Bankruptcy and Diligence etc (Scotland) Bill
The next item of business is a debate on motion S2M-5044, in the name of Allan Wilson, that Parliament agrees that the Bankruptcy and Diligence etc (Scotland) Bill be passed.
Parliament should support business by putting in place an effective enforcement system and it should ensure that the law deals fairly with people who are affected by debt. It should help people who can overcome their debt problems to do so and it should support business risk by helping people who are overcome by debt to start again.
In 2003, the Executive made a commitment to modernise the laws of diligence and bankruptcy. A year ago, we made good on that commitment by introducing the Bankruptcy and Diligence etc (Scotland) Bill to Parliament. The bill will reform the law of bankruptcy and the law of floating charges, create a Scottish civil enforcement commission and reform the law of diligence or court enforcement. As everyone now appreciates, the bill is a major piece of legislation. It will make root-and-branch changes to a key area of civil law and will build in much detailed and careful work by the Scottish Law Commission on diligence and floating charge reform. It has been 20 years in the making, and the changes it proposes will, if the bill is agreed today, be with us for many years.
The minister will recall that, when he spoke to the Enterprise and Culture Committee on benefit arrestments as part of bank arrestments, he said that he would contact the Department for Work and Pensions to establish whether there are social security matters that mean that it is beyond the remit of Parliament to legislate in those areas. Has he managed to contact the DWP with that matter in mind and what is the DWP's advice?
I can answer half that question. I have contacted the DWP and I await its advice.
The bill sets out the legal framework for the matters contained within it for a generation. That framework will help us to create the conditions that are needed to support sustainable long-term economic growth.
However, there is always more to do. Consumer debt has hit the headlines in the past year—many people have borrowed more than they can afford to repay. The number of people who have debt problems is increasing throughout the United Kingdom and the improvements that will be made by the bill are needed now more than ever.
There are many improvements in the bill—I have mentioned most of them in the course of the day. They are in many respects not glamorous changes—I think we would all agree that debt is a difficult subject—but they are useful and important, all the same. I am pleased that many people have given their time to help to make the bill that is before us today much better than the one that the Executive originally introduced. I thank the convener, members and clerks of the Enterprise and Culture Committee for their long and careful consideration of this very large bill at stages 1 and 2. I welcome in particular the committee's decision to endorse our big picture on reform of bankruptcy, reform of floating charges, a new enforcement commission and radical changes to enforcement law.
I thank the other people and bodies—they are too numerous to list in the short time that is available—who have come to us with ideas about how to develop the bill. Contrary to the opinions of some people, I have listened to them all, as is only right because the bill must strike a balance between the competing interests of creditors and debtors. I have made changes when I agreed that the bill did not strike the right balance, and I will continue to do so. Money Advice Scotland and others told me that some people find it too hard to get debt relief through bankruptcy. People cannot prove that they are insolvent if creditors do not try to enforce the debt; creditors do not try to do so if there is no money to be had. I have introduced a new path into bankruptcy for low income, low asset debtors, which was introduced at stage 2. Citizens Advice Scotland and others told me that some people who could pay their debts are being forced into bankruptcy, so a power for the court to delay sequestration where a payment programme may be agreed was introduced at stage 2. They also told me that people might struggle to be heard in bankruptcy cases, so a power to provide for representation by people such as money advisers was also inserted in the bill.
The Society of Messengers-at-Arms and Sheriff Officers told me that the proposed name—messenger of court—for the new combined profession did not reflect properly what messengers-at-arms and sheriff officers do, and that it would be better if they were appointed by the Court of Session, although it agreed that the creation of a Scottish civil enforcement commission is a useful and sensible reform. I listened to those concerns and changed the name of the new profession to "judicial officer", and agreed that the officers would be appointed by the Lord President of the Court of Session on the recommendation of the commission.
People were worried—I suspect that some remain worried—about the possible impact of land attachments. Selling land is indeed a serious business, although not as serious as bankruptcy.
I put three questions to the minister during the stage 3 proceedings. I appreciate that the debate was very full and that he did not have sufficient time to respond to all the points, so I would be grateful if he would respond in writing and make that response available to Parliament as a whole.
As ever, there have been time constraints, but I will be pleased to do as Jackie Baillie asks.
The bill applies more than 20 debtor protections. I listened to concerns that were expressed and extended the protections at stage 2. Land will now be attached only for debts of more than £3,000. Citizens Advice Scotland told me that bank arrestment can be too harsh, particularly for people on benefits, so new rights for people to apply to the court for the release of an arrestment came into the bill.
The debt arrangement scheme can help creditors get paid and help debtors by stopping enforcement. It can be an even better debt tool than it is. Debt relief and freezing of enforcement to allow people to apply for help were both enabled at stage 2. The Enterprise and Culture Committee agreed to many other useful improvements.
