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I pay tribute to Lord Newton, who has already made such a valuable contribution to debate on the Bill in the other place. Although, as a successor of his, I now have the pleasure of representing the people of Braintree, unlike him I have had no involvement with the Council on Tribunals. I must therefore steer clear of part 1 and confine my remarks to parts 3 and 5, which deal with enforcement proceedings and debt management. I also pay tribute to the Minister, who delivered the Governments case cogently and responded to interventions thoughtfully.
Much of the debate on part 3 has revolved around the vital question of balance. As Lord Kingsland was at pains to make clear in the other place, market economies are dependent on contracts being enforceable, and the necessary result of that is that debtors must be made to pay. Foreign investment is dependent on the rule of law and the enforcement of contract, as countries such as China have found, to their credit, in recent years. However, that somewhat
cold principle must be balanced against the consequences of enforcement against more vulnerable debtors, of whom we have heard much during the debate. If we fail to strike that balance correctly, we truly will show the unacceptable face of capitalism. Treating debtors with greater humanity in what are usually very stressful circumstances should never be seen as undermining either commercial certainty or the rule of law. I am pleased that the Government have recognised that principle by bringing this Bill before the House.
There has been plenty of comment on the delicacy of the balance between the rights of creditors and debtors, and I do not intend to add to that. However, it is important that each group should know their rights without having to go through legal gymnastics. Citizens advice bureaux have dealt with 1.4 million debt problems in the last yearabout 5,300 per dayand I am sure that they would be happy if those numbers were to come down because people could find their own answers.
Unfortunately, debt is a widespread problem and it tends to afflict those who are least able to deal with it; I have spent a considerable amount of time in the Treasury Committee trying to tackle that issue. That being so, there is a strong case for taking two steps in particular: first, proper regulation of bailiffs, and secondly, the provision of clear and standardised information to debtors, setting out their rights, responsibilities and remedies at the first point of contact with a bailiff.
On the first point, the Government seem to have resiled from a promise to regulate the industry, and the justification that has been given is based on cost, not need. That is perplexing to me, because the Government are not known for stinting on the cost of regulation elsewhere, and if ever regulation were needed, it is here. Bailiffs have the potential to cause more distress and loss than any other arm of the stateexcept perhaps the Child Support Agency. If the Government are to make a case against the regulation of bailiffs, they must do so for better reasons than cost.
On the second point, it seems to me reasonable that bailiffs should have to provide clear and standardised information to debtors. Let me raise by way of comparison the situation that currently applies in the mortgage lending and insurance industries. At the instigation of the Financial Services Authority, for the last two years providers have had to provide a key facts analysis of the service that they give and the products that they are offering. It is a standardised and branded format that sets out, as the name suggests, key facts. That system is easily accessible to the layman and makes for sensible consumer protection. I would like something comparable to apply to bailiffs, which provides debtors with standardised and easily understood information. Such a document should include all relevant details of the debt, the charges and the expectations about repayment. More importantly, it should also set out the debtors rights, and details of how to pursue complaints about any breach of those rights.
That principle is very much in line with recommendations 3, 4 and 5 of Professor Beatsons independent review of bailiff law. It also underpinned the amendments tabled, but not pursued, by Lord
Kingsland and Lord Thomas in another place. Lord Kingsland argued that the information provided to debtors should
include the rights of the debtor, the powers available to the bailiffs, and, perhaps most importantly, what the bailiff cannot do.[ Official Report, House of Lords, 14 December 2006; Vol. 687, c. GC93.]
One reason for bringing the legislation together into one piece of lawfrom common law, statute, regulations and so onis to enable greater clarity both for those who enforce the law and those at the receiving end.[ Official Report, House of Lords, 31 January 2007; Vol. 689, c. 272.]
I say: let us ensure that that new-found clarity is communicated to those affected. I hope that the Minister will reconsider whether the mandatory provision of a standardised document along the lines suggested can be incorporated into the Bill.
I shall now turn to the proposals in part 5 on debt management and relief. That part of the Bill received very little comment, and almost no alteration, during its passage through the other place. Perhaps the reason for that is that these provisions have been broadly welcomed. However, I want to make some broad comments not on what is present in part 5, but on what is absent from it.
In November, the Treasury Committee, of which I am a member, published a pair of reports addressing financial inclusion and the ways in which it is lacking for many of the most vulnerable people in our society. One of the points that we looked at was the difficulty that undischarged bankrupts and others with irregular credit histories encounter when trying to open basic bank accounts. That appears to be an innocuous issue, but in my view it is the tip of the iceberg.
Figures compiled by Credit Action show that there were 27,644 individual insolvencies in England and Wales in the third quarter of 2006an increase of 55.4 per cent. on the same period a year previously. The number of people becoming insolvent in 2006 is likely to exceed 110,000, which is more than the population of Exeter. The estimate for 2007 has already risen to 150,000. That trend has been affected by the Governments commitment in the Enterprise Act 2002 to
allow a fresh start for those who have failed through no fault of their own
by removing some of the stigma of insolvency. That intention is good, as is the intention behind the provisions in part 5 of the Bill, but what worries me is that the Government have yet to address the issue of personal debt in the round.
