First, I should point out that the concept that those who can pay should pay is a long-established principle of our individual insolvency regime. People in debt already use a variety of procedures to deal with debt, including the formal debt-management plans run by the public and private sector, or more formal, court-based procedures, such as county court administration orders, of which there are about 8,000 a year. However, that regime can be used only when the debtor has total debts of less than £5,000 and a judgment against them.

The IVA regime set out in the Insolvency Act 1986 has provided about 7,000 IVAs per year. Very few IVAs are entered into after a bankruptcy order has been made, however. A benefit of the post-bankruptcy IVA is that the bankruptcy order can be annulled and the debtor is no longer subject to bankruptcy restrictions. If a person defaults on an IVA, there are grounds to petition again for bankruptcy.

We have proposed that the official receiver should be able to act as a nominee and draw up the IVA proposal, which is then put to creditors, and a supervisor who implements and manages the proposal approved by creditors in post-bankruptcy IVA cases. That proposal was first included in ''Bankruptcy—A Fresh Start,'' the Insolvency Service consultation document that was issued in 2000, and last year's White Paper, ''Productivity and Enterprise—Insolvency—A Second Chance'', and was welcomed by both debtors and creditors.

Most stakeholders agree that IVAs can lead to a better return to creditors, but debtors and creditors have criticised the level of entry fee and the administration fees charged by supervisors. Allowing the official receiver to act in fairly straightforward post-bankruptcy cases will bring competition into the lower end of the IVA market. The official receiver is well placed to establish whether an IVA would be appropriate for a bankrupt, as he already has details of assets and income through his examination of the bankrupt's affairs.

I turn to some of the points that the hon. Member for Eastbourne raised. First, the offence of providing false information will be drawn to the bankrupt's attention before she or he provides information to the official receiver on an IVA proposal. Additionally, if the official receiver has any doubts about the veracity of the bankrupt statement, she or he is likely to decline to act as the nominee for that person. The continuing attraction of IVAs, to which the hon. Gentleman referred, is that the bankruptcy is annulled and not discharged—it is as though it never was. IVAs will continue to be attractive for that reason under the new regime, notwithstanding the hon. Gentleman's points.

The intention, though, is not to increase the number of post-bankruptcy IVAs. Only around 0.5 per cent. of IVAs annually are post-bankruptcy. I hope that that clarifies the points for the hon. Gentleman. I commend the clause to the Committee.