House of Commons Hansard Debates for 17 Jun 1992

Mr. Stewart : I have great respect for the hon. Gentleman, but I am surprised that after all this time he does not appear to have read my speech. I stated clearly :

"The savings and expenditure on sequestrations will be achieved through tighter control over the fees paid to insolvency practitioners and through the introduction of simpler procedures in small asset cases."--[ Official Report, Scottish Grand Committee, 8 June 1992 ; c. 56.]

My right hon. Friend the Secretary of State repeated that point when he opened the debate.

Mr. McAllion : I listened carefully to the Minister and the Secretary of State, and I have read the Minister's speech. I will deal with their claims later because I do not believe that they can deliver the kind of protection promised in the Bill. That will not matter once the Bill has passed through the House, because nothing can then be done to retrieve the situation.

I have been dealing with Tory Governments in the House for five years. I have learnt not to trust Tory Governments and especially not to trust the Parliamentary Under-Secretary of State for Scotland, the hon. Member for Eastwood (Mr. Stewart) when they make commitments about political issues. The Minister's policies are completely opposed to the best interests of the people I represent in the House.

Mr. Allan Stewart rose --

Mr. McAllion : If the Minister is about to ask me to recount an instance when he misled the House and the people of Scotland, I will do that right now : the poll tax. The Minister was one of the most vociferous supporters of the poll tax throughout the last Parliament. However, he then stood on his head and said that he no longer

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supported it. He said that he supported the new council tax because the poll tax had been the disaster that we said it was going to be throughout the last Parliament when

Mr. Deputy Speaker (Mr. Geoffrey Lofthouse) : Order. The hon. Gentleman should withdraw the word "misled".

Mr. McAllion : The Minister certainly gave an impression about something that was not true. Whether he deliberately misled the House, he painted a picture that could not be delivered in the real world outside the fantasy world in this place.

The trouble with dealing with issues in Standing Committee, even in respect of a Scottish Standing Committee when there must be no fewer than 16 hon. Members from Scottish constituencies on the Committee, is that there will be a Government majority in the Committee as a result of the addition of English Members to the Committee or by keeping Opposition Members off it. In other words, the minority party in Scotland--the Conservative party-- will be able to create an artificial majority on a Standing Committee dealing with a Bill on matters that relate exclisively to Scotland.

I do not doubt the Minister for a moment when he says that he will consider just about anything in Committee. I am sure that he might even consider the possibility of establishing a socialist republic in Scotland, but that does not mean that he will concede it in the Standing Committee. He will consider any of our suggestions in Committee, but he will use the Government's inbuilt majority not to give concessions to the Opposition. That has always been my experience of Standing Committees under the Tory Government. They listen, but they never hear what is said. They have no intention of honouring the commitments they give in Second Reading debates. At the heart of the Bill is the Government's determination to cut public spending on bankruptcy procedures. The Secretary of State described how the costs are spiralling out of control. He said that the costs were £20 million last year ; that they would be £50 million in 1993-94 and £80 million in 1994-95. He even identified the source of those spiralling costs as he did in the Scottish Grand Committee. He said that the source was the changing rate or pattern of sequestrations since the introduction of the Bankruptcy (Scotland) Act 1985.

Initially sequestrations were seen as a means whereby debtors' assets could be realised and the proceeds divided fairly between the creditors, the 1985 Act changed all that according to the Secretary of State. In 1986-87, 75 per cent. of the total of 437 sequestrations were creditor driven and came before the courts because the creditors asked for that to happen, in 1991- 92, 87 per cent. of 8,500 sequestrations arose through the procedure which allowed debtors to appoint insolvency practitioners as trustees to petition the courts on their behalf.

In those cases, the funding came directly from the public purse. Millions of pounds of public money will be saved only if debtors are denied access to bankruptcy procedures that are currently available to them. If those debtors have to be guaranteed continuing access to bankruptcy procedures under a different form, it is difficult to see how the savings in public expenditure can be achieved.

