a bit on the hon. Gentleman's behalf, given his fascination with that company. The trust was incorporated on 22 November 1996, but failed to file accounts or annual returns as required by the Companies Act 1985. It failed to respond to statutory letters inquiring whether it was still in operation or carrying on business under section 652 of the 1985 Act. It was struck off and dissolved on 8 September 1998 and was restored to the register after a relatively short period, on 5 November 1998. All outstanding documents filed at the time of restoration are up to date with all current filing requirements. I would be the last person in the world to defend Mr. Fayed, but that should be on record as it is perhaps an additional piece of information that I am sure would interest the hon. Member for Christchurch.

Eric Forth (Conservative, Bromley and Chislehurst)

Perhaps the Minister could clarify something. He seems to be saying that all the required information is available from 1998 onwards since the company was restored to the register. Is he also telling us that we now know everything that we need to know and should know about the company between 1996 and 1998, as that is the period of the most interest to my hon. Friend the Member for Christchurch?

Kim Howells (Labour, Pontypridd)

I understand that the relevant information is there, but I am sure that the hon. Member for Christchurch could find out very quickly by accessing the terrific new computerised filing system in Companies House. He need merely get on to his PC—

Christopher Chope (Conservative, Christchurch)

I do not have a PC.

Kim Howells (Labour, Pontypridd)

That has certainly thrown me. It would be good if the hon. Gentleman had a PC, but if he does not have one he cannot access the files online. I suggest that he travels to Cardiff, which is an excellent city, goes to Companies House and talks to the estimable staff there, who will do the job for him. By the way, I understand that there are even short courses to help people access files via their PCs, if the hon. Gentleman is interested, but clearly he is not. Amendment No. 14 would require the Secretary of State to prepare a summary statement of the outcome of the relevant investigation before accepting a disqualification undertaking from a director, and to make that summary a matter of public record. I am not at all sure that the hon. Member for Christchurch would like the effect of the amendment, were it accepted. It would seem to impose a duty on the Secretary of State to make public a summary of the unfit conduct he alleges against a director following the completion of his investigation. Although I would ask which investigation the hon. Gentleman needs to refer to, that is not at all clear and only section 8 of the Company Directors Disqualification Act expressly refers to investigations. That summary would include any allegations that the Secretary of State was prepared subsequently to withdraw before accepting a disqualification undertaking. Let me remind the House of how we envisage the process working. When inviting a director to offer an undertaking, as a matter of practice, the Secretary of State will put the unfit conduct that he alleges to the director concerned so as to give the director the opportunity to respond to it. It might be that the director is able to demonstrate to the satisfaction of the Secretary of State that one or more of the allegations made no longer stands up—in other words, that the case that the Secretary of State is putting to him is not accurate in one or more respects. A director may be able to introduce new evidence which puts an entirely different complexion on the conduct concerned. Where that occurs, the Secretary of State may withdraw that allegation and consequently be prepared to accept an undertaking for a lesser period. In those circumstances, if the amendment were agreed to, the public record would disclose an allegation of unfit conduct that had subsequently been withdrawn. I am sure that the hon. Member for Christchurch would agree that it would be unjust to place a director in that position. It does not seem right to us and we do not consider that the amendment should become part of the Bill. We remain of the view that the public record at Companies House should only show particulars of disqualification undertakings accepted by the Secretary of State. I now turn briefly to amendment No. 22, which was addressed by the hon. Member for South-West Hertfordshire. It is the same as amendment No. 71, which we debated in Committee. For those who have not had the opportunity to read Hansard, I shall repeat the point that I made. We do not consider that the court should be restrained in the way that is proposed under the amendment. It would be far more appropriate for the court to have a discretion on whether to reduce the period for which an undertaking is to be in force or provide for it to cease to be in force. It could be that some factor other than a material change in circumstances since the person gave the undertaking—a change in law, for example—would be of sufficient importance to persuade the court to make an order under new section 8A. According to the text of the new section, the court will be able to take into account any factors that it considers relevant when making such an order. The court will be helped in reaching a view by any matters that the Secretary of State calls to its attention under subsection (2) of the new section. With that, I urge the hon. Member for Christchurch to withdraw his amendment.

Christopher Chope (Conservative, Christchurch)

I am grateful to the Minister for his response, although I find it disappointing in some respects. He argued that my amendment No. 14 could cause injustice to directors because the statement of facts might subsequently be proved to be inaccurate. That is why, when we made the original proposal in Committee, we said that we wanted an agreed statement of facts. The Minister raised all sorts of objections to that. He said that it might cause delay or that it might be difficult to get an agreement. We then moved an amendment to overcome those obstacles and now, in typical civil service fashion, the Minister raises objections to the idea that there should be a non-agreed statement of fact. It is desirable to have more facts available on the public record than there will be under the Government's proposals. That is my concern. As for the Minister's arguments in relation to new clauses 1 and 2, first, I am grateful to him for letting us know that the People's Trust has become a phoenix rising from the ashes. Back in 1997 there was an enormous amount of press comment saying that the People's Trust was no longer trading, had gone out of business and had vacated its luxurious Knightsbridge offices. It was reported that the disappearance of the People's Trust marks the end of Mr. Fayed's third foray into public morals. That is how the Evening Standard described the situation on 8 August 1997. Perhaps the resurrection of the People's Trust suggests that there is yet another foray on the way. I shall look with interest at the contents of the documents to which the Minister has drawn our attention, but I do not think that the fact that they have now been filed alters the burden of my argument. I illustrated my contention that there was a gap in the law and the Minister agreed. However, he then recited a series of sanctions which, although they might apply to different cases do not apply to a case in which somebody makes only one serious breach of his duty to file accounts.

Richard Page (Conservative, South West Hertfordshire)

If my hon. Friend is in the slightest bit worried about finding examples to prove his point, I can spend an hour or two with him after the debate giving him the necessary names.

Christopher Chope (Conservative, Christchurch)

I do not think we need any more examples. The examples that I quoted are sufficient. The fact that the Minister has not been able to show us what remedies are available demonstrates that there is a gap in the law that needs to be filled.

John Burnett (Liberal Democrat, Torridge and West Devon)

The hon. Gentleman is quite right. Not only should there be a duty to file accounts, but there should be a duty to file one set of accounts in good time. In the case of the additional clause which is qualified, as new clause 2 is, there should be a draconian sanction for failure, and there is not one now.

Christopher Chope (Conservative, Christchurch)

The hon. Gentleman is absolutely right. I am very grateful to him for his involvement in the promotion of new clause 2. My right hon. Friend the Member for Bromley and Chislehurst (Mr. Forth) spoke earlier about the implications for limits on party political funding. It is no good if people say that they will not file the accounts, and the company is then dissolved and struck off, and, at some stage in the future, when the time for investigating the funding of parties in a general election campaign is over, the company is resurrected. I was caught out because I had assumed that, once a company's accounts were no longer available because it had been struck off and dissolved, that was the end of the matter. Now the Minister says that, in this specific case, the company came back later. That is no good. The people responsible for that appalling default of their obligations under company law have carried on with impunity. New clause 2 would put an end to that loophole. The Minister made a rather feeble response to new clause 1. We are talking about serious issues of rogue traders. The Government purport to be on the same side as us in campaigning against rogue traders and the injustice that they cause to the hapless individual. An early-day motion has been tabled on the subject and the hon. Member for Luton, South (Ms Moran) promoted a ten-minute Bill supporting action against rogue traders. I tabled the new clause to take action on the matter, and the Minister's response is that it is not appropriate. That is not good enough. The people will decide on this. The Government have been going on about how they will do something against rogue traders, but they are merely paying lip service to people's concerns. They are not legislating to close the loopholes. I thank my hon. Friend the Member for Bournemouth, West (Mr. Butterfill) for introducing into the debate a pertinent example drawn from his own experience as a non-executive director and as a member of the Trade and Industry Committee; I thank my hon. Friend the Member for South-West Hertfordshire (Mr. Page) for his support for my new clauses and amendments; and I thank the hon. Member for Torridge and West Devon (Mr. Burnett) for his help and advice. It would be a gross indulgence to divide the House on more than one of the new clauses. As new clause 2 would remedy the greatest mischief straight away, and there is no complaint about its drafting, that will be the right one on which to have a vote. I hope that hon. Members will support it when I give them the opportunity to do so. I beg to ask leave to withdraw the motion.

DISQUALIFICATION ORDERS: UNFITNESS OF DIRECTOR

Disqualification orders: unfitness of director

SECTION 309(1) OF THE INSOLVENCY ACT 1986 TO APPLY TO NOMINEES

Austin Mitchell (Labour, Great Grimsby)

I beg to move, That the clause be read a Second time.

Sylvia Heal (Deputy Speaker, Halesowen and Rowley Regis)

With this it will be convenient to discuss the following amendments: No. 46, in schedule 1, page 15, line 6, at end insert— 'and notify the registrar of companies, the company and any petitioning creditor of the company of the actual fees charged, the basis of the charges, the outcome of the moratorium and whether during the term of the moratorium he has been the subject of any adverse court judgment or disciplinary findings by any of the Recognised Supervisory Bodies.'.

