§ Mr. Waterson
I beg to move amendment No. 76, in page 177, line 32, leave out clause 259.
I was hoping that the Chamber would fill up at this point, and it has: my right hon. Friend the Member for Wokingham (Mr. Redwood) has appeared. Given that the amendment would delete the clause that deals with the disqualification from office of Members of Parliament as a result of bankruptcy, I thought that more Members of Parliament might have an interest in it, but apparently they do not.
The Government are trying to ensure that, under the new regime, Members of Parliament—and, indeed, local councillors and various other office holders—can be elected and retain office, even if they become bankrupt. If they become subject to a bankruptcy restriction order—in other words, if they are one of those culpable bankrupts whom we hear so much about—the same consequences will be visited on them as are currently visited on them if they become bankrupt. We tested that proposition in Committee for two broad reasons. First, in the real world, can one distinguish, in this or any other context, between two neat categories—culpable, malign bankrupts, and non—culpable, benign bankrupts—even assuming that the stretched resources of the Insolvency Service allow it so to differentiate?
Secondly, should there be a different and somewhat higher test for Members of Parliament? Are the Government really arguing that benign, blundering but basically honest Members of Parliament who have been unlucky in business or in their purchases should not suffer some kind of disadvantage as a result of going bankrupt? I take the view that there should be a higher test for Members of Parliament. Even in the case of "bad luck" bankrupts, their being unwise enough to go bankrupt should be sufficient—as is the currently the case—to justify their disqualification. That is to say nothing of whether we want a Member of Parliament to continue to serve who may have been a rogue, and who recklessly or intentionally left behind debts.
Of course, we have had our share of rogue Members who have gone bankrupt and left behind financial responsibilities. Robert Maxwell, the former Member for Buckingham, and John Stonehouse are two names that come to mind, but it has happened fairly regularly for some 200 years. Indeed, Spencer Perceval, the only British Prime Minister ever to be assassinated, was shot in the House of Commons by a bankrupt called Bellingham—a direct antecedent of my hon. Friend the Member for North-West Norfolk (Mr. Bellingham).
Even if a "bad luck"—to use the Minister's expression—bankrupt Member of Parliament satisfied all creditors, in this age of intrusive media interest in almost every aspect of our humdrum, mundane lives, the matter would doubtless end up in the public domain. Leaving 92 aside the question of whether the hapless Member had in fact run up such debts in their own constituency—an action that would be unwise—the matter would come out sooner or later, at least in the constituency. Is it really the business of the House of Commons to tell our constituents that no stigma should be attached to being bankrupted for any reason if one is a Member of Parliament or wishes to be one? It is all right for us to tell the rest of the population that they need no longer feel any stigma, but how can we tell them how they should view a Member of Parliament or would-be Member who is in the same position?
As I said in Committee, the proposals assume that bankruptcy has no victims. I make no apology for repeating what I have said today: leaving aside the damage caused to business and the credit industry, many bankrupts leave debts payable to their immediate family and friends. They may even leave friends or relations to go bankrupt themselves as a result, Is it really the Government's view that Members of Parliament—or anyone else—can be wholly innocent when they become bankrupt?
The British population are possessed of a greater wisdom. I do not mean that wisdom that has sent every Member here—that goes without saying—but if an MP has been injudicious enough to run up debts that cannot be paid, leaving many people out of pocket, it is arguable that such a person should not be entrusted with representing constituents' interests. I admit that there, but for the grace of God, go I. Any one of us could make an unfortunate investment, such as in a home in our constituency, because MPs can be subject to bad luck as much as anyone else. However, we must think carefully about whether we should change the rules for ourselves. People expect a higher standard from a Member of Parliament, or someone who seeks to be a Member of Parliament, and there is a strong argument that the current rules should continue to apply.
If the Government are intent on changing the rules for everyone else, because they think that it will encourage entrepreneurial spirit or will be redistributive—whatever their real motives are—they can make it easier for the rest of population to go bankrupt and come out of bankruptcy, and they can remove the stigma. However, no matter how much law we pass here, an MP who becomes bankrupt or a candidate who has been bankrupt will still have a stigma attached to them, and I see no particular problem with that. People will have to weigh up the character and abilities of such a person—including, perhaps, the level of gullibility—before deciding who should represent them in this place. The Government have yet to make out a case, in Committee or elsewhere, for this change in the law.
