Section 2 — Disposal of application

Mortgage Rights (Scotland) Bill: Stage 3 – in the Scottish Parliament at 3:30 pm on 20 June 2001.

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Photo of George Reid George Reid Scottish National Party 3:30, 20 June 2001

We move to the third group of amendments. Amendment 10 is grouped with amendment 11.

Photo of Robert Brown Robert Brown Liberal Democrat

I want to remind members of the underlying purpose of the bill, as it is important to look to the objectives that we are trying to achieve. We are trying to put into law something that does not exist at the moment: a right for those who are threatened with eviction as a result of mortgage arrears to put their concerns to the court, and to allow the court discretion, under certain circumstances, to refuse or continue the repossession arrangements.

Accordingly, the social objective of the bill is to reduce the number of people who become unnecessarily homeless. With amendments 10 and 11, I am trying to reflect in the bill the implications of the evidence that we heard, particularly from the Edinburgh in-court advice project, at stage 1. Liz Cameron, on behalf of that project, gave the committee compelling evidence. She was asked about the intervention that was offered by her project in cases of rent evictions. Such situations are similar to mortgage evictions to an extent, but they will differ among different courts. In the case of rent evictions, the court has power to continue or refuse evictions.

Liz Cameron indicated that, in the short term, her project helped people to present their case to the sheriff in such a way as to make it more likely that they would be able to stay in their houses and make regular payments over a period. I asked her what her percentage success rate was in that regard, and she replied:

"this is a gut feeling: I would say that it is about 90 per cent. Some people come to us for what I would call long-term help and work with us for a while. We have figures from the CAB, which tends to work with people long term, and there has not been a single eviction among the 700 cases that it has dealt with."—[Official Report, Social Inclusion, Housing and Voluntary Sector Committee, 20 September 2000; c 1398.]

That applies to the separate category of rent evictions, but I think that the same principle applies, and is borne out by evidence relating to the similar provisions under the English legislation—a similarly high success rate has been shown to be possible in England.

The essence is to get people to do something about their problems. They may be in unemployment or have fallen on hard times; they may have fallen ill; they may have been away from home; there may be some domestic difficulty. Whatever the background reason, the point is to get people to deal with it. People often develop an ostrich syndrome, and do not deal with their problem. If we can get people to court or get them to do something about their problems, advice is available on tap to help them, through the Edinburgh in-court advice project, the equivalent Glasgow project—and through other courts—and various other ways.

The key is legal and financial advice to enable people to get their affairs on to a long-term basis. The implication of the evidence that the committee heard is that, if the proper advice is available, in the majority—even the vast majority—of cases, people can get things back on track, resume their payments and hold on to their house. The social and personal cost of people being put out of their houses is done away with.

In amendment 10, I am trying to include in the bill a specific power for the court to use, when it comes to consider applications, to continue proceedings in order to enable the debtor to obtain legal or financial advice. There is a more limited power for continuation, which applies in only some instances. Amendment 10 seeks specifically to broaden the right to continue proceedings and to direct the court's attention to the significance of legal or financial advice. I hope that the chamber will be prepared to take on board that important provision.

In the interim—during a continuation of proceedings lasting a month, six weeks or whatever—the court would have the power to impose conditions, to ensure that the position did not deteriorate. If the court thought it appropriate, people would have to continue to make payments or to do something to ensure that things kept ticking over.

Amendment 11 is similar in nature. I draw members' attention to section 2(2)(b), which gives guidance to the court on the circumstances in which it should consider making orders to refuse repossessions or to continue a case. The court is to have regard to

"the applicant's ability to fulfil within a reasonable period the obligations under the standard security in respect of which the debtor is in default".

Imagine a situation in which a wife has been left with a house after her husband has gone off. She may be able, with the assistance of the Department of Social Security, to pay the interest on the mortgage, but not to pay off the capital. Under section 2(2)(b), she would have to catch up on the full payments, capital and interest, before the court could approve the application. My modest amendment attempts to soften that provision. It recognises that, where a debtor's spouse cannot make full payments, it may be equitable for them to make partial payments, without prejudicing the creditor, because of the equity that is in the house. I proposed such an amendment at stage 2, but unfortunately I was unable to persuade Cathie Craigie to take it on board.