Austin Mitchell (Labour, Great Grimsby)

The purpose of the new clause and associated amendments is to swing the balance in favour of workers and trade unions. The new clause would involve them more in the process of a company's 28-day moratorium, and outline their role in that process. So far the debate has been like a class reunion of Standing Committee B. It is a shame that more Labour Members are not present, as by amending in little ways little measures such as this Bill we can swing the balance in favour of the workers, the less well-off and the people who form the section of society that we represent. The vested interests always have people such as the Conservative Members present this afternoon who will speak for them and push their views and interests. It is important that we Labour Members use our influence to push the balance the other way when the opportunity arises. It is as important for us to do that as it is for the Government to introduce major legislation. The Government tackle the big picture, and we Back Benchers tackle the small picture. That is what I want to try and do with these amendments. New clause 3 would impose on the nominee duties at present incumbent on the directors, to ensure that he attends to the same interest. The Bill is right and worth pursuing. It is a minor measure, but it will be useful and will help to save companies. If we can get this measure in the interstices of the Government's legislative programme—as we can now, because the House is effectively ticking over, waiting for more messages to come from the Lords so we can get our teeth into the bigger issues—we should do so, and that is what we are doing. The Conservative party's critique that this is an unnecessary measure has no standing. However, if it is necessary, it is necessary to use it for the purposes of the people. 4 pm The measure gives a new role to a vested interest—it creates a new role for insolvency practitioners. They have already been consulted on it extensively and they say that they want to be consulted more and to exert more influence on the processes and regulations when they are introduced. This is a Labour Government, however—it is not a Conservative Government, pandering to the vested interests. So when we have the legislative opportunity, we should use our role as a Labour Government to tilt the balance in the right direction. After all, for 18 years, it has been substantially tilted the other way. It is time to swing the balance back a little. New clause 3 would impose responsibilities that are in the Companies Act 1985. Indeed, I was surprised to find them there. They were introduced to the Companies Act 1967. The surprising thing is that after the long years of Conservative Government, in which numerous Companies Acts were passed, almost year after year, as the previous Government changed their mind on these issues, these provisions were never removed. This is an important and potentially influential measure. The 1985 Act says: The matters to which the directors of a company are to have regard in the performance of their functions include the interests of the company's employees in general… That is a point of leverage which has been too little noticed and used. If the responsibility is incumbent on directors under the 1985 Act, it should also be incumbent on the nominee in the period when the nominee's decisions will effectively change the shape of the company. For example, decisions will be taken about shedding staff. Attempts to save a company, given present priorities, always seem to involve firing people and reducing the number of employees to save money. Decisions made by the nominee will thus affect the employees. In that case, why should they not have the same responsibilities as the directors who continue to run the company and who should continue to exercise those responsibilities, but who are temporarily less powerful than the nominee? A company is a team—it depends on its employees. It is a collective effort. We have to take a collective, communal view of a company. It does not consist simply of the directors and those in charge—everyone has an interest. The interests of the workers clearly lie in the company's survival. However, those interests get neglected in the vulture culture of insolvency and administration. The whole process is a grab for money—the banks are the most powerful grabbers and play the most powerful role. They make so many loans, mortgages and floating charges, they have the necessary personnel and experience, so they will be the dominant influence. The workers are in a very weak position. They have a role as creditors; my hon. Friend the Minister will doubtless emphasise that as he did in Committee, because the workers may be owed wages. I want to give the workers a role beyond that, as an integral part of the company, with an interest in its survival. They are stakeholders. I know that we do not talk so much about stakeholders now. Having discovered stakeholderism in the mid-1990s, we moved rapidly on to the third way. I am not sure what happened to the third way, but it has gone the way of all bright ideas. However, I think that the stakeholder philosophy is correct. Employees are stakeholders in the company; they have an interest in the company, and that should be taken into account. The new clause is a comparatively diluted expression of that view, which amendment No. 3 develops more fully. It was well supported in Committee by both Labour and Liberal Democrat Members. I am not gifted with the killer instinct—something I have in common with the Prime Minister. I am too nice a guy and tend to think that one simply has to put the argument and the truth will prevail, a failing that spreads right across to Downing street. But had I the killer instinct, the Minister could have been beaten on this issue. I did not want to do that. The Minister undertook to look at the issue and see what he could do to incline the balance my way. I am sure that he has done that, and I am grateful to him. I see from the posters going up around the country that it is now party policy to say "Thank you, thank you, thank you." As one of my constituents said, "What the hell for?" So I thank the Minister, but I was disappointed by the reply that he sent me when he exercised that function. He more or less advised me to go away in a fashion advised by French Connection UK. He said that it could not be done in the way that I wanted. I know what is happening here. The vested interests say, "We can't do that". The officials say, "Play it safe, Minister, there's no point in extending the role of the Bill. It will be a nuisance, it's another imponderable, it's not within the scope of the Bill which is simply concerned with matters of company administration and insolvency, so let us keep the focus on the main issue. Don't buy into emotive concepts like the workers or the stakeholders. Best say no—that's the easiest course." I hope that, now I have approached the issue in a moderate form by proposing new clause 3, the Minister might look again at what he said in his letter. The nominee is effectively making a life or death decision on the company and should have the same responsibilities as directors.

John Butterfill (Conservative, Bournemouth West)

I have the disadvantage of not having served on the Standing Committee although, together with my hon. Friends on the Select Committee, I considered a number of these issues. The effect of the amendment is not entirely clear, and perhaps when the Minister replies it will become a little clearer. At present, the directors and, indeed, the officers of the company have personal liability under certain circumstances for malfeasance and can be sued individually. Is the hon. Gentleman intending to pass on to the nominee a similar liability vis-à-vis his duties in the particular connection that he proposes? If so, does he think that it will be easy to find a nominee under those circumstances?

Austin Mitchell (Labour, Great Grimsby)

It is good to hear the voice of the vested interests again expressed here, even if it did not get on to the Committee. The answer is that the directors have that responsibility, but they are also responsible for having regard to the interests of the company's employees in general. They have both responsibilities. They continue to be in charge of the company during this period. I want the nominee to be impressed with the same responsibility. It is fairly simple. It does not detract from the directors—they have the responsibility too. The new clause would spread the responsibility to the nominee.

John Butterfill (Conservative, Bournemouth West)

rose—

Austin Mitchell (Labour, Great Grimsby)

No, I do not want to give way again, because the tear-jerking picture of directors at risk will be paraded before us. I simply want the responsibility that directors have to employees to be shared. I am not going to get bogged down in that argument.

John Butterfill (Conservative, Bournemouth West)

Will the hon. Gentleman give way?

Austin Mitchell (Labour, Great Grimsby)

No. I am sorry, but I am moving on.

John Butterfill (Conservative, Bournemouth West)

rose—

Sylvia Heal (Deputy Speaker, Halesowen and Rowley Regis)

Order. The hon. Member for Great Grimsby (Mr. Mitchell) has said that he will not give way.

John Butterfill (Conservative, Bournemouth West)

On a point of order, Madam Deputy Speaker. The hon. Gentleman has publicly accused me of representing a vested interest in the Bill. I want him to tell the House what vested interest he thinks I represent.

Austin Mitchell (Labour, Great Grimsby)

The hon. Gentleman may be somewhat sympathetic to the interests of directors. He paints that picture of directors at risk, giving the impression that the risk would be increased if the nominee shared the same responsibilities and had to pay attention to the workers' interests. That is why I accused him of pushing a vested or a sectional interest—that of the directors. I am speaking for the interests of the employees. I do not want to go further down that road—I did not want to give way in the first place, but I did so out of courtesy. The point was largely irrelevant, but it has been answered. Amendment No. 46 is designed to ensure that the nominee is accountable to directors and the public. At present, the Bill only requires the nominee to inform the court when the moratorium has been brought to an end. It does not require the public filing of information on matters that have to be disclosed. The Bill would extend what amounts to a state-guaranteed market for insolvency and business restructuring, to the benefit of insolvency practitioners. They have that privilege and it should be accompanied by an accountability requirement. That is what I am trying to impose in amendment No. 46. Amendment No. 47 would bring paragraphs 26 and 28 of schedule 1 into alignment with each other. The Bill does not recognise that creditors, members of companies and other stakeholders have the right to ask the courts to seek a replacement of the nominee. Under paragraph 26, they can apply to the court if they are dissatisfied with what is going on, but they do not have the power that is given to the directors in paragraph 28 to have the nominee replaced. Those powers should be equal. The amendment would bring paragraphs 28 and 26 into line by extending the power to any creditor, member of the company or other person affected by the moratorium. That seems to be a balanced requirement. Amendment No. 3 is the nub of my argument on Report, as it was in Committee. We should impose on the nominee a duty of care to the employees of the company. Why does the Bill not impose that duty—to have regard to the interests of employees when making decisions? As the Bill stands, only the interests of creditors are promoted and protected. We are a Parliament that is elected by the people for all the people. We should enact legislation that benefits as many people as possible—not merely the minority covered by these procedures. I proposed a similar amendment in Committee. The Minister's response was that he was not keen to change the legislation and to recognise the rights of employees, which I regret. Where we have the power to do so, we should. My hon. Friend also stated that an employee's position is no different from that of any other creditor. Most employees will be creditors and, in that capacity, they can make representations to the nominee and even go to court. The response that they are merely creditors is flawed. Creditors' committee meetings are dominated by the major creditors, which usually means the bank and the insolvency practitioner. Working together, they dominate the proceedings and other people do not get a look-in. A nominee needs to be expressly instructed in legislation to ensure that employee interests are not overlooked. That is the duty of care imposed in the amendment. 4.15 pm I recall in Committee the touching picture painted of workers at Sturmey Archer by my hon. Friend the Member for Nottingham, South (Mr. Simpson) who has put his name to amendment No. 3. He talked of their difficulties in understanding what was going on and getting representation. Let us give the nominee a duty of care. The Minister has replied that employees are creditors and, as such, have rights. I am seeking recognition of their rights as employees, not as creditors. After all, it is the blood, sweat, muscles and brawn of workers that keep the company going. Without that human capital, no business will survive. At the restructuring of the company, matters that are crucial to all have to be decided—pension rights, jobs, wage levels, security and all the things that go with a job. Those matters cannot be discussed without the employees or their representatives being involved—if they have a trade union to do it, I am happy with that because a trade union will always represent the interests of the employees. Directors have a responsibility to attend to the interests of employees and that should be the nominee's responsibility too. All those rights should be respected in business. In this legislation, we have the opportunity to ensure that those rights are protected and to incline the balance to the workers. It is not an onerous imposition or a radical restructuring of the Bill. It is merely saying that in the vulture culture, when all the creditors move in and everyone is grabbing, either to keep the company going or to close it down—grabbing for the assets and getting the best deal for themselves—someone should pay attention to the interests of the workers and have a duty of care to them. Someone should involve their representatives in the discussions. We are in power and we are a Labour party. This is the party of the workers and the trade unions. We should incline the balance to them by the simple procedure of a duty of care. In the new clause, I have modified the provision and toned it down so as not to frighten the Minister or his advisers. The full-blooded statement is in amendment No. 3, and either would be suitable—obviously, I prefer the amendment. I cannot see why the Minister cannot leap to his feet and say, "Yes. I've seen the light. This is the responsibility of a Labour Minister. Let us have new clause 3."

