Home Owner and Debtor Protection (Scotland) Bill
The next item of business is a debate on motion S3M-5650, in the name of Alex Neil, on the Home Owner and Debtor Protection (Scotland) Bill. Before I invite the minister to open the debate, I call on Nicola Sturgeon, as a cabinet secretary, to signify Crown consent to the bill.
For the purposes of rule 9.11 of the standing orders of the Scottish Parliament, I advise the Parliament that Her Majesty, having been informed of the purport of the Home Owner and Debtor Protection (Scotland) Bill, has consented to place her prerogative and interests, in so far as they are affected by the bill, at the disposal of the Parliament, for the purposes of the bill.
Thank you. I call Alex Neil to speak to and move the motion in his name.
I am glad to open the stage 3 debate on the Home Owner and Debtor Protection (Scotland) Bill.
I pay tribute to the work of the Local Government and Communities Committee under the convenership of Duncan McNeil. The committee considered the bill in a diligent, thorough and constructive manner at stages 1 and 2. It is to the committee's great credit that we were able to move from the bill's introduction in October to completion of stage 2 before the end of January. I pay tribute in particular to the work of the clerks to the committee, who were extremely helpful and co-operative.
It is almost a year to the day since the repossessions group, which was ably chaired by Adrian Stalker, first met. I record again my appreciation of the group's role in recommending the ways in which legislative protection for home owners needed to be strengthened. The debt action forum is also to be commended for its role in shaping part 2 of the bill. The policy development and passage of this small but complex bill has been relatively swift, but the bill has certainly been subject to appropriate testing and scrutiny.
Although the key principles of the bill were widely shared and have not been altered, we listened carefully to committee members' views and were happy to make a number of amendments to the bill on points of detail, notably in section 1, on voluntary surrender, in section 6, on recall arrangements, in section 7, on lay representation, in section 9, on certificates for sequestration, and in section 10, on trust deeds. Our acceptance this morning of amendments 2 and 3, in the name of Mary Mulligan, is further evidence of our willingness to listen and adjust when it is right to do so.
We could not address some issues that members raised. For example, although we supported the spirit of Bob Doris's amendments, which sought to protect people from liability for their lender's legal expenses when the lender had not complied with pre-action requirements, it is regrettable that the matter is—at the moment—reserved to the United Kingdom Parliament. For that reason alone we could not support Bob Doris's amendments. However, as I promised to do at stage 2—this Government keeps its promises—I have written to Lord Myners to ask the UK Government to address the issue, and copies of my letter are available from the Scottish Parliament information centre. [Interruption.] The debate had become a bit too consensual, Presiding Officer.
I am also grateful to Bob Doris for raising an important point about voluntary surrender. We responded to concerns that a formal affidavit was too onerous, but Bob Doris also sought the creation of a set of guidelines, to enable borrowers to be clear about what they are doing. As I said to the committee, it will be for the lender to decide how that will work in practice; that is not an issue for the bill. However, I reassure Bob Doris and other members that it is one of a number of issues that we will seek to address when we implement the bill, through consultation of all interested parties. I also assure the Parliament that we will keep the new legislation and funding for the advice sector, courts and others under review, and we will come back to the Parliament, if that is required, to ensure that the provisions work as the Parliament intended or to correct deficiencies.
Pauline McNeill did us a service when she drew the Parliament's attention to a serious issue. Fergus Ewing explained that although we could not have supported the amendment in her name, we are happy to engage with her and other members to get to the root of the issue and to consider what steps can be taken to improve the transparency and scrutiny of insolvency practitioners' fees.
Not just members but key stakeholders were influential throughout the passage of the bill. I commend stakeholders for their on-going support, consultation and input. In particular, I thank Citizens Advice Scotland, Money Advice Scotland, the Council of Mortgage Lenders—it says "moneylenders" in my notes—Shelter Scotland and the Scottish Association of Law Centres for their willingness to engage constructively, and for the work that they do to avoid repossessions and to help people who are struggling with debt. The insolvency profession and the Law Society of Scotland also engaged fully. Stakeholders did not always get their own way, but the process of consultation was extremely valuable in securing a better balance between protection for lenders and debtors and ensuring that we produced workable legislation.
I remind members of the circumstances that prompted us to introduce the bill. One of the most significant consequences of the economic recession, especially during the past year or so, is that too many Scots are caught in a debt trap, which puts family homes—and families—at risk. Our response, which is embodied in the bill, has been to act quickly to legislate, well ahead of our colleagues south of the border, to introduce more protection for home owners, not just in these difficult times but for the longer term, and to offer support to people who currently cannot access debt solutions.
As members know, the pressing need for legislation has been a focus during previous debates, but it is worth restating why the bill is so important. Home repossessions in the UK increased fivefold from 8,000 in 2004 to 40,000 in 2008, and the Council of Mortgage Lenders has forecast a further rise to 53,000 this year. In November, the CML predicted that the number of families in the UK who have mortgage arrears that amount to more than 2.5 per cent of the balance would top 205,000 in 2010. The risks for such people will only intensify if unemployment or interest rates, or both, go on rising.
