With this it will be convenient to discuss the following amendments:
No. 164, in clause 101, page 66, line 15, after ‘may’, insert
‘subject to the discretion of the court’.
No. 167, in clause 101, page 66, leave out lines 30to 32.
No. 165, in clause 101, page 66, line 30, after ‘may’, insert
‘subject to the discretion of the court’.
No. 166, in clause 101, page 66, line 33, after ‘may’, insert
‘subject to the discretion of the court’.
Once again, we have quite a few points to go through, but I will try and be brief. If I have any questions for the Minister later, I will also try to brief, as I appreciate that time is pressing.
In seeking to move our amendments Nos. 163 to 167, we are looking at the repayment requirement that can be imposed on debtors who are placed under an administrative order by a county court. To be clear to the Minister, this is a probing amendment. We are trying to establish who is in control of determining the repayment requirement imposed on debtors. My concern with the clause is that there seems to be two sources of authority when it comes to determining the requirement. First is the implied discretion of the court making the order—I emphasise implied. Second is the regulations to be made in due course by the Lord Chancellor.
Amendments Nos. 163 to 166 seek to make the discretion of the court explicit, not implicit. Amendment No. 163 specifically gives the court discretion over whether the debtor must pay scheduled debts in full or to some other extent. AmendmentNo. 164 would ensure that the court has discretion over arrangements made in respect of several different creditors. That is vital because only the court is in the proper position to be aware of special circumstances that may affect the treatment of different creditors; meaningful guidance would be difficult to offer simply by regulation. Amendment No. 165 makes it clear that the court has discretion over ordinary payments other than by instalment, when there are appropriate circumstances. Amendment No. 166 tackles the rather ominous stipulation that the
“repayment requirement may include provision in addition to any that is required or permitted by this section.”
The amendment stipulates that any such inclusion is also at the court’s discretion and cannot spring, like a jack-in-the-box, from regulations that are yet to appear.
At the very least, the clause must distinguish more clearly between what the court may make a condition of an administrative order, at its discretion, and what it must do, as required by the regulations. Administration orders will be used by vulnerable people in difficult circumstances. I believe that the clause, as drafted, will sow the seeds for conflict between proper judicial discretion and administrative prescription. I should like the Minister’s assurance that no such conflict is anticipated. The amendment is thus just a probing amendment.
Amendment No. 167 is an attempt to clarify what the Government intend by the stipulation that repayments should be made by instalment. I am not sure that we share a common definition of an instalment. Proposed new section 112E(10) of the County Courts Act 1984 will provide for repayments
“to be made by other means” including lump sums, in addition to instalments. That is not necessarily a sinister suggestion, and I can see the intention behind it. If a debtor has a meagre income stream but access to a lump sum, the lump sum should be available for use in settling the debt. However, it is not clear to me that subsection (10) is necessary for the achievement of that objective, and I believe that it would be better to omit it.
The repayment requirement is based on payment by instalments, but instalments are, to my mind, merely sums of money provided at agreed times in part settlement of a debt. It is perfectly conceivable for one large initial instalment to be followed by several smaller, regular instalments. Indeed, that is common practice in credit agreements that I have seen, whenthe first sum represents a deposit or when there is an agreed scope to vary instalments depending on an individual’s circumstances. Credit card debt is predicated entirely on the principle that payments are regular but that the amounts vary depending on the debtor’s available resources. They are still instalments in settlement of a debt. It would therefore be in the spirit of an instalment plan for the court to require one or more lump sums followed by smaller regular payments based on surplus income.
It seems to me rather complicated and potentially confusing to tell a debtor, “Here is your initial instalment plan, but the court may still ask you for additional lump sums on top of that.” I should welcome the Minister’s comments on whether an instalment plan, within the normal meaning of the phrase, is capable of achieving what the Government intend, without the inclusion of new subsection (10).
I compliment the hon. Gentleman on his analysis. Our view is that there is no need to insert the phrase
“subject to the discretion of the court” because the power is entirely permissive. The word “may” is sufficient to allow the court to exercise all its discretion in making the decision. I assure him, if that is his concern, that administration orders will be made on a case by case basis, and on no other, wholly with regard to individual circumstances.