Richard Page (Conservative, South West Hertfordshire)

I will speak to amendment No. 33, but before I do so, I will deal briefly with some of the comments of the hon. Member for Great Grimsby (Mr. Mitchell). His new clause has merit and I hope that the Minister will not be as hard-hearted and dismissive as he was in Committee. I hope that he will try to understand that the workers in a company have rights and responsibilities, and that a Labour Government should be looking after them, not casting them to one side. The hon. Member for Great Grimsby accused Conservative Members of blowing hot and cold. If we agree with the hon. Gentleman, we are right, but if we introduce the slightest balance, we are wrong and we are promoting vested interests. The attack on my hon. Friend the Member for Bournemouth, West (Mr. Butterfill) was unjustified, unwarranted and without any evidence. That is typical of the way in which the hon. Member for Great Grimsby—with great humour, and most amusingly—shoots from the hip.

Sir Sydney Chapman (Conservative, Chipping Barnet)

In fairness to the House, if an hon. Member states that another hon. Member has a vested interest, it is incumbent on the hon. Member making that assertion to say exactly what those vested interests are. It is not necessarily wrong to have a vested interest—it all depends on the import one gives to the word "vested". Does my hon. Friend agree that our principal duty is not to support one sectional or vested interest against another, but to ensure that our legislation is fair?

Richard Page (Conservative, South West Hertfordshire)

My hon. Friend makes the point that I was trying to make: we should introduce balance in whatever we say. I certainly would never accuse a Labour Member of representing the vested interests of a trade union. Why should a Member not represent such interests? That is part of the great spread of diverse interests represented in the House; we hear a variety of views and can form a judgment. From such a balance, we can come to the best decision for the people of this country. That is why we are sent to this place. I resent being lumped in under the term "vested interest". I remind the hon. Member for Great Grimsby that I introduced a ten-minute Bill that proposed splitting responsibilities: someone involved in the valuation of a company should not be allowed to carry out the liquidation. I think that the hon. Gentleman agreed with me—he praised me for that proposal—but now he lines me up with the vested interests against which he obviously has a vendetta. He would do more for everybody and do it better if he balanced his words more carefully, and thought before shooting from the hip. When one disagrees with the legislation under discussion, it is a standing temptation to regard it as coming from cloud cuckoo land. That seems odd to me, as according to the Greek play by Aristophanes, the laws of logic applied more rigorously in cloud cuckoo land than they did on earth, but I use the term in its currently accepted sense when I apply it to this aspect of the Bill.

Kim Howells (Labour, Pontypridd)

I am slightly confused as to whether the hon. Gentleman thinks that the Bill or the amendment comes from cloud cuckoo land.

Richard Page (Conservative, South West Hertfordshire)

The Minister will have the opportunity later to tell me that my amendment comes from cloud cuckoo land; I was saying that the balance in this part of the Bill comes from there. I should like to be able to say that the Bill's provisions for applying to the courts were entirely logical and straightforward. Creditors can apply, as can directors and anyone affected by the moratorium—including the company; so can liquidators, administrators, shareholders and the supervisors of voluntary agreements, but not the nominee. Nominees will have responsibility for assessing whether voluntary arrangements proposed by a company's directors are likely to be approved and implemented—the kernel of the Bill. Such nominees will also have to come to a view on whether the voluntary arrangements are likely to be improved without modification, or whether they might fail. Those are huge and important responsibilities. With great respect to the Minister, it is for this House and the other place to decide whether a nominee should have the right to apply to the courts when he or she may need guidance on the performance of his or her duties. If his or her decisions can be challenged in the courts by the parties I mentioned, surely it is fair and equitable to afford the nominee an equal opportunity to exercise that right. The purpose of the amendment is not to give nominees an escape clause so that they can evade their responsibilities and under which courts would take over those administrative and commercial decisions. I suspect that the Minister's opposition to the amendment is based on Mr. Justice Neuberger's decision—as though he and not Parliament ran the country. Although I have enormous respect for Mr. Justice Neuberger, it is not for him to decide whether nominees, or any insolvency holder, should have the right to apply to the court when in doubt about the decision that should be made; it is for Parliament to decide whether nominees should have that right. If we decide that they should have such a right, judges should respect that—unless, of course, the matter involves human rights issues. At present, everyone involved in the whole chain of events—except the nominee—can apply to the court. Yet the nominee has to make that crucial decision that will bring the moratorium into effect, or will continue it. At times such a decision can be extremely difficult, especially if the nominee forms the view that the original voluntary arrangement will not be approved, but is likely to be approved with modifications proposed by a creditor. The proposed procedure is novel—it does not take a tried and trusted path; the company could obtain a moratorium by applying to an authorised person rather than to a judge. The difficult decisions that were made by judges will be made by authorised persons. In Committee, we were all fully aware of how many times the Minister was asked to explain by which route the nominees might appear. In a rare show of comradeship with the hon. Member for Great Grimsby, I acknowledge his excellent and valid point about the number of organisations that could license practitioners. The measure would add yet another one, but in a rather vague and nebulous form—appearing from the ether or through some osmotic process, an organisation would be approved by the Secretary of State and could then approve a nominee. We should proceed along that route with caution. I must not say that the Minister has been sloppy, but he has only made vague and conciliatory noises about what a future nominee might be like—hard facts and detail are lacking. Those authorised persons do not have to hold the same qualifications as a licensed insolvency practitioner. We are well aware of the views of the hon. Member for Great Grimsby on those gentlemen. It is important that the Secretary of State should ensure that if he creates even more bodies that can grant approval to carry out such work, they should be of a standard and quality that will be a help rather than a hindrance. During proceedings on the measure, we frequently made the critical comment that it is half a Bill, or even less than half a Bill. It would have been an ideal measure under which to introduce monitoring or quality control of the operations of insolvency practitioners. But no such provisions were included. The issue certainly occupied the time of one member of the Committee. He made his argument forcibly and we were all made aware of what he was trying to achieve. The House will have gathered that I refer to the hon. Member for Great Grimsby. 4.30 pm Just as there are rogue directors—although the vast majority of directors are decent people who work hard to the best of their ability—so too there are licensed practitioners who do not behave appropriately, but the majority do a good job. I was pleased to hear from the new named body of licensed practitioners—the Association of British Recovery Professionals—that its title includes the word "recovery". I recently received, as did every member of the Committee, a letter from that body, saying that the word "recovery" is now very much in the forefront of its thinking. That is a change of emphasis and direction, which I am sure we all welcomed. If the Bill does nothing more than to introduce the culture of rescue and recovery earlier in the process, it will have achieved something. Too many businesses run right to the wire, when they could have been saved if they had taken decisions earlier. In the United States an eminent gentleman—so eminent that his name escapes me—conducted research and discovered that if a company had taken slightly earlier the measures that it took in the last six months of its existence, it would have been rescued. Too many directors do nothing until the cliff edge is crumbling beneath their feet, and by then it is far too late—too late for moratoriums or any form of rescue. If any message is to be conveyed from this place to company directors, I hope that it will be my strong encouragement to seek advice and help earlier, instead of bottling things up and thinking that they can work their way out of their difficulties. In so many cases, neither success nor rescue comes, and the inevitable pain of bankruptcy follows. I return to my comments about the fear that the authorised person will not be of sufficient quality. I do worry that a number of authorised persons will be out of their depth, so to my mind it would be bizarre and pointless to deny them the right to appeal to the court. What conceivable advantage can there be in denying the nominee such an opportunity? If he applies to the court unnecessarily, wasting the court's time, the court's displeasure will no doubt be exhibited and reflected in an appropriate order for costs, but it cannot be right to deny the nominee the right to apply to a court when he has a real need for guidance. I urge the Government to reconsider the amendment.

John Burnett (Liberal Democrat, Torridge and West Devon)

I shall speak to new clause 3 and amendment No. 46. I was delighted to hear the speech by the hon. Member for South-West Hertfordshire (Mr. Page) because I believe that there is very significant support in all parts of the House for new clause 3. It is not draconian. We are talking about duties that are already imposed on directors. They are not onerous. Let us read what the new clause says. It imposes the burden of section 309(1) of the Companies Act 1985 on nominees—and why should nominees not have regard to the interests of the company's employees? The new clause is pretty tame, and not onerous. It merely provides that the nominee should at least consider the interests of the company's employees.

Kim Howells (Labour, Pontypridd)

rose—

John Burnett (Liberal Democrat, Torridge and West Devon)

I am happy to give way to the Minister.