Neither amendment 10 or amendment 11 opposes the main thrust of the bill. They are modest additions that would improve the bill's success rate and assist in meeting the social objectives that Cathie Craigie and all members seek to achieve.

I move amendment 10.

Photo of Brian Adam Brian Adam Scottish National Party

I am delighted to support both the amendments in the name of Robert Brown. The intention of the bill is to prevent people becoming homeless as a result of falling into arrears with their payments. When individuals start to fail to make payments, they often find it difficult to dig themselves out of the hole that they have created. They ignore letters from the lender. Only when the situation has become critical do they start to consider whether they can retrieve it.

The provisions that Robert Brown described would help individuals to deal with their problems. It takes a little time to resolve such situations. Amendment 10 is worth while because it will help to maximise the number of people who benefit from the bill. The same applies to amendment 11. The fact that someone is not able immediately to repay the capital as well as the interest on their mortgage should not preclude the sheriff from agreeing to a revised arrangement. I hope that on this occasion Cathie Craigie and the Executive will agree to support the amendments, which will not destroy the bill but strengthen it. The object of the exercise is to minimise the number of people who become homeless.

Photo of Bill Aitken Bill Aitken Conservative

When people are in a hole, sometimes the most merciful thing to do is to persuade them to stop digging. There is a danger that amendments 10 and 11 will prevent that happening.

As Robert Brown said, people may find themselves in the position of having their homes recovered by the heritable creditor for two reasons: irresponsibility or misfortune. Through such means as personal health insurance, people may reduce the impact on their ability to pay their mortgage of illness that prevents them from working and earning.

Neither amendment 10 nor amendment 11 is likely to have much impact on those who fall into the category of financial mismanagement. We are not talking about a substantial number of cases. Indeed, it is clear from the evidence that the committee took that the conventional mortgage providers bend over backwards to prevent repossession.

Amendments 10 and 11 fail to recognise the fact that, by the time individuals are at the door of the sheriff court, practically everything possible has been done to persuade the mortgage lender not to repossess and every possible effort has been made to come to an accommodation.

I do not consider that there are merits in amendments 10 and 11, although I recognise the good intentions therein. The amendments add nothing to the bill, and we shall vote against them.

Photo of Cathie Craigie Cathie Craigie Labour 3:45, 20 June 2001

Amendments 10 and 11 have different effects, so I will deal with each in turn.

We discussed the proposals in amendment 10 at stage 2. The amendment proposes that the court should take account of whether the debtor has had the opportunity to obtain legal or financial advice before the court hearing, and allows the court to consider whether the court process should be continued until the debtor obtains that advice.

I understand Robert Brown's thinking behind amendment 10, and I fully support the principle that, through the bill, we should make every effort to encourage the debtor to secure legal and debt advice. Such efforts should help those who may be in a panic about their situation to find out about their rights and to get support from people who are experienced in dealing with similar situations. Robert Brown and I agree that securing legal and debt advice at an early stage is crucial and should help people in that vulnerable group to find a way through their mortgage difficulties and, ultimately, to get back on their feet.

However, I believe that the bill provides for such efforts to be made, as it points debtors to the information and advice that they require. In addition, I am clear that the rules of court already provide for the proposal that Robert Brown makes in amendment 10. The bill encourages the debtor and occupiers who receive a notice to seek advice on debt management, and points them to the citizens advice bureau and other advice agencies. Members will recall that the bill was amended during stage 2 to include a secondary power for Scottish ministers to amend the notes and forms in the bill by order, primarily to include the telephone number of the national debt line when that service becomes available. Other debt advice agencies could be included in those notes and forms as time goes on. Those provisions should encourage debtors to act earlier and to secure advice on their debts when they have time to make a difference.

It is important that our emphasis is on signposting and encouraging people to seek advice at an earlier stage, as early advice can make a real difference to the debtor and their family by helping them get the situation under control before the debt starts to get out of hand. However, when, for some reason, the debtor did not manage to secure legal or financial advice at an early stage, the court is able, under the rules of court, to continue the proceedings to allow the debtor to obtain legal or financial advice. Current practice is for the court to make that decision, and I am clear that amendment 10 would not result in a difference from that practice.

