I beg to move amendment No. 556, in page 173, line 36, leave out 'or'.

With this it will be convenient to take the following amendments: No. 435, in page 173, line 38, after 'specified', insert 'part or'.

No. 557, in page 173, line 39, at end add ',

(c) both (a) and (b)'.

No. 434, in page 174, leave out lines 9 to 13 and insert—

'(5) An income payments agreement must specify the period during which it is to have effect which period may end after the discharge of the bankrupt.'.

We can dispense with these amendments fairly briskly. Amendments Nos. 556, 557 and 435 are technical amendments, which would introduce more flexibility and cover a situation in which a bankrupt had both earned and unearned income.

Amendment No. 434 echoes our debate on the previous clause, but relates to the duration of the income payments agreement. I simply reiterate what the CBI and others have said: there is no clear reason for the limitation, and it would make more sense to leave the issue to the discretion of the courts, which will quickly establish their practice in the matter while retaining the power to deal more rigorously with exceptional cases. This has nothing to do with entrepreneurialism or enterprise; it is driven by the rule that where a debtor can pay, he should pay. However, given that some of the arguments relating to amendment No. 434 are similar to those that the Under-Secretary contemptuously dismissed in relation to the previous clause, I have little hope that she will accept the amendment.

I am sorry; I am trying to dismiss suggestions gently.

Amendment No. 556 provides for a situation in which a bankrupt can make payments to his trustee under an income payments agreement both by himself and from a third party at the same time. It is difficult to envisage such a situation arising. Payments are generally made by third parties, such as employers, for example, because a bankrupt has failed, for whatever reason, to make the payments himself, and the trustee goes directly to the employer with an attachment of earnings order to enforce payment. The proposals provide that where an IPA is breached by the

bankrupt, the trustee may, under subsection (3), apply to the court for a variation for direct payment by a third party.

By removing the word ''or'', as the amendment would, an income payments agreement could provide only for both a bankrupt and a third party to make payments. Individual payment by one or the other would not be possible. I am sure that that is not what was intended. It certainly does not seem necessary or appropriate.

Amendment No. 435 would ensure that the same terms are used in referring to the contributions from a bankrupt's income made under an income payments agreement, irrespective of whether they are made direct by the bankrupt or from a third party, such as the bankrupt's employer. Although that might seem sensible at first sight, it would be wrong. Clause 249 introduces new section 310A into the Insolvency Act 1986 relating to income payments agreements. Subsection (1)(a) states that an IPA might provide for a proportion or part of the bankrupt's income to be paid to the trustee or official receiver, whereas subsection (1)(b) provides only that a proportion of the money due to the bankrupt by way of income should be paid to the trustee or official receiver by a third party. The amendment would do away with that distinction.

The reason for the distinction is that paragraph (a) deals with the whole of the bankrupt's income, from whatever source, and allows the bankrupt to agree to designate either a proportion of his income or specific part of it, whereas paragraph (b) deals only with money due to the bankrupt from a third party—for example, salary from employment. In that instance, it is sufficient for the agreement to specify a proportion of it.

I find it difficult to imagine the situation covered by amendment No. 557, which provides for a situation in which a bankrupt can make payments under an IPA both by himself and from a third party. The amendment is unnecessary because, generally, payments are made by third parties, as I said before.

On amendment No. 434, it is right that those bankrupts who are able to make contributions from their income should still be required to do so. I entirely agree with the hon. Member for Eastbourne on that, but setting a three-year limit to the duration of the new income payments agreements reflects both the current and proposed treatment of income payments orders—both the IPA and IPO arrangements. It recognises that there should be a balance between the benefits that that will bring to the bankrupt's creditors and the rehabilitation of the individual concerned.

It is also hard to see why anyone who entered an IPA would want to bind themselves for a longer period than could be made under an IPO. That could waste a large amount of court time, which is what IPAs seek to avoid. For those reasons, I invite the hon. Member for Eastbourne to withdraw the amendment. Before I do so, I should like to tackle a further issue that he raised. The term ''income'' covers all forms of income, whether earned or unearned.

I am grateful for that nugget in an otherwise rather dispiriting response from the Under-Secretary. We have achieved something by establishing what income includes, so I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 249 ordered to stand part of the Bill.

Clauses 250 and 251 ordered to stand part of the Bill.