Kim Howells (Labour, Pontypridd)

Will the hon. Gentleman concede that the intent of the Bill is to offer some companies the opportunity to survive and to continue trading, and therefore to help employment? The whole point of the Bill is to offer support for employees, because without it, they will not have jobs.

John Burnett (Liberal Democrat, Torridge and West Devon)

I entirely agree that the object of the exercise is to promote the rescue culture. We have in this country a particularly creditor-friendly business culture. I believe that all hon. Members who served on the Committee, from whatever party they came, recognised that. If the moratorium has the effect of keeping a company in existence, that is marvellous, but in taking his or her decisions, the nominee should at least have regard to the interests of the company's employees. That is not an onerous provision. Nominees must consider such matters. They may disregard them, but they must at least consider the number of employees in the company, whether the company should contract and whether people should be sacked. They should at least give those matters some weight. That is all that the new clause would provide. In my view, it is entirely correct. The employees have invested their time and efforts in the company and been loyal to it, and their interests should at least be considered. Amendment No. 46 is not draconian or onerous in the slightest. At present, insolvency practitioners have almost carte blanche to charge what they like. There is little scope for those fees to be taxed or challenged, and that is deeply unfair to directors, employees and creditors—particularly unsecured creditors. The hon. Member for Great Grimsby (Mr. Mitchell) is not the only hon. Member who has highlighted that unfairness. Two or three years ago, no less a Member than the right hon. Member for Maidstone and The Weald (Miss Widdecombe) initiated an Adjournment debate on the subject. The amendment is a small step in the right direction. Fees and other matters should be reported to the Registrar of Companies. I hope that when the Minister replies to the debate, he will tell us what he hopes to do and what provision his Department proposes to make to remedy this and other defects in the legislation, which were highlighted from both sides of the Committee.

Brian White (Labour, North East Milton Keynes)

I have a great deal of sympathy for the amendments tabled by my hon. Friend the Member for Great Grimsby (Mr. Mitchell). I suspect that I could have a long discussion with him about the things for which his constituents should be thankful to the Government—not least the national minimum wage—but I shall leave that for now. In Committee an awful lot of examples were cited of the type of problems that the amendments would address and the Minister expressed some sympathy for the points that were raised. We should remember that the Bill deals with small companies, and that the period when discussions are held about whether to impose a moratorium is often traumatic for employees—it is probably the most stressful time of their lives. As the hon. Member for South-West Hertfordshire (Mr. Page) put it, a decision taken early can save jobs. I shall be interested to hear the Minister's reply, because one thing that concerns me about the Government's unwillingness to accept the amendments is that, as I understand it, the Minister's argument in Committee was that employees are creditors and so are protected because they are part of the creditors' meeting. He argued that if they are not creditors, they are just normal employees and are protected by the directors. My worry is that the influence of the nominee in overriding the directors' wishes or suggesting to directors that they should go in a slightly different direction will be at variance with the interests of employees and key personnel. It is not unknown for key personnel, especially of small IT companies, to be poached and to move to other companies. There are several such key issues that the creditors' meeting would not address which would be crucial to the nominee's administration and the way in which the directors operate the company during the moratorium. If the nominee does not have a duty of care to employees, I fear that the directors will say, "Of course, we would like to look after you, but this nasty nominee is telling us to do something different." Because of the relationship between the nominee and the directors, the terms and conditions of employees could be directly affected by decisions that they cannot influence. My hon. Friend the Minister seems to rely greatly on the fact that employees will receive protection as creditors, but there are other concerns that he did not address in Committee.

John Burnett (Liberal Democrat, Torridge and West Devon)

We considered two particular points in Committee. The first was the duty of nominees to creditors and the second was whether an employee was likely to be a creditor. In fact, he or she will almost certainly be a creditor. Therefore, does the hon. Gentleman agree that new clause 3 at least provides for the interests of a company's employees to be regarded by the nominee during the moratorium?

Brian White (Labour, North East Milton Keynes)

That is why I have some sympathy for the new clause and shall be interested to hear my hon. Friend's comments. The emphasis in the Committee was on the employees' role as creditors, but the issue goes beyond that. If we do not consider the problem fully, the Bill may not achieve its aims of saving people's jobs and giving them hope by providing a breathing space. If there is a simple duty of care on the nominee, different decisions may be taken and that may secure the employment of the people in the company concerned.

John Butterfill (Conservative, Bournemouth West)

The House owes a debt of gratitude to the hon. Member for Great Grimsby (Mr. Mitchell) for bringing this matter to its attention. New clause 3 and amendment No. 46 deserve serious consideration. Like the hon. Member for Milton Keynes, North-East (Mr. White), I am minded to support amendment No. 46, but I am not entirely clear about how the new clause will function. I shall listen to the Minister's considered reply before I make up my mind. In principle, the idea that there should be a duty to look after the interests of employees should be accepted by all reasonable people.

John Burnett (Liberal Democrat, Torridge and West Devon)

I hope that the hon. Gentleman will accept that the provision in new clause 3 is not as strong as that—it is a pretty tame proposal. It would be a requirement not to look after the interests of employees but to have regard to them.

John Butterfill (Conservative, Bournemouth West)

The hon. Gentleman has an advantage over me on this, because he is a qualified lawyer with experience of the legal niceties. However, I shall listen to the Minister before I finally make up my mind.

Richard Page (Conservative, South West Hertfordshire)

My hon. Friend, who was savaged earlier by the hon. Member for Great Grimsby (Mr. Mitchell), is showing his true colours by considering the matter dispassionately. Does he not agree that employees would be best served by amendment No. 46? If the Registrar of Companies is notified of the fees charged, the basis of the charge and the terms and outcome of the moratorium, there is more chance—if things go wrong—of money being recovered to pay creditors and employees. Will that not give those in the company a better chance of receiving something if, sadly, the moratorium does not work?

John Butterfill (Conservative, Bournemouth West)

I have already said that I support amendment No. 46. It is admirable and will go a long way to dealing with some of the rare but considerable abuses that take place from time to time when companies go into liquidation. 4.45 pm I have been nice about the hon. Member for Great Grimsby, but I was a little disappointed when he did not follow the best traditions of the House and did not allow me to intervene when he was rather rude and accused me of defending vested interests. My interests are fully declared in the Register of Members' Interests. I have two small directorships of family companies that do not have any employees other than the directors themselves. Therefore, I have no interest to defend in that respect. I have already talked about my experience as a non-executive director of Maples. The hon. Gentleman seeks to include in the Bill provisions from the Companies Act 1985, which was passed by a Conservative Administration. If this Bill is passed, in the event of a liquidation, the nominee will have a duty to consider the interests of all those concerned. That is important. The hon. Gentleman referred to vultures, but they may be defending the interests of customers. For example in the case of Maples, our constituents—many of them pensioners—might have put down a £1,000 deposit on a three-piece suite, which would represent a huge purchase for them. Suddenly, the company went bust and they wanted their money back. Customers are also entitled to consideration, and it is always extremely difficult to balance the different interests and to treat everyone even-handedly and fairly, particularly if one knows that not everyone will be paid in full. On reflection, I am sure that the hon. Gentleman would agree with that. I have just voted for a new clause that would have helped to prevent the abuses that have occurred in some companies. I am disappointed that the hon. Gentleman did not support it, and he may recall that the Insolvency Act 1993 started as a private Member's Bill that I promoted. It protected the innocent purchasers of property that could be seized by a receiver or a liquidator. I changed the law to defend innocent purchasers from those that the hon. Gentleman describes as vultures. I do not apologise for my record on this issue. The general theme of this group of amendments is the nominee's supervisory activity in relation to the moratorium. Unfortunately, I am the only contributor to the debate who did not serve on the Standing Committee, but I served on the Select Committee that considered the draft Bill. Therefore, I wish to point out the respects in which the Government have failed to meet the concerns that the Select Committee expressed. One of the dangers is that nominees could face a conflict of interest. They will be invited by the directors to take up a paid position and a few in the profession—I hope not many—might think that it is worth taking such a rewarded post even if they think that a company does not have much chance of surviving. That would be regrettable, but the Government have failed to include in the Bill one of the defences that the Select Committee drew to its attention. If the directors of a company fail to attract the person that they want as nominee because he does not think that the company will survive, they may go to as many as 20 people to trawl for a nominee. Eventually, they may find a person who is sufficiently self-motivated to do the job. The Select Committee suggested that the Government should include a defence against trawling, but they signally failed to do so. Perhaps the Minister will tell us why. Equally, the Government are changing the requirement for qualifications of nominees. That again exacerbates the danger. Up to now, only qualified insolvency practitioners have been able to fulfil that role, but the Bill will allow anyone with an appropriate qualification or who is a member of a recognised professional body to fulfil the task. Plenty of people, such as certified accountants and chartered accountants, are members of appropriate professional bodies. Although they might be good accountants and produce good audits, they might have no experience of the specialised subject of insolvency. Again, the Select Committee made it clear that it was concerned that the Government were considering involving such people. A broad spectrum of people made representations to the Committee, and many of them expressed the same concerns. The Select Committee concluded that it might have been better if the Government had left this particular change to the wider review of the whole issue of insolvency. We are all—I hope—interested in protecting every section of the public, including, as the hon. Member for Great Grimsby said, employees, but that must be even-handed, transparent and above all fair.