An issue on which all members agree is the need for more reliable statistics for Scotland. I had written yet again to the Council of Mortgage Lenders to ask for that information, but I regret that I received a reply in the negative yesterday. The CML's view is that issues to do with reporting the Scottish numbers cannot be resolved unless action is taken by the regulators—in this case, the Financial Services Authority. That is a disappointing reply. Given that the FSA will be under new management from the summer, subject to the election result and its consequences, I will again approach the FSA and ask it to take appropriate action.
In relation to the need for legislation to protect home owners, the FSA said recently that
"firms were often too quick to take repossession action",
and that
"some firms explored very few forbearance options before taking legal action against borrowers. We observed these poor practices across the mortgage market".
Not only in the Scottish Parliament but throughout the country, the bill is welcome and will make a material difference to many families and individuals who find themselves in the unenviable position of having too much debt and facing the prospect of repossession of their homes.
I am delighted to move,
That the Parliament agrees that the Home Owner and Debtor Protection (Scotland) Bill be passed.
I thank the clerks to the Local Government and Communities Committee for their help and support during the passage of the bill. The bill is relatively short and succinct and bears no comparison by length with the Marine (Scotland) Bill, which the Parliament considered last week. However, it is a highly technical bill, and I am sure that members of the committee agree that the clerks were a great help in ensuring that we have understood its complexities. I also thank the bill team, particularly for their assistance with the amendments.
I remind members how we have arrived at this stage today. At the beginning of 2009, Cathy Jamieson and other members of the Scottish Parliament—including Ross Finnie and Robin Harper, who are in the chamber—realised that the number of people at risk of having their homes repossessed due to mortgage arrears was increasing and, crucially, that people in Scotland did not have the same protections as people in England and Wales, where a pre-action protocol was in place that ensures that certain procedures are carried out before a court can grant a repossession decree.
Cathy Jamieson and others suggested that the same protection should be available to people in Scotland but, unfortunately, the Cabinet Secretary for Health and Wellbeing, Nicola Sturgeon, first said that it was not necessary and then, after significant pressure from many—including Mike Dailly of the Govan Law Centre, who experienced the deficiency daily in his professional role—decided to delay further by setting up the repossessions sub-group of the debt action forum. That should at least have ensured that potential legislation would be fully developed. However, the committee was concerned that many witnesses who gave evidence at stage 1 raised concerns about the consultation process. That concerned the committee enough for it to say in its stage 1 report that "on balance" the consultation on part 1 was sufficient, but on part 2 it was not. Indeed, committee members were unsure why part 2 was included in the bill, so it is to the credit of committee members that there is a bill here today to consider.
I acknowledge and welcome the fact that when the two ministers—Mr Neil and Mr Ewing—saw the committee's concerns, they listened and made efforts to respond to them. However, we should not have been in that position in the first place. I hope that lessons have been learned and that it is recognised, in particular, that there are still debt issues to address.
The bill is principally, as the minister said, about offering protection to those who are at risk of losing their homes due to debt, so I will highlight a few of the main points of the bill that will contribute to that aim.
Part 1 introduces the pre-action court protocols that were sought. I acknowledge that their legislative status means that they have more weight than their English counterparts, but I also contend that it may have been possible to achieve the same results through amendments to the Mortgage Rights (Scotland) Act 2001. That might have been a quicker route. How many people have been faced with repossession without the support that the bill provides?
The second most important aspect of part 1 is the provisions that will enable lay representation in repossession cases. Although that is to be welcomed, as organisations such as Citizens Advice Scotland, Money Advice Scotland and Shelter say, there is some concern about how well resourced they are to deliver the service. The committee convener, Duncan McNeil, pursued the issue with witnesses, including the minister, Alex Neil, and received some reassurance, but I agree with Mr McNeil that the matter needs to be kept under review.
In part 2, sections 9 and 10 provided further provisions in relation to a certificate for sequestration and the removal of the family home from trust deeds, both of which have proved—I am sure the ministers would agree—quite controversial. It is clear to everyone that those sections would have benefited from more detailed consultation before the introduction of the bill. However, I believe that the committee was right to be pragmatic and to recognise that the measures could offer assistance to certain people. I am grateful to Citizens Advice Scotland for the examples that it provided to demonstrate that; Labour will support the measures today.
There have been concerns about the bill delivering the protections that were sought without bringing about unintended consequences that would do more harm than good. The nature of the bill process is that there is detailed analysis and amendment, but that was particularly so in this case.
As I said, there are still some concerns about the resourcing of lay representation. There are also concerns, to which the minister referred this morning, about the ability of the courts to cope. More than ever, the regulations and guidance that are issued with the act will be critical in making it effective. Finally, it will be essential to ensure that the bill is working as soon as possible—I am sure that the minister will not delay further.
With these comments, I offer my and my party's support for the Home Owner and Debtor Protection (Scotland) Bill.
For a measure that was fast-tracked procedurally by the Government without the usual public consultation, and which was regarded by the Labour Party as being so urgent that members were at one time exhorted to turn up during last year's summer recess to pass the bill, the reality of its progress through Parliament has turned out to be somewhat different.
Instead of a bill that focused exclusively on repossessions, building on legislation that was passed by the Parliament in the form of the Mortgage Rights (Scotland) Act 2001, we have been presented with a hybrid measure that contained contentious and extraneous provisions relating to personal bankruptcy, as set out in part 2.
