Corporate report

The Insolvency Service annual plan 2020 to 2021

Published 3 November 2020

Foreword from the Chief Executive

This year the plan has been developed against the backdrop of the COVID-19 pandemic, which has impacted on the economy in an unprecedented way. The Insolvency Service has an important role to play in supporting businesses and individuals in financial difficulty or facing redundancy as a result of their employer becoming insolvent. As an agency we have continued to deliver essential services, such as bankruptcy, debt relief orders and redundancy payments, uninterrupted through the lockdown period, using technology to support new ways of delivering our services to our customers.

The Insolvency Service has played a key role in the Government’s response to the pandemic, through the introduction of emergency legislation in the Corporate Insolvency and Governance Act to support businesses survive through the worst of the pandemic. Our objectives for this year include ensuring that this legislation delivers the intended support to businesses and that the agency is able to respond effectively to the new demands on its operational services resulting from COVID-19.

During 2020/21, we will also complete the work for a new Breathing Space solution which will go live in 2021. This new option will provide those in financial difficulty with legal protection from creditor actions while they obtain debt advice and find the right solution to their debt problems.

This will be a challenging year for the agency as it supports businesses and individuals impacted by COVID-19. The plan sets out how the Insolvency Service we will ensure we are able to respond to these challenges, whilst delivering the changes already planned as the agency moves towards its target operating model, delivering effective and efficient services using modern technology on a financially sustainable footing.

Dean Beale

Inspector General and Agency Chief Executive

Foreword from the Chair of the Insolvency Service Board

I am delighted and privileged to have been Chair of the Insolvency Service Board since January 2017. During this time, the Insolvency Service has worked continuously to undertake its core aim of delivering economic confidence. This work is now more critical than ever before, as we continue to tackle the economic challenges presented by COVID-19 and seek to support the country’s economic bounce-back which we all agree is crucial.

Although COVID-19 has meant that we have had to respond to new challenges, our core goals have not materially changed. As we continue to evolve and develop as an organisation, we have refreshed the approach to our headline commitments and performance so that our plans are now much more closely aligned to the agency’s purpose of delivering economic confidence, through supporting those in financial distress, tackling financial wrongdoing in this arena and maximising returns to creditors.

I am incredibly proud of the agency’s work in developing and delivering the Corporate Insolvency and Governance Act 2020. This Act provides critical rescue support, in particular to businesses impacted by the pandemic. Working closely with colleagues across government, these wide-ranging legislative protections were the product of countless hours and significant effort by our people, going above and beyond to provide vital support to the economy. That this Act was delivered in a very short timescale and whilst working entirely from home is a phenomenal achievement. I want to take this opportunity to thank all those who played a part in this process.

As Chair, I am keen not only to recognise what has been achieved recently, but also to look to the year ahead and beyond. This year, we will continue our work to deliver a Breathing Space solution for those individuals facing debt problems. Through this work we will be working alongside HM Treasury to protect individuals from creditor action whilst they seek further help to take control of their finances.

We must and will continue to tackle economic wrongdoing, whether in bankruptcy or the management of companies. Our enforcement work, often in conjunction with others, is crucial to help ensure that those who commit corporate misconduct are prevented from damaging the country’s economic progress. Similarly, our work on cases of national interest will continue to bring tangible economic benefit to the country.

As a Board and working very closely with the Executive Leadership Team, we have commenced work on a detailed five-year strategic review to cement our strategic direction, and to ensure that the agency can continue to play a central role in the country’s recovery in the coming years. The objectives in this plan are challenging and reflect the wide-ranging nature of our responsibilities. However, I have every faith that, with our people and stakeholders beside us, we will deliver on those commitments.

Stephen Allinson

Chair of the Insolvency Service Board

Delivering Economic Confidence

The Insolvency Service plays a vital role in supporting people and businesses in financial distress; providing debt relief for individuals who are in financial difficulty; delivering redundancy payments services to those who have lost their jobs through no fault of their own; and liquidating companies where there is no prospect of a rescue. Our investigation and enforcement work cover a wide range of financial wrongdoing, through the prosecution and disqualification of directors and winding up businesses where it is in the public interest to do so (for example, to disrupt organised crime). This work helps market confidence by providing a level playing field to businesses and a safe environment for investment and lending, supporting the UK to be the best place to start and grow a business.