Amendment No. 167 would indeed exclude the new section 112E(10), which would allow the court to decide, taking account of individual circumstances, whether it would be appropriate for the debtor to make a lump sum or other kind of payment in addition to normal instalments. Apart from the perhaps semantic point—I do not mean that as a criticism—about what is an instalment and what is a lump sum, I have not, I am afraid, fully understood what in the subsection is worrying the hon. Gentleman, so if I do not deal with the root of his worries I know that you, Mr. Bercow, will allow him to return to the matter.
The provision is there because in addition to a normal instalment order, a debtor might somehow get some more money—from a bonus or a windfall, for example, or by disposing of assets—and it may become appropriate for the court to make an additional order. Instalment is intended to mean a constant series of similar instalments, although they can be variable. That is all that the clause is about; there is nothing sinisterin it.
I hope that I have reassured the hon. Gentleman, but he can come back to me if he still has concerns that I have not dealt with.
I thank the Minister for dealing with my concerns. I especially appreciate her point about the importance of reflecting an individual’s circumstances, and I hope that the Government’s proposals will deal with that matter.
I think that the Minister has clarified for me the flexibility of what is being proposed: that there is an ability to vary instalments. I was concerned because the amount of an instalment and the pattern in which it is paid are usually of a fixed nature. Normal ways of repaying debts can vary. Lump sums can be paid upfront or at the back end, and the amounts themselves can vary at every stage during the instalment plan. If the Minister is giving me an assurance on the proposal I will not press the amendment to a Division, but I ask her to reaffirm that I have understood what she said.
One would expect that instalments would be ordered to be regular, although I can understand what the hon. Gentleman is saying. If, after paying instalments of £10 a week for six months, the person concerned was in work again and the creditor wanted the instalment to be increased from that point, it would none the less still be an instalment. However, what is proposed is merely the ability, if some money falls into the hands of the debtor, for the court not to be tied to the instalment provision but to facilitate its being flexible, and notwithstanding the instalments, to be able to order a lump sum to be paid, or a lump sum instead of the rest of the instalments. The proposalis about flexibility, which, as the hon. Gentleman perceived, is important.
‘above the Bank of England base rate’.
This is a probing amendment on a very sensitive issue, which aims to establish whether it is equitable for creditors to charge interest on debts scheduled under an administration order if the rate of interest is kept at the Bank of England’s rate. The principle in play in the clause, and throughout this part of the Bill, is the need to strike an adequate balance between the obligations of the debtors and the rights of creditors.
Although much of our recent discussion has been about protecting the obligations, and even the needs, of debtors, we must respect the fact that creditors have rights, and recognise the legitimate expectations of creditors who have acted responsibly, by allowing all creditors to charge some interest on debts that are scheduled to administration orders.
It is right that the debtor should be given shelter by the court from punitive rates of interest and charges when they get into difficulties. Hon. Members have heard some of the heart-stopping statistics on personal debt, especially in the aftermath of Farepak’s collapse, when home credit providers aggressively targeted those who had lost out.
It is easy to see the potential of the debt trap when reputable store cards can charge consumers interest rates of around 30 per cent. On a rate of just 25 per cent., it would take 12 years to pay off a £1,000 debt by making minimum payments and would eventually cost over twice the original sum borrowed. At the more aggressive end of the home credit market, which we looked at in the Treasury Committee, it is now impossible for a debtor to clear their debt once they get into difficulty. But allowing interest rates that do not exceed the bank’s base rate would be a compromise that also protected creditors’ rights. I hope that doing so would also be in line with a general principle that judgment debts do carry interest.
There are at least two perspectives on this issue. The first would be to say that creditors are lucky to receive any repayments at all and leave it at that, but the alternative is to admit that creditors should have the right to levy reasonable interest until the debt has been redeemed, even if the rate is substantially lower than the one previously agreed with the debtor. I should therefore be grateful if the Minister could tell us whether this issue was considered in her consultation and whether she might be prepared to revisit it now.
