Corporate report

The Insolvency Service annual plan 2021 to 2022

Published 10 September 2021

Applies to England, Scotland and Wales

Foreword from the Chair of the Insolvency Service Board

I am delighted to introduce the Insolvency Service’s annual plan for 2021-2022, having been appointed Chair of the Insolvency Service Board in April 2021.

This is an exciting and important time for the Insolvency Service as we launch our new five-year strategy. It is my privilege to head up a Board with a broad range of experience and knowledge who will work with Dean and the Executive Leadership Team to lead the Agency forward.

Our published five-year strategy sets out our strategic direction that will ensure the agency can play a central role in supporting the country’s economic recovery from coronavirus (COVID-19). Whilst both the five-year strategy and this Annual Plan are ambitious, we are confident both in the need to change and in our ability to migrate successfully to an even more modern Agency with a strong customer service ethic.

As an important first step in this ambition, we are committed this year to putting customer satisfaction and real-life impacts at the heart of our services through, for example:

• developing statutory debt repayment plans: already this year we have launched Breathing Space, a service that gives those in problem debt legal protection from their creditors whilst they receive help from regulated debt advisors. Following on from this success, we shall begin the development of statutory debt repayment plans, which will allow eligible individuals to enter into a formal agreement with their creditors to repay their debts over a manageable timeframe.

• taking forward government plans to extend Debt Relief Orders to support more vulnerable people in problem debt

• processing redundancy payment claims in an average time of 14 days or less, allowing people who lose their jobs suddenly to be paid quickly.

• taking enforcement action against those who have abused government support during this pandemic, for example tackling cases where there has been abuse of the Bounce Back Loans Scheme. We are keen to use some new powers proposed by the government allowing us to investigate dissolved companies and their directors.

• continue to work to prevent financial misconduct and avoid insolvency before it occurs by developing and introducing a package of learning materials focussing on director education.

This will undoubtedly be a challenging year for businesses and individuals alike. Despite such challenges across the whole of the economy we shall not lose sight of a focus on how we support our customers and external stakeholders affected by insolvency. That commitment is core to the Agency and will remain so.

Mark Austin

Chair of the Insolvency Service Board

Foreword from the Chief Executive

I am pleased to introduce the Insolvency Service annual plan for 2021 to 2022. This is my second annual plan since being appointed as Chief Executive. The plan sets out our priorities for the forthcoming year and how we will support businesses and citizens as the economy begins to recover from the effects of COVID-19, helping to protect business and jobs where possible.

Now more than ever our core objectives of providing economic confidence through supporting those in financial distress, tackling financial wrongdoing and maximising returns to creditors will be vital as the country builds back better. We were able to continue to deliver our essential services throughout the challenging times of the last 12 months, but looking ahead we will be expanding and improving those services to support economic recovery. We have an important new role to play in 2021 in the delivery of Breathing Space, supporting people in problem debt to get the help and advice they need. We will also be scaling up our capabilities to support those who need to access our services. We will strive to deliver excellent standards of service to our customers, underpinned by a new approach to measuring customer satisfaction which will better help us to continually improve our service delivery.

This year also sees the launch of our strategic plan for the next five years. The plan sets out how the agency will evolve over the next five years to achieve its ambition to be at the centre of a fair, efficient and effective insolvency system that is a global leader in insolvency solutions for citizens and for businesses, supported by a profession that is recognised for the highest professional, technical and ethical standards when carrying out its work. Our year one work will include consulting on the regulatory regime for Insolvency Practitioners, developing more guidance and support for directors to help avoid insolvency, and the implementation of a new strategic assessment tool to ensure our investigation and enforcement activities are targeted to the cases which deliver the best outcomes to protect the public and business.

Our customers are at the heart of everything we do, but we cannot achieve our ambitions without a dedicated, resilient and capable team of people. Our new People Strategy has set out our ambitions to build an agency for the future, which attracts and nurtures talent and supports a diverse workforce. I want the agency to be a model modern Civil Service organisation where people want to develop their careers, including those already working in the wider insolvency profession.

It will be a challenging year, but the last 12 months has demonstrated how the agency can respond to significant challenges, with a team of people committed to the essential public services they provide. This gives me huge confidence that we will achieve our goals for the year ahead.

