Credit Schemes
The final item of business is a members' business debate on motion S2M-69, in the name of Sarah Boyack, on fair credit schemes. The debate will be concluded without a question being put.
Motion debated,
That the Parliament welcomes the recently published in-depth report into personal debt in the UK, In Too Deep, produced by the citizens advice bureau (CAB) service in Scotland, England, Wales and Northern Ireland; acknowledges the Scottish context of the report; notes with concern the report's findings that more people in Scotland blamed low incomes than elsewhere in the UK and more people coped with their debt problem by taking out further borrowing than elsewhere in the UK; further notes that personal debt is nearly always connected to other problems in people's lives such as loss of job or ill-health; notes that the number of debt cases brought to citizens advice bureaux in Scotland is at an all-time high with nearly 60,000 new debt enquiries last year; recognises the link between CAB clients and MSPs' constituents and therefore supports the invaluable work of Scotland's CAB service as a vital provider of free, independent, impartial and comprehensive advice and as the leading voice on the issue of personal debt in Scotland today; welcomes the commitments in A Partnership for a Better Scotland to support the extension of the money advice service, building on the work of the CAB and other bodies to assist those burdened by multiple debt, and considers that the Scottish Executive should increase access to affordable credit for people on very low incomes and, as a matter of urgency, take action on the commitment from A Partnership for a Better Scotland to work with the Department of Trade and Industry to introduce fairer credit schemes and protection from exorbitant interest rates.
I thank the members who supported the motion and I am grateful that so many have stayed to hear the debate. I also thank Citizens Advice Scotland for the work that it has done on raising our awareness of the problem in its report entitled "In too deep: CAB clients' experience of debt". Debt continues to be one of the most significant problems about which people throughout Scotland contact citizens advice bureaux and other debt management agencies. The cross-party support for the motion shows the strength of feeling and the urgent need to address the root causes and management of debt throughout Scotland.
I also congratulate the Daily Record on its excellent campaign to expose loan sharks. My colleague Trish Godman wants to talk about the need for tough action to stamp out the misery that is caused by loan sharks.
The CAS report—"In too deep"—is well named. It reports that bureaux throughout Scotland have been dealing with an alarming 47 per cent increase in the number of new debt inquiries. The report outlines how debt is often associated with changes in circumstances, such as the loss of a job, ill health or the break-up of a relationship. It also shows that it is still far too easy for people in Scotland to get credit—especially credit that is offered at high or extortionate rates. Recent figures show that Scotland's CABx are dealing with more and more inquiries about debt.
The average debt among clients who went to CABx was more than £8,000. That is the average. Nearly two thirds of debt-related inquiries are about consumer-related debt issues to do with mail order, hire purchase, credit sales and loans.
What causes debt in Scotland? The CAS report is clear that the root cause is poverty that is brought on by low income. A vast number of people throughout Scotland do not have bank accounts or access to what might be described as mainstream credit. I do not know whether members know this, but anyone who rents property long term will find that they instantly pay more interest—simply because they are not a home owner. That is discrimination and it is not fair and the issue has to be tackled.
In my constituency, the Gorgie/Dalry CAB answers hundreds of inquiries on debt issues. In the past year, more than 46 per cent of all debt inquires related to consumer debt to do with catalogues, hire purchase and people getting over their limits with credit cards. Interest rates associated with those types of borrowing are much higher than for other mainstream sources of credit.
A terrible cost is hidden behind the statistics on easy credit and the spiralling of people's debts. I want to give members just a couple of examples from my constituency. The first concerns a 22-year-old man who was working part time on a low wage. He applied for and got a credit card with a £250 limit. He spent up to the limit and then, for a variety of reasons, found that he could not meet the minimum monthly repayments. After six months of that, his debt is now more than £1,000 and is totally unsustainable—he cannot pay it off. He is now being penalised for being over his credit limit and the additional interest is exacerbating the problem.
The other example is of a 30-year-old woman who works full time but is also on a low wage. She bought a computer for £900 and took additional breakdown cover costing £325, which was paid for with a deal that offered interest-free credit over the first year. She made repayments of £44 a month during that first year but found that, after a year, there was still more than £630 to pay. Unable to pay the outstanding amount, she continues with the credit agreement but the interest rate has shot up from 0 per cent to 29.5 per cent. At the end of the four-year agreement, she will have paid nearly £2,100 for a £900 computer.
