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Mr. Carmichael: I am pleased to support the new clause in the name of the hon. Member for Eastbourne (Mr. Waterson). I am aware from my casework experience that this is a problem, even north of the border, where, as he says, the fees are more lenient. It seems absurd that, for lack of ready money, people cannot afford to make themselves bankrupt when it is manifestly the only course

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of action open to them. The Government's attitude on this point strikes me as being not only less than helpful but inconsistent with their approach to the rest of the Bill. We have just acknowledged that in some circumstances it is right that creditors should be left unsatisfied, but in the next breath we seem to be saying that the Government must always get their pound of flesh in the form of administrative fees.

The new clause is tightly drawn and it would mean that people could get to the starting gate. The hon. Gentleman referred to the remarks made by the Minister in Committee to the effect that bankruptcy is not a right. That question is ultimately determined by the courts, and it is wrong that access to that determination should be based on one's ability to come up with ready cash.

Mr. Mark Field: I want to say a few words in support of the comments made by my hon. Friend the Member for Eastbourne (Mr. Waterson) and the hon. Member for Orkney and Shetland (Mr. Carmichael). It strikes me as odd that when we are trying to diminish the stigma of bankruptcy—the Minister will appreciate that there are, at least among Members on this side of the House, shades of opinion about the desirability of that aim—we are also making it ever more difficult for people to go into bankruptcy if they lack the relatively modest sums required.

I hope that the Minister will think twice. The new clause is tightly drawn and there is no great risk of its being abused. The advice that many hon. Members have received from citizens advice bureaux throughout the country is that the measure would not cost the Treasury huge sums, but it would be a sensible move, given the plan to ease the bankruptcy procedure. I hope that the Minister will have given some thought to the comments made in Committee and here today, and that she will be able to give us some comfort about the concerns that we have expressed.

Miss Melanie Johnson: Our debate has clearly shown the importance with which hon. Members regard the issues raised by new clause 2. The costs of entry into bankruptcy were also raised on Second Reading by my hon. Friend the Member for South Ribble (Mr. Borrow), and a new clause identical to this one was tabled by the hon. Member for Eastbourne (Mr. Waterson) in Committee. In addition, NACAB has briefed extensively on this point, as a result of which the Government have received a number of letters from hon. Members. I therefore welcome the opportunity to discuss the issue and the points covered by the new clause.

Before I do so, however, I must say that I am bemused by the arguments advanced by the hon. Member for Eastbourne in support of the new clause, especially in light of his arguments about new clause 6. On the one hand, he argued on Second Reading and in Committee that we are being too soft on bankrupts and opening the floodgates to more consumer bankruptcy. Indeed, he was hot on that trail only moments ago. On the other hand, he has tabled this new clause, so that those who are unable to make any contribution to creditors will be able to enter bankruptcy and wipe the slate clean.

As the House will be aware, bankruptcy is not the only method of dealing with debts; nor, depending on the circumstances of the case, does bankruptcy necessarily

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provide the best outcomes for both the debtor and the creditor. I point out also that the courts have found that a person's entry into bankruptcy is not a right. The hon. Gentleman referred to the case of R v. Lord Chancellor ex parte Lightfoot, saying that the law would not help on this point, but the Court of Appeal held that the requirement to pay a deposit did not unlawfully restrict any fundamental right of access to the courts. Bankruptcy should be considered as a last resort; indeed, I thought that that was what Conservative Members were arguing. On this occasion they seem to be arguing that bankruptcy is too difficult for many people, and should be made easier, even though they may have no resources for creditors to access.

There are several other routes available to individuals with financial problems, many of which do not require a deposit. Many individuals can, and do, apply to the county court for administration orders and discharge their liabilities through monthly payments, which are set at a level that the individual can afford. More than 7,500 debtors took advantage of that route in 2001. Additionally, growing numbers of individuals with debt problems seek advice and assistance from organisations in the voluntary sector such as the Consumer Credit Counselling Service and Paylink. Those organisations will administer debt repayment plans on behalf of debtors at no cost to the debtor, the administration cost being met by creditors who agree to forgo a proportion of new debt. Several of them offer repayment plans of as little as £1 per week.

In considering changes to the arrangements for bankruptcy, account must be taken of the impact on creditors' interests, and that is my concern in considering the new clause. That point is particularly important in considering any proposal to reduce or waive entry costs in hardship cases. The bankruptcy entry deposit defrays part of the costs of administering the case. The deposit does not cover the full economic costs of administering the case, and any reduction in the deposit would mean that a greater proportion of the costs of case administration would have to be met from elsewhere, which would lead to lower returns to creditors.

The level of the deposit and fees are set through secondary legislation. It is therefore unnecessary and unduly inflexible to deal with the matter in the Bill. We recognise that this is an issue of concern, but it is also a complex matter. In considering the need for changes, it would be necessary to ensure that there is a continuing balance between the interests of the debtors and creditors. We believe that the current arrangements strike the correct balance, whereas the new clause would not.

To answer the specific point on deposits raised by the hon. Member for Orkney and Shetland (Mr. Carmichael), none of the individual insolvency provisions, nor those on fees and deposits, applies north of the border. I hope that that helps him.

The current arrangements strike the right balance, and I ask the hon. Member for Eastbourne to withdraw the motion. If he does not, and in view of the fairly fundamental inconsistency in the Opposition's approach to these matters, I shall ask the House to oppose the new clause.

Mr. Waterson: The Minister has scored a spectacular own goal. I might as easily describe her extremely tough

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and Gradgrind-like attitude to the new clause as wholly inconsistent with her attitude to the new clause relating to bankrupts' homes. She takes a stern line now—although perhaps I should be grateful that she has not invited me to a seminar on the issue. I thought I had made it clear that I was talking about people for whom bankruptcy is indeed the last resort, and that the only thing that keeps them from it is an inability to raise the money for the fees that have to be paid if they are to become bankrupt.

There is a way forward that does not involve the complication from which the hon. Lady shies away. I raised it in Committee and the Minister promised to reflect on it; I repeated it in my speech moving the new clause, but the Minister signally failed to touch on it in her reply. That way forward is to do something about the £5,000 limit that applies in the county court, which may have become outdated.

Miss Johnson: I should have addressed that point and I apologise for not doing so. The hon. Gentleman asked in Committee whether there might be some merit in reconsidering the upper limit of £5,000 of total debts that currently applies for the purpose of qualifying for a county court administration order, and I said that I would reflect on it.

Such matters are for my right hon. and learned Friend the Lord Chancellor to decide. His review of the enforcement of civil court judgments includes reform of county court administration orders. The Government are considering a range of options, both court based and non-court based. We do not intend to take any interim measures such as increasing the scope of the existing county court administration orders scheme, including increasing the limit, before we have considered the options for reform in that wider context. I hope that the hon. Gentleman appreciates that that is the sensible setting for further consideration of the issues.

Mr. Waterson: I am grateful for that, and I suppose it does make sense that the matter is to be considered in a broader context. I am moderately delighted that it has not been lost sight of altogether.

The Minister is taking an unnecessarily stern line. We know the sort of people that the provision covers—they are the sort of people described in NACAB's extensive briefing. I am sorry that the Government are not prepared to be more flexible; despite that, I beg to ask leave to withdraw the motion.

Motion and clause, by leave, withdrawn.

Schedule 16

Schedule B1 to Insolvency Act 1986

Mr. Waterson: I beg to move amendment No. 79, in page 243, line 13, after "company", insert—


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