HC Deb 26 October 1976 vol 918 cc350-6

Amendments made: No. 43, in page 16, line 17, at end insert—

1965 c. 2. The Administration of Justice Act 1965. Section 21.'.

No. 44, in page 16, line 23, column 3, at beginning insert Section 4(3).'—[Mr. Clinton Davis.]

Order for Third Reading read.

Mr. Deputy Speaker

The Queen's Consent must be signified. We need a Privy Councillor here.

Mr. Clinton Davis

On a point of order, Mr. Deputy Speaker. I thought that the presence of a Privy Councillor was required at the end of the debate on Third Reading. But I gather that my right hon. Friend the Secretary of State for Trade has been called for and is on his way, so the requirement will be met in a moment. I wonder whether you would indicate the specific requirement, Mr. Deputy Speaker.

Mr. Deputy Speaker

It is very simple. We require a Privy Councillor to signify the Queen's Consent. If we do not have a Privy Councillor present, there is nothing I can do. The Queen's Consent must be signified at this stage.

I see that a Privy Councillor is now present.

[Queen's Consent, on behalf of the Crown, signified.]

7.21 p.m.

Mr. Clinton Davis

I beg to move, That the Bill be now read the Third time.

I shall not prolong the proceedings unduly, but I think it appropriate to make one or two comments about the Bill as it has now emerged and the future course which the Government propose to take in relation to the law of insolvency.

There is clearly a need for a Bill of this kind. This was evidenced by the general approval by all those concerned with insolvency law and practice of many of the main features of the Bill. It is not surprising that a number of people did not think that it had gone far enough. I have a good deal of sympathy with that view. But our intention, within the constraints of a Bill which had to be dealt with under the Second Reading Committee procedure, was to include only the most urgently needed changes, particularly with regard to the restoration of the value of the monetary limits in the Bankruptcy Acts and the winding-up provisions of the Companies Act 1948. In many cases the monetary limits are the same today as they were in 1914 or even earlier.

There is a clear and overwhelming need for a review of the whole law of insolvency. For this reason my right hon. Friend the Secretary of State for Trade announced to the House on 25th October that he was setting up a departmental inquiry under the chairmanship of Mr. Kenneth Cork to carry out a fundamental and exhaustive reappraisal of all aspects of the insolvency laws of England and Wales.

An attack was made on Mr. Kenneth Cork by my hon. Friend the Member for Bolsover (Mr. Skinner) during the course of our deliberations. With respect to my hon. Friend, it was an unfair attack. Mr. Cork's expertise is well recognised in this country. He has undertaken a very valuable process of inquiry into the EEC position in relation to the law of insolvency. His chairmanship has been expert and most useful.

A review of Scots insolvency law is already being undertaken by the Scottish Law Commission and we are making arrangements to keep the two review bodies fully informed of each other's thinking and progress. This is particularly important in view of the discussions which are currently taking place in Brussels with the object of drafting an EEC bankruptcy convention. This convention is not intended to alter national laws save in a comparatively small area of law dealing mainly with the validity or otherwise of certain kinds of transactions taking place during what is known as the suspect period immediately before a bankruptcy or company liquidation. It will, however, provide a set of rules to prevent multiple bankruptcies and to enable a bankruptcy or company liquidation taking place in any member State to have effect throughout the Community. Clearly, both review bodies will have to have regard to the effect of this proposed convention when considering what changes ought to be made in our national insolvency laws.

One of the features of the work on this Bill in Committee and subsequently which I found gratifying—it was mentioned by the hon. Member for Worthing (Mr. Higgins) and the hon. and learned Member for Southport (Mr. Percival)—was the degree of personal consultation in which I was able to engage with members of the professions primarily concerned with the law of insolvency and, indeed, with both hon. Members. All of us had the aim of seeking to ensure that, within the limits of a Bill selected for the truncated Second Reading Committee procedure, with necessarily limited objectives, we should secure some urgently needed changes in the law and also erase certain anomalies. The constructive dialogue which took place has, I think, improved the Bill and achieved those immediate goals we had set ourselves. It reflected well on the measure of co-operation between the Government and the Opposition on what was not a politically controversial Bill but was nevertheless, in certain respects, contentious. The changes which we have made have been quite significant.

There will no longer be an obligation to hold a public examination in every bankruptcy. This will spare debtors, in suitable cases, unnecessary publicity. We are providing, for the first time in England and Wales, for automatic discharge for bankrupts in some cases and for automatic review for the purpose of discharge in the others. In future the only reason for a bankrupt remaining undischarged for a long period, even for life, will be if his conduct so warrants it.

