My Lords, this amendment seeks to amend the Insolvency Act 1986 to prevent suppliers withdrawing their services from a company after it enters formal insolvency. The amendment also seeks to address concerns about whether all utility providers are bound by an existing provision to prevent them demanding so-called ransom payments as a condition of continuing supply, which is an issue that the noble Lord, Lord Stevenson, highlighted in his speech. In addition, it seeks to extend that provision to IT suppliers.
The Government recognise the concerns that have been raised here and are looking very closely at these issues. My noble friend Lord Razzall recognised the difficulty in creating a balance here. We are committed to exploring any option which might help to rescue viable businesses and jobs, or which would improve the outcome for creditors of insolvent companies. The UK’s insolvency regime is very well regarded internationally. The regime continues to rank highly in World Bank reports for its ability to deliver quick and effective business rescue mechanisms. We want to maintain that standing and, indeed, build upon it.
However, I am sure noble Lords will recognise that this is a complex issue and that proper consideration must be given to the consequences that might result from such a change. For example, forcing suppliers to continue to supply an insolvent business might interfere with commercial behaviours and contractual rights. Freedom of contract is an important tenet in English law. Restricting a supplier’s right to terminate might also lead to knock-on insolvencies and could affect the pricing of contracts. While we recognise the advantages that such an amendment might bring, in the light of the important issues it raises, the Government wish to understand more clearly the consequences before deciding whether, and if so how, to change the law. In that way, we can satisfy ourselves that the right balance is being struck between the competing interests. I thank noble Lords for tabling this amendment and I assure them that the Government will consider this important issue very carefully.
Turning to Amendment 58HZA, this proposed new clause would require the annual report on HMRC’s charter to include a review of how its standards and values interacted with HMRC’s strategic objectives for the relevant year. It would also require the report to be made with the aim of taking a long-term view when considering proposals from individuals to repay their debts. The charter sets out HMRC’s role and the standards of behaviour and values to which the department aspires when dealing with everyone. The charter contains nine rights and three obligations. Examples include: the right to help and support; honest and even-handed treatment; professional behaviour; and acting with integrity. HMRC has six strategic objectives. These include improving the customer experience and maximising revenue to close the tax gap. The standards and values set out in the charter cover all aspects of HMRC’s work to meet these objectives, as well as its interactions with individuals and businesses.
At this point, I want to acknowledge the reference made in the speech of the noble Lord, Lord Stevenson, to StepChange. He produced some statistics and used
the word “grim”. They are indeed grim figures, which I listened to extremely carefully. Whether HMRC should report on levels of personal debt was a question that the noble Lord raised. We very much recognise the issues that he raised about vulnerable customers and consumers, and the level of personal debt that he highlighted so eloquently. The Government very much recognise the need to look at these issues and we are doing so, which I should stress goes beyond HMRC’s remit.
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As regards the “Time to Pay” scheme, HMRC already takes a long-term view to collecting debts in this respect. “Time to Pay” arrangements have always formed part of HMRC’s approach to collecting tax. Such arrangements are agreed with businesses and individuals to enable HMRC to collect the tax over an agreed period. This approach provides a better return for the Exchequer than forcing a viable business into insolvency or an individual into bankruptcy. I thought it would be helpful to bring this into the debate given the intervention of the noble Lord, Lord Stevenson.
The noble Lord, Lord Mitchell, referred to pre-packs. I reassure him that we have been listening carefully to the concerns that have been expressed about the use of pre-pack procedures, especially where sales are back to the connected partners, and have met with key stakeholders to discuss the issue. We have invited those who complain about the procedure to provide evidence of abuse, so that this can be taken up with the regulatory bodies. We have already improved transparency for creditors and the introduction of SIP 16 has improved the information provided to creditors in pre-pack sales. The regulatory bodies are in the process of revising SIP 16 to tighten up further the information which must be disclosed to creditors. This should provide greater confidence that the pre-pack sale is in the interests of creditors.
We are continuing to monitor information disclosed under SIP 16 reports and will report on our findings. I very much relate to the anecdote recounted by the noble Lord concerning companies that go insolvent and then re-emerge, days or weeks later, under a different guise. There was an instance of that rather close to home for me concerning a building company where that did, indeed, happen. I reassure the noble Lord that we are looking at those very important issues. With the assurances I have given about considering the important issue raised in Amendment 58H, I hope that the noble Lord and, indeed, the noble Baroness, will withdraw the amendment.