Debt Advice and Awareness
We come now to members' business. I ask members who are leaving to do so quietly and quickly, so that we can proceed with an important debate on motion S1M-1569, in the name of Fiona Hyslop, on debt advice and debt awareness day. I invite members who want to take part in the debate to press their request-to-speak buttons now.
Motion debated,
That the Parliament notes with concern the alarmingly high levels of consumer debt in Lothian; notes that this is indicative of the situation across all of Scotland; recognises the invaluable work of Scotland's Citizens Advice Bureaux (CAB) in dealing with over 34,000 new cases of consumer debt in Scotland last year; gives backing to the CAB Services Debt Awareness Day on 14 February 2001 warning of the scale and danger of consumer debt; condemns the irresponsible marketing techniques that entice people to borrow beyond their means, especially those on low incomes, and calls upon the Scottish Executive to invest in independent advice agencies which are at the front-line in tackling debt and poverty issues in Scotland.
I have been asked why we are holding a debate on a topic as depressing as debt on St Valentine's day. Perhaps it is reflective of the dour thrawnness of Scots. However, as the manager of the citizens advice bureau in Livingston told me, debt and money worries have broken many a relationship. The work of advice agencies in helping people to deal with their debt issues can often save pressured relationships in the process. Indeed, I understand that one of the stories surrounding St Valentine—whether it is true I am not sure—is that he gave money to three sisters who, for some reason, were deemed too poor to get married: credit for love.
On a more serious note, I am pleased to have been given the opportunity to raise these issues in a members' business debate. Since lodging the motion, I, like other members, have been contacted by a number of organisations, who have expressed their approval that we are dealing with the subject directly.
I want to talk about the state of debt in the Lothians and in Scotland. Citizens Advice Scotland estimates that, in the Lothians alone, it deals with at least £10 million of personal consumer debt. The Advice Shop in Bathgate estimates that its clients have £3 million in different kinds of debt. The debt case load is increasing. Penicuik CAB tells me that it has dealt with 58 per cent more multiple debt cases. Since 1979, total unsecured consumer credit in the UK has increased elevenfold.
Debt is caused by several factors. Poverty is a prime cause, as is easy access to expensive credit and personal problems caused by relationship breakdown, pregnancy or death, which can make a bad debt situation spiral out of control. There is also a generation issue. Older people worry mercilessly about going into debt and will not eat or heat their homes so that they do not do so. The younger generation are armed to the hilt with store charge cards and, in some cases, build up £20,000 to £30,000 of unsecured consumer debt in their early 20s, while staying at home with their parents.
On poverty, one of the issues of concern is the operation of the social fund, which is meant to be a safety net for the poorest in our society, but operates to exclude the very poorest in our society who cannot afford to repay the loan and are therefore refused. When we judge ourselves on social justice, we should ask what this policy does for the poorest, most marginalised in our society.
We owe an enormous debt to Citizens Advice Scotland, which is organising this debt awareness day. It has 57 member citizens advice bureaux, which deliver the service through 130 service points. Last year, one in 11 Scots used their local CAB. Each CAB is an independent charity and must raise its own funding, most of which comes from local authorities. They have 1,800 volunteer advisers, which make up 90 per cent of the Scottish CAB service. We express our thanks for their service. It is interesting that 77 per cent of all Department of Social Security forms and packs refer clients to their local CAB for general advice—they are part and parcel of the public service.
I will mention several issues that are of concern. We must consider the impact that water charges will have on debt. Bill Scott, the director of Lothian Anti-Poverty Alliance, stated in yesterday's Edinburgh Evening News:
"The poor are finding it increasingly hard to pay and, worse, because water charges are combined with council tax bills, thousands of families faced with the stark choice of feeding the children or paying the bill then default on both. The increase in water charges, as well as ruining people's lives, is also ruining local authorities' ability to collect local taxes and thus pay for vital services . . . For many, large increases in water charges may be the straw that breaks the camel's back."
That is another reason why this debate on debt is pertinent.
I will also raise concern about irresponsible marketing techniques. In this day and age, money is sold aggressively and mercilessly: from flyers through the letterbox to adverts in the paper and satellite entertainment adverts. Although consumer credit is reserved to Westminster, if we are serious about tackling debt and poverty we must tackle the extortion that takes place, in the name of legitimate lending, by disreputable lenders.
As a nationalist, I would argue for those powers to be under the control of this Parliament. The main point is that whoever has those powers must take action. I hope that Margaret Curran, in her speech, will take the opportunity to report—as we do not often get the opportunity to hear about the outcomes of the joint ministerial committee on poverty—on debt issues and on the operation of the social fund, which I mentioned earlier.
Most debtors have multiple debts to several creditors. The City of Edinburgh Council's money advice team found that 71 per cent of people seeking help with mounting debt owed money to five creditors or more. Concerns have constantly been raised with me about the recent increase in debt management companies, some of which charge between 15 and 25 per cent interest in fees for taking on consolidated loans. If someone is on a good salary, it may make sense for them to have someone manage their debt, but if they are on a poverty income, that is an excessive charge. We must ensure that people know that free independent advice is available.
