House of Commons Hansard Debates for 17 Jun 1992

Column 936

Are the Government also saying--it would appear that they are--that they accept that only Opposition Members will act as ciphers for the concerns, questions and suggestions of the socially sensitive organisations in Scotland? Again, that is what they appear to be saying in denying the setting up of a Special Standing Committee. It is important that we get around the table in a dialogue with the people who are trying to put submissions to us--accountants, consumers' organisations and debt counselling organisations--and work out a strategy sensibly and thoroughly. The present method may place us in a more defensive and protagonist position because of the Government's decision on the Special Standing Committee. I invite the Secretary of State and his junior Ministers to review their position and to help the Opposition to achieve what we thought was promised in the Scottish Grand Committee--the optimum result for debtors and creditors in Scotland.

6.7 pm

Mrs. Margaret Ewing (Moray) : The Secretary of State spoke of the widespread harmony for a change in the bankruptcy law in Scotland. Speeches from the two sides of the House have shown that there is harmony on that general principle. However, I wish to look at the underpinning issues because, if we are to talk about harmony, we should seek to achieve changes to the law that would have the full support of the community in Scotland. It is clear from the representations that have been made prior to the debate in the Scottish Grand Committee and since then that that harmony does not exist in Scotland.

The Secretary of State also said that the legislation was being introduced as a result of the monitoring of the workings of the 1985 bankruptcy legislation. That is a slightly ingenuous interpretation to put on the Bill because the workings of the 1985 Act were not constantly monitored. The Department of Trade and Industry instituted not monitoring but evaluation processes in 1990, subsequent to questions that I asked in the House. So there was not consistent monitoring of the workings of that Act until that stage. That should be clearly recorded in our deliberations.

We all welcomed the issue of access which was dealt with in the 1985 Act and we want that issue to be retained in this legislation. But if we are to move forward, we should ensure that the changes that we make are effective and will work on behalf of all the people of Scotland.

There is no confidence north of the border that the Bill will resolve the problem of excessive cost, which is the essential trigger mechanism that has set this legislation in train. The Bill is, in effect, nationalisation, although the Minister hates to use that word. Alternative ways of saving money have been offered to him. In the Scottish Grand Committee, I suggested taking a time-and-line attitude similar to that of the legal aid provision of advice and assistance. He appeared to reject that idea, saying that the legislation had to be on the statute book before he could consider such issues. I find his attitude difficult to understand, as the Institute of Chartered Accountants of Scotland has made alternative proposals. Is the Minister saying that the legislation has to be on the statute book before the institute's suggestions can be implemented or even considered?

Column 937

Mr. Allan Stewart : I was saying that the present agreement between the institute and the accountant in bankruptcy is voluntary. The Bill gives the Secretary of State powers relating to the setting of fees so that he is in a much stronger position than at present.

Mrs. Ewing : The powers do not need to be contained in legislation such as the Bill but could be introduced via other mechanisms available to the Secretary of State, such as statutory instruments, to provide elements to assist him in altering the present position.

Mr. Stewart : I can assure the hon. Lady that such changes would require primary legislation.

Mrs. Ewing : I am grateful to the Minister for clarifying that. As he knows, I am not a legal expert and I am trying to get to grips with the issue as I have many worries about the legislation. Is the Minister prepared to take a serious look at the representations that have been made by a variety of organisations to ensure that the primary legislation provides a framework that can be used to develop bankruptcy law and address the problems at the heart of the matter? That case is being put to him firmly by Opposition Members, and I ask him to consider it seriously.

Primary legislation can be amended in future, but we should ensure that any primary legislation that we place on the statute book does not have to be amended time and again to resolve problems that could have been avoided in the first instance.

Mr. Stewart : The short answer to the hon. Lady's question is yes.