The case for early action on repossessions arose from an alarming projection on the likely number of repossessions in 2009, which turned out to be way off the mark. It was founded on the belief that, without immediate reform of the law, thousands would be thrown out of their homes and on to the streets as a result of the actions of hard-hearted lenders who care only for money and not a jot for the welfare of families. As usual, that proved to be a gross caricature of the truth, which bore no relationship to the good practice of the overwhelming majority of lenders in this country. All the evidence that was taken on the bill demonstrated that customers who are in arrears with their mortgages are treated with sensitivity, both as a matter of corporate social responsibility and as a matter of sound commercial judgment, because it makes economic sense to assist people to stay in their homes and to ride out the recession rather than to lose money on loans that were secured over homes that were falling sharply in value and in which there was high negative equity.
However, as with many issues in politics, something had to be seen to be done, and when it turned out that there was a relatively minor difference in the law between England and Scotland, Labour was quick to demand that it be corrected and the Scottish National Party was anxious not to be caught out. Accordingly, the measures in part 1 were invested with a political importance and significance that far outweighed their practical consequences.
As I said in the stage 1 debate, in part 1 we have changes that will make marginal improvements to the law, but will do little more than codify existing good practice. They will make little or no difference to the number of people whose homes are repossessed. For that, we will require a recovery from the Labour recession. All that is being done in part 1 is to require the courts to take a more proactive supervisory role in ensuring that all the options have been considered, in conjunction with the debtor, before a repossession order in favour of the lender is granted.
The areas that the committee's report identified as requiring amendment have been duly amended and further tidied up this morning. Therefore, as regards part 1 we can look back with a degree of modest satisfaction on a modest measure, because that is what it is. I will leave the exaggerated claims and counter-claims for Labour and the SNP to fight over.
The criticisms of the Government's handling of part 2 have been many, various and wholly justified. The Government is guilty of ignoring the recommendations of its own debt action forum, which called for fuller public consultation on personal insolvency and the family home. The Government has engaged in all manner of sophistry and double-talk to imply consensus where none exists and consultation where none took place. It has acted in bad faith and forfeited the good will of professional bodies that are involved in this aspect of the law. All of that is particularly true in relation to section 10. Moreover, in relation to section 9, an amendment was approved at stage 2 that removed the legal responsibility of the authorised person in certifying the entitlement of a debtor to relief from debt that comes from sequestration. We now have a situation in which bankruptcy is available on demand and certificates of sequestration are granted by people who take no legal responsibility to creditors for doing so.
The history of this Parliament in the field of debt has been a one-way street of reforms that make it easier for people to avoid paying their bills. Before we go any further beyond this bill, we should pause to think about the stage that we have reached. The credit system is the engine of our economy. As we have seen in spectacular fashion recently, the credit system is good only when sound loans are made to people who can afford to repay them. That is true of a small personal loan from a credit union and a mortgage of tens of thousands of pounds from a major bank. The availability of credit is of the greatest importance to people on lower incomes. If we undermine the system and make credit more difficult or expensive to obtain because we make it easier for some people to avoid and default on paying their debts, we do our society and our economy as a whole a great disservice. In passing the bill, we should reflect on that.
I rise in support of the Home Owner and Debtor Protection (Scotland) Bill not only because I have listened to and agree with much of the evidence given to the lead committee, on which I sit, but because the bill will provide vital protection to people who are in serious debt and will allow them to remain in the home that they sought to purchase. It is vital that we minimise such stressful situations and help keep the family unit together.
We were pleased that, as a result of Opposition campaigning and pressure, which the Liberal Democrats led, the Scottish Government established the debt action forum and the repossessions sub-group. Both produced final reports, aspects of which have been taken forward in the bill. Feedback from Citizens Advice Scotland and others who gave evidence to the committee has demonstrated great support for the debt action forum and the repossessions group.
Concerns were rightly expressed about the unusually short consultation period, but that had to be balanced with the urgent need for reform.
Although we were happy to support the bill at stage 1, we had a number of concerns that we wanted to be addressed before the bill came back at stage 2, in particular about the recall of decree. We are pleased that the Government listened to our argument on that. We stressed at stage 1 and stage 2 that there should be an opportunity to make a second application for a recall of decree in certain circumstances and that the bill should be amended in that regard.
I thank the committee clerks and members of the committee who went through a great deal of detail in the bill. I thank Alex Neil and his officials for redrafting the bill as a result of the concerns that I raised in committee in relation to a spouse or partner of the debtor making a second application for a recall of decree where it is felt that the debtor may not be acting in the best interests of the family unit by allowing their home to be repossessed to pay off their debts. I believe that that provides a vital protection, which will both keep a family in its home and keep the family unit together at a time of great personal stress, giving people the best opportunity to recover from debt.
Insolvency practitioners voiced a number of concerns about measures in the bill that they believed might affect their livelihood, and creditors expressed concerns about the imbalance in some of the provisions, which they believe unfairly favour the debtor and may leave the system open to abuse.
Some of the key concerns have been addressed, within reason, by Government amendments that the committee agreed at stage 2 in order to have a more balanced and fair system.
