Social Justice Committee,

Meeting date: Thursday, May 23, 2002

Official Report 225KB pdf

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Debt Arrangement and Attachment (Scotland) Bill: Stage 1

We come to item 3. I ask Robert Brown to declare an interest.

Because of the nature of the bill, I declare my membership of the Law Society of Scotland and my consultancy with Ross Harper and Murphy solicitors in Glasgow.

Thank you. I remind members that we are questioning Scottish Executive officials, so our questions should focus on technical aspects of the bill. I say to our visitors that if any questions stray inappropriately into matters on which they cannot respond, it is enough simply to say that. I will ensure that such matters are raised with the minister. We are not in the business of putting officials in a difficult position. We are happy to transfer questions to those with responsibility for answering them. We will not argue about your responsibilities; we will take them as read.

I welcome Alisdair McIntosh, the head of the access to justice division, Laura Dolan, the bill team leader, and Marieke Dwarshuis, from the financial and economic inclusion branch. I invite the officials to make a short opening statement.

I will say just a few words to set the bill in context.

When the Scottish Parliament decided to abolish poindings and warrant sales, it asked the Executive to produce proposals for a humane and workable alternative. The bill is intended to fulfil that remit.

The bill must be considered against its wider background. The first element of that was the working group on a replacement for poinding and warrant sale's report, "Striking the Balance: a new approach to debt management", the key recommendations of which the bill implements. The report was the subject of wide consultation and received widespread support.

Other elements were ministers' decision, as announced in December 2001, to invest an additional £3 million a year in front-line money advice, and the announcement earlier this year that the Executive would support the new telephone debtline project in Fife. Ministers are also considering options for giving the money advice sector additional support. The Executive is also undertaking a range of wider action on debt and financial exclusion initiatives, with the aim of tackling problems at their roots.

Last month, the consultation document on the enforcement system as a whole, "Enforcement of Civil Obligations in Scotland", was published. It makes a wide range of proposals, the most significant of which is a detailed proposal for a debt arrangement scheme, which would allow people to repay multiple debts in a managed way, over time and free from the threat of enforcement action. The document also proposes new arrangements for the regulation and oversight of the enforcement process, including the creation of a new independent watchdog.

The bill should be considered as part of a comprehensive and—as ministers consider it—holistic approach to the problem of debt. Ministers' overall policy aims are to ensure that people have access to information and advice as early as possible to help them to tackle their money problems; to provide new avenues for negotiated settlement of debt; to ensure that the most vulnerable people have effective protection; and to ensure that enforcement action is taken only as a last resort against those who can pay their debts but refuse to do so.

The bill will embody that approach. It establishes the foundations for the debt arrangement scheme and creates two new procedures for enforcement when that is necessary. The first is a relatively streamlined procedure for commercial cases, and the second is a more tightly controlled procedure for domestic cases, which may be used as a last resort, but only against those who can pay but refuse to do so. The bill introduces into the court process the provision of user-friendly advice and information for debtors and creates new protections and safeguards for debtors.

Crucially, the bill is intended to establish an effective mechanism for domestic cases, to filter out from the enforcement process everyone who cannot pay, and to create a new way out for everyone who can pay and is prepared to do so, but over time. That should remove entirely from the enforcement process the vast majority of debtors and leave to face enforcement action only the few who can pay but refuse to do so.

We are happy to explain the bill in more detail and to answer members' questions.

I will kick off with a couple of general questions. The policy memorandum states that the bill

"implements the central recommendations of the Working Group … in its report Striking the Balance: a new approach to debt management".

That was mentioned. Which recommendations are implemented in the bill, which have been taken forward by other means and which, if any, are not being taken forward at all?

Ministers are committed to taking forward all elements of the working group's report. The bill makes a substantial contribution to the recommendation on the provision of user-friendly advice and information for debtors, but that recommendation is also addressed by the additional investment to which I referred. As I have said, the foundations of the statutory debt arrangement scheme are taken forward in the bill, as are the reform of enforcement procedures, which the working group called for, the recommendation for an effective and proportionate sanction of last resort and a faster-track procedure for commercial cases.

Issues relating to wider reform and regulation of the enforcement process and the detailed proposals for the debt arrangement scheme to supplement the basic architecture in the bill are taken forward in the consultation. Subject to approval of the bill, regulations on those will be introduced as soon as possible.

In addition to providing for a debt arrangement scheme and a new form of diligence, the bill provides for the abolition of poindings and warrant sales and repeals the Abolition of Poindings and Warrant Sales Act 2001, which currently provides for the abolition of poinding and warrant sales by 31 December 2002. The policy memorandum states that the bill abolishes the 2001 act

"in order to avoid complicating the statute book to no practical effect".

Will you expand on the problems that would be created by not repealing the 2001 act? Are there examples of such clearing out? Has that been done with any other legislation that has gone through the Scottish Parliament?

The Parliament agreed to defer entry into force of the 2001 act specifically to allow the Executive to propose a humane and workable alternative for the longer term. The bill is intended to be that and supersedes the 2001 act.

