Enterprise Bill

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Mr. Field: Those in local government often feel that they have even greater restrictions placed upon them than Members of this House. Historically that has

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been the case, although perhaps less so with some of the regulations imposed on Members of the House of Commons over the past six or seven years since the Neill committee and various other restrictions.

We have discussed at some length the relation to the interim order. I appreciate that in the discussions on schedule 20 the Under-Secretary confirmed that such orders would be made only when there is a prima facie case for a fully fledged bankruptcy restrictions order. But what if, after the interim order is made, the BRO does not come to pass? Would a councillor subject to an interim order, perhaps for only a few weeks, then have to resign and a by-election be called? Is there some opportunity by which the interim order can be done away with?

Under clause 255, an interim order would be enough for the disqualification to come into effect. Would that disqualification be declared void? What would take effect? In local government, the wheels of bureaucracy might move more quickly than in national Government. There was a high-profile case, in different circumstances, in the Newham constituency during the previous Parliament, where a disqualification order was subsequently declared void by the High Court. It is likely that the process will be accelerated with local government.

I should be interested to know whether consideration has been given to when an interim order is not upheld for some reason; whether it is intended that councillors should be disqualified and a by-election held; or whether some time mechanism will be put into place to ensure that the process is not so accelerated that an interim order alone would result in disqualification.

Miss Johnson: Similar issues were raised on earlier related clauses. This clause enacts a parallel provision for councillors to that we have been discussing for Members of Parliament and Justices of the Peace. It does not necessarily follow that bankruptcy makes individuals unfit to serve as local councillors. There might be circumstances under which they were able to continue. There is the same distinction with those subject to bankruptcy restrictions orders.

The interim order requires a prima facie case before it is made. I confirm that a councillor subject to an interim BRO would have to resign. That may not be the answer the hon. Gentleman seeks, but there has to be a good prima facie case in the first place for an interim BRO to be issued. The kind of eventuality he contemplates is therefore unlikely to occur.

Question put and agreed to.

Clause 255 ordered to stand part of the Bill.

Clause 256

Disqualification from office: general

Amendment made: No. 483, in page 177, line 16, at end insert ''or body''.—[Miss Johnson.]

6.30 pm

Mr. Waterson: I beg to move amendment No. 559, in Clause 256, page 177, leave out lines 26 to 28.

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This takes us back to the stigma problem. Looking at this from the other end of the telescope, whatever one's views on it, the Government's policy is to reduce the stigma of bankruptcy. However, Clause 256(8)(c) actually extends the definition of a bankrupt to include those in England and Wales who are subject to IVAs and deeds of arrangements and those in Scotland who are subject to something called trust deeds for creditors. According to PricewaterhouseCoopers, such people have never before been treated as bankrupts for any purpose and have never been subject to any of the restrictions on bankrupts. One of the attractions of a composition of creditors is that they enable the debtor to avoid the stigma and restrictions of bankruptcy, including, for example, any restrictions on exercising their profession. So we take the view that this is a retrograde step and I would like the Minister to justify why there should be this significant change from the current practice.

Miss Johnson: Amendment No. 559, if passed, would create a harsher regime for those who are not bankrupt than for those who are, so I am not quite clear how that relates to the hon. Gentleman's earlier remarks. Many debtors come to an agreement with their creditors outside of bankruptcy, through composition of debts, through a deed or through a settlement or an arrangement. Those people have tried to face up to their financial position by attempting to discharge their debts and we believe that is a responsible attitude that should be encouraged. The effect of these amendments would be that restrictions could still be lifted and amended for those who are bankrupt, but not for those who are in agreements with creditors outside of the bankruptcy. That seems paradoxical, as it would lead to a harsher regime for those who are not bankrupt than for those who are. I therefore trust that that was merely a probing amendment, that I have now persuaded the hon. Gentleman and that he will withdraw it.

Mr. Waterson: Absolutely. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Amendment made: No. 484 in clause 256, page 177, line 27, after second 'a', insert 'trust'.—[Miss Johnson]

Question proposed. That the clause, as amended, stand part of the Bill.

Mr. Waterson: As the excellent explanatory notes make clear, this clause

    ''will provide a wide order-making power for any Secretary of State or the National Assembly for Wales, to review legislation under his or her policy control and to maintain, repeal, amend or abolish such restrictions on bankrupts as they deem appropriate.''