I promised to consider the impact on credit unions of the rising number of protected trust deeds. I wanted to ensure that the powers in the bill are wide enough to give them extra help if they need it, and to consider whether the court needed a bit more discretion where there is a reasonable chance of the creditor being paid. I now believe that we can do more to help people who face bankruptcy.
Some people will think that we should do more and some will think that we should do less—that is inevitable in consideration of a bill such as this. Members will be asked to agree some late changes that I do not agree with and I look forward to the debate.
The bill strikes the right balance in all important respects. I have been greatly encouraged by the fact that so many people agree with and have welcomed the changes that we are making.
I move,
That the Parliament agrees that the Bankruptcy and Diligence etc. (Scotland) Bill be passed.
When the bill started on its journey we were relatively sanguine. We were aware that there were matters of adjudication in Scotland that had reached desuetude, that there had not been a review of them for approximately 20 years and that the basis of our economy and nature of our society had changed. Accordingly, we decided at stage 1 not to vote against the bill because we were prepared to give it a fair wind. To an extent we were brought on board by Mr Stephen and Mr Wilson, who said that the purpose of the bill was to promote and support a culture of entrepreneurship, which we agree that Scotland should seek to promote. The Parliament should play its part in that.
We are not necessarily convinced that the evidence shows that the proposed legislative changes will advance that culture one iota. There is clearly a problem to address. Only time will tell whether we address it by effecting a cultural change or through other legislation or education. However, we would not have voted against the bill on that basis alone; we were prepared to take the problem on board.
We also accept that there is a significant problem with consumer debt in Scotland, which is of considerable concern to all parties in the Parliament and must be addressed. We are conscious that we—and the Executive—are hamstrung by being able to tackle only the consequences of debt. We cannot address the problems for those who operate businesses or who get in over their heads and face insolvency, the consequences of which can be alcoholism, depression or suicide.
Until such time as the Parliament can address the reasons for the creation of debt as well as the consequences thereof, we will always have significant problems. Until such time as we have control over consumer credit and not simply over insolvency matters, there will be a significant problem in Scotland. The legislation that was passed recently at Westminster is inadequate and the problem of insolvency continues to grow. Many members commented on the escalation of the problem in England, although time will tell whether that is a result of the legislative changes or simply of societal changes, which are happening here as well as down there.
As I said, we were prepared to give the bill a fair wind and to accept that, even if we cannot address consumer credit, changes are required to the insolvency system. Today, we proposed alternative measures in respect of sheriff officers, as we are not convinced that a civil enforcement commission is necessary. As Mr Brownlee and members from other parties said, the commission will be yet another unnecessary quango, at huge cost, to replace a system that currently operates well at no cost to the taxpayer. We also took a different view of the nature of ownership of sheriff officers firms, although other members disagreed. We may come to rue that decision and have to readdress the issue.
However, those matters would not necessarily have led us to vote no to the bill in the final vote. In some circumstances, we must accept that the Executive parties have a majority and that they won the election—not necessarily the overall popular mandate, but the overall numbers required to allow a Government to govern. We would have been prepared to allow the Executive to exercise its right to govern without our saying no. However, as Mr Gorrie said earlier, on some fundamental matters, we must draw a line in the sand and, although we accept that the Executive has a right to govern, we must exercise our right to say no. The continuation of the land attachment policy is one matter on which a line in the sand must be drawn—frankly, it is unacceptable.
Nobody in our party disputes the point that many members made that the land attachment provisions are more about theory than practice. As with poindings and warrant sales, it is likely that relatively few land attachments will transpire. However, we are conscious that organisations in broader civic Scotland, including Shelter, Money Advice Scotland, Citizens Advice Scotland and the Law Society of Scotland, have made the point that the provision will be used not only by predatory lenders, but by predatory people who seek to recover debt to frighten and intimidate people who get into difficulties. There will be consequences for consolidated debt, compounding the agony that already exists. In those circumstances, we cannot and will not vote for the bill.
At the outset of the process, we were prepared to give the bill a fair wind, but the failure to address the problems with the land attachment provisions makes it fundamentally unacceptable. We will vote against it and, when we return in May, we will do all in our power to ensure that the people of Scotland keep a roof above their heads, even if they get into debt.
As a member of the Enterprise and Culture Committee, I record my thanks to the clerks for all their assistance in dealing with the bill. Many a happy hour was spent in committee addressing the issues and considering amendments at stage 2. I also record my thanks to Nicholas Grier, the committee adviser, who brought the, dare I say it, necessary level of expertise in helping committee members to address some of the legal issues that were presented to us.
The background to the bill is the serious and worsening situation with sequestrations in Scotland, the number of which rose from 2,700 in 1997-98 to 3,500 in 2004-05, while the number of protected trust deeds rose from 890 to more than 6,000 in the same period. That reflects a wider culture in society of growing personal debt. The level of personal debt in the United Kingdom is estimated to be £1.1 trillion, which is a staggering sum that is unprecedented in our country's history. A recent YouGov survey for The Scotsman found that one in five Scots have unsecured debts that are in excess of £10,000 and that 20 per cent of those people say that they are seriously considering declaring themselves bankrupt. We have a culture of spend now and worry later.