When we think about it, a range of questions arises from that case. I am sure that members will have read about issues to do with the massive cost of additional breakdown cover. There is a need to be absolutely clear to individual consumers about the real cost of such deals and about what happens after the interest-free period. There is also a basic issue about how well equipped people are to deal with enticing offers that can trap them into long-term and escalating financial commitments. I have not even begun to explore what stress and pressure can do to people when they have those kinds of debts to deal with. We have to look at how we tackle the root causes of debt and at how people can be helped to get out of the traps that they might fall into.
Some issues need to be addressed by the Scottish Parliament and the Executive, some issues need to be addressed by the United Kingdom Government, and trading standards issues could be dealt with by local authorities. There is also a role for the media in making people much more aware of the pitfalls of debt.
When I read the commitments in the coalition's "A Partnership for a Better Scotland", I saw a lot of very good ideas. There are measures such as an extension of the money advice service, which will build on the work of local authorities, the citizens advice bureaux network and other voluntary sector bodies, to help those who are burdened by multiple debt. In Edinburgh, we are already seeing the benefits of new money advice staff who are in place to help people. We must support credit unions and community banking arrangements to ensure that people have affordable alternatives to mainstream banking.
In my area, I am aware of two particular projects, the first of which involves the Canmore Housing Association and the Gorgie/Dalry Credit Union Ltd, and gives people access to low-cost loans. Another is the prospect plus scheme in Wester Hailes, which is run by the Bank of Scotland with the local housing association. Such practical projects will give people real opportunities. They break ground because they offer access to affordable credit at manageable levels. In the Wester Hailes project, a traditional bank works with a local housing association; there must be more projects of that kind and the big banks must tackle such issues more seriously.
I am also in favour of local enterprise and trading schemes. It is vital that the Executive continues to work with the Department of Trade and Industry to tackle harassment by loan sharks and to introduce fairer credit schemes and new protection from exorbitant interest rates. I ask the minister to set out a time scale on the implementation of the partnership agreement.
Citizens Advice Scotland has raised with me the issue of debt tribunals, which would allow people to challenge extortionate debt agreements. The difference between debt tribunals and a normal court setting is that debt tribunals would be chaired by someone who has expertise in money or debt advice issues, they would be public and they would be free to the debtor. As a result, they would be much more accessible, in line with existing tribunals for benefit and employment matters. According to CAS, the fact that debt tribunals would be public—and therefore different from the DTI-proposed arbitration process, which would be private—means that they would set precedents in helping people to challenge unfair credit agreements. The process would be much more transparent and accessible. I ask the minister to focus on debt tribunals in the future.
I pay tribute to the work of many people in my constituency, in particular Barbara Swan of Gorgie/Dalry CAB and the 45 trained volunteers who do a huge amount to try to alleviate my constituents' debt problems.
We must tackle the root causes of debt. Our wider anti-poverty work on creating jobs with decent wages and on delivering tax credits must be part of the solution, but we should also focus on policies to promote responsible lending by the banks and lenders. There should be much more sensible limits and the costs should be explained to potential borrowers in an up-front and effective way.
People on low incomes need protection and we must help them. Spiralling debt and fair credit are important issues for hundreds of thousands of people throughout Scotland; those issues should be dealt with urgently by the Scottish Executive and the UK Government. Let us ensure that tonight's debate pushes the issue up our political agenda.
Let us have speeches of three minutes, so that we can get everyone in.
I thank Sarah Boyack for securing such an important debate. Many of us, whether we are constituency or list MSPs, feel that debt is one of the most important issues.
I would like to praise the work of citizens advice bureaux, which provide such a marvellous service. In particular, I want to pay tribute to the trained volunteers whom Sarah Boyack mentioned, who give their time to help others through their work with the CABx.
During the election campaign, I was fortunate enough to visit East Renfrewshire citizens advice bureau in Barrhead, where and I spent a lot of time talking to volunteers and members of staff. I want to support the motion and to highlight some issues from East Renfrewshire, where I live.
