Insolvency (Hansard, 10 June 1992)

§ 19. Mr. Battle
To ask the President of the Board of Trade if he will make a statement on the workings of the Insolvency Act 1986.

§ Mr. Neil Hamilton
The Insolvency Act 1986 has a number of major aims: to provide remedies against abuse of limited liability by company officers; to regulate the activities of insolvency practitioners; to simplify formal insolvency procedures to allow official receivers to concentrate on protective and investigative work and to introduce new voluntary procedures allowing those in difficulties to come to an arrangement with creditors. I am broadly satisfied that the Act is achieving these objectives, but my officials in the Insolvency Service executive agency continue to monitor its workings.

§ Mr. Battle
I am grateful to the Minister for that reply, but does he accept that the Maxwell pensioners—and others, such as the Lewis's pensioners in Leeds—are trapped not only by faults in social security law, but by the inadequacies of the Insolvency Act 1986? Does he agree that the Government must amend that Act to ensure that occupational pensions are better protected and that they are not simply lost when a company goes under? If not, it would seem that the Maxwell episode is sadly proving to be the tip of a lost pensions iceberg.

§ Mr. Hamilton
As the hon. Gentleman will know, my right hon. Friend the Secretary of State for Social Security made a statement on Monday, an ingredient of which was that we should make provision under the Social Security Act 1990 to make deficits from pension funds that are wound-up a debt owed by the employer. The hon. Gentleman wants those debts to be made preferential. If that were done, it would be at the expense of other unsecured creditors of the company. It is not absolutely certain in welfare terms that that would be an improvement. However, my right hon. Friend the Secretary of State for Social Security has announced a wide-ranging review of the law on pensions and that is one of the subjects that it would be appropriate to consider in connection with that review.