The bill deals with timely and appropriate law reform and I believe much of it to be necessary and welcome. I record my appreciation of the minister's approach to the bill and of his willingness to engage with the various stakeholders and listen to interested parties who wanted certain amendments to be lodged. Further, I am grateful to him for accepting some of the points that I made about floating charges.
Some of the reforms—specifically the abolition of sequestration for rent and the abolition of the landlord's hypothec, which commercial lawyers will have enjoyed using—will be regretted but, over the piece, the provisions in the bill make a lot of sense. There is an exception to that, which I will come to shortly.
The central thrust of the bankruptcy part of the bill is to reduce the period of bankruptcy from three years to one year. That is the central policy change. The committee looked in vain for evidence of the good reasons behind the change. Originally, we were told that the bill would encourage enterprise. However, as the committee found out through figures that were provided by the Institute of Chartered Accountants, only a fraction of bankruptcies are business related—the great majority are personal bankruptcies. Frankly, therefore, there is little evidence that the bill will do anything to encourage an entrepreneurial culture. In fact, it seems that the change might be driven primarily by a desire to draw the law in Scotland into line with the law in England, where the bankruptcy period was reduced to one year in the Enterprise Act 2002, the consequence of which has been an even greater acceleration in the number of personal bankruptcies.
Whatever the Executive's intention—and I do not for a second believe that the Executive intended to increase the number of bankruptcies—the change in the law will mean that bankruptcy is increasingly seen as being an easy option and an easier way of getting rid of debt and coming through the other side of a crisis. I cannot think that that is in the interests of this country or this Parliament.
I agree with much of what Kenny MacAskill said about land attachment, although the way in which he presented his case was unfortunate. Throughout the process, we never heard a convincing case from the stakeholders for the new attachment. No one was calling out for the new diligence to be created, yet the Executive seemed determined to press ahead with it.
This is a flawed piece of legislation. I fear that it will normalise bankruptcy, making it the normal way in which people deal with debt. I fear that it will give rise to an even greater increase in personal bankruptcy.
Will the member give way?
I am over my time limit already, but I am happy to give way if the Presiding Officer will allow it.
Perhaps you can make your point when you sum up, minister.
I cannot believe that passing legislation that will result in increased levels of personal bankruptcy is in the interests of our country, given the background of rising personal debt. Therefore, we will not support the bill this evening.
I congratulate the minister on his willingness to take on board the comments of the committee and the concerned groups that have been advising us on the bill, particularly with regard to land attachment. It is always better to make policy based on evidence, and the provisions that have been put in place today will give us the opportunity to do just that.
As the minister said, we should not lose sight of the fact that although the land attachment provisions are one of the harsher measures in the bill, they are still a less harsh prospect than bankruptcy, which would result in a debtor definitely losing their house and many of their belongings. The decision gives creditors a reason not to pursue that course. Further, it ends the unfairness of adjudication, which had remained very nearly unchanged since the 17th century and did nothing to protect the interests of debtors.
Generally, the bill manages to keep its balance as it walks the line between social and economic policy. Today, we will be working to end the punitive effects of bankruptcy on entrepreneurs and to develop the entrepreneurial society that we in this Parliament have been seeking to create. We should not punish people for taking the necessary risks that come with starting a business. The Parliament has a strong record on reforming the way in which debt is dealt with. From the Abolition of Poindings and Warrant Sales Act 2001 to the Debt Arrangement and Attachment (Scotland) Act 2002, we have recognised the reality that people who are in financial difficulties face and the fact that they need support and advice to help them to repay, rather than threats.
Will the member remind us how the Liberals voted on the abolition of poindings and warrant sales?
The member knows the answer perfectly well. The point about the bill, which is different from Mr Sheridan's demagoguery, is that the committee worked hard on it in co-operation with the minister, and for that reason it is better legislation. Nothing is ever set in tablets of stone.
The bill builds on the principle that we should support debtors and give them advice. It contains many provisions that will support debtors and give them opportunities for fair repayment.
Given the background to the bill, I take the opportunity to raise the important related issue of financial services. In considering the bill, it became clear that financial literacy is important if we are to prevent people from facing bankruptcy and debt attachment. Credit is all too easy to come by, and it is all too easy to let it get out of control. The more one has, the more one can get. It is vital that we work to deliver financial education and let young people, in particular, understand what it is to have debt, how to deal with it and how to budget. As a devolved institution, it is within our gift to give our young people those life skills.
We should continue to exercise our influence over financial providers to improve practice. Work has been done to get Scottish banks to agree that disadvantaged areas will have cash machines that offer free withdrawals. It is recognised that charging local people—especially those on benefits—to get their own money deprives them of an unacceptably high proportion of their income. I hope that the minister will assure us that those issues will be considered following the successful passage of the bill.