In the past year, East Renfrewshire CAB dealt with 6,802 cases, of which 27 per cent—1,836—were debt related. That might seem to be an astonishing work load for an area that is perceived to be one of the most affluent areas in Scotland, but the reality is often very different from the perception. That is certainly true in this case. Although 19 per cent of those who approached East Renfrewshire CAB were unemployed, 21 per cent were fully employed, 12 per cent were partly employed and 3.5 per cent were self-employed. Debt does not affect only those who find themselves out of work.
Although 21 per cent of East Renfrewshire CAB's clients were local authority tenants and 12 per cent were housing association tenants, 30 per cent were home owners. Those figures make it clear that debt problems affect all sectors of society—although I accept Sarah Boyack's point that the deep relationship between debt and ingrained poverty is the main problem.
The East Renfrewshire CAB money advice service provides services such as debt counselling, income maximisation, negotiation with creditors and representation for members of the public. On the face of it, it seems that East Renfrewshire CAB fits exactly into the Executive's thinking as given in the partnership agreement and as reiterated by the motion's commitment
"to support the extension of the money advice service".
Unfortunately, however, there has been a bit of a problem in East Renfrewshire in the past few years. The Executive assigned East Renfrewshire Council £40,000 so that it could develop money advice. The CAB applied for half of that money but got nothing. Instead, the £40,000 went to a council department, which used the money to employ a money adviser and an administrative worker, leaving the CAB to struggle on with the four voluntary workers that it had on its books. It is outrageous that the council kept that money and did not give some of it to the CAB so that it could use its expertise to give people independent advice and representation. People have debts for many different reasons including the poll tax, council tax and rent arrears, and some people are threatened with eviction. The pursuer of all such debts is the council, so it is not appropriate that the council should directly employ the staff who go on to represent people who are in conflict with the council. We need independent advice that is given through CABx.
There is another problem in that under section 187 of the Social Security Administration Act 1992, certain benefits are inalienable, although banks often freeze accounts that contain tax credits. The CAB must then have those bank accounts unfrozen. Therefore, if the Department for Work and Pensions pursues the initiative to pay more benefits into bank accounts, that might become more of a problem. I ask the minister and the Executive to be aware of that problem and to try to tackle it through getting all interested parties together to sort out the problem so that, in future, people do not experience frozen bank accounts.
I congratulate Sarah Boyack on raising the issue.
In a past life, I worked as a volunteer for a citizens advice bureau; very few people who have debt problems appreciate the service that citizens advice bureaux offer. When people came along with lists of their debts, I was surprised to find that, when I phoned the council or loans agencies, they were agreeable to freezing interest, which made debt repayment more manageable and got rid of people's feeling that their situation was out of control. We must do more to publicise those services.
Stewart Maxwell talked about the point in the motion that personal debt is nearly always connected to problems such as loss of a job or ill health. I agree that there is also an enormous amount of hidden debt and stress throughout the public and private sectors—a person does not have to lose his or her job to get into debt. The figure that Stewart Maxwell quoted of 30 per cent of East Renfrewshire CAB clients' being home owners was probably close to the truth and should be considered.
Stewart Maxwell also spoke of the utility debt that is mentioned in the CAB report. Although people who attended CABx said that utility debt had increased by 1 per cent, we should consider water charges; there are no benefits or repayments on water charges. A paper from the Forum of Private Business shows that some businesses face increases of 427 per cent, 626 per cent, 600 per cent and 483 per cent in their water charges. We must consider that small businesses simply cannot pay higher wages when their business costs are so high—significantly higher than is the case in other parts of the United Kingdom.
As Sarah Boyack said, we are not just talking about money. We have to note that
"a quarter of CAB debt clients were already seeking treatment for stress, depression and anxiety from their GP. Just under half of those who were receiving medical treatment for depression felt that their symptoms had been caused by their debt problems."
That causes further financial problems within the national health service.
I agree with the third recommendation in the CAB's summary, which states:
"The codes of practice for banks and other credit lenders should include commitments to assess the borrower's ability to repay before lending."
I realise that I am running out of time.
You are.
I hope that citizens advice bureaux throughout Scotland will keep a supply of information about where credit unions exist and that they will encourage their clients to join those unions. To get a credit union loan, a person has to save for 13 weeks and prove that they can save before they can borrow.