Let us turn to solutions. The bottom line is that we must tackle poverty by increasing the incomes of the poorest in our country. The powers to do that are not as yet available to this Parliament. We must work in whatever way we can and make representations to London that the consumer credit legislation must be addressed; lending at an interest rate of 400 per cent must not be acceptable. In addition, something is needed to fill the gap between ability to make payments and bankruptcy.
We must provide advice services when people need them. Many CABx are only open on certain days. I understand that the average number of hours that a CAB is open has reduced from 25 hours to 24 hours a week in the past year. Debt advice must be seen as part of the Government's broader social inclusion strategy. The answer lies in providing independent advice agencies with a stable and secure financial framework which would allow them to concentrate on providing their core services effectively and to continue the types of innovative schemes such as the Edinburgh in-court advice project that I hope will be expanded to other courts.
We must ensure that people are aware that they can access free independent money advice before they get locked into expensive loan consolidation deals. While welcoming the national debt line phone service, we should agree that it complements rather than replaces a face-to-face service. Face-to-face counselling is often required as it gives the individual personal support. I have received representations from advice workers that they could counsel 50 per cent of cases initially through telephone, but not the 70 per cent that it has been suggested that the national debt line would deal with. Perhaps the minister could address that issue in her response.
We must ensure that, wherever possible, there is common practice among creditors and that credit unions are encouraged, supported and developed to provide a community-based, low-cost access to credit to cut out the loan sharks and other legitimate but predatory lenders. Our message today must be to seek advice early—the value of early advice as a preventive measure should not be ignored.
Scotland is a place where we do not like speaking about money, whether it is about what we earn—unless it is a tabloid discussing MSPs' salaries—or what we owe in debt terms. Today, by having this debt debate, the Scottish Parliament is itself facing up to one of Scotland's most serious problems and identifying some solutions.
Thirteen members have indicated that they wish to speak in this debate. I have spoken to the minister and she is prepared to stay on until 5 minutes to 6. I will take a motion without notice to that effect.
Motion moved,
That the debate be extended by up to 30 minutes.—[Dr Winnie Ewing.]
Motion agreed to.
I congratulate Fiona Hyslop on securing this debate, which centres on an issue on which we all want to see some action. I commend to members the booklet "Debt on our Doorstep" that has been circulated today by the Scottish Churches Parliamentary Office. This very good report provides a lot of detail about the real difficulties that people face when they are caught in the spiral of debt and suggests some very positive ways forward.
I will spend a few minutes talking about the role of the credit union movement in this matter. I hold an ideological view that credit unions do not just provide a source of debt relief for poor people and a legitimate way of organising financial services; they have made all the difference for many people without high incomes as they survive and manage their debt.
At a community level, credit unions not only give people an opportunity to borrow money to pay off debts that have been set at a higher level, for example, but allow them to link into the notion of saving. That is vital, as it allows people on low incomes to manage their debt and save at the same time. "Debt on our Doorstep" includes the story of a woman who opted to use the credit union. Some of the £10 that she put into the union each week paid off her loan, while some of it was saved. She said:
"By the time Christmas came round again, I'd paid off the loan and had £125 set up".
The £15 she made each week through using the credit union instead of loan sharks or other companies made a huge difference and allowed her to use the £125 she saved to do something positive for her family.
However, it is not just loan sharks who rip people off as far as debt is concerned. Anyone on a low income finds it difficult to get access even to more respected financial institutions. People with a reasonable salary can go on to the internet and change their credit card to a company that will give 0 per cent interest for six months. However, anyone without an MSP's salary or a credit reference should try getting that.
We must also address the issue of fuel poverty. Why should people on perfectly reasonable salaries who can afford to pay by direct debit and monthly instalments be able to access greater savings on their electricity and gas when people on low incomes have no option but to pay weekly? As a wee experiment, I went on to the internet and found that, according to the utility companies, I could save £103 a year if I transferred from one company to another.
To somebody on a low income, £2 a week would make all the difference. However, that option is not open to them unless they have some money to pay up front. There are many issues that we could address as social inclusion issues, and I am sure that the minister will suggest some ways forward and tell us what has been done to date on this subject.
I finish by reminding members that this issue affects all our constituents, although it is often hidden because people fear being singled out. We should therefore support all efforts to access advice and information, whether over the telephone or through contacting citizens advice bureaux or other organisations.
I pay tribute to the hundreds—probably thousands—of people throughout Scotland who have acted as volunteers in the citizens advice service and other informal or formal agencies that assist people who are in debt. It is of great credit to Fiona Hyslop that she has secured this debate on a serious subject that affects many of our constituents.
Members have touched on several issues already. Some other matters relate to reserved powers. We cannot proceed further without mentioning the benefits system and the advice and support that people need when they are claiming benefits. Before I was a member of the Parliament, I did not understand the complexity or difficulty that many people face when they are trying to claim benefits or get direct benefit advice. Some members might think that someone has only to go down to the benefits office and ask whether they are entitled to disability living allowance to be given that information. However, the system does not work like that. The person must fill in and send away numerous forms, and the process may take two months. They might have to phone or otherwise contact their MSP or MP. It is an involved process, and we need to do something about it.