The amendment would allow creditorsto receive some payment by way of interest, while governing the amount of interest so that it could not be punitive. The point is to stop interest being charged once an order comes into force. A debtor at that stage needs an end point and to start to be rehabilitated. That is our thinking and why we have made the provision in the new section 112H(2) under this clause, indicating that no more fees, charges or interest may be charged while the order is in place.
The idea is to get the maximum repayment available from the debtor so that the total debt or the largest possible proportion of it will be paid back within the maximum period of five years. The orders have an end point. There is no mechanism to extend the endpoint. It is intended to be a finite solution. If interest were added—this would present certain technical problems—there is a danger that the total debt could go beyond the maximum limits set in the regulations, which may be about £15,000. In that circumstance the court would have to revoke the order. That element of uncertainty is undesirable too.
The other point is that we consulted about adding interest at this stage and ascertained that the general view was that we were taking the right approach and that it was good to offer an end point and then work to rehabilitation and to leave interest out of the equation from then on. I hope that the hon. Gentleman can be persuaded to withdraw the amendment.
I am encouraged by some of the points that the Minister made. However, I have another scenario to put to her which might help to clarify my argument. The first scenario involves an individual who owed £5,000, of which he could afford to repay only £3,000. A deal would be struck that was effectively below par value of that debt—par being £5,000 and the discounted amount being £3,000. Clearly he would not have the wherewithal to pay any interest. The point that the Minister makes is absolutely right.
In a different scenario in which, let us say, the amount is again £5,000, but the individual’s earning capability is such that a negotiation is struck enabling him to pay back the full amount at par value but over a period, common sense tells me that there is an ability to pay some interest. Assuming that interest rates remain as they are—reasonably low—the amount that would accumulate at base bank rate on the par value of the debt would not reach the sort of amount that it would, for example, on a credit card.
I am trying to differentiate between a negotiation on a figure that is below par value—the £3,000 example in which the person does not have the wherewithal to repay the full amount—and the £5,000 par value example, in which the person clearly has the ability to pay everything back, but in which the Minister seems to be suggesting that he is unable to pay any interest at all to somebody who has lent him that money in good faith.
I appreciate the difference between the two scenarios, but in this part of the Bill we are considering somebody who has got himself into debt and is helpless to get out of it on his own.
On that point, I have just been looking at remedies other than bankruptcy. It strikes me is that we are considering not just people who have got into debt through gross irresponsibility or who have built up a huge amount of debt on credit cards, but a small minority of sophisticated business people who have got themselves into debt and who do not want to go bankrupt. They are looking for remedies other than bankruptcy to sort out their debts, andthey might have received credit from other private individuals. Should there not be a way of distinguishing between banks and finance companies that offercredit, and individuals who provide it for other individuals? In the latter case, there might be an argument for them to receive some interest on the credit that they have made available.
I can see the scenario to which the hon. Gentleman refers. However, here we are trying to deal with people whose debts have overwhelmed them, whatever category he wants to put them in. They are taking a fairly significant step for the present and the future in entering, through the courts, into an order of the kind that we are considering. All the way up to that point interest will have run on the loan, on the judgment debt and so on. Only when that is clear will that person be able to engage the court to save him from his predicament, and then the interest will stop running. By then, it will be a finite problem; the point will be to get rid of the debt. It seems to us that, given that he will be a long way down the road at that point, it will be appropriate to stop the interest running on—the creditor will have received it all the way until then—and to concentrate on rehabilitating the debtor and getting the debt paid off as quickly as possible. I invite the hon. Gentleman to agree that that is a very reasonable way in which to see the matter.
I am not sure whether I am being pedantic or whether there is a clerical error here. I believe that the date should be 2007 and not 2006. If the Minister could correct me on that, I would appreciate it.
I think that the Government could rightly be accused of optimism on this point. I understand that what happens is that it will be updated anyway when the Act is printed, but I am grateful for the prompt.
I am overwhelmed with delight to be able to accept it. There are those behind me who wanted to vote, but I will control them.
On that minor victory, I should almost like to retire, but I shall press on.