As my hon. Friend the Member for Newbury (Mr. Benyon) said, the level of consumer debt is staggering, at well over £1.3 trillion; indeed, the only other sum that reaches such dizzy heights is the time bomb of public sector net debt. Of that more than £1.3 trillion of personal debt, more than £200 billion is unsecured, with the average British adult owing £4,524 in unsecured debt at the end of last year.
The Bill is an unsightly agglomeration of a number of necessary reforms, all bundled together into a weighty 297-page document; my hon. Friend the Member for South Staffordshire (Sir Patrick Cormack)
alluded to that. It has already been remarked upon that the provisions in part 6 concerning the protection of cultural objects on loan seem incongruous in the context of the Bill.
Instead of the hotch-potch that we have been given, I would have preferred a Bill that addressed all the factors that come into play in relation to consumer credit and enforcement. The first, and in my view most important, step that should be taken is to reappraise the terms on which personal credit is offered. I have come across one case in which a man who had recently been granted leave to remain in this country and was living off benefits nevertheless managed to secure a loan of £25,000. He proceeded to withdraw the entire sum from the bank the day after it was paid to him, and returned to his country of origin, leaving his young wife to deal with the bailiffs. Such situations are not rare, and some fault must attach to unscrupulous lenders. Secondly, there should be debt management and relief to provide people who are in a financial muddle with a second chance. Thirdly, thenand only thenthere should be clear and complete regulation of the bailiffs, who step in when all other options have been exhausted.
The Government have missed a valuable opportunity in the Bill to examine not only debt, but its causes. I am unable to resist an offering from 1758 by Dr. Johnson on that theme. Speaking of the practice of imprisonment for debt, he said:
We have now learned that rashness and imprudence will not be deterred from taking credit; let us try whether fraud and avarice may be more easily restrained from giving it.
It has already been said that many of the people who get into debt are the most vulnerable in our society and the least well equipped to deal with the situation. The Bills debt management and relief proposals may offer them a key, but I would rather that they did not serve a sentence at all. There appears not to be a meeting of minds within the Government on that issue. I should like the Ministers assurance that the Department of Trade and Industry and the Department for Constitutional Affairs have agreed on what must be done. If so, will he tells us what discussions have taken place?
maybe the banks are lending too much money or maybe they're not being as careful as they used to be in scrutinising the applications...If they'd not lent it in the first place then they wouldn't be in the difficulty of trying to recover it.
However, the real problem is not with high street banks, but, as we have heard, with the less reputable end of the market, where credit is more aggressively marketed and less rigorously vetted. Many IVAindividual voluntary arrangementproviders have been placed in that bracket, but the DTI still seems opposed to regulating them.
Chapter 4 of part 5 creates approved debt management schemes that can arrange debt repayment plans, which amounts to partial regulation. Those
new schemes are intended to complement other provisionsincluding IVAs. So some schemes are approved by the Lord Chancellor and others not, the sole difference being that only approved schemes can compel creditor participation. I question whether that is good enough, because debtors will still be vulnerable to aggressive marketing of unapproved IVAs; there was still a 118 per cent. increase in the use of IVAs last year. It is a great shame that although we have such positive progress on providing more options for those caught in the debt trap, we do not go further to protect both creditors and debtors by requiring the approval of all IVAs.
I welcome many of the provisions in the Bill relating to debt and enforcement proceedings. The Government have indeed recognised the need to tie up a number of loose ends and to offer debtors more options for a second chance. However, I am convinced that there are several areas in which the Bill could be improved, and I look forward to continuing our discussions in Committee.
Mr. Henry Bellingham (North-West Norfolk) (Con): I begin by declaring an interest as a qualified barrister. During my time at the Bar, I appeared before a number of different tribunals. I pay tribute to the numerous organisations that have briefed us on the Bill and played a full part in ensuring that the debate in the House of Lords was so well informed. They include Citizens Advice, the Zacchaeus 2000 Trust, the Association of Civil Enforcement Agencies, the Enforcement Law Reform Group, the Enforcement Services Association and a number of other different organisations and associations. I agree with my hon. Friend the Member for South Staffordshire (Sir Patrick Cormack) that the House of Lords did a quite excellent job in going through the Bill in significant detail. Many aspects of it were not debated because they were self-explanatory and straightforward, but their lordshipsparticularly those representing the official Opposition and the other partiesfocused on one or two key areas, and as a consequence they improved the Bill considerably.
I turn first to part 1 of the Bill. Tribunals are one of the most visible parts of the legal system. As the Minister pointed out, the huge growth in the tribunal system has been unstructured, which is why Sir Andrew Leggatt was asked to carry out a full review, which reported in 2001. My only regret is that it has taken so long to introduce legislation to implement much of that excellent review. Sir Andrew recommended a single coherent administration system, independent of Government Departments. He also recommended the two-tier system along with the better use of back-up infrastructure, so that the staff and the different tribunal heads can be used flexibly and interchangeably. I take on board the point that my hon. Friend the Member for North-East Hertfordshire (Mr. Heald) made about whether the term judges should be used; we may well return to that point in Committee.
