Mr. Field: Like my hon. Friend the Member for Eastbourne, I plan to say a lot more about the aspects of principle that are at stake when we debate clause stand part. I feel discomfort at the idea that bankrupts will be able to get off as quickly as within a year. Representations that we have received, including recent ones from the National Association of Citizens Advice Bureaux, imply that because people get into debt they should have an easy route to bankruptcy. That is an uncomfortable state of affairs. Several such proposals appear in clause 258, which we shall discuss in more detail later. However, in so far as individuals find themselves in great debt and paying high rates of interest to moneylenders, that is a matter for the laws on usury rather than those dealing with bankruptcy.
On Amendment No. 455 I would like to know whose interests the Minister regards as being best served by a fixed discharge period. Surely, it is a matter of fact rather than of law as to when a bankrupt has satisfied various requirements in order to be discharged. A one-year period is too short, for reasons of resourcing and practicality that have already been discussed. Moreover, as I have said, it is a matter of fact, and a fixed limit—which will no doubt become a target limit—will place administrators under pressure to rush things through more quickly than they should. That would be to the detriment of creditors, who deserve our protection as well as individuals seeking to rely on new bankruptcy rules.
I understand the DTI's point of view and its desire to be clear and certain about these matters. However, personal bankruptcies can be very complicated or very simple. It may be that the bankruptcy can be sorted out in a matter of months, particularly if friends of the bankrupt are able to lend money and allow for the bankruptcy to be discharged in a short period of time, but each bankruptcy is a matter of fact and trying to use a 12-month limit as a template is not the right way to proceed. What is the Under-Secretary's thinking on the matter?
Mr. Ken Purchase (Wolverhampton, North-East): I am concerned about the Government's new approach to bankruptcy as embodied in the clause. I understand that it is necessary to find ways to encourage people to take risks. However, increased rewards are often available to those who take risks. That is a balance,
Column Number: 633about which people have to make a decision. I have seen so many people ruined not once or twice but three or four times by people who have been bankrupt, escaped from the provisions and learned no lessons, except how to become a better criminal and find new ways of swindling people out of their hard-earned cash. I am concerned that we are not sending out the desired message—that we are encouraging enterprise and innovation and that we recognise that they are the lifeblood of the country—but a message that allows people to say, ''Here is a new escape clause from my responsibilities towards those with whom I have done business.'' I am exceedingly concerned.
To an extent, I share the scepticism of the hon. Member for Eastbourne of politicians, particularly Labour politicians, going to the USA, seeing something that looks superficially good but is embedded in a particular nation's business culture and believing that it can be transposed into a different culture and country. Very often, the exchange of ideas brings improvements that would not otherwise have been possible. However, I have to repeat that, in my 10 years of advising small businesses, I have met an awful lot of people who, if they are not crooks, love being on the brink and pitting their wits against not only the people with whom they do business but the system, creating loopholes through which to escape from their difficulties.
I will treat the amendments as probing amendments, but they bring out a flavour that is necessary to this debate and of which we must take note. People may remember the case of Freddie Laker, which perhaps brought bankruptcy into disrepute with the general public. He crashed his aeroplane company—sorry for the metaphor—and walked away, and was running another aeroplane company in a few days. That was on the corporate side, but he was the individual concerned. Would he be considered reckless under the new regulations? The thousands of travellers who lost their money certainly felt that he was.
As I have said, I am worried that we are giving the receiver the power to decide what is reckless. I am not sure whether we know what the ground rules are; the Under-Secretary must tell us how we will determine what is reckless and what is entrepreneurship that should be applauded. As the hon. Member for Eastbourne said, we need to know what arrangements there will be for dealing with what will undoubtedly be the greater number of people processed through the courts as a result of the 12-month rule. We need the answers to those questions.
To underline my point, I should say that, as a Labour Member of Parliament, I remain deeply suspicious of people who often get into trouble, not because they cannot avoid it, but because they do not take proper precautions. To take a simple example, a person's business might be doing very well with one or two customers, but he may fail to take out appropriate insurance. If one of the people with whom he deals goes down the pan and cannot pay him, there will be a ripple effect, and he will be unable to pay others. That will be because he ignored the opportunity to take out
Column Number: 634cover, insurance and bonds, and did not run his business properly.
