Home Owner and Debtor Protection (Scotland) Bill: Stage 1
The next item of business is a debate on motion S3M-5415, in the name of Alex Neil, on the Home Owner and Debtor Protection (Scotland) Bill.
As this is the last debate of 2009, no doubt the whole chamber will be full of pro-Government Christmas cheer when we discuss this important bill, which will take forward an element of social justice in Scotland that is very important to a number of people.
I pay tribute to the Local Government and Communities Committee, under the convenership of Duncan McNeil, which considered this complex bill within a reasonably tight timescale and, if I may say so, produced a balanced and well-researched stage 1 report. I commend the committee for producing an excellent report. In recommending approval of the bill's general principles, the committee recognised that not only in the chamber but outside among stakeholders there is widespread acceptance of the bill's general principles; any debate is around implementation issues rather than the fundamental principles.
Does the minister acknowledge that that widespread acceptance extends to part 1 of the bill, for which he is responsible, but it certainly does not apply to part 2, for which Mr Ewing is responsible?
With all due respect to my good friend Mr McLetchie, I disagree with him. There is widespread support for the general principles of part 2, although there is perhaps more debate on the implementation of part 2 than there is on the implementation of part 1.
In my speech I want to deal, where I can, with some of the specific issues that the committee raised, but before I do that it is worth reminding ourselves why the bill is so important, particularly on a day when there have been 800 job losses at Globespan, which reinforces the position in which we find ourselves, in respect of recession, high unemployment and high levels of both personal and business debt. Too many people, both north and south of the border, find themselves in the debt trap.
However, I pay tribute in general terms to lenders. Compared with the situation in the early 1990s—considering the number of repossessions that took place then compared with the number that have taken place in the current recession, and given the fact that, throughout the United Kingdom, there are now 7 million more mortgages than there were then—the proportion of people who are falling into the repossession trap is significantly lower than it was all those years ago. That is the case for two reasons. First, many of the lenders learned the lessons of the recession in the early 1990s, and more of them are taking early action to avoid having to repossess. When people fall into arrears now, action is taken and advice is given at a much earlier stage, which I welcome. Secondly, both north and south of the border, the actions that have been taken by the Scottish Government and the UK Government have made a significant contribution—not only through the advice that is now offered, but through the likes of the home owners support fund—to minimising the adverse impact of repossession and debt on families and their standard of living.
Having said that, there is no doubt that, for the past six years, there has been a steady year-on-year increase in the number of repossessions in Scotland, most notably in the past two years. The figures show that 40,000 repossessions took place in the UK in 2008 and that 48,000 repossessions are predicted to take place in 2009. I repeat my request to the Council of Mortgage Lenders Scotland and the Financial Services Authority to give us the Scottish figures on a regular basis. That would help us to plan our budget to assist such people and would give us a clear breakdown of where the problem is most persistent.
However, this is not just about repossessions; there is a similar picture regarding the increase in mortgage arrears. Over the same period, there has been a 47 per cent increase in the number of people with mortgage arrears amounting to more than 2.5 per cent of their balance, and there has been a 77 per cent hike in the number of mortgages that have been in arrears for more than three months.
Similarly, there has been a significant increase in the number of court actions for repossession in the sheriff courts. The number of such actions rose by 20 per cent between 2007-08 and 2008-09. Unfortunately, the existing legislation falls short of providing people with appropriate support. Although the Mortgage Rights (Scotland) Act 2001, which we passed eight years ago, gives home owners more time to find a solution to their payment difficulties, only 5 per cent of all repossession cases are defended in Scotland's courts. There is a clear need to take further action to protect people from the threat of homelessness.
The minister mentioned the fact that 5 per cent of repossession cases are currently defended in court. How many such cases does he expect to be defended in court following the passing of the bill?
As we have made clear in the financial memorandum to the bill, our upper estimate is that 50 per cent of people will defend actions in the courts, which is 10 times the current figure. The other cases will not be defended in court probably on the decision of the debtor not to defend for personal reasons. The clear point is that the bill will make it much easier for people who want to defend actions in court to do so, in terms of both court procedure and available resources.
The existing legislation does not provide a suitable solution for debtors who cannot access the debt relief that is offered by bankruptcy. No route into bankruptcy is currently open to them. It is essential that we provide effective measures to safeguard home owners, so that, whenever there is no real benefit to creditors in selling the home, the debtor has the reassurance of knowing that their home is protected. That is a humane measure. The need for urgent action to protect hard-pressed families is clear and widely recognised.
I will now address what the two parts of the bill will do. Part 1 will improve the protection that is available through the Mortgage Rights (Scotland) Act 2001 by extending protection to all repossession cases involving residential property and ensuring that all cases—unless the property is voluntarily surrendered—are heard in court. It will also require lenders to show in court that they have considered every reasonable alternative to repossession. I point out that the report from Shelter down south shows that the pre-action protocol that operates in England and Wales still results in a third of people not going through the proper procedure. In light of that, our decision to include that process in statute is absolutely the right decision. Part 1 will also allow home owners to be represented in court by approved lay representatives rather than solicitors, should they wish.
Those provisions will significantly strengthen home owner protection. Nonetheless, we recognise that certain points of detail in part 1 need to be addressed. As we have indicated to the Local Government and Communities Committee, we will bring forward appropriate amendments at stage 2, following discussion with the committee and external stakeholders.
Part 2 concerns sequestration and trust deeds. It makes a series of amendments to the Bankruptcy (Scotland) Act 1985 and contains four broad provisions. Section 9 introduces a new route into bankruptcy, which will be based on a certificate signed by an authorised person. At present, there are two commonly used ways for someone to make themselves bankrupt: they can show that they are "apparently insolvent" if their creditors have taken court action to pursue debt, or they can apply for bankruptcy on the basis that they meet the statutory test of low income and low assets—LILA. Although we believe that the vast majority of debtors now have access to bankruptcy if they need it, we estimate that around 500 people annually need the debt relief that is provided by bankruptcy but cannot access it. Section 9 will rectify that situation.
Section 10 introduces flexibility to trust deeds to allow the protection of a trust deed that does not include the family home, but only with the consent of creditors. We anticipate that that will be particularly appropriate in cases in which there is little or no unsecured equity in the family home, which calls into question the benefit of selling it. I appreciate that there have been some concerns about section 10 and some misapprehensions—not to mention misinformation—about what it does. I therefore want to make it absolutely clear that the provision does not automatically exclude homes from all trust deeds.
Other provisions in part 2 concern the Edinburgh Gazette. Section 12 repeals the requirement to advertise awards of bankruptcy in the Edinburgh Gazette. Members of the debt action forum supported that measure, but I accept that the loss of income from adverts may affect the Edinburgh Gazette. Accordingly, we will continue to work with Her Majesty's Stationery Office and the Stationery Office to ensure that, as far as possible, any impact is mitigated. We will also ensure that, before the provision is commenced, the register of insolvencies is able to provide stakeholders with at least the same level of service as is currently available from the Edinburgh Gazette.
I acknowledge that concerns have been expressed about consultation, particularly with regard to part 2. However, although we employed a non-traditional way of consulting, we believe that the bill has been subject to more consultation than many other bills that have come before this chamber. Indeed, when we were being pressed to pass the bill in one day, we resisted that temptation so that we could consult properly the committee, the stakeholders and the Parliament. As a result of that, and with the amendments that we will make at stage 2, I am confident that we will end up with a home owner and debtor protection act that will do what it says on the tin, and will prevent people's homes from being unnecessarily repossessed.
I move,
That the Parliament agrees to the general principles of the Home Owner and Debtor Protection (Scotland) Bill.
The Local Government and Communities Committee had, as the minister mentioned, a limited amount of time in which to consider the Home Owner and Debtor Protection (Scotland) Bill. We held some fairly hefty evidence sessions and additional committee meetings, for which I thank the hard-working clerks and the Scottish Parliament information centre team, who did all the heavy lifting in that respect, and my committee colleagues. I also thank those who submitted written evidence—we received a lot of it—and those who came along to the meetings to give oral evidence.
All the evidence showed us that, in football parlance, this is a bill of two halves. Part 1, which is concerned with helping home owners who are at risk of having their homes repossessed, commanded support for its general principles. However, part 2, which deals with bankruptcy, threw up a lot of disagreements and was far more problematic.
One of the big issues that the committee considered was whether the right balance had been struck between the need for sufficient consultation and the need to take action quickly. We are acutely aware of the current economic situation, and we know that there have been 48,000 repossessions in the UK in 2009. Although that figure is much lower than the original and more pessimistic estimate of 75,000, it nonetheless represents an increase of 20 per cent on the number of repossessions in 2008. On balance, we think that the case was made for part 1, which deals with repossessions, to be implemented quickly.
However, things were very different with regard to part 2, which introduces proposals on bankruptcy that were not specifically recommended by the debt action forum. We heard very different views about the operation of the forum, with regard to whether proceedings were to be kept confidential, and whether people were aware of what would be in the bill and what would be subject to further consultation. We do not think that part 2 strikes the right balance, and we believe that the consultation on it was unsatisfactory.
For a number of people, having their home repossessed is a very real threat, so it is important to ensure that repossession is a measure of last resort. The committee welcomes the measures that are proposed in part 1, and we have made a number of recommendations on specific proposals. The first is on the proposal that when someone voluntarily gives up their property and hands their keys in, they have to sign an affidavit to certify that they do not occupy the property and neither does anyone else. There were two different views on that. There were concerns that, apart from being overly bureaucratic, the affidavit process would prove costly for people who are already saddled with debt. We think that, overall, there are advantages in having a formal process, but it seems to be counterproductive to introduce a system that is so bureaucratic that it is not used. We ask the Scottish Government to think again about that issue, and to lodge amendments at stage 2 if that is appropriate.