Finally, the third recommendation in the leaflet also states that banks need to act responsibly to gauge ability to repay a loan before it is granted. A friend of mine is a bank manager, but his bonuses are based on how much money is loaned, rather than on the ability to repay the loans.
First, I congratulate Sarah Boyack on her motion, on securing the debate and on her excellent speech. In her motion and her speech, Sarah Boyack rightly paid tribute to the workers at citizens advice bureaux for their excellent work in helping people to deal with what are often crippling debts. Such debts can wreck the lives of individuals and their families.
Many people on low incomes are beguiled into taking on huge debts by crafty smooth-talking agents who come knocking on their doors. However, poor people are denied reasonable borrowing facilities and rates, often because of where they live, and sometimes slip into the clutches of loan sharks. That is easy to understand because it is ready money, and the people usually know who it is that will lend them the money—the woman in the next close or the man in the next street. No questions are asked and they are handed ready cash. I think of a constituent of mine who came to me recently with a debt that she is paying back at £60 a week—£10 to the original debt and £50 to the loan shark.
Loan sharks are extremely difficult to dislodge from communities of low-income families, for all the reasons that I have mentioned and because they are hard to pin down. From fairly recent discussions that I have had with senior banking officials, police officers, local councillors and council officials, it is clear that we do not have the resources or the law to expel those predators and stop their activities. They flourish among the poor and it is difficult to flush them out. Trading standards officers often know who the loan sharks are, but they cannot get people to stand up and name them, because it is from them that they get their money. The Debt Arrangement and Attachment (Scotland) Act 2002, which we passed last year, addressed debt management schemes, which was good and fine, and I was very pleased that we passed it, but it did not address the problem of loan sharks.
The community-based credit union movement must be given every practical encouragement by the Scottish Executive, by Westminster and by local authorities to expand its activities sustainably. That requires imaginative thinking and decisions to be made in Edinburgh and London. All of us with credit unions in our constituencies know that they are the people's banks—they are community banks. The hard-working members of credit unions should be working in our high streets everywhere, as we see their counterparts doing in, for example, Australia and the Irish Republic.
The staff of local citizens advice bureaux do a great job in helping people to sort out their lives. Those clients are often in the most appalling circumstances, and citizens advice bureaux help them comprehensively and realistically. Credit unions, appropriately supported by Government in Edinburgh and London and by local councils, can bring to people on low incomes dignity and self-respect through provision of banking services in the community. People who offer low-income families credit at disgracefully high interest rates—from the commercial companies at one end of the spectrum to the loan sharks at the other—cannot compete with a well-run credit union that has a substantial number of customers in the local community. We should be backing citizens advice bureaux and credit unions in their endeavours to bring respect and peace of mind to people on low incomes.
It is excellent that Sarah Boyack has secured this debate today. We had several debates on this subject in the previous Parliament and we must keep the pressure up, because debt is one of the major problems of our society. In fact, the annual report of Citizens Advice Scotland shows that consumer debt is the greatest single issue that is brought before citizens advice bureaux. The excellent report that we are debating today—"In too deep"—illustrates clearly what we know from our experience of trying to help other people, which is the effect that debt has on the other parts of a person's life. It is often totally destructive of families, relationships, health and so on.
We look forward to the Executive producing a bill on the subject. I hope that the minister will take account of some of the excellent points that have been made in the report.
Members have mentioned credit unions. The report suggests a good idea that I have advocated previously, which is that the banks should work more closely with the credit unions. The banks have the money, but not the know-how—they do not know who is a chancer and who is not.
The credit unions know the local scene and have really good people, but they do not have enough money to lend. If the banks and the credit unions were put together, the banks could give bulk sums to the credit unions, who could lend the money on to people. In that way, the banks would get their money back much more reliably and the community would be helped in the process.
We need more funding for debt advice. Although the money that the Executive has given for that service in the past is welcome, some councils snaffled far too much of the funding—other members have mentioned that. In future, the Executive must make it clear that independent advice must be made available. The CABx offer really good value for money and they should be supported.
If the CABx had more money, they could advertise locally a bit more, which could lead to more people coming into their offices earlier in their debt career, so to speak. People's problems could be sorted out more quickly and the whole thing would not be such a disaster.
