§ Mr. PawseyTo ask the Chancellor of the Duchy of Lancaster whether he intends to seek any changes in the fees charged in bankruptcy and winding-up proceedings as set out in the Insolvency Fees Order 1986; and if he will make a statement.
§ Mr. MaudeA substantial contribution towards paying the costs of running the insolvency service in my Department is derived from various fees prescribed by the Insolvency Fees Order 1986. These are either of fixed amounts or on a percentage scale.
Although some of the fixed fees were increased by that order, the product this year has not come up to expectations because there has been a drop in the number 242W of winding-up orders made and a rise in the number of insolvency cases closed where the assets are insufficient to meet the fixed fees charged. The scales of percentage fees which, by their nature, are only chargeable where assets exist, have, in the main, net been increased since 1980.
In order to provide the necessary funds to finance the work of the insolvency service, the Government intend to increase certain of the percentage fees relating to the performance by the Secretary of State of his general duties under the insolvency legislation and to the purchase of Government securities at the request of liquidators. These fees are identified by numbers 10, 11 and 12 in part 1 of the fees order and fee 13 in part II.
Fees 10 and 13 are calculated on moneys paid into the insolvency services account in each case where a company is wound up by the court or an individual is made bankrupt, charged on a sliding scale ranging from 10 per cent. on the first £50,000 down to 1 per cent. on any amount in excess of £5 million; these will be increased on a scale from 15 per cent. down to 1.5 per cent.
Fee 11 is charged, on moneys paid into the account in respect of companies wound up voluntarily, on two scale points of 1.25 per cent. and 0.75 per cent.; these wilt be increased to 1.75 per cent. and 1.25 per cent. The case limit on the total amount payable under this fee will he increased from £7,500 to £12,500. Fee 12 is charged at the rate of 0.375 per cent. on the amount expended at the request of a liquidator on any purchase of Government securities; it will be increased to 0.625 per cent. These fee increases are to be contained in a fees order which will be laid before Parliament shortly. The increases will take effect in February 1988 and are estimated to produce £500,000 in the year to 31 March next and £4 million in a full year.
The order will also include an increase of £1.15 in fees numbered 7 in part I and numbered 10 in part 11 of the 1986 fees order. These fees are made in respect of the insertion in the London Gazette by the Secretary of State or the Official Receiver or any notice authorised by the Insolvency Act or the rules. The increase represents no more than the additional charge now made by the London Gazette for these advertisements.
A review of the fee-charging policy and financing of the insolvency service is at present being undertaken by a project team headed by a professional accountant seconded to my Department. The team is expected to report by March 1988 and its findings may lead to further proposals for fee changes.