The bill outlines what it refers to as pre-action requirements, which creditors have to satisfy before they consider repossession. There is already a pre-action protocol in England and Wales, which, as its name suggests, is a protocol rather than something that is set out in legislation. Again, there were slightly different views on whether it was better to have that in legislation than in a protocol, and on how the protocol had worked in England and Wales. On balance, the committee supports the principle of enshrining those pre-action requirements in legislation to give them more force.
The bill will effectively allow someone to recall a decree, and restart court proceedings and present their case. However, there can be only one application, and it can be made only if the person did not participate in the original proceedings. We realise that we cannot have a situation in which an infinite number of people can restart proceedings. However, the committee believes that the bill should be amended to allow a second application if the court is satisfied that the application is being made for a different reason.
We welcome the proposal to allow lay representation in repossession cases, but we also seek a lot of reassurance in that area. A number of organisations will be allowed to act as lay representatives, including those in the advice sector. We are concerned about the bill's impact on the advice sector and whether the sector has the necessary resources and capacity to deal with what might be a lot of extra work and increased expectations.
On funding, £3 million was made available for legal advice and representation, but that was more than a year ago and the money is already funding 16 projects. We do not know whether there will be enough funding to meet the extra demand under the bill. That is why we have asked the Scottish Government to outline how it will support the delivery of the bill's provisions and to report back to us on an on-going basis.
I turn to the aspects of the bill that caused the committee the most concern—the various proposals on bankruptcy. The first proposal is to create a new route into bankruptcy called the certificate for sequestration. There was support for that, albeit with some dissenting voices, but what has caused the most consternation is the proposal that the Accountant in Bankruptcy will automatically become the trustee in such cases. That was not recommended by the debt action forum. We received a huge number of submissions from insolvency practitioners who objected to that role for the AIB. The committee questioned whether the AIB will have enough resources and expertise to carry out that new role. That is why we have asked the Scottish Government to provide further information on the work that is likely to be involved for the AIB and how that compares with what it does now. We have also asked the Government to give us the basis for its assumptions on the number and grade of additional staff who will be required.
The other major issue with part 2 is the way in which family homes are treated in protected trust deeds. We heard the minister's comments on that earlier, so I can miss out the crash course in bankruptcy law. However, it is important to say that, if someone has a protected trust deed, creditors are prevented from taking court action against them and must accept the payment that is made under the arrangement. However, a trust deed can become protected only if the whole of the debtor's estate apart from items such as essential household goods is transferred to the trustee, and that includes the person's house. The bill allows the trustee discretion to exempt the family home from the protected trust deed. At present, there is no such discretion.
A lot of criticism has been levelled at that provision. Much of it stems from differences of opinion about what the bill is intended to implement. Again, that shows the unsatisfactory nature of the consultation. If there had been proper consultation, those differences of opinion might not have arisen. Concerns were raised that the provision could be subject to abuse—for example, someone might buy an expensive property in the knowledge that it could be exempted and the equity in the house could not be touched. The Minister for Community Safety said that the intention was that family homes would be exempted in cases where there was limited equity, although, as we have heard again today, no limit is set out in the bill. The Institute of Chartered Accountants of Scotland suggested that that there should be a cap on the amount of equity. The minister thought that there were a number of difficulties with that, although he said that he did not have a closed mind on the matter.
A number of other concerns were raised about the exemption of the family home. For example, the Law Society of Scotland said that that could upset the balance of insolvency law, because the family home will be exempted under a protected trust deed but not in the case of bankruptcy. That will be the subject of further consultation. We state in our report that, regardless of the validity of the arguments for and against the provision, we are concerned that there has been such disagreement, and we believe that it arose because the consultation was unsatisfactory.
The lack of consultation came up again in connection with the bill's proposal to stop advertising bankruptcies and trust deeds in the Edinburgh Gazette, but we have heard what the minister has to say on that issue. As he knows, the Edinburgh Gazette has disputed the figures in the Government's financial memorandum on the costs of advertising in the journal. We recommend that urgent discussions take place to sort out the matter.
We are also concerned that the AIB-run register of insolvencies might not be able to provide all the necessary information by the time the bill is implemented. As a result, we recommend that the Scottish Government provide further information on the precise work that will be undertaken on the register and, crucially, the timescales for that work.
If this has been a bill of two halves, an own goal has been scored in the second half. Part 2 contains significant areas of disagreement, although I should point out the consensus on exempting homes with limited equity from trust deeds. The advice sector strongly supports the new certificated route into bankruptcy—
You are now in extra time, Mr McNeil.
Thank you for showing me that mercy, Presiding Officer.
In the spirit of the Christmas season and in response to the minister's call for cheer, I want first to welcome the fact that we are finally discussing the legislation in Parliament. However, I hope that, in making some criticisms of the bill and raising a number of concerns, I will not sound too much as if I am saying, "Bah! Humbug!"
My welcome for the debate is tinged with disappointment that, as Duncan McNeil made clear in his excellent speech, the bill has some problems. What is clear, however, is that we must ensure that home owners in Scotland get adequate support and assistance when things go wrong. The financial uncertainty that the nation has faced over the past two years looks set to continue for some time and, as Alex Neil recognised, many people have been made unemployed or their circumstances have changed dramatically. Families who might once have been able to manage their debt are now facing levels of debt that they simply cannot meet. Every home that is lost is a personal tragedy, and it has happened far too many times over the past couple of years. I am sure that MSPs will have examples from their own areas and we certainly know how hard it is when someone breaks down in front of us at a constituency surgery because the threat of repossession is looming large.
Some people, of course, have made unwise choices about the debt that they have taken on, but many families who are now coping with unemployment or short-time working have worked hard over the years to build a decent life for themselves. They might feel ashamed to admit the difficulties that they face; they might not know where to turn for help; or they might leave it too late to get the help that they need. Indeed, they might need time and support to get back on their feet. In that respect, the minister mentioned the pressures on the people who will, sadly, lose their jobs as a result of the collapse of Globespan. I hope that he will urge John Swinney to look at what can be done to ensure that firms, particularly small businesses, that are under pressure can access additional help and support to keep people in work. After all, keeping people in employment is one of the best ways of ensuring that they do not get into difficulty with their mortgage and face repossession.
It is therefore right that we seek to make repossession a last resort and ensure that all possible steps are taken to keep people in their homes. As we know, the UK Government has acted quickly on this matter, and I have always believed that home buyers in Scotland deserve the same protection. As for Alex Neil's suggestion that we were ill advised to have asked for this legislation to be passed in a day, I point out that we wanted it to be dealt with quickly. We certainly believe that it could have been introduced more quickly and, frankly, we did not expect it to be in its current form. When we called for the introduction of a bill, we expected to get something simple and straightforward.
I am sure that other members will set out the various facts and figures over the course of the afternoon. However, I will mention one or two: in 2008, there were an estimated 40,000 repossessions, which was a record high. Although, for this year, the Council of Mortgage Lenders has recently revised its original forecast of 65,000 repossessions down to 48,000, the number is still huge and demonstrates the need for urgent action.
The minister mentioned the difficulty of obtaining Scottish figures. He will recall that, in August, he responded to my call for the Scottish Government to produce such figures by stating that he would press the Financial Services Authority and the UK Government to provide them. I know that he has called on them again today to do that, but perhaps he could say what he has done to press those organisations to provide that information. We need robust figures to outline the scale of the problem in Scotland if we are going to respond to the issues properly.
Even given the lack of robust Scottish data, we know that the problem is growing and on-the-ground organisations such as the Govan Law Centre and citizens advice bureaux and money advice centres throughout the country all tell us that this problem needs action.
Members will recall that, along with colleagues from all parties, we have been calling for the introduction of legislation for more than a year. There has been a degree of complacency on the part of the Scottish Government in the time that it has taken to introduce the bill. We have heard about the Local Government and Communities Committee's concerns about part 2, and I am sure that more will be said about that in the debate. It gives me no great pleasure to say that, in the way that part 2 was put before the committee, there has been a degree of incompetence to add to the complacency. From the committee discussions, it is clear that there has not been a different way of consulting, as Alex Neil would have it, but a lack of consultation on part 2. Indeed, the committee report specifically points out that it was "unsatisfactory".
As a minister who took through a lot of legislation, it was suggested to me, often with the best of intentions, that we could take the opportunity presented by a particular bill to tidy something up or to add a bit here or there on issues that were not core to the fundamental principles of the bill. The phrase "repelling all boarders" was coined to resist the pressure to do many unrelated things in one bill or to add seemingly innocuous clauses that had not been scrutinised or consulted on. Alex Neil is smiling, so he has obviously heard the phrase. Arguably, that is part and parcel of what goes on when legislation is drawn up, but it is not acceptable for a vital bill to be put at risk by being introduced in an inept way. Sadly, that is what has happened in this case, and the ministers have to take responsibility for that.
I am glad that the committee does not believe that the whole bill is compromised by that degree of incompetence. The committee must now do much of the consultation and work that the ministers have not been able to do. It should be thanked for that, but we must also learn lessons for the future.
I suggest that part 2 is a botch job. I do not know whether members will recall the children's television programme "Bodger and Badger". For those who do not know it, Bodger was the odd-job man who was sent out to clear up all sorts of messes, and Badger was his badly behaved sidekick who got himself into all sorts of trouble. I hesitate to say that Alex Neil and Fergus Ewing are the Bodger and Badger of the Scottish Parliament, but I hope that they will look in detail at what has happened with the bill and ensure that it does not happen again. The committee report on part 2 is damning, with recommendation after recommendation calling for more information, asking the Scottish Government to respond to concerns, seeking clarification on how things are likely to work in practice, and overall, slamming the Government for its unsatisfactory consultation.