In addition to sorting out the loan sharks, we have to sort out the banks, as they are really bad at lending to people who are seriously in debt. We debated that issue at some length in the previous session of the Parliament.
I appeal to the minister to pursue a joint effort to tackle debt between the Scottish Executive and the Westminster Government and the Scottish Parliament and the UK Parliament—I am thinking in particular of the Scottish MPs. Some issues are in the court of the UK Parliament whereas others are in ours. Together we could try to crack this business, which is a real cancer on our society.
I congratulate Sarah Boyack on securing the debate and on her excellent motion.
Much has been said about the misery caused by constant debt. The negative effect on the health and well-being of families is also well understood. What is not recognised—much less costed—is the dependence on the health service caused by the effect of constant debt, because of the need for anti-depressant drugs. It is daunting that anyone can cope with interest rates of 200 per cent.
Action must be taken to give substance to the pledge that was made in "A Partnership for a Better Scotland" to work with the Department of Trade and Industry, tackle harassment by loan sharks and introduce fairer credit schemes and new protection from exorbitant interest rates.
In promoting better management of personal money, we must provide much safer alternatives. As other members have said, part of the solution must surely be to make greater use of credit unions, which were much vaunted in the previous session of the Parliament. Indeed, a motion on credit union development was the first motion to receive all-party support in the Scottish Parliament.
Since July of last year, the credit unions have come under the direct regulation of the Financial Services Authority. That situation has caused serious problems for many of the credit unions, with some considering giving up and others, which were trying to start up, having to give up through the sheer bureaucracy that is necessitated by FSA regulation.
There is a need for better understanding of the nature of credit unions. That understanding must include how they are managed by their members, most of whom are volunteers. If we really want to address the serious issue of debt in this country, the least that we must do is protect the organisations that provide a helping hand to those who want to manage their money carefully.
I look to the Executive to investigate those problems. It should also encourage the FSA to streamline procedures while, at the same time, protecting the credit unions and their members from fraud. We also need to provide much greater education in schools on the many life skills that young people require, such as managing money, and how to say no to the enticement of endless in-store credit cards. Such education could include the wider issue of what really matters in life. There are some things that money cannot buy.
I, too, congratulate Sarah Boyack on securing the debate. As Donald Gorrie said, we had a number of debates on debt in the previous session and we hope that we will get some action in this session.
I will concentrate my remarks on one specific area. In the previous session, I proposed a bank arrestment bill. I will explain the background to that proposal and then ask the minister to answer a few questions in her closing speech.
When someone's wages are arrested, a certain amount of money—about £70—is left in the person's wage packet to allow them to live while the outstanding debt is resolved. Wages tend to be paid weekly or monthly, so the requisite amount is left. However, when someone's bank account is arrested, no money is left in the account. The result is that the person whose bank account has been arrested has nothing to live on until the issue is resolved, very often weeks later.
That problem has become much more acute in recent years because, for example, many more pensioners now get their pension paid into a bank account rather than collecting it in cash at the post office. Similarly, many other benefit claimants get their benefits paid into a bank account. So, if their bank account is arrested and no money is left, they are left destitute. That has the knock-on effect that such people sometimes have to go to unscrupulous money lenders to borrow money to see them by until they can get the issue resolved and the arrestment lifted.
In preparing my proposal for a bank arrestment bill, I worked with the legal sub-committee of the Committee of Scottish Clearing Bankers. The banks are very much behind such a measure, because they think that it would help not only them, but, more important, those whose bank accounts are subject to arrestment.
I ask the minister to tell us whether she will take the measure forward. Because the legal experts in the Parliament—as opposed to the Executive—question whether such a bill would fall within the jurisdiction of our powers under the Scotland Act 1998, I ask the minister whether it is her interpretation that the Parliament could pass such a bill. I also offer her all the assistance that I possibly can by way of my research and contacts in the clearing banks. If the Executive was willing to take over the proposal for a bank arrestment bill, nobody would be more delighted than me.
I, too, congratulate my colleague Sarah Boyack on securing the debate. As a member of the Social Justice Committee in the previous session, I listened to some quite harrowing evidence from those who had fallen into debt. The distress, misery and fear that living with debt can cause was clearly conveyed by those who gave evidence to the committee.