We must avoid the situation in which some debtors use that procedure simply to buy more time. For example, a debtor may state to the court that they have been unable to obtain advice, simply in order to drag out the proceedings. It is not in the interests of the debtor to keep the situation going on and on—there must be a time to draw the line.

The bill offers sufficient flexibility for the court to ensure that the debtor obtains financial or legal advice—that is the crux of the matter. The bill does not require the provision that is suggested in amendment 10, and I encourage Robert Brown to withdraw that amendment.

I will move on to amendment 11, as I understand that we must watch the clock this afternoon. I fully understand the sentiments behind amendment 11, which would make primarily a drafting change that would have no real effect on the bill's provisions. When the court examines an "applicant's ability" to fulfil his or her obligations, it will, in effect, be considering the

"extent to which the applicant may be able" to fulfil those obligations. I believe that the intended effect of amendment 11 is already fully contained in the bill, so I ask Robert Brown not to move amendment 11.

Photo of Margaret Curran Margaret Curran Labour

Before I comment directly on amendments 10 and 11, I wish to say that I am well aware of Robert Brown's commitment to ensuring that advice and information is provided for all people. I recognise the many efforts that he has made to ensure that such rights are maximised, and any comments that I make about the impact that his amendments would have in no way undermine his attempts in that field. Our only debate is about how the aim should be achieved.

The committee process, which has substantially influenced Robert Brown's thinking, has been significant in shaping the bill. The evidence from other aspects of the committee's work has led to informed discussion at various levels. I thank Robert Brown, the groups who gave evidence and the others who have contributed much to our thinking on the issue. We looked at the evidence and paid great attention to the details. Again, the debate is about how it is done and the impact that it would have.

As Cathie Craigie said, the proposals in amendment 10 were discussed in some depth at stage 2. Cathie Craigie has outlined how the bill's provisions complement the court's ability to continue cases under the rules of court. In introducing the bill, we need to think of the balance that needs to be struck. We must also bear in mind the interests of lenders as well as debtors. If we do not do that, there may be untold impacts that none of us would want.

The normal expectation must be that debtors should obtain legal or financial advice in the two-month period that is available for applications to be made. If, for instance, their circumstances change, debtors must also have some time to seek further advice before the case goes to court. It would be inappropriate if debtors were simply to sit on their hands. I recognise that only a small minority would do that, but nonetheless we cannot encourage debtors to expect the courts automatically to grant a stay of execution simply to allow debtors to get further advice.

Of course, there are genuine reasons why it has often not been possible for debtors to seek advice during the two-month period. However, as Cathie Craigie explained, the courts already have the power to sist proceedings while advice is being obtained. The key to getting advice that can make a difference is to get it early. We must encourage people to get advice early. To allow debtors to delay seeking advice would not create the impact that Robert Brown is seeking. As has been outlined, a number of efforts have been made in the bill's notices to ensure that debtors are assisted in obtaining advice at the earliest opportunity. We think that amendment 10 could have an impact that is the opposite of what is intended.

Amendment 11 would bring about a drafting change that would have no real effect. However, the underlying debate is important, because we have given an undertaking to provide the Judicial Studies Committee with a statement on the purposes of the bill and the Official Report of the bill's stages. That will assist the Judicial Studies committee in preparing the guidance and training for sheriffs on the bill's provisions. As Cathie Craigie noted, it is important that the courts could, where the circumstances warranted it, allow the debtor to pay the interest only for a period. That should be for only a relatively short period. Again, the debate goes back to the need to balance the interests of lenders and debtors. I do not see the purpose in amendment 11 and agree with Cathie Craigie that Robert Brown should not move it.

Photo of George Reid George Reid Scottish National Party

I have received further late requests to speak. For reasons of time, I shall not take them. If members want to speak, they should do so before the minister gets up.

Photo of Robert Brown Robert Brown Liberal Democrat

I am grateful to colleagues for the quality of the debate on the issue. I am also grateful for what the minister said about advice, which is an issue that was well thrashed out during the stage 1 and stage 2 debates. That issue lies behind today's debate.

I will make some brief comments in reply. Margaret Curran said, rightly, that it was a question of striking the balance. That is the theme that goes throughout the issue. However, perhaps I should have made the point earlier that amendments 10 and 11 are not the same as the amendments that I lodged at stage 2. The amendments have been changed slightly and put into a different format. Amendment 10 would provide the court with a power to continue the proceedings so that advice could be obtained. The court would not be obliged to consider whether to continue the proceedings. That is a change to the previous arrangement.

