Repossessions Group Report
The next item of business is a statement by Nicola Sturgeon on the repossessions group's final report. The cabinet secretary will take questions at the end of her statement, so there should be no interventions or interruptions.
Last week, the Scottish Government published "Repossessions Group—Final Report", which was the culmination of four months' hard work by independent experts. I record my thanks to the group and its chair, Adrian Stalker. I very much welcome the report and I have already committed to take forward its recommendations. Some of those can be dealt with immediately and others will require more work, but we will take action on all of them. All the recommendations are important in ensuring that we protect families who are at risk of losing their homes.
Let me highlight two key recommendations that are intended to enhance the legislative protection for home owners who are at risk of repossession. The first will enhance protection under the Mortgage Rights (Scotland) Act 2001. Under that act, Scottish home owners already have protection that enables them to seek from the court a suspension of repossession to allow them more time to find a solution to their payment difficulties. That provides greater statutory protection than exists elsewhere in the United Kingdom. However, that protection is taken up in only a small minority of court actions, and not all repossessions involve court action. Therefore, the repossessions group has recommended that we introduce legislation to allow the protection that is available under that act to apply more widely.
The group has recommended that all repossessions, with only a few specific exceptions, should go to court. We intend to take forward that recommendation, subject to consultation—as recommended in the report—on the impact on the smooth running of other court business and on home owners. For instance, we must recognise that it would be wrong to prolong a process that will, regrettably, inevitably end in repossession. We should help everyone we can but, unfortunately, some people might not be able to sustain home ownership in the longer term. Therefore, we must ensure that we do not increase their debt and distress by delaying the inevitable. We must also ensure that their transition into a sustainable form of housing is as smooth as possible.
The second key recommendation that I want to highlight will ensure that repossession is the last resort. There has been much discussion—much of it ill informed—of the pre-action protocol that was introduced by the English judiciary last year. Some have seen the protocol as the be-all and end-all. Others, including the experts on the repossessions group, have considered the issue more carefully and have not recommended a pre-action protocol for Scotland.
The group has noted that the English protocol does not have any substantive legal effect and does not affect the rights of either the borrower or the lender. It also noted that, because the Council of Mortgage Lenders' guidance, which was issued on the same day as the protocol, applies across the UK, any limited benefit that it has will apply in Scotland anyway.
The group has therefore opted for a more radical option. It has recommended that the Scottish Government should introduce legislation that would impose legal obligations on lenders to show that they had considered every reasonable alternative to repossession, and to ensure that the extent to which they had done so would be considered as part of the court process. That would give Scottish families, unlike families in England, protection with legislative backing.
I am pleased to confirm that we will legislate to implement those recommendations. I am grateful for Labour's early commitment to support a bill and can confirm that, over the summer, we will assess the practical implications for the courts and will take account of the findings of the Gill review on the scope that exists for improved handling of housing cases. We will introduce a bill after the summer recess.
Turning to other recommendations in the report, I asked the group to consider other measures beyond legislation, so its report contains a range of other recommendations on, for example, the provision of debt advice, mortgage support schemes, and legal aid and advice. Time will not allow me to cover all those matters in detail, but I will deal with some of the main points.
The group has highlighted the importance of free, independent debt advice. We, too, are clear about the importance of the provision of appropriate advice at an early stage. That is why we provided an additional £1 million to Citizens Advice Scotland to increase the capacity of face-to-face debt advice services. It is also why we supported a £400,000 television and online advertising campaign for the national debtline, which was designed to encourage people to tackle their debt problems as soon as possible to avoid escalation towards repossession.
However, we should do more, which is why I am announcing an additional £250,000 to help advice agencies to reassure clients about the quality of their information and advice services through accreditation against the national standards, as recommended by the repossessions group.
The group has welcomed the help that has been provided through our £35 million home owners support fund, which is enabling hundreds of families to remain in their homes. Our new mortgage to rent and mortgage to shared equity schemes now offer earlier access to people who are in difficulty and, unlike mortgage rescue schemes elsewhere in the UK, they are not restricted to people who are in priority need under homelessness legislation.
