Debt Advice and Awareness

Part of the debate – in the Scottish Parliament at 5:49 pm on 14 February 2001.

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Photo of Margaret Curran Margaret Curran Labour 5:49, 14 February 2001

I am about to address the points that were raised on that issue and to clarify how we are proceeding. I am late for another commitment, so I ask Kenny Gibson to bear with me and I will cover his point in my speech.

Our plans for a Scottish telephone debt line are being advanced by a small team led by the Executive, involving Money Advice Scotland, Citizens Advice Scotland and other money advice providers, local authorities and the credit industry. Fiona Hyslop made the point that the debt line would be unable to cope with 70 per cent of cases. That figure is a pilot figure. We have been told that that is the proper level, but the pilot scheme will assess whether it is correct, so we may come back to Fiona on that point.

Our aim is to make free quality money advice available to everyone in Scotland, wherever they live and whatever their income, regardless of whether they have the means to repay their debts. The debt line will build on current provision, but will make debt advice more widely available and more easily accessible. Recent research shows that of 152 advice outlets, only four were open at the weekend and only 42 provided any services during the evening.

It is important to stress that the telephone debt line will build on existing face-to-face provision and will not be a substitute for it. We are aware of the importance of such services and that they will always have a critical role to play, but we also need to look at new ways of delivering advice and information. However, we know, as many people have observed, that the existing provision cannot meet the demand, and that demand is growing.

We are concerned about the increasing role that is being played by fee chargers, who sometimes move in to fill the gap. Not only are people who cannot afford it paying for services that they should be able to get free, but concerns have been expressed about the accuracy of the advice provided. The funding of local advice provision is the responsibility of local authorities. They are best placed to judge competing demands, and therefore best placed to determine what assistance might be appropriate for individual citizens advice bureaux. That is very much within the framework of local democracy. This Parliament has made it clear on many occasions that there should be appropriate funding for local authorities to make their decisions, and this is part of that.

However, we are keen to ensure that local authorities recognise the importance that the Executive attaches to the provision of advice as part of the social justice agenda, so we have discussed with the Convention of Scottish Local Authorities the possibility of issuing guidance. Resources are finite, as we all know, but we recognise that demand is high and growing, and we need to find ways of making the resources that are available go further and of pulling in new resources. For example, the telephone debt line will be financed by the creditors themselves.

We need to look at different models of delivery. New technology offers opportunities that should be seized. We are aware that CAS is already using the internet to provide advice, and we applaud its efforts in looking at new ways of delivery, its innovative work in the Highlands and Islands using e-mail, and its feasibility study into the provision of advice over the telephone. We are exploring how we can build on that work in piloting the telephone debt line. We are also looking at how the Executive can enhance and support the infrastructure of the sector, such as training needs, the development of standards and research requirements. We have already announced that we will fund research into the quality of the money advice that is available in Scotland. That research will provide the data that we need to inform future policy development and the allocation of resources by identifying where the improvements are needed in the delivery of money advice services.

Of course, the provision of money and debt advice cuts across other agendas. The working group that I referred to earlier has heard a raft of evidence about important services, and I hope that it will come to the Parliament with recommendations. It is clear that early access to debt advice would prevent those who are too poor to repay their debts getting to the stage of having legal action taken against them. I am sure that that is an imperative that we all share.

The work currently being undertaken to develop a community legal service in Scotland offers the Executive the opportunity to take a strategic overview of advice provision that places the client at the centre of the system. We want to see a strong social justice element run through that work. We have set up broad-based groups to consider how to develop community legal services in Scotland and how to improve Scottish citizens' access to quality information advice and assistance about problems involving the law in all aspects right across the country. The group that involves CAS will report to the Deputy First Minister in October.

The Executive is working in partnership not only in Scotland. I am sure that a number of members are interested in the fact that we are involved in the work that is being undertaken by the Department of Trade and Industry to improve the lending practices of credit providers and the transparency of information provided to consumers.

The Executive has encouraged the DTI to involve Scottish advice providers in the discussions of its indebtedness task force, which aims to establish a dialogue to develop practical solutions for responsible lending and borrowing. We need to improve the transparency of information provided to consumers before and when signing a credit agreement and, again, that has been flagged up.

A key proposal is the adoption of core principles of lending practice, including the examination of applicants' overall borrowing and their ability to repay. We look forward to seeing the report of the task force's conclusions and recommendations. We will report on that later in the spring, and I am sure that the Parliament will return to that issue.

Several questions about reserved matters have been flagged up. I recognise members' commitment to pursuing those issues. The joint ministerial committee on poverty is a common platform on which the Executive can raise issues. We intend to put debt on that committee's agenda. We are working in partnership with our colleagues at Westminster and in local authorities to ensure that we pick up many of the issues that have been raised about benefits and other matters.

The focus of the Executive's work on financial inclusion has been to increase the choice of financial services to meet the needs of people on low incomes. Too many Scots in disadvantaged communities—who are often those with the greatest need—do not have the access to financial services that the rest of us enjoy, and are worse off as a result.

If we are to tackle financial exclusion and deliver social justice, the need for creative solutions is pressing. I am pleased that we have begun that work in the past 18 months. I look forward to the establishment of partnership arrangements throughout the United Kingdom to progress that work.