Technically, there are three ways to deal with the matter. The first option is that the 2001 act could enter into force for a symbolic period and immediately be replaced by the bill once it becomes law. Ministers did not think that that was necessary or desirable because, as the convener said, it would clutter up the statute book without any practical effect.

The second option is for the 2001 act and the bill to enter into force at exactly the same time. If the bill is to work, it would need to make a series of complex consequential amendments to the provisions of the 2001 act. Again, that would be to no practical effect in the outside world.

The third option is for the bill to repeal the 2001 act while preserving the abolition of poinding and warrant sales. Ministers thought that that was the most straightforward and transparent approach and was consistent with their general obligation not to complicate the statute book without practical effect.

I am informed that it is common practice to take the opportunity to simplify. I can consult colleagues and come back to you with a note on previous examples if you would like us to do so.

I am interested specifically in legislation that has come through the Scottish Parliament. I mentioned cluttering the statute book, which exists in our imagination. What would be the effect of the 2001 act's doing nothing other than sitting there? People would know that it was there. What would be the practical effect of its remaining on the statute book?

The practical effect of its remaining on the statute book would be that anyone who sought to know exactly what the law was on the issue would have to examine the two acts side by side. There would be no difference to the outside world. Ministers are under a general obligation not to complicate the statute book unnecessarily. I am afraid that I do not have examples to hand of recent precedent, but we can certainly examine that and come back to the committee.

Thank you; that would be helpful.

What alternatives were considered before the Executive decided to introduce a new form of diligence against corporeal moveable property in domestic cases?

That is covered briefly in the policy memorandum. In essence, the working group concluded that an approach with no sanction of last resort would not work for a number of reasons. First, it would result in a significant decline in the collection of council tax and other liabilities, which could damage local services. Secondly, it might encourage a non-payment culture for debts below £1,500 and, for debts above £1,500, it would encourage creditors to pursue debtors by way of sequestration, which the working group thought was much harsher in many respects.

The group also considered that the approach would encourage less scrupulous creditors to have recourse to informal methods of debt collection, which could involve unacceptable intimidation. This was difficult to quantify, but the group thought that there was a risk that a perception of a gap in the enforcement system could reduce the availability of credit from reputable sources, which would leave the field open for less reputable lenders—to put it crudely, loan sharks.

Having concluded that there needed to be a sanction of last resort, the group considered whether any other form of enforcement could deliver that. Having examined the systems in a range of other countries, it concluded that the only other possibility was enforcement by way of civil imprisonment, which it ruled out as totally unacceptable in modern Scotland. Although ministers shared that analysis, with the working group's support, they put the matter out to consultation but no alternatives were proposed. Ministers' key concern was to ensure that enforcement against moveable property in domestic cases was genuinely a sanction of last resort. That is what the bill seeks to achieve.

There was a fourth option, which was to retain the Abolition of Poindings and Warrant Sales Act 2001 and not introduce the Debt Arrangement and Attachment (Scotland) Bill. However, we are here, so I would like to discuss part 1 of the bill, on the debt arrangement scheme. Which main aspects of the scheme are still to be finalised, following consultation?

As I said, the basic architecture of the scheme is established in part 1 of the bill. Issues that will need to be addressed in the light of the consultation include specific arrangements to deal with situations in which most but not all of an individual's creditors agree to the proposals that a money adviser draws up on their behalf. Arrangements for dealing with default and the need to vary repayment programmes in the light of the changing circumstances of the person who is making the repayments will also have to be addressed. Practical details, such as forms, procedures and setting up a register of programmes that are in force to ensure that enforcement action is blocked, will have to be addressed. There are a number of other specific points in the consultation document, which Laura Dolan might want to mention.

The consultation paper covers quite a few detailed areas and gives options. It would take quite a while to go through them all.

I refer members to part 4(D) of the consultation paper, which sets out the options that have been considered and asks which of those people prefer. At the end of part 4(D), there is a list of questions on which the Executive particularly seeks input from consultees. Part 4(D) also sets out the Executive's ideas and preferences. Of course, none of that is set in stone. It is hoped that people will give their views and tell us about their practical experience of current similar voluntary arrangements, which will help us to see the way forward.

Why was it thought necessary or desirable to set out much of the scheme in regulations?

There is a straightforward reason for that. The establishment of a debt arrangement scheme has considerable support; indeed, some bodies, notably the Scottish Law Commission, proposed the idea some time ago. The working group and ministers considered that the scheme could make a major contribution to dealing with the problem of debt. Ministers wanted to get the scheme up and running as quickly as possible, but only on the basis of consultation on the practical aspects of the scheme. That is why ministers decided to seek approval from Parliament for the basic architecture, which is in the bill, and to set up a fast-track process for regulations to settle the fine print, again with Parliament's approval. That process will begin as soon as possible after the bill is approved. It would not have been possible to establish the debt arrangement scheme as quickly with any other course of action.

Who will administer the debt arrangement scheme and the debt payment programmes that it establishes? What qualifications will they require?