The Insolvency Service oversees a world-class insolvency regime which supports the UK’s position as one of the leading jurisdictions for cross-border corporate restructuring. Through the Corporate Insolvency and Governance Act 2020, we developed new policies and implemented legislative change which has helped businesses to trade through the COVID-19 pandemic. This work will support businesses weather the current economic impact and assist the nation’s economic recovery, by providing new rescue options to help companies bounce back and survive as a going concern.

Our core objective is to deliver economic confidence through:

• Supporting those in financial distress

• Tackling financial wrongdoing

• Maximising returns to creditors

Our objectives are of greater significance today than ever before, as the country responds to the economic shock caused by COVID-19. We will continue to anticipate and respond to this challenging environment confidently and innovatively.

Our continuous improvement ethos and commitment to excellent customer service are at the heart of everything we do and underpin our priorities for 2020/21. During the coming year we will ensure that our delivery keeps pace with a changing economic environment, placing customers and stakeholders at the centre of everything we do.

Over the last few years we have implemented significant changes to the way our services are delivered. We have transformed our infrastructure, streamlined our estate and reorganised our delivery units, improving our efficiency and effectiveness.

During the year we will:

Improve the transparency and frequency with which we report our performance

This year, we will publish a quarterly scorecard on gov.uk that will provide detailed reporting on our operational performance, providing greater transparency about our activity on a more regular basis.

Review the initial impact of the Corporate Insolvency and Governance Act 2020, ensuring the measures deliver the necessary support to businesses as the economy emerges from the COVID-19 pandemic

This new legislation represents the most significant change to our corporate insolvency framework for many years. We will continue to engage with our stakeholders to ensure that the law works as intended and business gets the support needed to survive through the difficult economic impact of COVID-19, ensuring that the temporary measures introduced remain in place where that is appropriate.

Publish our review of insolvency practitioner regulation and set out proposals for the future

A well-regulated insolvency profession is fundamental to the effective delivery of the insolvency regime. In addition to finalising the review, we will continue to exercise our oversight functions on behalf of the Secretary of State, reviewing and monitoring the work of the Recognised Professional Bodies that regulate insolvency practitioners to ensure compliance with the Regulatory Objectives. We will closely review levels of complaints, identify emerging themes and take robust action where required. We will also build on existing work to ensure volume IVA providers are well-regulated and explore ways to improve diversity in the profession with regulators and other interested stakeholders.

Implement a new, improved methodology for measuring customer satisfaction that will provide more meaningful data by design, and ensure we achieve a performance level in the upper quartile of public service organisations

We will re-evaluate how we measure customer satisfaction, gathering more focused data from a wider range of customers who rely on our services. This will ensure we can improve the quality of those services, allow us to more meaningfully assess our impact on our customers and commit to our performance being in the upper-quartile of cross-government results.

Support the insolvency industry’s preparations for the end of the EU exit implementation period to ensure cross-border insolvency cases continue to work effectively for UK stakeholders

In addition to building on existing international relationships to ensure that the UK retains its position as a world-leading jurisdiction for insolvency matters, we will publish a guide for insolvency practitioners that will assist them when administering pan-European insolvency cases. During the year, we will consult on the implementation in the UK of two new Model Laws adopted by the United Nations Commission on International Trade Law: the UNCITRAL Model Law on Recognition and Enforcement of Insolvency-Related Judgments; and the UNCITRAL Model Law on Enterprise Group Insolvency

Increase the support we give to the insolvency profession through increased knowledge sharing and publication of guidance

Following feedback from stakeholders, a user-friendly insolvency technical guide is being developed available online and we will maximise the opportunities for sharing information and guidance with the industry through our “Dear Insolvency Practitioner” newsletter

Supporting those in financial distress

The country has faced unprecedented challenges as a result of the COVID-19 pandemic and accompanying shock to the economy. The Government’s comprehensive response to help businesses and individuals with the immediate impact of the virus has restricted the number of insolvencies since March 2020. However, previous economic downturns have contributed to increased corporate and personal insolvencies, with far-reaching impacts on the Insolvency Service’s workload. Our modelling suggests that corporate and individual insolvencies may rise later this year, increasing the demand for our services.