The UK Government ran a campaign of adverts in which Thora Hird appeared in a cafe, telling people about the various benefits to which they could be entitled. However, there is much evidence to show that that campaign was not significantly successful. We need to think again on the matter. Elderly women constitute one of the biggest groups in our society who do not take up benefits. Especially in rural communities, it has not traditionally been the women's role to deal with the household finances, and when they are left on their own they think that claiming benefits is wrong and have difficulty with it. We must tackle that.
We must also consider issues such as funeral expenses, which Fiona Hyslop mentioned. In Carlisle recently, at a seminar on funerals, people were asked to consider the issues of saying to their families that they did not want £5,000 funerals that would place their families in debt for the rest of their lives, and planning what sort of funerals they wanted so that their families would not have to go through the process of making difficult financial decisions when they were most vulnerable. Such initiatives encourage people to think ahead about such matters.
We should provide support where it is needed—for example, in a hospital environment. I recently met people who had suffered mental health difficulties, who found that accessing advice and support in the hospital environment could be quite difficult. We must take help and support to people where they are, encourage them to be open about being in debt and prepare them to confront difficult issues such as funerals. There is much that we can do, and I hope that this debate will contribute to that.
I warmly congratulate Fiona Hyslop on securing this debate and offer my firm support to the CAB service's debt awareness day. I extend my thanks to all those who work in the CAB service—both professionals and volunteers—in my constituency, especially Maureen Bennett and her colleagues at the Roxburgh CAB and her other colleagues at the eastern Borders CAB.
Roxburgh CAB has told me that debt is endemic throughout Scotland. Indeed, during last year, it dealt with 2,340 consumer debt cases, which made up 32.5 per cent of all inquiries. The definition of consumer debt did not even include housing and tax debts. In other words, virtually half the work of that bureau alone related to debt. Roxburgh CAB considers debt to be "a major social problem" in my area.
What is the way forward? Members have mentioned some of it: there is to be a change in the attitude of lenders and a change in the attitude of creditors, whose first response, far too often, is to tell people to pay up in full rather than to offer payment plans.
It is also perfectly clear that an obligation to assist people to maximise their benefits must be placed on the DSS. There is currently no such obligation. Claimants turn up with their claims, make their claims and are not told whether they could claim more, even if they could. It is important that that attitude is changed at source. Changing it may require Westminster to act—I am not sure—but it is essential that something is done about that situation.
We should also facilitate direct deductions from benefit to pay for specific types of bills, if the individual so wishes. The DSS 519 fuel direct scheme was particularly successful in coping with fuel debt problems, but it operated only if the consumer was happy to accept the facility that was offered.
A number of sea changes are required and it is important that this debate has highlighted them.
We have opportunities to enhance payment facilities. The Post Office tells me that more than 90 per cent of the Scottish population lives within 1 mile of a post office. I have not been able to verify that, but I am sure that it is true. If it is, the Post Office must offer major opportunities for making payment facilities available. There is a connection between coping with levels of debt and repayments and boosting the income of a number of rural sub-post offices. That will need some investment by central Government.
The Executive must consider the scheme that is being proposed by Scottish Borders Council for assisting with escalating water bills and which involves developing a rebate scheme linking the charge to housing benefit. I will write to the minister about that soon.
It is high time that targeted investment was made in the CABx and in Money Advice Scotland and other advice agencies. I do not mean that staff or big grants should be provided, but some equipment, software and training would make a considerable difference to a number of the local bureaux.
I do not think that the complexity of the work that is carried out by citizens advice bureaux in relation to clients who have debt problems is widely appreciated. The problems are not easy to resolve and it is often difficult to get at the facts accurately. I join other members, notably Fiona Hyslop, who initiated today's debate, in paying tribute to all the CABx and credit unions. I am sure that all members would want to encourage credit unions and promote their activities as the most effective, the cheapest and perhaps the friendliest way of obtaining credit, especially for those who have least resources. In my constituency there are credit unions that do an excellent job.
I spent about a decade as a solicitor specialising in insolvency law, acting purely for the debtor. Typically, I would be consulted a week or so before someone was due to be evicted. Usually, I was contacted by a female—I notice that all the Labour MSPs here tonight, bar one, are females—who had been left to take on the responsibility of trying to resolve the financial difficulties that were once perhaps the responsibility of a male in the family.
The circumstances of many of the people who came to my office were absolutely dire. The misery that debt causes is, I know, appreciated by all those who are involved in trying to help people with their plights. It is quite moving for them to have someone in their office who is breaking down in front of them, and whose life has been ruined by debt.
It is up to us to find practical ways to resolve such situations, and I will make some suggestions. Bankruptcy legislation must be reformed and liberalised. The stigma of bankruptcy, although justified when it comes to rogues, is not justified in most cases. The stipulated three-year period must be shortened, and the termination of warrant sales should come now, not in two years' time. I am aware that 500 or 600 warrant sales will go ahead because of the unfortunate decision that was taken on the timing of the provisions of the Abolition of Poindings and Warrant Sales (Scotland) Act 2001.
