I shall try to keep my remarks as brief as I can.
My hon. Friend the Member for City of Chester (Stephen Mosley) laid out much of what I wanted to say about the importance of small businesses as a sector. We ignore them at our peril as they are, as we have heard, the backbone of our economy and have, I think, played a vital part in driving down the claimant count in my constituency by nearly 36%, driving youth unemployment down by nearly 45% and upping the
number of apprenticeships by nearly 60%. They play an important part and we must do all we can to support them.
Although perhaps not everything we have done as a Government has been helpful to small businesses, I truly believe that the Bill is. It takes steps towards helping secure their future and addressing the challenges they face. We could go one step further, perhaps, by creating a US-style small business administration unit within the heart of Government to ensure that the impact on small businesses of every piece of legislation that goes through this House is taken into account.
There is one issue in particular that I want to speak about that might not be covered elsewhere, and that is clause 117. It relates to the Government’s proposal to create a reserve power to prohibit pre-pack administration sales to connected parties if certain criteria are not met. I want to talk about that in the context of the printing industry. I should declare an interest and refer people to my entry in the Register of Members’ Financial Interests, where they will find that I am a shareholder in a small family printing business.
The printing industry is particularly vulnerable to the impact of pre-packaged sales in administration. Printing is an over-capacity industry dominated by small companies. Consequently, the incidence of pre-pack administrations in the industry has been relatively high and the damage caused to creditors and competitors alike has been significant. Those controversial business rescue arrangements enable the debts of previous owners to be written off and have attracted criticism from creditors and competitors. When there is a connected party—that is, when the owners of the new company are the same as those who ran the old company—creditors are aggrieved because they have lost money owed to them and competitors are aggrieved because they face a rival who now has an unfair trading advantage.
The British Printing Industries Federation believes that an insolvency practitioner, or IP, who has previously provided advice to a company on the potential for a pre-packaged sale in administration has an inherent conflict of interest should they later accept a formal appointment as administrator with a view subsequently to execute a pre-pack sale. The BPIF therefore considers that an IP advising a company prior to a pre-pack sale should be precluded from becoming the administrator for the company concerned, to curb the incidence of cases where an IP attempts to secure new business by inviting distressed businesses to enter a pre-pack before other options, such as seeking an alternative operator for the business or a potential sale, are properly explored.
The introduction of a requirement for a different IP to accept appointment as administrator would improve confidence that pre-packs are used only in appropriate circumstances by ensuring that conflicts of interest were avoided. That would enhance the confidence of creditors in the insolvency practitioner’s handling of the administration. I realise that this is a technical issue, but it is a big issue for the printing industry and, I suspect, other industries, too. I have no pecuniary interest in the business any more as I am no longer a director and no longer receive any payment from it. I would like the Minister to look hard at this issue and ensure that
we have covered every option in the clause to ensure that it works the way we think that it does.
I would have liked to have said much more, Madam Deputy Speaker, but I am sure that it will all be covered elsewhere or can wait until another day.
6.3 pm