APPOINTMENT AND FUNCTIONS OF INTERIM TRUSTEE (Hansard, 15 February 1993)

§ The Parliamentary Under-Secretary of State for Scotland (Mr. Allan Stewart)
I beg to move, That this House doth agree with the Lords in the said amendment.

§ Mr. Deputy Speaker (Mr. Michael Morris)
With this, it will be convenient to discuss Lords amendments Nos. 5 to 7.

§ Mr. Stewart
This group of amendments was tabled in another place in response to concerns expressed by involvency practitioners that the Bill as it stood could create problems for some business debtors. The practitioners feared that such debtors would be unable to secure the immediate appointment of an interim trustee to manage the business while the sequestration process was proceeding.
In the light of those concerns, amendment No. 5 restores the position to that which presently applies under the Bankruptcy (Scotland) Act 1985 and allows the court to appoint an interim trustee without delay after the presentation of a debtor's petition. While amendment No. 6 retains the opportunity for the Accountant in Bankruptcy to make an early application for a certificate of summary administration, the other amendments make consequential drafting changes.
I acknowledge that a number of amendments were tabled by the Opposition in another place. I hope that the hon. Member for Monklands, West (Mr. Clarke) will agree that the Opposition amendments were designed to achieve the same purpose as the Government amendments before the House. As the hon. Gentleman will be aware, the Opposition amendments were withdrawn in favour of the Government amendments simply because the latter were technically accurate. I pay tribute to Opposition Members in another place for tabling their amendments.

§ Mr. Tom Clarke (Monklands, West)
I thank the Minister for his comments. In particular, I thank my colleagues in another place, particularly Lord Macaulay and Lord Carmichael, who were very vigilant when the legislation was last considered there.
I welcome the Minister's endorsement of the role of the Opposition in another place. However, will he explain the qualifications that the courts will consider necessary for the interim trustee? Are those qualifications consistent with the views of the Institute of Chartered Accountants of Scotland which sought, I thought successfully, to persuade the Minister to ensure that sequestration may be awarded forthwith after the presentation of a debtor's petition? No doubt the institute had in mind the role relevant to that of an interim trustee. Before we make a judgment on the package that the Minister has brought back from another place, I should be grateful if he would explain the role and qualifications of the interim trustee.

§ Mr. Stewart
I am happy to respond to the perfectly fair point made by the hon. Gentleman. I can confirm that the 74 Government have discussed with the Institute of Chartered Accountants of Scotland the arrangements for implementing the Bill. I assure the hon. Gentleman that an interim trustee, other than the Accountant in Bankruptcy himself or herself, must be an insolvency practitioner, as is the case under the Bankruptcy (Scotland) Act 1985.
We intend to introduce the provisions of the Bill so that the Accountant in Bankruptcy would be appointed the trustee in most small asset cases. The accountant would then retain a proportion of cases in-house, but allocate the remainder to insolvency practitioners on the same basis as under the 1985 Act.
Those cases would be allocated on a fixed-price basis. That would allow all concerned—the Accountant in Bankruptcy and the insolvency practitioners to whom the hon. Member for Monklands, West referred—the opportunity to gain experience under the new regime. That should permit a fairer comparison to be made between public sector and private sector provision when full market testing is undertaken.
The hon. Member for Moray (Mrs. Ewing) has distinguished herself in written parliamentary questions —[HON. MEMBERS: "Hear, hear."] I am glad to see the unanimity between the Labour party and the Scottish National party. The Scottish Liberals are not present and I do not see them rushing into the Chamber to take part in this very important debate. However, at least we have agreement—almost uniquely these days—between the Labour party and the Scottish National party. The hon. Member for Moray played a major part in our considerations during the proceedings on the Bill.

§ Dr. John Reid (Motherwell, North)
With due deference to the Minister, and although I do not want to correct his grammar, something cannot be "almost unique". It is either unique, or it is not. I hope that that will help with future speeches.

§ Mr. Stewart
I have received linguistic advice from the Government Whip, but I believe that the hon. Member for Motherwell, North (Dr. Reid) is correct, and I stand corrected.

§ Mr. Phil Gallie (Ayr)
It is good to hear that the hon. Member for Motherwell, North (Dr. Reid) is a bit better on his English than he was on his arithmetic in another place the other day.

§ Mr. Stewart
My hon. Friend expresses himself with his customary robustness. However, I do not intend in this debate to arouse the hon. Member for Motherwell, North excessively. However, the hon. Member for Moray played a major and constructive part in our consideration of the subject in Committee. I believe that it would be generally agreed that the Committee stage was constructive.

§ Mrs. Margaret Ewing (Moray)
I am sorry that I missed the Minister's earlier exchanges with the hon. Member for Monklands, West (Mr. Clarke). Am Ito understand from the Minister's remarks that the Accountant in Bankruptcy will now almost put bankruptcy cases out to private tender? Will the top sum allocated be £600 or less?

§ Mr. Stewart
I am happy to respond to the hon. Lady and to confirm the exact position which follows the consultations over the summer between the Institute of Chartered Accountants, the Accountant in Bankruptcy and the Scottish Office.
75 There will be an interim stage in 1993–94—let us take, for the sake of argument, the assumption that the Bill is implemented from the beginning of April—when experience can be gained of operating under the procedures in the Bill before proceeding to a full-blown market testing exercise. The intention is to bring in the provisions of the Bill so that the Accountant in Bankruptcy would be appointed trustee in most small asset cases. The accountant would then retain a proportion of such cases in-house, but allocate the remainder to insolvency practitioners on a fixed-price basis.
That procedure will allow all concerned to gain experience under the new regime and should permit a fairer comparison to be made between public and private sector provision when full market testing is undertaken. I am delighted that we have been joined by the hon. Member for Liverpool, Mossley Hill (Mr. Alton), of the Liberal Democrats, in order to express his knowledge and experience of and interest in the Bankruptcy (Scotland) Bill.
I assure the hon. Member for Moray that the accountant has recently circulated his proposals to all insolvency practitioners. As I have said, I hope that we can have such arrangements in place.

§ Mrs. Ewing
Has the Accountant in Bankruptcy given any indication of the basis on which he will deal with market testing? Last year, the Minister told me that he was working on anticipated bankruptcies of about 20,000 per annum. Is it not the case that the Accountant in Bankruptcy is now looking at a much smaller number of annual bankruptcies on which to base his market testing?

§ Mr. Stewart
I am unable to give the hon. Lady an exact estimate. With her expertise, she will know that there is great uncertainty about such matters, but the number will be below the original estimate.
The hon. Member for Moray asked about fees. I can confirm the figure that she suggested. The Accountant in Bankruptcy has offered the professionally standard fee of £600 plus VAT—that is, £705 gross—to handle a summary case. Work over and above that would be paid at a set fee or an hourly rate as appropriate in accordance with the tariff set by the accountant. I hope that, with that explanation, the amendments will commend themselves to the House.