The main problem is the attitude to enforcement procedures of those who are responsible for the credit policy of banks and building societies. The loss of local bank managers, at least in my experience, has brought with it the loss of flexibility and understanding. In some cases, the ability to reach a sensible decision has also been lost.
It is not in our remit to tell banks or building societies what to do, but, during my 10 years of experience, I often had to complain to an almost unbelievable extent. As members can perhaps imagine, I do not find the activity of complaining a difficult experience. However, those complaints often had to be made to the governor of the Bank of Scotland, to try to prevent the eviction of someone who was able to pay their mortgage and whose arrears were modest and plainly affordable. I had to complain to the governor to stop the eviction going ahead because nobody else could understand the problem. That is because all the bank managers have gone into some twilight zone; they have disappeared and been replaced by clerks—it is not their fault—computers and letters generated at 25 quid a throw. That all penalises the poor. All that must go; all that must change.
It is no coincidence that I see no bank managers up in the public gallery. I suspect that lots of people from CABx and money advice centres are there. Where are all the bank managers today? Will they listen to or read this debate? I think that they should, and I hope that Margaret Curran, when she gives us her pearls of wisdom at the end of the debate, will join me in urging the well-heeled fat cats who are running our banks to take heed of this debate.
I am not at all surprised that Fergus Ewing does not find any difficulty in complaining. That is one of the things that many of us have noticed about him.
Oh, come on.
Is Margaret agreeing or disagreeing with me?
I welcome Fiona Hyslop's initiation of this debate. As is the case for many MPs and MSPs, several of my constituency cases are associated with questions of debt, whether that is consumer debt or debt associated with public agencies. It is an important issue, which this Parliament should be dealing with.
I join other members in paying tribute to the role played by citizens advice bureaux throughout Scotland, both in dealing with individual cases and in launching debt awareness day.
I agree with Fiona Hyslop that we need to deal with some of the punitive levels of interest that are charged. That chimes well with Cathy Jamieson's point about the fact that it is often the people who are least able to afford finance or energy who are paying the highest cost. The Parliament, in partnership with our colleagues down south, should be working to address that.
Tackling poverty must be central to how we address the problem of debt. I hope that the minister will address the ways in which the Scottish Executive is working with the UK Government to consider the impact of debt on many of the poorest members of our society.
One issue that has not been discussed much this evening is the local authorities' role in tackling debt management issues. West Lothian Council has a good record in that area, and has a highly regarded advice shop. Local authorities are often involved as the creditors in cases involving housing debt and council tax debt. They can play an important role in referring people who are in such debt to providers of appropriate advice, whether to CABx or to the council's advice shops.
In West Lothian, in addition to the work of the CAB, the local authority advice shop dealt with more than 3,000 requests for advice on money or benefits, more than half of which related to consumer debt. The advice shop reports some of the problems that Fergus Ewing described in trying to persuade creditors to reach agreements, even in cases where people can afford to make repayments and the proposals are sensible. The local authority has a crucial role to play in taking a proactive approach to debt. It should provide not only a debt service but a full benefits service.
I hope that the minister will note my concern about the increasing number of benefit applications that are rejected initially but are successful on appeal. That issue should be raised with the Department of Social Security.
In summary—I know that many other members wish to speak—the problems of debt that have been discussed today are issues that the Parliament should deal with. We should not solve them on our own, but should do so with our colleagues at Westminster and in local authorities, and with organisations such as CABs.
I join other members in paying tribute to Fiona Hyslop for securing this important debate.
I had the great pleasure of working in the improving debt recovery working group with many people who were at the front line of dealing with debt problems—people from Citizens Advice Scotland, Money Advice Scotland, the law centres, the Church of Scotland, and the various anti-poverty groups throughout Scotland. The most important aspect of that group's work was its attempt to humanise debt recovery—to improve it and make it more compassionate and understanding than it is. I recommend that group's report to all members, regardless of their political hue.
The report identified why people in Scotland get into debt; no rocket science is required to answer that question. The main reason is inadequacy of income, whether as a result of low benefits or low pay. The second major reason is changes in circumstances; for example, because of illness, marital breakdown, loss of job, or moving from unemployment to employment. The third reason that the report identified was the availability of credit, often from unscrupulous organisations and individuals who are willing and able to give credit without explaining the fine detail, which leads to many people getting into serious debt.
The difficulty that we face in tackling this issue is that many relevant policy areas are reserved. The Parliament may not have the power to address some of the fundamental problems, but there are three points to which I would like the minister to respond. First, there is the operation of the social fund in Scotland, which I realise is a reserved matter. It is unacceptable that the number of refusals of applications for loans from the social fund should have risen from 11,000 in 1999-2000 to 362,000 in 2000-01. Something is wrong with the operation of the social fund. I ask the Executive to carry out an appraisal of the operation of the social fund in Scotland and to examine how the new regulations affect those who are desperate for social fund loans.