Dean Beale

Inspector General and Agency Chief Executive

Delivering economic confidence

The Insolvency Service is an executive agency of the Department for Business, Energy and Industrial Strategy. The Department works to build and support a dynamic and competitive UK economy. The agency is a vital part of the framework supporting economic growth by overseeing and fostering an effective insolvency regime. In 2021-2022 our prime objective of delivering economic confidence will be paramount as the country recovers and regenerates from the COVID-19 crisis.

2020-2021 saw us refresh our performance commitments so that our plans were aligned more closely with our core objective of delivering economic confidence, and put customers and stakeholders at the heart of everything we do. For this year we have undertaken a full strategic review. As a result, we have a new and ambitious five-year agency strategy which will evolve the agency to ensure it delivers its core objectives more effectively for the changing economic and social environment in this country. The strategy’s implementation is becoming a reality and enabling us to enhance the energised approach for the coming years to ensure we are an agency fit for the future: more responsive and more effective. It will see us focus on our people and customers. It will complement and align to the evolving panorama across Government, including the levelling up agenda, the strategic modernisation of the Civil Service and the priorities of the Department for Business, Energy and Industrial Strategy.

This annual plan sets out our priorities for the year ahead. It represents year one of our 5-year strategy which was published concurrently with this plan, on the 10th September 2021.

We will deliver economic confidence in three ways:

Supporting those in financial distress.

Never has this objective been more significant than in the wake of the COVID-19 pandemic. Many of our services support some of the most vulnerable people in society in financial distress. We make redundancy payments to people whose employer has become insolvent and make Debt Relief Orders or adjudicate on bankruptcy for those with inescapable debt problems. We make sure that failing businesses have a range of options for a rescue, but where that is not possible that they are liquidated in an efficient, fair and orderly way.

Tackling financial wrongdoing.

Our investigation and enforcement teams support market confidence through a range of actions helping to make the UK a great place to work and do business. They investigate and bring actions for prosecution, disqualification of unfit company directors and wind up live companies which trade against the public interest.

Maximising returns to creditors.

Where theOfficial Receiver is appointed in an insolvency, their primary focus is to realise assets and make returns to creditors where possible. Their appointment in large and complex public interest cases, such as happened in Carillion, British Steel and Thomas Cook, plays an important role in the national and local economies, managing the significant impact such insolvencies can have on employees, suppliers and customers.

During the year we will:

Work to ensure the insolvency regime supports individuals and businesses to help with the economic recovery as the country emerges from the pandemic

Last year, we delivered significant reforms through the Corporate Insolvency and Governance Act as part of the Government’s response to the economic challenges of the pandemic. It represents the most substantial change to the corporate insolvency regime for many years, with new corporate restructuring tools to complement the existing options for distressed businesses, helping to make the UK’s regime one of the world’s best. The Act also introduced temporary provisions to help businesses continue to trade despite significant challenges imposed by measures put in place to protect our citizens’ health.Following consultation with stakeholders, government used a power revived by the Act to strengthenthe legislative framework for pre-pack sales in administration to enhance confidence in the insolvency process as the economy emerges from the effect of Covid-19.

As part of our oversight of the insolvency regime, we will work with stakeholders to evaluate the legislation’s impact in supporting the economic recovery from the pandemic. An important part of our work will be developing proposals to ensure the regulatory regime, in particular the measures in the Corporate Insolvency and Governance Act, continue to support viable businesses impacted by the pandemic. We will work to ensure that any temporary modifications to the insolvency regime remain in place only for as long as they are required. We will also continue to evaluate the effectiveness and impact of the permanent insolvency measures.

Work with stakeholders on proposals to incorporate new UNCITRAL model laws on cross-border insolvency into the insolvency regime

The United Nations Commission on International Trade Law (UNCITRAL) works to harmonise and modernise international trade law through the development of legislative and non-legislative instruments in key areas of commercial law, including insolvency. In 2018 and 2019 the Commission adopted two new Model Laws dealing with insolvency, the Model Law on Recognition and Enforcement of Insolvency-Related Judgments, and the Model Law on Enterprise Group Insolvency, which provide new tools for dealing with domestic and cross-border insolvencies. We will work with stakeholders to develop proposals for incorporating the new Model Laws into UK legislative framework, adding to the existing provisions for the effective functioning of cross-border insolvency cases and maintaining the UK’s position as one of the leading jurisdictions for dealing with multinational insolvency cases.

We will develop proposals to strengthen the regulatory regime for Insolvency Practitioners

The effective delivery of the insolvency regime depends on a well-regulated insolvency profession. In addition to finalising our proposals, 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 and confidence in the insolvency regime.