§ Miss Melanie Johnson
Amendment No. 76 seeks to maintain the status quo regarding the bankruptcy disqualification of Members. However, under the Bill it would not be possible to do so, because if a Member were subject to a bankruptcy restrictions order, he or she would not be disqualified. The hon. Member for Eastbourne (Mr. Waterson) does not appear to have realised the implications of his amendment, although it may be only a probing amendment. Those subject to BROs would not be disqualified, but they are exactly the people who we are saying are the most serious bankrupts and who will be subject to a much more rigorous regime under the Bill 93 than under existing bankruptcy provisions. I hope that the hon. Gentleman will take that point to heart, because his allegations that our changes to the regime are always in favour of leniency are growing a little stale. In truth, the BRO provision will make bankruptcy a suitably serious matter in the appropriate cases.
The last bankruptcy disqualification of a sitting Member of Parliament was in the late 1920s, notwithstanding the more recent names that the hon. Gentleman mentioned. Such disqualification is unusual, but that is not to say that we should not have provision to cover it. Section 427 of the Insolvency Act 1986 currently provides that a person who becomes bankrupt in England and Wales, or Northern Ireland, or has his estate sequestered in Scotland, is disqualified from being elected to this House or sitting or voting in either House or Committee of either House.
§ Mr. Waterson
I appreciate the practical point that the Minister has just made, but she must also remember that we are talking about people who might wish to put themselves forward for election to Parliament who currently would not be allowed to do so. The issue would not arise for sitting Members, but would for those who wish to stand and would be allowed to do so, even though they were bankrupt.
§ Miss Johnson
Former members of the Committee will remember that my hon. Friend the Member for North-East Derbyshire (Mr. Barnes) provided some illuminating insights as to the history of the disqualification of Members and, in particular, whether it is right that somebody who is bankrupt should be disqualified from standing for election to Parliament. I have written to my hon. Friend and other former Committee members confirming that the Bill as currently drafted will enable a person who becomes bankrupt but is not subject to a BRO to be elected to and to participate in this House, but that if a person subject to a BRO were to be elected, the return would be void. However, it is very unlikely that a person subject to a BRO would be chosen as a candidate.
Under section 427 of the 1986 Act, a Member of Parliament would be able to continue to undertake constituency work. However, if after six months he or she remained bankrupt or sequestrated, his or her seat would be vacated. We recognise that arrangements relating to the conduct of Members of Parliament are a matter for Parliament itself to determine and not the Government alone. Therefore, the proposals in the Bill were the result of discussion between the Lord President of the Council and the Chairman of the Standards and Privileges Committee.
The right hon. Member for North-West Hampshire (Sir George Young) confirmed that against the background of the Government's objectives it would no longer be appropriate for a Member who becomes bankrupt to be disqualified from sitting or voting, and nor would it be fair to the constituents. The Standards and Privileges Committee also felt that if a Member becomes subject to a bankruptcy restrictions order or an interim order, his or her seat should be vacated. By the same token, only bankrupts subject to a BRO or an interim BRO should be disqualified from election to the House.
The Government are grateful for the Committee's consideration of this matter and accept its advice, which is reflected in clause 259. That position was supported 94 by some of my hon. Friends who spoke to the issue in Committee. The clause also disqualifies a member of the other place who is subject to a BRO, or interim order, from sitting and voting.
Initially, the proposals will apply only to those persons made bankrupt in England and Wales. That is because Scotland and Northern Ireland have their own devolved individual insolvency regimes and until such time as they are amended, Members sequestrated in Scotland or made bankrupt in Northern Ireland will continue to be subject to the current arrangements.
I do not need to go into more detail about the arrangements for the devolved Administrations, but we should recognise that we currently have a lower standard than some other areas because a Member is allowed a six-month period of grace to get either an annulment or a discharge before he or she has to vacate their seat. In other areas, there is no such grace period and disqualification has immediate effect. To leave things as they are, as the amendment advocates, and to take no action against Members who are subject to a BRO would widen that disparity even further. We would be faced with the perverse possibility that bankrupt Members could have to vacate their seats after six months, but could stand for election again and be returned even after their discharge even though they were subject to a BRO.
We should bring the provisions on Members into line with what will happen elsewhere. The order-making power in clause 261 will allow unnecessary bankruptcy disqualifications to be removed or amended. It is already clear that a number of restrictions on bankrupts will be replaced by restrictions on persons subject to a BRO. That is what we will be doing for Members in clause 259.
I will not be accepting amendment No. 76 which would have some. perhaps unintended, undesirable consequences. I believe that the moves that we are making are in the right direction, although the Government entirely accept that this is a matter for this House.
§ Mr. Waterson
I was merely trying to put the principle before the House. The Minister referred to a probing amendment, and if ever there was one, this was it. I still believe that those outside the House will not look kindly on us giving ourselves this exemption. The Minister has rightly pointed out some practical difficulties and, given her full explanation on at least two occasions, I beg to ask leave to withdraw the amendment.
§ Amendment, by leave, withdrawn.