Different roles are involved in the debt arrangement scheme. The first area of activity involves an adviser assessing the individual's circumstances, such as their incomings, outgoings and debts, and what would be a manageable repayment over a specified period. The adviser will then take the proposals to the creditors and negotiate with them a debt repayment programme.

The second area of activity is the procedure for registering the agreed programmes, so that they act as an effective block on the enforcement process. That will be done by a centrally located administrative unit. The intention is that the proposed civil enforcement commission, on which the Executive is consulting, will carry out the function. In the interim, it will be necessary to set up a small unit, attached to the Executive, to perform the largely mechanical functions of registration.

The third area of activity is the distribution of payments. The intention is that the debtor will make a periodic payment to a single person, who is known in the bill as a payments distributor, who will distribute the amount among the various creditors by bank transfer or other automated means.

All those functions will be specified in more detail in the regulations. They will be subject to the approval of ministers, although ministers will not approve individual advisers or payment distributors. Ministers will establish by way of regulations and rules the standards by which participants will have to abide. My colleague Marieke Dwarshuis has worked closely with the money advice sector on quality standards and training and development for money advisers, who will have an important role in the process. She may want to add something.

I do not want to add anything at this point, unless members have specific questions on that aspect of the bill.

There will be a further role for the sheriff court. It is envisaged that applications will be dealt with administratively because, for the most part, they will be fairly straightforward. We know from the way in which some voluntary arrangements work that that is possible. However, in some cases there will be quite significant disputes and it will be appropriate for a sheriff to deal with them and reach a decision on how they should be determined. Such cases will be remitted to the sheriff court by the administrative body that will deal with the majority of cases.

We do not want to burden the courts with every application. Members may be aware that the Scottish Law Commission made proposals for a debt arrangement scheme many years before the automated processes that are now available were being used. At that stage, the Scottish Law Commission suggested that sheriff clerks should run the scheme. That would have placed a considerable burden on the courts so we do not propose to do that. We are trying to build on and make best use of practices that have been developed since then. However, there will still be a need for the sheriff court to be involved where there is an element of dispute.

What measures are planned to ensure that, where appropriate, debtors make use of the scheme? Existing measures are designed to assist debtors, but time-to-pay orders have not always been widely used in the past.

A number of measures have been taken, chief among which is the integration of information and advice for debtors into the court process where enforcement action is initiated. More significantly, there is additional investment in money advice for early intervention. Where that has not been taken up, the provision of information and advice for debtors is an integral part of the proposed procedure. Such information includes: first, information about the procedures, the options available and the possible consequences of one choice or another; secondly, more general advice and information about getting to grips with financial problems; and thirdly, and most crucially, details of local outlets for advice about money and of sources from which people can seek more detailed and expert help. The procedure has been designed to allow people a window of opportunity before there is any question of a court hearing.

In the event that people still do not take advice and do not take advantage of the opportunities available to them, and a hearing happens, the sheriff has discretion to order a money adviser to visit the debtor's home—bringing the advice to the debtor rather than encouraging the debtor to go to the advice.

Taken together, ministers believe that the measures represent a significant improvement in awareness and in the tools available to the debtor.

So rather than waiting for all the bills behind the mantelpiece clock to go away, which they will not, a person should be able to get advice early.

Absolutely.

Is there a timetable for putting the scheme into operation?

There is.

What is it?

There are several different elements. First, the information and advice pack—which is to be a new part of the court procedure—will be commissioned from money advisers and legal experts and will be available as soon as the Parliament enacts the bill. The investment in additional front-line money advice has already been channelled to local authorities with clear guidelines on what they must do to recruit money advisers. The new advisers should be coming on stream while the bill is being discussed so that they are ready when the bill is enacted.

We hope to be in a position to bring forward regulations on the debt arrangement scheme soon after the bill is enacted. That will depend in part on the responses to the consultation exercise.

Is the money that is being and will continue to be channelled to local authorities ring fenced, or do local authorities have discretion in how they use it?

It is not formally ring fenced, but the allocation has been accompanied by clear guidance to local authorities, and requirements have been placed on them to show that the additional investment will be invested in front-line money advice. Local authorities will be required to account for their share of the £3 million and the front-line money advice that it has bought.

Council tax was one of the main problems that led to the abolition of poindings and warrant sales and will be a feature in many debt situations. Will you give us an indication of the guidance that has been given to local authorities? Will the advice be provided in-house or through citizens advice bureaux, which form the biggest general advice service? What is the intended scenario?

The guidelines state that the resources should be used specifically for specialist money advice. The decision on whether to use in-house provision or other provision is for local authorities to take. They are best placed to assess local needs and to determine how to meet them. We have asked local authorities to consult local money advice agencies on how the money will be used. We have also asked them to consider choice for clients. It is intended to assess whether a range of providers of money advice is available.

Will you make the guidance available to the committee?

Yes.

I have two broader questions on the cost of setting up the debt arrangement scheme, and in particular the debt payment programmes. First, who will meet the cost of the arrangement beyond the £3 million and the various other moneys that are being provided? Secondly, court costs are usually added to what the debtor has to pay. Will that be the case with this scheme, or will there be, in effect, no charge for the debtor or the creditor?

