HL Deb 14 July 1983 vol 443 cc892-4

3.18 p.m.

Baroness Burton of Coventry

My Lords, I beg leave to ask the Question standing in my name on the Order Paper.

The Question was as follows:

To ask Her Majesty's Government whether they are aware of the hardship facing those consumers who send money for goods to companies that subsequently go bankrupt; and what action is proposed to deal with this problem.

Lord Lyell

My Lords, Her Majesty's Government are aware of the difficulties of those who suffer losses in this way and are considering possible means by which the problem might be relieved. However, the vast majority of businesses which accept deposits are honest traders and it would be harmful to their interests to impose wide-ranging restrictions in order to control the minority of potential defaulters.

Baroness Burton of Coventry

My Lords, if we might really get down to brass tacks, may I ask the Minister whether he is aware that the Office of Fair Trading is conducting a detailed study of prepayment problems? If he is aware of that, can he say how long this study will take? Secondly, may I ask him whether he realises that those people who are being given evidence of malpractices in this field feel that the existing law is not being used as it could be to counter these malpractices? Finally, is the insolvency branch of the Department of Trade looking into these malpractices, are these reported to them, and are they prepared to take action on the matter?

Lord Lyell

My Lords, so far as the first part of the noble Baroness's question is concerned, I am afraid that I am not certain, I may be able to ascertain a date; if I can I shall write to the noble Baroness.

On the second part of the noble Baroness's question, as she will know, these matters—and indeed many others—are covered in discussions and works that are going on in the Department of Trade and Industry on the Cork report. Thirdly, the insolvency department is aware of the problems raised by the noble Baroness. But she and your Lordships will be pleased to know that the Government realise that these consumers may sometimes lose money in the way in which the noble Baroness has described. However, they can protect themselves against this loss in a variety of ways. The noble Baroness and your Lordships will be fascinated to see the leaflet that is available which sets everything out in clear and concise terms as to the steps that consumers should take in the event of the misfortune described by the noble Baroness.

Baroness Burton of Coventry

My Lords, but that is not getting us anywhere except in a very long time. We know about the Cork report. Will the Minister say whether there is any chance that some action might be taken soon? Am I not correct in believing that prior to the general election it was the intention of the Department of Trade that some action would be taken to help consumers in this matter? Could he inquire whether the insolvency department in the Department of Trade and Industry is given information about the malpractices that occur and is definitely dealing with them?

Lord Lyell

My Lords, the insolvency department is receiving information about malpractices; but it believes that these problems should be dealt with under the entire umbrella of the Cork report as a whole. I will inquire whether there are any other details that I can ascertain for the noble Baroness and I will write to her.

Baroness Elliot of Harwood

My Lords, does the noble Lord realise that there is great urgency about this matter? Unfortunately, one of the things that result from the present recession is the fact that many companies go out of business suddenly without warning and people who are dealing with them suddenly find that the companies have heavy debts which they are unable to pay. It is a tremendously urgent matter and unfortunately is one of the consequences of the present recession. I hope that the Government realise that this is something that could be dealt with more swiftly and better, because the problem is getting worse.

Lord Lyell

My Lords, the Government appreciate the urgency of the problem. I am sure that my noble friend and the noble Baroness, Lady Burton, will appreciate that this entire problem is part of a major jigsaw in insolvency, and that jigsaw covers the Cork report and one or two other things. But I take note of the urgency and the comments of my noble friend and the eternal vigilance of the noble Baroness.

Lord Mishcon

My Lords. the Minister has just referred to the jigsaw of the Cork report and an examination of insolvency. Does he realise that the Government take an extremely long time to solve puzzles and this happens to be one of them? Is he aware that a considerable amount of dust has accumulated on the Cork report which is in the library of the Secretary of State? Will he kindly dust off the report and tell us when we are likely to see action in regard to it?

Lord Lyell

My Lords, the noble Lord is always very flattering to me when he refers to legal matters. I have my copy of the Cork report. I shall forbear from reading to the noble Lord and to your Lordships the fascinating paragraph 1055 that covers much of the ground we have been over this afternoon. The noble Lord and your Lordships will appreciate that this massive report—I stress it is only part of the jigsaw covering the problems raised by the noble Baroness, and others—was a result of five years of comprehensive study of the whole of the law covering insolvency and other problems. But I will bring the concern of the noble Lord to my right honourable friend.

Lord Molloy

My Lords, is the noble Lord aware that there is another element that I would ask him to consider? Many of the bankruptcies that take place are quite genuine in these hard times. People have no desire to defraud or cheat. Sometimes it happens; but there is another element where firms are created to go bankrupt and they work this racket very skilfully. They are aided—lamentably I have to say—by the national press and various magazines. Will the noble Lord be prepared to take on board and consider this element?

Lord Lyell

My Lords, not only have I taken it on board, but the Government and the Central Office of Information also have taken it on board. At a later stage I may discuss this with the noble Lord. I have a valuable little leaflet. If any of your Lordships wish to read it we can make it available in the Library.

Baroness Burton of Coventry

My Lords, I hope that all those people will take on board one simple question. Looking at the complicated jigsaw, may I ask the Minister whether he will look into the matter and answer a Question after the Recess about whether the Government consider it possible that one section might be taken out of the Cork report so that the problems affecting private consumers over insolvency might he dealt with?

Lord Lyell

As of today, my Lords, I could not give the noble Baroness that guarantee; but if the noble Baroness will study Chapter 22 of the Cork report and start at paragraph 1048, I think she will find the answers and, indeed, answers to many other questions germane to the points she has raised this afternoon contained in a sympathetic statement by Mr. Justice Megarry, as he then was. She will find that the Cork report covers that point. It suggests, among other things, that it is extremely difficult to separate the interests of the consumers from other creditors: for instance, small traders who might be equally grievously affected by bankruptcy or by fraudulent practices. If the noble Baroness wishes to put down a Question. I invite her to do so and we shall attempt to answer it.