§ 2.43 p.m.
§ BARONESS PHILLIPS
My Lords, I beg to move that this Bill be now read a second time. The Insolvency Services (Accounting and Investment) Bill, which I am asking your Lordships to read a second time today, is concerned with matters incidental to insolvency law; it does not affect the substantive provisions of this law. Under the Bankruptcy Act 1914 and the Companies Act 1948, trustees in bankruptcy and liquidators of companies must, subject to certain exceptions, pay moneys coming into their hands into accounts kept by the Board of Trade with the Bank of England. The Board hand over to the Treasury for investment in Government securities the amounts estimated to be surplus, for the time being, to their requirements for meeting the demands in respect of bankrupts' and companies' estates. The income from the investments, together with fees collected in connection with bankruptcy and companies winding-up proceedings, is paid into the Bankruptcy and Companies Winding-up (Fees) Account established under Section 13 of the Economy (Miscellaneous Provisions) Act 1926 and operated by the Treasury. Issues may be made from this Account towards meeting the costs of administration of the insolvency services. Section 14 of the Economy (Miscellaneous Provisions) Act 1926 requires that, in fixing the scales of bankruptcy fees and of companies winding-up fees, regard shall be had to the sum which it is anticipated will on average be from 7 time to time required to meet the costs of administration of the insolvency services.
Despite this statutory link between costs and income for the insolvency services, deficits have occurred on an increasing scale since 1933. The Board have looked closely at the administration of the insolvency services and take advantage of such scope for economy as is possible. Bankruptcy and companies winding-up fees were substantially increased from May 1, 1969 and the Board consider that the present fees are as high as is consistent with the need to avoid discouraging creditors, debtors and shareholders from making proper use of the official services. There is no prospect of eliminating the remaining deficit on the service and the Bill accordingly repeals the statutory link between costs and income; the Fees Account will also be wound up. Nevertheless, fees will be reviewed in 1970 and subsequent years to ensure that the administration remains efficient and economical and that the net cost to public funds is no greater than the circumstances justify.
Section 15 of the Economy (Miscellaneous Provisions) Act 1926 requires the Treasury to cause to be prepared, and laid before both Houses of Parliament, an annual account showing receipts and expenditure in respect of bankruptcy and companies winding-up proceedings. These arrangements have been criticised by the Public Accounts Committee on the grounds that the annual account is not subject to audit by the Comptroller and Auditor General and does not include any record of the sums deposited with the Board or invested by the Treasury. The Bill accordingly makes new arrangements in respect of the form of the annual accounts and their audit by the Comptroller and Auditor General who will lay them, with his report, before Parliament. The new form of accounts will be adopted for the first complete financial year after the Bill comes into operation.
The Bill also transfers, from the Treasury to the National Debt Commissioners, responsibility for investment of surplus insolvency funds and sets up an Insolvency Services Investment Account to be kept at the Bank of England by the National Debt Commissioners for this purpose. The Bill will enable the 8 Commissioners to invest the moneys standing to the credit of the Investment Account, in accordance with directions given by the Treasury, in any manner specified in Part II of Schedule 1 to the Trustee Investments Act 1961. Income from the investments will initially be paid into the Investment Account. Where the annual account kept by the National Debt Commissioners shows that the gross amount of interest earned from the securities exceeds the aggregate of a sum, determined by the Treasury, to provide against depreciation of the securities and the sums paid out to meet companies' entitlements to interest payments, the excess amount will be paid into the Consolidated Fund. If this aggregate is greater than the gross amount of interest earned during the year, the deficiency will be met from the Consolidated Fund. I feel sure that there must be a simpler way of saying that.
The Bill also provides for the surrender to the Consolidated Fund of unclaimed dividends and indivisible balances arising from estates in bankruptcy and companies in liquidation before a date determined from time to time by the Treasury. This date will be chosen on the basis that demands from creditors and share-holders in respect of unclaimed dividends and indivisible balances are no longer likely to arise. Thus the balance in the Board's accounts (together with the sums due to the Board from the Investment Account) will more nearly reflect the Board's realistic liabilities. The arrangement will not, however, affect the ability of creditors and shareholders to claim any sums to which they are entitled. Finally, the Bill provides for recourse to the Consolidated Fund if the funds in the accounts maintained by the Board of Trade or the National Debt Commissioners are insufficient to meet their liabilities. In practice, such recourse is unlikely to be necessary.