I will answer the second question first. It is envisaged that, ultimately, there should be a saving in court costs. That will happen over a lengthy period of time. If people are channelled into the debt arrangement scheme before court action is taken against them, it is envisaged that there will be a large reduction in the number of court actions for the payment of money. Quantifying the scale of that reduction is extremely difficult. We will have to see how successful the scheme is in getting to people before court action has been taken but, ideally, it is envisaged that there will be a reduction.

On daily running costs, there are two significant aspects. At the moment, voluntary schemes are run by not-for-profit organisations and, in effect, take contributions from creditors by deducting a proportion of the amount that is paid to them at the end of the day. Creditors are extremely amenable to that, as it means that they can cut down their administration costs, because they do not need to chase up debts, keep track of what is coming in, and do everything else that is involved. There are proposals in the consultation paper on that and specific questions have been asked. Questions are also asked about whether fees should be charged. For example, should people pay a fee when they apply to join the scheme?

There are proposals in the consultation paper for a public register to be set up. If creditors are unable to take enforcement or sequestration action against people who are in the scheme, they will want to access a register of names of people who are in the scheme. The consultation paper asks questions about paying fees for that as well. That might provide an element of funding for the scheme.

I suspect that it is optimistic in the extreme to suggest that there will be savings in the long term. Would there be a court fee charge for the sheriff's involvement in the matter?

Nothing has been determined on that at this point.

I think that I am right in saying that it is broadly envisaged that all the creditors will agree to the debt payment programmes but that regulations will mean that the consent of particular creditors can be dispensed with. What might those circumstances be?

There is some explanation of that in the consultation paper. A situation might arise in which only one creditor of a body of creditors is unwilling to participate. That creditor might be concerned with a large or a small proportion of the total debt, depending on how that is assessed. Views are sought on the extent to which creditors—whether they be large in number or large in terms of the proportion of the total debt—should have the opportunity to say that they do not want the scheme to go ahead.

It is envisaged that if, for example, the creditor is concerned with a large proportion of the debt, the issue would go to the sheriff. A substantial debtor might want to opt for sequestration, in which case there would be all sorts of arguments about the merits of that and the issue would best be dealt with by the sheriff.

If the matter concerns a creditor who says that they would prefer to get £5 a month rather than £4 a month, that would be better dealt with administratively so that the courts are not clogged up with the administration of finance rather than with the administration of justice. It is a question of balancing those interests to ensure that the appropriate kind of dispute is dealt with in the appropriate place.

Will it be possible for a group of debtors within the larger group, whether it is in the majority or the minority, to say, unreasonably, that they do not agree with the debt arrangement and want to proceed with an alternative diligence?

It is envisaged that, administratively, it will be open to those making the decisions to be able to dispense with an unreasonable objection.

Am I right in understanding that, if a debt payment programme has been agreed and authorised under the arrangements, it has the effect of stopping further diligence while it is in operation?

Yes.

What happens if a month's or a week's payment is missed?

There are provisions for a variation of the scheme. You are talking about a small blip that causes one payment to be missed. However, if an event has taken place that means that the person cannot carry on under the conditions that have been agreed at the outset—for example, if they have lost their job—there will be an opportunity for a variation of the scheme. It is envisaged that that will be done with the support of the money adviser, who will be able to assess the current situation and the future situation.

We know from information that we have received from people running voluntary schemes that creditors are willing to have an adjustment in the arrangement that was originally agreed if there are justifiable circumstances. We also know that creditors want to get that done early to ensure that there are no on-going difficulties.

It is envisaged that the scheme will allow for the preparation of a report by the people distributing payments to alert the money advisers to instances where there has been a non-payment. That will allow the situation to be dealt with quickly. There will be on-going monitoring of the situation so that it does not escalate and get out of hand before it can be resolved.

Shall I deal with part 3 now?

No, we will come back to that later.

Some people have suggested that the bill does little more than rename poindings and warrant sales. Can you outline for the committee the similarities and differences between the diligence of poindings and warrant sales and attachments and the diligence proposed by the Executive?

It is easier to talk about the differences, as there are many more differences than similarities. The crucial issues are the enforcement procedures, how the processes can be used, where and in what circumstances they can be used and against whom they can be used. The procedure in part 2, which will apply in commercial cases—those not involving domestic property—is similar to that under the current system. That is for a straightforward reason: commercial cases have not given rise to substantial public concern. The working group concluded that, as there had not been such concern, there was no fundamental need to change the procedure.

Nevertheless, the process in the bill includes three new measures of debtor protection in commercial cases. The first is the provision of the debt information and advice pack. The second is provision for vehicles reasonably required by the debtor and the third is specific protection for mobile homes where they are used as the principal residence.

The procedure in part 3 is very different.

We will deal with part 3 later.

Sections 14 and 17 make special provision for mobile homes that are not the principal residence of the debtor. Can you outline why those provisions are needed and what effect they will have?