Mrs. Ewing : I find that interesting, as the Minister seems to be saying that, if the Government are to take account of the proposals, a large number of Government amendments will be tabled in any Standing Committee that is established to consider the Bill. Consultation is important because, as a Parliament, we have not addressed the causes of bankruptcy. Hon. Members mentioned the increase in credit. In an article in the business section of The Scotsman yesterday, Gordon Milne expressed his concern at the rise in consumer credit. We should consider the self- employed. It was suggested that the Minister might supply statistics on how many sequestration cases there have been involving the self-employed and small businesses. Such issues have not been addressed, despite requests for investigations into the causes of bankruptcy. We need an objective appraisal of the costs of sequestration. What skills and expertise are needed? How much time needs to be spent on different cases? We should consider those questions before taking a major step forward.

In an earlier intervention, I mentioned Mark Berman, the only practitioner in debt advice in the Dumfries and Galloway region. I said that some aspects of the Bill would make it much more complicated, at least initially, for people to start sequestration procedures. Other hon. Members have mentioned the fears of individuals--some of which are physical fears. People obviously have mental and emotional worries, but they are also anxious about physical aspects related to warrant sales, with the knock

Column 938

on the door and all that that implies. Technical amendments contained in the Bill could be introduced immediately, while allowing consultation to take place.

Some of the proposals in schedule 1 are designed to close loopholes that exist in current legislation. Paragraph 16 of schedule 1 amends section 54 of the Bankruptcy (Scotland) Act 1985, which failed to protect the rights of secured creditors such as banks and building societies by preserving their security after the debtor obtained a discharge from bankruptcy at the end of a three-year period. Section 54 needs to be amended quickly, as debtors who are continuing to pay mortgages and rent are threatened by the possibility of eviction under the provisions of the 1985 Act. That is an horrendous position in which to place people who are honestly trying their best to continue payments, despite severe difficulties.

Surely it is not beyond even this Government to consider the possibility of twin-track legislation in Scotland to introduce the Bill's positive proposals, and implement them simply and quickly, while taking the opportunity to look at bankruptcy law in general and ensure that the legislation is effective. If the Government are taking stock, they must bear in mind the Bill's fundamental proposals.

The Scottish National party will support the proposal to set up a Special Standing Committee to consult all the organisations in Scotland involved in bankruptcy. Surely the Minister must have been impressed by the fact that organisations as diverse as the Institute of Chartered Accountants in Scotland, the Law Society of Scotland, the Castlemilk law centre and the Drumchapel debt

centre--organisations from different spectrums of society--are as one in asking for further consultations.

A letter from Mark Berman in Dumfries and Galloway states : "There appears to have been a total lack of consultation on this important issue. In February of this year, Money Advice Scotland held a seminar on bankruptcy, at which the keynote speaker was the Accountant in Bankruptcy. At no point did he indicate that such radical changes were imminent."

It is now June and we are talking about radical changes. He continued :

"At no point was Money Advice Scotland, Citizens Advice Scotland, The Scottish Federation of Independent Advice Centres, or the Institute of Trading Standards consulted. These are groups that deal with a large number of the no asset' sequestrations. There was no need for the secrecy, as all groups could have, and probably would have, been able to make suggestions that would have improved the system without the destruction of a process which has, to this point, shown itself relatively successful."

That organisation works at the sharp end dealing with debtors' problems. It knows better than any hon. Member what it is like to deal with a person who walks through the door with problems on which its representatives have to offer advice. It is on behalf of such people that we make our plea for a consultation process.

It has already been said in today's debate that the time scale involving the Second Reading, the meeting of the Selection Committee and the establishment of a Standing Committee means that there is no opportunity for the Bill to finish its passage through the House of Commons before the summer recess. I have already drafted many amendments and, if I am chosen to serve on the Standing Committee, I shall move them and fight the Bill line by line. I am sure that many hon. Members will do the same.

Why are we Scottish Members not using the weeks before the summer recess to meet organisations to try to

Column 939

ensure the harmony of which the Secretary of State spoke? There is a Caledonian consensus that we need time to consider the issue. If we want harmony, we should ensure that the voice of those working in the sphere of bankruptcy are heard as the legislation makes its progress.