Mr McLetchie pontificated at great length and sought to remove section 10 completely. However, as he well knows, many organisations that act on behalf of the debtor welcomed section 10 and the protection that it will provide to debtors. Given that he is never one to retire to the corner to lick his wounds, I am sure that Mr McLetchie will defend business interests to the max, even today at stage 3.
The fact that only three amendments were lodged at stage 3 is testament to the hard work of officials, members and outside groups, who have sought to ensure that the bill is not only robust and fair but brings real protection to people who are caught in the debt trap, which is often not of their own making.
I welcome the passage of the bill thus far and I very much hope that it will be passed at decision time.
I reiterate the thanks that have been given to the committee clerks, the bill team and the ministers involved. If there was ever a bill that had the fingerprints of the Parliament all over it, this is it. Where genuine concerns were raised, they were listened to and the bill has been shaped by the Parliament as it has gone through. That is the way that all legislation should go through this Parliament.
I will give some context to the bill. In 2004, the United Kingdom figure for repossessions was around 8,000. Despite the fact that the Council of Mortgage Lenders has revised the figure expected in the coming year down—I think to 48,000—in 2008 the figure was 40,000, which is still a huge increase in the number of repossessions over a four-year period.
I say to David McLetchie that just as Nero fiddled while Rome burned, if the Conservatives had their way, they would be sitting on their hands while vulnerable home owners had their homes repossessed. It is vital that we act, and the bill will ensure that we do.
There should be a Scottish figure for repossessions, but we have some data. We know that there has been a 77 per cent hike in the number of mortgages that have been in arrears for three months or more, which shows that more people are getting into mortgage difficulty. We also know that between 2008 and 2009, courts in Scotland granted more repossessions—the figure rose from 67 to 75 per cent. There is an evidence base there. We also know that between December 2008 and December 2009, 21 per cent more actions to repossess were initiated in courts. The evidence is clear: we have to act.
That is why the Scottish Government has moved to introduce statutory pre-action requirements. I give credit to our neighbours in England who introduced the pre-action protocol. In looking at best practice elsewhere, we sought to improve on the pre-action protocol by putting pre-action requirements on a statutory footing. Perhaps the Government south of the border will look at putting its system on a statutory footing at some point, too.
Just for the record, the consultation on the measures south of the border does not finish until the end of March, so there is no chance of legislation before the general election. Therefore, yet again, Scotland is well ahead of what is happening in the rest of the United Kingdom.
I thank the minister for that information. I hope that whatever party gets in south of the border after the next election will look at best practice in Scotland and follow suit.
The minister raised issues about cost. The Scottish Government sought to put in the bill a provision that would ensure that sheriffs could award costs against lenders should they move to repossess via a court and that repossession fails. Shelter, Citizens Advice Scotland and Money Advice Scotland drew to my attention the fact that under the Conveyancing and Feudal Reform (Scotland) Act 1970—under the terms of standard conditions of security—it would be permissible for a mortgage lender to rack up thousands of pounds in legal fees while attempting to repossess a vulnerable person's home. Although a Scottish sheriff could say that it had failed to meet the statutory requirement to be reasonable in seeking a proper credit solution and could award costs against the mortgage company, under the same act, it is also permissible for the lender to introduce back-door charges, so the legal fee could be added directly to the debt of the vulnerable home owner. I find that unacceptable, which is why I worked with Shelter to lodge an amendment on that at stage 2.
However, I did not know at that point that that would impinge upon the regulation of financial services, which is outwith the terms of the Scotland Act 1998. I thank the minister for his reassurance that he will work with me on that. He has written to Lord Myners to raise the point with him. It makes no difference to me whether the UK Government legislates to end those unfair back-door charges or whether it gives Scotland the power to do so. I just want to help vulnerable home owners and I hope that we can all unite around that. I will certainly write to Lord Myners, too.
I am absolutely delighted with one or two other aspects of the bill. I am delighted to see provision for lay representation in Scottish courts. The experts who have helped vulnerable home owners from the first point at which they access debt advice to the end point, when they face repossession of their homes—Shelter, Money Advice Scotland and Citizens Advice Scotland—are the very people who should be in court. I thank the minister for his reassurance about voluntary surrender and ask him to keep a weather eye on how that process works.
I am delighted that section 10 has remained intact. There is no compulsion whatever on anyone—the creditor or the borrower—to enter into a protected trust deed. The same situation applies in England. Let us ensure that section 10 stays in the bill. I am delighted with the minister's reassurances. Let us vote for the bill today.
I, too, add my thanks to the members and staff of the Local Government and Communities Committee who worked so hard to get the bill through the Parliament in the short space of time that they had to deal with it.
From some speeches in the chamber, people might think that the pressure to bring the bill was about party-political point scoring. I say to those members that I pursued the matter vigorously because of the scale of the problem. For example, in the Tesco car park in Auchinleck, a woman stopped me only to break down in tears as she told me that her house was about to be repossessed—she did not know where to turn to get advice; a businessman came to my office in Cumnock and was in tears as he told me of the pressures on him—his worry was that he would lose his home; a couple came to my surgery in Maybole to seek help in exactly the same kind of circumstances; and there was also the woman who e-mailed me at midnight, desperate for advice about where to go. That is what the bill is about.