If the Minister argues that, in an average sequestration, 89 per cent. of the cost of the work arises from what he describes as junior administrative grades and that that

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work can be handled more efficiently and more cost-effectively in the public sector than in the private sector, that argument delights me. Of course, the Minister himself is one of the great apostles of free enterprise, and he does not really believe that argument. The Secretary of State said that the Government are taking the process back into the public sector so that they can then use market testing to put it back into the private sector. Their case is that they can make savings by putting the process into the public sector and make even more savings by putting it back into the private sector. That makes nonsense of the Government's arguments in support of the measure.

The Minister knows that, if cash is to be saved, access to bankruptcy procedures must be limited to people with debt problems. That is why I continue to oppose the measure and why I shall support the motion. There must be a Special Standing Committee. The majority of hon. Members who vote tonight will not have read the 1985 Act and will not know what issues are involved in the Bill. They will simply vote on party lines on issues that they know nothing about. This is an important measure, which will have a real effect on real people in Scotland. For their sake, it is absolutely essential that every Scottish Member fully understands exactly what is involved in the change that will be brought about by the Bill. None of us is anexpert in the matter, although some hon. Members have legal backgrounds. The real experts are in Scottish communities, working for money-advice projects, citizens advice bureaux, legal firms, accountants and so on. We need to hear from them what the implications of the measure are. Therefore, it is absolutely essential that there is a Special Standing Committee. If the Government are not prepared to concede that, it is because they are not prepared to have their Bill exposed to expert scrutiny. That is all the more reason why the Government have no right to proceed with the Bill.

5.21 pm

Mr. Phil Gallie (Ayr) : It absolutely amazes me that Opposition Members feel that the Bill should go to yet another Committee, particularly as they say that they agree with its contents. Perhaps that is simply a means of inducing an argument. To date, we have had two Scottish Grand Committee sittings ; today we are having the Second Reading debate, and the Bill will then be committed to a Standing Committee. At that point we will go into the detail of the Bill.

There has been a massive escalation in costs, from £13,000 five years ago to £18.5 million today. Surely there is something wrong. Surely we need to act swiftly. If we look to the future, we see escalating costs. I do not know what Opposition Members think, but money wasted on administration--that is what much of the money represents--could be better spent in my constituency. I look to the Government to do that as swiftly as possible, and I look to Opposition Members to back them.

Mrs. Ewing : The hon. Gentleman may not be aware of the background of the legislation, but, several years ago, there were cries and calls from Opposition parties for an investigation into the matter, which could have saved £12 million to £15 million. If the Government had acted more

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expeditiously, that money could have been saved and spent on better prospects. The legislation does not take account of all elements of bankruptcy law. It is almost a misnomer of a Bill, as bankruptcy is mentioned only in the title. We have not examined the regulations or other aspects to ensure that we have an effective system of sequestration in Scotland, enabling access at reasonable cost.

Mr. Gallie : I thank the hon. Lady for her intervention. The Bill addresses real problems. The Government have examined it in detail, and many items in the Bill will assist better administration in future. The matter is urgent and I certainly support the Government. I deplore the attitude of Opposition Members who complain about lack of time to debate the issues. The Scottish Grand Committee lost 45 minutes on absolute nonsense and protests about issues that have nothing to do with the Bill. The hon. Member for Dundee, East (Mr. McAllion) said that my hon. Friend the Member for Tayside, North (Mr. Walker) took 22 minutes to debate the issues in the Bill, yet the hon. Gentleman was involved in wasting those 45 minutes in Committee. I ask right hon. and hon. Members to bear that point in mind. There is much talk about consultation with other quarters. The hon. Member for Glasgow, Garscadden (Mr. Dewar) listed several contacts. He talked about the Institute of Chartered Accountants of Scotland, local accountants, Drumchapel law centre, citizens advice bureaux and money advice centres. He omitted the Scottish Consumer Council. That organisation took account of creditors. I am surprised that the hon. Gentleman omitted it. Perhaps he would like to comment on that. [ Hon. Members :-- "Why?"] Because three parties are interested in the Bill. There are the creditors, who are important ; the accountants, who certainly have an interest and have operated in such matters in recent years, and, most important, the individuals and companies which are in deep trouble. In Committee, creditors were ignored by Opposition Members.

