After the collapse of construction giant Carillion a consultation is being launched over planned action against “irresponsible” company directors, with the government planning insolvency reforms to give new powers to staff and suppliers affected by large-scale insolvencies.
While most companies are run responsibly, ministers have raised concerns after the corporate failures such as Carillion and BHS, that directors could unfairly shield themselves from the effects of insolvency or even profit from business failures while workers and small suppliers lose out.
The insolvency reforms include getting back money for workers by reversing asset stripping, disqualifying directors who sell a struggling company and giving new powers to the Insolvency Service.
Business secretary, Greg Clark said: “Britain has a good reputation internationally for being a dependable place to do business, based on required high standards.
“This framework has been regularly upgraded and in the light of some recent corporate failures I believe the lessons should be learned and applied.
“These reforms will give the regulatory authorities much stronger powers to come down hard on abuse and to make irresponsible directors bear the consequences of their actions.”
The Insolvency Service disqualifies around 1,200 directors a year.
Chairman of the Work and Pensions Committee, Frank Field said: “The lesson from BHS, Carillion and the two Philip Greens is that our whole system of corporate accountability ceases to operate over wide areas of British industry.
“The greedy and complacent can take a one way bet with the livelihoods of their workers, their smaller suppliers and the taxpayer. I welcome any move that holds individuals more accountable for their conduct, and strengthens the hand of the little guy as a result.”
Rebecca Long-Bailey, shadow business secretary, said: “The Tories have spent years turning a blind eye to bad business behaviour. Scandals like the failure of BHS and Carillion showed how quickly the future of a company and its workforce can be sacrificed for the sake of a quick buck.”
“The government should have taken action then, instead of choosing to ignore alarm bell after alarm bell.”