Kim Howells (Labour, Pontypridd)

I shall deal first with amendment No. 3 and new clause 3 in the name of my hon. Friend the Member for Great Grimsby (Mr. Mitchell). The amendment seeks to place on a nominee and a supervisor a duty of care to employees. However, I am not sure that my hon. Friend appreciates that it would place a duty of care on a supervisor only under the existing voluntary arrangement procedure—that is, without the moratorium. It is also not at all clear whether the proposed duty on a nominee is to apply in both moratorium and non-moratorium cases. Either way, I believe that neither the new clause nor the amendment is necessary. The first part of the amendment would provide for the supervisor to owe employees a duty of care in the existing voluntary arrangement procedure but, as I have said, that is not necessary. Section 7(3) of the Insolvency Act 1986 provides: If any of the company's creditors or any other person is dissatisfied by any act, omission or decision of the supervisor, he may apply to the court. Therefore, if employees have concerns about the way in which the supervisor is acting, the 1986 Act already provides them with the ability to challenge the actions of the supervisor by seeking an appropriate order. New clause 3 is not necessary either. Paragraph 26 of proposed new schedule Al similarly allows any other person affected by a moratorium to apply to the court if he is dissatisfied by any act, omission or decision of the nominee.

John Burnett (Liberal Democrat, Torridge and West Devon)

Why should employees have to bother to apply to the court? Will the Minister concede that we are not proposing an onerous duty?

Kim Howells (Labour, Pontypridd)

A proper procedure must be followed. I shall expand on this matter when I address the important issues raised by the hon. Member for Bournemouth, West (Mr. Butterfill), who spoke about redressing the balance in the way in which the case is presented. That is an important issue. I know from the many cases that arrive on my desk from the companies investigation team at the Department of Trade and Industry that we cannot blind ourselves to the truth that there are many sharp directors who are prepared to fleece creditors, some of whom are pensioners who might have used their savings to put down a deposit on a three-piece suite, as the hon. Gentleman said. We must take into account all stakeholders, not just employees. I think that my hon. Friend the Member for Great Grimsby might have misunderstood the function of the supervisor and the nominees in a moratorium case. Neither will assume control of the company. I have said that a number of times, but hon. Members have not taken it on board. The purpose of the supervisor will be to perform the duties as set out for him in the voluntary arrangement. The nominee's role during the moratorium is set out clearly in proposed new schedule 1A. The directors will remain in charge of the company both during and after the moratorium. We therefore do not consider it appropriate to include a provision in the Bill that imposes such an undefined duty of care on a supervisor. Nor do we think it right that he should have to consult employees' representatives or that nominees should be subject to the duty imposed in section 309 of the Companies Act 1985. That section, which is headed Directors to have regard to interests of employees, states: Accordingly, the duty imposed by this section on the directors is owed by them to the company (and the company alone) and is enforceable in the same way as any other fiduciary duty owed to a company by its directors. We must remember that the directors are still in charge of a company in a moratorium, and section 309 continues to apply. Therefore, they should have regard to that duty when framing a rescue plan. That is my point which, for whatever reason, my hon. Friends do not want to accept.

Brian White (Labour, North East Milton Keynes)

Many examples were given in Committee of employees whose directors did not act in the way outlined by the Minister. Will he undertake to ensure that, for the purposes of this Bill, that duty will be publicised clearly so that people who go into voluntary arrangements understand it?

Kim Howells (Labour, Pontypridd)

I readily concede that successive Governments have done a bad job in making employees aware of their rights in such circumstances, but it is clear from section 309 that those rights are already enshrined in law. Far too often, trade unions do not take sufficient notice of them and employees do not know about them. I am not so worried about employees who are represented by trade unions, but about non-union, low-paid shop workers because those people do not have the confidence or the knowledge to use what is available. That is the problem. My hon. Friend the Member for Milton Keynes, North-East (Mr. White) is right to say that we have a real job to do to educate people.

John Burnett (Liberal Democrat, Torridge and West Devon)

We are not talking about directors—we know that they must comply with section 309(1). I hope that the Minister will direct his attention to the fact that new clause 3 would impose on a nominee the very small burden of having to have regard to the interests of the company's employees.

Kim Howells (Labour, Pontypridd)

I have tried already to respond to that point. I have said that it is an unnecessary burden, and I believe just that. My hon. Friend the Member for Great Grimsby said in Committee that he was looking for a way of ensuring that employees' interests were included in the equation. He will understand that supervisors and nominees will be aware that employees are able to make application under section 7(3) or paragraph 24, and should take that right into account when performing their duties. Additionally, supervisors and nominees will be aware that if they act in such a way as to give rise to a course of action—such as in tort—they will be vulnerable to legal action, and they would have to take that into account too. On amendment No. 3, given the supervisor's function, it would be inappropriate for him to have regularly to consult employees' representatives. However, if an employee happened also to be a creditor, the supervisor would keep him informed of progress in the same way as he would other creditors. I think that my hon. Friend the Member for Great Grimsby referred to amendment No. 47 after dealing with new clause 3 and amendment No. 3. It is a similar amendment to one that he tabled in Committee. Like that one, I believe that amendment No. 47 is unnecessary. First, it is not necessary for any creditor or any member of the company to be able to make such an application. If he or she is not happy with the existing nominee, they can vote to change the nominee at the meeting summoned under paragraph 29 of schedule A1. That can be achieved by proposing that it be a condition of any extension of the moratorium that the nominee be replaced. I hope that the House accepts that. Alternatively, it can be proposed that the nominee be changed by amending the voluntary arrangement proposal considered by the meeting. It would be up to the meeting to pass such a proposal. We do not consider it appropriate that anyone should be able to apply to the court to change the nominee. The right contained in paragraph 28 to make application to the court to replace the nominee is designed to deal with specific circumstances. 5 pm The hon. Member for Bournemouth, West raised an extremely important point. I have said that I see far too many cases of shysters fleecing those whom we refer to as creditors. I know that my hon. Friend the Member for Great Grimsby knows about those cases. I had one recently that received much publicity. It involved the World of Leather, where extremely dubious practices were carried on in the last few weeks of trading. Constituents were affected throughout the country and there were some sad results. Many people did not get their money back and they did not get their three-piece suites. They are creditors—it is not only the big banks that are creditors, along with the circulating vultures, as my hon. Friend referred to them. I know of elderly and poor people who saved up for three-piece suites and did not get them. We must remember that the process is designed to protect those people, as much as it is designed to ensure fair play in every other respect. We are offering a period of respite for companies when they feel that they are in trouble. Perhaps the Bill will significantly add to that rescue culture. The hon. Member for Bournemouth, West asked whether directors will be encouraged to shop around for a nominee until they find one who is prepared to sign the necessary statement. His intervention was tantamount to that. The likelihood is that in practice they will not have time to do that. We should bear that in mind. However, there seems no good reason why directors should not be able to test the market. In the early days of consideration of the Bill in Committee, there was much discussion about the enormous fees that are charged by insolvency practitioners. Many allegations were made by my hon. Friend the Member for Great Grimsby and others about dubious practices concerning fee setting and levels of fees. Perhaps the Bill will go some way towards breaking that monopoly.

John Butterfill (Conservative, Bournemouth West)

It is not that I have any concern about people shopping around to get the best fee. That is entirely admirable. I am worried that if they shop around and are repeatedly turned down because experienced professionals say that there is no hope of their acting as nominees, they will eventually find someone who for self-interest—that of earning a few quid—will say, "Yes, I'll do it." That point, which the Government have not addressed, was addressed by the Select Committee.

Kim Howells (Labour, Pontypridd)

I shall try to convince the hon. Gentleman that we have addressed it and that we are concerned. As the hon. Gentleman says, some nominees might be more rescue-oriented than others for many reasons, good as well as bad. We know that there is a flip side to the coin. There are some professionals who are notoriously not interested in rescues, whereas there are others who generally are. It could work both ways. Any prospective nominee should be up to the standard expected of him. There is no question about that. That goes to the point made by the hon. Member for South-West Hertfordshire (Mr. Page). I believe that they will be up to the proper standard because they will be authorised and regulated by a body recognised by the Secretary of State for that purpose. However, if needed, in the unlikely event of a director being able to pull the wool over a nominee's eyes, various remedies are available in schedule A1 to address the abuse. Not the least of those is the offence contained in paragraph 40, which provides for the punishment of those who make false representations and the like to obtain a moratorium. Those of us who have previously been involved with the Bill are accustomed to hearing my hon. Friend the Member for Great Grimsby talk about the importance of public accountability of insolvency practitioners, and he is right to highlight that. However, in amendment No. 46, he is again talking about fees. I am glad that he wants to discuss fees, which are an important subject and one that is obviously dear to his heart—but the fact is that the Bill is not about the regulation of practitioners' fees. At issue is the requirement on the nominee to give notice of the end of a moratorium. That requirement can arise for two reasons, among others: first, because the moratorium has come to an end without a voluntary arrangement being agreed; and, secondly, when an arrangement has taken effect following the meetings of a company and its creditors. In the first instance, the question of payment of the nominee's fees will be a matter for the company and its directors, not anyone else, to deal with. In the second instance, the nominee's fees will be a matter for the meetings to consider when voting on whether or not to accept the voluntary arrangement. What the nominee is to be paid is a matter that must be included in a voluntary arrangement, under rule 1.3 of the existing company voluntary arrangement procedure, and we intend that a similar provision should apply to the new moratorium procedure. My hon. Friend should also take comfort from paragraph 32 of the new schedule, which sets out that, if a meeting proposes to extend the moratorium, the nominee has to inform the meeting of the costs of his monitoring activity up to that point and what he intends to do in that respect during the proposed extension. Therefore, anticipated costs will have to be approved if the moratorium is not to end. In those circumstances, I consider it to be neither necessary nor appropriate for the nominee to have to give the notice set out in amendment No. 46 regarding his fees. My hon. Friend also desires the nominee to have to notify various individuals of any adverse court judgment or disciplinary findings by any of the Recognised Supervisory Bodies. I do not consider that to be appropriate to the Bill, which my hon. Friend described in Committee as a very modest measure. Such issues have nothing to do with a moratorium and, as I have said before, practitioner regulation is not a matter for the Bill. The hon. Member for South-West Hertfordshire spoke to amendment No. 33, which is identical to one that he tabled in Committee. For the benefit of those who have not had a chance to read Hansard, I repeat that we do not consider it necessary to provide the nominee with the power to apply to the court for directions. The nature of the nominee's role is such that he should not be in a position in which such an application would be appropriate. Commercial and administrative decisions are for the nominee, not for the court. We do not consider that the court should be used to provide the nominee with a way in which to avoid taking decisions that are, rightly, for him, or to enable him to obtain the court's endorsement of his intended course of action. I look to Mr. Justice Neuberger for neither direction nor support, but the hon. Member for South-West Hertfordshire is correct to say that I take a great deal of comfort from Mr. Justice Neuberger' s ruling in the case of T and D Industries plc and another, relating to a company that was the subject of an administration order. Having made those points, I hope that my hon. Friend the Member for Great Grimsby will withdraw his amendment and that the others will not be pressed.