6.19 pm

Mr. Malcolm Chisholm (Edinburgh, Leith) : I am interested in the Bill from the point of view of low-income debtors. I have been influenced by the strongly expressed views of people in the Leith constituency who advise them.

Many such debtors have been dragged unavoidably into the use of expensive credit for everyday living expenses. Some of their debts might be called state sanctioned debts because they pay the price of Government policies, such as the poll tax, social fund repayments and enforced rent increases. Even more fundamentally, it is the Government's failed economic policy that underlies the debt spiral, with still rising unemployment and continuing high interest rates. That, rather than the too easy access to sequestration emphasised by the Secretary of State, explains the rising tide of bankruptcy. Those in my constituency who give advice and have come to me with their concerns make three points. First, they ask why they, the experts, have not been consulted on the Bill and why it has suddenly appeared from nowhere. I suggest that it is because the Government are not interested in what happens to low-income debtors. Secondly, they tell me that the Bankruptcy (Scotland) Act 1985 is one piece of legislation that works quite well. Indeed, I cannot think of any other legislation in the past 13 years of which that could be said. They tell me that it provides an escape route for low-income debtors. Thirdly, they believe that the purpose of the Bill is to make it more difficult for people to be declared bankrupt and that that is the hidden agenda of the Bill.

Before this debate, there was some evidence for that in the answer that the Under-Secretary of State, the hon. Member for Edinburgh, West (Lord James Douglas-Hamilton), gave on 16 March about there being too easy access to sequestration. In the Scottish Grand Committee the Under-Secretary of State, the hon. Member for Eastwood (Mr. Stewart), suggested the same when he said that the 1985 Act was designed for trading concerns and that too many people were using it for the wrong purpose. Finally, today the cat was let out of the bag by the Secretary of State. The first 10 minutes of his speech were all to the effect that far too many people were using the sequestration procedures. Therefore, the open agenda of the Bill is to cut down on the number of people who gain access to sequestration.

There are three particular concerns. The first is to do with money, the second with accessibility and the third with counselling. Clause 6 provides that money must be paid by someone seeking sequestration through a petition in court. Clause 8 talks of fees being paid to the accountant in bankruptcy. Some of that has been explained in terms of legal aid for poor people. We are told that legal aid will be available, but there is nothing in the Bill about that. Before 1985, legal aid was not available to people seeking sequestration. Even if legal aid is made available, there will be delays, many law firms will not take legal aid work and many people will be excluded from it.

Column 940

On accessibility, I am sure that everybody in Scotland would like to pay a visit to Leith where the accountant in bankruptcy is based. It is impossible for people in financial difficulties to pay such a visit. In effect, we have a system of bankruptcy by post. How can people have access to good local advisers if everything is centralised in one place ?

The Bill says nothing about counselling ; yet I am told by the debt advisers that insolvency practitioners give good advice to people in difficulties. That is not mentioned in the Bill. Its purpose is betrayed by that because, clearly, it is not concerned with the welfare of low-income debtors.

We are told that the Bill has been introduced because of the expense of the present legislation. Lots of dodgy figures are floating about. It is suggested that, in 1994, 30,000 or 40,000 people will be seeking sequestration--perhaps that is the Government's comment on their own economic policies. One of those who spoke to me told me that on those projections the whole of Scotland would be bankrupt by the year 2010. That may be another fitting comment on the Government's economic policies, should they still be ruling Scotland then, which they will not.

Moreover, if the Government want to reduce the expenditure, there are other ways of doing so, such as by reducing the sequestration period from three to two or one year, by abolishing the block fee or by taking the accountants' offer to slash fees. If the Bill were about saving money, those measures could be adopted. The hidden agenda is the desire to cut numbers. Public expenditure savings will, of course, be made through reducing the numbers of those who have access to the sequestration procedure.

I appeal to my hon. Friends not to be seduced by the

nationalisation argument. Nationalisation does not mean anything that is run by a Government official. I support nationalisation more than any other hon. Member--I hope that I am not insulting anybody present--although I would not necessarily use the word

"nationalisation". I support nationalisation only if it helps working people and those who would like to be working people if the Government gave them the chance. The Bill does not help those people, which is why I shall vote against it tonight.