There are valuable changes which I am convinced will give quite large numbers of people who merit the chance the opportunity to free themselves of a stigma and to make a fresh contribution to society, which, perhaps, our previous law did much to impair. The new Insolvency Rules Committee will ensure that those who operate our insolvency laws in practice will be closely involved in seeing that the procedural rules are kept up to date and in advising upon what changes are needed. We are making a determined effort to prevent those persons who are not fit to manage companies, as demonstrated by the failure within a certain period of any two companies in which they have held directorships, from being a director or from taking part in the management of another company for a specified term. These represent valuable changes in the law and, therefore, I commend the Bill to the House.

7.28 p.m.

Mr. Higgins

I join the Under-Secretary in paying tribute to those who have engaged in consultations on the Bill. When it was first drafted and introduced, there had not been consultation as wide- spread as was necessary if we were to ensure that the law was changed in a generally satisfactory manner. But since then the debates here and in Committee and the consultations have resulted in great improvements in the Bill.

I shall not say that there was never a dull moment in our discussions. Indeed, I could not tell what was going to happen from one moment to the next. I was looking forward to hearing a speech by you, Mr. Deputy Speaker, about the need for the Queen's Consent to be signified, but we avoided that last-minute hurdle.

The changes made as a result of the Opposition's representations are substantial and not simply some of the traditional points such as making changes subject to affirmative rather than negative resolution. We managed to persuade the Government that many of their suggested monetary limits were not appropriate. We also managed to reduce the element of retrospection in the Bill, a matter which the House always regards as important. We have also had Clause 10 deleted. I shall not go over the debates we had on that.

I pay tribute to my hon. and learned Friend the Member for Southport (Mr. Percival) who has throughout given great help to the Committee and on the Floor of the House on technical matters. This involved him in a great deal of work. I do not think that any of us would underestimate the amount of work done by him on behalf of the Opposition, who do not have the back-up which the Government have from the Civil Service. As a result of that hard work, the changes that have been incorporated in the Bill have greatly improved it.

There is one point on the broad principle of what is still in the Bill that I wish to emphasise. Throughout, the aim has been to strike a balance between creditors on the one hand and debtors on the other. When the Bill was first introduced, my hon. and learned Friend the Member for Southport and I felt strongly that the balance was not right and that the position of creditors was being further eroded. I hope that as a result of the changes that have been made we have helped to get the balance back to where it should be.

The Minister said that a committee is to be set up under Mr. Kenneth Cork to look into the whole question of insolvency law. I should be out of order, Mr. Deputy Speaker, if I went into detail, but that proposal is to be welcomed. Although hon. Members are concerned about the proliferation of committees, this is a complex matter which needs to be examined in depth.

I am a little worried, given the changes that we have made in the Bill, that it is suggested that the committee might sit for two or three years before completing its work. Another document has been laid before us, Cmnd. 6602, the Report of the Advisory Committee—also under the chairmanship of Mr. Kenneth Cork—entitled "The EEC Preliminary Draft Convention on Bankruptcy, Winding-up, Arrangements, Compositions, and Similar Proceedings". It would be helpful if the Minister would say whether any action is to be taken on that report before the other committee under Mr. Cork's chairmanship completes its work.

The precise relationship between the two committees is important, and it would be absurd if we were to consider altering our laws without taking account of the position of the EEC and the relationship between the two sets of proposals. The proposals are not co-extensive and the report which I referred and which runs to 180 pages draws attention to several differences and problems which we are likely to have to face.

The Bill is a useful measure with the Companies (No. 2) Bill, which was recently given a Third Reading. It is a much improved piece of legislation. It reflects the way in which the House of Commons, when there is no guillotine and the Government are not determined to force through legislation regardless of drafting, can do its work properly. This is a good example of the way in which legislation should go through the House compared with the way in which other legislation has been dispatched.

I express my thanks to the Under-Secretary of State and the Solicitor-General who has assisted him on the Front Bench for the way in which they have patiently considered the arguments put to them and worked hard behind the scenes. The results are incorporated in the Bill, to which I am sure the House will wish to give a Third Reading.

7.33 p.m.

Mr. Clinton Davis

I should like to respond briefly to the points made by the hon. Member for Worthing (Mr. Higgins). There will be an inter-relationship between the work done by the committee which deliberated on EEC matters under the chairmanship of Mr. Kenneth Cork and the committee to be set up under the same chairman. I am advised that it is likely to be two or three years before the review on the insolvency law in England and Wales will be completed. A committee is also deliberating on Scottish law. There are a number of provisions in relation to insolvency law which will not be affected by EEC legislation.

As to the degree of co-operation, the hon. Gentleman must reflect upon the fact that the Opposition's attitude to the Bill, which was extremely co-operative and helpful, is not always the Opposition's attitude. Unhappily, the Opposition frequently adopt a somewhat irrelevant attitude to many of the issues that face the country today.

Question put and agreed to.

Bill accordingly read the Third time and passed, with amendments.