That was not identified as a particular issue by the working group and was not raised in the consultation. However, in the process of preparing the bill, we became concerned about the fact that mobile homes are both moveable property and potentially a principal residence—the mobile home could be the principal residence of either the debtor or a third party. Ministers decided that special arrangements were needed to protect people who live in mobile homes that are their principal residence. Is that a sufficient explanation?

That is fine. You mentioned the debt advice package. What will be contained in the package and what safeguards will there be to ensure that the debtor has an opportunity to act on any advice before an attachment is issued? What publicity will surround the procedure so that people who are just getting into difficulties know that new arrangements are in place?

The Executive will commission the information pack from Money Advice Scotland and legal experts. The pack will contain three basic elements. The first is information and advice about the relevant legal procedures, the choices open to debtors and the possible consequences of taking one or other option. The second is more general information and advice on tackling debt and handling financial problems. The third is details of local Money Advice Scotland outlets that can provide assistance. In the case of single debts, time-to-pay arrangements are one option. Another is participation in the debt arrangement scheme. We can also check whether the person is claiming the benefits to which he or she may be entitled.

We intend to ensure that the new provisions and the advice and information pack are given considerable publicity and are well known. We will work with the money advice sector on how best to do that.

The voluntary sector will provide much of the support that will be offered to people. Are you confident that it will have the resources and ability to deal with the increased demand on its services?

The additional investment in money advice is channelled through local authorities, but it will not necessarily remain with local authorities. In many areas, local authorities fund a variety of advice outlets. The advice sector should benefit clearly and directly from the additional investment that ministers have announced. Our colleagues in the social inclusion division have worked with the money advice sector to develop mechanisms for providing central support to the sector—through training, development, quality standards, referral mechanisms and other forms of accreditation.

The research that Money Advice Scotland carried out in 2000—I do not know whether members have seen its report "Money Advice Services in Scotland—A time to reflect"—indicated that at that time there were 67 full-time specialist money advisers, 19 part-time specialist money advisers and 170 volunteer specialist money advisers in Scotland. We believe that the additional £3 million annually should provide for at least 75 additional full-time money advisers. That represents almost a doubling of current provision.

I am reminded of a point that I should have made earlier, concerning safeguards for ensuring that people receive the information and advice pack. The procedure that is foreseen in the bill will have the effect of ensuring that it is not possible to proceed in any circumstances with attachment unless the debtor has received the advice and information pack, which must be made available to him or her. That is an additional safeguard, albeit one that applies towards the end of the process.

Earlier, I mentioned that, when there is a hearing, the sheriff has the discretion to order that a money adviser visit the person concerned in his or her home. The provision ensures that, where all else has failed and the person has not taken advantage of the opportunities that they have been offered, advice and information services can be brought to them. It is important to underline that fact.

It is important that people should have access to the information that you intend to provide. However, sometimes they will require assistance in working through that information. The committee has highlighted the need for comprehensive advice services to be provided throughout Scotland. I remember that at early evidence-taking sessions concerns were raised with the committee about the patchy coverage across Scotland. I am fortunate to represent a constituency that is well supported by the voluntary sector and by the local authority, North Lanarkshire Council. However, the same may not be true of rural Perthshire, where last year I spoke with the local CAB. We need to ensure that coverage is even across Scotland and that people are not disadvantaged because of where they live.

The criteria that we have used for distributing money among local authorities are based on the number of jobseekers allowance and income support claimants in those areas. Those have been used as indicators of deprivation, on the basis of which the £3 million has been distributed among local authorities. We have ensured that there is a minimum of £40,000 per local authority; the sum would be lower if the money was divvied up on the basis of figures alone. That will ensure that there is significant provision in each local authority area. A smaller sum would not allow any money advice provision to be set up. The exception to that is the island authorities, which have been given £20,000 each.

That is an important point, but we have to remember that it is not just poor people who get into debt. We cannot give money to local authorities based only on deprivation. It is important to bear that in mind, as people with income sometimes make unwise choices that lead them into situations that impact negatively on their lives.

Alisdair McInstosh said that mobile homes are potentially moveable property to which attachment could apply. What about a mobile home that is the principal residence of someone who is not the debtor? What rights do they have to know about what is happening and about the possibility of their home being sold? How does that impinge on the rights of tenants to live in that home under some form of contract or tenancy agreement? How does it relate to the European convention on human rights and people's right to a home?

The bill addresses head on the issue of mobile homes that are occupied by people other than the debtor. It states:

"Where a mobile home which is the only or principal residence of a person other than the debtor has been attached the sheriff may … order that the attachment of the mobile home is to cease to have effect."

That is precisely in order to protect people who are living in mobile homes that do not belong to them.

Our legal advisers looked closely at all aspects of the bill and satisfied themselves that its provisions were compliant with the ECHR. It was on that basis that ministers were able to certify that the bill had legislative competence. As you will be aware, the Presiding Officer is also required to take his own, independent view on whether bills have legislative competence, which includes consideration of whether they are compliant with the ECHR. He has done so in this case.