In closing, I endorse the sentiments that Murdo Fraser expressed apropos the work of the committee's clerks, the people who gave us evidence and our adviser. Our consideration of the bill was a long piece of work. We put many hours and weeks into it, but there was good co-operation between the committee and the minister. I pay tribute to the minister for listening to what we said and altering the bill accordingly.
I commend the bill to the Parliament.
Whenever the Parliament considers a bill—and particularly when it considers complex bills such as the Bankruptcy and Diligence etc (Scotland) Bill—members are required to judge, on balance, whether it is worthy of support and whether it should be passed. As the minister said in his opening remarks, the bill strikes a balance between creditors' legitimate right to recover the debts that they are owed and the right of debtors to reasonable protection and due process.
The test that members must apply when they vote on the bill tonight is whether it strikes the right balance. I regret that my party will be unable to support the bill. Despite the deliberations of the Enterprise and Culture Committee and the deliberations in the chamber today, the correct balance has not been struck.
The Government started with the provision that land attachment could be used to deal with a debt of £1,500. The sum then became £3,000, and today the bill was amended to include a review after two years. That sequence of events does not strike me as a compelling illustration of ministerial and parliamentary confidence in the measures. The propositions that we considered today are indicative of the unease—both within the Parliament and outside—about the Executive's direction.
Does the member agree that increasing the limit for land attachment to £5,000 while the limit for sequestration applications remained at £3,000 would create a perverse incentive to sequestrate rather than to attach?
The conclusion that I draw about the whole area is that the Government has got it wrong. As a result, the bill cannot be supported.
Jamie Stone said that we should base our conclusions on evidence. My view is that a number of organisations that are much more deeply involved than any of us in providing financial advice to those in peril provided compelling evidence for why the bill is inadequate.
Many organisations can provide first-class advice and support to individuals at times of financial peril and when they are in debt. I worry that the land attachment provisions and the implicit threat to financially vulnerable individuals that land attachment can represent will be used not to encourage people to take the advice of valuable organisations such as credit unions, but to force people in a panic to take other steps in relation to their financial arrangements that will put them in the hands of loan sharks and all the rest of it. That would be damaging for individuals.
The bill is another under which the Government sets up a quango. Every time we have a bill, we have another quango, which means that the state and the government infrastructure become bigger. In all legislation, we should look for opportunities to rationalise the governance of Scotland. Far too many bodies are involved and the bill will create another.
On the basis of those arguments about the problems of land attachment and the expansion of the governance of our country, I regret that my party will not support the bill.
As other members have said, the bill process has been long and complex. I suggest that it was at times daunting, even for committee members who have legal knowledge—Murdo Fraser, who is such a person, has left the chamber. The word "diligence" meant not a busy and dedicated little housewife working but something else entirely, and I struggled with that definition. I also seem to recall seeing somewhere in the bill arcane rules on the seizure of ships.
Like other members, I thank the clerks, the official report, our adviser—in particular—and all the people who gave evidence. Committee members appreciated the clarity of the evidence and witnesses' willingness to explain in simple language terms with which we were not familiar. People from Fife money advice service and Citizens Advice and Rights Fife spent considerable time with me in my constituency office going through the measures in the bill and giving me useful examples of debt, debt counselling and what they have done for my constituents. That coloured my questions in the committee and my subsequent discussions with the minister and others.
Legislation on these matters has not been revised substantively since 1985 and many provisions are out of date, to say the least. The law in England and Wales has been revised, so there was some pressure—particularly from business and financial institutions—for harmonisation, which will happen.
As John Swinney said, the bill is about balance. Its primary purposes were to reduce the barriers to entrepreneurs restarting in business; to give creditors the ability to recover money that is owed to them; and to give debtors sufficient protection to prevent them from—as we heard—having mobile telephone calls at 4, 5, and 6 in the morning and 10, 11 and 12 o'clock at night or being told when they are in hospital that someone does not believe them and that they should go and pay off their debts. That must not be allowed to continue.
It quickly became clear to the committee that, aside from the relatively few business bankruptcies that were under consideration, the major issue was consumer debt. We crystallised most of our thinking around the NINAs, who became LILAs—the no income, no asset debtors who are now low income, low asset debtors—because they have the greatest difficulty and are least able to stand up for themselves. This morning, I heard that people could have recourse to the sheriff principal if they object to something, but that can happen only if someone has the time, the space and the ability to know that and to write the letter.
I thank the minister for listening and for acting on the crystallisation of debt; the regulation of sheriff officers, messengers-at-arms and insolvency practitioners; changes to the debt arrangement scheme and the money advice service; and whether there should be land attachment regardless of status, which I believe cannot be taken out of the equation altogether. I congratulate the minister again on his considerable movement on the protection of the homes of people with lower incomes and lay representation in court, and on the work that has been done on credit unions.