Embed new customer satisfaction measures and improve our overall performance, achieving a score of 84% or greater

Following on from a review commenced in 2020-21, we introduced a new measure to assess our performance in terms of customer satisfaction, which includes measuring the quality of our customer contact. The new approach facilitates greater understanding of gaps and areas we can target for improving our services. This feedback has led us to make wide-ranging refinements to our correspondence and to our online content, and greater consultation with stakeholders. Additionally, we are now a member of the Institute for Customer Service, and this year we will assess our services against these standards. We will take forward the resulting feedback to further improve our contact with customers.

Supporting those in financial distress

In 2020, the Government put in place an unprecedented economic package supporting businesses and individuals. The demand for our services which support people in financial distress is expected to grow and past economic shocks have usually driven an increase in personal and corporate insolvencies. If the demand grows, we will be ready to respond to ensure that support is available when needed.

Our Redundancy Payments Service provides crucial funds to people whose employers cannot pay them statutory redundancy entitlements, mainly through insolvency. It is paramount that people who lose their jobs due to employer insolvency can access critical funds urgently. In 2020-21, this essential service saw us make payments totalling in excess of £420million to over 110,000 people.

During the year we will:

Deliver on the Government’s commitment to implement a new breathing space for people with challenging debt

In partnership with HM Treasury, we have developed and implemented a new online portal for debt advisors to access the new breathing space scheme, providing relief for people with problem debt. It will help them get their finances under control, supported by a regulated debt advisor. People accessing the scheme will see creditor enforcement actions halted, and interest frozen whilst they obtain professional debt advice. We will implement this system in May 2021. Following the delivery of breathing space, we will commence work on the new statutory debt management plan. The Plan will enable someone in problem debt to enter a statutory agreement to repay their debts to a manageable timetable. Individuals entering a plan would receive legal protections from creditor action for the duration of their plan.

Process redundancy payment claims in an average time of 14 days or less

People who suddenly lose their job need to be paid the financial support they are entitled to as quickly as possible. Whilst the volume of claims handled has been increasing since the start of the pandemic, we will continue to process claims within an average time of 14 days or less.

Make 95% of bankruptcy orders sought by individuals within 2 working days and determine 95% of Debt Relief Order applications within 48 hours

It is important that those who need to access our insolvency services are able to receive debt relief quickly. We will seek therefore to maintain our performance in confirming applications promptly.

Answer 85% or greater of calls to agency enquiry lines within two minutes and successfully answer 95% of calls to our enquiry lines

We understand that people may need to speak with us about their redundancy claims, insolvency claims or their own cases. We have invested in our telephony systems to help us deal with such calls more effectively. and to provide the best customer service we can.

Extend Debt Relief Orders to support more vulnerable people in problem debt

We will take forward the Government’s plans to change the criteria for obtaining a Debt Relief Order so as to ensure that more individuals with low levels of assets can access the Debt Relief Order process to resolve their financial difficulties and make a fresh start with their lives.

Tackling financial wrongdoing

Our investigation and enforcement teams contribute to the UK’s economy by ensuring a fair, level playing field for businesses, investors and customers alike. We tackle financial wrongdoing by investigating companies and their directors, taking action to disqualify unfit directors, prosecuting criminality and winding up companies where it is in the public interest. We aim to ensure that our activities are targeted to those where the most harm has occurred, and where the need to protect the public and the business landscape is at its greatest. In addition, we wish to help directors make better decisions upstream of insolvency by sharing our experience of the types of behaviour or conduct that can cause harm to a company, its creditors and other stakeholders, and have a negative impact on a company’s trading prospects. Through this work we hope to help prevent insolvency and improve the overall conduct and performance of directors through education and guidance.

During the year we will:

Develop a new Strategic Assessment of enforcement priorities which will allow us to better target our activities and respond to challenges and risks as they evolve

A Strategic Assessment is a recognised product of the National Intelligence Modeland a comprehensive living document which will be updated annually. It will enable us to build on previous individual pictures of insolvency and corporate misconduct threats so that we have a detailed landscape view with which to identify the key existing and emerging threats, and to prioritise enforcement activity across our investigative and legal teams. It will facilitate better targeting of our enforcement work and help us preserve a level playing field, for example by tackling those who have dishonestly obtained Government financial support during the pandemic.

Harness the benefits of technological developments so as to conduct interviews and court hearings remotely and share documents.

