Hewitt introduces Bill to boost enterprise and prosperity
(26 March 2002)

The Enterprise Bill was published in Parliament today by Trade and Industry Secretary Patricia Hewitt. The Bill represents a major step towards the Government's objective of making the UK the best place in the world to do business.

The Bill will benefit business and consumers by putting in place a modern framework of pro-enterprise measures to drive up productivity in the UK. The Bill will deliver millions of pounds worth of benefits for consumers, business and the economy.

The enterprise reforms will:

• Promote strong, fair competition and open, dynamic markets
• Deliver a better deal for consumers
• Make the insolvency regime more supportive of enterprise
• Remove Ministers from competition decisions.

Announcing the publication of the Bill, Patricia Hewitt said:

"The Enterprise Bill is good news for business, consumers and the economy. The measures in it will promote an enterprise culture. That can mean prosperity for all. Our approach recognises that we need continuous improvement to compete in the fast-changing global economy."

"To achieve the growth and improvements in standards of living that we all want, we need a world-class competition regime to open up markets across the economy and encourage enterprise."

"Strong, fair competition helps put downward pressure on prices and upward pressure on quality. It boosts innovation and productivity. Competition also increases the power of consumers. The Bill empowers consumers and honest businesses by establishing more effective consumer protection.

"Unfair competition damages honest businesses as well as consumers. Ultimately it damages the economy, employment and our living standards. So strong competition and consumer protection is vital if UK business is to get to the future first.

"We must have a modern insolvency regime which supports enterprise and encourages responsible risk-taking. In the UK, 31.5 per cent of people say that fear of failure would prevent them from starting a business. In the US that level is just 21 per cent. The Enterprise Bill will help to reduce the stigma associated with honest failures, including bad-luck bankruptcies.

"But we will provide more effective protection against the small minority of bankrupts who abuse their creditors and the public. Reckless and culpable bankrupts will be subject to a new, tougher regime of up to 15 years.

"Failing companies should not be forced to the wall unnecessarily, but investors must have the confidence to continue supporting British business. Business is a dynamic process and that responsible risk-taking is fundamental to survival and growth. The fear and consequence of honest failure should not act as a disincentive to entrepreneurs.

"Taken together, the measures in this Bill will create a regulatory framework that is more streamlined, targeted and transparent - one which works better for business and consumers.

The potential benefits to business and consumers could add up to hundreds of millions of Pounds. These reforms will help foster a spirit of enterprise in the UK and help UK businesses compete effectively in world markets."

ENTERPRISE BILL - MAIN FEATURES

Competition

- Taking politics out of competition decisions - instead expert, independent, competition bodies will take decisions on mergers and markets against a new competition-based test within a more transparent, predictable and accountable framework.

- Procedural improvements for business. There will be a new right of appeal to the Competition Appeals Tribunals in merger and market inquiries. Inquiries will have to be completed within statutory maximum timetables. There will be rules for the conduct of the Competition Commission's inquiries allowing for a more transparent remedies process following the publication of provisional competition findings.

- Criminal sanctions with a maximum penalty of five years in prison to deter those individuals who dishonestly operate hardcore cartels - agreements to fix prices, share markets, limit production and rig bids. The offence will be tightly defined ensuring that honest businesspeople will have nothing to fear. US research shows that cartels raise the prices of the affected goods and services by 10 per cent on average.

- Greater opportunities to gain redress for victims of anti-competitive behaviour - making it easier for individuals to bring claims for damages for losses suffered due to anti-competitive behaviour (there have been no successful actions for 30 years). Consumer bodies will be able to make claims on behalf of named individuals who have suffered.

Consumers

- The Stop Now Orders regime will be extended to protect consumers from traders who do not meet their legal obligations. The new enforcement regime will apply to infringements of all legislation protecting the economic interests of consumers, such as failing to carry out a service (eg building work or home maintenance) to a reasonable standard. This will also ensure that honest traders, especially small businesses, do not face unfair competition from those who engage in unlawful conduct.

- OFT approved Codes of Practice - the OFT will be able to give formal approval to codes of practice - helping consumers identify businesses they can trust eg car repair garages or estate agents for example. Businesses involved in the scheme will also gain a marketing advantage.

- Consumer bodies will be able to make 'super-complaints' to the OFT. The OFT will be required to respond within 90 days. This will significantly strengthen the voice of consumers on competition matters.

Insolvency

- Reducing the stigma of bankruptcy by giving entrepreneurs a second chance if they have failed through no fault of their own. Bankrupts who are not reckless or dishonest will be released from restrictions after a maximum of 12 months. Also, many of the irrelevant and outdated restrictions that currently apply to bankrupts will be removed.

- Reckless and culpable bankrupts will be subject to a new more stringent regime - they will have to comply with Bankruptcy Restriction Orders for up to 15 years. This will provide improved protection for creditors and the public.

- Facilitating the rescue of viable companies, and if that is not practicable, achieve a better result for the company's creditors as a whole. This will be achieved by restricting the use of administrative receivership - where a single secured creditor has effective control - and shifting the balance in favour of administration - which takes account of the interests of all creditors. Administration will be streamlined - making it more effective - by providing out-of- court routes into administration for floating charge holders and companies; removing bureaucracy and reducing the time limits.

- Abolition of the Crown's preferential rights to recover unpaid taxes ahead of other creditors; this will bring real benefits to unsecured creditors, including many small firms; and

- Modernisation of the financial regime of the Insolvency Service: simplifying the fee structure and bringing increased transparency and simplicity. Reforms to the Insolvency Service Investment Account will ensure that the maximum possible investment return goes to insolvent estates thereby benefiting creditors, including many small firms. These last two measures will free up to #110 million per year for distribution to creditors.

Further details about the Enterprise Bill can be found on the DT website - click here.