Lord Moynihan of Chelsea (Con)

My Lords, in moving Amendment 108, I will speak to Amendment 109, also in my name. My declaration of interest is that I have worked in my career with hundreds of companies, many of which had to create redundancies at one time or another and a few of which had to go into liquidation. I am not an insolvency practitioner. The first of these amendments, Amendment 108, is a small but very important proposal. First, a disclaimer: I am not seeking to alter the vast majority of what is proposed under Clause 27, only that small minority of redundancy cases that occur when a company goes into insolvency. Also, I am not proposing any override of TUPE legislation, in particular in so-called pre-packs. I am proposing that on a non-partisan basis, we take advantage of the passing of this Bill to rectify a long-standing conflict between two separate laws—a conflict that often places insolvency practitioners in an impossible position. What is this conflict? It is between the provisions of the Insolvency Act 1986 versus the Trade Union and Labour Relations (Consolidation) Act 1992, the latter of which, as your Lordships know, today’s Bill seeks. The conflict has long existed; it is not a function primarily of the Bill we are discussing today. Let me explain briefly what it is. Insolvency practitioners are required to act quickly, so that value is not eroded. The 1992 Act, however, requires consultation of between 30 to 45 days, which would utterly frustrate the imperative to move swiftly. The liquidator is basically required to break one or the other laws, and always chooses to break the 1992 law—and will choose to break it as amended by this Bill, because the liquidator has to act speedily. A long consultation, whether 30 or 45 days, is always found to be impossible. As a result, ambulance chasers write offering “free money” to all employees because the law has been broken and therefore the provision comes in that penalty money should be paid to these workers. This does not happen in all cases—only when trade unions are involved or the insolvency is large enough for the no-win no-fee crowd to move in. Much of the money in bankruptcies then ends up in the hands of lawyers rather than any of the creditors. We should note that in most non-liquidation situations these stringent provisions make such penalty awards rare. An employer would be foolish to flout the requirements. It happens only in liquidation, where the liquidator is essentially forced to choose to flout one law or another.