Many of our services provide support to people in financial distress, be that as a result of becoming unable to pay their debts or losing their jobs as a result of their employer’s financial difficulty. Our online Adjudicator gives people rapid access to the protection of bankruptcy and our Redundancy Payments Service provides vital funds to individuals who find themselves out of work, often at very short notice and through no fault of their own. We also provide debt solutions to help some of the most vulnerable in society secure a fresh start; our debt relief order regime provides relief to those with low levels of unmanageable debt, limited assets and minimal surplus income.

The Insolvency Service will be the body responsible for the delivery of the Government’s new Breathing Space solution that allows individuals a period of time to address their financial problems free from enforcement action by their creditors.

During the year we will:

Continue to work in partnership with HM Treasury to build and deliver a system to provide a breathing space for those with problem debt

Alongside HM Treasury, we will continue to work towards delivery of the Government’s manifesto commitment to implement the Breathing Space solution, a scheme which will significantly expand support for those in financial distress.

During 2020/21 we will complete the design and build of a new online portal for the money advice sector to access the scheme on behalf of their clients. We have kept the user central to the system’s design, engaging with a wide variety of stakeholders as we develop the system.

Make 95% of bankruptcy orders sought by individuals within 2 working days and determine 95% of debt relief order applications within 48 hours

Customers in financial distress who come to us seeking a solution need to know that their case will be dealt with quickly, so as to afford them some certainty during troubled times. We intend to maintain our high levels of performance by making 95% of bankruptcy orders within 2 working days and 95% of debt relief orders within 48 hours.

Improve the time taken to process redundancy payment claims, beyond an average processing time of 14 days or less

Individuals who lose their jobs suddenly need to be paid what they are owed as quickly as possible and we will continue to improve the time taken to make payments, despite the significant increase in redundancy claims driven by the pandemic. We will consolidate the changes we have made to the way we process claims and will continue to focus on improving the customer experience by implementing new customer contact technology

Implement a new telephony system that will build additional capacity and flexibility into our frontline customer services, improve the service for our users

We will deliver new telephony systems to improve our customer’s experience when they need to contact us. We will also improve the quality of information available to our customers online, to reduce the need for them to contact us directly and allow them to ‘self-serve’ where possible.

Tackling financial wrongdoing

Our investigation and enforcement activities, supported by funding from our parent department BEIS, contributes to an innovative and productive economy by instilling confidence in business. We tackle financial wrongdoing by bringing civil and criminal proceedings against those who act against the public interest. Our enforcement activity delivers significant protection to customers, businesses and investors. We act to disqualify rogue company directors where they are culpable of corporate misconduct and bring criminal proceedings against those who we suspect of criminal activity in relation to an insolvency or company investigation. We also investigate trading “live” companies, before issuing proceedings to wind them up where there is a public interest in doing so.

We are alert to the potential for financial wrongdoing linked to the pandemic. We will work across government to tackle misconduct in this area to reduce the impact both on individuals directly affected and the taxpayer where there has been misuse of Government help. Where there has been misconduct by individuals in relation to their personal finances, we can also act to extend the period to which bankrupts or those with debt relief orders are subject to restrictions (including restricting future ability to obtain credit).

This year we will continue our transformational change programme in our investigation and enforcement work. We will drive savings through more efficient working practices, continuing to grow and upskill our in-house legal team, and look to deal with cases in a way that matches the pace and nature of an evolving platform of financial and director misconduct.

During the year we will:

Work to prevent financial misconduct before it arises by developing a programme of director education, raising the capability and awareness of new directors and highlighting the consequences when that conduct falls short

During 2020/21 we will develop a programme of director education, where we will share our extensive experience to help prevent director misconduct and its accompanying losses to creditors prior to a company’s insolvency. We will also work to develop an educational package to tackle cases where misconduct has already occurred to help prevent it happening again.

Improve the way we measure our enforcement outcomes and introduce a new quarterly report for publication on a wide range of activity in this area

Traditionally, our effectiveness has been judged against specific enforcement outcomes; most notably on timeliness and quantity. We want to be transparent about our activities and demonstrate to everyone how we provide value for money. In line with many other enforcement agencies, we intend to provide more detailed information about our activities and how these contribute to tackling financial misconduct. We will, during the coming year, refine how we measure and report on our performance in this regard. This will provide assurance to stakeholders on the wide range of investigation and enforcement the agency undertakes.