I congratulate the committee on the work that it has done so far, and I recognise that it has a great deal to do at stage 2. Notwithstanding all that I have said, we will support the bill at stage 1, because it is vital for the people of Scotland. However, we expect to see a much improved bill when it returns to the chamber at stage 3 after the committee has worked on it.
Before we look at the specific provisions in the bill, it will be instructive to consider its origins. The rising tide of home repossessions is, of course, just one consequence of Labour's recession and the catastrophic mismanagement of the British economy by the present Prime Minister and former Chancellor of the Exchequer. One of the sticking plasters announced to deal with the problem for England and Wales was a set of new court protocols that came into force in November 2008, which required lenders seeking repossession of a property to demonstrate that they had fully explored with their borrowers all the options that would enable them to stay in their own home before any repossession order was granted by the court.
Of course, it was not long before Labour took up the cudgels here in the Scottish Parliament. In so doing, Labour was, by implication, critical of the adequacy of the measures that were enacted in the Mortgage Rights (Scotland) Act 2001, which was piloted through the Scottish Parliament in 2001 by Labour's Cathie Craigie, with Scottish Executive support. Malcolm Chisholm, Cathy Jamieson and Mary Mulligan were all prominent in demanding new legislation on repossessions to bring Scotland into line with England. However, it was Iain Gray who got particularly excited about the matter at First Minister's questions on 11 June this year, when he lambasted the Scottish National Party Government for delay and demanded instant legislation. Indeed, to the palpable horror and consternation of his back benchers, he pledged that Labour members would
"come back during the summer recess to vote"—[Official Report, 11 June; c 18322.]
the legislation through, such was the apparent urgency of the situation.
Well, of course, the Parliament did come back during the summer recess, but it was not to deal with repossessions; it was to hear an explanation for the early release of al-Megrahi, who, I note incidentally, is still living in the sunny climes of Tripoli 119 days after Mr MacAskill gave him a get-out-of-jail-free card.
In the meantime, the repossessions group that the Scottish Government established was continuing its review of the law and, in June, it came up with the recommendations that form the basis for the proposals in part 1.
It is worth noting that the estimate of 75,000 repossessions in the UK as a whole that was provided by the Council of Mortgage Lenders in February 2009 was revised downwards to 65,000 in June and to 48,000 in November, although that is still an increase of 8,000 on the 2008 repossessions figure. Nonetheless, it is true to say that, in many respects, the fears that were voiced at the outset about repossessions virtually doubling in 2009 have not been fulfilled. One might ask why, because the economy certainly has not got any better; it has got worse. The answer is that the good practice that is enshrined in the pre-action protocols that were announced in England has been applied by lenders across the whole United Kingdom, as we heard in evidence to the committee.
I hear what the member says, but does he accept Shelter's research, which shows that, for one third of the cases heard, the pre-action protocol has not been activated?
Of course I accept the research. What I simply say is that the good practice of lenders has been rolled out across the UK, which was the evidence that was given to the committee. What all that shows is that responsible lenders regard repossessions as a last resort and make every effort to assist borrowers who are in arrears and financial difficulties, and that, far from lenders rushing to throw them out of their homes, the interval between a borrower first falling into arrears and a repossession action being taken averages some 18 months. In fairness, the Minister for Housing and Communities, Mr Neil, was right to praise the responsibility of our lenders and the sensitive manner in which they have dealt with arrears cases.
It is also the case that many repossessions are the result of voluntary surrenders, because some borrowers recognise that staying in their present home is not a viable option and they want to clear their feet financially, if possible, and make a fresh start. It is worth noting that, at a time of falling house prices, encouraging people to stay in their present homes at all costs may not be in their best interests, because it only increases the amount of negative equity and the overall indebtedness that they are running up. That is why sensible and balanced advice on the options is essential. Accordingly, not only should a willingness to consider all options be demonstrated by lenders, people should have access to independent money advice through CABx and money advice services to assist them in making a judgment that is in their best interests at a time when they are clearly under a great deal of stress.
When we strip away all the hype and political grandstanding that have surrounded the bill, what we are left with in part 1 is a modest series of measures, which make marginal improvements to the law but do little more than enact and codify the existing good practice that is followed by the vast majority of lenders in Scotland.
Modest though it is, we support part 1 on that basis, although we trust that the Government will lodge amendments to the section that deals with voluntary surrenders, as Duncan McNeil said.
Although we can welcome part 1, the same cannot be said for part 2 and, in particular, sections 9 and 10. The consultation that was undertaken by ministers on the proposals was little short of a disgrace. The proposals were not fully discussed by the debt action forum; nor were they recommended in the forum's report. Nor were those specific proposals properly and fully discussed in subsequent meetings of stakeholders. In the diplomatic language of parliamentary reports, the adequacy of the consultation is described as "unacceptable" by the Finance Committee and "unsatisfactory" by the Local Government and Communities Committee. The conclusions of both committees were reached unanimously and should give the minister, Mr Ewing, cause to think again.
Will the member give way?
No, I am sorry.
It is interesting to note that the measures in part 2 were never intended to be the be-all and end-all of legislative action in the field. We are told, for example, that there is to be a further consultation about protected trust deeds, an aspect of which will be the exclusion of certain assets. That is commendable, but it leads one to ask why the stand-alone provision in section 10 is being proposed in isolation from the wider consultation, when there was wholly inadequate, unsatisfactory and unacceptable consultation on that proposal in the first place. Furthermore, there is to be another consultation on the proposed debt and family homes bill, the content of and timetable for which remain far from clear. I hope that the minister will clarify the situation.
Cathy Jamieson talked about a botched job on part 2 and mentioned cartoon characters, so I will refer to another one. The question for ministers is this: can they fix it? I hope they can.
The economic downturn is putting particular pressures on home owners, not just in relation to difficulties in paying their mortgages. If the equity in a person's home is reduced, less money can be released from the main asset, so there is less flexibility in dealing with other debts. The credit crunch has also made it more difficult for people to access new loans at reasonable terms, to release the equity in their homes.
It is vital that legal protections are in place to ensure that repossession is truly a last resort. There could be no more important time to put in place such measures than during the recession. Although the measures are long overdue, we support the bill. However, the issue is highly complex. In the interests of people who face eviction, it is important that we get the bill right. It is vital that threatened home owners get the protection that they deserve.
As a result of campaigning by and pressure from the Opposition, led by the Liberal Democrats, the Scottish Government established the debt action forum, a sub-group of which was the repossessions group. Both groups produced final reports, many aspects of which are being taken forward in the bill.
We have been pushing the Scottish Government to bring Scotland's repossession laws into line with England's laws for a long time and we are pleased that the Government has finally listened to us and decided to do the right thing. That is an embarrassing climbdown for the Scottish National Party and a victory for common sense.
Does the member accept that, far from bringing our laws into line with England's laws, we will have a legislative framework that is far superior to that of England?
I will touch on that point later. There is certainly a commonality of views between the minister and me on the matter.
Currently, there are more than 30,000 people who have been assessed as priority homeless in Scotland—the figure has gone up 56 per cent since 2000. The impact of the economic downturn on the labour market has had a significant effect on household incomes and levels of mortgage arrears and repossessions. The Council of Mortgage Lenders predicted that 65,000 people in the UK would face eviction in 2009, which is a substantially higher number than in 2008, when 40,000 repossessions took place.
Rising unemployment in Scotland will contribute to more borrowers being behind on their mortgages. In 2007-08, decrees granted accounted for about 60 per cent of actions initiated; in the most recent year, that has risen to 75 per cent. Citizens Advice Scotland's recent research report "Drowning in Debt" found that the average consumer debt held by a citizens advice bureau debt client was £20,193—a 50 per cent increase in only five years.
As a member of the Local Government and Communities Committee, I have heard and read all the evidence that was brought to it. The committee report is, overall, supportive of part 1, but it expresses a number of concerns and recommendations on part 2, which were well put by the convener, Duncan McNeil.
In several of the submissions that the committee received, concerns were raised about the absence of the normal consultation period for the bill. Concerns have also been expressed in the creditor press about the lack of consultation and the possibility of unintended consequences.
Among the organisations that commented on the bill, Shelter Scotland does not believe that its measures will unduly restrict lenders or burden the courts. It strongly supports the measure to develop a pre-action protocol through primary legislation rather than the advisory route that was taken in England. Citizens Advice Scotland strongly supports the bill too. CAS believes that it will have a positive impact on CAB clients who experience debt and/or housing problems. It welcomes the intention to enable lay representation in repossession cases and calls for CAB advisers to be enabled to represent their clients in hearings.
Insolvency practitioners have raised concerns about various provisions. They have expressed particular concerns about section 10 in part 2, which would allow for certain assets and liabilities—namely, the family home—to be excluded from a protected trust deed while still allowing the deed to become protected.
Access to advice was also seen as crucial by all DAF members. It was accepted that supply does not currently match demand, as debtors may wait weeks for a face-to-face appointment with a money adviser.
The proposals will also allow people who would previously have chosen not to appear in court because of the expense to appear at no initial cost. That welcome step can only take much of the stress of a court appearance away from the debtor.
On the recall of decrees, the committee recognises that a balance needs to be struck between the rights of lenders and borrowers and notes the Scottish Government's argument that there must be a limitation on the number of entitled residents who can recall a decree. The committee is persuaded that there should be an opportunity for a second application to be made in those circumstances and recommends that the Scottish Government consider an amendment in that regard. That was of particular concern to me, as I am not convinced that the debtor would always have the best interests of their family at heart if repossession was to take place.