The bill is about putting in place the right legislation to ensure that every possible step is taken before people are put through the courts and out on to the streets. The bill is also about ensuring that we do everything possible to intervene early in getting advice and information to the people who need it. I support the bill and I will, of course, vote for it at decision time.
When I, along with members of other political parties who were keen to see something done, raised the issues that I have just outlined, we were told, "We hear what you are saying. We will get a bill through and we will do it as quickly as possible." Alex Neil's speech would have led anyone to think that that happened; unfortunately, it was not the case. More than a year ago, Labour, the Liberal Democrats and the Greens raised the issue on a cross-party basis and with the support of Margo MacDonald. At the time, the Cabinet Secretary for Health and Wellbeing's response was that the measure was not needed. As Mary Mulligan said, while the cabinet secretary was saying that, others at the front line were telling a different story. They were telling us that the measure was badly needed and that legislation should be taken forward.
No matter whether or not her criticisms of the Government are valid, we are way ahead of the member's colleagues at Westminster, where she aspires to go in three months' time. Her colleagues do not even have a bill on the stocks. Indeed, they have not even finished the consultation. It will be another two months before they have done that.
I am glad that Alex Neil recognises that I may well be on my way to another place where I will, of course, pursue the issue as vigorously as I have done in this place.
I find it astonishing to hear him say that we are "way ahead". I accept that the bill will put us ahead, but that is only because Labour and other parties consistently pushed the Scottish Government to do something. As I said earlier, the cabinet secretary's initial position was that legislation was not needed.
I am always willing to work with anybody who has the best interests of our local communities at heart. I, for one, will not stand by and say nothing when people are being let down, and home owners were being let down. Thankfully, the cabinet secretary recognised that her initial judgment on the matter was wrong and did something about it. I wish that Alex Neil had a wee bit more grace about recognising that the issue was pushed forward on a cross-party basis.
Shelter Scotland and Citizens Advice Scotland welcomed the bill, albeit that Shelter pointed out that there is no room for complacency. In particular, it said—and I agree with Shelter—that the argument can be made for change, irrespective of the recession. It said that people would continue to require help and support after the recession eases.
In my area, we have a new pan-Ayrshire advice project. I was particularly pleased to attend the launch in Kilmarnock at which the cabinet secretary made a speech. That is exactly the kind of support that my constituents need. As I described at the outset, they need to know where to go to get help and legal advice and representation quickly and effectively—help that will mean that cases do not need to go to court. Concerns have been raised about additional burdens on the courts, but if the advice services work properly, my hope is that the courts will not have to deal with so many cases.
I regret that I have had to introduce a slightly sour note to the proceedings, but the bill was improved by the very good work of a parliamentary committee. That is what the Parliament is about and we should take credit for that. As I said, I will support the bill at decision time. I hope that the Scottish Government has the good grace at least to recognise that it brought the bill before the Parliament because of cross-party consensus.
I rise to support the Home Owner and Debtor Protection (Scotland) Bill. Members will be well aware of their constituents' problems in retaining their home, particularly in the current economic climate, and Cathy Jamieson portrayed them eloquently. I am glad that there is general agreement in the chamber on the need for measures to avoid home repossession wherever possible.
The main driver of the Scottish Government in bringing forward the bill was to offer greater protection to the home owner. Clearly, that is desirable, particularly given the economic backdrop to the debate. In practical terms, the bill aims to put into legislation in part 1 the recommendations of the repossessions group and in part 2 proposals in respect of bankruptcy. The bill aims to enhance debtors' rights under the Mortgage Rights (Scotland) Act 2001 by extending protection to people in all repossession cases that involve residential property.
The stage 1 debate saw recognition that agreement differed on the provisions in part 1 and part 2. During the bill's passage, a number of members said that the Council of Mortgage Lenders' figures on repossessions needed to be made available in Scotland. I was reassured when the Scottish Government said that it was endeavouring to pursue the matter by writing to the Council of Mortgage Lenders and the Financial Services Authority to get the figures for Scotland prepared and released. Like the minister, I express my disappointment at the Council of Mortgage Lenders' decision not to release the figures. Clearly, the Council of Mortgage Lenders does not understand the role of Government and Parliament in dealing with housing issues in Scotland.
As I said in the debate on the bill back in December 2009, behind the repossession figures there is "a human price". Significant issues remain with loans that are secured against the family home. Concern has been expressed that the process will be overly bureaucratic—lenders claimed as much. Secured creditors are concerned about the potential additional costs of raising repossession cases in the courts. However, financial lenders and institutions need to be aware of the wider demands of society. There is no point in simply talking about corporate social responsibility; they have to do some real work on that theme, particularly in relation to debt.
Importantly, the committee supported the principle of enshrining the pre-action requirements in legislation so that they would have legal force. The bill imposes a clear obligation to ensure that the lender has considered alternatives to repossession before it raises an action. The bill addresses some concerns that have been identified in England and Wales about the process of voluntary pre-action protocols where borrowers have limited redress to lenders. The overarching objective of the bill is clear and unambiguous protection for vulnerable home owners.