The bill is good and will do much for the poorest in our communities, who are the ones about whom we should be most concerned and who will benefit most from it. The bill will also help and support people whose individual debts may be small but whose cumulative debts may be large. They will gain some freedom.
I commend the bill to the chamber and I hope that the Opposition parties will reconsider their position and vote with us.
The consideration of the bill has been long and technical, and sincere thanks are due to the clerks to the Enterprise and Culture Committee for their exceptional dedication and patience in helping the members to understand the intricacies of that complicated process. They deserve thanks for all their hard work which, on some occasions, continued well into the night. Thanks must also go to Nicholas Grier, the committee's adviser, for his patience, forbearance and skill in reducing some of the complexities of the bill to more understandable language. In addition, I echo Christine May's thanks to the witnesses, who often brought things down to the basics of what the bill is about.
Nevertheless, questions remain on the decision to allocate the bill to the Enterprise and Culture Committee. Early on, it became apparent that much of the evidence related to personal bankruptcy, not to businesses. Placing the bill with the Communities Committees, however, would perhaps have created difficulties in pressing ahead with the new diligence of land attachment. I am concerned that the new diligence may create homelessness faster than the Executive can reduce it. I sincerely hope that that will not be the case, but concerns remain.
We must recognise the serious consequences of debt not only on the individual, but on the economy. With a total United Kingdom debt of £1.1 trillion, we patently do not have a securely based economy. However, that is for another debate.
I am also concerned that the passing of the bill will not address the serious issues surrounding debt. There is no doubt that the bill makes improvements, but there are serious omissions, some of which I accept were beyond the remit of the bill. I was struck by the evidence that we took from someone with experience of the equivalent English legislation who argued that there is a growing culture of buy now, file later. I doubt that anyone would welcome such an irresponsible attitude in Scotland.
That is where there is a huge gap in the remit of the bill. It fails to address financial education and advice or the part that irresponsible lending plays in encouraging debt. I welcome the concessions that are being made to the credit unions, but I urge greater Executive support in promoting the important part that credit unions play in providing safe and fair banking. A start could be made by dispelling the notion that credit unions are only for those who are on low incomes. They are open to all, regardless of income. Perhaps a more general use of credit unions would encourage the larger banks to review their excessive charges, which act as a deterrent to people on low incomes.
Many of us received a briefing from the IFS School of Finance, which highlighted its personal finance management course that is being rolled out in some English schools. Whether or not that is the right scheme, the purpose must be applauded. Better understanding of how to plan and manage spending in relation to income is surely essential if we are to tackle the ever-increasing misery of debt.
The Green party is minded not to support the bill. However, I will make my decision after I have heard the minister's concluding remarks.
It is right that the debate should take place, given the galloping debt mountain—if, indeed, mountains can gallop—that is sweeping the country. It is necessary for us to consider, against that background, whether we are striking the right balance between the rights of creditors to recover the money that is owed to them and the rights of debtors to be protected from unscrupulous creditors and to find an honourable way out of their difficulties.
The problem, which other members have highlighted, is that although there are many good things in the bill, there is one huge minus. It is the risk, which other members have talked about, of land attachments leading to people being forced to sell their family homes to pay off debts of £3,000. That is a potentially draconian, fierce and unbalanced approach to managing the delicate relationship between creditors and debtors.
One cannot help but compare today's debate with the debate that the Parliament had in the previous session on the Abolition of Poindings and Warrant Sales Bill. At that time, the Parliament rightly rescinded the existing legislation because it felt that it was archaic, that it humiliated people and that, above all, it was utterly ineffective in recovering the debts that it sought to recover. It was designed to humiliate debtors and was therefore unacceptable to the people of Scotland and the Parliament, not least because there were and are far better ways of recovering debt.
However, the Bankruptcy and Diligence etc (Scotland) Bill contains many worse provisions than those that were in the old poindings and warrant sales legislation. It raises the prospect of people losing their houses as a consequence of getting into debt. Under the hated poindings and warrant sales, a debtor faced having all their prized possessions taken out of their house and auctioned in public but, under the bill, people will face even greater misery when they and their possessions are taken outside and their house is auctioned in public. That could leave families homeless and, let us not forget, councils would consider them to be intentionally homeless and therefore requiring to be provided only with emergency accommodation. All that could happen to someone who has debts of just £3,000.
The minister and the Parliament have heard evidence and received warnings from the Law Society of Scotland, and members have talked about the same evidence and warnings coming from right across civic Scotland. The Law Society said that once creditors hear how the land attachment provisions work, they will be queuing up to use land attachment as a first resort rather than a last resort, leaving behind the better means—lodging inhibitions against the sale of a house, arrestment of earnings and bank accounts, attachment of luxury goods and money enforcement orders—as they race towards land attachment as a way of getting their money back.
You should be finishing now, Mr Fox.
Indeed, Presiding Officer.