The current situation for debtors in Scotland lags behind that in England, but I firmly believe that, rather than simply adhering to England's protection of debtors, we in Scotland are creating a stronger basis on which they can recover from their debt by enshrining their protection in legislation. The bill provides a better balance between the creditor and the debtor, and I confirm that the Liberal Democrats will support it at stage 1 this afternoon.
As Cathy Jamieson indicated, every member has their own experiences of being approached by constituents about problems in maintaining their current home and having their home repossessed by lenders. In the current economic climate, there is a need for measures to avoid home repossession.
The Local Government and Communities Committee held a number of evidence-gathering sessions in its examination of the Home Owner and Debtor Protection (Scotland) Bill. The bill builds on the establishment of the debt action forum and its discussions since January this year. Part 1 aims to put into legislation the recommendations of the repossessions group and part 2 contains proposals on bankruptcy.
As the committee details in its stage 1 report, there was cause for concern about whether the consultation on the bill was adequate, particularly as there was no formal three-month consultation period. The committee acknowledges that there is a difference between parts 1 and 2 and, on balance, believes that the consultation on part 1 was sufficient.
In the evidence sessions, it became clear to the committee that the repossession figures that the Council of Mortgage Lenders produces should be made available for Scotland. That is why paragraph 113 of the committee's report notes:
"The Committee is very concerned that the Council of Mortgage Lenders is not able to provide figures relating to the numbers of repossessions in Scotland."
As some members will remember, since the 1980s, there has been a cry to establish a home-owning democracy in Scotland. However, that comes at a price, especially in times of recession, and it is a human price. Behind the repossession figures there is a human face that we need to reflect on. I hope that the bill will go some way to tackling that. There are significant issues about other loans that might be secured against the family home. The spectre of redundancy hangs over everyone, and the fear of repossession hangs over many people at present.
Concern has been raised that the new processes will be overly bureaucratic. Some lenders claimed in evidence that they will not use them. However, the lenders should be aware of the demands from the wider community, who in turn actually own many of those financial institutions as taxpayers. Those same institutions want to foreclose and repossess the homes of people who are affected by the recession. Surely I am not alone in recognising the supreme irony of lenders advocating such a position in the current difficult economic times. It is important that the committee supported the principle that pre-action requirements should be enshrined in legislation so that they have legal force. The bill also attempts to address some of the concerns that have been identified with the process in England and Wales, where borrowers have limited redress to lenders.
There are capacity issues for money advisers and those who offer advice to people who are at risk of having their homes taken over by lenders. I welcome the fact that the Scottish Government has made available £3 million for advice services, some of which will assist in funding representation for people who face the threat of repossession. The advice services that are funded must be available throughout Scotland.
Part 2 is probably the more contentious part of the bill. The measures on the certificate for sequestration aim to introduce a new route into bankruptcy that does not require a debtor to show insolvency. A debtor will be able to apply to an authorised person for a certificate that means that they can petition for bankruptcy.
It should be noted that a number of bodies with vested interests have issues with part 2. It was disappointing that the final report of the debt action forum stated that the stakeholders in the forum had varying views on the proposal to widen access to bankruptcy and to allow people to apply for their own bankruptcy. That report states that the proposal was
"supported by some Forum members."
The committee's stage 1 report states that further information should be provided on the work that will be required of the Accountant in Bankruptcy and its role in the new route into bankruptcy. The evidence to the committee, which is reflected in the report, centred on the financial costs. Blair Nimmo from the Institute of Chartered Accountants of Scotland noted in evidence that there will be a cost to the public purse and that the measures
"will increase the size of the public sector".—[Official Report, Local Government and Communities Committee, 4 November 2009; c 2565.]
I welcome the minister's commitment to consider the role of insolvency practitioners and the capacity issue relating to the Accountant in Bankruptcy.
Credit agencies raised concerns over whether the register of insolvencies will include all the necessary information. That led some to state in evidence that the bill could increase the cost of borrowing for Scottish consumers. The Local Government and Communities Committee and the Finance Committee acknowledge the concerns that have been highlighted and note the need to continue a dialogue with stakeholders who remain concerned about the financial suppositions, particularly in respect of the current role of the Edinburgh Gazette.
I welcome the stage 1 debate and the broad principles in the bill. I look forward to the bill coming back to the Local Government and Communities Committee. I thank all those who provided written and oral evidence on the bill, which aided the committee in considering the issues. I support the bill.
I am pleased to take part in the debate, as it relates to matters that have been raised with me by constituents in Strathkelvin and Bearsden who, in the main, are employed as insolvency practitioners. From their point of view, I think I can safely say that the whole development of the bill has raised concerns. For understandable reasons, the Administration was being urged to move swiftly to change the law to limit the damages to home owners in Scotland who might find their family home being repossessed, when such a fate could be avoided. As my colleague Cathy Jamison said, Labour members support many of the general principles behind the bill and the need for swift action to help families who are facing very real hardship. However, there are ways in which to move quickly and still do things in the right way; as we have heard, that is far from what happened in this case.
It might be claimed that some of the provisions that were originally contained in the bill would have made matters worse than the law as it currently stands. It could also be argued that what has been produced by this Administration might be the wrong bill at the wrong time, but we can set that aside.
The problems with the bill date right back to its beginning when the Minister for Community Safety, Mr Ewing, set up the debt action forum to consider matters. Its membership was unbalanced, with key groups being left out. The composition and operation of the debt action forum were flawed, so it is no surprise that the resulting report was flawed. However, one of the report's conclusions that made sense was that there should be wider public consultation on how family homes are to be treated. However, ministers ignored that sensible suggestion from the group that they had set up and produced section 10, which relates to trust deeds and contains a provision that will allow further property to be excluded without the need for consultation.
A bill was produced that ministers claimed was based on the discussion and decisions of the debt action forum, but that was not the case with regard to significant provisions. It has been claimed to me that the bill also contains important provisions that in some cases were never discussed by the debt action forum. Mr McLetchie made that point in his speech. In other cases, provisions were discussed but not agreed by all members of the group. Some measures were claimed to be widely supported when that was simply not the case.
One issue of particular concern to me is information that was given by official sources to the Finance Committee when we discussed the bill with members of the bill team. Evidence provided had raised concerns about the estimates of the number of insolvency cases that would be handled under the bill if it were made law. Insolvency practitioners raised the point that the Accountant in Bankruptcy—the Government agency handling such matters—misjudged dramatically the number of applications that there would be under the low-income, low-asset route into bankruptcy or LILA, as it is known colloquially.
Officials told the committee that their estimate had been of 7,500 cases in the first year, whereas there had been over 9,000. The impression given was that the Accountant in Bankruptcy had never suggested that numbers would be lower than that. Why then did Gillian Thompson, the then Accountant in Bankruptcy, write in a letter that was published in The Herald on 27 February 2008 that there would be 5,000 LILA applications in the first year, followed by 3,000 in the years thereafter, and claim that suggestions that the number would be higher were "scaremongering"?
As we have heard, there is widespread concern about the provisions that are set out in part 2, particularly in section 10. Concern has been expressed by the Law Society of Scotland, the Institute of Chartered Accountants of Scotland, R3, which is the insolvency trade body, senior lawyers and academics who are experts in the field—many people who are at the sharp end of the issues, including the Govan Law Centre. The insolvency trade body R3 and ICAS have called for the removal of section 10 from the bill on the basis of genuine concern that inadequate consideration has been given to its effects. Widespread professional concerns, lack of proper consultation, ill-thought-out provisions in part 2 and questionable evidence given to committees of this Parliament—that is not the way to make good laws of the kind that the people of Scotland deserve.
Ministers have stated that a further consultation on protected trust deeds is imminent and that the debt and family homes (Scotland) bill will be introduced shortly. That will surely be the time to carry out a review of personal insolvency and fully consider all aspects of the family home.
As Duncan McNeil said, this is clearly a bill of two halves. Part 1 deals with the protection of hard-pressed home owners facing repossession. There is clearly a need for legislation to be passed quickly to help people in that situation. However, part 2 contains significant areas of concern that are still to be resolved. I hope that, even at this late stage, the Government will listen to the professionals and address their concerns.
As other members have said, there has been pressure from across the political spectrum for legislation to deal with some of the human consequences of the economic downturn. The Home Owner and Debtor Protection (Scotland) Bill forms at least part of that response.
The two parts of the bill deal with distinct issues. However, in its report, the Local Government and Communities Committee endorsed the general principles of both part 1 and part 2. Essentially, those principles are to strengthen the existing provision in Scots law to protect home owners and to build on the experience of how the Mortgage Rights (Scotland) Act 2001 has worked in practice.
The need for action is clear. Citizens Advice Scotland is one of many organisations that strongly support the bill. It was represented on the debt action forum and is only too aware of what debt means for families around Scotland. One theme of evidence was the need to obtain reliable Scottish figures for repossession. I understand that the Scottish Government has been in dialogue with the Financial Services Authority about requiring lenders to provide separate Scottish data in order better to inform policy making in the distinct Scottish housing market. The issue is highlighted in the Local Government and Communities Committee's report. However, the figures at UK level present a concerning picture, with 53,000 repossessions forecast for 2010 and repossession orders granted by courts at their highest for at least a decade. In the present climate, none of that comes as any great surprise.
The Scottish Government has responded to the need in ways other than legislation. In January 2008, an additional £35 million was provided to the home owners support fund to help with mortgage to rent and the new mortgage to shared equity scheme, which was launched in March that year. Between January and August 2009, almost 150 families benefited from the scheme. The Government has also increased funding for debt advice, with an additional £1 million for Citizens Advice Scotland in 2009-10 and a further £250,000 to support accreditation towards the national standards for information and advice. Funding for relevant legal advice has increased by £3 million over two years.
