We all love a good reshuffle, don’t we? Don’t we?! No, me neither. Not when it leads to uncertainty for people I am advising anyway. It is of course much too early to judge the newly formed government administration’s latest round of musical chairs, but the appointment this month of Cambridge and LSE Economics graduate and PhD and former professional business strategist Greg Clark to the newly created post of Secretary of State for Business, Energy and Industrial Strategy suggests that the chairs themselves are being replaced, or at least reupholstered. A new (albeit very experienced) man, for a new department.
It wasn’t so long ago, and for a very long time (around 1983 to 2007) that we had a government department responsible (amongst many other things) for Business Law, including insolvency and director disqualification called “the Department of Trade and Industry” (DTI). Additional responsibilities arrived into the department, such as Energy, and in 2005 it even tried to change its name to “the Department for Productivity, Energy and Industry” (sound familiar, Dr Clark?) but this tinkering was met with widespread derision and it became the DTI again within the week! It was, by and large, pretty clear what it did and what it was responsible for, at least from the perspective of the UK insolvency industry and those advising companies and individuals. It was anything but perfect, but knew where we were with it.
For some (no doubt) clever reason, in 2007 the DTI was broken up into “the Department for Innovation, Universities and Skills” (DIUS) and “the Department for Business, Enterprise and Regulatory Reform” (BERR). Business Law, etc naturally went to live with the BERR side of the divorce. Just as many divorces come with a prospect of reconciliation, however, BERR and DIUS were remerged just 2 years later in 2009. What to call the newly reformed department with two halves of the old DTI being sewn back together? Not the DTI surely? A name in use off and on since 1970, when it took over from “the Board of Trade” (which had been with us for centuries) – no, no far too old fashioned. And to complicate matters, BERR lost control of energy policy in 2008 to “the Department of Energy and Climate Change” (DECC). What we needed was something new, so why not “the Department for Business, Innovation and Skills” (BIS)? I hope you are keeping up. The 2009 press release said that BIS would “lead the fight against recession” and “build now for future prosperity”.
BIS survived under that name (as did DECC) until the demise of David Cameron’s administration and looked like it might even go on beyond it, but it seems it may now have issued its last press release on 21 July 2016. What we have now is “the Department for Business, Energy and Industrial Strategy” (BEIS) which – wait for it – follows the merger of BIS and DECC! You couldn’t make it up, but someone has.
But is this just semantics? Is there any significance to the resurgence of the perceived importance of Energy and Industry in the new, enlarged department, words last seen together in the department’s title for that fatal week in 2005? What is in a name, after all? Will the new Secretary of State and his staff have time and other resource to devote sufficient attention to all their competing priorities? We shall have to see. For now though, although the merger and new name were announced on 14 July, at the time of writing (22 July) the government’s website was still telling us that BEIS is currently working with only one public body (the Nuclear Decommissioning Authority) and that BIS (which is supposed to have gone, remember?) is still working with 45 public bodies, including Companies House and the Insolvency Service. No doubt this will regularise itself over the coming days and weeks. In the meantime, hopefully Dr Clark and his staff know who is actually responsible for what.
What we can already see, however, is that this is just the tip of the iceberg. On 21 July, a quiet overhaul occurred within the Insolvency Service fee structure (see our blog), without any adequate consultation. The press release issued by the Insolvency Service about this was arguably very misleading, seeking for example to justify the fact that over £8m in cost is to be put back onto creditors and business by reference to it (the IS) having taken steps to benefit us previously by the removal of crown preference (this in fact had nothing to do with the IS, and everything to do with an Act of Parliament in 2002!). It now seems to be policy that this vital agency will – like HM Courts Service before it – remain under massive pressure to be self-financing, even at the expense of creditors, debtors and the insolvency industry. It is to be hoped that this will not lead to further ‘dumbing down’ of the public sector end of the insolvency spectrum. Out of court bankruptcy processes, the unnecessary extension of debt advice regulation to qualified insolvency practitioner accountants, the removal of the LASPO exemption for insolvency proceedings and the new ability of IPs to sell off office holder claims (whilst individually some of these reforms do have some merit) have all combined over the past 10 months or so to encourage abuses of what was once a world leading insolvency system. After Brexit, the UK economy will need all the competitive advantage it can get so I do hope that this month’s developments in the Insolvency Service do not also lead to complex insolvency matters being retained by underqualified public servants, at the considerable expense of the business community generally. If this happens it will be sure to impact upon business confidence in trading in the UK. Intending no disrespect to the Insolvency Service, who are generally excellent at prosecuting their core duties, I have seen first hand many times what happens when the Official Receiver hangs on to bankruptcies and compulsory liquidations beyond the point where they are out of their depth with the law they are seeking to apply, and the consequences for creditors, other stakeholders and the public purse as a result have occasionally been quite frightening.
So, to Dr Clark and BEIS I say good luck, you are going to need it. Please remember there is help available and I humbly suggest you need to book yourselves a meeting with R3 sooner rather than later.