Mr. Dewar : At the great danger of extending the hon. Gentleman's speech, may I ask him to comment on the views of the Scottish Consumer Council? The hon. Gentleman will remember that it said : "We support the Bill's primary purpose."

It went on to say :

"We are extremely doubtful that individual debtors will feel competent to petition the court without any form of assistance." The council went on to say that the system was wrong and gave three specific, fundamental ways in which it should be changed and which the Government are resisting. The council said :

"We are very disappointed that there has been no prior consultation."

The Scottish Consumer Council has great sympathy with my point of view.

Mr. Gallie : I have taken much time to examine all the consultations in detail. Further, I have met representatives. [Laughter.] Perhaps it is hilarious to the hon. Member for Garscadden that Conservative Members take time to talk to those bodies. I have taken time to talk to the Scottish Consumer Council. I have also taken time to talk to accountants and advisory bodies. I recognise the points that they have raised and I am prepared to take them on

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board. I am quite sure that the Government have also taken them on board. The place to consider them in detail is in Committee.

Mr. Wilson : We must get to the bottom of this. The hon. Gentleman prayed in aid the Scottish Consumer Council and said that it was concerned about creditors. I am sure that it is--we all are--and that is perfectly right. However, in addition to what my hon. Friend the Member for Glasgow, Garscadden (Mr. Dewar) said, the Scottish Consumer Council said :

"Our concern is to ensure that the benefits to consumer debtors introduced with the 1985 Act are not lost in the process of this Bill."

Does the hon. Gentleman share that concern?

Mr. Gallie : Of course I share that concern. I have borne it very much in mind. The Bill provides protection. I do not necessarily agree with every issue that has been raised. Conflicting views have been put forward. I acknowledge that. I will make my judgment, and no doubt other hon. Members will also do so.

I return to the Bill. The Bankruptcy (Scotland) Act 1985 was designed to help people who had reached a state of personal and financial crisis. I wish to concentrate on low assets cases. From 1985 onwards, the Act provided a great deal of protection for debtors from debt collectors, sheriff officers and institutions. It took constant pressure off them. As I said in the Scottish Grand Committee, it was a caring Act. For many people there seemed to be no way out. The 1985 Act gave them some light at the end of the tunnel. However, sequestration is all too often taken up as an easy option, as I said in the Grand Committee. I was told that I was insensitive in doing so. Perhaps the tears trickle down the cheeks of Opposition Members when they look at things in realistic terms. But my heart goes out to the many small businesses and self-employed people who have extended credit terms in good faith. One of the consequences of too easy recourse to sequestration is bankruptcy and loss of jobs for others. We must take that on board. There is a snowball effect. We seek protection for individuals. We need protection all round. As my hon. Friend the Member for Tayside, North said, all too often people are pushed into bankruptcy without giving due consideration to what it means for the future. Once they have signed on the line with an insolvency practitioner, there is no way back. There is no pause for reflection. There is no chance of changing their mind. People often do not realise that bankruptcy means that for them credit will not be an option for the next 15 years. That can be important to young people who want to set up home. It can be important to people at large. We must bear that in mind. I suggest that, as we have done in other legislation, we could inject some form of cooling-off period into the Bill. I ask my hon. Friend the Under-Secretary to consider that.

What of the private insolvency practitioners? They have come in for some stick today. In many cases, these people do an excellent job. In most cases they certainly treat in a sympathetic manner the issues and the people with whom they are dealing. But others have a business approach. The current legislation offers practitioners easy access to considerable rewards. In the Scottish Grand Committee I was delighted to hear my hon. Friend the Minister say that he would examine that point.

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The fact that a practitioner can pick up £2,300 to clear a debt of £750 is a bad deal for everyone--for the individual and certainly for the taxpayer. The accountancy profession recognises that there is a need for change. It has suggested that an element of self-regulation is possible. I believe that the industry is capable of achieving that and that it is sufficiently responsible to do so. However, there must be a major change in the fee structure.