The amendment concerns the calculation of a debtor’s qualifying debts for the purposes of seeking them through an administration order. I am concerned that this seems a rather abstruse business. Regulations will be prescribed as to the maximum sum that a debtor can earn and still be subject to administration order. I accept the need for a figure to be set, but I hope that the Minister will help with why the calculation of qualifying debts is envisaged to be so complex that it cannot be left to a county court.
Qualifying debts are all debts that have arisen before the date of the calculation, and it is already abundantly clear that the debtor cannot pay off any business debts. Can the Minister explain the complexities that necessitate further regulations on this subject? Can she also explain why the new section 112AD(3) is worded as it is:
“Regulations must make further provision about how the total amount of a debtor’s qualifying debt is to be calculated.”?
That is very strong. It suggests that the Government have already given this some significant thought, and if so, can we see the draft regulations, if the Minister actually has issued them?
I endorse what my hon. Friend has just said. One of the things that told me a little in looking at proposed new section 112 AD, headed “Calculating the debtor’s qualifying debts”, is, as he pointed out, subsections (3) and (4), where the text talks about the regulations making further regulation and about how the total amount of qualifying debts has been calculated. Under subsection (4), regulations “may” make provision. I should like the Minister to explain why they “must” in subsection (3), but not in subsection (4). Why is there a difference? Why is one subsection more powerful and stronger than the other? As my hon. Friend mentioned with regard to the regulations, the Government—with respect—have had a long time to get the Bill right. It has been a long time coming and we have had a series of publications, with a Green Paper and a White Paper, and a huge amount of consultation with all the different sectors.
As far as I am aware, the only part of the Bill that came as a bit of a surprise—the hon. Member for North Southwark and Bermondsey alluded to this—is part 6, which relates to works of art. The Government have had a huge amount of time to get the structure and detail absolutely spot on in relation to debt management and relief, and things such as administration orders. I will press the Minister further: we hear of future regulations, but surely we ought to know now exactly what the position is now.
The amendment would remove the means of calculating a debt as qualifying debt, which is a vital component of the new scheme: we need to know what the debtor owes. It would also stop the court taking account of debts arising before the order was made but not yet due for repayment—for example, debts under a deferred credit scheme. We oppose the amendment because it would not allow provision to be made for the court to add up his indebtedness, so the court would not be able to make a decision on whether an administration order is the best method of assistance available to him.
Allowing that assessment to be made of the debtor’s true indebtedness could result in his being directed to a better way forward than the administration scheme, so it is imperative to allow the court to advise and direct the debtor in any way that is most advantageous to him.
“Must” and “may” in subsections (3) and (4) are there for the following reasons: subsection (3) is about the total amount of the debtor’s qualifying debt, so it is imperative that the system of administration orders functions, and that it is clear and certain what a qualifying debt is. It must be clear what his total is. It is imperative that there are regulations set out that point to a fixed sum when his personal circumstances are considered.
My guess is that it is less important to work outhow the amount of a particular qualifying debt is calculated. Flexibility about that can adequately be reflected in rules that we are likely—though not obliged—to make. If we do not make it compulsory to have regulations on how the total qualifying debt is calculated, people will not be able to ascertain with certainty what it is. It is important that that regulatory power is there and that we can direct it to happen. We will consult on all this, as we have on everything else.
In paragraphs 275 and 276 of the policy statement, with which Opposition Members are quite familiar, we have set out the Government’s current thinking on this. We do not have regulations ready yet, because we want to consult, and I cannot say exactly when they willbe ready, but hon. Gentlemen can see that the document—I do not know whether they have it—says:
“To ensure that the reformed scheme meets its objectives, the court will take into account all the debtor’s existing qualifying debts for the purposes of meeting the prescribed maximum, regardless of whether or not a debt is due at the time of the calculation. This enables the court to consider the impact of deferred debts that will become due during the lifetime of the order and avoid the need to revoke an order where such a debt will cause the total debt to exceed the prescribed maximum”.
It then reiterates that the Lord Chancellor is
“to make provision about how the total amount of the debtor’s qualifying debts are to be calculated to ensure that a standard approach is taken”.
That is the point that I have tried to set out.