As many other members have mentioned, civic Scotland is up in arms about the bill. It threatens to undo much of the good that the Parliament has done on homelessness and, for those reasons, the Scottish Socialist Party will not support it at 5 o'clock.
The bill reminds me of one of those old good news, bad news stories about a patient in hospital who asks to be given the bad news first. He is informed that he has lost his legs, but the good news is that his neighbour in the next bed has left him a lovely pair of slippers.
Any good that might be in the bill is completely eclipsed by the almighty negative prospect of the new diligence, which is uncalled for, unresearched, and not backed up by any evidence. Frankly, it is an illustration of bad law in the making that amendments are accepted at the last minute to provide for the Executive to review the legislation over a two-year period. If the minister and the Executive were confident about the bill, if there were any evidence for the need for the bill, or if any research had been done that backed up the new diligence, why would it be necessary to rush through an amendment to review the legislation?
Does the member agree that the review will have one of two outcomes? Either it will prove his case or it will prove mine. I am confident that the review will prove my case and I predict that, at the conclusion of the review, land attachment will have had little or no impact on levels of homelessness. As the member knows, homelessness is caused by a wide and complex multiplicity of reasons and not by land attachment.
That is one of the longer interventions that I have had in the Parliament, which perhaps reflects the weakness of the minister's argument. The minister says that he is confident about his review. Is he not listening to what civic Scotland is telling him or to what members have said during the debate? To review the number of land attachments that result in loss of homes is not going to be the story that we will have to worry about. It is the misery that will be caused in between times that we are worried about—the families who, for a debt of £3,001, find themselves threatened with losing their house and, to avoid that, go deeper into debt. The misery will pile up but, in two years, the minister will be able to say, "There have not been that many land attachments, so we must be right."
The point that I made was that the same argument was used in relation to warrant sales. "Don't worry about warrant sales," we were told. "Don't change warrant sales. There are hardly any warrant sales." Of course there were hardly any warrant sales. In the last year for which records were held, there were only 500 warrant sales, so people asked why we should bother to abolish them if they were not being used. The point was that there were 23,000 threats of warrant sales, which led to people getting further and further into debt via the poinding process.
It is from that point of view that the bill is not good legislation. It is a poverty of argument to say that what is proposed is better than bankruptcy. That is a bit like saying, "If you think the electric chair is bad, why don't you try hanging?" What the Executive should be doing is introducing more protection from creditors and from bankruptcy, not introducing a new, unwanted and dangerous diligence. The bill should be rejected on that basis.
The bill has 204 sections and six schedules, and it goes back a considerable way. It is a bill that my party will certainly support, because its features are worthy of support.
On bankruptcy, I do not accept the view that the bill will not have some contribution to make in improving the enterprise culture. No one has ever pretended that it is the be-all and end-all, but we live in a society whose culture is that we fear two things: success and failure. The bill tries to destigmatise what has so often gone hand in hand with bankruptcy. I recall meeting two young businessmen in the west of Scotland who were finding it difficult to raise funds because their father had gone bankrupt some 20 years earlier. That is the sort of thing that we want to get away from and the bill can make a contribution to that. Of course, there is a proper balance of considerations, not only for creditors but for the interests of our wider society, because people should not use bankruptcy as a means of cheating, and creditors must still have a reasonable expectation of being able to get some settlement for their debts.
I turn to diligence. In the policy memorandum to the bill, there is a quotation from Lord Stair, the Scottish lawyer who said in 1681:
"Decrees would be of no effect, but as bees without stings, if the law did not fix the kinds and forms of the executions thereof".
It is important to recognise that, when we are dealing with diligence, we are dealing with things that can, by their very nature, be painful. The bill tries to ensure that the response to debt is an appropriate one. There should be no place to hide for those who can pay but simply will not pay. For those who could pay, but who may need some time or some support to do so, the bill builds on the Debt Arrangement and Attachment (Scotland) Act 2002 to provide ways in which there can be flexibility in paying off and properly managing debt. For those who cannot pay, the bill ensures that there will be ways in which they can clear their feet and get a chance to start again. It helps them to find a humane way out.
I have listened to the opinion, reflected in many of the speeches in the debate, that the key issue is debt attachment, particularly in relation to dwelling-houses. That is an issue that has exercised members in all parts of the chamber, and ministers too. However, I have not heard anyone who is opposed to the proposal—with the possible exception of Tommy Sheridan, who said in his final comments that if there is a problem with bankruptcy, we must do something about that too—say what they would do to deal with sequestration and bankruptcy. Scotland cannot become a country where debt paying is a voluntary activity, as that would do no good for anti-poverty strategies or for attempts to create prosperity.
Not much imagination is required to predict that if the Executive had said from the outset that it would give complete protection to dwelling-houses, three or four years from now, as sequestrations rose and were used to put pressure on people to pay their debts, we would be told that the Parliament had sleepwalked into sequestration. We know full well where those criticisms would have come from. It is not easy to strike the necessary balances, but I believe that serious efforts have been made, improved by some of the amendments that have been agreed to today. As Allan Wilson has said, the fact that we will have a review of the legislation provides an opportunity for the case to be tested.
