More foreigners will head to the United Kingdom for “bankruptcy tourism” if an office at a Yorkshire port closes, union leaders have warned.
The Insolvency Service has announced that the Official Receiver’s Office in Hull will close in September, with the loss of 45 jobs and an estimated £1m to the local economy.
Unions claim until recently the number of foreigners heading to the UK to take advantage of less onerous rules on bankruptcy has been a “growth industry” and will rise again, with the loss of the Hull office and local knowledge.
Under EU rules, EU nationals can file their own bankruptcy petitions with the help of companies which provide evidence that the petitioners’ “centre of main interest” is in England and Wales.
Earlier this year Hull firm Lovell Hill & Co LLP was wound up, following an investigation which discovered it was helping Germans to take advantage of shorter bankruptcy discharge periods.
In one instance a German businessman was claiming he lived locally, but simply flew in for appointments staying at a local hotel. People made bankrupt in the UK can be “discharged” after a year in contrast to seven in Germany. Staff have been told jobs are available in Leeds, but those who feel the commute is too much would be forced to take voluntary redundancy, the union has said.
Prospect branch secretary Yvette Hill said: “Bankruptcy tourism has all but ended in the county court at Hull because of the local knowledge acquired by the Official Receiver’s staff.
“The closure of the Hull office and the loss of this important local knowledge will once again make it easier for EU nationals to make the short trip across the North Sea to write off their debts and leave with their assets intact.”
Hull North MP Diana Johnson will tomorrow lead a delegation of MPs and Lord Haskins, the Humber Local Enterprise Partnership’s chairman, to lobby Government Minister Jenny Willott.
Ms Johnson said: “One aspect of the policy of ‘rebalancing the economy’, that the coalition always say they support, is bringing staff from Whitehall departments to areas such as Hull – not taking them away.”
Latest figures show the number of companies going into liquidation are up 4.9 per cent compared to the same quarter last year. But the Insolvency Service said it wanted to relocate its offices to Leeds due of the need to reduce their estate by a third “to reflect the reduced caseload we are handling and reduce costs”. It also said it would save £270,000 to £315,000 over five years.
A statement added: “The Insolvency Service, like most Government bodies, has to work with a smaller budget. There will be significant operational benefits from larger offices in terms of flexibility, employee interchange and development opportunities.
“The needs of the customers are paramount in our approach to estates and we will establish interview facilities in the Humber area to ensure there is minimal effect on interviewees.”