An awful lot of people who run small businesses should not be allowed anywhere near them. John Harvey-Jones was quizzed about the difference between American and British culture. The interviewer said, ''Sir John, you're aware that almost every city, town and small village in America runs an MBA course. If this country wants to play catch-up, should we not make similar provisions to enable people to go on courses and understand much more about their businesses so that they do not get into so much trouble?'' John Harvey-Jones was a trouble-shooter; people might remember the television show. He replied, ''I've been going round this country looking at small businesses, and I'd be pleased if people in some of them could even read a balance sheet, let alone do an MBA.''
We seem to be ignoring the education that is required to run a business. Let us consider other countries. The French, for example, will not let people join the chamber of commerce unless those responsible are satisfied that applicants can run a business properly. Other countries have similar restrictions, but we think that people can somehow simply start a business, and to hell with knowing anything about it. We think that they can simply muddle through as amateurs, but an awful lot of them get hurt.
We may be doing so inadvertently, but I cannot help but think that we are sending the wrong message on bankruptcy for individuals. If we are going to tell people, ''It's not always your fault, so let's get you cleared up and back on the road,'' we should also tell them at least to try to take some advice before starting a business. That might avoid the tragedies that often result.
Mr. Carmichael: I did not intend to contribute to this part of the debate, but I have been emboldened by the speeches of the hon. Member for Wolverhampton, North-East (Mr. Purchase) and of Conservative Members.
I well recall the issue being discussed on Second Reading, when the Under-Secretary said that the Government wanted to remove the stigma from bankruptcy. Thinking out loud, I asked what was wrong with stigma, and was accused by colleagues of being excessively Presbyterian. We all have our own backgrounds and bring our own baggage to issues, and I can think of worse insults that might be slung at me.
I have profound reservations about the clause, which stem from the same genesis as those I have already expressed. I recognise that its purpose is to strike a balance, and I take the Under-Secretary's point that we need to encourage enterprise, but I am not convinced that the bankruptcy proposals achieve that. Enterprise must be encouraged all round.
Other members of the Committee have made the observation, with which even I cannot argue, that my constituency does not contain many large public limited companies. I have a particular concern for small businesses, which are often left most damaged by business failures—as the hon. Member for Wolverhampton, North-East implied—because they
Column Number: 635are least able to absorb losses. I see nothing in the Bill to comfort small businesses, which may run on a modest and conservative model and are uninterested in taking big risks; they are the ones that suffer most.
I share the concerns expressed about the practical implications of the measures. Clearly, a significant rise will occur in the number of cases processed. What measures will be implemented to ensure that the structure proposed is workable, even if it is undesirable? A new bankruptcy structure with whose philosophy people have reservations will be completely discredited if it does not work efficiently.
My final point may not be necessary, but in the current climate it is best to err on the side of caution. I referred to small businesses in my constituency, and I should inform the Committee that my wife is setting up a small business as part of a veterinary practice in Kirkwall.
Miss Johnson: I am grateful to hon. Members for their wide-ranging comments on the amendments. I shall do my best to respond to them, although I may have to repeat some of my remarks during the clause stand part debate if it turns out to be a long one. It will be difficult to reply to hon. Members' comments without making general points about the amendments.
The hon. Member for Orkney and Shetland, with his Presbyterian instincts, picked out the word stigma. The fundamental point is whether that principle is appropriate in relation to bankruptcy, as the hon. Member for Eastbourne said. I should remind hon. Members that we are talking about personal insolvency, as it is easy to forget that that is a fundamental tenet of the argument.
I agree with the hon. Member for Orkney and Shetland that we are trying to achieve a better balance between those who are stigmatised for good reason, because there are those who should be stigmatised—by the way, I do not have a problem with the word stigma either—and those who are stigmatised despite their bankruptcy being no fault of their own. We are not trying to do away with the idea of stigma, as my hon. Friend the Member for Wolverhampton, North-East suggested; we are trying to ensure that the stigma attached to bankruptcy restrictions orders relates only to those who are reckless bankrupts. Tighter provision exists under the bankruptcy restrictions orders, which I will discuss in more detail in a moment.
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