The government has put small business at the heart of the agenda for its second term by pledging to introduce an Enterprise Bill and carry out sweeping reforms of UK bankruptcy and insolvency laws.
The well-trailed Enterprise Bill will see a ‘radical reform’ of the competition regime to end anti-competitive behaviour, with the sanction of criminal penalties. In addition it will include reform of insolvency laws.
With this legislation the government hopes to de-stigmatise failure and support entrepreneurs who have failed through bad luck rather than acting dishonestly.
But insolvency practitioners have already sounded a warning saying that reducing the bankruptcy period for ‘honest’ bankrupts from three years to 12 months will have a detrimental effect on returns to creditors.
According to the association of business recovery professionals, R3, it will have the reverse effect by making bankruptcy more appealing to company directors than individual voluntary arrangements.
With the Enterprise Bill, the government also hopes to test future mergers on competition grounds rather than the current public interest criteria and remove ministers from the decision-making process. And there are other competition measures too.
The government plans to make the operation of a cartel a criminal offence and to allow consumer organisations more power to appeal to the Office of Fair Trading.
The Institute of Directors gave a qualified welcome to the speech. ‘The help for enterprise, including changes to capital gains tax and the insolvency law and as outlined by the chancellor on Monday, will be welcome to business,’ it said.
‘But the chancellor’s proposal to introduce possible imprisonment for directors involved in price fixing sends out an unfortunate anti-business message. Changes to competition law are, moreover, premature as the 1998 Competition Act only became fully operational in March 2000 and should be allowed to settle down.’
‘The proposals on competition policy are many and various and we will closely scrutinise them to ensure they tackle real problems in a proportionate way. That is especially true for the proposed criminal penalties for operators of cartels, which could be premature.’
The government was also accused of further complicating tax legislation with plans for a Tax Credit Bill.
Liberal Democrat shadow chancellor Matthew Taylor said: ‘What is really needed is a simpler, fairer tax system that raises funds from those that can best afford it for investment in health, education and pensions.’
For full coverage of the Queen’s Speech go to www.accountancyage.com/News/1122287.