I also ask the Executive to examine the idea that Glasgow City Council submitted to the recent Scottish Affairs Committee inquiry into poverty in Scotland: that the working families tax credit should be disregarded for the calculation of housing benefit and council tax benefit for those who move from unemployment to employment. The problem is often that the clawback from the income of families who are in that situation is as high as 85p in the pound, which means that it is uneconomical for people who live on very low incomes to get jobs.
Thirdly, I would like the minister to consider carrying out a proper appraisal of the adequacy of benefit in Scotland. There has never been a proper appraisal. Even the levels of benefit that were recommended by Beveridge were never adhered to. We have crept along with a system that has often been totally inadequate to meet living costs. I ask the minister to conduct a full appraisal of benefits that are meaningful in relation to living costs.
Despite the fact that the amount of time for the debate has been extended, I might, if speeches are not under three minutes, be unable to call all the members who wish to speak.
I welcome the debate and I congratulate all the members who have made thoughtful contributions to it. I express some concern for Fergus Ewing's bank manager—no one would take on that job enthusiastically.
When I learned about the debate, I got in touch with the various CABx in the Highlands and Islands. It became apparent that debt is not simply an urban problem, but … a rural problem.
I wish to raise three issues—the three minutes that you gave me, Presiding Officer, are quite adequate. First, we must understand the additional barriers that exist in rural areas—the Highlands and Islands in particular—for those who seek to use the services of the CABx. I refer not only to transport barriers, but to the physical barriers that prevent people from getting to the CABx.
I received a submission from Ross and Cromarty CAB, which demonstrates that the additional costs in rural areas have a particular impact. The submission said that
"if funding levels do not rise to meet the costs of maintaining our services, we will be forced to close two satellite bureaux at Dingwall and Tain and one outreach at Gairloch."
The level of service that is provided by that CAB will undoubtedly deteriorate.
My second point relates to multiple debt, which Fiona Hyslop mentioned. Shetland CAB gave some interesting evidence on multiple debt in rural communities. Debts that people owe to credit card and catalogue companies, local authorities and finance companies are intertwined and multiple debt means inevitably that somebody who wants to sort out their problems must make multiple visits to the local CAB, because such debt cannot be resolved in one visit. Therefore, the particularly rural problems of transport and other physical barriers come back into play.
The third issue goes to the heart of the service that can be offered in our rural communities. Recruiting and training volunteers is harder and more expensive in rural areas because of the costs of transport: high fuel prices and so on. Home visits play an important role and are essential to people who live in the region that I represent. I ask the Executive to reconsider giving additional funding and attention to rural CAB services. It would be much appreciated.
Given the nature of debt awareness day, it is not surprising that a report that was passed today to the policy committee of Highland Council states:
"Inevitably, local agencies may have to cut their hours, the number of local offices and even outreach clinics".
I suggest that, today of all days, we must make a resolution that that cannot and must not happen.
I will try not to traverse the ground that has been covered so excellently by Fiona Hyslop and other speakers. Instead, I will make a few positive suggestions.
The Executive should encourage the banks—by speaking to higher-level people than poor, abused branch managers—to lend money to local organisations that in turn lend money to people. Local people know who are the chancers and who are the good bets and that would be a good, cheap mechanism through which loans could be made. If the banks lent money to such organisations, the loans would be good loans and the banks would get a lot back. It would be helpful if the Executive could explain to the banks that they would earn a lot of brownie points by doing that.
We should make it as easy as possible for our poorer communities to set up co-operatives and other small groups, which would help people to start working and to earn a bit of money. The rules are quite difficult and there is a great temptation to stray outwith them. We could make it easier for small, local co-operatives to enable people to make money locally.
The Executive must fund CABx more adequately. I am sure that all members visit CABx—I try to visit all the CABx in central Scotland—that could do more outreach work to help people. In the end, debt repayment arrangements take time to organise. There must be enough time to have a one-to-one discussion to talk the debtor through their situation and sort out their problems.
Volunteers do a splendid job, but they need more resources. That would mean more paid staff to train more volunteers. There should be a significant contribution from the communities budget to help citizens advice bureaux throughout the country.
My final point is that it is alleged that we are responsible for some of the problems, in that the Scottish Government, backed by the Parliament, has asked councils to improve their community charge collection rates. It is alleged that many councils respond simply by calling in the sheriff officers more quickly. Sheriff officers do not wish to know about a composition until they have done a poinding, because they get £65 for a poinding. After that, there may be a composition. The current system, however, means that neither the council nor the sheriff officers will be interested in sorting the problem out through repayment of £5 a week, or whatever the rate is. Our well-intentioned pressure on councils causes the problem—we should think about that.
I, too, congratulate Fiona Hyslop on securing a timely and important debate.
The purpose of the debate is to highlight the problems that debt causes for society and to pay tribute to citizens advice bureaux the length and breadth of Scotland. In particular, I want to pay tribute to the citizens advice bureau in Aberdeen and the Banff and Buchan bureau, which is based in Peterhead. Both bureaux are both extremely busy and I have had a working relationship with each in recent years.