I note that the schedule to the bill shows that we are abolishing an act from 1584, as well as the Ejection Caution Act 1594. Indeed, the bill repeals eight acts of the old Scottish Parliament. I wonder what will happen in 2428 and how many provisions of the bill will exist then. In trying to address the issues of 2006, the bill represents a substantial piece of legislation. I offer my congratulations to the minister, the committee and all who have been involved in producing it.
As several members have said, the reform of our bankruptcy laws is about striking a balance between, on one hand, a desire to promote an entrepreneurial culture in Scotland to tick another box in the Executive's top priority of growing the economy that we are constantly told about and, on the other hand, dealing with the rising level of personal and consumer debt. In adjudging the bill, I think that it is fair to inquire which the bigger problem is. I am in no doubt that the bigger of the two problems is the level of personal debt and insolvencies. The level of personal insolvencies in Scotland is four times what it was in 1997, and the same growth is reflected in the arrestments of bank accounts and wages for private debts. The number of arrestments of bank accounts and wages that are required to enforce payment of council tax is no less than 237,000.
Indeed, it is worth reflecting that the law of diligence in all its forms is in many respects about enforcing payment of the taxes that we need to run our public services. We should be careful to avoid a situation in which paying tax as a debt becomes voluntary, because that would only put a greater strain on public services and a greater burden on responsible taxpayers who pay their share.
I am sorry, but I cannot resist it. Does that mean that Mr McLetchie will join me in condemning those who set up their affairs in offshore accounts to avoid paying taxation, many of whom are major donors to the Tory party?
Every man is entitled to organise his affairs in accordance with the law of the land. That is true for supporters of my party as it is for supporters of Mr Sheridan's party. Perhaps he should ask some of his film star friends about tax avoidance and tax mitigation in that industry.
The minister deserves credit for listening to the arguments on some of the amendments that have been debated today, particularly on the vexed issue of land attachment. It is a new diligence, but we must bear in mind that the alternative would be the process of sequestration, for which there is no protection for the debtor's home. People would go straight to the process of sequestration without the land attachment alternative, and we would not want to encourage that outcome.
Although the minister deserves credit for those amendments, he deserves no credit at all for failing to take account of the wider picture on protected trust deeds. He said that he was dealing with the big picture of diligence and the management of debt in Scotland, but the picture has a couple of reels missing, at both the start and the end.
Ultimately, the bill goes in the wrong direction. It encourages people to avoid payment of their debts and runs counter to the process of debt arrangement schemes that arose from the legislation that came out of the working group on a replacement for poinding and warrant sale, which Jim Wallace set up and on which I was pleased to serve during the first session. That legislation was designed to encourage people to pay their debts; on balance, this bill encourages people to avoid them. For that reason, the Conservatives will not support the bill.
Citizens Advice Scotland gave us a stage 3 briefing, the first line of which says:
"Without exemption of the primary dwelling house, land attachment will be a significant step backwards in modernising diligence."
That is why the Scottish National Party will vote against the bill tonight. The arguments were rehearsed earlier, but the minister should be left in no doubt about the widespread anger and concern that the measures will bring.
The minister asserted earlier that he is not wicked or immoral. He may not be, but setting up a system whereby somebody's home can be forcibly sold for a debt of £3,000 is both wicked and immoral. Land attachment will not be the diligence of last resort; it will be the diligence of first resort.
Yesterday, the Executive performed a U-turn on the St Andrew's Day Bank Holiday (Scotland) Bill. I recognise that the Executive is not programmed for any more than one U-turn in a four-year period. Personally, I would have traded yesterday's U-turn for a U-turn today. The minister may bluster all he wants, and Labour members may be in denial, but the impact of the Bankruptcy and Diligence etc (Scotland) Bill will be felt in communities that the minister knows well the length and breadth of Scotland.
The Parliament removed the threat that poindings and warrant sales held over people, yet the Executive is hellbent on replacing that threat with another, which would arguably have a greater impact. It will drive people to borrow at even higher rates of interest and will cause even more indebtedness.
I am indebted to Citizens Advice Scotland for making the point that land attachments are a far more coercive measure than poindings and warrant sales, as they involve the ultimate loss of a debtor's home. The Government has forced young families to buy a home rather than rent, because there are no affordable houses to rent. Often, they have to buy at prices that they cannot afford. Now the Government is prepared to allow homes to be sold from under those families if they run up a debt of £3,000.
It is in the area of homelessness that the bill's impact will be felt most. The Executive has rightly received praise for its homelessness policy, but the bill comes in marked contrast. It could, and I believe will, create homelessness. It is draconian. I urge members of the Executive parties to think again and, even at this late stage, to perform the U-turn that the minister opposes and vote against the bill.