We adapted and evolved our investigative and legal processes to continue to deliver enforcement outcomes during the pandemic. Restrictions put in place to curb the virus’ spread led to closed buildings and courts. As a result, we had to adapt and implement new ways of working for example, directors of insolvent companies were interviewed remotely via online meetings and court hearings were conducted remotely using telephone and video conferencing. We will continue to employ those modifications which have benefited our investigative and enforcement activities as well helping those with whom we engage: for example, witnesses, victims, and directors.

Build upon our quarterly published report of enforcement activity

To improve transparency of our enforcement work, and to better demonstrate how we provide value for money from our activities, we introduced a quarterly report. We want to publish more information about our work so that people can understand more about what we do and how we do it. This new information will include details such as the percentage of cases investigated, the percentage resulting in further action, particularisation around elements of our litigation work, time taken to investigate and determine that prosecution proceedings should be instituted, and the range of misconduct and criminal offences in respect of which we have taken action.

Continue to work to prevent financial misconduct and avoid insolvency before it occurs by delivering the initial phase of director education

We want to help prevent insolvency where possible, ensure directors meet their statutory duties and rehabilitate and educate those whose companies fail. We will work with a range of organisations, including BEIS, Companies House and external stakeholders to develop a suite of learning materials for the public and provide a self-assessment toolkit to help directors assess the state of their business and take suitable action if necessary.

Maximising returns to creditors

Our Official Receivers continue to act as trustee in a bankruptcy or a liquidator of a company where no private sector Insolvency Practitioner is appointed. They ensure the insolvency is handled fairly and that assets are realised promptly so that any distribution can be made to creditors. Last year we returned £35.9M to creditors following a bankruptcy or compulsory liquidation.

During the year we will:

Issue a report to creditors within 15 days of interviewing (or a decision that no interview is required) in at least 92% of cases

Creditors need to be informed promptly of the details of an insolvency case, including the prospect of receiving a dividend. The Official Receiver is required by law to report to creditors on the reasons for insolvency and the likelihood of a dividend. We will do so as quickly as possible and aim in at least 92% of cases to issue a report within 15 days of interviewing the bankrupt or company’s director.

People

We have around 1,700 colleagues in the agency. Our people are our greatest asset, and it is through them that we deliver our vital work to customers and stakeholders. In November 2020 we launched a new People Strategy: a plan to build greater capability and support for our people. Putting this into practice will enable us to be an expert, inclusive, agency that attracts and retains talented people, particularly those with an interest in pursuing a career in insolvency work generally, as well as building expertise and resilience through career long learning and development. We will continue to provide expert training to our teams to enable them to reach their potential. We will also continue to take our people through the Insolvency Service Investigator Programme, which builds the specialist knowledge and skills to work effectively in counter fraud and insolvency. We will launch a new suite of management, leadership and high potential learning opportunities. Together these will support our ambition for the agency to be a ‘great place to work’.

During the year we will:

Improve our outcomes in the Civil Service People Survey, in particular by:

• becoming a Civil Service High Performer in overall engagement,

• improving our results in Continuous Learning and Career Progression, and

• achieving Civil Service High Performer in the following theme scores-

• My Manager

• Leadership & Managing Change

• Leadership Statement

The annual Civil Service People Survey asks civil servants about their attitudes to and experience of working in Government departments. It covers a wealth of topics and gives us a real insight into our people’s views and actions needed in response. This helps us build a more resilient agency, fit for the future, that can respond and adapt to unforeseen challenges and maximise opportunities.

Increase our attraction of diverse applicants for vacancies by 10% or greater

A diverse workforce will always bring more varied experiences and viewpoints, driving greater innovation and deeper understanding of the people we serve. As an agency, we want to make sure we are representative of wider U.K. society. Consequently, this year we will work to encourage applications from individuals with more diverse backgrounds by using redesigned recruitment products and widening the scope of where we place advertisements. This will help to broaden the pool of candidates applying for our roles and help us promote the Insolvency Service as an employer committed to diversity and inclusion.

Increase our benchmark scores from diversity assessments

We want to improve our approach and progress on diversity and inclusion in every part of our business, from recruitment to communication. To see how we are doing, we will challenge ourselves to improve our benchmarking scores from diversity assessments, to help ensure that the Insolvency Service is a great place to work. In particular, we will seek assessment by the Employers Network for Equality and Inclusion. The feedback we receive will help us drive and direct action in the year ahead, as we continue to make the agency a fully inclusive place to work.