I fear that these are somewhat intricate arrangements. In fact, the honourable Lady who introduced the Bill in another place said that it had been described as a Bill of minute interest and revolting complexity, an attitude with which she found herself in agreement; and I must say that I have no reason to change that opinion. I will not weary your Lordships with a detailed clause by clause explanation of the Bill. I should, however, make 9 it clear that the Bill does not in any way change the duties of trustees in bankruptcy or liquidators of companies, or the rights and obligations of creditors and debtors; neither will the Bill lead to any additional subvention of the insolvency services by the taxpayer beyond that which would have been unavoidable anyway. Nevertheless the Bill is necessary and indeed overdue; the failure of successive Governments to introduce it earlier has been the subject of criticism from the Public Accounts Committee. It will have the desirable effect of permitting improved scrutiny by Parliament of the transactions carried out by Departments administering the insolvency services and will relieve the Board of Trade of statutory obligations with which it is no longer practicable to comply. My Lords, I beg to move.
§ Moved, That the Bill be now read 2a. —(Baroness Phillips.)
§ 2.52 p.m.
§ LORD ERROLL OF HALE
My Lords, I am sure that your Lordships would like me to thank the noble Baroness for her introduction of the Bill and for so lucidly reading out the brief which she had been hurriedly handed. As this is the first occasion on which your Lordships have met in 1970, I do not wish to start off in any mood of disparagement, but rather would like to congratulate the noble Baroness on contributing —I think I am right in saying—to Parliamentary history. I believe that it is the first time that a daughter has, as a Minister, introduced into the House of Commons a Bill which her mother has then introduced into your Lordships' House. That is notable, and we should certainly like to wish the noble Baroness and her daughter all success in their political careers. I am sure that nobody would be more forward in offering congratulations than the noble Baroness, Lady Summerskill, who unfortunately has been narrowly pipped at this historical post. It might have fallen to her to pull off such a notable double, but in fact it has fallen to the noble Baroness, Lady Phillips.
I must say that as this is a Board of Trade Bill I am very sorry that the Member of your Lordships' House who is a Board of Trade Minister did not think it necessary to be here himself. He is not out of the country and he is 10 not ill. Indeed, when I arrived here at twenty-five past two I had every expectation of seeing him ready to take his Department's Bill through your Lord-ships' Chamber. It has often been a criticism of mine that in your Lordships' House we have very few Ministers. Those we have we like and they are very good, but we should like to see Ministers who are responsible departmentally taking their own Bills through the House and not handing them on to spokesmen. It is in some cases inevitable that a spokesman for a Department should make a speech on behalf of a colleague; but when we are lucky enough to have a Minister of State of the Board of Trade in your Lordships' House I think he might have taken the trouble to come here this afternoon. I have not given him notice of my remarks, because it never occurred to me that he would fail to be present.
Also, I am rather sad, because I was looking forward very much to congratulating him on the honour bestowed him on January 1, an honour which I think is well merited and fully justified. But it is rather difficult to congratulate a person who does not bother to come on a day when his own Bill is before the House.
§ LORD BESWICK
My Lords, I think the noble Lord is carrying this point unnecessarily far. My noble friend Lord Brown has special responsibilities for export and he is carrying out those duties very well indeed, to the satisfaction, I hope, even of the noble Lord, Lord Erroll of Hale. He is not able to be here all the time, and he does not have any particular connection with this Bill. My noble friend Lady Phillips does have a special connection here, and I should have thought the whole House would welcome the fact that she was taking the Bill through the House.
§ LORD ERROLL OF HALE
My Lords, I have made my point and noble Lords can judge for themselves whether the view of the noble Lord, Lord Beswick, is more appropriate than mine. But certainly my training and experience was that a Minister always came to the House, whether it was the Lower House or the Upper House, when it was a Bill of his Department, and I hope that that principle is not to be breached by the precedent created to-day.
11 We start off into the dazzling 1970s on the first day of your Lordships' attendance with a Bill produced by Her Majesty's Government for the insolvency services. This is their great offering to the white hot technological revolution, to progress, to the fuller life, to the full development of our natural and other resources. All they can offer your Lordships is the Insolvency Services (Accounting and Investment) Bill. Well, my Lords, something has to be first in 1970, and this is what we have got. But what I think is so tragic is that it is such a dreary little Bill. This is symptomatic of the way the Board of Trade is being treated by the Prime Minister and his Cabinet colleagues.
