HC Deb 27 July 1981 vol 9 cc805-6
5. Mr. Clinton Davis

asked the Secretary of State for Trade if he will state by what percentage bankruptcies and insolvencies, respectively, in the United Kingdom have increased since May 1979.

The Under-Secretary of State for Trade (Mr. Reginald Eyre)

In the second quarter of 1981 the number of bankruptcies was 46 per cent. higher than in the second quarter of 1979. Figures for total company liquidations are not available for the second quarter of 1981; in the first quarter they were 104 per cent higher than in the same period of 1979.

Mr. Davis

In the light of that appalling and deteriorating situation and the obvious need for an efficient Official Receiver service, will the Minister say what support he has received for his cock-eyed schemes virtually to wind up the Official Receiver service? What reactions have been evoked from the Cork committee with regard to that proposal?

Mr. Eyre

All hon. Members will be relieved to know that the number of bankruptcies was slightly lower in the second quarter of 1981 than in the first quarter. The figure for compulsory liquidations of companies was considerably lower. Those figures show that the upward trend may now have come to an end. With regard to the hon. Member's reference to bankruptcy and insolvency procedure, we are awaiting the second part of the Cork committee's report. After that the Government will make clear their intentions.

Mr. Anthony Grant

Bearing in mind the desire of the hon. Member for Hackney, Central (Mr. Davis) and of the Opposition to present a fair picture, will my hon. Friend tell the House the increase in the number of new firms started up in the same period?

Mr. Eyre

There are healthy signs that there is a high birth rate of new firms. For example, no fewer than 69,100 new companies were registered in 1980–81. In addition, the increased number of registered businesses in the same year was 153,200.

Mr. Arthur Lewis

To what extent have those higher bankruptcies been caused or accentuated by the higher bank rates, higher interest rates generally, the inflationary spiral that the Government have created since May 1979 and above all, high unemployment? Have those factors had any effect?

Mr. Eyre

Interest rates have, of course, been a factor, but the real trouble is that in recent years we have had rising prices and reduced competitiveness, which have brought about a loss of profitability and, accordingly, a sad loss of employment.