In my constituency, Airdrie CAB reports that it dealt last year with more than 2,000 debt cases, the vast majority of which were consumer debt. It had 534 clients with complex or multiple debts. The average debt was £8,000 and, frighteningly, the total debt dealt with amounted to almost £4 million.
Of course, debt can affect those with a relatively high income as well as the poorest in our society. However, the Citizens Advice report "In too deep" made it clear that the largest number of CAB debt clients are among the poorest in our society. I will focus on that group.
It is a simple fact that the poorer someone is, the more they will pay for credit. The cheapest forms of credit available—including short-term, interest-free periods and low-interest-rate credit facilities—are more often than not available only to those who earn above a certain threshold. Those on income support who need or want access to credit are often left with a choice between the local loan shark or the door-to-door lender, as we have heard. Those people will be charged interest rates that are many times higher than those available to the better-off. As a result, the poorest members of our society are more likely to fall into the black hole of debt.
It is vital that those people are given every possible means of support. Positive options are available. After my election in 1999, one of the first motions that I lodged in the Scottish Parliament was on the subject of credit unions. Credit unions are managed—and, in many cases, run—by members for members. They encourage regular saving and prudent borrowing, and members must continue to save while they pay back their loans. In short, credit unions encourage reasonable and sustainable borrowing, which is in direct contrast to the approach that is taken by many of our high-street lenders.
Where debt problems have occurred, people must be given effective support as soon as possible. In that context, I want to praise the work of Airdrie CAB and North Lanarkshire Council. Workers in Airdrie CAB and the council's money advice section provide a high level of support and advice for those who have debt problems. Importantly, they can act as a barrier between the debtor and the creditor, help to alleviate stress and provide information and guidance to both parties. Both agencies participate in north Lanarkshire information and advice forum along with social services welfare rights and independent advice centres. That is a good example of partnership working between statutory and voluntary organisations, the aim of which is to deliver the best possible service to the client.
I am pleased that Sarah Boyack has been able to secure a debate on this issue so early in the new session. Debt continues to be a crippling problem for far too many Scots. Local government and agencies such as the CAB are playing their part in trying to alleviate and deal with the problem. It is now time for lenders to act more responsibly and play their part in reducing debt levels as well.
Like other speakers, I congratulate Sarah Boyack on securing this members' business debate. As a new MSP, I can testify that a great number of calls that I make in the first instance refer constituents' anxieties and questions to local CABx in the Lothians. I have used the services of citizens advice bureaux in the past and believe that they are a credit to the communities that they serve.
The report "In too deep", which has been produced by the CAB service, concludes that the average monthly income of its clients in Scotland is less than half that for the population of Britain as a whole. Moreover, an enormously high proportion of its clients receive means-tested benefits and tax credits and are tenants of social landlords. As a result, they are less likely to be able to access mainstream credit. The report also highlights that the council tax forms the biggest single most commonly reported priority debt that the clients face. I hope that, in light of that fact, the minister will recognise the need to consider replacing the council tax with something that is much more closely related to people's income and ability to pay.
Like other members, I congratulate the credit unions on supporting people who are unable to access high-street credit. However, I note in passing yesterday's report that the Royal Bank of Scotland is now the world's richest bank. It might not be in the best interests of commercial high-street banks and building societies to allow the extension of credit unions to eat into their customer base. Indeed, there might well be a conflict between their interests and the interests of the communities that the credit unions serve. Nonetheless, I hope that the Executive will take on board the need to advertise and make clear the facilities and provisions that the credit union movement in Scotland can offer. After all, credit unions play a valuable role and need all our support.
In the partnership document that was put before Parliament two weeks ago, the Executive said that it intended to extend
"the money advice service … to help those burdened by multiple debt".
I sincerely hope that that statement represents a significant intention to give a helping hand to those who need it the most and is not simply tokenism. We will have to wait and see.
Finally, in the "In too deep" report, the CAB service states that many Government initiatives that have been introduced thus far might lack the teeth to be applied thoroughly, because they depend on lenders' and creditors' codes of practice.
I hope that the Executive will continue to support citizens advice bureaux throughout the country and provide greater resources for them. One of the principal priorities should be to advertise more widely the work of the citizens advice bureaux and the credit unions.