There was substantial debate in the other place on judicial review, and the Government granted a substantial concession. My hon. Friend described how the Bill now makes it clear that a hearing must involve a High Court judge, or
such other persons as may be agreed from time to time between the Lord Chief Justice, the Lord President, or the Lord Chief Justice of Northern Ireland, as the case may be, and the Senior President of Tribunals.
We will probe that issue in Committee, because I agree with my hon. Friend that, if at all possible, a High Court judge should be involved. A judicial review is an extremely serious issue, as the hon. Member for North Southwark and Bermondsey (Simon Hughes) also pointed out. We will push that point hard in Committee.
Bringing together different parts of an existing organisation and putting in place a substantial consolidation exercise makes sense in theory, but this Governments record of bringing together different organisations into what is meant to be a more focused and streamlined body is not particularly good. There have been many examples of their making it clear that they wanted to go ahead with a consolidation exercise, save money and build in efficiencies, only for us to end up with an organisation that costs far more once the process has been completed. I could give a number of examples, but an obvious one is the Commission for Equality and Human Rights. Given the sum total of its different parts, it is a much bigger organisation that costs much more, with far more scope for adding extra costs to the end users. We will have to be very careful about that with this legislation.
We want to reconsider some of the points raised in the other place about judicial appointments. The hon. Member for Wolverhampton, South-West (Rob Marris) and my hon. Friend the Member for Shipley (Philip Davies)in his own inimitable stylemade the point that those appointments must be made on merit alone. The Opposition of course understand why the Government want to widen the pool of prospective appointees to the bench, but the absolute and overriding criterion must be the quality of those applicants, who must be appointed on merit.
My hon. Friend the Member for Newbury (Mr. Benyon) made an excellent speech in which he brought to bear his substantial small business experience. He flagged up the plight of small firms in the context of a claims culture in which an increasing number of vexatious claims are being made. There is a growing compensation culture; indeed, it is difficult to open the business pages of any newspaper without seeing yet another case of a claim by an employee. Often, such claims are totally vexatious. As the CBI pointed out in its briefing to us, its latest trend survey highlights the fact that many of the firms that it questioned felt compelled to settle cases, despite receiving advice that they were likely to win at tribunal, because of the cost and amount of management time that it would take to defend claims, which are often vexatious.
It is interesting that my hon. Friend the Member for Newbury made that point, because our policy at the last election was to introduce a system whereby the tribunal could ask for a bond or deposit from the applicant before the case could go forward. That would go a long way to prevent the plethora of vexatious cases that are tying up management time and destroying wealth creation in this country.
On debt relief, a range of new solutions will be targeted at those who are least able to cope. Given the record amount of money owed in society, we support
measures that will make it easier for such people to sort their lives out. We support the principle of debt relief orders. I was interested to hear the wise and sensible words of my hon. Friend the Member for Braintree (Mr. Newmark), who brought to bear his experience and knowledge, especially given his involvement in the two Treasury Committee reports. He made some very sensible suggestions that we will consider in Committee and perhaps include in amendments. I thank him for his contribution.
I am staggered by the proposals in the Bill on immunity from seizure for works of art and cultural objects, as that has nothing whatever to do with tribunals, courts or enforcement. It may well be highly desirable to introduce those measures, but this Bill is not necessarily the vehicle by which to do so. Having said that, there are substantial problems. We heard about the Russian loan of French impressionist pictures to the Swiss museum, and about the 2004 exhibition of paintings and other exhibits that were going to be on loan from Taiwan. That exhibition did not take place because of threats from the Peoples Republic of China, which said that it had a legitimate objection because those exhibits were misappropriated by the ex-leader of Taiwan and Free Chinese President Chiang Kai-shek.
My hon. Friend the Member for South Staffordshire made it clear that there is a serious problem in the museums sector and that there are fears about the future as we move into a more litigious time. That is quite right, given that much more emphasis is being placed on works of art that were looted, particularly during the Nazi era and the holocaust. That point was well made by the hon. Member for Stoke-on-Trent, Central (Mark Fisher).
There is a need to balance the rights of original owners against the need for museums to stage exhibitions and widen the cultural horizons of the people who go to them. I welcomed the changes that the Government made during the Grand Committee and Report stages in the House of Lords. I agree with my hon. Friend the Member for South Staffordshire that the Government have listened, been pragmatic and introduced sensible changes, particularly on due diligence and in setting up the approval mechanisms for museums and other centres. However, we will reconsider the definition of due diligence.
I would appreciate it if the Minister addressed the point made by the hon. Member for Stoke-on-Trent, Central about the possibility of works of art being sold after exhibitions. That is most unlikely, because they will be protected with immunity only for a very specific, fixed period of time. The idea that the original owner, or the person or gallery who owns the picture or work of art at the time of the exhibition, could somehow intervene and enable that picture to be sold or put up for auction after the exhibition is slightly far-fetched, but perhaps the Minister could clarify that point, because it is causing concern to a number of colleagues.
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