External Affairs update: August and September 2023

16 October 2023

As Parliament returns, R3’s External Affairs team had a full agenda in August and September with a Government announcement on the insolvency regulations, an update from the Government on the personal insolvency framework review, and continued media interest in the insolvency profession and its work…

Movement on IP regulation

On September 12^th, the Government published its long-awaited response to 'The Future of Insolvency Regulation' consultation.

While we broadly welcome the changes the Government is proposing to introduce, we need much more detail on each of the main proposals, and have concerns about the financial risk the proposed compensation scheme may place on firms, particularly smaller practices.

The Government is now working with stakeholders from the profession to understand their views on the initial proposals, with plans to progress the areas requiring legislation when Parliamentary time allows.

In the coming months, alongside our ongoing engagement with the Government on this, we will be seeking members’ views on the proposals through a variety of webinars, discussions, and sessions at conferences.

Reforming the personal insolvency framework

At the beginning of August, the Government published a document responding to last year’s call-for-evidence on the personal insolvency framework review, and promised to consult on proposals for reform early next year.

While movement on this is welcome, we’re slightly concerned at the pace at which these reforms are progressing, given the rise in personal insolvency levels and the increasing number of demands on debt charities. We appreciate a review of this scale is not a simple task but feel that progress could have been more rapid.

The Government is now working with stakeholders and other interested parties to develop proposals for reforming the personal insolvency framework, and we will take every opportunity available to shape the consultation and highlight members’ views, concerns, and suggestions during its development.

It’s looking likely that the consultation will be published in early 2024, and we’ve already started working with our Personal Insolvency Committee and technical team to develop our formal response and are looking to draft and publish a paper on this area of policy in the autumn, which will help shape our response to the Government’s consultation.

Engaging with the Opposition

As we ramp up our engagement will all the main UK political parties, towards the end of September we were pleased to be invited to the In Conversation with Wes Streeting MP event at the Cinnamon Club.

With a General Election on the horizon, it was interesting to hear discussions from the Shadow Secretary for Health and Social Care around what the NHS might look like under a Labour Government, his perspective on how the Labour party has transformed under Kier Starmer’s leadership, and his hopes for the next election.

Wes Streeting emphasised that collaboration is vital for a better future in the UK, particularly between the private and public sectors. He also acknowledged the challenges Labour has encountered while engaging with the party members and supporters across the political spectrum as we transition away from the Corbyn era, but highlighted the opportunity for progress and renewal under the leadership of Keir Starmer.

Representing R3 in the Scottish Parliament

In mid-September, Katie McLachlan represented R3's Scotland Technical Committee by providing evidence to the Scottish Parliament's Economy and Fair Work Committee regarding the Bankruptcy and Diligence (Scotland) Bill, which aims to introduce a number of reforms in a bid to improve the effectiveness and transparency of Scotland's debt resolution and recovery processes.

This session was held to provide the Committee with insights from insolvency experts into the Bill's proposed changes, their implications, and how they would affect debtors and creditors.

During her session, Katie made it clear that R3 is broadly supportive of the Bill - in particular the proposed mental health moratorium, which, if introduced, will prevent creditors from taking action for a set period of time against individuals who have a mental illness.

The Committee welcomed Katie’s contribution and said it would continue to liaise with R3 as the Bill continues to pass through the parliament. We will continue to monitor its passage and will provide further guidance and updates as it progresses.

R3 in the media

The major story of the summer for us was the IP regulation announcement, and our response to it featured in a number of articles including the Times, the Financial Times, City A.M, and a range of trade publications.

Media interest in insolvency statistics remained high in August and September, with our comments featuring in articles in a range of trade and regional publications including the Guardian, the Sun,  Credit Connect, Greater Birmingham Business Chambers, and Business News Wales.

Stories on local business trends were also been popular over the past two months, with a story on a rise in start-ups in Yorkshire and Humberside featuring in articles in the Yorkshire Times, Insider, and the Craven Herald, while news of a yearly fall in late payments in Scotland featured in stories in Credit Connect, Scottish Business Insider, and Scottish Financial News.

And the news that Ian Leonard had been appointed as R3’s new Chair in Northern Ireland  was covered by a number of Irish and trade publications in August, including News Letter, Irish News, Credit Connect and Accountancy Today.