My hon. Friend the Member for North-West Norfolk mentioned the amount of consultation that has preceded our debate. I believe, if I recall correctly, that when we discussed the first part of the Bill, on tribunals, the Minister mentioned that there would be a consultation period in the autumn. Will that focus purely on that part of the Bill or will it cover the aspects that we are discussing now?
There will be a whole raft of overlapping consultation processes, but there would not be any significant point in linking this one with the oneabout tribunals. We obviously want the regulations to come into force as early as possible, because the administration order provision is not of much use unless we know exactly how the qualifying debt will be calculated. The political will to get the regulations ready is definitely there, but we want to ensure that we have all the appropriate consultations. As the hon. Gentleman correctly recalled, it is intended that the consultation on tribunals will take place in the autumn, and this one will start in the summer, as we want to get it under way quickly.
I have one comment—not on the regulations timetable but on the amounts criteria. As the Minister and other hon. Members know well, the simpler and the more aligned are the amounts that qualify or disqualify people for something—in the present case, the debts are taken into account—the easier it is for advisers, including people in citizens advice bureaux.
Will any parallel scales, tables or precedents beused? Amounts are easier to comprehend if they are expressed in round figures and multiples of 5,000, if they remain the same for a while and if any change is well publicised and regular. This part of the Bill is good, and I want it to work in the most user-friendly way and with least complication for the people whouse it.
I do not know whether tables can be replicated for use in relation to the present provisions. Obviously, there is a wealth of experience among precisely such bodies as the citizens advice bureaux, and we shall want to tap into that when we assemble the new system for helping people out of debt.
On the timetable, I hope that I have made it clear that the tribunal consultation will be in the autumn. We shall consult on the regulations that are the subject of our current discussion in the summer.
I am sorry to press the Minister, but there remains concern among all Conservative Members. There has been significant consultation in the lead-up to the Bill. However, we identify with the spirit of opinion that has been expressed on how the various aspects of the Bill—on tribunals, courts and enforcement—should be implemented when it becomes an Act. If there is a consultation period after enactment, it could significantly change the direction of the new legislation from that for which support has been expressed in our debate. There has been enough consultation; more of it would put the cart before the horse. When the Bill leaves Parliament, there should be enough direction that yet further consultation is not required.
There cannot be a change of direction. There is enormously long legal history whereby regulations can fit only within the framework of an Act and must not be ultra vires, so the regulations could not take us in a different direction. With respect to the hon. Gentleman, we need to keep our feet on the ground. We are talking about how to calculate people’s debt. The legislation contains a scheme whereby debtors can be helped out of their debt position, and it is important to scrutinise that scheme properly now. The consultation on how debts will calculated will come within the ambit of that scheme and not outside. There will soon be consultation and discussion in the House.
I appreciate the Minister’s explanation and accept particularly her points about the timetable and ensuring that debtors can take the most advantageous route. In the absence of providing the further information that Opposition Members have requested, I hope that the Minister will give us all time to reflect, at a later stage, on the points that we have tried to make with the amendment, which I shall not press to a vote.
I am not aware of any requested information that I have not supplied. If the hon. Gentleman sets out what he wants to know, we will do our best to comply.
Will the Minister give us a full description, on Report, of what the consultation will involve? Who will participate in it; how long will it be; and what will be its broad nature? I do not challenge the need to provide an approach that is not exactly broad-brush—it is detailed—but that requires some engagement with the various organisations that will use the legislation. The Minister has twice said that there will be summer and autumn consultation periods. Who will be invited to participate in those consultations and what will be their scope? I appreciate that she might not be able to provide that information now, but it would be useful on Report.
I am happy to comply with the hon. Gentleman’s request. I did not appreciate exactlywhat he wanted to know, or I would have answered straight away. Normal Cabinet Office provision for consultations will apply. There will be three months’ consultation, and it will be made public that a consultation will take place. I do not doubt that individual organisations known by the Governmentto have an interest in the matter will be directly approached for input, but the general publicity surrounding the consultation will be directed to all relevant areas in the hope that interested parties will come forward as well. The consultation will be as comprehensive as possible, because it is important to get things right. The way to do that is to consult the maximum number of people with the maximum amount of experience, to reflect on their responses and to produce an answer to the House.