However, there was a widely shared feeling that further action at legislative level was necessary as a matter of urgency. That urgency necessitated a reasonable attitude towards the length of the consultation period for the bill, but interested parties were engaged extensively. As other members have mentioned, initially there were calls from some quarters for emergency legislation, which would have restricted engagement severely. That route was rejected.
Part 1 makes extensive changes to the extent to which home owners and other residents can apply to court to delay repossession under the 2001 act. That facility has been extended to include almost all instances in which a lender seeks to repossess a property as a result of debts or mortgage arrears. Crucially, a lender will no longer be able to sell a domestic home that is used as a security without recourse to court action. Lenders will have to show that they have considered reasonable alternatives to repossession. The bill codifies industry best-practice guidance and goes further than the England and Wales pre-action protocol in the area—with good reason, as others have observed.
It is worth clarifying one issue that was raised in evidence—the protection of the family home in the process. The bill does not provide absolute protection of the family home from bankruptcy or repossession. The fear that it would do that lay behind some, although not all, of the criticisms that were made of the bill in committee.
As others have mentioned, part 2 deals with issues relating to bankruptcy and trust deeds, removing the requirement for the creditor to give consent before a person enters bankruptcy by creating an alternative route that involves their being assessed by an authorised person, such as a solicitor, as being unable to pay debts.
Much of the evidence on part 2 was, declaredly, from people who make a living—in some cases, a substantial living—from the existing system. That notwithstanding, it would be fair to reflect a variety of views among the committee on part 2.
The issue around the Accountant in Bankruptcy automatically becoming the trustee in certificate for sequestration cases caused continuing debate in the committee. Some of the other concerns that were raised by insolvency practitioners about part 2 were not shared by organisations such as Shelter, which believed that the provisions help people who currently do not have debt solutions available to them. In any event, evidence from ministers indicated their willingness to consider amending the bill at stage 2 if outstanding areas of concern remain. Discussions between ministers and stakeholders continue.
Despite there being various areas, particularly in part 2, in which the committee identified a need for further parliamentary scrutiny and debate, the committee was able to endorse the general principles of the bill. I hope that Parliament will be willing to do likewise at 5 o'clock.
I add my thanks to those of others to the clerks and the Scottish Parliament information centre for getting us through stage 1 and taking us thus far.
That there is a need for legislation to protect home owners in times of recession can be in no doubt. We do not have figures specific to Scotland but, as other members have mentioned, the Council of Mortgage Lenders predicts that 8,000 more people in the UK will have faced repossession in 2009 than in 2008.
For more than a year now, Scottish Labour has been calling for action to protect Scottish home owners so that, if they encounter problems, they will have at least as much protection as people in similar situations in England and Wales. Like many independent commentators, we believe that that could have been achieved without new primary legislation, simply by introducing pre-action protocols and possibly by amending existing legislation. The Scottish Government found it necessary, however, to set up the repossessions group—a sub-group of the debt action forum—the main recommendation of which was, indeed, pre-action protocols and the amendment of existing legislation.
Nonetheless, the Government decided to introduce a distinct piece of proposed primary legislation. Our party was pleased that the Scottish Government had at last received the evidence that it clearly needed before it could act. We were willing to accept that, in order to expedite action, the Government would forgo the usual consultation. Unfortunately, the Scottish Government has rather played on our good will, and on the good will of the whole Parliament. The Government's bill is badly constructed and it links together two disparate sets of issues—and, in the process, it has created controversy, confusion and disagreement among those who work in this area.
There are a number of outstanding issues regarding part 1. Some witnesses who gave evidence to the committee suggested that the provisions in section 1 relating to the voluntary surrender process might be overly bureaucratic and, consequently, that they might not be used by lenders. We await the minister's further consideration of the issue with interest.
The committee concluded that the Government should seriously consider introducing an opportunity for a second recall of a decree, with the proviso that an entitled resident can persuade the court that the recall application is being made for a different reason from the first one.
All committee members were concerned that lay representatives should be accredited. For that reason, we welcome the draft Scottish statutory instrument that introduces that safeguard. We are also concerned that lay representatives should have the appropriate training. Concerns remain that there might not be enough capacity in the advice centres to fulfil expectations.
As Duncan McNeil said, the Scottish Government made available about £3 million for advice and representation, but that money was for only two years, and it was announced in November 2008, prior to the introduction of the bill. I hope that, in summing up, the minister will indicate that that money will be supplemented, if required, and that he will indicate how he sees the scheme of lay accreditation working in more detail.
The committee was unsure whether the court system would have the necessary capacity and resources to perform the additional duties that the bill will bring. Reassurance from the minister on that issue would be welcome.
In the time allotted to me, I cannot cover the committee's many concerns regarding part 2. However, it is worth noting just a few of them. Serious concerns have been raised with the committee about the ability of the Accountant in Bankruptcy to fulfil its proposed new obligations. Given some of the inaccuracies in the paperwork that it supplied to the committee, that seems a justified concern. It is right that the minister has indicated a willingness to re-examine the proposal. I am sure that the committee will wish to discuss the issue with him as the bill progresses towards stage 3.
Section 10 caused substantial disagreement, as members have heard. The disagreement among witnesses was quite widespread, but there was some consensus over the principle that a home with a limited amount of equity should be exempted from protected trust deeds. Committee members felt that such was the level of disagreement we had to record the issue in our stage 1 report. The minister has agreed to report back, possibly today, on further discussions with the sector on how section 10 is intended to work in practice. Again, that is welcome.
The Local Government and Communities Committee, the Finance Committee and the Subordinate Legislation Committee have all expressed concerns about part 2. I do not recall having previously received so many letters and e-mails arguing the detailed points of such a bill. That is disappointing. Even more disappointing is the fact that ministers could not offer enough reassurance to members on the issue, which involves not a controversial matter of principle but a measure on which a broad consensus should, and indeed could, be built. I am afraid that ministers have failed to satisfy either the sector or the committee.
In my view, ministers have a big job to do if the bill is to be safely passed and protection thereafter given to those who have been made vulnerable by financial difficulties. I suspect that, if the committee had not been so clear about the need to offer protection to such people, we might well have rejected part 2 out of hand. I genuinely and sincerely hope that ministers will rise to the challenge by ensuring that they and their officials work with the committee and the sectors to ensure that the bill is in far better shape when it comes back to the Parliament at stage 3.
This afternoon's debate provides a fitting end to the current parliamentary term: there will be many things on which our parties disagree, but the passage of the Home Owner and Debtor Protection (Scotland) Bill through its stage 1 committee scrutiny will, in my opinion, be a shining example of the parties coming together to get the job done. The bill will be a powerful tool to protect family homes from repossession and to ensure that effective debt solutions exist for the many vulnerable individuals and families who are caught in an inescapable debt trap. That debt trap is often due to current defective legislation. Therefore, as we enter the holiday period, we should remember that the bill provides an example of what this Parliament can do when we put our minds to it.
I hope that stages 2 and 3 can be completed very early in the new year. All of us in the Parliament have a responsibility to seek consensus where possible and to agree on a reasoned compromise where it is appropriate to do so. Indeed, I believe that ministers were in listening mode throughout stage 1, so I look forward to seeing what will emerge during stage 2.
I want to cast an eye south of the border. Some unionist colleagues might anticipate that every comparison drawn with England is an attempt to play party politics, but I can assure them otherwise. It is believed that England has had some success with the pre-action protocol, which is a list of best-practice protocols that lenders should go through before seeking repossession. Indeed, Labour members have spoken highly of such protocols in previous months. As Alex Neil mentioned, under the protocol—which is clearly a step forward—around one third of cases are still not dealt with appropriately. The move to put the pre-action protocol on a statutory basis in Scotland, combined with the provisions that will require all repossession cases to appear in court and—just as important—enable statutory pre-action requirements to be tested in court, will give this Parliament an incredibly strong and powerful framework for dealing with repossessions in Scotland. I believe that the bill will put Scotland ahead of its closest neighbours in tackling repossessions, but the progressive legislation in England is what has led us to this point.
Another provision in part 1 that I want to highlight is the right to representation in court by a lay representative. I believe that, in years to come, this Parliament will view that practice as commonplace and will wonder why it took us all so long to allow people from organisations such as debt action Scotland and Citizens Advice Scotland to provide such representation in court. After all, such organisations often support families with debt and repossession issues, providing vital support, building up trust and giving advice along the way. In many circumstances, they are best placed to defend repossession actions in court.
Much has been said about part 2 of the bill. It is vital that we ensure that part 2 is as good as it can be and that all that is good about it is not lost as the bill progresses. We should not let the consultation issue get in the way of that. I see nothing in part 2 that cannot be retained, either in its current form or following further clarification or—if need be—amendment. I believe that our committee agrees, which is why, despite the concerns about consultation, we all agree to the general principles of both parts of the bill.
Mr McLetchie was extremely critical of part 2. He evoked Bob the Builder in asking whether we could fix it. Although he hoped that we could, in much of his speech he appeared to suggest that the only tool that the Conservatives would use would be the spanner that they would throw in the works. I strongly hope that that is not the case.
I would not claim that Labour has similar intentions—I believe that its members will be constructive, even though I may not agree with Cathy Jamieson's or David Whitton's choice of language to describe the bill. It is the Government's responsibility to produce draft legislation and it is the Parliament's job to improve and amend it as appropriate, and I genuinely believe that Labour will work in partnership to achieve that aim.