6.26 pm

Mr. Brian Wilson (Cunninghame, North) : I shall concentrate initially on two issues. I do not know whether it is possible to have two nubs of the matter, but if it is, these are the key issues. The first issue has not been sufficiently covered today. The letter from the Institute of Chartered Accountants of Scotland has been addressed to only a select group of Members, but it is fundamental to our consideration of the Bill. If the Minister is about to tell us, as the Secretary of State seemed to tell us earlier, that serious consideration is being given to accepting the ICAS proposition, the whole basis of the Bill is transformed. Indeed, much of its substance would be removed.

ICAS, having seen the Government's proposals and, presumably, recognised the seriousness of the Government's intent, is in effect saying, "Okay, the game's up. We'll do a cheap deal, guv." It is proposing in certain circumstances, and in cases with no assets, which are the great majority, to offer a deal of £800 plus the necessary outlays which, typically, it puts at £200 per sequestration.

Column 941

I am in no position to assess whether that is a better or worse deal for the public purse than setting up a separate department, as the Government propose. If the Government agree that the ICAS deal solves most of the problem and they are willing to enter into a deal with ICAS whereby the fees are remeasured at that level, it is nonsense to proceed with a Bill whose central thrust is to set up a different procedure that would lie in abeyance for cases with no assets. The Minister shakes his head, but if he can explain to me how acceptance of the ICAS offer, if it can be called that, is not in conflict with the procedures on which virtually all our discussions in the Scottish Grand Committee and most of tonight's debate have been predicated, I shall be interested to hear from him.

The second issue has already been raised in an intervention by my hon. Friend the Member for Falkirk, East (Mr. Connarty). As several hon. Members have rightly pointed out, the drift of the Secretary of State's remarks seemed to be that the Bill was all about a numbers game ; that the numbers have got out of hand. The corollary of that is that if the problem is to be resolved it must be through a cut in numbers.

In the Scottish Grand Committee, the Under-Secretary, in his reply, referred to the concern that the changes proposed in the Bill might result in debtors being denied access to sequestration ; in other words, the numbers argument. He said :

"I assure the Committee that the Government have no such intention. The savings in expenditure on sequestration will be achieved through tighter control over the fees paid to insolvency practitioners and through the introduction of simple procedures in small asset cases."--[ Official Report, Scottish Grand Committee, 8 June 1992 ; c. 56.]

In other words, numbers have nothing to do with it. Numbers can go up. If that is what the force of social circumstances demands, so be it. But, according to that statement, all the savings will be made through cutting the level of costs per case, not attacking the number of cases.

That is obviously at odds with what was said by the Secretary of State and Conservative Members where clearly the populist line being taken is that there are far too many cases and a bit of discipline would be a great social advance because so many people are taking the easy option.

A written answer to the hon. Member for Moray (Mrs. Ewing) seems to point in the same direction. In reply to one of her questions, the Under- Secretary of State said :

"It is clear that the major factor influencing the number of sequestrations in Scotland is the easier access by individuals to the sequestration process following the introduction of the 1985 Act."--[ Official Report, 16 March 1992 ; Vol. 205,c. 821 .]

If that is the source of the problem, one does not have to be unduly suspicious to believe that the Government's measure to deal with it will be to reduce access and thereby reduce the number of sequestrations.

It is the Opposition's case, and, in fairness, probably that of the more enlightened Conservative Members, that all the talk of easy options and people rushing into sequestration is nonsense. It is not true ; it is a false picture. I agree, as I think will my hon. Friends, that creditors' interests must be protected. We are in favour of protecting creditors' interests and that should be built into the Bill. In addition, people must be protected from themselves. The idea of them being pushed into sequestration or

Column 942

encouraged into sequestration, either as an allegedly easy option or in order further to swell the proceeds for the insolvency practitioners, is outrageous. If that is happening, it should be stopped. I am sure that there is no difference between hon. Members on that. But from what has been said tonight, there is a great difference between us on the prevalence of that practice. Certainly that charge cannot be levelled without some evidence being adduced.