Two weeks ago, I met representatives of the Aberdeen citizens advice bureau. They told me that the number of clients that they had met in connection with debt in the past two years had doubled. The trend is very much upwards. Fifteen per cent of all their new inquiries related to consumer debt and 60 per cent of all repeat inquiries related to consumer debt. The manager of the Aberdeen bureau tells me that consumer debt is now a major social problem in Aberdeen.
Many people think of Aberdeen and the surrounding area as affluent. However, statistics highlight the fact that debt can affect people from all social backgrounds and of all incomes. The region has areas of social deprivation and people on low incomes. Those people are hit especially hard by the problem. The cost of living in Aberdeen is particularly high and property costs are high. Most people who work in the city travel to work from outwith the city. There is no public transport so they must use their cars. People must sometimes put fuel on their credit cards, because the alternative is not to get to work.
Many people also think that there is lots of cash around the area because of the oil industry. However, because that industry offers fixed-term or short-term contracts, people often get into debt over five years, only to find that they are out of a job in a matter of months, but still have bills to pay.
In the Aberdeen bureau, the staff of 60 are rushed off their feet. They are trying to get more volunteers—which speaks volumes about the situation in the area. The bureau deals with virtually all the north-east, apart from Banff and Buchan. There is no bureau between Montrose and Aberdeen. The whole of south Aberdeenshire and parts of Angus have no access to a bureau. As Duncan Hamilton said, that highlights the difficulties that face rural communities. People either have to spend money to get to a bureau for a face-to-face meeting, or the bureaux themselves have to find the money.
Because of local government cuts, it is often difficult to have outreach clinics in rural communities. The Scottish Executive must address that. If a debt line is set up, more work will be created for the bureaux. They want to help people who live in outlying areas, but if more phone calls come in, they will need more resources.
I want to touch briefly on three areas in which we can help. First, we must get into communities and give resources to the bureaux and other agencies so that they can give advice in rural communities and urban areas. Let us help community organisations such as credit unions to get off the ground. Secondly, the Parliament must use its powers to change the laws in relation to rogue moneylenders and consumer credit. We must remember what happened with Landmark Home Furnishing Ltd and the number of people who had to save up cash for deposits, but then lost it with no comeback.
Thirdly, we must get rid of some daft policies. Water charges are a prime example. Low-income families have been hit especially hard by increased water charges—up to 300 per cent in some cases—in the past few years. The Press and Journal today mentions that many families are being hit hard and suffering from increased debt because of high water charges in the north and north-east of Scotland.
I add my congratulations to Fiona Hyslop on bringing this issue to the attention of the Parliament. The three points that I will address have been addressed, but I would like to add my voice to them.
Fergus Ewing made a point about mortgage repossessions. I was also involved in such a case; I had to go very high up in the bank, and a long way away, before I found help. There was a great deal of sensitivity and understanding at that level, but I had to go a long way for it.
Not so long ago, many of us were at St Columba by the Castle Episcopal Church, where we heard presentations from two people whose lives were ruined by debt. The Executive must address itself to creating a culture of credit unions as the best way to seek help. Most of us borrow for luxuries but, as Tommy Sheridan said, it is appalling that some people must borrow for necessities.
Like Fiona Hyslop, Richard Lochhead and Duncan Hamilton, I have been approached by Edinburgh CAB about its problems with its funding—there is not enough of it nor is there security of funding. Those problems must be addressed.
I thank Fiona Hyslop for bringing this important issue to the chamber for discussion. I know that time is short, so I will not repeat what others have said about the causes of debt. I hope that today's debate will focus minds on the problems that come when people find themselves in debt. I hope also that we can highlight the fact that help is available and that by seeking early help and advice, there is a road out of debt.
Today was designated by CAS as debt awareness day. I hope that the media will highlight the services that CABx provide. The romantics among us—Fiona Hyslop must be one—will know that it is St Valentine's day, a day for lovers. In trying to link the two themes I am reminded of the saying, "when there's no enough money coming in the door, love flies oot the windae". I remember people saying that when I was younger. While the romantics were looking for the postie and waiting for good news from a secret admirer this morning, many people, as they do every day of the week, dreaded hearing something fall on the mat because they knew that it would be a reminder or a red bill. I am sure that members understand the pressures that such a worry brings to individuals' and families' lives.
I, too, would like to thank the volunteers and workers in CABx throughout the country who deal with such problems and help to make life easier for people. I welcome to the gallery Elspeth Wilson and Ian Eadie from the Cumbernauld and Kilsyth CAB. They head a team of 20 volunteers who dealt with between 6,000 and 7,000 people in the bureau last year. Consumer debt is by far their biggest problem. In the past 10 months they dealt with around £3 million of consumer debt in that small area.
I admire the work that CABx do. Somebody must fight for the rights of people who are in debt; somebody must fight their corner to ensure that practical and professional help is given. I urge the Deputy Minister for Social Justice to work with colleagues at Westminster, because debt does not stop at borders. I also ask her to work to promote debt advice centres and ensure that every community has access to free and impartial advice.
