HC Deb 27 May 1941 vol 371 cc1741-4
Sir Leonard Lyle (Bournemouth)

I beg to move, in page 11, line 1, to leave out from "Section," to the end of line 16, and to insert: and notwithstanding Subsection (1) of Section thirty-three of the Bankruptcy Act, 1914, all debts or classes of debts shall rank equally among themselves. 1 very much regret that my hon. and gallant Friend the Member for Eastbourne (Major C. S. Taylor) is not here to move this Amendment. He has written to me to say that he is detained on military duties, and, therefore, it falls upon me to move the Amendment. I feel that its proposals are only fair and just. In peacetime, when any bankruptcy occurs and the estate is wound up there is a prior claim on the disposable funds for rates and taxes. This Bill presupposes the same procedure in the distribution of assets; and we object to that. I object, partly because I think we should get away from bankruptcy procedure. I think I am right in saying that when this Bill was before the House on Second Reading, and when it was in Committee, certain hon. Members were very pained because official receivers might be delegated to take the places of the liabilities adjustment officers. They asserted that that was rather suggestive of bankruptcy proceedings. In wartime, we have to adopt special treatment for hard-hit individuals. I hope that local authorities will not press for their pound of flesh and their so-called first cut off the joint. Local authorities are perfectly able to get assistance from the State, but nobody assists the hard-hit small trader. The Government, at any rate, do not assist him with any money grant. All he is given is a moratorium; and that is of very little use to him. Some small traders are being hit very hard, and they need our help far more than local authorities do. Many are fighting a very gallant fight, and are having great difficulty in keeping their heads above water. Therefore, rates should not be preferentially treated.

What about taxes? I appeal to my right hon. Friend to see whether he cannot persuade the Treasury to forgo their prior claim on disposable assets. To the Exchequer, it must be a very small thing. I know that small things in the aggregate amount to a lot; but to the State the question is really trivial, and the money would hardly be missed. We are not asking them to give up their rights, but only to agree that their rights should rank equally with those of individuals. Nothing that they would lose would be missed, whereas anything that is done for the small trader will be of the greatest importance to his whole livelihood. I know that the reply will be that we are merely following precedent, but I would appeal to the House and to the right hon. and learned Gentleman to drop precedent. We have dropped precedent many times, thank goodness, during this war, with very valuable and beneficial effects. Why do we want to follow precedent in such a case as this? We have in many cases helped hundreds of thousands of people by dropping precedent and striking out on novel lines more fitted to the great struggle in which we are engaged. I appeal on behalf of the small trader. We have done very little for the small trader in the past, and here we have an opportunity of doing him some small service. We are not asking a favour, but merely that the small trader should be put on an equality with vast and powerful interests, and I hope we shall not let the opportunity slip past.

Mr. Silverman (Nelson and Colne)

I beg to second the Amendment.

Mr. Craven-Ellis (Southampton)

I would like to support the Amendment. My hon. Friend the Member for Bournemouth (Sir L. Lyle) said that the Revenue would not lose very much, but I question whether it would lose anything at all. Many small traders, and large traders as well, are put into extreme difficulties and ultimate bankruptcy because of the priority claim of local authorities as far as rates are concerned, and of the Treasury as far as taxes are concerned. If the Treasury and local authorities were put into the same position as ordinary traders, many firms would not have to go into bankruptcy.

The Attorney-General

I do not think that this suggestion has been made before in the course of our discussions, and it would be a mistake to accept it. The general idea of the Bill is to apply the principles of bankruptcy—I say that without offence—to the general principles of dealing with the man who cannot pay his debts and his creditors, making it more elastic and conciliatory, and making these very great changes, namely, protecting from realisation, the assets of a man's trade and business, his home and so on. The general idea of the Bill is that there is no bankruptcy. We have done everything to avoid bankruptcy in the principles which have been approved as right and proper. Among these principles are the priorities which only apply to one year's rates and taxes. They do not go beyond one year, but they also apply to arrears of wages, salaries of clerks and workmen, and arrears of workmen's compensation, and all this would be swept away by the Amendment. I think that that would be a mistake. It would be wrong to introduce this exception into the Bill. My hon. Friend who moved the Amendment said that we ought not to be tied down by precedent, and I agree with him. The whole idea of the Bill is a complete departure from precedent in principle from beginning to end, and I think it would be wrong to interfere with it, and having done what we have to protect the business premises and the equipment and tools of a man's business, and his home, it is reasonable for the ordinary relationships under the Bankruptcy Acts to continue.

Sir L. Lyle

Would my right hon. and learned Friend deal with the point as to why the State and local authorities should come before any ordinary trader or individual?

The Attorney-General

I should have thought that one of the obvious things was that it was in the interests of obtaining money to protect our hearths and homes. The local authorities carry out services without which we could not be provided, for instance, with water to drink, and we would be unprotected from fire. In Committee there was an Amendment because it was feared that the priority did not apply in certain cases of death. Local authorities can come to an arrangement with the liabilities assessment officer, and the Inland Revenue have a similar power, and I do not think that the House need apprehend that either local authorities or the Revenue would be unreasonable in agreeing to schemes which would enable a man to survive. They will have just the same object as other creditors to see that he is kept alive in the business sense and can start again when times are normal. I believe that there would be objection in many quarters if this limited priority did not apply in this Bill. The Bill is really meant to achieve the protection of a man's business premises, and I hope, therefore, that my hon. Friends will see their way not to press the Amendment, because we cannot accept it.

Mr. Silverman

Would the argument of the right hon. and learned Gentleman apply to the priority which is preserved in this Clause to landlords? One could follow his argument very well in connection with wages and workmen's compensation and in the case of death, but it does not give, any right under this procedure to protect the priority of the claim of the landlord over that of other claimants.

The Attorney-General

I think it does. There is priority under the Bankruptcy Acts for one year's rates.

Mr. Silverman

Is there not priority for six months' rates?

The Attorney-General

I think my hon. Friend is right, and I missed that, but the answer must be that, as far as that is concerned, it would be a pity to interfere with the rules that Parliament has approved.

Sir L. Lyle

I beg to ask leave to withdraw the Amendment.

Amendment, by leave, withdrawn.