I join colleagues in congratulating Sarah Boyack on lodging the motion for debate and on making an excellent speech.
As we come to the end of the debate, I will endeavour not to repeat what has already been said. However, I put on record my agreement with and endorsement of three particular areas that have been covered by other members. One is the recognition of the importance of the work of credit unions. It is important for us to recognise that many local credit unions have developed a wider role beyond their initial role to encourage people to save and provide. In my area, Craigmillar Credit Union has done excellent joint work that has brought together in creative ways initiatives that cover healthy eating alongside savings and early literacy projects. There is potential to build further on those initiatives.
The second point is that I endorse what others have said about our dependence as MSPs on CABx. I do not keep a record of the number of referrals that I make, but the number is significant. All MSPs are in a similar position in that respect. Therefore, we have a particular interest in working closely with Citizens Advice Scotland nationally and locally to discover how we can provide effective local support together.
That takes me to my third point, which is to note briefly matters concerning the funding of CABx. Portobello and Musselburgh CABx in my constituency perennially address the question whether funding will be continued year on year. Invariably it is, I am pleased to say, but more could still be done to create more sustainable and secure arrangements for the CABx network.
The report "In too deep" addresses my main point tonight—other members have touched on it—which is about how we effectively bridge the constitutional divide to advance work in this area. I commend in particular some of the work and comments of Kaliani Lyle, the chief executive of Citizens Advice Scotland.
In the first session of Parliament, we were feeling our way about how we managed some of the relationships between devolved and reserved matters. It was all too easy to say simply, "Consumer debt is a reserved matter." The Consumer Credit Act 1974 might well be a reserved matter, but consumer debt most certainly is not. In the new session of Parliament, one of the big challenges that we face is to consider how we can develop mechanisms—they will be different for different issues—to help Scotland and the UK work together effectively within the devolved framework to address issues precisely such as debt. If we were to address the debt issue in the way that Citizens Advice Scotland suggests, it would be a meaningful way in which we could step up our efforts to cross that constitutional divide. I am interested to hear what the minister has to say about that.
I join in the universal congratulations to Sarah Boyack on introducing this crucial topic today. I also acknowledge the work that is done by the citizens advice bureaux, the credit union movement and their enthusiastic and well-informed volunteers.
We must increase access to affordable credit for people on low incomes. I take this opportunity to draw the minister's attention to an excellent programme that is being run by community finance solutions at the University of Salford. The programme is creating a network of community-based industrial and provident societies that complement the work of credit unions by raising substantial funds from mainstream banks, registered social landlords, the public sector and local people who want to make an investment in their community. Those funds are used to provide affordable, easy-access loans for personal consumption and business start-ups. They focus on people who are living in social housing, who typically have very low levels of income, few savings and no assets that can be used to secure bank loans.
The programme has so far helped to establish societies in Salford, London, Sandwell, Portsmouth, Blackburn and Blackpool, and in rural areas such as Cumbria a range of community asset reinvestment trust services is being developed. The Cumbrian community asset reinvestment trust will be a locally owned financial institution that will aim to widen access to affordable credit and to provide land and buildings to support economic renewal and community enterprises such as secondary co-operatives and incubator business units for people with little business experience or financial security and for small voluntary organisations. That trust was formed as part of the foot-and-mouth disease recovery plan, with backing from the UK Treasury. The model would appear to suit run-down economies and rural economies in the south of Scotland and elsewhere, and I ask the minister to increase the choice of affordable credit options to those on low incomes and to consider supporting such a scheme in the Borders or Dumfries and Galloway.
I add my congratulations to Sarah Boyack on securing this evening's debate on such an important issue. I also commend all those who have taken part in the debate for their speeches. Many of us have learnt much from the work that is clearly going on around the country to support people with debt problems.
Dealing with debt is just one strand in the Executive's work to tackle social inequality. In the partnership agreement, we have committed ourselves to improving further the opportunities and living conditions that are offered to the people of Scotland and to ending child poverty. That theme pervades all areas of Government work, including health, education, employment and housing. Sarah Boyack asked how much prominence would be given to the issue and when we could expect work to begin. I reassure members that work is on-going, and we hope to see some action fairly soon.