If specific aspects of the bill cause concern to the committee or other parties, we will be happy to consider them and get back to you. We are satisfied that the bill respects the ECHR.

Are you saying that the first that someone might know about their home being attached is when the issue goes before the sheriff? Does that person—the tenant of a mobile home that is owned by a debtor—have no rights at all before that point?

There is provision for prior notice. I ask Laura Dolan to clarify the matter.

It is not easy to determine that in the context of the bill, as such questions as arrangements for notice will be dealt with in the rules of court. The Parliament will see the rules of court in due course, but they are currently in the preparatory stages. The supporting rules of court cover many issues, including forms and notice.

Have we checked how such provisions work in relation to the legality of tenants' rights under tenancy agreements?

I believe that they work satisfactorily. If we can get back to you about any particular issues in that regard, we will be happy to do so.

If it would be convenient, I will say a few more words about safeguards in connection with court procedures for attachment. Section 38 allows the sheriff clerk to assist people with court procedure by filling out forms and generally giving them advice. Another safeguard, for people who are in employment but in the poverty band, is the telephone debtline, of which I think the committee is aware. The debtline is for people who cannot access advice during the day.

The committee is interested in money advice and debt advice. The evidence that we have heard today does not reassure me that there is an army of people out there who can give that advice. I would like some of the information that we have heard about today to be sent to the committee so that we can assess it. I am concerned that we might be putting too much weight on the shoulders of the volunteers who give debt advice.

Let me explain some of the issues. First, we do not intend the bulk of money advice to be provided by volunteers, which is why £3 million has been made available for specialist money advisers, most of whom we envisage will be employed advisers rather than volunteers. Secondly, we are in discussions, which are far progressed, with money advice agencies in Scotland about additional central support for money advice. You expressed concern that there might not be enough money advisers out there. The additional money is to ensure that there will be centrally provided training for money advisers and for what we call secondary advice provision, which will allow inexperienced money advisers or advisers who do not have experience of particular aspects of money advice to consult more experienced specialists or solicitors.

We are also considering whether to provide specialist information centrally. Advice provision could rest on that bottom line. We will also work with money advice providers to develop common standards and quality assurance and a common statistical framework to ensure that we have figures that indicate how many people are being assisted with debt problems throughout Scotland. We are quite far advanced in those discussions. The intention is that the central support for money advice will come on stream in time to support the new money advisers who will be employed throughout Scotland.

That is to be welcomed.

Be brief, then I will take Kenny Gibson.

Right. Will I get back in after that?

Do not ask me hard questions at this time of the afternoon. I will take Kenny Gibson just now. If you want to come back in afterwards, I will take you.

I think that we all welcome the additional £3 million, but that works out at just over a penny per person per week in Scotland. Therefore, the sum is not as significant as it may seem—distributed across 5 million people, it is not a lot of money. I am concerned about the impact of the bill on organisations such as Citizens Advice Scotland. Even with centralised support and specific money advice people, organisations such as Citizens Advice Scotland will be stretched because of additional burdens arising from new legislation from Scotland and Westminster. What support will you provide for such organisations?

Section 38 allows a debtor to obtain advice and assistance from the sheriff clerk on procedures available to the debtor under parts 2 and 3 of the bill. Are there plans not only to encourage the use of that facility, but to monitor its use?

On whether £3 million will be enough as an additional investment, the assessment of that figure was made in a report called "Facing up to Debt: Housing Debt Advice and Counselling in Scotland". The report, which was commissioned by the Executive's central research unit, concluded that current provision does not meet the need and that there is a shortfall in debt advice provision in Scotland to the value of approximately £3.5 million. We plan to put an additional £3 million into front-line money advice. We shall also provide additional central support for money advice services. Our current assessment suggests that the combination of those two measures would be an adequate provision.

Does Citizens Advice Scotland agree with that?

I do not know whether it agrees.

We will have the opportunity to question Citizens Advice Scotland later.

Yes, indeed. I am sorry, convener.

At present we cannot assess the additional call on advice that will result from the bill.

The Debtors (Scotland) Act 1987 enabled sheriff clerks to provide advice and information on procedures in certain circumstances. Experience suggests that sheriff clerks have an important part to play in helping people with the procedures and paperwork, not least because they are experienced and on hand when a matter comes to court. It is not being suggested that sheriff clerks are in any way a substitute for money advisers, but they are a useful complement. That is why ministers wanted that facility to continue to be available under the bill. We will be monitoring how arrangements under the bill work as a whole and that is one aspect that we will certainly want to keep under review.

Section 43 provides that legal aid is not available for proceedings under parts 2 and 3 of the bill. Could you explain the reasons for that?

There are two reasons. First, the procedures are designed to be simple, understandable and accessible. Secondly, the bill specifically provides that debtors may be assisted by lay representatives, whether money advisers or others. Money advisers have often indicated that they would like the opportunity to represent their clients in court, rather than have solicitors do so, for example. The bill makes explicit provision for that and it is not felt that, in those circumstances, legal aid is necessary or appropriate. However, initial advice and assistance from a solicitor are available on that point of Scots law, just as they are on any other point of Scots law, to all those who qualify under the financial criteria. People will be able to get initial advice and assistance, as it is called in legal aid terminology, from a solicitor if they so choose. However, if and when the matter comes to court action, they will be able to be represented by a person of their choice.

