As all members who have taken part in the debate have said, the issue was covered in detail at stage 2. As Robert Brown said, my colleague, Richard Simpson expressed at that time some sympathy with the general objective of amendments 36 and 45. I share that sympathy but, for reasons that I shall explain, we do not think that it will be possible to give effect to the amendments.
Since that time, we have received an analysis of the consultation responses. The responses showed mixed views on whether the composition of debts or the freezing of interest should be imposed on creditors. I do not want to go into the fine detail, but the consultation responses reveal that, of a total of 40 respondents who addressed the issue, 24 were in favour and 14 were against those measures. Those who were in favour were mainly advice agencies that interpreted the consultation question—which asked about discharge on less than full payment—in different ways. Those who were against the amendments were, not surprisingly, mainly creditors who were very strongly opposed to any form of compulsory discharge of debts on less than full payment. There is no reason why creditors cannot voluntarily waive interest payments or write off part, or all, of a debt, as some do at present.
We will consider those views carefully and ensure that they are reflected, as far as possible, in the regulations that will now be subject to affirmative resolution. I stress the phrase "as far as possible", because we would like to allow for waiving interest by agreement between debtor and creditor and, where appropriate, for forgiveness of debt on less than full payment in line with voluntary practice in some negotiated settlements.
We know, from those who are operating voluntary schemes, that some creditors are prepared to freeze interest from the start of the scheme. To do so is often in their best interests. We also know that, towards the end of a scheme, some creditors are prepared to write off outstanding debts if debtors have paid regularly. That might not be in the creditor's best interests, but it represents recognition of the efforts that the debtor has made.
Amendment 36 would prevent any interest that was legally due to accrue on debts from being included in the programme. It would have the effect of overriding legally binding contractual arrangements that had previously been entered into by debtors. We sought legal opinion on whether an amendment could be drafted to provide reassurance that the debt arrangement scheme would allow for, but not compel, the freezing of interest and the writing off of debt without exceeding the legislative competence of
However desirable it might seem in social policy terms, a freeze on interest simply cannot be achieved with a stroke of the pen. It would override otherwise legally binding contractual arrangements that have been freely entered into and, as Robert Brown said, it would raise serious concerns about the infringement of creditors' rights to property under article 1 of protocol 1 of the European convention on human rights.
The creditor's right to receive full payment of the debt and interest that is due in terms of the contract into which the debtor and creditor have entered may be construed as the creditor's "possession" for the purposes of article 1 of protocol 1. The creditor could waive those rights, but it would be an entirely different matter for those rights to be automatically removed by legislation. On Robert Brown's point about public interest, it is not clear whether removing the creditor's rights would be in the public interest or in the interests of one section of the public—namely, debtors.
Robert Brown referred to the issue of bankruptcy as a possible precedent. However, the nature of bankruptcy is that a debtor's assets are insufficient to meet their debts. Amendments 36 and 45 could mean that a person would be able to pay their debts, but because of actions by the State, part of their obligation would be written off.
If the provisions in amendments 36 and 45 are contrary to the ECHR, as we believe, it would be outwith Parliament's legislative competence to introduce them. Robert Brown said that we could consider the issue in the context of the civil diligence review. I acknowledge the importance that members throughout the chamber attach to the issue of contractual interest in a debt payment programme. We would be willing to ascertain whether there are ways of addressing the matter that are within Parliament's competence. However, I cannot promise anything. Accordingly, I ask Parliament to reject amendments 36 and 45.