I regret that Alex Neil and Kenny Gibson, who stayed for the debate, have been beaten by the clock.
I am disappointed that we did not get to hear Alex Neil and Kenny Gibson. I think that the level of debate we have had this afternoon is a credit to the Parliament, as is the commitment to resolving the issue that has been demonstrated by every member who spoke.
I would like to add my congratulations to those that have already been extended to Fiona Hyslop on choosing to highlight debt awareness day in this manner and on securing the debate. It is particularly significant that we are holding the debate on Valentine's day and is an important reminder of the serious problems that we face. The Executive shares the concerns expressed about the increasing level of consumer debt and the need for action to be taken to protect and inform consumers.
I, too, applaud the work undertaken by citizens advice bureaux. If members will permit me to speak about my constituency, I can tell them that I know how highly valued are the services provided by the local bureau. Front-line agencies are uniquely placed to respond to the needs of local residents and their communities. In Easterhouse, I have seen the significant contributions made by volunteers. I recognise the points that were made about the problems in rural areas, but in urban Glasgow voluntary groups play a key role and that should be supported.
It is not just CABx that make a contribution—all independent and local authority advice providers play an important role in achieving social justice. In Easterhouse, the money advice project estimates that it secures £1.5 million a year in benefit claims. I take the points that have been made about the need for benefit uptake. I hope to come to back to that later. If members bear with me, I will attempt to answer the points that have been raised.
We know conclusively that high-quality, impartial information and advice is critical if people are to be able to take charge of their own financial circumstances—to know their rights and entitlements and be able to secure them. Agencies such as the National Association of Citizens Advice Bureaux also play an important role negotiating on behalf of their clients and providing advocacy and representative support. Several members have mentioned that.
Tackling debt is a key element of our social justice agenda. Indebtedness has increased throughout society and is a major issue for many people living in Scotland today. For people on a low income the problem is particularly acute. Their debt is not usually a result of profligate spending on store cards, but because they are poor and unexpected crises can throw their precarious finances into chaos.
The choices available to those excluded from mainstream provision are limited and, as Cathy Jamieson pointed out, often expensive. It is not acceptable that those who have the least money with which to pay often have to pay the most. For those reasons, financial inclusion has been one of the strands of our empowering communities agenda. Over the last 18 months, the Executive has been working in partnership with a wide range of organisations to improve the financial services available to people on low incomes.
Money matters, but learning to manage money and being able to access suitable financial products is also important. The package of measures that we have been developing will not only help prevent people getting into debt in the first place but enable those who find themselves in financial difficulties to resolve those situations more quickly. We are working with the credit union movement to develop a national strategy for Scotland. Several members spoke of the significance of that. The strategy will address the development needs of credit unions, help the movement grow and increase access to low-cost credit and the other valuable services provided by strong credit unions. Credit unions can provide an increased source of low-cost credit as an alternative to the high-cost home credit providers.
I take Fergus Ewing's points about banking. I would be delighted to concede that Fergus is a more effective complainer than I am, although I am not sure whether that is a title that he desires. We have encouraged the Scottish banks to make basic bank accounts available. That will allow everyone to choose to benefit from the advantages that a bank account offers, such as attracting lower fuel tariffs by paying bills by direct debit, without being in danger of going overdrawn and attracting bank charges. We must be assertive with the banks and the credit industry when it comes to their social responsibilities.
As part of the reforms that the minister and her colleagues are considering introducing, will she consider the possibility of addressing the issue of summary warrants? She will remember the evidence from the DSS that, even when it is in the wrong, it sends a letter out of the blue demanding £500, £600 or £700 within a fortnight. That drives people into debt and causes a great deal of fear. Will the minister consider making it a statutory obligation that when utilities, banks and public sector agencies notify people of debt, they must notify them of the advice services available? Such agencies should have a statutory duty to reach a repayment schedule.
Alex Neil will know that the working group that is examining alternatives to poindings and warrant sales is doing quite a bit. We have heard interesting evidence, which we are still considering. I am sure that the issue that Alex Neil mentioned will be raised in that group. We have to minimise factors that make the experiences of low-income families more difficult, and a range of issues are being looked at in that context.
We are exploring with the insurance industry, the Convention of Scottish Local Authorities and the Scottish Federation of Housing Associations how low-cost insurance products with rent schemes can be made more widely available. I am sure that many members are aware that issues such as insurance can be crippling to people and the lack of insurance can cause enormous difficulties in communities, so that is an important aspect.
We also need to find new and alternative means of delivering and providing access to financial products that are suited to the needs of those on low incomes, but we recognise the importance of quality independent money advice and information if people are to be able to take control of their financial circumstances.
Will the minister give way?
We are running out of time.
I am thinking of your next engagement, minister. Very briefly, Mr Gibson.
I thank the Presiding Officer and minister, given that I could not participate in the debate. Does the Executive intend to ensure that there is a sound financial framework for Citizens Advice Scotland and similar agencies to enable them to continue with their work in future?
I am about to address the points that were raised on that issue and to clarify how we are proceeding. I am late for another commitment, so I ask Kenny Gibson to bear with me and I will cover his point in my speech.