It is important to get advice early. One or two members have made the point that people should not put their heads in the sand. The problem is that people do, indeed, stick their heads in the sand and get into situations that they would not get into in an ideal world. To pick up on Bill Aitken's point, perhaps people do not take out insurance when they ought to. We have to deal with the consequences of decisions that may be silly, unfortunate or financially incautious, but which are nevertheless understandable in the situations that frequently recur. I do not accept the absolute distinction that Bill Aitken made between irresponsibility and misfortune. There is a gradation in such things; there are many shades of grey, rather than the black-and-white distinction that Bill Aitken suggests. People are under financial pressure—sometimes as a result of being encouraged, when perhaps they should not have been, by the Government to buy houses. Perhaps Mr Aitken should bear that in mind when he comments on such matters.

I will press amendments 10 and 11. Amendment 10 is about advice and it goes beyond the issue of the powers that exist at the moment to draw the attention of the sheriff and solicitors to that important issue. I cannot believe that a continuation of two or three weeks for legal, financial or housing advice will make a great difference when there will already have been a two-month call-up; four, six or eight weeks to get the case to court; and a period of arrears before that. An extra two or three weeks is relatively trivial in the overall scheme of things.

I do not accept that amendment 11 does not make a real change to the wording, although I am reassured by the minister's comments on the intentions of the bill, which I am sure that sheriffs will take account of. I would prefer the bill to be worded in the way that I have suggested. I hope that the chamber will accept amendment 11 as well as amendment 10.

Photo of George Reid George Reid Scottish National Party

The question is, that amendment 10 be agreed to. Are we agreed?

Members:

No.

Division number 5

For: Adam, Brian, Brown, Robert, Campbell, Colin, Canavan, Dennis, Crawford, Bruce, Cunningham, Roseanna, Elder, Dorothy-Grace, Ewing, Dr Winnie, Ewing, Fergus, Ewing, Mrs Margaret, Gibson, Mr Kenneth, Gorrie, Donald, Grahame, Christine, Hamilton, Mr Duncan, Harper, Robin, Hyslop, Fiona, Jenkins, Ian, Lochhead, Richard, MacAskill, Mr Kenny, MacDonald, Ms Margo, Marwick, Tricia, Matheson, Michael, McGugan, Irene, McLeod, Fiona, Munro, John Farquhar, Neil, Alex, Paterson, Mr Gil, Quinan, Mr Lloyd, Radcliffe, Nora, Raffan, Mr Keith, Rumbles, Mr Mike, Russell, Michael, Scott, Tavish, Sheridan, Tommy, Smith, Iain, Stevenson, Stewart, Sturgeon, Nicola, Swinney, Mr John, Ullrich, Kay, Welsh, Mr Andrew, White, Ms Sandra
Against: Aitken, Bill, Baillie, Jackie, Barrie, Scott, Boyack, Sarah, Butler, Bill, Chisholm, Malcolm, Craigie, Cathie, Curran, Ms Margaret, Davidson, Mr David, Deacon, Susan, Douglas-Hamilton, Lord James, Eadie, Helen, Ferguson, Patricia, Finnie, Ross, Fitzpatrick, Brian, Gallie, Phil, Gillon, Karen, Goldie, Miss Annabel, Grant, Rhoda, Gray, Iain, Harding, Mr Keith, Henry, Hugh, Home Robertson, Mr John, Hughes, Janis, Jackson, Dr Sylvia, Jackson, Gordon, Jamieson, Cathy, Jamieson, Margaret, Johnstone, Alex, Kerr, Mr Andy, Lamont, Johann, Livingstone, Marilyn, Lyon, George, Macdonald, Lewis, Macintosh, Mr Kenneth, MacKay, Angus, MacLean, Kate, Macmillan, Maureen, Martin, Paul, McAllion, Mr John, McAveety, Mr Frank, McCabe, Mr Tom, McConnell, Mr Jack, McGrigor, Mr Jamie, McIntosh, Mrs Lyndsay, McLetchie, David, McMahon, Mr Michael, McNeil, Mr Duncan, McNeill, Pauline, McNulty, Des, Monteith, Mr Brian, Morgan, Alasdair, Morrison, Mr Alasdair, Muldoon, Bristow, Mulligan, Mrs Mary, Murray, Dr Elaine, Oldfather, Irene, Peacock, Peter, Peattie, Cathy, Robson, Euan, Scanlon, Mary, Scott, John, Simpson, Dr Richard, Smith, Elaine, Stephen, Nicol, Thomson, Elaine, Tosh, Mr Murray, Wallace, Ben, Wallace, Mr Jim, Watson, Mike, Whitefield, Karen, Wilson, Allan, Young, John