There was a time when the Board of Trade was a great Department of State, when almost every year one of the major legislative Acts of the Session was a Board of Trade measure. Now all we get from the emasculated Board of Trade is the Insolvency Services (Accounting and Investment) Bill. The noble Lord, Lord Brown, when he was taking the Companies Bill through your Lordships' House, confidently promised us a second and very important Companies Bill before the end of the present Parliament. This, as we know, is the last Session of the present Parliament. Do we get a major Bill? Do we get the Companies Bill, the Bill which we were assured would include the authorising of no par value shares—one great promise which has of course been broken? What we get instead is an Insolvency Services (Accounting and Investment) Bill, which the President of the Board of Trade did not bother to take through the Commons and which the Minister of State at the Board of Trade does not even bother to take through your Lordships' House.
This is not only a reflection on your Lordships' House; it is also a clear exposition of what the present Prime Minister thinks of the emasculated Board of Trade. He was once a President of the Board of Trade himself, and an important psychiatrist said to me the other day that he thought that what is happening is because, having learned the real facts of life when he was at the Board of Trade, the Prime Minister is now determined to reduce its status as far as he possibly can. We can accept that, as we have to accept many other things. We accept, 12 too, the description of the Bill given by the noble Baroness.
We note that in defence of the Bill the noble Baroness said that bankruptcies had increased rapidly in 1969—another feature of the Labour Government's attitude towards private business, and particularly small companies, because it is the small companies that are going bankrupt or becoming insolvent at the present time. We know that the present Administration do not like private enterprise. They are a Socialist Government. We know, too, that they cannot really attack the big companies, so they take it out of the small companies—take it out of them in the form of corporation tax and close company legislation specifically directed against the small businessman and the small company. They take it out of them in the S.E.T. levy and in other ways. Small wonder, therefore, that many of these smaller businesses are going bankrupt and that insolvency services are having to cope with a bigger demand than ever before! That is why this Bill is regrettably necessary at the present time.
Although I do not like the Bill, I would not recommend noble Lords to divide against it, because it is a necessary piece of machinery in the climate which the Government have chosen to create. After all, they are usually preferred creditors. They want to make sure that they get out of the broken businesses what they can of P.A.Y.E. instalments which otherwise would not be paid. They want to make sure that any arrears of tax are collected before the other creditors get a chance. This is dressed up as a modest piece of social legislation. The taxpayer must pay for the cost of this measure, but he will get back a good deal of what is expended on the insolvency services, because otherwise the Government might have much greater difficulty in getting in first at what is left of the "kill". So this sordid little measure is what the present Labour Administration offer to your Lordships' House on the first Sitting Day of a new decade.
§ BARONESS PHILLIPS
My Lords, if I did not know the noble Lord, Lord Erroll of Hale, so well, I might take him seriously. But I feel that he can hardly describe this Bill as a "sordid little measure" when, so far as I can discover from my researches, it was originally put forward at a time when he must have 13 been the President of the Board of Trade. Until now time has not been found for it by successive Governments in their parliamentary programmes.
I should like to take up one point that the noble Lord mentioned. I do not think I said that the number of bankruptcies was increasing. I said that bankruptcies and companies winding-up fees were substantially increased; but those, of course, are the fees dealing with the fund. I was also rather intrigued when the noble Lord, Lord Erroll, told us that this is the last Session of the present Parliament. I am very glad that he has so much information. He obviously has a recourse to the Prime Minister which perhaps the rest of us are not so fortunate as to have.
In defence of my noble friend Lord Brown I would merely say that I have offered all along to assist Ministers so that they did not have too heavy a programme of legislation. It may be that my noble friend thought he was giving me something to do—and I must say I have enjoyed it. I am sorry that the noble Lord, Lord Erroll, does not share this enjoyment, but as the Bill goes through your Lordships' House perhaps we shall have further exchanges. I should not like him to feel, however, that I do not have the Board of Trace behind me, because I have been fortunate enough to have a great deal of briefing, comment and discussion for this Bill and I therefore commend it to your Lordships.
§ On Question, Bill read 2a, and committed to a Committee of the Whole House.