The amendment goes further in attempting to resolve the possible conflict between the court’s discretion and the regulations by omitting the need for regulations altogether. That is desirable for a single reason: I do not want any district judge to have to tell a debtor that, although he would like to schedule the debts in a way that is fair, just and reasonable, the regulations prevent him from doing so.
If the court has discretion over the amount of debt to be repaid and which creditors take priority under the order, it seems unnecessary to fetter its discretion over the amounts of the repayments. However, if it is the Government’s view that the court needs guidance on the calculation of surplus income and the nature of the instalments, would it not be reasonable also to offer it guidance on the total sum to be repaid? It seems that the court is being trusted with some decisions, but not others. I therefore seek the Minister’s clarification on why that should be so and what reasoning has been evoked to justify the differing treatments?
This amendment would remove the power to make regulations that will allow the Government to prescribe a consistent approach, across all courts, to the calculation of the amount of instalments in relation to a debtor’s surplus income. Consistency is a key feature of the scheme, which received support from all sides. It is better to have a framework within which the courts can apply their discretion to an individual set of circumstances, to avoid an incompatibility between what happensto someone in court jurisdiction A and what happens to someone in a similar position in court jurisdiction B.
I am told that creditors are keen to see an end to the current system in which different courts make vastly different orders on individual circumstances that are largely the same. The advice sector also favours a national system that will ensure a consistent approach to these issues, and one imagines that it will feel competent and more empowered to advise with a good deal of certainty.
Therefore, regulations made under proposed new section 112E(9) of the County Courts Act 1984 will ensure a consistent approach based on the ability to pay, probably using a version of the common financial statement, which is widely accepted across both the credit and the advice sectors as the most comprehensive and best tool for doing that kind of assessment. That type of scheme is not appropriate for those with insufficient surplus income to meet the commitment. The revised scheme is targeted at those debtors who can afford to make reasonable repayments up to the five-year term of the order.
Unfortunately, I am a bit of pedant on language. The Minister used the word “probably” in relation to the use of the common financial statement. Is there any ambiguity that I should be concerned about? Is there something else that she is thinking about or will the system be based on a common financial statement?
No, the system is part of the regulation-making process that I have already described to the hon. Member for Bournemouth, East. The common financial statement commends itself to us as the appropriate tool, and it is widely used by advice agencies. However, if somebody has come up with a better tool by June—if that is when summer starts—we would be open to the suggestion of using it instead. That is the direction of our thinking at the moment. It is our preferred tool, but there will not be much deviation from a tool that is similar to the common financial statement. Nevertheless, we will leave the options open until the consultation has been held.
If we accepted the amendment, it would prevent the introduction of a common procedure for determining instalments. Each court would carry on making its own assessments based on locally devised criteria, which would add complexity, cost and—overwhelmingly what we do not want—uncertainty. We therefore urge that the amendment be withdrawn.
Again, I am encouraged by what the Minister has said. I understand the need for debtors to pool their obligations on the basis of a common financial statement. She mentioned other tools that are available, but I cannot think of any alternative other than a common financial statement. However, if she wants to leave flexibility for that open, I probably would not object to it—although I cannot imagine what it would be. I beg to ask leave to withdraw the amendment.
I should like to ask a general question about the clause and this welcome part of the Bill. This is the first clause stand part debate under this part, which tries to find systems whereby people with small or medium debts can have them managed in a way that resolves the problems. There was a helpful introduction in the explanatory notes, supplied bythe Government to all Committee members and available through the Vote Office, explaining the background and the alternatives: administration orders, enforcement registration orders, debt relief orders and debt management schemes.
I have two generic questions about both orders in the clause and their context. First, on a practical matter, if somebody gets into personal debt, what is the sequence or process that will determine the alternative route out of it? Options are available. In the explanatory notes, the administration orders are described as a
“scheme for those with multiple debts totalling no more than £5,000, one of which must be a judgment debt.”
There is, as we will see in a little while, a set of arrangements under what are now called debt management schemes. The idea is to prevent people from going into bankruptcy and to try to reach an arrangement that, in many cases, comes to an end in a year, so that, in that time, matters can be resolved by agreement and the creditors will accept that they will not necessarily get all the money to which they are entitled. However, in return, they will get some of the money and the debtor will honour the agreement and pay that off.