However, our budgets are not limitless, so it is right that we target funding towards those families in greatest need—those who are least able to trade down in the housing market. I do not apologise for that, but we are and must remain flexible. People who have particular housing needs due to disability may be considered eligible even if they do not meet the price threshold.
Applications under the new schemes have almost doubled compared with the same period last year. We have already received 220 applications, 130 of which are being processed. A number are already at the landlord selection stage and only 14 have been deemed ineligible due to price. There have been claims that our schemes are impossible to access, but those statistics clearly suggest otherwise. As far as completed cases are concerned, 120 families have been helped in Scotland since January, whereas only two have been helped in England since the launch of the mortgage rescue scheme there.
Given that we have always said that we will keep our schemes under review and that the repossessions group has emphasised the importance of our doing so, I am pleased to announce that the first review will take place in August. By then, we will have enough data to assess the take-up and rejection rates, and will have a robust evidence base for any adjustments. In that review, we will consider any relevant evidence from advice agencies or others.
The repossessions group has recognised that court procedures can be intimidating and confusing and has recommended changes to simplify the process and facilitate the provision of legal advice. We have already made available an additional £3 million over two years to expand in-court and other legal advice services. I am pleased to say that we agree that the group's recommendations on clear advice, lay representation, clustering of cases and pro-forma applications should be implemented.
From April, we substantially increased the upper disposable income limit for civil legal aid from £10,306 to £25,000. That means that around three quarters of all adults in Scotland are now potentially eligible for legal aid. There are many myths about legal aid, particularly on the operation of clawback. However, the repossessions group has made some useful recommendations to overcome concerns. We will work with the Scottish Legal Aid Board to take forward action on those recommendations.
The report welcomes lenders' commitments to help home owners in difficulty but also urges continued restraint. That is extremely important, and it is a message that we will take forward strongly in ministerial meetings with lenders.
Of course, implementation of the repossessions group's recommendations will build on other measures that have put Scotland ahead of the rest of the UK in supporting those at risk of repossession and homelessness. For example, we have implemented section 11 of the Homelessness etc (Scotland) Act 2003. From 1 April, lenders have been required to inform local authorities when taking court action for repossession, which enables earlier support to be provided. It now looks like the UK Government will follow our lead on that, too.
This Government is committed to protecting Scottish families in the economic downturn and beyond. I look forward to working with colleagues throughout Parliament to achieve that in the weeks and months ahead.
The cabinet secretary will now take questions on issues raised in her statement. We have just over 20 minutes for such questions, after which I must move to the next item of business.
I welcome the statement and the report and thank the working group for its hard work. I regret, however, that there has been a delay in getting us to this stage, which is nothing to do with the work of the group. I acknowledge that there are families who have lost their homes in the eight months since the issue was first raised with the cabinet secretary.
I am slightly disappointed that the cabinet secretary once again seems to be showing insecurity on the issue and that she seems to feel obliged to continue to criticise what is happening in England. I would have hoped that she would find the grace to acknowledge that there has been cross-party support for many of the working group's measures and—from the outset—for legislation to ensure that repossession is a last resort. The working group has recommended a number of measures, including legislation, that we have been asking for all along. I again confirm that Labour members will work constructively to ensure that appropriate legislation is passed as quickly as possible.
Recommendation 8 of the report calls on the UK Government to ensure maximum take-up of its mortgage support scheme, but the report does not call for the maximum take-up of the Scottish Government's scheme that I am sure the cabinet secretary wants. Will she outline the specific action that she intends to take to promote maximum take-up of the Scottish Government's scheme?
With section 11 of the Homelessness etc (Scotland) Act 2003 now commenced, local authorities should be aware of repossessions three weeks before a decree can pass. Is the cabinet secretary confident that each local authority has in place a system of support for people who face repossession? Has she been reassured that all local authorities have allocated sufficient funding? How does she intend to monitor the effectiveness of local authority activity?