Austin Mitchell (Labour, Great Grimsby)

I should make a couple of points before coming to my agonising decision about whether to keep the House on tenterhooks by pressing the matter to a Division. In answer to my hon. Friend the Member for Milton Keynes, North-East (Mr. White), may I say that I was not neglecting the big things that the Labour Government are doing: they are important and the Government are successful. What I said was that, as Back-Benchers, we have a little influence on legislation affecting the way in which companies are run, insolvencies administered and companies rescued, and we should use that opportunity to tilt the balance towards our section of society and the workers. We have only a little influence but we can do much to improve society through little changes to legislation. That seems to me to be the responsibility of the Back Bencher. We do not get much responsibility, for heaven's sake; we should use what we have. I did not want to take the question from the hon. Member for Bournemouth, West (Mr. Butterfill) because I did not want to go down that legalistic path. If the hon. Gentleman understood me to say that he represented vested interests or, worse still, that he was one of the vultures I was criticising, I correct that impression and apologise. I was not saying that. The hon. Gentleman was asserting the primacy of company directors by pointing out their legal responsibilities—to the detriment of the workers, I thought. My sole point was about the need to swing the balance towards the workers.

John Butterfill (Conservative, Bournemouth West)

rose—

Austin Mitchell (Labour, Great Grimsby)

No, I will not give way. I make no correction on the vulture culture. In too many cases the interests of the banks is predominant, and in the scrabble over the money, the banks have enormous power. I know that there are tear-jerking pictures of people all over the country who are owed small sums by fraudulent companies, but that is not what we are discussing. Through the Bill, we are trying to instil the rescue culture, to keep companies going. The power of the vultures to close companies down and to call in debt, in the unpredictable, lurching way in which banks do that, needs to be checked. All that I am trying to do is to tilt the balance towards the workers. After all, we are the Labour party still, I think. We are a party of stakeholders, and voice the interests of stakeholders. We work in a European context, and workers' rights are properly advanced by all the proposals coming out of Europe—something that I strongly support. We have an opportunity, so why are we not doing what we can and should do? The trade unionists to whom I have spoken and with whom I formulated the amendments think that we will do so, but I am disappointed to find that my hon. Friend the Minister does not consider that necessary. I do not accept the argument that workers can apply to the courts. That is not part of their repertoire or expertise, and it should not be necessary if we write their primacy into legislation. I am not asking for the interests of the employees alone to be taken into consideration. I am asking for them to be taken into consideration, but not as the predominant influence.

Kim Howells (Labour, Pontypridd)

I thank my hon. Friend for giving way. I am sure that he did not mean that it is not for workers or trade unions to take these matters to court. Many of the great advances that have been made by trade unions and workers have been made in court, as a result of brilliant advocacy. Even I am old enough to remember some of it, and I have witnessed it first-hand. I am sure that my hon. Friend does not mean what he just said.

Austin Mitchell (Labour, Great Grimsby)

I wish that I could speak Welsh, rather than the simple verities of Yorkshire—pure language of the people of the north. I was not saying that at all. I said that applying to the courts was not part of workers' expertise. Certainly, they need backing and support from the trade unions, and the trade unions provide it. We can encourage them to provide more of it. If the rights of workers have been trampled on, it is the responsibility of the trade unions to help them to go to court, but in some cases workers are not members of trade unions. The courts are an uncertain way of making progress, and we could make progress in the matter by simply writing into the Bill the requirement of a duty of care to the workers. That is all I ask. I do not see why my hon. Friend is so adamant. I know that he has received advice to the effect that that would be a nuisance, would complicate matters and might lead to unforeseen consequences. I believe that it would set the tone for the entire procedure. My hon. Friend has turned down the idea and I am disappointed by his reply. It seems to me that as he is the Minister of social and corporate responsibility and as such issues are raised in that context, appropriate provisions should be included in the Bill. 5.15 pm I was excited by the tumultuous support that I received from the other side of the House—Conservative Members are clamouring to support my proposal—but it puts me in an embarrassing situation. I would like to lead the Liberals and the Conservatives to the barricades and shout, "What about the workers?"

Richard Page (Conservative, South West Hertfordshire)

After the hon. Gentleman's dramatic words at the start of our debate, is he now saying that he will not press the new clause to a vote and will back off? Surely not!

Austin Mitchell (Labour, Great Grimsby)

When I used the word "tumultuous" I was referring not to the hon. Gentleman's speech, but to the widespread support I received from Opposition Members. I was delighted by their support—that shows that they have learned something after failing the workers for 18 years. I am disappointed by the lack of support among Labour Members, especially from the Minister, and I am now in an embarrassing position. Neither of my two co-authors of the new clause could be present for the debate. In light of that, I give up. I did not push the matter in Committee because of a lack of killer instinct. With a feeling of sad impotence, I beg to ask leave to withdraw the motion.

ADMINISTRATION ORDERS

Richard Page (Conservative, South West Hertfordshire)

I beg to move amendment No. 26, in page 6, line 7, at end insert "and occupied by".

Sylvia Heal (Deputy Speaker, Halesowen and Rowley Regis)

With this it will be convenient to discuss the following amendments: No. 27, in page 6, line 14, at end insert "and occupied by". No. 23, in schedule 1, page 15, line 25, at end insert "and occupied by". No. 25, in schedule 3, page 38, line 19, after second "to", insert "and occupied by". No. 24, in page 38, line 37, after second "to", insert "and occupied by".

Richard Page (Conservative, South West Hertfordshire)

Unusually, I start by paying a small tribute to the Government and the Minister for at long last recognising the current legal difficulties affecting landlords and companies. The position was anomalous; it was and is quite illogical for a landlord to be prevented from taking proceedings against a company in possession of premises rented from that landlord when, at the same time, the landlord is allowed to re-enter such premises peaceably. Unfortunately, the Department's proposal is still confusing. It appears on the basis of the legal advice I have received—not from the good justice Neuberger, but from another source—that under the amendment tabled by the Minister in Committee, it would be possible for a landlord to be forbidden from peaceably re-entering premises that are not occupied by the company that has sought and obtained a moratorium. I find the reasoning behind that rather difficult to detect. The amendments are of a probing nature; I am a seeker after truth. Looking the hon. Member for Great Grimsby (Mr. Mitchell) in the eye, I say that this is a query from a vested interest. It is important that this matter is clarified. I am delighted that the hon. Gentleman was in the Lobby, voting for the new clause. I commend him on his courage at this particular moment in his political career. The purpose of the new moratorium procedure is to protect companies that have a reasonable prospect of becoming viable during a limited period. We all say amen to that and we all hope that they will be viable not only for that limited period, but will successfully trade out of their difficulties. I agree with the Minister that it would be quite perverse for such companies to be deprived by a landlord of the premises that they legitimately occupy: however peaceably that landlord regained possession, the business would collapse and the purpose of the moratorium would be negated. Surely there should be no bar on a landlord reoccupying premises that the company in question is not using. It cannot be carrying on businesses vital to the success of the moratorium in premises that are unoccupied. I believe that the amendments would deal with the odd situation that the Bill will create. They will ensure that the landlord's legitimate interests in unoccupied premises are protected, while ensuring that companies under the protection of the new moratorium procedures do not suffer. As long ago as 15 June my noble Friend Baroness Buscombe pointed out in another place the problems that arose from the Bill in its previous form. I will not go through all the difficulties and problems that would emerge, but I can understand that it is a natural instinct for a company in difficulty to keep as many options open as possible. Would a fairer balance be struck if, as part of that application for a statutory moratorium, the tenant was required to specify those tenancies which were essential to the rescue effort? These would be protected by the moratorium, while the landlord's rights in relation to the remainder would be unaffected. This exception to the general rule could be achieved as part of the revision of the insolvency rules. Nothing brings home the value of an amendment more than examples from the real world, and I have one. Three months after an administrator was appointed, a debtor who had leased three properties from a large landlord produced a list of properties that the debtor wished to retain and take forward to see his company survive. One month's rent had been paid on one property, but nothing had been paid on the others. One unit had been sold with full payment of arrears, although it took some time for the landlord to receive confirmation that the arrears would be made good. The second unit had been closed, and the administrator wished to retain the third. As matters stand, the landlord would be forbidden from doing anything with the premises that were not required. As I said, my noble Friend Baroness Buscombe spoke about the matter some time ago, but it has taken six months for Government amendments to be introduced. Why on earth did it take so long to introduce those relatively simple amendments? That sort of delay is unacceptable. Furthermore, the lateness of the arrival of the Government amendments means that it has been difficult for the Opposition to consult all the interested parties, take advice and reach a satisfactory overall position. My amendments would address the problem, and I shall be interested to hear what the Minister has to say about the points that I have made.