Deliver effective market protection and tackle economic wrongdoing by maximising the use of our resources to investigate and take action against a wide range of identified misconduct

During 2020/21, we will deploy our resources to investigate and take enforcement action where it is in the public interest to do so, by disqualifying directors, winding up companies or issuing criminal proceedings. We will take action against a wide spectrum of misconduct, targeting the most serious offences and deploying resources on cases of national economic interest. We will also work across-government and with other agencies to tackle both existing and COVID-19-related fraud. This work is critical in maintaining a level playing field for business and creating a safe environment for investment.

Maximising returns to creditors

Our network of Official Receivers ensures that those who are adjudged bankrupt, as well as companies wound up by the court, are dealt with in an orderly and fair way.

When an insolvency occurs, ensuring that all assets of value are realised and distributed quickly is paramount in mitigating the effects of insolvency and maximising returns to creditors is integral to the work of the Official Receiver as Trustee and Liquidator. Last year we returned over £61 million to those owed money following a bankruptcy or compulsory liquidation.

We will continue to ensure that bankrupts with sufficient disposable income to contribute to their debts, do so. We will also start to see the outcome of our work to collect the significant volumes of PPI mis-selling compensation which constitute assets in historic bankruptcy estates.

During the year we will:

Complete the transformation of our Official Receiver Services function to make it more efficient and cost effective

During 2020/21 we will aim to complete a transformation of the way our Official Receivers operate and deal with our customers, by creating centres of expertise capable of undertaking multiple work streams simultaneously, leading to greater efficiency and effectiveness in delivering our services. The majority of cases handled by our network of Official Receivers have few or no assets of value. Where assets exist, however, including those that have been put out of the reach of creditors, we will realise them as quickly as possible and maximise their value to the estate.

This transformation will help ensure that our delivery model is sufficiently robust and flexible to deal with significant fluctuations in case numbers and allow us to deal swiftly and effectively with national interest cases like British Steel or Thomas Cook. Such cases, whilst infrequent, are core to our responsibilities.

Issue reports to creditors within 15 days of interviewing (or a decision that no interview is required) in at least 91% of cases

We know that creditors need to be made aware as soon as possible of the prospect of a dividend if they have dealt with a company or individual that has become insolvent. We will issue our statutory reports setting out the reasons for insolvency and the likelihood of a return as swiftly as possible.

Complete the recovery of funds arising from PPI mis-selling compensation and commence distribution on relevant cases

During 2020/21, we will complete the recovery of the significant volume of claims made against financial institutions for historic PPI mis-selling and begin the process of distributing those funds to creditors on cases (where there are sufficient monies to do so). This is expected to commence later in the year, once all receipts are completed.

Corporate Responsibility

Our responsibility to the environment and our contribution to reducing carbon emissions in pursuit of a future “net zero” is a key factor in planning how we want to do business.

We have already delivered benefits arising from our transformational changes with video-conferencing capabilities allowing us to reduce our business-related travel and therefore our carbon emissions.

During the year we will:

Implement a new environmental policy and actively pursue improved performance from our supply chain to reduce our carbon footprint and help contribute to the UK’s ambition to be net zero by 2050

We will work to mitigate our carbon footprint and play our part in the safeguarding of our climate by undertaking only necessary travel and where possible switching to lower-emission modes of transport, asking our suppliers to do the same.

Refresh our estates strategy and ensure that the government’s environmental policies are a cornerstone of our plans

We will continue to foster a ‘Circular Economy’ culture: re-using and recycling of goods; reducing our requirement for paper; rolling out waste segregation and recycling initiatives in our offices; and ensuring that we procure carefully to reduce waste volumes sent to landfill. Our commercial team will continue to work with our suppliers to ensure sustainability is a key element in our contracts for goods and services.

People

The Insolvency Service employs more than 1,700 people and they are our greatest asset. Economic impacts arising from the COVID-19 pandemic are expected to significantly increase the agency’s workload and we must become more flexible and resilient. To that end, we will grow our leadership capability and offer new opportunities for professional development to our staff. We will deliver a comprehensive training package for new entrants that will furnish our people with skills to identify and demonstrate misconduct across a range of corporate, civil and criminal disciplines. We will also support more of our people to become members of the Government Counter Fraud Profession and enable our people to study for professional insolvency qualifications. During 2020/21 we will create a new Diversity Forum to involve the whole agency in improving diversity and inclusion.