Opposition Members have made comments about nationalising insolvency practice. The hon. Member for Garscadden seems to have been converted on the way to the polling booth to the benefits of privatisation. I welcomed his comments about nationalisation of the bankruptcy procedure. But I also welcomed the words of my right hon. Friend the Secretary of State, who suggested that the private practitioners had a part to play. That is an important point and I await further developments with interest.

The hon. Member for Garscadden referred briefly to non-payers of the community charge. It is unacceptable to me that scroungers, the deliberate non-payers of the community charge who have incurred debts of £750, can look to the insolvency procedure for a way out at the expense of the taxpayer. I ask my hon. Friend the Under-Secretary to consider that point.

At the beginning of my speech, I made the observation that much of the cash currently spent on the insolvency procedure was being wasted on administration and unnecessary involvement without practical achievement. Much of that money would be welcome in my constituency. I take this opportunity to underline that if some saving can be made on administration costs in whatever way--I do not take a dogmatic approach in the argument between privatisation and nationalisation--I would like that money, all of which comes out of the same budget, to be pushed into improving the infrastructure in Ayrshire and especially into upgrading the A70 to trunk road status.

The Bill seeks to simplify the present system. It will inject a pause for reflection. It will save wasted resource. I look forward to its early implementation.

5.37 pm

Mr. James Wallace (Orkney and Shetland) : In the Scottish Grand Committee, the hon. Member for Ayr (Mr. Gallie) spoke with exemplary brevity because of time pressure. This evening, for the first time in a Scottish debate on the Floor of the House, we have had an opportunity to hear him speak at greater length. It is clear to Opposition Members that his speeches share many of the distinctive features that we have come to associate with those of the hon. Member for Tayside, North (Mr. Walker).

Both hon. Gentlemen made reference to the appalling position of those who get into debt. It is widely agreed on both sides of the House that those faced with the pressures and anxiety of debt are in an appalling position. However, one is entitled to ask under which Government and what philosophy and attitude were so many people pushed into acquiring more and more material possessions? Which Government made credit all the easier to obtain? Now many people suffer the consequences, which affect not only them but their families.

As I did in the Grand Committee, I immediately declare an interest. I am a parliamentary adviser to the Institute of

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Chartered Accountants of Scotland. As has already been said, the institute has written a letter to the Minister of State, Lord Fraser, stating how it sees the way forward and making suggestions. Many of us who heard the Secretary of State try to give some semblance of having consulted on the Bill noted that almost all the consultation took place after the Bill was published. I support the case for a Special Standing Committee for several reasons which I shall give in a moment. However, I wish to say at the outset that if there was ever an argument for a Scottish Parliament to deal with Scottish affairs, the way in which the Bill has been dealt with is it.

There have been two sessions in the Scottish Grand Committee and today's debate. Those hon. Members who support the idea of a Scottish Parliament have never believed that we should adopt Westminster procedures lock, stock and barrel. The procedures in this place are so archaic and hostile to the proper consideration of technical measures such as the Bill, that one would hope that with an opportunity to start afresh, one could do it properly. We advocate pre-legislative committees, which could examine such issues and consider the views of accountants and of the many other organisations which have written to us to explain their worries about this legislation.

The hon. Member for Dundee, East (Mr. McAllion), talking about how the Bill was drawn up and launched on an unsuspecting public and profession, caused me to wonder whether the Government involved anyone with practical experience of insolvency proceedings in the drafting of the Bill. I must confess that, for three or four years, I tutored in conveyancing at Edinburgh university, without having carried out a practical conveyance. There are obvious drawbacks to that, as we are now realising.

So much could be done to improve this legislation with input from people with first-hand, practical experience. We could achieve the Government's objective. It is accepted on both sides of the House that there should be a means for people who get into debt to have access to the courts, to undergo the sequestration process--that process takes a long time--and to start anew. Creditors' interests should be properly looked after, as should the interests of the state and the taxpayer, by ensuring value for money. Those objectives are widely shared.