Sir Sydney Chapman (Conservative, Chipping Barnet)

I support the amendments tabled by my hon. Friend the Member for South-West Hertfordshire (Mr. Page) and my right hon. Friend the Member for Wells (Mr. Heathcoat-Amory). As the Minister will know, I generally support the Bill, although, in Committee, I argued for ways in which it could be improved. However, at the basis of the Bill is the fact that it is fair legislation. The Government's intention in establishing moratorium arrangements in insolvency legislation is to enable businesses to trade out of their difficulties if possible. I fully support the Minister in trying to achieve that. The British Property Federation has brought a certain matter to my attention. It states that the issue in question is the Government's proposal to reverse the Razzaq vs Pala court decision so that a landlord may not exercise the right of peaceable re-entry of a property while a voluntary moratorium agreement is in place without the permission of a court. I agree with the general principle of that proposal, as does the British Property Federation. However, the federation is concerned to ensure that the fair balance between the interests of landlords and tenants is not disturbed, and that both should feel that their interests are properly safeguarded under the legislation. I should tell the House, and the hon. Member for Great Grimsby (Mr. Mitchell) in particular, that I am not a landlord or a tenant, so I do not have a vested interest in advancing that case. However, the British Property Federation makes a fair point.

John Burnett (Liberal Democrat, Torridge and West Devon)

Does the hon. Gentleman agree that property might be empty at the time of a moratorium because there is no stock and no money to pay for it? However, the moratorium would result in restructuring of finances and there could be cash and stock, and the property might have to be used again.

Sir Sydney Chapman (Conservative, Chipping Barnet)

I think that I am at one with the hon. Gentleman. However I shall choose my words carefully and say that the balance of fairness would be preserved if, as an exception to the general rule, a tenant applying for a statutory moratorium was required to specify those tenancies that were essential to the rescue effort. Those would be protected by the moratorium, while landlords' rights in relation to the remainder would be unaffected. Our amendments would achieve that and ensure fairness. Will the Minister look at them sympathetically, as they would make the Bill fairer?

Kim Howells (Labour, Pontypridd)

I have a great deal of sympathy with the approach of the hon. Member for Chipping Barnet (Sir S. Chapman). It is an issue that we have to look at carefully. We undertook a short consultation and, not surprisingly, views were polarised. It could prove to be a bone of contention. The amendments tabled by the hon. Member for South-West Hertfordshire (Mr. Page) would permit a landlord to exercise the right of forfeiture by means of peaceful re-entry where the premises concerned were unoccupied without first having to go to court. As the hon. Member for Torridge and West Devon (Mr. Burnett) said, just because premises are unoccupied does not necessarily mean that they are essential to the rescue attempt, and that is why we do not consider the amendments to be appropriate. After consulting and listening to the arguments, we concluded that the best way to approach the issue was to give the landlord the right to apply to the court for leave to re-enter any premises leased by the company or debtor to see whether or not they were necessary to the rescue attempt. The court can decide whether it is appropriate for the landlord to exercise the right of forfeiture. The amendments could possibly mean that in order to ensure that a landlord could not exercise a right peaceably to re-enter premises, the company would have to ensure that the premises in question were physically occupied at all times. That seems unnecessary. There is also the point that the company may have sub-let its premises. In those circumstances, the premises clearly would not be occupied by the company, hence the landlord would presumably be free to exercise any right to peaceably re-enter despite the fact that the premises might be essential to the rescue attempt. If premises are no longer needed by a tenant, he is unlikely to defend any application by a landlord to forfeit the lease permitted by the court. Further, peaceable re-entry is not a frequently used right and also applies almost exclusively to business premises. In addition, the moratorium is very short, so the impact of the provision on a landlord would be limited in terms of time. I hope that the hon. Gentleman will accept that explanation of where we stand and why we think that the amendments are not entirely appropriate.

Richard Page (Conservative, South West Hertfordshire)

In view of the Minister's explanation and the point that I had not fully considered regarding premises being sub-let, I beg to ask leave to withdraw the amendment. Amendment, by leave, withdrawn.

INSOLVENT ESTATES OF DECEASED PERSONS

Richard Page (Conservative, South West Hertfordshire)

I beg to move amendment No. 28, in page 7, line 32, at end insert— 'who has died after the commencement of this section'. The amendment appears to be relatively simple and straightforward and I hope that the Minister sees it that way as well. It is highly important as it deals with a problem on which Ministers here and in another place have failed to satisfy right hon. and hon. Members and experts in insolvency law outside the House. It is clear that the provision will have serious consequences for debtors who die before it comes into operation. I am advised that if the provision is enacted in its present form it will have retrospective effects. I am always reminded of a story about Winston Churchill. Someone told him that the first day of a child's life is one of the most dangerous, and Winston Churchill replied that the last is not without its hazards as well. Leaving that aside, I dread to think of the position of people who have arranged their affairs on the basis of what they understood the law to be. Widows who may be living on restricted means in modest accommodation may find themselves faced with debts equal to the value of the interest in their homes held by their dead husbands. It is obvious that they will not be able to pay, or if they do they will be eligible for a much greater degree of support from the social security system. I believe many things about the Government, but I do not believe that they intend or want such an effect, since ruining widows or families through retrospective changes in insolvency law would not win the votes or the popularity that all Governments seek. 5.45 pm Far be it from me to try to help the Government to avoid the pitfalls of unpopularity, but the safeguard in the amendment would help them to avoid an unnecessary trap. I hope that that is a compelling argument for the Minister to accept it, especially bearing in mind the fact that he is one of the self-confessed architects of new Labour.

John Butterfill (Conservative, Bournemouth West)

I strongly support the amendment. It is a general principle of English law that legislation should not act retrospectively. It is not unknown for the House to pass retrospective legislation, but in general all Governments—and all hon. Members—have sought not to enact it, because it makes it difficult for people to plan their lives, creating unnecessary uncertainty and possibly affecting existing contractual arrangements. There has long been a principle in English law that joint tenants own both absolutely and jointly, and that when one dies, the whole reverts to the other—or others, as there may be more than one. If the Government feel that that is no longer a form of ownership that should be protected, the answer is surely to amend the law on joint tenancies rather than to single out that area in the Bill. Anomalies will be created. Building societies and others who have charges over property, in the expectation that they will achieve a charge over the whole in the case of a joint tenant, could have difficulties. The Bill is profoundly flawed on this matter, and that is compounded by the retrospective nature of clause 12. This is not a new issue. It was considered by the Trade and Industry Committee, which said: There is a genuine policy question as to whether the interests of a deceased debtor in property held jointly should be treated as forming part of his estate for the purpose of its administration in bankruptcy. This deserves to be addressed explicitly rather than by merely referring back to…the 1986 Act; it remains for Ministers to make a positive case for any such change. Clause 12 does precisely what the Trade and Industry Committee said that we should not do: it refers back to the 1986 Act. Frankly, that will not do. It is an abuse of the House and an affront to the Committee's recommendations. Another of its specific recommendations was: It would be useful if the explanatory notes could confirm that no retrospective effect is intended… The Bill does precisely the opposite. Neither the clause nor the retrospective effect should be allowed to survive.

Christopher Chope (Conservative, Christchurch)

My hon. Friend the Member for Bournemouth, West (Mr. Butterfill) makes a powerful point that I wish to build on. When the Select Committee made the recommendation to which he referred, the Government responded in paragraph 20 of the fourth special report of the Trade and Industry Committee, issued on 8 February. They said that the Committee's comments had been noted, and that it would be made clear that the provisions would not have retrospective effect. Therefore the Government have already committed themselves to ensuring that the provision does not have retrospective effect, yet unless the amendment is accepted, clause 12 will have retrospective effect. In a short debate on my amendment (a) in Standing Committee, I found it hard to follow the Minister's argument as to why the provision would not be retrospective. Having looked at his argument again, I am convinced that the Bill is retrospective, and that if the Government stick to it they will be contradicting their undertaking to the Select Committee. The Minister told the Standing Committee: Hon. Members will appreciate that we must strike a balance between the interests of creditors who have not been paid by a deceased insolvent and a survivor who has become sole owner of what he or she formerly owned jointly with a deceased insolvent.—[Official Report, Standing Committee B, Tuesday 7 November; c. 130.] That would be fine if the Bill applies only to people who die after it attains Royal Assent. However, what happens to such a survivor who finds, after the Bill is enacted, that the provision is used to alter the position that he or she was in before the legislation was implemented?

John Butterfill (Conservative, Bournemouth West)

I have an example in which my hon. Friend may be interested. In it, a woman who knows that her husband is terminally ill goes to a building society for a loan. It is granted on the basis that there is a joint tenancy and that, if the husband dies fairly quickly as is expected, she will own the whole property. Does my hon. Friend agree that the Bill would mean that the building society's security would be halved?

Christopher Chope (Conservative, Christchurch)

My hon. Friend is right, and I do not doubt that many other examples of that effect could be devised. However, that is the problem of retrospective legislation, as the Trade and Industry Committee recognised. The Government undertook that the provision would not have retrospective effect, but the Bill as it stands would have just that effect. I hope that the Government will accept the amendment.