Mr. Gallie : I have had constituents who have claimed that they have signed on to the sequestration process while in an emotional state without being aware of the consequences and that if they had been so aware they would not have signed on. That is a fact which to my mind is indisputable and which is part of the situation we face.

Mr. Wilson : It may be a fact, but it is certainly not indisputable, nor is it proven. The charge that the hon. Gentleman is levelling, presumably against his local accountants, is sufficiently serious to be taken up with them. I suspect that an interesting meeting would ensue. If the hon. Gentleman makes that charge, he is presumably capable of pursuing it.

Mr. Ernie Ross (Dundee, West) : Does not my hon. Friend think it rather strange that, if what the hon. Member for Ayr (Mr. Gallie) says is correct, there is nothing in the Bill about counselling. The evidence from those involved in the money advice centres and all the other organisations concerned was that they and the insolvency practitioners give a great deal of counselling. As I said in the Scottish Grand Committee, given that such people are in an emotional state, why is there no financial provision for counselling in the Bill?

Mr. Wilson : Those points strengthen the case that we are making for a further examination of the measure. It is offensive to insolvency practitioners, never mind to money advice organisations, to suggest that they are somehow inciting people to sequestrate, as though accountants were out in the street with a hook pulling them in in order to encourage them to sequestrate and thereby secure fees for themselves. It is not a picture that I recognise.

I draw the attention of the hon. Member for Ayr to figures with which I was supplied by the Strathclyde money advice service based in Ayr from a survey of cases in the Ayr, Irvine and Kilmarnock area, where 83 per cent. of multiple debt cases resulted in no sequestration and 17 per cent. did so result. Given those statistics, it is improbable that such incitement is going on. If it is, it should be identified and stopped. However, I have seen no evidence that it is going on, and we should not base legislation on the assumption that it is.

The hon. Member for Ayr referred to people escaping the poll tax by taking that extreme course of action. All hon. Members have had hundreds of cases of people who are in debt and difficulty because of the poll tax. I honestly have not come across one case in my constituency of anyone resolving that difficulty, or dreaming of resolving it, by recourse to sequestration. We are talking about people who are in multiple debt-- catalogue, utility and bank debt. The idea that people are escaping from the poll tax by this device is fairly absurd.

I referred to the number of cases in Lerwick where only 16 individuals have sought sequestration in the past year. It was suggested that that said something peculiar about or to the credit of--Lerwick, but looking through

Column 943

a list of sequestrations by sheriff court area in Scotland I am struck not by the oddity of Lerwick but by the consistency of the position. With one or two blips, which could doubtlessly be investigated further, one finds great consistency of relatively low numbers in each area in proportion to population.

My hon. Friends the Members for Dundee, East (Mr. McAllion) and for Dundee, West (Mr. Ross) would be interested to know that, in the year ended 31 March 1992, the Dundee sheriff court had 131 sequestration cases. That is an extremely modest number in a city where everyone knows that a great deal of hardship exists.

Mr. McAllion : I am grateful to my hon. Friend for drawing that statistic to the attention of the House. He will know from information passed to me from the Dundee money advice project that its estimate of the number of cases of debt problems that it handles in a year--this is just one project in the city--is 12,000.

Mr. Wilson : That is a useful reinforcement of the point. Sequestrations represent only a tiny proportion of the total number of debt cases. Ayr sheriff court had 275 cases. That does not suggest that queues are forming each day to take this easy and attractive course. Incidentally, at Ayr sheriff court, the procedure has cost some £600,000. If the whole thing were wiped out, not many roads could be built on the proceeds. Falkirk has had 554 such cases, Forfar 31 and Elgin 151. Those figures are not excessive, and they do not suggest that a campaign is in operation to persuade people to sequestrate themselves.