The arrangement also seeks to resolve a real life problem, which is that some people get themselves into a financial muddle and do not have the financial wherewithal to sustain the obligations. As we probably all know from our personal circumstances, it is much easier to manage one repayment arrangement than many. The people who get into the biggest difficulty in life are often those who try to juggle repayments here and there.
If people are being chased, quite properly, by creditors for money that they are obliged to pay, from whom and where can they seek advice in the court structure? The matter relates to the context of the court structure, which will set out the sequence, or the best choice, for people to follow. Again, that reflects our debate a moment ago; it is about ensuring that we clog up the courts as little as possible, get as much agreement as possible and that creditors who are owed money get it, whenever possible. Above all, however, it is about debtors getting into as little further difficulty as possible, with all the knock-on effects and consequences.
I bridge that point, on my way to my second question, by reminding Committee colleagues about figures that we all know. There is now record personal indebtedness in this country. I have heard in the past few days that that may just have levelled off. The figure in my head is some £13 trillion, which is an incredible, almost unimaginable figure. However, people are willing to consider debt, because of the amount of mortgage that they can take out—five times their income—and because of the number of consumer goods that they are buying. This country is saddled with debt, which is fundamentally problematical for Britain and not a sign of healthy long-term economic stability.
Secondly, in case we agree to this part of the Bill, particularly the part on debt management schemes, has the Department conducted an assessment of what that will mean in debt reduction? How many people will be affected? In the Library research notes and the notes on clauses, I have been able to find only the following figures. Paragraph 384, under “Debt Management Schemes” in the departmental explanatory notes, says:
“It is estimated that over 25,000 such debt repayment plans were arranged in 2004 and there are currently around 70,000 active plans.”
I have not found an assessment of the likely impact on indebtedness and the number of people in debt. How many people are expected to be taken out of indebtedness and out of the courts? It is an important generic issue as well as a social policy issue.
The measures seem to be a good idea. They are a welcome part of the Bill, and everybody has been positive about them, but does research suggest that they will make a significant or only a small impact? I should be happy to receive any information that the Minister can give me or point me toward. It would put the measures in the wider context of helping people get out of the pressured position of being in debt, which causes people in our constituencies illness, grief, family breakdown and worse. I hope that the measures will take some small steps to alleviate that.
I do not accept the description of a nation saddled with debt. Debt is important. It is difficult to live life without substantial debt. I would have to live in a tent if I did not have a debt called a mortgage. The Government are worried about, and have taken the new steps to address, debt that is out of control. Debt is a useful tool when properly controlled.
We have altered, extended and changed an existing system of coming to terms with debt. It is a system of mutual undertakings whereby the debtor agrees that he or she will pay off a certain amount and, as the hon. Member for North Southwark and Bermondsey said, is relieved of the management of many repayments. Creditors acquiesce in having their ability to take further action restricted so long as the payments are made.
That is of course a court-controlled procedure. It will need to go to the courts, so the options that we have been discussing—mediation, alternative dispute resolution and so on—will have passed by the time we get to such a position. There is no doubt that advice is available. I chronicled its availability a few days ago. Agencies such as citizens advice bureaux, law centres, solicitors, the Department of Trade and Industry, financial advisers and advisers financed by the financial inclusion fund are available, as is outreach to contact people whose debts are causing them significant stress and difficulty. One would expect that kind of advice to encourage an individual to come to court to ask for such assistance. It is not inconceivable that, on some occasions, the creditor might suggest it, and the individual might take advice and see the wisdom of it.
In so far as I can help the hon. Gentleman, those are likely to be the mechanics of how the helpful provisions will come into play in a troubled individual’s life. I cannot give him any significant figures on how many such schemes we expect to emerge. There is only anecdotal material at present, and study is ongoing, but he is right that there are about 25,000 administration orders a year. That must give some guideline about what is likely to follow from the various versions of debt management. I cannot say more than there are 25,000 orders a year now, and that that number may exist in future. I am reflecting on whether I have answered all that he asked—I think that I have.