Our plans for a Scottish telephone debt line are being advanced by a small team led by the Executive, involving Money Advice Scotland, Citizens Advice Scotland and other money advice providers, local authorities and the credit industry. Fiona Hyslop made the point that the debt line would be unable to cope with 70 per cent of cases. That figure is a pilot figure. We have been told that that is the proper level, but the pilot scheme will assess whether it is correct, so we may come back to Fiona on that point.
Our aim is to make free quality money advice available to everyone in Scotland, wherever they live and whatever their income, regardless of whether they have the means to repay their debts. The debt line will build on current provision, but will make debt advice more widely available and more easily accessible. Recent research shows that of 152 advice outlets, only four were open at the weekend and only 42 provided any services during the evening.
It is important to stress that the telephone debt line will build on existing face-to-face provision and will not be a substitute for it. We are aware of the importance of such services and that they will always have a critical role to play, but we also need to look at new ways of delivering advice and information. However, we know, as many people have observed, that the existing provision cannot meet the demand, and that demand is growing.
We are concerned about the increasing role that is being played by fee chargers, who sometimes move in to fill the gap. Not only are people who cannot afford it paying for services that they should be able to get free, but concerns have been expressed about the accuracy of the advice provided. The funding of local advice provision is the responsibility of local authorities. They are best placed to judge competing demands, and therefore best placed to determine what assistance might be appropriate for individual citizens advice bureaux. That is very much within the framework of local democracy. This Parliament has made it clear on many occasions that there should be appropriate funding for local authorities to make their decisions, and this is part of that.
However, we are keen to ensure that local authorities recognise the importance that the Executive attaches to the provision of advice as part of the social justice agenda, so we have discussed with the Convention of Scottish Local Authorities the possibility of issuing guidance. Resources are finite, as we all know, but we recognise that demand is high and growing, and we need to find ways of making the resources that are available go further and of pulling in new resources. For example, the telephone debt line will be financed by the creditors themselves.
We need to look at different models of delivery. New technology offers opportunities that should be seized. We are aware that CAS is already using the internet to provide advice, and we applaud its efforts in looking at new ways of delivery, its innovative work in the Highlands and Islands using e-mail, and its feasibility study into the provision of advice over the telephone. We are exploring how we can build on that work in piloting the telephone debt line. We are also looking at how the Executive can enhance and support the infrastructure of the sector, such as training needs, the development of standards and research requirements. We have already announced that we will fund research into the quality of the money advice that is available in Scotland. That research will provide the data that we need to inform future policy development and the allocation of resources by identifying where the improvements are needed in the delivery of money advice services.
Of course, the provision of money and debt advice cuts across other agendas. The working group that I referred to earlier has heard a raft of evidence about important services, and I hope that it will come to the Parliament with recommendations. It is clear that early access to debt advice would prevent those who are too poor to repay their debts getting to the stage of having legal action taken against them. I am sure that that is an imperative that we all share.
The work currently being undertaken to develop a community legal service in Scotland offers the Executive the opportunity to take a strategic overview of advice provision that places the client at the centre of the system. We want to see a strong social justice element run through that work. We have set up broad-based groups to consider how to develop community legal services in Scotland and how to improve Scottish citizens' access to quality information advice and assistance about problems involving the law in all aspects right across the country. The group that involves CAS will report to the Deputy First Minister in October.
The Executive is working in partnership not only in Scotland. I am sure that a number of members are interested in the fact that we are involved in the work that is being undertaken by the Department of Trade and Industry to improve the lending practices of credit providers and the transparency of information provided to consumers.
The Executive has encouraged the DTI to involve Scottish advice providers in the discussions of its indebtedness task force, which aims to establish a dialogue to develop practical solutions for responsible lending and borrowing. We need to improve the transparency of information provided to consumers before and when signing a credit agreement and, again, that has been flagged up.
A key proposal is the adoption of core principles of lending practice, including the examination of applicants' overall borrowing and their ability to repay. We look forward to seeing the report of the task force's conclusions and recommendations. We will report on that later in the spring, and I am sure that the Parliament will return to that issue.
Several questions about reserved matters have been flagged up. I recognise members' commitment to pursuing those issues. The joint ministerial committee on poverty is a common platform on which the Executive can raise issues. We intend to put debt on that committee's agenda. We are working in partnership with our colleagues at Westminster and in local authorities to ensure that we pick up many of the issues that have been raised about benefits and other matters.
The focus of the Executive's work on financial inclusion has been to increase the choice of financial services to meet the needs of people on low incomes. Too many Scots in disadvantaged communities—who are often those with the greatest need—do not have the access to financial services that the rest of us enjoy, and are worse off as a result.
If we are to tackle financial exclusion and deliver social justice, the need for creative solutions is pressing. I am pleased that we have begun that work in the past 18 months. I look forward to the establishment of partnership arrangements throughout the United Kingdom to progress that work.
Thank you for staying on, minister—you are now late. That concludes the debate on debt advice.
Meeting closed at 18:02.