Delegated Powers and Law Reform Committee
Meeting date: Tuesday, September 17, 2013
Official Report
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Bankruptcy and Debt Advice (Scotland) Bill: Stage 1
The purpose of agenda item 5 is for the committee to consider the delegated powers in the Bankruptcy and Debt Advice (Scotland) Bill at stage 1. In considering the bill, the committee is invited to agree the questions that it wishes to raise with the Scottish Government on the delegated powers in the bill. It is suggested that, as usual, those questions are raised in written correspondence. The responses that are received will help to inform a draft report on the bill, which the committee will consider at a later date.
Section 3 inserts a new section 5D into the Bankruptcy (Scotland) Act 1985. The power that is proposed would establish through regulations a common financial tool, which would be used to assess an appropriate amount of a living debtor’s income to be paid to a trustee after the sequestration of the debtor’s estate. That is known as the debtor’s contribution. Various requirements of the common financial tool are set out in new section 5D. For example, the common financial tool must ensure that an amount is allowed for any obligation that the debtor has to pay child support maintenance. Otherwise, the power to prescribe the method of calculation is extremely broad.
A similar power to prescribe the method of assessing the amount of a debtor’s assets, income, liabilities and expenditure in relation to the debt arrangement scheme is also added to section 7(2) of the Debt Arrangement and Attachment (Scotland) Act 2002.
The power in section 5D is to be subject to the affirmative procedure, because the Scottish Government recognises the broad application of the common financial tool and because it will make significant determinations in relation to the liabilities and entitlement of the debtor. However, the power in section 7(2) of the 2002 act is subject to the negative procedure, as that is the current procedure that applies to regulations under that act.
The committee may wish to note that the Scottish Government has conceded the principle that the power in proposed section 7(2)(bd) of the 2002 act is significant in its effect and that its subject matter could be controversial. When it considered the matter from first principles, the Scottish Government chose the affirmative procedure for the equivalent power in section 5D. The committee may also wish to observe that the first time that powers to make provision in relation to debt payment programmes was exercised under the 2002 act, it was subject to the affirmative procedure.
Does the committee agree to ask the Scottish Government for further justification for the choice of negative procedure for the new power that is conferred by proposed section 7(2)(bd) of the 2002 act?
Members indicated agreement.
New sections 32A to 32G of the 1985 act, which are inserted by section 4 of the bill, make provision for debtor contribution orders. The power in section 32D(5) allows the Scottish ministers to make provision about the instructions to be provided to employers to deduct the debtor’s contribution from earnings.
The power is extremely broad, in that it enables any provision to be made that relates to instructions to make deductions from earnings, including the consequences for employers of failure to comply, which need not be merely administrative and which, therefore, might, in principle, include some sanction.
Does the committee therefore wish to ask the Scottish Government for further justification for the selection of negative procedure as an appropriate level of scrutiny?
Members indicated agreement.
Does the committee also agree to ask the Government to explain what consequences or sanctions could be imposed under the power?
Members indicated agreement.