The next item is the legislative consent motion on the Corporate Insolvency and Governance Bill. I call on the Minister for Housing and Local Government to move the motion—Julie James.

Motion NDM7330 Julie James

To propose that the Senedd, in accordance with Standing Order 29.6 agrees that provisions in the Corporate Insolvency and Governance Bill in so far as they fall within the legislative competence of the Senedd, should be considered by the UK Parliament.

Motion moved.

Diolch, Llywydd. I welcome this opportunity to explain the background to this legislative consent motion. The Secretary of State for Business, Energy and Industrial Strategy introduced the UK Government's Corporate Insolvency and Governance Bill on 20 May, 2020. The purpose of the Bill is twofold: some provisions are specifically aimed at putting in place temporary emergency measures to help companies deal with the COVID-19 pandemic by amending company and insolvency law, introducing, for example, provisions to allow companies and similar bodies temporary flexibility to hold an annual general meeting and other general meetings electronically, by telephone or virtually, for the period between 26 March 2020 and 30 September 2020.

The remaining provisions bring forward insolvency law reforms, which the UK Government has been developing and consulting on over the last few years. Again, these measures are regarded as being particularly helpful to address issues raised by the COVID-19 pandemic. In particular, the Bill introduces a new moratorium into the Insolvency Act 1986, which will apply to all companies. In certain circumstances, a company will be able to apply for a moratorium, which is intended to allow a company in financial distress a breathing space to explore its rescue and restructuring options free from creditor action.

During the moratorium period, certain benefits and restrictions will apply. For example, no legal action will be able to be taken or continued against a company without leave of the court. Companies that are subject to a moratorium will remain under the control of their directors, but will also be overseen by a monitor, a licence insolvency practitioner, who is an officer of the court.

As I mentioned, the Bill will apply to all UK companies. Insolvency generally is a reserved matter and so the provisions would apply across the UK. And understandably perhaps, in view of the COVID-19 situation, the Bill is being fast-tracked through the UK Parliament. Royal Assent is expected by the end of June.

On 5 May my officials were contacted by officials from the Business, Energy and Industrial Strategy Department, as it became apparent that the Bill provisions impacted on existing insolvency provisions in housing legislation, which are designed to help if a registered social landlord should get into financial difficulties. These provisions, contained in the Housing Act 1996, also include for a moratorium period, which provides time for the Welsh Ministers, as regulator of social housing, to work with the RSL to resolve issues, primarily to find a solution that enables the social housing assets to be retained in the regulated social housing sector, in turn protecting tenants. Regretfully, the fast-tracking of the Bill has meant that the usual committee scrutiny of the legislative consent memorandum has not been possible, and so this debate has been extended to provide Members with the opportunity for their views to be heard.

A very small number of RSLs in Wales are registered companies, and so the Bill's moratorium provisions will apply to them. The moratorium provisions will not, however, apply to other forms of RSL, such as registered societies or charitable incorporated organisations. This results in different insolvency provisions for different types of RSLs in Wales and a clear potential for the proposed new insolvency moratorium to conflict with the existing arrangements, which apply to all forms of RSL in Wales.

In the time available, it has not been possible to fully assess the implications of the new provisions, given the extensive insolvency powers that already exist. For that reason, I agree that officials should seek provisions in the Bill to enable the Welsh Ministers to be able to apply, disapply or modify the provisions by secondary legislation, in order to ensure that the provisions in the Bill relating to the moratorium operate in a way that is complementary to the existing RSL insolvency provisions in Wales, and maintain the Welsh Ministers' existing powers and functions to deal with the RSL insolvencies, as set out in the Housing Act 1996, to achieve the desired outcomes of that insolvency regime—the main one being the protection of social housing stock and assets and the protection of tenants—and to ensure that the provisions within the Bill relating to the moratorium operate, in so far as they can, in a way that is consistent for all forms of RSL in Wales.

The Bill, as introduced, has therefore been drafted to take account of the policy intentions, where that was possible, and now makes various specific provisions for the Welsh Ministers. There are reasonable legal arguments that the provisions for the Welsh Ministers are within the legislative competence of the Senedd, and I therefore believe that the legislative consent of the Senedd should be sought. However, whilst I believe the provisions fall within the legislative competence of the Senedd, I am content that they should be made in the UK Government Bill for reasons of expedience, in view of the subject matter.

I therefore move the motion and ask the Senedd to approve this legislative consent motion. Diolch.

I think this is a reasonable approach to take. It's important that flexibility is maintained through a moratorium period, can be given to RSLs that are in financial difficulty—obviously, as the Minister has just explained, that was something available, and is available, indeed, under current housing legislation—and, for Welsh Ministers to gain powers to ensure that there is an appropriate fit and that there isn't a legal contradiction generated, we think the approach the Minister has outlined is a reasonable one. Above all, we need to protect the social housing asset in Wales, and, as the Minister said, thereby protect the interests of tenants. So, I would urge that Members support the LCM.  

I call now the Chair of the Legislation, Justice and Constitution Committee, Mick Antoniw. Just wait for the microphone to be turned on. Try again, Mick. No, we have a problem with your sound. Can we just pause for a second while somebody provides some advice? 

I think that's fixed now, Llywydd. 

Yes, you've fixed it, Mick. 

Thank you. Llywydd, the committee, of course, as the Minister has explained, has not had the opportunity to scrutinise this particular memorandum. But, as Chair of the committee, there are a number of comments that I think it is important that I do make, because this is a serious piece of legislation that does impact on rights, albeit predominantly corporate rights, but also, to some extent, individual rights.

So, the legislation is brought within the context of the economic and financial pressures, which are very much unique, in these extraordinary circumstances. So, the normal fiscal rules and obligations, if applied strictly, could lead to many companies collapsing. So, the purpose of the Bill is to create a space for any company in financial difficulty—a breathing space, as it is described—by removing the impact of creditor action, that is, steps that a company or individual can take to enforce debts and financial obligations.

So, the Bill does allow a company an important moratorium of up to 40 days. And, in addition, it restricts the capacity for legal actions—that is, essentially, enforcement. There have rightly been identified issues relating to registered social landlords in the Bill that conflict with aspects of Welsh Government policy. A key objective outlined by the Welsh Government is to maintain existing powers and responsibilities as set out in the Housing Act 1996, which the Minister referred to, and to ensure there are no negative consequences for registered social landlords.

The Bill makes moratorium provision for registered social landlords in difficulty using a draft affirmative procedure, but negative resolution procedure for the first six months. In addition, the duty in the Bill to consult on any regulations during the first six weeks will also not apply.

Now, as a committee, we will want to review in due course the operation of this Bill and the way in which the powers it provides have been used. Thank you, Llywydd.

Diolch. The Minister to respond.

Just to thank the two Members for their comments, and we've taken them on board, and to urge people to support the legislative consent motion. Diolch, Llywydd.

The proposal, then, is to agree the motion. Does any Member object? I'm seeing no objections to the motion and therefore it's agreed in accordance with Standing Order 12.36.

Motion agreed in accordance with Standing Order 12.36.