Corporate Insolvency and Governance Bill

Debate between Richard Fuller and Lucy Powell

2nd reading & 2nd reading: House of Commons
Wednesday 3rd June 2020 Commons Chamber

[Richard Fuller]

After my hon. Friend’s comments about association football, of which I have absolutely no understanding at all, I will bow to his better judgment on this topic too, but generally I am not really in favour of the Government having skin in the commercial game. When they get active in the economy, they tend to blunder around and probably, with the best of intentions, make things worse. I am not saying that they should not have their role; certainly, right now, many people will want the Government to have a role. Many Members have rightly looked at the measures the Government have put in place to support business and praised them.

Of course, people need not just take our word for that. Ask people around the world which country’s Government have responded best to the economic consequences of the virus and they will say that the United Kingdom Government are No. 1, with Japan, America and Germany in the United Kingdom’s wake. That is a tremendous credit to Ministers, but I would not like to encourage them to make that participation any longer than it needs to be.

On the guidance for going concern judgments, the Department will have spoken with auditors about how they are approaching their going concern judgments this audit season. Does the Bill have any impact on those judgments? Does the Department already think that it might need to bring forward any other measures based on the independent judgments of those auditors?

I raise that because in the 2007 crisis, there was a feeling that the rating agencies had been captured by their corporate clients and were giving ratings that perhaps did not reflect the true underlying status of businesses. We are fortunate in this country already to have embarked on reforms of accounting and on the separation of accounting and other activities to limit that risk, but I just caution that we ought be aware of that in a year’s time when we look at those going concern judgments. We would not like those to come back on our accounting firms, which are doing the best they can.

In Committee, the Minister would be wise to give a few more details about the role of the monitor—my hon. Friend the Member for Huntingdon (Mr Djanogly) raised that issue—and what role the Department will have in monitoring the monitors. Is any change expected to that?

One other concern I have is that facilitating businesses to continue trading at a time when the economy as a whole may be recovering and uncertain has a hint about it of creating some form of zombie businesses, where people are compelled to provide supply, as is required under the Bill, but there is the increasing sense that those businesses are not going to make it. I may be expressing a concern based on widespread use of the insolvency practice, which may not come to fruition—let us hope that for many people it does not—but I wonder what the Government’s thoughts are about the risk of businesses existing in name but not actually being able to create a long-term future for themselves or their employees.

I mentioned the Opposition’s amendment 1, on the voice of employees on obtaining a moratorium. If that were tweaked, it would be an interesting issue for the Government to consider. I also mentioned in an intervention the powers of the small business commissioner. The Secretary of State was right to say, “Hold on a minute; that’s something that we will come back to,” particularly as we are going through this in one day. It is probably not something that we would want to put through so fast. Similarly the calls by the Leader of the Opposition—[Interruption.] I did it again. I am so sorry. It is so hard to forget that time.

[Lucy Powell (Manchester Central) (Lab/Co-op)]

The best one.

[Richard Fuller]

Perhaps the current Leader of the Opposition would take offence at what the shadow Minister has said. I am not sure, although if we are ranking Leaders of the Opposition, I would say that as long as they are Labour, that is fine by me.

Notwithstanding the shadow Secretary of State’s position, he raised the issue of reform of corporate governance. It is an interesting topic, and the RSA Group did an interesting review of it last year, but again I would say to the Opposition that this is probably not the time for bringing that forward.

The protection of pension schemes is an issue that the Government ought to consider quite seriously. I have had personal experience of that, and I would not like those dependent on a pension fund to find themselves somehow further at risk as a result of these issues.

I started by mentioning the position 72 days ago and some of the consequences for businesses in the interim. I wanted to be absolutely clear that every single politician has been part of causing that, and, to the extent to which the Opposition continue to be supportive of the Government, as they have been in this debate, and the Government continue to be open with the Opposition, that is the spirit that the country would expect. For those businesses that have fallen because of the crisis or are likely to fail, I would like to say that, as a Member of Parliament, I am sorry. I am sorry for all that has happened to your businesses. I am sorry for the consequences. In the case of one particular constituent—who I will not name in full, but her first name is Peta—let me say that I have worked tirelessly to find ways in which Government programmes can support what you have done and will continue to do so. However, the best thing that we can do is to restore the British economy, get the Bill passed to ensure protection for the businesses that will fall on hard times and get the economy moving again.