The present opportunity for comment makes us realise what could have been done at an earlier stage if the Government had consulted. The Bill should go to a Special Standing Committee, which would allow the Government to respond properly to the proposals by the Institute of Chartered Accountants of Scotland. The Secretary of State said that they would be considered with interest, but it is of fundamental importance for the House to know the Government's response before we deal with the Bill, line by line and clause by clause.

The question of debtors' access to sequestration procedures has been mentioned. I accept what the Under-Secretary of State said in Committee, in response to my hon. and learned Friend the Member for Fife, North-East (Mr. Campbell), and what the Secretary of State said today about it not being the Government's intention, in proceeding with the legislation, to put up

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barriers that do not exist. However, whatever their intention, many organisations that have written to us are justifiably concerned that there are such barriers.

In the Scottish Grand Committee, the Minister referred to advice by way of representation. A letter, which I and no doubt all my colleagues have received, from Drumchapel law centre encloses "a further Briefing Note on the Bill"

on behalf of the "Tackling Debt Group", which referred to the fact that the group had expressed concern about

"Advice By Way of Representation",

because there is

"necessity of a means test--with no scope for taking debts into account",

which might make some people ineligible and, that "limited circumstances" are "presently available" for

"clients incapable of self-representation through eg language difficulty."

Whatever the intention behind the Bill, there is concern about other procedures--not necessarily those outlined in the Bill--for example, the legal aid regulations, and concern that the position is not as the Government intend. We have also received representations from Money Advice Scotland, which pointed out :

"The concurrence of a creditor in any small assets petition is extremely unlikely"

and which believes that some of the procedures and requirements in the legislation might also put up barriers. I accept that that might not be intended, but it might well be a consequence of the Bill. We must properly examine the Institute of Chartered Accountants' proposals and analyse some of the serious worries expressed by people who have to deal with debtors daily, and who feel that the Bill will block a route which is now open to them, or at least put a high barrier in their way. There is no challenge to the objectives of the legislation and there would not be the sort of partisan approach that might colour a Special Standing Committee considering a more contentious piece of legislation.

I must refer to the proposals submitted by the Institute of Chartered Accountants of Scotland to the noble and learned Lord Fraser, for example in relation to cases where there are assets--non-schedule 2 cases. We heard a welcome repetition of the assurance given to me and to the hon. Member for Kincardine and Deeside (Mr. Kynoch) in the Scottish Grand Committee, that the Government would undoubtedly reconsider the matter.

The institute also suggests that there should be a switch in onus. Rather than the debtor having to acquire the consent of two thirds of the creditors, one third should have to object to prevent protected trust deed status, as sequestration might thus be avoided, which would further reduce any call on the public purse.

I understand that, in about 80 per cent. of all cases, there are no assets. The summary administration procedure is a welcome feature of the Bill, and it has been estimated that it might cost a fee of about £800 plus outlays, which is a considerable saving on the amounts being discussed. We need some inkling of the Government's response to that proposal, because it totally shifts the background against which the Bill is being discussed.

As another practical means to save money, it has been suggested that the accountant in bankruptcy should merely audit a sample of cases. There should be proper discussion of whether that would offer an adequate safeguard, where public money is involved.

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The institute also discusses what it describes as "small asset" procedure--cases where assets are not sizeable but where a business is involved and the work will thus not be straightforward, rather than cases of consumer debt. It is suggested that the interim trustee would act, the present block fee of £2,000 would apply, and it would be up to the trustee to submit to the accountant in bankruptcy that that was the proper way to proceed. The accountant could countermand that if he thought that the case should proceed by way of summary administration.

That would reverse what is likely to happen under the Government's proposals, when the first step in what might well be a more than usually complicated procedure would be to apply to the accountant in bankruptcy who, recognising that the case would be more than run-of-the-mill procedure, would use the powers given to him under the Bill to farm it out to a practitioner at a fee. That would involve an important loss of time and unnecessary duplication of effort. If the insolvency practitioner acts as the interim trustee--subject to the accountant in bankruptcy saying that that was not appropriate and that the case should proceed to summary administration--the safeguards would still exist, but some of the other qualities of the present system could remain.

