External Affairs update: Summer 2023

29 August 2023

As summer draws to a close we look back at what R3’s External Affairs team have been working on.  In a word, it’s been busy, with a full policy and public affairs agenda in the run up to the parliamentary recess, briefings for a Westminster Hall debate, updates on economic crime and a meeting with R3’s Policy Group to discuss IP regulations, the state of the economy and more…

Mentioned in Director Disqualification Debate

On 14^th June, R3 was called up to provide a briefing ahead a Westminster Hall debate on Insolvency Law and Director Disqualifications in which R3 policy positions were referenced.

The debate was brought forward to discuss the Rating (Coronavirus) and Directors Disqualification (Dissolved Companies) Act, which from 2021 introduced powers to enable The Insolvency Service to investigate directors of dissolved companies.

This legislation was welcomed by R3, but despite the intentions behind the Act, its impact has been relatively minor so far.

Initiated by Rebecca Long Bailey MP and supported by former shadow Chancellor, John McDonnell, the debate highlighted the need for stronger regulations to address the abuse of corporate insolvency processes. She emphasised the impact of rising insolvencies on businesses and workers, including cases of poor governance, asset stripping, and denial of outstanding pay and redundancy.

Prior to the debate, we briefed Shadow Insolvency Minister Seema Malhotra MP on our concerns with the Government’s approach to director disqualification, including the low number of disqualifications reported annually, the lack of resources available to tackle director misconduct and the Government’s heavy focus on COVID-related fraud.

We were pleased to see R3 mentioned during the debate, with Seema Malhotra MP noting our members’ concerns around the disparity between the number of reports made about director misconduct and the amount of director disqualifications which took place every year. 

In response, the Minister of State for Business and Trade, Kevin Hollinrake MP, acknowledged the importance of strong corporate governance and effective insolvency regulations, and emphasised the need for a balanced approach to avoid counterproductive measures that may hinder entrepreneurship and competition.

Importantly, the Minister agreed that the Government “can go further on insolvency reform” and that “it is the Government’s intention to move towards a system of regulation with a single independent regulator”.

We will continue to update members on this matter as and when more information is available.

Movement on economic crime

The Economic Crime and Corporate Transparency Bill, which has been making its way through Parliament since September 2022, completed Report Stage in the House of Lords at the end of June.

The Third Reading, the final stage at the House of Lords, took place on Tuesday 4th July, and will now go to the Commons for consideration of Lords amendments on Monday 4 September.  

We have been engaging with parliamentarians on our concerns with the Bill in its current form and hope to see revisions made before the Bill achieves Royal Assent this year.

Refining policy positions

Towards the end of June, the External Affairs team held a meeting of R3’s Policy Group to discuss several policy issues.

In the meeting, members shared their viewpoints on the state of the economy and gave anecdotal evidence to the mood of directors at present, the types of processes most popular in different regions and in different industries, and how different demographics of people across England and Wales are being hit by the cost of living.

In addition, the meeting also explored the upcoming insolvency regulation review announced in December 2021 and considered how the Government’s approach may affect insolvency professionals in the future.

R3 in the media

Media interest in insolvency and wider business trends remained high in June and July.

Our comments on the May insolvency statistics featured in stories in over 200 national, trade and regional publications, including the Times, the Financial Times, Bloomberg, the Independent, and Mail Online, while our comments on the June statistics featured in stories in the National, Mail Online and the Daily Telegraph, to name a few.

In the last week of July, R3 Vice President Tim Cooper’s comments on the Q1 corporate and personal insolvency statistics for Scotland were featured in publications including the Sun and the Times, as well as a range of Scottish and trade publications, while R3 President Nicky Fisher’s comments on the Q1 statistics for England and Wales featured in the Evening Standard, LBC, the Daily Telegraph and more.

R3 was also quoted in a range of stories about local business trends, including a story in relation to the rise in start-ups in Yorkshire and Scotland, articles in Insider Media, the Business Desk, Scottish Business News and Credit Connect,  while our comments on insolvency-related activity in the Midlands also saw us featured in articles in the Business Connect, East Midlands Business Link and the Business Desk.