John Burnett (Liberal Democrat, Torridge and West Devon)

Clause 12 is designed to deal with a well known mischief. It is manifestly unfair that a deceased insolvent's interest in joint property escapes the creditor's net, but it is also unfair to make the change retrospectively. Retrospective law is bad law and contrary to the House's traditions. The hon. Member for Bournemouth, West (Mr. Butterfill) gave the example of a woman whose only asset, after she is widowed, might be the property in which she lives and which she will inherit from her insolvent husband when he dies. Another problem appears in clause 12(3), which states that the court must have regard to all the circumstances of the case, including the interests of the deceased's creditors and of the survivor. However, the subsection continues: but, unless the circumstances are exceptional— and we do not know what is meant by "exceptional; that will be for the courts to decide in due course— the court must assume that the interests of the deceased's creditors outweigh all other considerations. That is pretty draconian and unfair. In reply to a point I made in Committee about how long this liability was to last, the Minister referred me to the Limitation Act 1980—that is, six years. An order might be made or applied for under this measure in respect of events that occurred five years ago. That is a bit tough, and I hope that the Minister reconsiders. I support the amendment.

Kim Howells (Labour, Pontypridd)

By way of clarification, the Select Committee did not consider this version of the clause. We have moved away from revesting a property in a trustee. I do not know whether the hon. Member for South-West Hertfordshire (Mr. Page) has looked at what is, in effect, new clause 12, but as the hon. Member for Torridge and West Devon (Mr. Burnett) has just pointed out, the court can only make a monetary order and it will apply only when a petition is presented after the new section comes into force. I hope that the hon. Member for Bournemouth, West (Mr. Butterfill) will look at subsection (3), which was referred to by the hon. Member for Torridge and West Devon. The court can do justice, having regard to all the interests concerned, which includes the interests of the former wife. I thought that the hon. Member for Bournemouth, West gave a good example. It is entirely reasonable to assume that there will be such cases.

John Butterfill (Conservative, Bournemouth West)

I am grateful to the Minister for giving way, but that is not what subsection (3) actually says. It makes it clear that only in exceptional circumstances will anybody other than the creditors of the deceased be taken into account. I am by no means convinced that the circumstances that I have described—which I think are deserving, and would be accepted as such by any reasonable person—are what a court might consider, strictly speaking, as exceptional circumstances.

Kim Howells (Labour, Pontypridd)

It is a statement of faith—obviously I have more faith in the courts than the hon. Gentleman in that respect. [Interruption.] I will be steady. I think that what I said in Committee still holds true: we need to strike a balance between the interests of creditors who have not been paid by a deceased insolvent and the survivor, who is the sole owner of what he or she formerly owned jointly with the deceased insolvent. We are not convinced that the creditors of an insolvent should be in a worse position if the debtor has died than if he or she were living. We think that limiting the application of the new provision so that it will apply only in those cases where the petition for the insolvency administration order is presented after the new provision comes into force strikes the appropriate balance. It must be remembered that prior to the Palmer case, it was understood that the survivor would automatically have been deprived of the deceased's interest and the creditors would have got the debtor's entire share. On that basis, no thought would have been given to the survivor's situation or interests. Clause 12 certainly does not treat the survivor as harshly as that. Indeed, it provides for the court to have a discretion to make a monetary order against the survivor, which is very important. It provides that the order will concern only so much of the value lost to the estate as is needed to meet the debts and other liabilities to which his estate is subject. In addition, the court will make such an order only after it has weighed the interests of both the survivor and the deceased's creditors; and in the balancing exercise, the court must assume that the interests of the deceased's creditors will outweigh all other considerations, unless the circumstances are exceptional.

Christopher Chope (Conservative, Christchurch)

Is the Minister telling us that the measure may not prove retrospective in practice because one may be able to get the indulgence of the court not to apply it retrospectively? Nevertheless, the legislation will apply retrospectively and will put in jeopardy women whose husbands have died and who have relied upon having absolute entitlement to the formerly joint estate.

Kim Howells (Labour, Pontypridd)

It is a question of balance. The hon. Gentleman is right: a judgment has to be made. As I have tried to explain, the provision will apply only in those cases in which a petition has been presented after the measure comes into force. We think that that is right and I hope that the hon. Member for South-West Hertfordshire will withdraw the amendment.

Richard Page (Conservative, South West Hertfordshire)

On Second Reading in another place, the noble Lord McIntosh said that he understood the need to be satisfied there is no retrospective aspect involved.—[Official Report, House of Lords, 4 April 2000; Vol. 611, c. 1272.] In Committee, my hon. Friend the Member for Christchurch (Mr. Chope) said that he remained to be convinced that the Government's amendment would not have a retrospective effect. My hon. Friend the Member for Bournemouth, West (Mr. Butterfill) referred to the Select Committee report and touched on the matter yet again. My hon. Friend the Member for Christchurch referred the Minister to paragraph 20 of the Government's response to the Trade and Industry Committee, to the effect that the new provisions would not have a retrospective effect. My hon. Friend repeated that today.

Christopher Chope (Conservative, Christchurch)

It is important that the words be on the record. They are: It will be made clear that provisions will not have retrospective effect. That is what the Government said.

Richard Page (Conservative, South West Hertfordshire)

I am always grateful to my hon. Friend for taking my next line away from me. which he did a number of times in Committee. My opportunity will come, however, as the wheel turns. Despite all those Government statements and despite what the Minister has said, there has been no move. In its present form, the Bill has a retrospective effect in relation to those debtors who die before the commencement of this section. As I said, and it bears repeating, there will be widows who live in modest accommodation on a modest pension, who have ordered their affairs with regard to the law, and who, if the Bill is enacted in its present form, will find that their affairs are no longer valid.

John Butterfill (Conservative, Bournemouth West)

Does my hon. Friend agree that the plight of such a widow is compounded by the fact that, under (b), the petition for the order can be presented within five years of the day her husband died? That means that she may have to wait five years to find out whether the provision will descend upon her. That is the most appalling uncertainty in which to place her.

Richard Page (Conservative, South West Hertfordshire)

My hon. Friend makes his point. It is a fact of life that elderly people worry more than young people about security. I know of several of my elderly constituents who are desperately worried about accommodation and living in a secure environment. The risk of that environment being upset is exceedingly worrying. The provision will put widows under pressure and at risk. The Minister says that he has faith in the courts and so do I—particularly if one has a lot of money. My faith in the courts is such that, as I read the section, it clearly directs the courts that unless there are exceptional circumstances they must assume that the interests of the deceased's creditors outweigh all other considerations. The operative word is "exceptional". The Minister is therefore being disingenuous in his response. I do not believe that the effect that he described will be the effect in practice. The courts will, in practice, go for the extra money and those widows will be at risk, but—

Christopher Chope (Conservative, Christchurch)

I hope that my hon. Friend is not going to seek to withdraw the amendment. Surely, this is a constitutional outrage. Why should not this House deal with the matter rather than leaving it to the other place? Their Lordships were very concerned about any retrospective provisions. Will my hon. Friend join me to divide the House on this important issue?

Richard Page (Conservative, South West Hertfordshire)

This is what friends are for. I have to tell my hon. Friend, having considered the Minister's answer, that I believe that although the thrust and tone of my amendment are right, the drafting is neither specific nor accurate enough to deal with the matter. The Minister has shown himself in his true colours by his answer. I will seek leave to withdraw the amendment, but I hope that it can be produced in another place and that the Government can find it in their heart to look at the matter once again. I beg to ask leave to withdraw the amendment.

REPEALS AND AMENDMENTS

Bowen Wells (Conservative, Hertford and Stortford)

I beg to move amendment No. 51, in page 9, line 40, at end insert— '(3) Section 356 of that Act (Authority's powers to participate in proceedings: company voluntary arrangements) is amended as follows— (a) for subsection (1), there is substituted— (1) Where a voluntary arrangement has effect under Part I of the 1986 Act in respect of a company or insolvent partnership which is an authorised person, the Authority may apply to the court under section 6 or 7 of that Act.", (b) for subsection (2), there is substituted— (2) Where a voluntary arrangement has been approved under Part II of the 1989 Order in respect of a company or insolvent partnership which is an authorised person, the Authority may apply to the court under Article 19 or 20 of that Order.", (c) in subsection (3), for "either" there is substituted "any" '.

Alan Haselhurst (Deputy Speaker, Saffron Walden)

With this it will be convenient to discuss Government amendments Nos. 52 and 53.

Kim Howells (Labour, Pontypridd)

In Committee, the hon. Member for South-West Hertfordshire (Mr. Page) asked whether the Financial Services Authority should also be given the right to apply to a court under paragraph 39 of proposed new schedule Al to the Insolvency Act 1986, and he subsequently wrote to me on that point. I have carefully considered what he said, and I have concluded that we should afford the authority that further right—the right to make applications to the court on the grounds that any of the company's creditors or any other person is dissatisfied with the actions of the supervisor, and for the authority to be heard if such an application is made by another. However, we need to go a stage further. Such rights should also be afforded to the authority in respect of applications under section 7 of the 1986 Act and article 20 of the Insolvency (Northern Ireland) Order 1989. Those involve a procedure relating to existing voluntary arrangements without a moratorium, both here and in Northern Ireland. Such rights were not included in the Financial Services and Markets Act 2000 when it was passing through Parliament. We have concluded that they should have been, especially as the authority is given such rights in that Act to make an application and to appear on an application by another, in relation to the actions of a supervisor and the individual voluntary arrangements procedures. We have therefore tabled amendments Nos. 51, 52 and 53, to give the authority the right to make applications and be heard on applications under those three provisions. All three allow applications to be made where any of the company's creditors, or any other person, is dissatisfied by any act, omission or decision of the supervisor.

Richard Page (Conservative, South West Hertfordshire)

I wish to express to the Minister my appreciation of the fact that he has listened to the arguments. We shall support him if amendments Nos. 51, 52 and 53 are pressed to a vote.

EXTENT