Bankruptcy and Diligence (Scotland) Bill: statement by Minister for Public Finance

Thank you, Presiding Officer for the opportunity to address the Chamber today on the Stage 3 debate on the Bankruptcy and Diligence (Scotland) Bill.

I would like to thank the convener, and members of the Economy and Fair Work Committee for their assiduous scrutiny of the Bill during Stages 1 and 2, and for their ongoing support for the measures and small number of amendments we have made.

I would also like to thank the Delegated Powers and Law Reform Committee for their input and everyone that gave evidence during the different stages of the Bill.

Very importantly I would like to give a big thanks to Scottish Government officials – the accountant, bankruptcy and legal colleagues in the Scottish Government – for helping guide me through this process having picked up the Bill in its later stages.

Finally, I would like to thank my predecessor, Tom Arthur, for his hard work, dedication and commitment to the development of this Bill.

This is a focused Bill which makes small but important improvements. And I believe this is reflective of the fact that our bankruptcy system here in Scotland is widely perceived as meeting our needs.

More importantly, however, it represents a chance to make things better for a number of individuals with both serious mental health issues and problem debt. By creating the enabling power to establish a Mental Health Moratorium through regulations, this will help improve the lives of those who are struggling with debt and serious mental health issues.

The development of this Bill has been a good example of co-production.

The initial provisions in the Bill were developed from the recommendations of stakeholder-led groups who reviewed each of the statutory debt solutions to determine what improvements could be made. The provisions have been subject to extensive public consultation and reflect stakeholder recommendations that have achieved a level of consensus.

The Bill has been further developed during the stages of the Bill process where we have listened to feedback from Committee members, particularly in their Stage 1 report, and stakeholders to make further amendments to improve the Bill.

For the Mental Health Moratorium, we promised and delivered a draft set of Regulations to the Economy and Fair Work Committee prior to stage 3 of this Bill. In doing so, we provided them with the opportunity to see the policy intention of the Mental Health Moratorium. In particular, we have listened to their concerns about the eligibility criteria – and have widened it to allow more people access to the scheme.

We will continue to engage with stakeholders as we further develop the Regulations. This will include a public consultation giving stakeholders and Parliament the opportunity to continue to shape them into a scheme that will help the most vulnerable in our society. We will work with the advice and mental health sectors to develop clear guidance and training to ensure a successful delivery of the mental health moratorium. And we will work with them to ensure the tools they need are available.

Furthermore, we lodged amendments which were agreed to today which ensure that Parliament has the opportunity to fully scrutinise the Regulations that will establish the Mental Health Moratorium. We have also made a statutory commitment in the Bill to a undertake a review of the Mental Health moratorium after 5 years of its introduction - where a full report will be published and presented to Scottish Ministers.

We have implemented the Economy and Fair Work Committee’s recommendations and introduced provisions which will allow a private Insolvency Practitioner to be discharged as trustee where the debtor has been non-cooperative and there are no further actions the trustee can take. We have also clarified the law to provide that for a successful petition for recall within the first 6 months of a sequestration, debts can be paid in full without interest being charged but thereafter interest would have to be paid on those debts.

We have listened to the witnesses who raised concerns with the Committee. After further engagement with sheriff officers we have developed the provisions that provides them with more time to cite the individual to appear at a sequestration hearing as well as allowing them to serve arrestment schedules electronically. This will help make the process more efficient, cost effective and up to date with modern times.

We are aware that the topic of arrestment of funds is of great interest and the issue does require some clarity – particularly around protecting funds wholly derived from social security payments. As mentioned in our earlier session we commit to consult on this and take the time to consider all views to ensure that we get it right and ensure the measures taken do not have any unintended consequences.

There are some other matters, raised by stakeholders in their evidence to the Committee which can be addressed through secondary legislation that we will continue to look at. This includes matters such as the minimum period for reapplying for bankruptcy under the Minimal Asset Process and the minimum protected balance for earnings arrestments. As my predecessor said to the Committee, these are things that can be addressed in secondary legislation and that, I think, is the best way to address them.

It is also important to note that this Bill is part of a wider programme of reform, and we have commissioned an independent review to assess how far current statutory solutions meet the needs of a modern economy. This work is being taken forward by Yvonne MacDermid, OBE. Yvonne brings a wealth of experience to this work having served as Chief Executive at Money Advice Scotland for many years. Yvonne has now issued a public consultation document to receive feedback on the current solutions and will be reporting back to Scottish Ministers on the results in due course. I look forward to seeing this and continuing to work to make sure our statutory debt solutions are fit for purpose.

Moving forward the real work starts here and I look forward to working with Parliament, members of the Committee and our stakeholders to help ensure that Scotland’s statutory debt solutions meet the needs of the people of Scotland. Particularly the most vulnerable in our society suffering from serious mental health issues with problem debt.

I commend the Bill to Parliament and I move that the Parliament agrees to the Bankruptcy and Diligence (Scotland) Bill be passed.