It is worth considering whether the debt threshold of £750 might be increased. A figure of £1,500 has been mentioned. That might need to be increased by order to keep pace with inflation. The summary administration also puts a limit on liabilities, which must be less than £20,000. If the process is triggered off by a lack or a negligible amount of assets, the size of the liabilities hardly matters.

However, it would be a matter of public interest if someone had managed to build up liabilities of £100,000 or £200,000 on the basis of assets of, for examle, £2,000. In such a case, something would have gone very wrong and that would require further investigation. I do not believe that we need to stick to a figure of below £20,000. I have outlined some practical proposals, which could lead to a reduction in costs and achieve one of the objectives upon which all hon. Members are agreed.

I listened to what the Secretary of State said about maintaining the local network, which is important. Since the debate in the Scottish Grand Committee, I have received further correspondence from the citizens advice bureau in Shetland, which has just been established. It emphasises the importance of quick and ready access to an insolvency practitioner. Most of those serving the Shetlands come from Aberdeen and they manage to provide a quick response because of the good connections between the two. One firm of insolvency practitioners has already been mentioned in the debate and, in all fairness, I should add that the citizens advice bureau in Shetland has no complaints whatsoever about the quality of its service.

It is assumed that, if someone approaches an insolvency practitioner, a sequestration will automatically follow. I made the point in the Scottish Grand Committee that when the insolvency practitioner is given the opportunity to analyse a person's situation, assets and liabilities, a course of action, other than sequestration, may well be counselled. In response to my intervention, the Secretary of State confirmed that other such courses would not be possible under the Bill. Once one approaches the accountant in bankruptcy, that is that. In the past, one depended on seeking advice from bodies such as citizens

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advice bureaux or other advisers on money. In many parts of the country, the citizens advice bureaux and other money counselling services are not readily available. That is a serious gap. Under the Bill, the Government may push people into sequestration who might not otherwise choose that option.

It is important not to overlook the personal dimension. The letter that I received from the Shetland's citizens advice bureau states : "Here the personal relationship between the debtor and his trustee is invaluable, hence why we always recommend insolvency practitioners who regularly visit the island. This relationship provides a source of security and benefit for all concerned, debtor, trustee and creditor. I doubt that it will exist when the work is taken over by a government department, the public already see these as impersonal." We are considering people who are in dire straits, with very serious personal problems. We cannot put a monetary value on a personal relationship such as the Shetland citizens advice bureau described, but I fear that it might be lost.

Mr. Wilson : Does the hon. Gentleman agree that the statistics, which give the breakdown by court area, support his case? Last year, in Lerwick sheriff court, there were 16 sequestrations. That hardly suggests a rush for the "easy option" as has been suggested by some Conservative Members.

Mr. Wallace : The hon. Gentleman has the advantage of having a copy of the detailed breakdown, but the point is well made.

Mr. Gallie rose --

Mr. Wallace : I shall not give way, as I want to conclude. Sufficient arguments were made in the debate in the Scottish Grand Committee and have been made in this debate to suggest that the matter needs proper re-examination. As I told the Secretary of State, it is unlikely, given the timing of next week's meeting of the Select Committee on Selection and the fact that the Standing Committee--or better still a Special Standing Committee--will be unable to sit until 30 June at the earliest, that the Bill will finish its Committee stage before the recess. Therefore, the Government should turn "homeward and think again".

5.54 pm

Mr. Michael Connarty (Falkirk, East) : I do not intend to rehearse the arguments that I made at some length in the Scottish Grand Committee. I shall confine my remarks to the motion.

I admit to being a sceptic by persuasion, but I was drawn into suspending my normal suspicion by the Government's offers--unlike my hon. Friend the Member for Dundee, East (Mr. McAllion), who may have more experience of the Government. The Parliamentary Under-Secretary of State for Scotland, the hon. Member for Eastwood (Mr. Stewart), offered conciliation and even co- operation, which was very impressive. There was even a search for an understanding of the plight of persons forced into bankruptcy rather than a scurry by the Government to take back moneys from the private sector.

