HC Deb 11 July 1994 vol 246 cc382-5W
Mr. Kevin Hughes

To ask the President of the Board of Trade what has been the level of funding of the Insolvency Service in each of the past five years; and what is the extent of the new resources that have been made available to(a) the service and (b) the area of director disqualification.

Mr. Neil Hamilton

The running cost outturn for the Insolvency Service for each of the last five years were:

£
Year Million
1989–90 32.8
1990–91 35.6
1991–92 40.3
1992–93 151.4
1993–94 154.8
1Includes amounts for superannuation and internal DTI services, for earlier years calculated as:

£
Year Million
1989–90 +4.2
1990–91 +4.7
1991–92 +6.2

A total of £57.459 million has been allocated to the Insolvency Service from my Department's running costs for 1994–95. Included in this allocation is £1.831 million to fund the additional work required to meet the case closure target of 53,000, and £1 million additional in the area of investigation including director disqualification.

Mr. Kevin Hughes

To ask the President of the Board of Trade how many Insolvency Service staff were employed in the area of director disqualification in each of the last five years.

Mr. Neil Hamilton

Staff in the Insolvency Service employed in the area of director disqualification comprise(a) those in the disqualification units in London and Edinburgh engaged directly on disqualification work and (b) specialist staff in official receivers whose duties include the investigatory process which may result in the submission of prosecution and disqualification reports. Their number were as follows:

(a) Staff employed directly on disqualification work
Year Number
1989–90 45.00
1990–91 43.50
1991–92 50.50
1992–93 46.00
1993–94 47.00

(b) Staff employed in the investigatory process
Year Number
1989–90 568.00
1990–91 587.50
1991–92 590.50
1992–93 587.50
1993–94 568.00

In addition to (a) above, as at 30 June 1994 the disqualification unit employed 11 additional staff comprising three seconded from the private sector; four on loan from other Government Departments and four sandwich students. For 1994–95 further resources have been provided to enable up to 14 extra staff, including 10 specialist staff from the private sector, to be added to the complement of the disqualification unit. Thirty specialist staff from the private sector will be added to the complement of official receivers.

Mr. Austin Mitchell

To ask the President of the Board of Trade further to his answer of 27 June,Official Report, column 403–4, concerning tenders for the second stage review of the Insolvency Service, why he considered it appropriate to invite Stoy Hayward Consulting to bid in a single tender action; what consideration he gave to offering others to bid in order to determine whether he was receiving value for money; and if he will make a statement.

Mr. Neil Hamilton

The decision was taken to invite Stoy Hayward to bid for the second stage review in a single tender action because:

  1. (a) Stoy Hayward's bid for the initial stage work had been by some considerable margin the most keenly priced; and
  2. (b) in the course of their work on the first stage review they had shown that they provided excellent value for money.

These considerations together with the fact that it had become familiar with the work of official receivers and the structure of the Insolvency Service led to the decision that the costs involved in a competitive tendering exercise would not be justified.

Mr. Burden

To ask the President of the Board of Trade in how many cases referred to the Insolvency Services disqualification unit in each year since 1989–90 disqualification proceedings have been commenced.

Mr. Neil Hamilton

The number of companies in relation to which reports under the Company Directors Disqualification Act 1986 have been made and the number of disqualification proceedings commenced is as follows:

Year Cases Proceedings Commenced
1989–90 3,444 462
1990–91 4,508 449
1991–92 6,171 700
1992–93 6,710 564

Year Cases Proceedings Commenced
1993–94 7,521 464
11994–95 1,506 170
1Up to 30 June.

Note: The figures quoted for the number of cases are those for the number of companies reported on. However, the figures quoted for refer to individuals. It is estimated that on average proceedings are issued against 1.5 directors in any one company.

Mr. Burden

To ask the President of the Board of Trade what was(a) the budget and (b) the staffing levels of the Insolvency Service's disqualification unit for each year since 1989–90.

Mr. Neil Hamilton

The budget for the Insolvency Service's disqualification unit was:

£ million
1991–92 1.17
1992–93 1.34
1993–94 1.85
1994–95 1.90

Separate figures for disqualification running costs within Insolvency Service budgets were not kept prior to 1991–92.

The staffing levels of disqualification unit were:

Number
1989–90 45.00
1991–91 43.50
1991–92 50.50
1992–93 46.00
1993–94 47.00

The unit currently employs an additional 11 staff comprising three seconded from the private sector; four on loan from other Government Departments and four sandwich students. For 1994–95 further resources have been provided to enable up to 14 extra staff, including 10 specialist staff from the private sector, to be added to the complement of the disqualification unit.

Mr. Burden

To ask the President of the Board of Trade what criteria he uses to classify cases referred to the Insolvency Service into different priority classifications.

Mr. Neil Hamilton

While each case is considered on its merits the main criterion is the totality and materiality of the unfit conduct alleged having regard to the size of the deficiency, period of trading and previous failures, if any. In addition the following criterion are employed:

  • public companies have a quoted share issue
  • companies in which the petition was presented in the public interest by the Secretary of State or other regulator
  • companies dealing largely with the public attracting high publicity or numerous complaints
  • material losses by the public or matters of wider concern to the business community
  • quasi criminal misapplication of assets or third party property in material amounts
  • successive phoenix failures of less than two years trading periods.

Mr. Burden

To ask the President of the Board of Trade how many cases referred to the Insolvency Service's disqualification unit have been classified as category A in each year since 1989–90.

Mr. Neil Hamilton

The system of classification was not introduced by the disqualification unit until July 1991. The figures from then show:

Cases identified as category A
Year Number
1991–92 21
1992–93 49
1993–94 197
11994–95 129
1To 30 June 1994.

Mr. Burden

To ask the President of the Board of Trade how many category A cases referred to the Insolvency Service's disqualification unit in each year since 1989–90 were not completed by the Insolvency Service's disqualification unit within the two-year period in which disqualification proceedings may be brought.

Mr. Neil Hamilton

The system of case categorisation was introduced in July 1991. Details of cases abandoned after categorisation are not maintained in the manner requested. The total number of cases identified as meriting further investigation but which were not taken forward were:

Year Number
1991–92 369
1992–93 332
1993–94 763
11994–95 94
1To 31 May 1994.

These totals include cases which were not proceeded with because of parallel criminal proceedings, the bankruptcy of the potential respondent or the discovery of evidence which would refute or mitigate the allegations of misconduct.