Will you outline the main features of the special procedures set out in part 3 of the bill in relation to the attachment of articles kept in a dwelling-house?

The policy memorandum outlines the procedures in general terms, but I shall run through the specific elements. First, the part 3 procedure requires a specific application to the court. It is not available under summary process. Secondly, it requires notification to the debtor at least three weeks before any hearing can be scheduled, including transmission of the information and advice pack, with the intention of allowing the debtor an opportunity to seek help or to try to negotiate a settlement. If that is unsuccessful, the case may proceed to a hearing.

It is worth underlining two specific new elements in relation to the hearing. The first is the opportunity for the debtor to submit a voluntary declaration of financial circumstances—a declaration of income, liabilities and assets—which may be drawn up with the assistance of a money adviser. The Executive intends to provide supporting materials for money advisers to use for that purpose. The second is the opportunity for the debtor to be represented by a money adviser or another person of their choosing.

At the hearing, the creditor must demonstrate that they have sought to negotiate a settlement, that they have tried other forms of enforcement and that there are valuable, non-essential assets, the sale of which would realise a significant proportion of the debt. As well as considering that, the sheriff will take account of whether the debtor has received money advice and information; the voluntary declaration, to which I referred a moment ago; the nature of the debt, in particular whether it relates to taxes or duties or to any trade or business that the debtor might be conducting; whether the debtor conducts a business or a trade from their home; and whether there has been any previous arrangement. Such an arrangement might have been made under the debt arrangement scheme, or it might have been a time-to-pay arrangement or another arrangement that was in place but which has not worked for one reason or another.

Sheriffs have four broad options. First, where they are not satisfied that the debtor has engaged with the advice process, they can order a visit to the person's home by a money adviser. Secondly, where they consider that a prospect of settlement exists with a bit more time or information, they can defer judgment. Thirdly, where not all the conditions that I have outlined have been met, they will refuse an application. Where, in exceptional circumstances, all the conditions have been met, they may grant the application—subject, of course, to the restrictions on what can be taken, when it can be taken and how it can be taken. The decision is also subject to an appeal. Those are the steps in the procedure.

What makes those special procedures different from the arrangements under existing legislation on poindings and warrant sales, which the Parliament agreed needed to be ended?

The proposed procedures are different in many respects. First, they must be followed on the basis of a specific application. That is new. Secondly, the creditor must serve an advice and information pack. That is new. Thirdly, the hearing provides the opportunity for a voluntary declaration. That is new. Fourthly, there is provision for lay representation. That is new. Fifthly, the creditor must satisfy the sheriff of a whole series of factors, which I have just outlined. That is new. Sixthly, the sheriff must be satisfied not only in relation to those matters, but in relation to the other matters that I have outlined. Seventhly, there is a specific provision that the sheriff can order a visit from a money adviser.

The procedures differ from the previous arrangements in all those ways.

One of the factors of which the sheriff must be satisfied is that a reasonable prospect exists of the auction reducing the debt by at least 10 per cent or £50. Is there any particular rationale for those figures?

As I recall, the figures were based on recommendations from the Scottish Law Commission. The intention was to ensure that at least a minimum significant portion of the debt would be realised after any expenses that were associated with the procedure. Section 47(2) allows for the figure to be reviewed, according to what is judged appropriate in the light of changing circumstances.

You touched upon the expense of the procedure. The key problem with warrant sales was that people often found that they sold off an item only for the proceeds to go in legal and sheriff expenses. People ended up having reduced their debt by next to nothing. The new procedure will be elaborate and expensive. Will the expense be a definitive part of the action? Will the creditor be able to recover the expense? That is not currently possible in relation to poinding and warrant sale dues.

Certain aspects of the procedure will be recoverable, but that will be at the end of the process. Provision for expenses is set out in the schedule to the bill. The schedule specifies exactly what can be charged as expenses if the attachment is carried out.

Will that apply only if the exceptional attachment order is granted or will the debtor be landed with expenses even if the order is not granted?

It depends on the steps that are taken. An expense is incurred for each and every step that is taken.

If the creditor applies for an exceptional attachment order, one of two things happens—either he gets the order or he does not. I am sorry, to be gender neutral I should have said he or she. In each of those instances, is the cost of the procedure added to the debt? If so, do we have a feel for what the costs in a typical case might be? You may wish to take guidance from colleagues on that question and get back to the committee with the information. It is important for the committee to have a feel for that, as it will influence our view of the procedure.

The expenses occur when the attachment takes place. In schedule 1 to the bill, which is introduced by section 39, members will see a list of the expenses that can be charged that are incurred as part of the procedure of attachment.

Paragraph 6 of schedule 1 sets out that no expenses are

"due to or by either party"

in connection with an application or with any of the hearings that may be held under the bill.