I was particularly impressed by the nods and smiles of the Parliamentary Under-Secretary of State for Scotland, the hon. Member for Edinburgh, West (Lord James Douglas-Hamilton), when the arguments for such

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understanding were made. I now realise that he and his hon. Friend were squaddies, or, rather, non-commissioned officers, on the loose and that the sergeant major was on another exercise. He has now returned. The Government's normal dismissive approach to Scottish matters has been reasserted by their refusal to set up a Special Standing Committee, which we thought would be forthcoming. The House must ask what great concession the Government made. Was it that they would provide finances for something in Scotland or that they would concede the power to make decisions on the Bill to the majority of Scottish Members? The great concession that they nodded at and hinted at, but which they would not dare promise, was that they would listen to those in Scotland who were concerned about the Bill. I know that most Scots do not believe that. My hon. Friend the Member for Dundee, East stressed the fact that they, and I, would have been wrong to believe it. Given the Government's breach of faith--the fact that a Special Standing Committee will not be established and will not hear evidence--Labour Members were forced to ensure that this debate took place.

Why will the Government not listen? Are they afraid of what they might have heard from those who would have presented evidence to a Special Standing Committee? I had hoped to hear from the accountants rather than from the hon. Member for Orkney and Shetland (Mr. Wallace), who nevertheless did a splendid job on their behalf. I would have liked the accountants to explain how they discovered the sudden economies that allowed them to offer a cheaper deal. I must tell the hon. Member for Ayr (Mr. Gallie) that the moneys to which he referred went, not into administration, but into profits. As the hon. Member for Moray (Mrs. Ewing) pointed out, on a time- and-line basis, each case could have been dealt with for £500 when the standing charge was £2,140. The argument about the fees charged was not about administration but about profit.

I would be interested to hear the views of someone who can calculate, unlike the civil servants who put together the financial memorandum for the Bankruptcy (Scotland) Act 1985 and for the Bill. I would like to know how many cases one would reasonably expect to deal with between 1993 and 1995, given the present economic environment and the free and easy credit regime initiated by the Government.

Mr. Gallie : The hon. Gentleman has referred to civil servants' belief that, without the Bill, costs would escalate. May I draw his attention to the intervention of the hon. Member for Cunninghame, North (Mr. Wilson), who pointed out that relatively few cases had passed through Lerwick sheriff court? Surely that gives substance to the estimates made by civil servants.

Mr. Connarty : It probably says a great deal about frugality and the way in which people run their affairs in Lerwick rather than the Government's economic policies.

I would have been interested in the accountants' view of how many cases could be processed, if the estimate contained in the financial memorandum of a cut of between 75 and 80 per cent. in expenditure had been realised. The memorandum states :

"It is estimated that some 75-80 per cent. of the projected expenditure required to operate the present arrangements can be saved as a consequence of implementing the Bill."

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I do not see how that can happen unless far fewer cases go through than at present, not to mention the estimates of the number of cases in the future.

Accountants may have been tempted to give the view on the relative scale of their largesse of £18.5 million compared with other well-known transfers of profit-making enterprises to the private sector, such as British Telecom, British Gas and the electricity and water undertakings to name but a few. I am sure that those accountants do not consider their largesse to be very grand compared with the £95-a-second profits of BT.

I hoped to have heard from the debtors, possibly through those to whom they turn when in despair. I have heard many disturbing comments today about debtors taking on credit which they cannot afford and not being frugal enough.

For example, a client of a money adviser--a 19-year-old pregnant girl living in bed-and-breakfast accommodation--had lost her job and was no longer living at home, having fallen out with her parents. Where did she accrue most of her debt? She had bank loans of £1,200, £1,100 and £1,000. Amost 60 per cent. of her debts were made up of bank loans. That has little to do with trade ; it has more to do with how people who obviously do not have sufficient income to repay the debt are pushed, egged and encouraged into debt by what should be responsible institutions. That better shows the meaning of a "debtor" than those who take on debts which they do not intend to repay.