Will Tricia Marwick answer the question that I posed? What is the answer to the problem that we would have if we went down the road that she proposes in respect of debt attachment, whereby a person could be immediately sequestrated without any protection whatever with regard to their home?
The ministers have put forward their bill to do certain things, which they claim it will do, but the difficulty is that they have not listened to the evidence from Citizens Advice Scotland, money advice centres and the like. It is clear that any Executive that introduces legislation in this area of law would have to listen very carefully to what is said by organisations in that sector. It would have to strike the right balance between the creditor and the debtor. The bill patently fails to do that.
I urge members of the Executive parties to think again and vote against the bill at 5 o'clock. It deserves no better.
The Official Report will record that, in all Tricia Marwick had to say, there was no answer to the question that was posed by Jim Wallace. There remains no answer and there is complete silence from the Scottish National Party on how that circle might be squared.
I said this morning that the Bankruptcy and Diligence etc (Scotland) Bill, if it is passed today, will set out a framework that will last a generation. I believe that it will help to create the conditions for the future prosperity of our country and that it strikes a new and better balance between the interests of creditors and debtors, about whom so much has been said today. The bill will show how we in the Parliament are working to make Scotland a better place in which to live and in which to do business. Dare I say it, the changes that were made today make the bill even better—contrary to what The Herald might think.
There will be research. Tommy Sheridan said that there is a lack of empirical evidence to support our contentions. I do not accept that, but we will get information from the courts. The facts and figures—
Will the minister take a short intervention?
I have taken four or five interventions from Tommy Sheridan today already, so I—
Just a short intervention. Where is the—
Order.
I was referring to the facts and figures for how many attachments, sale orders and reports of sale involve homes. We will talk to stakeholders, such as local authorities, banks, debt workers and lawyers, who will tell us how land attachment is used—and how it is perceived, which is just as important. We will instruct professional researchers, although first we will need to get the facts and figures and talk to stakeholders in order to proceed with the project. It might not be possible to do that within 15 months, but I do not think that that is a problem, because the evaluation will not stop there. We will keep the diligence under review to ensure that it strikes the right balance, and we will exempt homes if that is the right thing to do.
I pay tribute to the Subordinate Legislation Committee, the Finance Committee, the Scottish Law Commission and everyone else involved—particularly the Enterprise and Culture Committee—for their support on the bill.
As I said, I am confident of the bill's success. I believe that it strikes the right balance between creditors and debtors and will, if we agree to pass it, make a positive difference. It will deliver a new and better-integrated system of debt management and debt relief. That will be good for everyone. The bill will help people to restart after bankruptcy. It will offer better protection for the public against those who try to abuse the system, and it will modernise floating charges and help business to borrow wisely. It will also give us a modern, properly regulated enforcement profession. The new civil enforcement commission will assist in that process.
I believe that the new focus on helping credit unions to help their customers is important. We will work with them to understand their problems. We will also consult in the first part of next year on how the trust deed regulations can help deserving customers to get support from credit unions, which work with the financially excluded and give them access to credit and goods and services that, because of their low income, they would not otherwise be able to access.
We will work with the enforcement profession to ensure that the new commission does its job well and effectively. In that way, we will ensure that the public interest is protected.
I was interested in two comments that were made during the debate. Murdo Fraser compared the Scottish and English situations. In fact, in 2005-06 Scottish sequestrations went up by 54 per cent. As he is probably well aware, the increase in England was half that figure. More creditors are bankrupting people in Scotland.
I gave the Parliament the benefit of the figures in percentage terms earlier in the debate, but I will now outline the cost in human terms of the increase in creditor-led sequestration. The figure has gone from 5,480 to 8,707 since 2004. If we strip away the political rhetoric of the Scottish National Party, those figures represent real people whose homes, goods and chattels have been stripped from them. Where were the moral crusaders when that was going on? They were nowhere.
This Executive has increased the £1,500 limit and introduced new debtor protection so that no income, no asset clients have access to debt relief. This Executive has amended the debt arrangement scheme to ensure that the debt crystallises so that debtors do not have new and punitive interest rate charges imposed upon them. This Executive also proposes to introduce debt relief into that process.
I was struck by the comparison with the figure of 500 warrant sales, because the figure that I have just given for creditor-led sequestrations is not twice but 17 times that number, which is far too many. If there is even one less creditor-led sequestration as a consequence of what we have done, that will be one less person who loses their home, their goods and their chattels. The bill would be worthwhile if only because that one person benefited consequentially.
The bill sweeps away a range of old, unfair diligences and replaces them with new ones that provide much better protections in respect of the could pays and the can't pays. The bill is focused on precisely the right people. More people are struggling with debt and more people are losing their homes, their goods and their chattels as a consequence of the current legislation. The bill makes the situation better for those people. It provides additional debtor protections and strikes the right balance between creditors and debtors. I urge members to support it.