We want the Bill to include protection for the right of the individual. We endorse the views of all the consumer organisations that have asked us to introduce such protection, so that people are not priced out of the process as they once were. The Minister told us the other day that the Government did not intend that to happen, but intention--or lack of intention--must be translated into the legislation.

The Scottish Consumer Council has asked for three specific assurances. First, it wants

"a simple form of petition which can be completed by a non-legally qualified person".

Secondly, it wants

"the technicalities of the reference to protected trust deeds deleted ; a debtor should be able to petition without a qualified creditor and without having to say what the effect would be of a trustee trying to make a trust deed protected".

Thirdly, it wants

"a Government undertaking that there will be no court dues in sequestration petitions."

I am sure that the Minister is as familiar with those demands as I am, and it would be encouraging if he gave an assurance--in the spirit of what he said in the Scottish Grand Committee--that they would be observed. If he does that, we shall be nearer to accepting that the Government's aim is not to limit the number of sequestrations, but to cut the costs in the ways suggested by other hon. Members and by the Institute of Chartered Accountants of Scotland.

The Opposition felt that this was a good opportunity for the Secretary of State to show a modicum of good will and common sense. In effect, the Bill overtakes an Act introduced seven short years ago by the same Government and, largely, the same Ministers. That Act was based on a travesty of false expectation in relation to its financial consequences. Now, the Government are again taking up the time of the House, Committees and individual

Column 944

Members to introduce legislation that is intended to redress the calculating errors that they made in 1985. I feel that a small amount of humility is called for. It should not be beneath Ministers to accept that a bit of advice might help them to get the legislation right this time--legislation that they recognise as largely uncontentious on party grounds--so that we do not have to undo it again in a few years.

Having considered all that the Secretary of State has said since the general election about new approaches to Scottish legislation, the Opposition considered it eminently sensible to use an existing device to involve more people--lay people ; people with some knowledge to offer hon. Members on both sides of the House--in the legislative process. It was a modest proposal, which was not especially partisan, a proposal that would have made this a better Bill than it will be. The Secretary of State, however, rejected it, and it is on that basis that his good intentions will be judged.

6.44 pm

The Parliamentary Under-Secretary of State for Scotland (Mr. Allan Stewart) : The hon. Member for Glasgow, Garscadden (Mr. Dewar) said that he had experienced an unexpected pleasure in Scottish politics. No doubt that is a fairly unusual experience for him nowadays. I am not sure whether the Bill was discussed at the meeting of Scottish Labour Members on Tuesday 2 June. We are indebted to the hon. Member for Hamilton (Mr. Robertson), who wrote in the "Commons Diary" in this week's issue of The House Magazine :

"The day at 8.00 pm is still young and I attend a two and quarter hour meeting of Scottish Labour MPs. The Group these days is to fraternal, constructive discussion what Kylie Minogue is to Shakespearean acting".

Let us not be churlish and deny the hon. Member for Garscadden the occasional pleasure in Scottish politics. Such pleasures are rare and unexpected ; let him enjoy them.

In our first debate, the hon. Gentleman said that he thought that I had introduced the Bill with gritted teeth. I assure him that my teeth are now ungritted, and I am delighted to be winding up the debate. We have heard a number of constructive speeches from Opposition Members : as well as two excellent speeches from Conservative Members : my hon. Friend the Member for Tayside, North (Mr. Walker) rightly pointed to the essential need for balance between the interests of debtor, creditor and taxpayer, while my hon. Friend the Member for Ayr (Mr. Gallie) made a number of positive suggestions, which the Government will consider.

The hon. Member for Garscadden, and a number of other hon. Members, have used terms such as "nationalisation", "market economy" and "market testing". In a generally constructive speech, for which I pay credit to him, the hon. Member for Cunninghame, North (Mr. Wilson) mentioned those concepts.