Part 2 is probably the most contentious aspect of the bill. One provision, the certificate for sequestration, aims to introduce a new route into bankruptcy that does not require a debtor to show insolvency. A debtor will be able to apply to an authorised person for a certificate, with which they can petition for bankruptcy. The Government acted on committee concerns that further information should be sought on the work that would be required of the Accountant in Bankruptcy and on its new role in the route into bankruptcy provisions. I welcome the fact that the minister acted on his commitment: amendment 43 at stage 2 leaves it open to insolvency practitioners to take on that work. It is worth noting that the Government said that it is committed to continued dialogue with the credit reference agencies on their concerns about the need for all necessary information to be included in the register of insolvencies.
I welcome the stage 3 debate and the key principles that are contained in the bill. I look forward to the bill being passed at decision time. I believe that it will have a positive effect in reducing the number of domestic repossessions in Scotland.
I put on record my thanks to all those who provided written and oral evidence during the stages of the bill. I also thank the clerks, SPICe, the ministers—Alex Neil and Fergus Ewing—and my colleagues on the Local Government and Communities Committee. I trust that the chamber will pass the bill at 5 o'clock today.
As other members have indicated, Parliament and, more important, people who live in fear of debt and its consequences have waited too long for this bill. Even at this late stage, there are one or two worrying areas in which there is a lack of certainty that the bill can or will deliver what the Scottish Government promises. Parliament has been ahead of Government in this case. A year ago, parties represented in the Parliament—the Labour Party, the Liberal Democrats and the Greens—along with Ms MacDonald urged the Government to take action.
Nevertheless, the bill is important. The work that the Local Government and Communities Committee has done has helped to clarify some, if not all, of the areas in which there were uncertainties. However, as a general rule, the Government should not come to a committee with legislation that is so unclear. There seems to have been a last-minute rush to address issues that might have been better dealt with in future legislation. I hope that the Government will learn from the experience and from the slight controversy that some of the proposed measures have provoked.
I hope that the Government will keep a watching brief on who can be permitted to exercise a second recall. I was pleased that the Government lodged amendments at stage 2 that meant that a second recall of decree could take place, but I am concerned that one category of residents may have been missed. At stage 2, some members of the Local Government and Communities Committee realised that adult children living with their parents might be penalised if they did not have the same right. With more young people living at home, partly because of the particular economic situation that the bill seeks to recognise, it would seem sensible for them to have some protection under law.
In spite of the Government's assertions, I am still not sure that the funding that is currently allocated will be sufficient to allow advice centres to bear the additional burdens that the bill will place on them. If we expect citizens advice and money advice centres to accept the additional work, to give it the priority that it deserves and to do so to the high standard that we and they would want, and if the Government believes that that is a key plank of its policy, surely we should take steps to ensure that the work is funded properly. I hope that ministers will monitor the situation and will act if there proves not to be enough money in circulation in advice centres to provide the training, support and back-up that will undoubtedly be needed.
At stage 2, the Local Government and Communities Committee rejected amendments from Mr McLetchie that sought to remove section 10 from the bill. Many members had a little sympathy for Mr McLetchie's argument; however, they were willing to give the bill their support because they thought that, on balance, ministers had a point, albeit one that should have been better developed and discussed.
Mary Mulligan's stage 3 amendments on the issue of reasonableness make sense and ensure consistency in the tests that are used. In my view, the amendments themselves are entirely reasonable and build on stage 2 amendments that were discussed in committee. I am pleased that the chamber has agreed to the amendments today and that the Government saw fit to support them.
I thank the committee clerks for their hard work and usual diligent approach to their tasks. In particular, I thank those who gave evidence to the committee. This was a technical bill and the evidence that we received was often conflicting. It was to the credit of those giving evidence that they were able to put their case in such a comprehensive manner.
Finally, I thank Mr Neil for tempering his cheerful consensual approach in opening this morning with a little of his usual political bias. Anything else from Mr Neil would have been just too disconcerting at this time in the morning.
As Cathy Jamieson pointed out, Liberal Democrats and I were happy to join her and the Labour Party, Patrick Harvie of the Greens and Margo MacDonald in raising this issue. I want to make clear, as Cathy Jamieson did, why we did so, as it is germane to some of the comments that David McLetchie made in his opening speech. We were concerned about instances that were being brought to our attention. We had believed that adequate protection was provided by the Mortgage Rights (Scotland) Act 2001, which the Parliament passed unanimously, but there was disturbing evidence that a number of people were being exploited in different financial circumstances.
My point is directed to Mr McLetchie, in particular. It was interesting that the Council of Mortgage Lenders took grave exception to the suggestion that something was wrong. I had to point out to it that I was not attacking the council or its members, which have acted in a responsible way. I was concerned that issues were being raised about a number of people who were not necessarily members of the council, who dealt with matters in a different way and who were perfectly happy, in different economic circumstances, to exploit the weak and the vulnerable. Legislation must address the needs of the population as a whole, but frequently it must be passed to address the situation of the weak and the vulnerable. The bill does both, but I raised the issue to which it relates out of concern for the weak and the vulnerable.
I reinforce the point that the member has just made. The Financial Services Authority has made available evidence about rogue lenders that illustrates why the bill is needed. Although the FSA was not called to give evidence to the Local Government and Communities Committee, we should take cognisance of the research that it has done.