It is, on the face of it, an extraordinarily wide provision.

I am curious as to what kind of people, situations and officers that we may be referring to here. We have gone to the lengths of having in the Bill clauses dealing with the situation of justices of the peace, Members of Parliament and members of local councils, so what situations do the Government envisage under the clause? It is a very wide provision, it gives tremendous powers, presumably it could impose disqualification

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where none exists, and also the opposite. With what areas is it designed to deal?

Miss Johnson: The Bill provides an opportunity to review the relevance of restrictions that appear unnecessary or outdated and there are a great number of other restrictions in both primary and secondary legislation that are automatically imposed on bankrupts by other legislation that might be appropriate for culpable bankrupts, but not in the remaining cases. Examples of restrictions include not being able to be a school governor, a member of a regional flood defence committee or a registrar of births, deaths and marriages. [Laughter.] Well, the hon. Gentleman asked, so I am telling him.

One area that is greatly affected by the automatic provisions is health. Numerous boards and tribunals that deal with health matters require members who have been made bankrupt to resign. Following an internal review, the Department of Health has confirmed that it intends to remove references to bankrupts in the legislation and replace them with references to bankruptcy restriction orders.

A number of the bodies that prohibit a bankrupt's involvement have never met. An example is the arbitration tribunal set up under the Wireless Telegraphy Act 1949—I am trying to vie with my hon. Friend the Member for North-East Derbyshire in going back to previous times. A number of bankrupts serve the local community in one way or another, and requiring them to refrain from such service is often one of the most embarrassing and traumatic effects of bankruptcy.

Colleagues in other Departments will review on their merits each of the restrictions for which they have policy responsibility, and appropriate proposals will be made in secondary legislation. That does not mean that all restrictions will be lifted, because they may be appropriate in certain cases. However, I have given a flavour of the wide diversity of cases covered by the clause and the reasons for supporting it.

Mr. Waterson: The Under-Secretary has certainly given us a flavour of those cases, which is helpful. I can imagine that it would be intolerably embarrassing to be asked to resign from a regional flood committee on the basis of one's bankruptcy, so I immediately withdraw all my reservations about the clause.

Question put and agreed to.

Clause 256, as amended, ordered to stand part of the Bill.

Clause 257 ordered to stand part of the Bill.

Schedule 23 agreed to.

Clause 258


Amendment made: No. 564, in page 178, line 28, leave out 'refuse or cancel' and insert

    'disregard an application or withdraw'.—[Miss Johnson.]

Mr. Waterson: I beg to move amendment No. 528, in page 178, line 38, at end insert—

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    '(5) Where the Secretary of State cancels the recognition of a body because of a failure to pay fees under subsection (1):

    (a) any member of that body who, immediately before such cancellation, was authorised to act as an insolvency practitioner by virtue of his membership and was so acting in relation to any other person or persons, shall continue to be authorised to act as an insolvency practitioner in relation to that person or those persons notwithstanding such cancellation, but

    (b) if the court is satisfied that such a member is not a fit and proper person to act as an insolvency practitioner it may order that this subsection shall not apply or shall cease to apply to him.'.

The Chairman: With this it will be convenient to take new clause 9—Fees: further provision—

    '.—The following shall be inserted after section 415(3) of the Insolvency Act 1986 (Fees orders (individual insolvency proceedings in England and Wales)):

    ''(3A) An order under this section shall provide for:

    (a) exemption from any fees payable under this section by applicants who, at the time when a fee would otherwise be payable, are in receipt of income support, income-based jobseekers allowance, working families tax credit or disabled persons tax credit (working tax credit and pension tax credit from April 2003) and any other benefit that the Secretary of State may by order specify;

    (b remission of all or part of any fees payable under this section where the Secretary of State considers that the payment of any fees payable under this section would, owing to the exceptional circumstances of the particular case, cause undue financial hardship;

    (c) a reduction in the fees payable under this section where:

    (i) two or more people living in the same household petition for bankruptcy at the same time, and

    (ii) they are jointly and severally liable for at least one debt in both petitions;

    (d) payment of any fees payable under this section by instalments''.'.

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