Let me make the position clear. It will doubtless come as no surprise to the House to learn that the Government are fully committed to market- testing the delivery of the sequestration service, in accordance with the principles which we have established. We shall look closely--this relates to a number of points made by hon. Members on both sides of the House--at the detailed implementation

Column 945

of the Bill. We shall want to ensure that, wherever possible, the private sector has an opportunity to undertake the work when it can be done in a cost-effective manner.

At present, the advice agency directs the debtor to a particular insolvency practitioner, who in most cases determines who shall act in a particular sequestration. Neither the creditor nor the taxpayer who is paying for the process has any say in the matter. That relates specifically to the points made by my hon. Friends about the need for balance. In effect, the chosen practitioner is in a monopoly : provided that he maintains a good relationship with the advice agency in his handling of its clients, he can be confident of a steady stream of work.

The hon. Member for Falkirk, East (Mr. Connarty) has moved from a stance of opposition in the Scottish Grand Committee to his present considered scepticism. Let me tell him that the accountant in bankruptcy will be in a position to introduce a much stronger dose of competition into the process. By contracting out the provision of the service to insolvency practitioners, he can ensure that value for money and quality of service are secured. The best, most efficient and most effective practitioners are likely to gain from the process. That is market testing ; it is the reverse of nationalisation. A number of hon. Members--including the hon. Member for Orkney and Shetland (Mr. Wallace) in his intervention on my right hon. Friend the Secretary of State--have rightly focused on the advice function. The hon. Member for Dundee, West (Mr. Ross) was among those who asked who would be responsible for that function. The Government intend to give consideration--in consultation with money advice agencies and others--to the preparation of a guide to sequestration and its consequences, which could be made available to the general public. The preparation and making of such a guide and the provision of purely factual information on the process of sequestration will be the responsibility of the accountant in bankruptcy.

Mr. Dalyell : Will the money advice organisations that the Minister is consulting include the citizens advice bureaux?

Mr. Stewart : I can give the hon. Gentleman an absolute assurance on that point. Many citizens advice bureaux give excellent advice and have developed some excellent computer software in precisely this area.

We shall be preparing a guide and will consult organisations such as the citizens advice bureaux. However, the accountant in bankruptcy will not be involved in advising an individual debtor as to whether to petition for sequestration.

Mr. Wallace : I welcome the fact that the Minister has said that a guide will be drawn up. Will advice and help also be given to the various bureaux with regard to alternatives to sequestration?

Mr. Stewart : Indeed. Both the hon. Member for Cunninghame, North and the hon. Member for Dundee, East (Mr. McAllion) pointed correctly to the fact that the majority of debt problems do not result in sequestration because of the advice that people receive.

Through the urban programme the Government have committed support amounting to £1.25 million to money

Column 946

advice centres in Scotland to ensure that debtors have access to good advice. The hon. Member for Linlithgow (Mr. Dalyell) will be reassured when I tell him that the Government have also provided core funding of over£1.4 million to Citizens Advice Scotland to assist its work with citizens advice bureaux.

Turning to the major point that hon. Members have made in this debate, I repeat the assurance that I have already given and that my right hon. Friend the Secretary of State for Scotland gave earlier today--savings will not be made at the expense of debtors' rights. The savings will come from two sources : more streamlined procedures and the Secretary of State's control of fees. A number of hon. Members have referred to the letter from the Institute of Chartered Accountants of Scotland, which says specifically that a major contributor to the savings that it identified will be the streamlined procedures that are set out in the Bill. I am glad that the hon. Member for Garscadden agrees.

The point that has been made about access relates specifically to legal aid. Debtors will be able to apply for legal aid for the purpose of obtaining the assistance of a solicitor in drawing up and presenting a petition for sequestration. In practice, we expect most debtor petitioners to be funded through the existing legal aid, advice and assistance scheme that is administered by solicitors. That advice can be provided quickly.

I repeat the assurance that I gave to the hon. and learned Member for Fife, North-East (Mr. Campbell) in the Scottish Grand Committee debate : we are also actively considering the extension of the assistance by way of representation scheme to provide legal assistance where a solicitor may have to appear before the court. Hon. Members should, of course, be able to raise questions of eligibility in Committee. That is the correct use of the Standing Committee procedure, but I give that absolute assurance about the Government's intention.

