Parliamentary Debates House of Commons Official Report General Committees
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PARLIAMENTARY DEBATES HOUSE OF COMMONS OFFICIAL REPORT GENERAL COMMITTEES Public Bill Committee RATING (CORONAVIRUS) AND DIRECTORS DISQUALIFICATION (DISSOLVED COMPANIES) BILL First Sitting Tuesday 6 July 2021 (Morning) CONTENTS Programme motion agreed to. Written evidence (Reporting to the House) motion agreed to. Motion to sit in private agreed to. Examination of witnesses. Adjourned till this day at Two o’clock. PBC (Bill 11) 2021 - 2022 No proofs can be supplied. Corrections that Members suggest for the final version of the report should be clearly marked in a copy of the report—not telephoned—and must be received in the Editor’s Room, House of Commons, not later than Saturday 10 July 2021 © Parliamentary Copyright House of Commons 2021 This publication may be reproduced under the terms of the Open Parliament licence, which is published at www.parliament.uk/site-information/copyright/. 1 Public Bill Committee6 JULY 2021 Rating (Coronavirus) and Directors 2 Disqualification (Dissolved Companies) The Committee consisted of the following Members: Chairs: DAVID MUNDELL,†CHRISTINA REES † Baker, Duncan (North Norfolk) (Con) † Scully, Paul (Parliamentary Under-Secretary of State † Baynes, Simon (Clwyd South) (Con) for Business, Energy and Industrial Strategy) † Grant, Peter (Glenrothes) (SNP) † Smith, Jeff (Manchester, Withington) (Lab) † Hall, Luke (Minister for Regional Growth and Local Tomlinson, Michael (Lord Commissioner of Her Government) Majesty’s Treasury) † Hunt, Jane (Loughborough) (Con) † Webb, Suzanne (Stourbridge) (Con) † Jenkinson, Mark (Workington) (Con) † Whitley, Mick (Birkenhead) (Lab) † Malhotra, Seema (Feltham and Heston) (Lab/Co- † Young, Jacob (Redcar) (Con) op) † Mishra, Navendu (Stockport) (Lab) Yohanna Sallberg, Committee Clerk † Richardson, Angela (Guildford) (Con) † Rimmer, Ms Marie (St Helens South and Whiston) (Lab) † attended the Committee Witnesses Stephen Pegge, Managing Director, Commercial Finance, UK Finance David Kerr, Fellow, Chartered Institute of Credit Management Dr John Tribe, Senior Lecturer in Law, University of Liverpool 3 Public Bill CommitteeHOUSE OF COMMONS Rating (Coronavirus) and Directors 4 Disqualification (Dissolved Companies) Public Bill Committee Date Time Witness Tuesday 6 July Until no later R3 Tuesday 6 July 2021 than 5:15 pm 3. the proceedings shall (so far as not previously concluded) be (Morning) brought to a conclusion at 5.00 pm on Thursday 8 July.—(Luke Hall.) [CHRISTINA REES in the Chair] Resolved, That, subject to the discretion of the Chair, any written evidence received by the Committee shall be reported to the House for Rating (Coronavirus) and Directors publication.—(Luke Hall.) Disqualification (Dissolved Resolved, Companies) Bill That, at this and any subsequent meeting at which oral evidence is to be heard, the Committee shall sit in private until the 9.25 am witnesses are admitted.—(Luke Hall.) The Chair: We are now sitting in public and the 9.27 am proceedings are being broadcast. Before we begin, I have a few preliminary announcements. Members will The Committee deliberated in private. understand the need to respect social distancing guidance. In line with the Commission’s decision, face coverings should be worn in Committee unless Members are Examination of Witness speaking or they are medically exempt. Hansard colleagues Stephen Pegge gave evidence. would be grateful if Members could email their speaking notes to [email protected]. Please switch 9.32 am electronic devices to silent. Tea and coffee are not allowed during sittings. The Chair: We are now sitting in public again, and the proceedings are being broadcast. Before we start hearing We will first consider the programme motion on the from the witnesses, do any Members wish to make any amendment paper. We will then consider a motion to declaration of interest in connection with the Bill? enable the reporting of written evidence for publication and a motion to allow us to deliberate in private about our questions before the oral evidence session. In view Peter Grant (Glenrothes) (SNP): One of the witnesses of the time available, I really hope that we can take this afternoon is from the Chartered Institute of Public those matters forward without debate. I call the Minister Finance and Accountancy. I am a member of that to move the programme motion standing in his name, institute. which was discussed yesterday by the programming sub-committee for the Bill. Q1 The Chair: So noted. Wewill now hear oral evidence Ordered, from Stephen Pegge, managing director, commercial That— finance, at UK Finance. Before calling the first Member 1. the Committee shall (in addition to its first meeting at to ask a question, I should like to remind all Members 9.25 am on Tuesday 6 July) that questions should be limited to matters within the meet— scope of the Bill and that we must stick to the timings in (a) at 2.00 pm on Tuesday 6 July; the programme motion the Committee has agreed. For this session, we have until 