I turn to the certificate for sequestration, which is vital. There are people out there who are caught in debt quicksand and are sinking fast. If someone has too high an income to make an application to the low-income, low-asset debtor scheme but does not earn enough to participate in a debt arrangement scheme or a protected trust deed, they are at the behest of their creditors. CAS has huge concerns about that and wants there to be no delay in the taking of action. It believes that any delay will result in another year of misery for many people in Scotland. The certificate for sequestration would solve the problem. So far, the biggest concern about it that I have heard is that the system might be overly bureaucratic, but I suspect that that is always the complaint whenever a new system comes in. It is for the Government to get that aspect right.
In the time that I have got left, I want to deal with the biggest red herring, which relates to protected trust deeds. It will not become compulsory to remove the family home from a protected trust deed; the bill will just make it legal to do so, which, at the moment, it is not. The bill simply provides another tool in the box for dealing with repossessions and securing family homes. I see no reason why creditors cannot make a debt arrangement to exclude a family home, regardless of the level of equity that is contained in it. I am open minded about whether we need guidelines, but I make it clear that as long as we are talking about a negotiated settlement that is not forced on the sector, there is no issue—it is a red herring.
I believe that the Parliament will come together on the bill's general principles, and I look forward to stage 2, when I hope that a constructive partnership will be developed that will save people from repossessions and provide them with debt solutions.
I am pleased to be able to speak in the debate, and I pay tribute to the members of the Local Government and Communities Committee, including my good friend David McLetchie, for producing a thorough and extremely useful committee report on the bill, which has informed the debate and correctly highlighted areas that require attention.
We all recognise the severe economic pressure that so many of our constituents are under, including those in my region of the Highlands and Islands, as unemployment goes up and disposable incomes are squeezed. The bill's policy memorandum states that the policy intent is
"to protect home owners and debtors during a period of recession, and in particular to reduce the risk of homelessness as a result of insolvency."
It is interesting, and I have to say rather shaming, that while other European Union countries, notably Italy, are managing to move out of recession, we in Britain are still languishing in such an awful mess. Bob Doris blamed David McLetchie for throwing a spanner in the works—I hardly think that it was him or our party that did that to one of the most successful economies that Europe has ever seen. The credit boom of the past 10 years meant that many people had ready access to mortgage credit, often for the first time in their lives, and we were able to fulfil their perfectly understandable and commendable desire to become property owners. The good economic conditions brought about by the previous Conservative Government, and the right to buy, were willingly taken up by a great many Scots. That scenario was sustainable as long as the British economy did well, but the economic crash and its consequences have led to a situation in which many people are now struggling to keep up with their mortgage repayments, experiencing negative equity and facing the dreadful prospect of repossession. The Council of Mortgage Lenders is still predicting somewhere in the region of 65,000 repossessions across the UK this year, which is significantly more than the 40,000 that took place last year and vastly more than the 8,200 recorded in 2004.
We recognise that the repossession of a home is surely one of the most devastating and stressful life events that could possibly befall anybody. I also share the concerns that have been widely expressed in the Parliament and elsewhere with regard to a lack of information about the number of repossessions that take place in Scotland. As with any issue, it is vital that we have a grasp of the extent of the problem when we seek to tackle it. It is concerning that we have very little evidence that is specific to Scotland in respect of the number of repossessions over the past two years or so; it would have been extremely useful to have had that information when the committee considered the bill.
More generally, on a theme that emerged when the committee took evidence at stage 1 and which David McLetchie highlighted, the Government should have been able to present more convincing evidence to show why current legislation was not sufficient and why the new legislation was required. Nevertheless, in these difficult and exceptional economic circumstances, the Scottish Conservatives believe that it is right that Government at all levels considers what action it can take to assist people to cope with the recession and to help prevent repossession, which we have always said should be a measure of last resort—a position, of course, with which lenders agree. That is why we will support the bill today, albeit while seeking improvements in the areas that David McLetchie covered earlier and which he will again address at the end of the debate. I also acknowledge the support that the bill has had from a range of organisations, including Citizens Advice Scotland, which sent me a very useful briefing note.
Part 1 of the bill brings Scotland more closely into line with the law in the rest of the UK on repossession and, crucially, it puts into statute a pre-action protocol for repossessions. That will allow the home owner greater opportunity to object to creditors taking repossession of their home. That essentially means codifying the good practice that exists in the rest of the UK and it therefore has our support.
There are more areas of concern in part 2. The committee's evidence correctly identified that the new route into bankruptcy in section 9 would potentially mean a significant shift of business from the private sector to the public sector and potential redundancies as a consequence. It was appropriate for the minister to take those concerns on board and to commit to re-examining the role of insolvency practitioners. We look forward to ministers delivering a more acceptable way forward on the matter in full consultation with private sector interests.
Today's debate has so far been, on the whole, constructive and useful. We are satisfied that there is enough need out there to justify the bill and enough in the bill to justify our party supporting it. My Conservative colleagues and I stand ready to work constructively with the Scottish Government and others to improve the bill in the next stages of the legislative process, so that we achieve clear and effective legislation that gives support to Scottish families who are struggling in very difficult economic times.
In the football parlance that Duncan McNeil spoke of, those must be our goals, and let us avoid the penalties—the awful penalties—that fall on the unfortunate householders who are shown the red card in their own homes.
I do not know whether I shall manage to continue the football analogy, but one image springs to mind. In stage 1 debates, the contributors are usually the members of the lead committee. For those of us who are not on the lead committee, it is a good thing that the team has turned up. I am in the grandstand, watching it all and trying to reflect on what is going on. I have been left very little to contribute to the detail, as other members have been playing the ball for some time. I will, therefore, offer a few thoughts on the edges of what we have been talking about.
Human nature is much to do with the problem that we have been addressing. A lot of what is in the bill and what has been talked about is the provision of information. I remind the chamber that many people are not very good at reading; therefore, the written information with which they are provided can be pretty useless. I am not making a point about the education system; I am simply asking members to recognise that sending people the appropriate advice in written form may not work and is less likely to work for those who have already got their affairs in a muddle, as they are probably less organised. It is therefore important that, when people get into an economic mess, they know where to turn—CAS would be one such place. They must also be convinced of the need to do so and must be empowered to do so. I wonder whether we have given enough thought to ensuring that the people who are least likely to interact are given the right way of interacting. Are we dealing with the vast majority of people, who can read and look after themselves, to the exclusion of those who are most vulnerable?
A second thought is about the nature of the bill. I will not go back over the party politics of it, but there was a call for swift legislation. There has also been a call for later legislation on the basis that we could have carried out more consultation. It seems to me that the ministers on the front bench today will be damned if they do and damned if they do not—they have taken a middle road and will be damned at both ends. That is just life.
The committee should not be terribly worried about being forced to go to stage 2 with quite a lot to do. Most members have been in the Parliament for a lot longer than I have and will not need to be reminded of that. Nevertheless, that has been my experience as a member of the Justice Committee. The Sexual Offences (Scotland) Bill, which we passed fairly recently, and the Criminal Justice and Licensing (Scotland) Bill, which we are currently working through, involved a huge amount of discussion with ministers at what I might call stage 1.5, so that what we got at stage 2 was agreed, further amendments were lodged and stage 3 was relatively straightforward. I do not think that anybody should be the slightest bit worried about the amount of work that will be involved—I am sure that the committee is up to making the modifications that are required, and I look forward to the end result.
Nevertheless, I worry slightly about part 2. Members have articulated the problems with it. I have in front of me a letter from ICAS, which I am sure that all members have seen. Paragraph 14, on protected trust deeds, states:
"ICAS believes that the proposal seeks to address a problem that does not exist."
I could continue the quote. It makes me wonder why we have received very different opinions from different parts of the landscape. I wonder whether there is a bit more work to do to get the right people into the room and around the table to work out what they are saying and where the compromise can be made.
The idea of lay representation affects everything to do with the justice system. Nobody has yet pointed out that, although lay representation may be entirely appropriate when the facts are the only things at issue—as, by and large, they will be in this case—we should be worried about lay representation when the law is at issue. We must recognise that, although it can sometimes be an ass, the law is usually complicated and that to allow laypeople to pretend that they know the law on a subject is a dangerous route to go down. We must ensure that we separate those two circumstances.
I feel as though I have been sitting among squabbling children. Labour wanted a one-day bill—a simple bill, as Cathy Jamieson put it—but the speed at which it is now being dealt with is too fast for Duncan McNeil, who wants more time for the consideration of the bill. Further, although David McLetchie is a member of the Local Government and Communities Committee, which backed the need for legislation in Scotland, he managed to argue with himself when he said that he felt that the protocols that are in place in England are adequate. Not to be outdone, although the minister outlined that early action by lenders has reduced the impact of repossession, he has brought to the chamber a bill that will encourage lenders to reduce the impact of repossession.
However, today's debate represents a serious attempt to solve a serious problem that affects more than 500 families in Scotland every year. Cathy Jamieson hit the nail on the head when she said that employment is one of the best ways in which to prevent repossession, although that is a moot point, given that, earlier today, the chamber heard about more than 1,000 job losses in Scotland. No doubt, that represents 1,000 families who are concerned that they might soon be in need of the protection of the bill that we are discussing. That is all the more reason why we must fully discuss and overcome the significant difficulties in part 2.
I am happy to accept David McLetchie's suggestion that, on average, 18 months elapse between the first notice of arrears and a repossession. I hope that all members will remember that it is now less than 18 months before our jobs are on the line. That is all the more reason to ensure that we get the bill absolutely right.
Like John Wilson, I look forward to further consideration of the bill and, particularly, the amendments that the Government will introduce at stage 2—I hope that they will be robust.
Part 2 of the bill is not the botch job that Cathy Jamieson said that it was, but it is fraught with problems that must be fixed properly, rather than fixed quickly.