Hon. Members have referred to the provision of services in areas other than rural areas. In the Scottish Grand Committee proceedings the right hon. and learned Member for Monklands, East (Mr. Smith) asked about the position in areas outside Edinburgh. The Bill will enable the accountant in bankruptcy to employ agents to perform any of his functions in individual sequestrations. I envisage the accountant taking advantage of that power, which will allow him to appoint practitioners in the more remote rural areas and in many other parts of Scotland as his agent, in order to ensure that a good quality of service is provided to debtors.

A number of hon. Members referred to the Institute of Chartered Accountants of Scotland's proposals which we have received today. We shall need to consider them carefully. A number of interesting ideas are set out in the institute's letter.

Mr. Dewar : They represent not minor amendments but a fundamental change to the Bill which sets out to deal with an enormous increase in schedule 2 cases and the consequential burden on the public purse. It has been decided that that problem should be dealt with by passing responsibility to the accountant in bankruptcy. The Institute of Chartered Accountants of Scotland proposes that it should remain in the driving seat but that there should be a very much lower fee scale and simplified procedures. It is not just a matter of looking at the

Column 947

proposal with interest. The fundamental question is whether, subject to detailed examination, that is an acceptable proposition.

Mr. Stewart : The Institute of Chartered Accountants of Scotland does not ask in its letter for the withdrawal of the Bill--quite the reverse. The institute has argued consistently that there is a great deal of merit in the Bill, as I believe the hon. Member for Orkney and Shetland would confirm. It has put forward a series of detailed proposals and interesting ideas. One of those is encouragement of the greater use of protected trust deeds. One would need to take account of the interets of creditors when examining the proposals. The hon. Member for Orkney and Shetland and others have confirmed that we are looking sympathetically at a change in procedure for non-schedule 2 cases.

A number of hon. Members asked detailed questions, one of which related to the self-employed. The statistics are unreliable, but they show that of those who have indicated their status, about 49 per cent. have no occupation or are unemployed and about 32 per cent. are employees. The balance is 19 per cent.

During the debate, Opposition Members have alleged that there has not been proper consultation. It is widely recognised that reform of the 1985 Act is needed urgently. We have brought forward our proposals after careful monitoring of the operation of the 1985 Act by the Department of Trade and Industry. The Bill was published on 8 May. It was then available to interested parties. It was considered in the Scottish Grand Committee on 4 June and 7 June, some 27 days after publication. Between then and today's Second Reading debate, nine more days have passed.

The earliest date for consideration of the Bill in Standing Committee is 30 June, merely a fortnight from now.

As my right hon. Friend the Secretary of State rightly told the House, by then there will have been seven and a half weeks for representations to be made and considered. I share entirely the objective of all hon. Members that we should get the Bill right. There is broad agreement on the objectives of the Bill. There is also broad agreement on the need to achieve a balance between the interests of the debtors, the creditors and the taxpayer. Of course it is our objective to get it right in Committee. That is the sensible way to proceed. I urge the House to accept the Bill and to reject the Opposition's motion.

Amendment negatived.

Main Question put forthwith, pursuant to Standing Order No. 60 (Amendment on Second or Third Reading), and agreed to.

Bill accordingly read a Second time.

Motion made, and Question put forthwith, pursuant to Standing Order No. 61 (Committal of Bills), That the Bill be committed to a Special Standing Committee.-- [Mr. Dewar.]

The House divided : Ayes 262, Noes 294.

Division No. 34] [7.00 pm

AYES

Abbott, Ms Diane

Adams, Mrs Irene

Ainger, Nicholas

Ainsworth, Robert (Cov'try NE)

Allen, Graham

Alton, David

Anderson, Donald (Swansea E)

Anderson, Ms Janet (Ros'dale)

Armstrong, Hilary

Ashdown, Rt Hon Paddy

Ashton, Joe

Austin-Walker, John

Next Section

Home Page