Chamber and committees

Amendment 12, in my name, would increase the protected minimum earnings amount in earnings arrestment to £1,000, which would bring it into line with the amount for bank account arrestments. That would give much-needed respite to those who are in debt at a time when many families are facing a cost of living crisis.

The committee received significant evidence of people experiencing severe hardship because of funds being taken off their wages to pay debts. One survey from Advice Scotland that was provided to the committee highlighted cases in which people were unable to pay for the essentials, had fallen into arrears and were left unable to pay other debts. Respondents to that survey reported a deterioration in their mental health. One woman said that she was struggling to keep her head above water because of the amount that the courts were taking off her wages. Another person reported being

“stuck in the vicious circle of being unable to pay current year’s council taxes due to wage arrestment to pay off previous years”.

Some people had considered leaving their jobs to escape arrestments.

Unfortunately, advice agencies are increasingly finding that earnings arrestments are unduly harsh on people who are in debt. For example, they do not discriminate between the composition of the household that those who have their earnings arrested live in, so the arrestments apply whether someone belongs to a single-person household or a household where there are three children and only one earner. Raising the minimum threshold to £1,000, which I stress would be in line with the protected minimum balance for the arrestment of funds in bank accounts, could make a real difference to people. It is important to point out that that would not reduce the amount that creditors can recover; it would just affect the time period over which they can do so.

Amendment 25, in my name, relates to bank account arrestments and clarifies the position in relation to whether social security benefits can be attached by a bank account arrestment. My clear policy aim in the amendment is to protect funds deriving from social security payments automatically and without the need for any challenge by a debtor.

There is currently a mechanism by which a debtor can challenge unduly harsh arrestments, and that should extend to funds deriving from social security benefits. However, that necessitates an application to court, and we know that, in such cases, benefits have not always been protected. There is well-known case law that shows that to be the case, such as Woods v Royal Bank of Scotland. I accept that that case was some time ago, but there are more recent cases such as North Lanarkshire Council v Crossan in 2008, in which it was confirmed that benefits were attached, and more recently—last July—Edinburgh Sheriff Court held that to be the case in McKenzie v City of Edinburgh Council.

What is frustrating for advice agencies is that, when funds in bank accounts are arrested, the creditor often still refuses to release funds, despite the law saying that benefits do not lose their character as benefits when paid into a bank account. People therefore often need to go to court to get their funds back, as was the case in McKenzie v City of Edinburgh Council. That is despite most social security law containing specific inalienability clauses that say that benefits cannot be alienated from the person for whom they were intended and cannot be attached.

My proposed amendment would aim to restate that law in the Debtors (Scotland) Act 1987. It would basically state that, where the funds in an account come wholly from social security benefits, they cannot be attached. Where the funds are not wholly benefits and are mixed in with other income such as earnings, they could still be attached, and people would need to use the existing remedies under the 1987 act to apply to the court for some, or all, of the funds to be released.

It would also protect banks that attach funds in good faith without knowing that they were benefits, so those banks would have no liability to the person to whom the funds were owed. The provision would be especially helpful for people on benefits and advice agencies, as it would clarify the law for creditors, and in particular for local authorities, which are responsible for the vast majority of bank account investments. They would know in the future that, where people can show that the funds in the account are wholly benefits, the funds should be released to the person who owns the account.

Although the first £1,000 in bank account investments is protected anyway, where people’s benefits amount to more than £1,000, which may be the case if they are receiving housing costs or adult disability payments, the provision would ensure that their full benefits are protected. Equally, it would protect people who may receive backdated benefits—for example, adult disability payments—when they win an appeal. I believe that that was always Parliament’s intention, and the courts have always taken that approach. My amendment would reinstate that position.

I move amendment 12.

For the Official Report, I can say that there were nods there: everybody agreed with that point.

On another area of procurement and fair trade, we heard evidence last week from the Scottish Fair Trade Forum. Scotland is a fair trade nation, South Lanarkshire and Aberdeenshire are Fairtrade zones, and Aberdeen city and the city of Edinburgh are Fairtrade cities. I suppose that, as part of your procurement strategy, you have to include a statement of general policy on fairly and ethically traded goods and services.

The Scottish Fair Trade Forum did a report a couple of years ago based on freedom of information requests to local authorities regarding spend on fair trade products. That was £2,644 for Aberdeen city for the 2021-22 financial year, £7,260 for Aberdeenshire, £3,756 for Edinburgh and £28,668 for South Lanarkshire—so South Lanarkshire was top of the table. However, I suspect that the level of spend on fair trade in each of your authorities is higher than that. Why are those figures not higher?

If you have a general policy commitment on fairly traded goods, how do you monitor it if you do not hold or publish that information in a usable way?

I wish to follow up on some of the points that have been raised. Local authorities have mentioned

“the challenges in monitoring and capturing this data in respect of sub-contractors and the wider supply chain”

once a contract has begun. They pointed out that,

“At contract evaluation stage, the evaluation panel will consider Fair Work First responses submitted by the principal contractor”,

but the council does not have the resources to follow that up through monitoring what actually happens with subcontractors.

I will start with you, Rob and Joe, as you spoke a wee bit about some relevant discussions. How do you monitor the delivery of fair work principles when you have a big capital project that might have gone to a contractor and that could be subcontracted in a whole range of ways? How do you know that the subcontractors are delivering on those principles?

Gordon, feel free to comment on how you monitor what happens beyond the main contractor. It is no secret that the NHS is facing huge financial challenges—my local health board has just announced that it has a £35 million deficit this year alone—and procurement must be one of the ways in which you are seeking to find savings in the health service. At the end of the day, price must be the absolute driver when it comes to delivery. To what extent are you using procurement to try to make the significant savings that you are having to make? What effect does that have on other issues such as fair work and the environment?

I turn to Gordon Beattie. The fact that there is a mixed bag in the NHS probably comes down to monitoring as much as anything else. People do not always measure the full range of fair trade goods that they buy. Is that a challenge for the health service? Are you even asked to do that at the moment?

I will follow up on the point about monitoring fair work. It is fair to say that you assess the fair work commitments from the main contractor but, if you have awarded a contract, you do not monitor anything beyond that when the contractor subcontracts. Is that the case? Is that entirely a resource issue?

I presume that that is the case for the other witnesses, too.

Melanie Mackenzie indicated agreement.

Lynette Robertson indicated agreement.

I have a final question about resources. Craig Fergusson has already touched on the resource challenge that you would have when going beyond primary contractors. You are having to make millions of pounds of savings every year. Has there been a drive to use procurement as part of those savings? Are local authorities absolutely pushing procurement as a way to save money? If so, that is, I presume, in tension with buying fair trade goods. Is that fair to say?

That line has been used in my local authority. People have said, “You can get the paper clips in the shop round the corner, so why are you ordering them from there?”