The Liberal Democrats will support the bill at stage 1. However, there are serious concerns around pre-action requirements, lay representation and certificates for sequestration, and disputed figures abound. Those factors must be seriously considered. Like John Wilson, I feel that enshrining the pre-action protocols in legislation is the correct way in which to proceed.
We must ensure that the legislation is swift; and robust and that it helps to reduce the spectre of repossession for hundreds of families in Scotland.
Today's interesting debate was kicked off by Alex Neil, full of his usual pugnacious bonhomie. He made some valid points. He was right to say that we require the Scottish figure for repossessions from the Council of Mortgage Lenders if we are to make effective policies that are tailored to Scotland's needs and circumstances. I must say that I find it extraordinarily difficult to understand how, in the sophisticated information technology age in which we live, lenders cannot tabulate arrears and repossession cases on a regional or Scottish basis. One wonders whether they have failed to note the postcodes of their borrowers.
Although Mr Neil was right in that regard, he was absolutely wrong in relation to the infamous section 10, which was discussed by many members during the debate. The minister and other members of the SNP took great pains to stress that the exclusion of a family home, as provided for in section 10, is possible only with the consent of creditors. However, if that is the case, how can it be a protection to home owners? If it is not a protection, why is it so urgent and why can it not be considered in the wider context of the consultation on protected trust deeds that we have been promised? Cathy Jamieson was right to draw on her previous experience as a minister to point out that the provision is not central to the core purpose of the bill and that, as recommended by ICAS, it should be withdrawn and reconsidered at a later stage in that wider context.
Duncan McNeil made a measured and thoughtful contribution that was faithful to the committee report and its unanimous conclusions, which we hope will be followed by amendments lodged by the Scottish Government at stages 2 and 3 of the bill. Mr McNeil identified the concern that the Accountant in Bankruptcy would have a monopoly of the cases that result in sequestrations under the certification route that is promoted in section 9. It would appear from correspondence that the minister is about to run up the white flag on that and lodge amendments—which we look forward to examining—at stage 2 to remove that monopoly. At least, that is what he has told the Institute of Chartered Accountants of Scotland.
Jim Tolson was right to highlight—and Bob Doris also focused on—the importance of money advice and money advisers in the whole process.
John Wilson asked whether the new revamped online register of insolvency will provide the same service to credit reference agencies as the present Edinburgh Gazette publication does. That information is critical to decision making.
David Whitton drew attention in his excellent contribution to the criticisms by insolvency practitioners of the consultation on part 2 and pointed out that the debt action forum said that wider consultation was needed. That recommendation from the forum has been summarily ignored by ministers, and they therefore cannot complain about the torrent of criticism that has descended on them for doing so.
Alasdair Allan drew attention to the fact that the committee unanimously recommended that the bill be approved at stage 1, which is true, but I remind him and Bob Doris that we on the committee also unanimously and heavily qualified that recommendation in relation to part 2.
Finally in my wee summary of members' contributions, I congratulate and welcome Jamie McGrigor's reminder about the growth in home ownership in Scotland thanks to the introduction of the right to buy by the Conservative Government, which did more to make homes affordable for working people in this country than any other measure enacted before or since.
As we have heard, section 9 introduces a new route into bankruptcy through the certificate for sequestration, which is designed to cater for debtors who do not have a route into bankruptcy under the present law. It takes them out of the legal limbo in which they find themselves. That, of course, is a matter of concern to us all, and especially to the Prime Minister—the man formerly known as Prudence—who is the architect of our misfortune. However, help is at hand.
Let us picture the Prime Minister, sitting in his summer house in North Queensferry and gloomily looking over the bleak midwinter of our discontent. Suddenly a messenger appears. "Fear not," he says, for sudden dread has seized Mr Brown's troubled mind. "Fear not, for I bring you tidings of great comfort and joy. Thanks to the diligence of Fergus Ewing, Alex Neil and the members of the Scottish Parliament, who even at this late hour are working in the best interests of the people of Scotland while Westminster has already packed up for Christmas, we are passing a law that will ensure that everyone in Scotland can become officially and legally bankrupt. No one will be overlooked, and no one will be left behind."
The Prime Minister is cheered up—what a Christmas gift! It is surely the ultimate piece of equal opportunities legislation. The man who promised an end to boom and bust can enter the new year confident in the knowledge that, thanks to the efforts of this Parliament, we can all go bust together. I can think of no better epitaph for this Labour Government.
It is clear that David McLetchie is in pantomime mood already.
I am pleased to close the debate on behalf of the Labour group. In my opinion, the bill was brought about through the efforts of my colleague Cathy Jamieson. I accept that members from all parties recognised that the recession would harm home owners and therefore wanted to protect them as much as possible, but it was Cathy Jamieson, ably supported by Mike Dailly and the Govan Law Centre, who saw that there is a gap in the support that is available. I say to Jim Tolson that Cathy Jamieson gathered cross-party support—notably from Ross Finnie, Patrick Harvie and Margo MacDonald—to ensure that a pre-court protocol is introduced in Scotland. Cathy Jamieson should be praised for her efforts, particularly as she could have accepted the reassurance from the Cabinet Secretary for Health and Wellbeing that no further action was necessary.
In response to the pressure from Cathy Jamieson and others, the cabinet secretary tried to sideline the issue by establishing a sub-committee of the debt action forum to be known as the repossessions group. I add my thanks to the members of that group for the work that they did, although we have to ask why there was no one from the Govan Law Centre on the group.
The group's report brought about part 1 of the bill, but it also raised the first issue for the Local Government and Communities Committee, which is whether there had been proper consultation on the bill. A number of members who spoke this afternoon picked up on that. I accept the Scottish Government's response was that there was a lot of pressure to act quickly as more home owners became at risk of losing their homes, but if the cabinet secretary had not procrastinated for so long in the first place, maybe there would have been time for proper consultation.
In response to members who say that it is ridiculous to suggest that we could have dealt with the bill in one day, I say that, if part 1 had been the entirety of the bill as was intended, it might have been possible for the Parliament to tidy up the drafting and deal with the bill in a much quicker timescale than the seven weeks that it has already taken us and however much longer it will take us.
On balance, the committee agreed that the consultation was adequate. All political parties have accepted the need for part 1 and, with the possible exception of Mr McLetchie, all members of the committee believed that there was a need for speed. We recognise that there might still need to be amendments at stage 2, but the general principles of the bill were agreed to.
I do not think that I am the only person who was surprised to see that part 2 had been added to the bill. Perhaps it is included for the reasons that Cathy Jamieson mentioned and because the civil service saw a way in which to deal with some uncomfortable legislative changes that it wanted to make. Perhaps the minister will clarify that in his closing speech.
When the committee looked at the consultation on part 2, it quickly became clear that there was a problem. Witnesses made it clear that they had expected there to be further consultation. There seems to be some disagreement about whether members of the DAF were asked to keep matters to themselves, but whatever the facts around confidentiality it appears that some of them felt unable to discuss issues with colleagues and other interested parties. That resulted in the committee report stating that consultation on part 2 was unsatisfactory—as David McLetchie says, that is parliamentary language, so we can interpret it as we will. We on the Labour benches cannot understand why there was such an issue, and we will reserve judgment on whether part 2 can be adequately amended at stage 2 to make it fit for purpose.
I turn to some of the points that were raised in the debate. A number of speakers mentioned the need for separate Scottish figures on repossessions, including the minister Alex Neil, Cathy Jamieson and John Wilson. I believe that all members support that. I ask the minister to say in his closing speech what the Scottish Government has done to pursue that since it was last raised.
I am happy to circulate to all members a list of all the correspondence that we have been in with both the FSA and the CML. However, I ask Mary Mulligan whether she will ask her friend the Chancellor of the Exchequer to order the FSA to provide the information.
I thank the minister for his offer. It really must be Christmas.
Duncan McNeil and other members mentioned the proposal of a formal affidavit. It appears that there is a need for a formal process to surrender a home voluntarily—as David McLetchie said, for some people it is the right thing to do—but the proposal in the bill seems to be too bureaucratic and likely to impose further costs on the debtor. The minister has already acknowledged that, and I suspect that the provision will be amended.
Citizens Advice Scotland, Money Advice Scotland and others have very much supported the proposal to allow borrowers to access lay representation. Patricia Ferguson and other members have also voiced their support for the move. However, as Alasdair Allan and David Whitton pointed out, we must ensure that lay representatives are properly trained and resourced. I believe that the £3 million for advice and representation that has been referred to this afternoon is for two years, including this year. The problem, of course, is that the bill has not been passed yet. I am sure that the ministers will agree that the court system will also need to be adequately resourced to deal with the increase from 5 to 50 per cent in cases defended under the Mortgage Rights (Scotland) Act 2001.
The Scottish Government obviously took some time to be convinced of the need for additional protection of home owners at risk of repossession and, when that happened, it sought to cover its tardiness by introducing a bill, part 1 of which is probably more elaborate than it needs to be, perhaps to justify the delay. However, I will not be churlish. I welcome the way in which Mr Neil and Mr Ewing have provided political parties with briefings and have responded to committee members' questions. I suspect that Mr Ewing will have the bigger burden in trying to right what is before us at the moment, and no matter whether he is Bodger, Badger or Bob the Builder I very much hope that he can fix it.
As I have said, part 1 can be made to do the job, but my party is concerned about part 2. It is only due to the hard work and good will of the Local Government and Communities Committee that we are here today, agreeing to the principles of the Home Owner and Debtor Protection (Scotland) Bill. Let me be clear, however: without further amendments and clarity on resourcing, we could be in a completely different position at stage 3.