I thank Cathy Jamieson for her questions. First, there has been no delay; we took the decision in January to set up the repossessions group to take a considered view of the action that is required to provide greater protection to home owners. Incidentally, Cathy Jamieson may care to recall that back then, Labour did not ask for legislation; it asked for a pre-action protocol, which the working group considers to have no substantive legal effect. Legislation is the preferred option.
I do not feel the need to criticise what is happening in England. However, the Labour Opposition here seems determined, at every turn, to run down what we are doing in Scotland by saying that it is inferior to what is happening in England. That is factually not the case, as I demonstrated in my statement, so it is incumbent on me to point that out.
Cathy Jamieson raised some important issues. For example, it is important to ensure maximum take-up of the home owners support fund. In partnership with Money Advice Scotland, and in order to increase awareness and understanding of the fund among advice agencies, we have been running a number of information sessions around the country. More than 100 organisations and 250 practitioners have attended those sessions, which has been important in ensuring their awareness of the fund. They, in turn, will be able to ensure that people who might benefit from the fund become aware of it, too.
Cathy Jamieson asked about the compliance of local authorities with section 11 of the Homelessness etc (Scotland) Act 2003. As she is well aware, it is incumbent on every local authority to ensure that it puts in place the systems and resources to ensure that the benefits of the legislation are realised in practice. If she wants to bring to me evidence that local authorities are not doing that, I will be more than happy to look into the matter.
I thank the cabinet secretary for advance sight of her statement. I am amazed by her information that the mortgage rescue scheme that is being run by the Labour Government in England has helped only two families. That is extraordinary. I am sure that the cabinet secretary will agree that repossession is the end of the world for many hard-working families, wherever they happen to live, and so must always be a last resort.
The cabinet secretary said that she is flexible about the home owners support fund, especially in relation to disabled people who do not meet the price threshold. I am glad about that. However, does the cabinet secretary note the information from Citizens Advice Scotland that four out of five people who are affected think that the changed scheme has worsened the situation because it appears to be based on postcodes rather than on actual need? It is impossible for many people who are in genuine need to access the scheme. Will she therefore consider re-evaluating the arbitrary property price ceiling of £100,000?
On Jamie McGrigor's point about the UK Government's scheme, I merely gave the figures that we have—it is not for me to defend or attack that performance. All I am saying—I will say it again—is that the performance of our schemes appears to be much in excess of the performance of the UK Government's scheme.
Jamie McGrigor made important points about the price threshold. I have read the survey in today's Herald, and I repeat the assurance that I gave in my statement: as we review the eligibility criteria, we will take into account all existing evidence. There is no arbitrary £100,000 ceiling on the value of property and it is not true to suggest that there is. Eligibility for the fund takes into account local variations in house prices and the size of the property. It is crucial that 2007 house price levels are used as a base because that is when house prices were at their highest. I will explain briefly the rationale behind price thresholds, which Shelter, in its briefing for MSPs in advance of my statement, welcomed and supported in principle. The rationale is that we ensure that we target resources—which are not limitless—at people at the bottom end of the market who have no other options. People in higher-value properties have the option of trading down, but people at the lower end do not. It is therefore right that we target our resources.
I challenge some of the information that has appeared in the media today, and which is not the same as statistics that we have. I do not have time to go into it all now, but we are committed to keeping the issues under review. As I have said, the first review will be in August. All concerns and issues will be taken into account.
I, too, am grateful to the cabinet secretary for the advance copy of her statement, and I welcome the publication of the working group's report. I do so because, until she appointed the group, I felt that she was being unnecessarily defensive about the nature and extent of the measures that are available to the citizens of Scotland. The group has made 13 recommendations, which I think justifies the concerns of all members of Opposition parties that more needed to be done.
I welcome, too, the cabinet secretary's undertaking to proceed with legislation for the extension of the Mortgage Rights (Scotland) Act 2001, so that it applies more widely, and her undertaking to impose legal obligations on lenders to show that they have considered every reasonable option. I welcome those moves because, although the guidance that is issued by the Council of Mortgage Lenders is all very well, it does not govern everyone who lends. In particular, it does not govern those who exploit people.
