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Miss Johnson: We are trying to make it easier to distinguish in both areas between those who face bankruptcy unexpectedly, through no fault of their own, and those who have behaved recklessly or wantonly. The distinction suggested in the amendment is entirely artificial, and we think that it would be unworkable in practice. The experience of the official receiver shows that the self-employed do not operate their business and professional lives in conveniently separate compartments—as we discussed at length in Committee, they are often inextricably linked.

For all those reasons, I do not believe that the amendments would work well or that we should accept them. I hope that hon. Members will not press them to a vote.

Amendment No. 86 was also discussed at considerable length in Committee. We do not support it, as it would effectively continue the one-size-fits-all approach. As I said in Committee, early discharge will occur only in straightforward cases where debtors co-operate with the official receiver. In cases where the administrative work is complete and the issue of public protection does not arise, there is no merit in preventing bankrupts from getting through the process as quickly as possible, or in not helping them to promote rehabilitation of their financial affairs. In almost all cases, such administrative work will be completed in under a year. One exception might be cases where the bankrupt has failed to co-operate fully with the official receiver. Such individuals would be subject to the suspension of discharge provisions, and would not be discharged until they have co-operated fully. Similarly, in most cases an investigation decision is made in the first few months after the bankruptcy order. Again, if investigation matters are outstanding, there will be no discharge within the 12-month period.

7.30 pm

Amendment No. 88 was also considered at length in Committee. The Bill will remove provisions relating to summary bankruptcy and introduce instead a general discretion for the official receiver to investigate cases as he or she sees fit. This is not a new concept. Sections of the Insolvency Act 1986 dealing with summary bankruptcy currently provide that, in cases involving unsecured liabilities of less than £20,000, the official

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receiver need only investigate if he or she sees fit. The advantage of the Bill's proposal is that resources can be used more effectively by looking at each case on its merits, rather than on the current basis of an arbitrary financial limit. The amendment would require an in-depth investigation in all cases, including those currently dealt with under the summary regime. It would therefore seek, for no good reason, to engage the official receiver in investigating cases that do not involve issues of public protection or criminal behaviour. That is at odds with the professed concern of Opposition Members to ensure that the official receiver is properly resourced to carry out his or her functions.

Finally, amendment No. 87, about which I have already spoken, is very similar to Government amendment No. 371.

Mr. Waterson: The Minister's response to amendment No. 85, which deals with the distinction between business and consumer bankruptcies, was extremely revealing. As I predicted, she mentioned the practicalities and difficulties involved. We are prepared to concede that such problems exist, and I am sure that they can be addressed. However, so far as the principle is concerned, she made it entirely clear that there is no intention to distinguish between business and consumer bankruptcies. That seems to undermine one of the few bases on which the word "enterprise" is justified as forming part of the Bill's title. This part of the Bill has consistently been spun over many months as a means of encouraging entrepreneurs. It is not supposed to encourage people to spend far too much on their credit cards, only to find that they cannot pay their debts.

The Minister is of course right to say that the analogy with America is not completely on all fours—no comparison between countries ever is. Major differences exist, but it is clear that a system that makes it easier to become bankrupt, and which removes the associated stigma, will lead to a very large growth in the number of bankruptcies. I challenge the Minister to say that her Department firmly predicts that the passage of the Bill as it stands will not lead to a very substantial increase in bankruptcies.

There is a clear conceptual problem. The Government have rowed back from the suggestion that they are trying to encourage entrepreneurs. I am happy to leave the practicalities of the amendments to parliamentary draftsmen, so long as the Minister is prepared to accept the principle behind them. However, as was underlined by the hon. Member for Southport (Dr. Pugh), it is clear that the Government's commitment to that principle is only skin deep. They do not care that, in fact, many more consumer bankrupts than business bankrupts will be drawn into the system. I suspect that, in practice, the impact on entrepreneurs will be largely negligible. The only effect will probably be that people will escape the net simply because far more bankruptcies will have to be processed. There will be insufficient resources, and the period of examination of bankrupts' assets will again be foreshortened by other provisions in the Bill.

I was very disappointed by what the Minister had to say, but in a sense I was heartened. Her comments support the point that I argued consistently throughout the Bill's passage: that, as the Confederation of British Industry said, the name "Enterprise Bill" is a complete misnomer. However, having made those points, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

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Schedule 20

Schedule 4A to Insolvency Act 1986


Amendment made: No. 371, in page 292, line 32, leave out "himself to be" and insert—

'or ought to have known that he was'.—[Miss Melanie Johnson.]