I have thoroughly enjoyed what has been a most interesting debate. First, I pay tribute to all members on the Local Government and Communities Committee, which is ably convened by Duncan McNeil. His presentation of the various arguments was entirely consistent with the committee's report. I also thank the committee clerks, who are also present this afternoon. I am sorry only that, as far as MSPs are concerned, the debate has been a relatively sparsely attended affair, for some reason that is completely incomprehensible to me.
I am prepared to take on the chin all the criticisms and comparisons that have been bandied around the chamber and I will, in so far as I can in the lengthy time that appears to be available to me, address the arguments that members have made.
Although the committee made very serious criticism about consultation, particularly with regard to part 2, I welcome its acknowledgement of the bill's necessity. As various members including Bob Doris said, it is good that Parliament recognises that the measures are essential. They will give people in Scotland considerable help in avoiding unnecessary eviction and in dealing with the difficult debt situations that they might face. I note that, as well as the criticism of part 2, there seemed to be among some members a parallel competition to claim greatest credit for the bill. I think that we can all take the credit in that respect.
I will start off by briefly addressing one or two points that were raised on part 1, then I will focus the main part of my speech on part 2. As was briefly mentioned earlier, a report was published today by Advice UK, Citizens Advice and Shelter on repossession court actions in England. It found that in one third of the cases in England, advisers considered that the lender had not complied with the pre-action protocol, and that in only six out of 101 such cases had the courts applied sanctions for non-compliance. It is fair to say that that entirely supports the line that our bill will provide greater protection in Scotland by making lender compliance and court scrutiny of that compliance a legal requirement. That is in contrast with the procedure in England, where there is no such substantive legal effect.
My experience as a solicitor was often to try to forestall evictions where possible—it is not always possible. I am making no general smear when I say that I often found that it was difficult to get answers from banks and building societies, especially in cases where things had started to go wrong. That experience has been entirely borne out by my subsequent 10 years as an MSP, during which constituents have frequently come to my surgeries to say that they have been to the local branch of their bank or building society, explained that someone in the household has lost their job and that they want to try to reduce their mortgage payment so that they can cope and avoid the worry that they might face eviction action, but have not been able to find out who makes such decisions in the organisation. In other words, it is very difficult to get to someone who has sufficient power and seniority to make decision about cases.
The bill will require all secured lenders, other than for involuntary surrender, to go to court to show methodically that they have complied with the requirements on them. That will provide a significant protection to many people in Scotland, and one that is not, I respectfully submit, in place in England. There is common ground, particularly between the Labour Party and the Liberal Democrats, that this is a worthy and sensible step. It is the right measure, and it is absolutely necessary to help people, especially during the recession, who find, having lost their job—in many cases through no fault of their own—that they might also face the loss of their home.
I never wish to misquote Mr McLetchie, because I am sure that I will be corrected instantly. However, he seemed to cast doubt on the utility and worth of the bill. If he did so, I have to respectfully disagree, and I do not think that the rest of Parliament will be with him.
Patricia Ferguson and Mary Mulligan mentioned court costs. We have looked at the issue pretty carefully and the Scottish Court Service, as members would expect, has considered it in great detail. We are satisfied that the courts will be able to cope with the additional burden. It is fair to say that no one can state with certainty what the number of additional cases will be, but Alex Neil and I are satisfied that the courts are well placed to deal with such cases—of course, they deal with them at the moment. We are satisfied on that score.
I turn now to part 2. I believe that it is absolutely essential for us to help our citizens to meet the problems that some of them will face because of the recession. Why is that? There are specific problems for which there is no legislative solution at present.
We set up the debt action forum, and I attended and chaired five of its seven meetings between January and May this year. We set the forum a specific remit in writing, entitled "Terms of Reference And Outline Brief: Debt Action Forum"—I have a copy of it here. I cannot read it all, but it states:
"debt solutions would require primary legislation in order to: Allow access to bankruptcy for an at-risk group with negative equity, who currently are effectively precluded from seeking bankruptcy because they have title in heritage".
Why is that factually correct? It is because we currently have the low-income, low-asset route, which provides a mechanism by which people can get debt relief through sequestration. The criteria are that one must not earn in excess of the minimum wage, one cannot have assets in excess of £1,000, and one cannot be a home owner.
When LILA was introduced by this Administration, following the cross-party approach to the implementation of the 2001 act, many thousands of LILA cases came forward, as Mr Whitton said. I will come to his comments on that later. The Citizens Advice Bureau and Money Advice Scotland said that they cleared filing cabinets of cases. Each of those cases was an individual person or family in Scotland who was waiting for debt relief measures.
However, what about the people who have a house, earn more than the minimum wage or have assets of more than £1,000? Currently, they may be able to access the debt relief measure of protected trust deeds, but they will not be able to do so unless the fees of protected trust deeds, which process is carried out entirely by the insolvency profession, can be met. In other words, if someone does not have the money, they cannot get into a trust deed or sequestration unless they are apparently insolvent or being pursued by a creditor. By and large, creditors will probably not pursue matters to that stage, because they will probably take the view that one cannot get blood out of a stone or that there is no point in throwing good money after bad. That is the view that they take, and it is a view that I am sure the solicitors among us will remember clients taking. It is a prudent decision to take.
That situation, however, still leaves people in limbo and unable to get debt relief, a trust deed or sequestration. Is that right? Mr McLetchie may think that it is not, but I was not sure whether that was the point that he was making from his protracted story involving Mr Brown and so on. I think it is not right, because I do not think that people should be denied access to debt relief. Indeed, the law of Scotland has recognised for centuries that there should be access to debt relief measures.
It should be said—I hope that all of us would agree with this, and it certainly needs to be said in a debate about sequestration and bankruptcy—that we are a nation of people who like to pay our debts and think that debts should be paid. I suspect that all of us will take that approach. Indeed, if we did not do that as a society, we would be in an even worse situation than we are. Debt law therefore needs to provide methods to help people pay off debts in an organised way. That is why, with cross-party support, the debt administration scheme was developed. That is also why we decided that, to encourage more people to take up the scheme, because the numbers of people who were doing so were disappointingly low, we would freeze interest and charges, which has led to increased use of that remedy.
Some people, however, are just not able to pay off their debts, or it may be that it would take them the rest of their lives to do so. I hope that we would all recognise that, in such cases, particularly in the many cases in which people have lost a job through no fault of their own, they should not be denied access to debt relief. The debt action forum recognised, having had in its remit the objective to discuss and consider the matter, that that is a gap that we need to fill. When the forum completed its deliberations, it was certainly the case, as some members argued—particularly Mr Whitton—that there was not total unanimity on the forum on all matters. However, I do not think that one might expect there to be total unanimity on an issue such as this. Be that as it may, when the debt action forum concluded its work, there was recognition that there is a group of people who are in limbo. They do not have access to sequestration, they do not have access to a trust deed and they cannot afford the fees of insolvency practitioners. They are therefore stuck.
What is the plight of such people? I met one such person at a surgery of mine in Nairn. They had debts of about £80,000 and owned a home but did not have enough income to be able to pay a contribution. They were receiving debt letters all the time, with all the pressure and anxiety that that causes. Such a family might be able to take up the opportunity that section 9 will afford to apply for a certificate for sequestration and therefore get debt relief.
I stress that section 9 derived from the debt action forum's remit and deliberations. A mechanism was then devised by a committee of experts, including Professor George Gretton.
Will the minister confirm what he has apparently told ICAS, which is that he will lodge amendments to section 9 at stage 2, to remove the monopoly that the bill would confer on the Accountant in Bankruptcy in relation to certificate for sequestration insolvencies?
Yes—we will lodge amendments that will ensure that in cases in which insolvency practitioners have started off, but been unable to complete, a protected trust deed, the insolvency practitioners will be able to carry that work through to sequestration. We will also lodge amendments that will make it clear that our aim is not to remove work from insolvency practitioners, nor is it to build a vast empire for the Accountant in Bankruptcy. I think that the amendments will largely satisfy Mr McLetchie, although time will tell. I am pleased to give him that assurance.
Section 10 also arose from the remit of the debt action forum, which all members of the forum received at the outset. That remit included the suggested debt solution to
"Allow a debtor's family home (subject to creditor consent) to be excluded from a protected trust deed".
As Mr Neil said, the process is being driven by creditors. ICAS has put forward an alternative proposal, which would allow exemption of family homes up to a certain value. As I said in committee, we think that the proposal has drawbacks. The British Bankers Association has said that there should be a more flexible mechanism—namely, I think, the one that we proposed in the bill.
I will explain why I think that section 10 should be supported. First, it will allow far greater flexibility. Secondly, it will allow the family home to be dealt with at the beginning rather than at the end of a trust deed. I am not criticising the work of insolvency practitioners, many of whom do that anyway, but the bill will focus minds and allow the matter to be dealt with at the beginning. Thirdly, section 10 will allow the administration of a trust deed to be done at lesser expense, and through a process that will be easier to manage and less complicated, because the house will be dealt with at the beginning. The approach provides an opportunity for, and not a challenge to, insolvency practitioners. It will also bring the position in Scotland into line with the position in England, where, as paragraph 44 of the policy memorandum states:
"Individual voluntary arrangements … allow debtors to exclude assets from arrangements with the agreement of their creditors."
Section 10 is necessary and is entirely connected with the aim of preventing unnecessary evictions, which is the bill's fundamental purpose.
I have now spoken for a considerable time.
Yes.
Some members may feel that it is too long.
More, more.
I am conscious that we are moving towards Christmas. I have been compared to Bob the Builder in this debate and have been asked, "Can you fix it?" The answer is "Yes, we can and, yes, we will."
I am grateful to the minister for ensuring that we did not have to suspend the sitting.