10.30 am. (b) at 11.30 am and 2.00 pm on Thursday 8 July. 2. the Committee shall hear oral evidence in accordance with Stephen Pegge: Good morning, and thank you for the the following Table: opportunity to come along today. My name is Stephen Pegge. I am managing director, commercial finance, at Date Time Witness UK Finance. UK Finance is the trade association for finance and banking. We have around 300 members, Tuesday 6 July Until no later UK Finance many of whom provide services to companies, and we than 10.30 am are involved more widely in supporting small and medium- Tuesday 6 July Until no later The Chartered Institute of sized enterprise policy. than 11:00 am Credit Management Tuesday 6 July Until no later Dr John Tribe, University than 11:25 am of Liverpool Q2 The Chair: Do you have any general remarks about Tuesday 6 July Until no later The Chartered Institute of the Bill? than 2:45 pm Public Finance Stephen Pegge: Yes. This is an important Bill, and and Accountancy; The one that certainly has the support of many in the Institute of Revenues business community, including lenders. I know that the Rating and Valuation consultation had widespread support. It does appear Tuesday 6 July Until no later Local Government that closing this loophole should be beneficial in terms than 3:15 pm Association of the enforcement of good practice, the prevention of Tuesday 6 July Until no later The Transparency Task than 4:00 pm Force abuse and a certain degree of deterrence of the misuse of an important and useful facility that allows companies Tuesday 6 July Until no later UKHospitality than 4:45 pm to be dissolved quickly and cheaply, where that is appropriate and justified, as an alternative to liquidation. 5 Public Bill Committee6 JULY 2021 Rating (Coronavirus) and Directors 6 Disqualification (Dissolved Companies) There have been instances over the years where companies Stephen Pegge: Yes, we have seen instances of this have been dissolved with outstanding liabilities, as a practice being used to try and avoid liability under result of creditors or those who are owed money. I bounce back loans. Back in May 2020, UK Finance should stress that it is not just a question of banks, but with the British Business Bank established the bounce others who may be owed money and indeed consumers bank loan fraud collaboration group. It involves attendees who have perhaps paid deposits on work that has not from the Cabinet Office; CIFAS, the UK fraud prevention been done or who are unable to recover those funds, service; the Treasury; BEIS; and the National Investigation because there has been a deliberate attempt to avoid Service—NATIS. The aim is for intelligence to be shared, debts by seeking dissolution. good practice to be developed and a threat log to be It is possible in current circumstances for action to be maintained and fed into the National Crime Agency taken, but it can be time consuming and costly, and and the National Economic Crime Centre. In fact, this would usually involve restoring a company to the register was one of the practices which had been identified if it has already been dissolved. The particular arrangements through that and has led to some efforts more recently here will make it possible for the Insolvency Service to to try to intervene and intercept these cases of dissolved investigate directors where there is evidence of abuse, companies involving Companies House and BEIS. even in circumstances where the business is not insolvent, In the meantime, it is always possible that these cases but instead has been dissolved. That is the loophole that may well have got through and there is some evidence— the Bill is looking to close and one, as I say, that we again, reported by the Insolvency Service—that there would very much support being open. could be around 2,000 such cases which are dissolved and where currently the powers to investigate do not The Chair: Thank you, Mr Pegge. We will now take exist, so it is a real problem. If it were to become a more questions from members of the Committee, if you popular route for fraud, while there are mechanisms to would be so kind as to answer.The Opposition traditionally deal with it and creditors can object when they get go first, so I call Jeff Smith. notice through alerts when these situations are gazetted, unscrupulous individuals can still get through and it is important that it is closed as a loophole. Q3 Jeff Smith (Manchester, Withington) (Lab): Hi, and thanks for coming to give evidence. I am just trying As regards the resources of the Insolvency Service, to get a picture of the scale of the problem. To what we have all been conscious that, while the number of extent do you think this is a problem? Are the measures insolvencies has been low during a period of suspension in this legislation adequate to deal with the scale of the and the generous support that has been provided to problem that you think is out there? businesses through public agencies and the finance industry, we would expect that to rise significantly in this next Stephen Pegge: To put it in context, the Insolvency period.