The cabinet secretary said that she will work with the Scottish Legal Aid Board. I hope that she will also work with others, because the recommendations in the report call for the engagement of others in the professions and other citizens. Simply discussing with SLAB how it will exercise its discretion will not make that process more transparent, nor will it make more solicitors engage in the process.
I thank Ross Finnie for expressing his support for the actions that I outlined in my statement. However, with the greatest of respect to Ross Finnie—I genuinely have the greatest of respect for him—I must say that appointing a group of experts of the range of those who were on the repossessions group, and inviting them to take a no-holds-barred look at the matter and to make recommendations, can be described as many things, but I do not think that it constitutes defensiveness. I simply make that point.
Ross Finnie will appreciate that, when we are considering changes to legal aid rules, one of the key players must be the Scottish Legal Aid Board. However, he was right to point out that it is not the only player that matters if we want to ensure that the rules work as we want them to, and that the flexibility and discretion that are inherent in them are being used to the full. I assure him without difficulty that we will engage with the full range of players and practitioners as we take forward the recommendations.
We move to open questions. If we have brief questions and brief answers, we will get everybody in.
The pre-action protocol has been presented by some people as a panacea for all repossession problems. For the sake of clarity, will the cabinet secretary say what impact the pre-action protocol has had since its introduction and what support there has been for it among stakeholders?
I have made my views on the pre-action protocol known. I accept that some of us might just have to agree to differ on the issue.
A range of experts and stakeholders—not just the repossessions group—have expressed the opinion that the pre-action protocol makes no difference whatever to the outcome of cases. Sandra White was right to point that out. The judge who drew up the protocol said that it did not change the powers of the courts. Also, Ian McQueen-Sims, an established debt expert—I had not heard of him before but, nevertheless, I am told that he is well versed in such issues—described the protocol as being
"about as much use as a chocolate teapot".
Obviously, I would use much more careful language than that.
More pertinently, the May/June 2009 issue of Shelter's magazine Roof had an article in which caseworkers—people who work on the front line—expressed reservations about the protocol's effectiveness in protecting people. All in all, I think that the repossessions group and the Government are right to go for the better option of statutory protection.
In answer to a previous question, the Minister for Housing and Communities said that he expected 600 people to benefit from mortgage to rent and mortgage to shared equity schemes over two years. In today's statement, the cabinet secretary said that, over 12 months, there had been 120 successful applicants. Is she concerned that the number is falling short despite obvious growing need? What will the Scottish Government do to increase the number of successful applications? In particular, how will advice services be resourced to offer the necessary support?
Based on my arithmetic, we are well on track to reach that figure of 600. Perhaps Mary Mulligan would care to go back and check that.
If more members—I am deliberately looking in the direction of the Labour seats—were to talk up and point out the benefits of the home owners support fund instead of continually trying to run it down, perhaps we would get more people to apply to it. The work that we have been doing with advice agencies to raise awareness, which I spoke about a few moments ago, is really important. I encourage all members to add to that work by raising awareness among their constituents.
The financial support for the mortgage to rent scheme when this Government took office was £10 million a year, whereas the support is now £35 million over two years, which is a real sign of this Government's commitment to helping the people who are most in need.
On the other steps that the Government is taking to help home owners, can it be estimated how many families overall may be able to stay in their homes because of the Scottish Government's extensive actions?
That is a valid question, and I am more than happy to take it away and see what work we can do to assess that figure. Bob Doris rightly made the point that the Government is already taking action across a range of fronts to help people who are at risk of repossession. Sadly, neither this nor any Government will be able to help everybody who is in mortgage difficulties—that is a sad fact of life. However, we should and will do everything that we can to ensure that we protect as many people as possible.
