Section 2 — Debt payment programmes

Debt Arrangement and Attachment (Scotland) Bill: Stage 3 – in the Scottish Parliament at 3:00 pm on 13th November 2002.

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Amendment 26 moved—[Mrs Lyndsay McIntosh].

Photo of Murray Tosh Murray Tosh Conservative

The question is, that amendment 26 be agreed to. Are we agreed?

Members:

No.

Division number 4

For: Aitken, Bill, Douglas-Hamilton, Lord James, Fergusson, Alex, Fraser, Murdo, Gallie, Phil, Goldie, Miss Annabel, Harding, Mr Keith, Johnstone, Alex, McIntosh, Mrs Lyndsay, McLetchie, David, Monteith, Mr Brian, Mundell, David, Scanlon, Mary, Scott, John, Young, John
Against: Adam, Brian, Alexander, Ms Wendy, Baillie, Jackie, Barrie, Scott, Boyack, Sarah, Brankin, Rhona, Brown, Robert, Butler, Bill, Campbell, Colin, Canavan, Dennis, Chisholm, Malcolm, Craigie, Cathie, Crawford, Bruce, Curran, Ms Margaret, Deacon, Susan, Eadie, Helen, Ewing, Dr Winnie, Ewing, Mrs Margaret, Ferguson, Patricia, Fitzpatrick, Brian, Gibson, Mr Kenneth, Gillon, Karen, Godman, Trish, Gorrie, Donald, Grahame, Christine, Grant, Rhoda, Gray, Iain, Hamilton, Mr Duncan, Harper, Robin, Henry, Hugh, Home Robertson, Mr John, Hughes, Janis, Hyslop, Fiona, Ingram, Mr Adam, Jackson, Gordon, Jamieson, Cathy, Jamieson, Margaret, Jenkins, Ian, Kerr, Mr Andy, Lamont, Johann, Livingstone, Marilyn, Lochhead, Richard, Lyon, George, MacAskill, Mr Kenny, MacDonald, Ms Margo, Macintosh, Mr Kenneth, MacKay, Angus, Maclean, Kate, Macmillan, Maureen, Martin, Paul, Marwick, Tricia, McAllion, Mr John, McAveety, Mr Frank, McCabe, Mr Tom, McGugan, Irene, McLeod, Fiona, McMahon, Mr Michael, McNeil, Mr Duncan, McNeill, Pauline, Morgan, Alasdair, Morrison, Mr Alasdair, Muldoon, Bristow, Mulligan, Mrs Mary, Murray, Dr Elaine, Neil, Alex, Oldfather, Irene, Paterson, Mr Gil, Peacock, Peter, Peattie, Cathy, Quinan, Mr Lloyd, Radcliffe, Nora, Raffan, Mr Keith, Robison, Shona, Robson, Euan, Rumbles, Mr Mike, Sheridan, Tommy, Simpson, Dr Richard, Smith, Iain, Sturgeon, Nicola, Swinney, Mr John, Thomson, Elaine, Wallace, Mr Jim, Watson, Mike, Welsh, Mr Andrew, White, Ms Sandra, Whitefield, Karen, Wilson, Allan, Wilson, Andrew

Photo of Murray Tosh Murray Tosh Conservative

The result of the division is: For 15, Against 88, Abstentions 0.

Amendment 26 disagreed to.

Photo of Richard Simpson Richard Simpson Labour

At stage 2, Robert Brown lodged an amendment—amendment 32—that was designed to add flexibility to the information that the debtor must provide about his or her debts in an application for approval of a debt repayment programme.

The Executive sympathised with the intention behind the amendment, but was concerned that it was too vague and could be open to abuse. We undertook to produce a more precisely worded alternative. Amendment 1 fulfils that commitment.

I move amendment 1.

Amendment 1 agreed to.

[Amendment 28 moved—[Mrs Lyndsay McIntosh].]

Photo of Murray Tosh Murray Tosh Conservative

The question is, that amendment 28 be agreed to? Are we agreed?

Members:

No.

Division number 5

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

Photo of Murray Tosh Murray Tosh Conservative

The result of the division is: For 15, Against 96, Abstentions 1.

Amendment 28 disagreed to.

Photo of Murray Tosh Murray Tosh Conservative

Amendment 30 is grouped with amendments 43 and 44.

Photo of Lyndsay McIntosh Lyndsay McIntosh Conservative

The bill implies in section 2(4) that a debt payment programme will ordinarily require the consent of all creditors. However, the bill leaves open the circumstances in which consent may be dispensed with under section 7(2)(g). I believe that the consent of the majority of creditors should be a prerequisite for a debt payment programme and that that should be made explicit in the bill. The problem of the unreasonable creditor could be dealt with by majority consent or by an override procedure that would enable an unreasonable refusal to be disregarded.

If amendment 30 were agreed to, section 7(2)(g) would not be necessary, given that the specification of the circumstances in which consent could be dispensed with would be provided for in the primary legislation. We need to try to strike a balance between protecting the interests of creditors and protecting the interests of debtors. If debt payment programmes operate in such a way as to protect only the interests of the latter, creditors will become unwilling to lend in circumstances in which they are unlikely to be able to recover their loans. The result would be increased financial exclusion.