Photo of George Reid George Reid Scottish National Party

The result of the division is: For 41, Against 73, Abstentions 0.

Amendment 10 disagreed to.

[Amendment 11 moved—[Robert Brown].]

Photo of George Reid George Reid Scottish National Party

The question is, that amendment 11 be agreed to. Are we agreed?

Members:

No.

Division number 6

For: Adam, Brian, Brown, Robert, Campbell, Colin, Canavan, Dennis, Crawford, Bruce, Cunningham, Roseanna, Elder, Dorothy-Grace, Ewing, Dr Winnie, Ewing, Fergus, Ewing, Mrs Margaret, Gorrie, Donald, Grahame, Christine, Hamilton, Mr Duncan, Harper, Robin, Hyslop, Fiona, Jenkins, Ian, Lochhead, Richard, MacAskill, Mr Kenny, MacDonald, Ms Margo, Marwick, Tricia, Matheson, Michael, McGugan, Irene, McLeod, Fiona, Munro, John Farquhar, Neil, Alex, Paterson, Mr Gil, Quinan, Mr Lloyd, Raffan, Mr Keith, Rumbles, Mr Mike, Russell, Michael, Sheridan, Tommy, Smith, Iain, Stevenson, Stewart, Sturgeon, Nicola, Swinney, Mr John, Ullrich, Kay, Welsh, Mr Andrew, White, Ms Sandra
Against: Aitken, Bill, Baillie, Jackie, Barrie, Scott, Boyack, Sarah, Butler, Bill, Chisholm, Malcolm, Craigie, Cathie, Curran, Ms Margaret, Davidson, Mr David, Deacon, Susan, Douglas-Hamilton, Lord James, Eadie, Helen, Ferguson, Patricia, Finnie, Ross, Fitzpatrick, Brian, Gallie, Phil, Gibson, Mr Kenneth, Gillon, Karen, Godman, Trish, Goldie, Miss Annabel, Grant, Rhoda, Gray, Iain, Harding, Mr Keith, Henry, Hugh, Home Robertson, Mr John, Hughes, Janis, Jackson, Dr Sylvia, Jackson, Gordon, Jamieson, Cathy, Jamieson, Margaret, Johnstone, Alex, Kerr, Mr Andy, Lamont, Johann, Livingstone, Marilyn, Lyon, George, Macdonald, Lewis, Macintosh, Mr Kenneth, MacKay, Angus, MacLean, Kate, Macmillan, Maureen, Martin, Paul, McAllion, Mr John, McAveety, Mr Frank, McCabe, Mr Tom, McConnell, Mr Jack, McGrigor, Mr Jamie, McIntosh, Mrs Lyndsay, McLetchie, David, McMahon, Mr Michael, McNeil, Mr Duncan, McNeill, Pauline, McNulty, Des, Monteith, Mr Brian, Morgan, Alasdair, Morrison, Mr Alasdair, Muldoon, Bristow, Mulligan, Mrs Mary, Murray, Dr Elaine, Oldfather, Irene, Peacock, Peter, Peattie, Cathy, Radcliffe, Nora, Robson, Euan, Scanlon, Mary, Scott, John, Scott, Tavish, Simpson, Dr Richard, Smith, Elaine, Stephen, Nicol, Thomson, Elaine, Tosh, Mr Murray, Wallace, Ben, Wallace, Mr Jim, Watson, Mike, Whitefield, Karen, Wilson, Allan, Young, John

Photo of George Reid George Reid Scottish National Party

The result of the division is: For 38, Against 77, Abstentions 0.

Amendment 11 disagreed to.