I wholly agree with the minister. The fact that the FSA has evidence about rogue lenders may be one reason why the Conservative party proposes to abolish it. We will find that in its forthcoming—
Will the member give way?
I will be delighted to hear Mr McLetchie speak about abolition of the FSA; I am sure that all members will be thrilled to listen to him.
Would the member care to name one of the rogue lenders to whom he refers?
I am not prepared to do that, because the issue is directly associated with particular constituents and I am not about to give anyone the opportunity to pursue them. It is necessary only to track down where someone lives—who and where they are—to start to do that, and I do not intend to provide that information. However, rogue lenders, rather than the people to whom Mr McLetchie referred, were the cause of concern.
We were glad that the repossessions group and the debt action group were established. At the time, it was felt that there was a need for speed. I thought that it would be good if something straightforward could be done over a year ago to amend the law. However, this is a complex body of law, so we opposed moves to rush the bill through Parliament. That would have been a grave mistake. We are a unicameral Parliament and it is vital that we observe all our current protocols when passing legislation. To that extent, I agree with David McLetchie. Given that we are a unicameral Parliament, it is not excusable for us to ignore consultation and proper evidence taking.
We wholly support the bill—which enshrines pre-action protocols, gives lay representation, removes the family home from trust deeds and provides for action for the recall of decrees—and believe that it will make a valuable contribution not just to the population as a whole but to the weak and the vulnerable, in particular.
I am pleased to be able to make a short contribution for the Scottish Conservatives in summing up the stage 3 debate. Like others, I pay tribute to the members of the Local Government and Communities Committee, including my good friend David McLetchie, for the excellent work that they have done on the bill, including the stage 1 report that informed our stage 1 debate and the improvements at stage 2, which effectively clarified and simplified elements of the bill. I thank organisations such as Citizens Advice Scotland, which provided useful briefings to me at this stage and previous stages in the legislative process.
As David McLetchie indicated, the Scottish Conservatives will vote to pass the bill today. David has already dealt with some of the points of detail in the stage 3 amendments, having himself helped to improve the bill at the committee stage. In general terms, we believe that it is appropriate that existing good practice in the area of repossessions is codified and that previous legislation is built upon. It is right that repossession pre-action is put into statute.
One issue that I identified during my contribution in the stage 1 debate, as others did in their contributions, was the widespread concern about the lack of Scotland-specific data on the number of repossessions. Since we are looking for that situation to be addressed, I am disappointed that the minister has not come up with that very important data. Will he make amends for that at some point?
Had I access to the data, I would undoubtedly publish them. I do not have access to the data, but I would welcome a commitment from the Conservatives that, if they win the general election, within 24 hours they will order the FSA to publish the data.
I thought that the minister said earlier that we were going to abolish the FSA, and I would have thought that the SNP might be able to come up with data about Scotland.
Cathy Jamieson had some very poignant examples of repossessions, which we all want to see the end of. Unfortunately, as David McLetchie said, it will require a Conservative-led recovery from Labour's recession for something to be done about the economic plight in which people find themselves. I hope that the bill will help improve the current legislative framework and boost the rights of under-pressure home owners in the short term and in the future.
This has been a consensual debate, apart from some contributions, although I suspect that the only person with whom I would take issue is Mr McLetchie. There is a need for the bill and a need for speed. I acknowledge that the repossession figures are lower than we anticipated, but any repossession case deserves our full consideration, so it is important to progress the bill.
Accepting that it is necessary to take matters forward, the member said that there was a need for speed. Does she acknowledge that, in fact, that is precisely what we did not get from the Government, because of its failure to focus on the primary issue in part 1?
If the member had listened to my opening statement, he would have heard me say that I regret the fact that there was delay at the beginning. The committee tried to speed up the process and I welcome committee members' contributions to that.
At stage 2 and, indeed, at stage 3 today, members raised the issue of the situation in which expenses are awarded against the debtor, even when an action for repossession is unsuccessful. I think that all committee members recognise the injustice of that, as does Shelter. The minister, while sympathetic, suggested that the situation strayed into reserved issues. I note that the minister has now written to Lord Myners at Her Majesty's Treasury expressing our concerns and asking for his view. I understand that we cannot legislate on a reserved matter, but it strikes me as perverse how often this Scottish Government turns to Westminster to decide on issues such as this. I realise that the Scottish Government may be trying to make a point, but it is not helpful to have yet further delay.
If we included a reserved matter in the bill, the danger is that we would be referred to the Supreme Court, which would mean that the bill would not be enacted for a considerable time. I do not think that any of us would want that to happen. I suggest to the member that the Local Government and Communities Committee writes to Lord Myners to support the points that I have made to him and to request urgent action from the United Kingdom Government.
The minister will be clear that I was not asking for a reserved matter to be included in the bill—I know the rules as well as he does. I am sure that the committee will consider his suggestion about writing to Lord Myners.
Patricia Ferguson referred earlier to another issue that was raised at stage 2, which was the definition of the "entitled resident" who would be eligible to apply for a recall. I thank the minister for responding in writing on the issue after stage 2. I understand why the bill uses the same definition as the Mortgage Rights (Scotland) Act 2001. However, with due regard to our earlier discussion on the need for consistency and to the points that Patricia Ferguson raised, there is a different situation now, after almost 10 years of the 2001 act, because more adult children live at home and contribute, if the parents are lucky, to a mortgage. That circumstance needs to be kept under review and I hope that the minister will do that.
