Corporate Insolvency and Governance Act 2020 (Coronavirus) (Extension of the Relevant Period) Regulations 2020

Lord Vaux of Harrowden Excerpts

Tuesday 27th October 2020 Grand Committee

[Lord Vaux of Harrowden (CB) [V]]

My Lords, I too welcome this statutory instrument and the extensions that it brings. I slightly question the timing of us having this debate. As I understand it, these regulations came into force a month ago. If we are to see further extensions, can they be put before Parliament in advance of their coming into force rather than a month later?

I will ask two fairly brief questions. First, similarly to the question of the noble Lord, Lord Blunkett, while the extensions are welcome it is clear that as the crisis continues—especially as we continue to tighten restrictions—the problems for many businesses continue to grow. Debt levels are inevitably rising. When conditions improve, as we all hope they will, and the temporary provisions expire businesses will not recover instantly. It will be a slow process as the economy, I hope, picks up again. From a cash-flow perspective the recovery period is often the most dangerous part of the cycle, as businesses need to build up stocks and so on before they start to see the revenue coming through. What thoughts does the Minister have about how we protect businesses during that recovery period—I hope this is not a bit premature—once these temporary provisions have come to an end?

Secondly, I particularly welcome the extension of the exemption from the contract termination clauses for small companies. As the Minister will recall, I am concerned that those clauses would have a disproportionate impact on the smallest companies. He referred to the same point in his speech; that is the reason for the extension. But that is potentially true for the smallest companies even in normal times, as well as when the crisis has ended and the extension has expired. Can he confirm whether the Government will keep this under close review and take action if the contract termination clauses have a negative impact on very small companies once the exemption period has ended?