Further to the cabinet secretary's answer to Jamie McGrigor, will she reflect on the work of Govan Law Centre? She clearly values the work of people who have experience on the front line; it is fair to say that all members would acknowledge that Govan Law Centre has substantial experience of working on the front line. The evidence in the centre's survey is disturbing in that it indicates that the majority of people who applied for assistance were, in effect, excluded from the home owners support fund. Will the cabinet secretary instruct her officials to engage with Govan Law Centre? It is all very well for us to pat ourselves on the back and think that we are doing terribly well, but when the evidence on the streets of Scotland tells us that things are not as they seem, should not the cabinet secretary be prepared to listen?
Margaret Curran will be aware that I value and support all organisations in Govan and engage with them as often as I can. Govan Law Centre is no different. Mike Dailly from the centre has met the Minister for Housing and Communities and has discussed the issues with officials. If she had been listening to my statement—I am sure that she was—she would have heard me say that, as we review the eligibility criteria for the scheme, we will take into account all evidence, including the evidence in Govan Law Centre's survey.
Having read the survey, I point out that it contains, I think, some factual inaccuracies. The survey used a sample of 25 advice agencies; I do not for a minute denigrate their opinions, but in our work to raise awareness of the scheme we have heard from 100 organisations and more than 250 practitioners. I will not say that none has raised issues about the scheme's operation—of course they have, which is why we must keep the scheme under review. I do not, however, think that they painted the same picture as the law centre's survey.
Does the cabinet secretary agree that, to an extent, the situation that we face is symptomatic of the fact that there has been such a focus on home ownership? Unfortunately, that focus has sometimes been about borrowing being forced on those who can ill afford such high levels of indebtedness. Does she view the current situation as a warning? Does she agree that a proper balance between home ownership and prudent and safe rental needs to be restored?
Yes, I do, which is why this Government is investing record sums in affordable housing for rent. It is why we have our fund to kick-start a new generation of council house building, which entails building hundreds of council houses, compared with the six council houses that were completed under the final four years of the Labour-Liberal Administration. I therefore agree whole-heartedly with Jamie Stone's point. The repossessions group did not have time to go into the matter in detail, but it raised the issue of people in social rented accommodation—as have Shelter and other stakeholders—who are at risk of eviction because of the economic downturn. We require to do further work in that area, too.
Will the minister revisit the valuation limits that are being used in Renfrewshire, which are, according to Renfrewshire citizens advice bureau in Paisley, preventing access to the mortgage to rent scheme? Will she consider giving tenants legal rights in order to protect those who faithfully pay their rent only to find that they face eviction because unscrupulous landlords are not paying their mortgages, as reported by Renfrewshire law centre?
I am not sure whether Hugh Henry was in the chamber for my statement. If he was, he would have heard me say that we will keep the eligibility criteria, including the price thresholds, under review. The first review will be in August, and any evidence that members feed in to that will be welcome.
Hugh Henry's second question relates to the comment that I made to Jamie—I almost forgot his name there.
Stone.
I said that I almost forgot his name.
I believe that Alex Neil has already given Hugh Henry a commitment that we will examine the matter. There is an issue about whether enough protection is offered to people who live in private rented accommodation if the owner defaults on mortgage payments. I give an undertaking that we will continue to examine that.
I welcome the cabinet secretary's statement and I am glad that the group that first brought the matter to the Government's attention has been given some recognition for the part that it played.
Like Hugh Henry, I am concerned about the eligibility criteria. I think that the cabinet secretary will understand that concern, given the level of house prices in Edinburgh in 2007, which she said would form the basis for access to the various schemes. I would like an assurance that the anomalous nature of the market in Edinburgh will not mean that Edinburgh householders find themselves at a disadvantage.
That is a fair point. The price thresholds are set according to local circumstances. Because house prices have come down since 2007, more properties will come within the price threshold than might previously have been the case. However, we will continue to keep the matter under review.
As Shelter rightly says, price thresholds exist to ensure that we target support at people at the lowest end of the market—those who do not have other options. I have already given a commitment to keep that under review and I will be happy to feed into that review the comments of Margo MacDonald and other members.