Deliver against our agency apprentice target

Prior to the pandemic we had a good track record of recruiting apprentices. In 2020-21, we were able to continue that work, resulting in the recruitment of 126 apprentices against a target of 41, significantly exceeding the required level for apprentices for public bodies set out in legislation. We will continue to contribute towards the Government’s overall annual target for recruiting apprentices and plan to ensure that at least 2.3% of all new staff will be recruited into apprentice positions.

Corporate Responsibility

We continue to take our responsibilities here seriously and whilst working at home in response to the pandemic we have cut our business travel and associated carbon emissions extensively. We must, however, continue to deliver our environmental strategy, and contribute to the Government’s target towards net-zero.

During the year we will:

Expand our Sustainability approach to include Social and Economic Factors in addition to our Environmental commitments

In support of the Government’s Carbon Budget target of a 78% reduction in emissions by 2035, the Agency will refresh our Environmental Policy and develop our flightpath to measure our progress. We will continue to report every quarter on our Greening Government Commitments, and our Environmental Policy will underpin our Estates Strategy work.

We will deliver against the BEIS Sustainability Strategy by investing in a dedicated resource to lead our Sustainability agenda, and we will develop a broader plan, identifying areas where we can contribute to meeting the social and economic challenges identified in the Government’s Build Back Better policy.

Ensure that all relevant procurements include social value and sustainability evaluation criteria at a minimum of 10% of overall score

Sustainability should be pivotal to everything we do. Procurement of commercial contracts can help embed social value and sustainability by using them as metrics in the assessment of commercial contracts.

Meet or exceed the Government target of 33% of spend going to Small and Medium-sized Enterprises (SMEs) by March 2022

Public spending can provide SMEs with opportunities for growth. We will build on our impressive record of SME inclusion in our supply chain (more than 36% of our spend went to SMEs last year) by ensuring barriers to participation are removed and SMEs have equal access to opportunities.

Our finances

Our starting assumption for 2021/22 is that case volumes will see a continuation of the sharp reductions in volumes experienced in 2020/21, and again be significantly lower than the long-term historical baseline. Our financial projections are based on that premise. Changes in the economic outlook caused by the pandemic, and Government responses to mitigate its impact, have driven a significant decrease in volumes. 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.

We expect RPS volumes to be higher in 2021/22 than in 2020/21, and we have agreed funding with HMRC to ensure we can deliver services to this level of demand.

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

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

During the year we will:

Deliver a balanced budget, with Agency costs being matched by funding and income

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

Ensure our Suppliers adhere to the Prompt Payment Code

Our commitments to our suppliers must flow through the extended supply chain. We will reinforce contractual obligations on prompt payment and handle any complaints about our suppliers promptly.

2021/22 Budget

Income/Funding	Budget 2020/21 £m	Outturn 2020/21 £m	Budget 2021/22 £m
Official Receiver Fee Income	63.7	100.11	39.22
Other Fee-Funded activities	19.0	11.93	22.0
BEIS funded: Investigations, Legal Services and Policy	44.1	51.34	44.1
HMRC funded: Redundancy Payments	7.7	9.1	12.7
HMT funded: Breathing Space and SDRP	2.0	5.05	7.1
BEIS funded: SR20 investment and investigation	-	-	14.5
Total	136.5	177.4	139.6

Operating Expenditure	Budget 2020/21 £m	Outturn 2020/21 £m	Budget 2021/22 £m
Staff costs	81.6	83.0	89.1
Estate costs	9.2	8.1	8.7
Legal costs	9.3	20.16	5.1
I.T. costs	21.6	19.1	22.5
Other (incl. non-cash)	14.8	9.6	13.2
SR20 investment and investigation	-	-	14.5
Total	136.5	139.9	153.1
Operating (Deficit)/Surplus	0.0	37.5	(13.5)

Footnotes

_{1. 2020/21 Outturn includes additional income from National Interest Cases and PPI partly offset by reductions in case volumes caused by the pandemic.}

_{2. Government support for businesses and individuals during the pandemic has had a material impact on Official Receiver case volumes and fee income, resulting in a budgeted operating deficit in 2021/22.}

_{3. Time and Rate fees lower than budgeted}

_{4. Additional funding for delivery of public-interest legal activity}

_{5. Additional funding obtained for necessary Breathing Space expenditure}

_{6. Refer to footnote 4}