Mr. Gallie : Will the hon. Gentleman give way?

Mr. Connarty : No. We have all heard enough from the hon. Member for Ayr for the moment.

I should like to have heard about the paralysis of debt and poverty. I have heard much about that in talking to people who deal with the problem. It makes petitioning on a personal basis terrifying for many people who are in the depths of poverty and debt. It is terrifying to many and a barrier to most. We need clear amendments to the legal aid rules to assure everyone that, when people wish to present a petition, they do not find themselves facing further financial barriers. We have heard assurances from the Government on that, but I want the Secretary of State to show that my hon. Friend the Member for Dundee, East (Mr. McAllion) was wrong to be sceptical, and that he will produce a solution to that problem faced by many people.

I wanted to hear more about the process through which people go. There is much talk about people being rushed into bankruptcy to get out of debt easily. Someone who deals with that matter advises me that the present procedure is extremely thorough. When a client asks such an organisation for help, his financial situation is studied closely. His income is maximised by checking on his entitlement to rebates, and creditors are contacted to explain the clients' position and requesting them to freeze interest payments accruing on accounts. Much work goes into trying to stop people entering the bankruptcy procedure. I have no evidence that people rush into it, as Conservative Members have been hinting.

The Government's approach suggests that bankruptcy is an option--but only after a long process. I wanted to hear about that process and to see some sensitivity toward it in the Bill. I also wanted to hear about the beneficial actions of the permanent trustees to ensure that those are not denied to people. According to my reading, they are

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certainly beneficial. I accept and have stressed that it is an expensive process. Indeed, I used the word "greed" when I spoke in the Scottish Grand Committee. That may have been too strong a term, but if costs can be cut by 50 or 60 per cent. in a couple of weeks, super-normal profits were being made and there might have been an element of greed.

Creditor pressure could be stopped, not only on the debtor but on his family, because it is distressing, frightening and crippling. The trustee could stop the recalibration of power meters, when people pay so much per unit for their power that they can never get out of debt, tackle their futures and put their lives in order. People with social fund repayments to make could have those repayments stopped to allow them a breather to try to sort themselves out. That is what credit, bankruptcy and sequestration were all about and that is what the Government said that they were about in 1985. We must ensure that those measures are still available to alleviate those pressures, even though people may not have the same automatic right to go to a permanent trustee.

It is important that the Bill should respond to people's fears. If we create more fear, we shall do an injustice to the people of Scotland. The fears of the organisations that represent debtors must be taken on board. Most of them have been mentioned before, but I shall mention some again. The charge for lodging a petition must be dealt with. Would the accountant in bankruptcy deal with problem creditors? Would he give the protection which the permanent trustee gives? Would the limited assets or summary procedure be introduced, as the Government say? Would not it be so complicated that people would have to go to another agency for help? I should have liked to have heard people speak about those problems, and that is why a Special Standing Committee was so important.

I wanted to hear from organisations that supported the prime purpose of the Bill. Some have been mentioned, but I refer particularly to the Scottish Consumer Council, which, although it supported the Bill, had serious reservations about it. It said : "We are extremely doubtful that individual debtors will feel competent to petition the court without any form of assistance it would be difficult for a debtor to present a petition in the correct form."

It went on to make sensible suggestions about simple forms of petition and said that the technicalities of the reference to protected trust deeds should be deleted so that the debtor could petition without a qualified creditor moving against him. There should then be an agreement that no costs would be incurred in the courts in the sequestration process. It is important that we hear from those people but the Government have denied us that opportunity.

We need to undertake a process of discussion and education, rather than just replying to people's questions and amending the Bill in a minor way. We need to enter a process of construction and, hopefully, reconstruction of the 1985 Act, not just to answer those simple questions but to give Scotland a legal process that will allow people to free themselves from the crippling spiral of debt. A Special Standing Committee would have given us that opportunity, which is why we are debating the matter tonight. Are the Government really saying that civil servants or Ministers alone can work out the results of legal procedures? The effects of the 1985 Act show that that is an untenable argument and it is unlikely that, if done alone, it will be done properly.

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