Clause 259

Disqualification from office: Parliament

Mr. Waterson: I beg to move amendment No. 76, in page 177, line 32, leave out clause 259.

I was hoping that the Chamber would fill up at this point, and it has: my right hon. Friend the Member for Wokingham (Mr. Redwood) has appeared. Given that the amendment would delete the clause that deals with the disqualification from office of Members of Parliament as a result of bankruptcy, I thought that more Members of Parliament might have an interest in it, but apparently they do not.

The Government are trying to ensure that, under the new regime, Members of Parliament—and, indeed, local councillors and various other office holders—can be elected and retain office, even if they become bankrupt. If they become subject to a bankruptcy restriction order—in other words, if they are one of those culpable bankrupts whom we hear so much about—the same consequences will be visited on them as are currently visited on them if they become bankrupt. We tested that proposition in Committee for two broad reasons. First, in the real world, can one distinguish, in this or any other context, between two neat categories—culpable, malign bankrupts, and non-culpable, benign bankrupts—even assuming that the stretched resources of the Insolvency Service allow it so to differentiate?

Secondly, should there be a different and somewhat higher test for Members of Parliament? Are the Government really arguing that benign, blundering but basically honest Members of Parliament who have been unlucky in business or in their purchases should not suffer some kind of disadvantage as a result of going bankrupt? I take the view that there should be a higher test for Members of Parliament. Even in the case of "bad luck" bankrupts, their being unwise enough to go bankrupt should be sufficient—as is the currently the case—to justify their disqualification. That is to say nothing of whether we want a Member of Parliament to continue to serve who may have been a rogue, and who recklessly or intentionally left behind debts.

Of course, we have had our share of rogue Members who have gone bankrupt and left behind financial responsibilities. Robert Maxwell, the former Member for Buckingham, and John Stonehouse are two names that come to mind, but it has happened fairly regularly for some 200 years. Indeed, Spencer Perceval, the only British Prime Minister ever to be assassinated, was shot in the House of Commons by a bankrupt called Bellingham—a direct antecedent of my hon. Friend the Member for North-West Norfolk (Mr. Bellingham).

Even if a "bad luck"—to use the Minister's expression—bankrupt Member of Parliament satisfied all creditors, in this age of intrusive media interest in almost every aspect of our humdrum, mundane lives, the matter would doubtless end up in the public domain. Leaving

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aside the question of whether the hapless Member had in fact run up such debts in their own constituency—an action that would be unwise—the matter would come out sooner or later, at least in the constituency. Is it really the business of the House of Commons to tell our constituents that no stigma should be attached to being bankrupted for any reason if one is a Member of Parliament or wishes to be one? It is all right for us to tell the rest of the population that they need no longer feel any stigma, but how can we tell them how they should view a Member of Parliament or would-be Member who is in the same position?

As I said in Committee, the proposals assume that bankruptcy has no victims. I make no apology for repeating what I have said today: leaving aside the damage caused to business and the credit industry, many bankrupts leave debts payable to their immediate family and friends. They may even leave friends or relations to go bankrupt themselves as a result. Is it really the Government's view that Members of Parliament—or anyone else—can be wholly innocent when they become bankrupt?

The British population are possessed of a greater wisdom. I do not mean that wisdom that has sent every Member here—that goes without saying—but if an MP has been injudicious enough to run up debts that cannot be paid, leaving many people out of pocket, it is arguable that such a person should not be entrusted with representing constituents' interests. I admit that there, but for the grace of God, go I. Any one of us could make an unfortunate investment, such as in a home in our constituency, because MPs can be subject to bad luck as much as anyone else. However, we must think carefully about whether we should change the rules for ourselves. People expect a higher standard from a Member of Parliament, or someone who seeks to be a Member of Parliament, and there is a strong argument that the current rules should continue to apply.

If the Government are intent on changing the rules for everyone else, because they think that it will encourage entrepreneurial spirit or will be redistributive—whatever their real motives are—they can make it easier for the rest of population to go bankrupt and come out of bankruptcy, and they can remove the stigma. However, no matter how much law we pass here, an MP who becomes bankrupt or a candidate who has been bankrupt will still have a stigma attached to them, and I see no particular problem with that. People will have to weigh up the character and abilities of such a person—including, perhaps, the level of gullibility—before deciding who should represent them in this place. The Government have yet to make out a case, in Committee or elsewhere, for this change in the law.


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