Debt Advice and Awareness

Part of the debate – in the Scottish Parliament at 5:31 pm on 14 February 2001.

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Photo of Tommy Sheridan Tommy Sheridan SSP 5:31, 14 February 2001

I join other members in paying tribute to Fiona Hyslop for securing this important debate.

I had the great pleasure of working in the improving debt recovery working group with many people who were at the front line of dealing with debt problems—people from Citizens Advice Scotland, Money Advice Scotland, the law centres, the Church of Scotland, and the various anti- poverty groups throughout Scotland. The most important aspect of that group's work was its attempt to humanise debt recovery—to improve it and make it more compassionate and understanding than it is. I recommend that group's report to all members, regardless of their political hue.

The report identified why people in Scotland get into debt; no rocket science is required to answer that question. The main reason is inadequacy of income, whether as a result of low benefits or low pay. The second major reason is changes in circumstances; for example, because of illness, marital breakdown, loss of job, or moving from unemployment to employment. The third reason that the report identified was the availability of credit, often from unscrupulous organisations and individuals who are willing and able to give credit without explaining the fine detail, which leads to many people getting into serious debt.

The difficulty that we face in tackling this issue is that many relevant policy areas are reserved. The Parliament may not have the power to address some of the fundamental problems, but there are three points to which I would like the minister to respond. First, there is the operation of the social fund in Scotland, which I realise is a reserved matter. It is unacceptable that the number of refusals of applications for loans from the social fund should have risen from 11,000 in 1999-2000 to 362,000 in 2000-01. Something is wrong with the operation of the social fund. I ask the Executive to carry out an appraisal of the operation of the social fund in Scotland and to examine how the new regulations affect those who are desperate for social fund loans.

I also ask the Executive to examine the idea that Glasgow City Council submitted to the recent Scottish Affairs Committee inquiry into poverty in Scotland: that the working families tax credit should be disregarded for the calculation of housing benefit and council tax benefit for those who move from unemployment to employment. The problem is often that the clawback from the income of families who are in that situation is as high as 85p in the pound, which means that it is uneconomical for people who live on very low incomes to get jobs.

Thirdly, I would like the minister to consider carrying out a proper appraisal of the adequacy of benefit in Scotland. There has never been a proper appraisal. Even the levels of benefit that were recommended by Beveridge were never adhered to. We have crept along with a system that has often been totally inadequate to meet living costs. I ask the minister to conduct a full appraisal of benefits that are meaningful in relation to living costs.