I want to concentrate on a number of ways in which the Executive is already seeking to address the matter. The Scottish Executive welcomes the "In too deep" report that was produced by Citizens Advice Scotland. We think that it is right and appropriate that Scotland's debt problems are highlighted by one of the agencies that are there to offer support and advice to those with debt and other financial problems. We recognise the place that Citizens Advice Scotland, Money Advice Scotland and all bodies that act to tackle people's debt problems have in focusing attention on the issue of unmanageable debt. We acknowledge the invaluable work that they do to help people break their cycle of debt and borrowing and to move forward to better money management, and we welcome the opportunity to debate the issue today.
It is when people find themselves trapped in a cycle of debt and borrowing that the most vulnerable can be taken advantage of by irresponsible and sometimes illegal moneylending, and we have heard some examples of that this evening. As has been said, it is a consumer protection issue and, as such, a reserved matter. However, as many members are aware, the UK Government is currently undertaking a thorough review of the Consumer Credit Act 1974. I assure members—particularly Susan Deacon, who raised the point—that the Executive is in close communication with the DTI on its work, including tackling loan sharks, and is ensuring that Scottish aspects of the issue are carefully considered.
On the distinction between reserved matters and devolved matters, are bank arrestments a reserved matter or a devolved matter?
I was going to go on to answer the points that Alex Neil made. As he has intervened at this stage, however, I should say that, if he had an assessment during the previous session that bank arrestments were reserved, I cannot tell him at this stage that they are not.
On the clear point that Alex Neil has made about bank account arrestments, he will be aware that the First Minister said, in a statement on the legislative programme:
"in this parliamentary year we will consult on and bring forward proposals for reform to the law on the enforcement of civil obligations in Scotland".
I understand that we will consider what powers we may have to address some issues that the member has raised. Given that Alex Neil has been so co-operative, I hope that he will be pleased that my response is equally co-operative and that we hope to make progress.
I am always glad to hear that.
I know that that is true.
I want to return to what we can do in Scotland, as opposed to discussing reserved issues. To prevent people from falling into a vicious cycle of debt, the Scottish Executive is committed to ensuring that all people—especially those on low incomes—have access to the financial products that most suit their needs. We are working hard with credit unions and the banking sector to empower individuals and to build their capacity to tackle their financial problems.
Credit unions have been mentioned many times. They do an excellent job in helping people to manage their household budgets, as they combine regular saving with responsible borrowing at affordable and regulated interest levels. Many credit unions also offer additional services, examples of which we have heard about in the debate. The Executive's support for credit unions is seen as a real strength of our approach to fighting financial exclusion and is actioned through a partnership with the credit union movement itself. In the partnership agreement, we have pledged to continue that support. However, we recognise that, as well as trying to prevent the circumstances from arising that drive people into debt, we must support those for whom debt is already a real problem.
I am a member of the Inverness Credit Union. Many members have said that credit unions need more help with marketing and advertising. I am sure that the minister knows that there is a Scottish Executive fund that can be applied to for money to help with such matters. The Inverness Credit Union was successful and circulated a free newspaper within the common bond area.
Given the Executive's commitment to credit unions, it is essential that we ensure that credit unions throughout the country are aware of the assistance that can be given to them to improve the services that they deliver and to improve recognition in their areas. We need to consider such matters.
When things go wrong and people find themselves with unmanageable debt, the Executive is committed to ensuring that they have access to free, impartial and confidential advice. We value the role that the money advice sector plays in providing such support and we want to ensure that the resources are available to meet the increasing demands that are placed on it. To do so, we have invested an additional £3 million a year from last year to increase the number of money advisers across the sector.
The benefits of our funding so far are even greater than we had originally hoped and have resulted in an extra 120 full-time-equivalent money advisers. However, we are not complacent. I say to Donald Gorrie that, although the money went through the local authorities, there has been an almost equal split between local authority advice and voluntary sector advice. We want to ensure that that will continue.
I am conscious of the time, so I will simply say that we recognise that there is much more to be done to tackle the problem of debt in Scotland. The partnership agreement confirms our commitment to extend our support for money advice and to ensure that there are fair credit schemes for everyone. We will send a clear message that we will not tolerate loan sharks and that we will work with the UK Government to put an end to extortionate credit—only then can we really tackle the cycle of debt in which people find themselves.
Meeting closed at 17:54.