My point is about continuations, which might lead to extensive costs. The problem raises policy issues. Has the Executive made an assessment of the likely costs and court dues? Perhaps you can give us information on that at a later stage.

We can certainly write to you, but, as can be seen in paragraph 6 of schedule 1, it is envisaged that expenses will not be charged to either party for the costs of hearings.

Does that include the cost to creditors of their solicitor being present at hearings?

If the creditor asks a solicitor to come with him, he would be liable on his own part. No expenses would be

"due to or by either party".

That is helpful.

My final question relates to the ECHR, to which Linda Fabiani referred. The sanctity of family life is the main issue and there is a question of proportion. Given that the bill envisages a compulsory arrangement involving people's houses, does the Executive have a view—I assume that it does—on whether the provisions will cause problems with regard to the ECHR?

Our legal adviser takes the clear view that the provision complies with the ECHR. We should note that the previous system was not subject to a challenge under the ECHR. The bill institutes substantial new debtor protections.

If the committee has a specific concern with regard to a provision, we will be happy to provide a further note on it.

We spoke about mobile homes being part of the attachment under the bill, but we did not speak about domestic garages that form part of a person's home. What is the reason behind excluding the property that is kept in a garage from the protections that are set out in the bill? I have a very specific reason for asking.

The reason is that the working group took the view that the primary concern was the protection of the house or flat itself and that domestic garages were not of the same sensitivity. Ministers shared that view and, in particular, acknowledged that, in some circumstances, garages may be used to store valuable but non-essential assets.

There could be an Aladdin's cave in a garage.

That could be the case, particularly if a person has been engaged in commercial or trading activity. I emphasise that the bill includes an exemption for vehicles that are reasonably required by the debtor. That issue is addressed separately.

I am trying to come at the bill as if it is brand new and not to compare it with anything else. If the sale of a significant proportion of a debtor's non-essential assets, which is supposed to raise £50 or 10 per cent of the debt, goes nowhere towards clearing the debt, what happens to the remainder of the debt?

If the enforcement procedure is not available because all the conditions have not been complied with, the procedure to which you refer could not be used. If another type of procedure could be used—for instance, if the debtor was in employment and an earnings arrestment was appropriate—that would be open to the creditor. However, if there is no enforcement procedure that can be competently or reasonably used, there is no means of enforcement. That is why it is considered essential that there be recourse for those who want to pay their debts. Even if they have only a small proportion of money left over from any income, they should have the opportunity to pay their debts through, for example, the debt arrangement scheme.

If selling someone's goods at auction is a last resort and it is deemed worth while to raise 10 per cent of the debt and that is all that is raised, what happens to the remaining 90 per cent of the debt?

If no other enforcement avenue can be followed, the creditor can do nothing about that.

What happens if the creditor has paid for a lawyer?

Creditors have to judge every day whether it is worth their while to do that. A process such as that proposed in the bill encourages creditors to think about that and to decide whether it is worth while for them and others to go down such avenues.

I also have a question about the role of the sheriff officer. Who will be responsible for pricing the goods before they go to auction? Will sheriff officers still have a role in warrant sales? Who will remove the moveable property from the dwelling-house? Will sheriff officers be given training under the bill to make them deal with people differently from how they have dealt with them in the past?

Pricing needs to be done and it is appropriate that people who are appropriately qualified and supervised do it. That leads me on to the second aspect, which concerns supervision of officers of court. If you have had the opportunity to read the consultation document "Enforcement of Civil Obligations in Scotland"—the consultation continues until July—you will know that a large part of the document addresses the subsidiary issues that have arisen in the debate about the conduct, supervision and training of officers of court. The document contains many proposals on those matters, particularly in relation to the overseeing body to which Alisdair McIntosh referred at the start of the discussion. There is considerable examination of the problems. Various complaints have been made at different stages. We are trying to get to the root of the problems and fix them. The proposals in the consultation document are intended to tackle those issues.

Will the decision on the significant amount that should have to be raised before proceeding to a sale be at the discretion of the individual sheriff or do you intend to specify the amount in guidance?

Section 47 contains a provision that a sale will go ahead if the sheriff is satisfied

"that there is a reasonable prospect that the sum recovered from an auction of the debtor's non-essential assets would be at least equal to the aggregate"

of the elements specified in the bill. The bill contains a provision that the figures may be adjusted by secondary legislation in the light of circumstances, but the amount is clear in the bill itself.

Is the provision that allows the amount to be varied an acknowledgement that the figure may be silly and might have to be changed?

Absolutely not. It is an acknowledgement of the fact that prices, incomes and economic circumstances change.

I thank the witnesses for coming along and answering our questions. A number of points have been flagged up to which the witnesses have agreed to respond further. If, once they have reflected on what has been said, there are other points on which they think it would be helpful for us to have clarification, that would also be welcome.

We now move into private session to consider item 4, which is a draft response, and item 5, on our approach to the Executive's response on HMOs.

Meeting continued in private until 16:37.