Amendment 30 seeks to introduce appropriate balance between the parties. A requirement to secure the consent of a majority of creditors would, in turn, secure full approval and commitment from creditors who would be obliged to participate. The Deputy Minister for Justice recognised in the Social Justice Committee meeting on 2 October the threat of financial exclusion resulting from striking an inappropriate balance. He said:

"The scheme is meant for the benefit of creditors as well as debtors, and it will not work if we look after the interests of one group and not of the other. Any undue weight that might be attached to debtor interests could lead to an adverse response by creditors in relation to other matters, which might affect the future contract or credit terms offered to people on low incomes".—[Official Report, Social Justice Committee, 2 October 2002; c 3072.]

I move amendment 30.

Photo of Tommy Sheridan Tommy Sheridan SSP

Amendment 44 relates to a primary amendment to establish a debt tribunal. Therefore I cannot understand why amendment 44 was selected on its own, given that the amendment on the debt tribunal was not selected. I will not be moving amendment 44.

Photo of Richard Simpson Richard Simpson Labour

Amendments 30 and 43 seek essentially to achieve the same thing and the Executive is opposed to both for the same reason. Section 2(4) already provides generally for creditors to give consent to a debtor's participation in a debt payment programme. Section 7(2)(g) allows the regulations to provide for circumstances in which that consent can be dispensed with. The question of the level of creditor support required was raised in the Executive's consultation. The independent analysis of responses shows a lack of agreement on what level of creditor support is needed for approval of a debt payment programme. Some considered that a straight majority of creditors was all that was necessary, but others disagreed and put forward other options. We think that it is right that we consider fully the responses and options before coming forward with detailed and, we hope, practical proposals in the regulations, which the Parliament will examine using the affirmative procedure.

Amendment 30 is technically defective, because it does not specify the criteria by which a majority of creditors is to be determined. It does not state whether the number of creditors or the value of the debt would be the determining factor. If the decision were based on numerical considerations, one could have a situation in which the major creditor was not in the majority, even though they had 85 per cent or 90 per cent of the debt, because there were four or five smaller creditors. There is a significant technical problem with amendment 30. It also does not deal with circumstances in which withholding consent is unreasonable.

I will not address amendment 44, as Tommy Sheridan has indicated that he will not move it. I ask for amendment 30 to be withdrawn and for amendment 43 not to be moved. Failing that, those amendments should be rejected.

Photo of Lyndsay McIntosh Lyndsay McIntosh Conservative 3:15 pm, 13th November 2002

I have consulted my assistant and, in view of the minister's comments that the issue can be dealt with in regulations, I am prepared not to press amendment 30.

Amendment 30, by agreement, withdrawn.

Photo of Murray Tosh Murray Tosh Conservative

Amendment 2 is grouped with amendment 32. I point out that, if amendment 2 is agreed to, I cannot call amendment 32, because it will be pre-empted.

Photo of Richard Simpson Richard Simpson Labour

At stage 2, Cathie Craigie and Robert Brown expressed concerns about the requirement to prescribe an upper monetary limit for the amount of debt and a lower limit for the number of creditors in relation to participation in a debt payment programme. Instead, they wanted section 7(2) to include a permissive power, so that the conditions for participation might provide for such limits, depending on the results of the consultation exercise.

The analysis of the consultation responses on the upper limit produced a mixed result. There was no agreement on whether there should be such a limit or on what any limit should be. Therefore, it would seem right that the requirement for a prescribed upper monetary limit be reconsidered.

The Executive promised to return to the issue at stage 3. By deleting the requirement, amendment 2 meets the Executive's commitment. There is no corresponding insertion of a permissive power in section 7(2), because that is not necessary. Section 7(1)(a), as further explained by section 7(2)(a) and section 7(2)(b), would enable that to be done.

We should look closely at the balance of the differing views that have been expressed on the issue. In light of the discussions at stage 1, the Executive also sought additional information from CABx, through a survey on the levels of typical voluntary arrangements. We want to take account of that informal information. Therefore, amendment 32 would not be wise at this stage and I respectfully ask Tommy Sheridan not to move it. Of course, the regulations will now be subject to the affirmative resolution procedure.

I move amendment 2.

Photo of Tommy Sheridan Tommy Sheridan SSP

As the minister said, discussion in the committee revolved around the issue of whether a maximum limit would be placed on the amount of debt of debtors seeking access to the debt arrangement scheme. All the advice agencies expressed the worry that, if a ceiling that was too low were imposed, a number of debtors would be excluded from the debt arrangement scheme. That would have a dangerous impact on whether future attachment orders would become exceptional.

In light of the minister's words and the nature of amendment 2, I am happy not to move amendment 32. I hope that the advice, information and consultation responses from Citizens Advice Scotland and others will be borne in mine and will become the guideline on access to the debt arrangement scheme. We cannot exclude people on the ground of an arbitrary, low maximum ceiling of debt.

Amendment 2 agreed to.