I acknowledge that the minister has reconvened the repossessions group to carry out further discussions with stakeholders on protection for unauthorised tenants. My colleague Hugh Henry first raised that issue in the Parliament, and I welcome the minister's serious consideration of it. I understand some of the difficulties in recognising an unauthorised tenant, but I am sure that committee members will be happy to consider any proposals in that regard during the passage of the Housing (Scotland) Bill. Obviously, the sooner proposals are made, the more properly we will be able to test them during the passage of the bill.
The minister referred in his opening statement to Pauline McNeill's stage 2 amendments on the fees charged by insolvency practitioners. In fact, her examples showed that some fees were exorbitant. I know that the minister has given a commitment to look at that issue further, and we welcome that. I offer my support for the minister's attempts to get figures on a Scotland-wide basis, because it is important to have such helpful figures.
The bill aims to offer additional protection to those in danger of repossession, but the minister will be aware that there is an equally difficult situation in relation to rent arrears. I hope that we will be able to have further discussion with the minister on that.
People across Scotland face repossession as we speak. The measures in the bill may help them, so enacting it as quickly as possible is critical. Regulations and guidance should be available as soon as possible. I am pleased to be able to offer my and the Labour Party's support for the bill. I look forward to joining others later in the day to pass the bill.
I thank most sincerely the Local Government and Communities Committee, ably convened by Duncan McNeil, for its work in considering the bill, which was not without some controversy. I also thank the Subordinate Legislation Committee, the Finance Committee and everyone involved in the debt action forum and the repossessions group, who gave their time freely and willingly. Finally, I thank the officials working for Mr Neil and me in both directorates, including the Accountant in Bankruptcy and her predecessor, for showing a commitment to their work for the ministers whom they support that was beyond the call of duty.
At times of economic hardship, people look to their Government for practical solutions. We believe that the bill that we will pass today offers just that. It is important to remember why the bill is so important and whom it is intended to help. Increasing numbers of people in Scotland are struggling with debt and facing the prospect of homelessness. We have been warned of further financial strain in the years ahead, with unemployment and interest rates expected to rise. Indeed, the most recent figures show a rise in unemployment in Scotland of 9,000 for the period September to November 2009. That is likely to put many more homeowners in the most serious financial difficulty, which they may have been able to avoid only temporarily due to reduced home loan costs.
Undoubtedly the most traumatic impact of debt is the harm that is caused to families, especially children, because of the stress and anxiety arising from the threat to the family home. That has been acknowledged by many members, including Mary Mulligan and Cathy Jamieson. We entirely support those sentiments and share the views that have been expressed. In my former life as a solicitor I had some experience of trying to help people stay in their homes and avoid unnecessary eviction during times of hardship. We must not underestimate the impact of the recession on Scots who are struggling to make ends meet.
As I have made clear throughout the passage of the bill, the Government agrees with the principle that those who can, should pay their debts. We entirely agree with that statement as it was expounded by Mr McLetchie. We also believe that the rights of creditors must be balanced with humane debt solutions that are proportionate to the impact of debt on families and the wider community.
The impact of debt on individuals can be most severe. It can exacerbate problems and can lead to addiction, the breaking up of families, depression and have all sorts of horrendous consequences that all members will be aware of from seeking to assist their constituents. The Home Owner and Debtor Protection (Scotland) Bill offers those people more help and I am delighted that it is likely to receive cross-party, indeed all-party, support today.
The bill widens access to the debt relief of bankruptcy. That is not a first choice, however—it is not like picking a bag of sweeties from a supermarket—it is a last resort, and a serious step. It is not something that people enter into lightly or are advised to enter into lightly. That said, as representatives of citizens advice bureaux in particular have emphasised, section 9 will provide to a large number of people an option that is presently denied to them. Those people are stuck. They are in limbo. They do not have access to debt relief. The bill will change that, and I am very pleased that that measure will be supported.
Section 10 involved some controversy. I thank all the stakeholders with whom I worked on the matter: those who supported the measure, such as CABx and Money Advice Scotland; and those who had reservations about it, such as the representatives of the Institute of Chartered Accountants in Scotland with whom we engaged thoroughly and consistently, and whom I met just last week to discuss how to take these matters forward. We will continue to engage with those organisations in that work. We have listened to stakeholders throughout the process, and we have responded to the views that committee members expressed. I was pleased and gratified that the Local Government and Communities Committee responded in kind by accepting at stage 2 that we had a case—a strong case, I believe—and almost all the committee's members supported section 10.
I am in no doubt that the Home Owner and Debtor Protection (Scotland) Bill will prevent unnecessary eviction, that it will provide new debt solutions for many families throughout Scotland and that, with the contributions that have been made in the Parliament, it will be a worthy addition to the statute book.
In the stage 1 debate, I was compared to Bob the Builder and was asked, "Can you fix it?" My response then was:
"Yes, we can and, yes, we will."—[Official Report, 17 December 2009; c 22400.]
Today I can say with confidence: yes we have. I urge members to support the bill.