So what is in the government’s new legislative programme for business and commerce?
At first sight, comparatively little – only the Finance and Enterprise Bills against a raft of Home Office and other public service legislation.
This was of course expected. Public sector reform being a key tenet of Labour’s manifesto pledges. Moreover, public sector reform has significant implications for business as the government continues its steady if controversial path towards public private partnerships.
The Enterprise Bill includes a number of innovative and interesting proposals.
Within days of the last election the chancellor announced independence for the Bank of England in setting interest rates, taking this highly important function out of the realms of political expediency and into the arena of measured economic analysis.
This time it is merger control, with direct political decision making delegated to the competition authorities.
The additional powers vested in these authorities to investigate complex monopolies must be a relatively small price to pay in exchange for a more consistent and predictable approach to merger decisions.
The second major positive move is the proposal, at last, to remove crown preference on insolvency. The most blameless of all bankrupts are those who are pushed into insolvency by the non-payment of trade debts by a bankrupt predecessor.
Since non-payment of tax is frequently the immediate cause of insolvency, payment of tax before unsecured creditors will result equally frequently in the non-payment of trade debts. Change on this front therefore is to be welcomed as a tangible demonstration of the government’s business friendly credentials.
This is accompanied by a proposal to abolish the ability for secured creditors to appoint administrative receivers.
The banks have long argued that this is a key element of the security available to them and without it there would be less funding available to ordinary companies, but this does not appear to have been the case in overseas jurisdictions where it is not available. The debate on this will be watched with interest by accountants.
Other elements of the insolvency proposals are more worrying. Gordon Brown’s desire to encourage entrepreneurs is commendable, but any judgement between deserving and undeserving bankrupts is bound to be difficult or impossible. Serial incompetence is no more desirable than serial dishonesty.
The Proceeds of Crime Bill also has ramifications for business and should go a long way towards correcting the economic distortions caused by crime, by boosting the confiscation of criminal proceeds.
A dedicated agency for confiscation, the Criminal Assets Recovery Agency, is proposed, with additional resources and much greater powers.
The devil is in the detail however, and in the version of the Bill published for consultation this spring, little provision had been made for the compensation of innocent parties caught up in and disadvantaged by crime.
Nor was consideration given to the position of legitimate businesses in which criminals had simply happened to invest and it is to be hoped that the version of the Bill introduced to parliament is amended to take into account business as well as law enforcement considerations.
Another particular quirk of the consultation version of the Bill is that it is proposed that the confiscation of criminal proceeds will take priority over the settlement of trade debts upon the insolvency of the criminal.
It would be truly ironic if the government simultaneously legislated to remove crown preference in non-criminal insolvency while introducing it in respect of the assets of a criminal.
Nobody would wish to enable criminals to have any opportunity to salt away their proceeds by the use of any technique – but insolvency, undertaken by properly regulated and ethical insolvency practitioners, is not a means by which this can be done.
Last but not least, more attention still needs to be focused on the minimisation of red tape. Legislation should be aimed at tackling the big issues.
Many of the administrative burdens on business are caused by apparently small obligations placed on either businesses or their advisers.
Take for example the proposed changes to the money laundering legislation in the Proceeds of Crime Bill. These propose absolutely no de minimis provisions, implying that accountants and other professional advisers would need to report the concealment of the proceeds of even the smallest of crimes, regardless of whether they had already been dealt with by disciplinary or police action at a local level.
All in all, however, a positive agenda for the coming term with more legislative focus on business than at first apparent.
Provided these details can be ironed out, crime reduction and UK competitiveness can go hand in hand.
OUR DTI STEERING GROUP CANDIDATES
Patricia Hewitt wants to create a more integrated DTI and has announced a strategic review into how the department can better deliver services to business people and technologists. We’d like to suggest the following candidates for the four business vacancies on a steering committee due to report in September.
They will join a team of ministers and civil servants, and the project will also make use of consultants.
Hewitt said: ‘Just as the business world is changing fast to meet huge challenges, so the DTI must change and adapt in order to realise our mission to help UK firms get to the future first.’
Andrew Likierman: the recently-knighted head of government accountancy services knows Whitehall inside out. An ICAEW and CIMA member, Likierman is also visiting professor at the London Business School, and is working on a cross-disciplinary project into new ways for companies to choose and use performance measures.
Julie Meyer: the 35-year-old founder of new economy network First Tuesday is, admittedly, Californian. But her contacts with venture capital and young entrepreneurs Europe-wide are second to none. As a former e-minister, Patricia Hewitt may well appreciate Meyer’s background and achievements.
Peter Wyman: this senior partner at Pricewater-house-Coopers is a heavy hitter when it comes to promoting good financial sense to UK plc and Whitehall. But his altercation with Gordon Brown over government figures last year may make the ambitious Patricia Hewitt reluctant to appoint him.
Sheila Masters: aka Baroness Noakes, her experience at the helm of the ICAEW turning a dusty institution into a modern day service-focused entity, plus her reputation as a straight-talker make her a good choice to advocate a more business-minded department. A partner at KPMG, she is experienced at liaising with government at all levels.
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