We will develop and deliver a refreshed resourcing strategy and improve workforce flexibility, identifying ways to manage ‘surge activity’ in case volumes using Civil Service recruitment principle exceptions. We will also support the wellbeing of colleagues and continue to manage sickness absence within acceptable levels.

During the year we will:

Refresh our leadership and management training opportunities and deliver an operational learning offer across all areas of the agency

In 2020/21, we will deliver a refreshed resourcing strategy, improving our flexibility and resilience to ensure we can respond quickly to changes in case volumes. We will incorporate a new operational learning offer for all of our people, irrespective of role, and make the Insolvency Service an even better place to work.

Embed diversity and inclusion at the heart of decision-making in the agency

Building on strong People Survey responses in 2019 around inclusion and diversity, we will celebrate the 2020 ‘Year of Inclusion’ by continuing to foster a culture of positive behaviours, promoting and supporting our wide range of employee network groups and ensuring our senior leaders lead by example, making diversity and inclusion an integral part of all decision making in the agency.

Deliver against our agency apprentice target (42 new apprentices in 2020-21)

We will look to further develop our people and enhance their skills through proactive engagement with the apprenticeship programme, contributing towards achievement of the overall government target (annually employing 2.3% of staff as new apprentices).

Retain our ambition to be a high performer in relation the civil service wide people survey

We will continue to improve engagement in the agency, building on our results in the 2019 People Survey and retain our ambitions to be a Civil Service high performer. We will also develop and launch an agency people strategy, which outlines our ambitions for our people, aligned to our business strategy.

Our Finances

Our starting assumption for 2020/21 was that case volumes would be broadly stable and our initial projections were based on that. We are now acutely aware of potential changes in the economic outlook caused by the pandemic and government responses to mitigate that impact. These necessary actions have impacted the flow of cases to the agency and are likely to drive fluctuations in the number of insolvencies, from which part of our fees are generated, and will impact on future income.

This year we have already seen a significant increase in claims to the Redundancy Payment Service beyond a level we can meet without additional resource and we are working with HMRC to increase our funding. We will, in response to the pandemic, continue to scrutinise and re-model our financial plans if necessary.

Delivery within those areas of our business that rely on a fixed funding model - particularly our investigation and enforcement work - will be impacted by changes in cases numbers that cannot be matched by funding changes. We will continue to use continuous improvement methodology to make sure that our cases are dealt with as efficiently as possible, ensuring we make most effective use of available funding.

We will, in due course, work with BEIS and HMRC to agree funding settlements for the next Spending Review period, which will enable the agency to deliver for our customers and provide the investment needed to support plans to continue our transformation programme. That will allow us to better react to fluctuations in case volumes and workload.

During the year we will:

Pay 80% of supplier invoices within 5 working days and 100% within 30 calendar days

As a government agency, we will meet our obligations on rapid payment of invoices which is now more important than ever.

2020/21 BUDGET

Income/Funding	Budget 2019/20 £m	Outturn 2019/20 £m	Budget 2020/21 £m
Official Receiver fee income	63.1	81.3	56.1
Other fee-funded Activities	18.9	16.5	19.6
BEIS funded: Investigations, Legal Services and Policy	45.9	44.4	44.1
HMRC funded: Redundancy Payments	7.7	8.0	7.7
HMT funded: Breathing Space and SRDP	-	2.5	2.0
Total	135.6	152.7	129.5

Operating Expenditure	Budget 2019/20 £m	Outturn 2019/20 £m	Budget 2020/21 £m
Staff costs - Permanent	81.4	70.0	79.7
Staff costs - Non-permanent	4.0	6.1	1.1
Total staff costs	85.4	76.0	80.8
Estate costs	10.4	9.9	9.5
Legal costs	6.1	6.8	4.6
I.T. costs	21.3	20.9	21.6
Other (incl. non-cash)	12.4	11.0	12.9
Total	135.5	124.7	129.5
Operating (Deficit)/Surplus	0.1	28.1	0.0