Chamber
Meeting of the Parliament 06 February 2024
06 Feb 2024 · S6 · Meeting of the Parliament
Item of business
Bankruptcy and Diligence (Scotland) Bill: Stage 1
I totally agree with that interesting intervention. In the United States, successful entrepreneurs often fail in business for a number of times before they are ultimately successful and people regard that as a run-of-the-mill part of entrepreneurial culture. The member makes a fair point about the need to see business failure as not always being negative, although there are often negative consequences for creditors.
However, there is, as I have perhaps alluded to, a potential moral hazard here: if bankruptcy is seen as too easy, it can be a tool for individuals to act irresponsibly, or even recklessly, and run up debts knowing that they will not have to repay them. Therefore, bankruptcy law has tried to strike a balance between the interests of the creditors and the interests of debtors, and there are some popular misconceptions about who those creditors might be.
In most bankruptcies—personal bankruptcies—the largest creditors are usually public agencies, such as His Majesty’s Revenue and Customs or local councils. The most common debt that leads to diligence proceedings in Scotland today is council tax. If we go too far in shifting the balance towards the rights of the debtors, we are potentially depriving public services of much-needed revenue.
In the same item of business
The Presiding Officer (Alison Johnstone)
NPA
The next item of business is a debate on motion S6M-12070, in the name of Tom Arthur, on the Bankruptcy and Diligence (Scotland) Bill at stage 1. I ask membe...
The Minister for Community Wealth and Public Finance (Tom Arthur)
SNP
I am grateful for the opportunity to address the chamber on the general principles of the Bankruptcy and Diligence (Scotland) Bill. The bill is not a big one...
Daniel Johnson (Edinburgh Southern) (Lab)
Lab
Does Tom Arthur not recognise that the very fact that the bill is an enabling bill, rather than one that sets out criteria, mechanisms and thresholds, makes ...
Tom Arthur
SNP
The member makes a fair point, which I will turn to as I progress through my prepared remarks. I commend the members of the mental health moratorium working...
Stephen Kerr (Central Scotland) (Con)
Con
The problem with the working group’s recommendations is that, if the Government eventually adopted them as its proposals, they would give people who are suff...
Tom Arthur
SNP
I will come on to further detail of what we will take forward in the regulations. The detail of how the proposals will work in practice will be set out in ...
The Presiding Officer
NPA
Thank you. Members may wish to know that we have time in hand this afternoon, and that we hope to give back time for any interventions taken. 14:38
Claire Baker (Mid Scotland and Fife) (Lab)
Lab
I am pleased to speak on behalf of the Economy and Fair Work Committee in the role of convener in this stage 1 debate on the Bankruptcy and Diligence (Scotla...
Murdo Fraser (Mid Scotland and Fife) (Con)
Con
I remind members of my entry in the register of members’ interests: I am a member of the Law Society of Scotland, albeit not currently practising. I echo th...
Stephen Kerr (Central Scotland) (Con)
Con
Does Murdo Fraser agree that it would be beneficial for the overall culture of enterprise in this country if we had a less stigmatising approach to bankruptc...
Murdo Fraser
Con
I totally agree with that interesting intervention. In the United States, successful entrepreneurs often fail in business for a number of times before they a...
Daniel Johnson
Lab
Does Murdo Fraser agree that there is an interesting contrast between public agencies and private businesses in the approaches that are being taken? The bank...
Murdo Fraser
Con
Mr Johnson makes a very fair point. In the evidence that was given to the committee, some of the strongest-worded evidence against some of the additional pro...
Fergus Ewing (Inverness and Nairn) (SNP)
SNP
Murdo Fraser sets out the challenge very clearly. Is there not a concomitant risk that many debtors who are aware of the fact that mental health may provide ...
Murdo Fraser
Con
Fergus Ewing, with his usual lawyerly background, makes a fair point about the potential for unintended consequences. I was pleased to note that, in his let...
The Deputy Presiding Officer (Annabelle Ewing)
SNP
Yes, please go ahead, Mr Fraser.
Murdo Fraser
Con
The question of the discharge of trustees was alluded to by the committee’s convener. The Institute of Chartered Accountants of Scotland told us in evidence ...
Daniel Johnson (Edinburgh Southern) (Lab)
Lab
All too often, poor mental health and debt go hand in hand and lead to absolutely disastrous social consequences, both for the people who are immediately aff...
Stephen Kerr
Con
Will the member take an intervention?
Daniel Johnson
Lab
I will take the intervention in a second. The Royal Edinburgh hospital is in my constituency—I am contacted by people there, but very often, it is quite far...
Stephen Kerr
Con
Does Daniel Johnson agree, however, that at the end of this legislative process, people in Scotland who are in the distressing circumstances that we are outl...
Daniel Johnson
Lab
Mr Kerr makes a valid point. In approaching this legislation, we need to ensure that we do the most that we can. If there are examples from elsewhere, in par...
Brian Whittle (South Scotland) (Con)
Con
Does the member recognise that if we were to expand those criteria, with which I think most of us would agree, the issue of resource would have to be addressed?
Daniel Johnson
Lab
I was coming to that very point. Although I think that a threshold that includes all those who are undergoing mental health treatment would be far too low, a...
The Deputy Presiding Officer
SNP
I remind all members who seek to speak in the debate to ensure that they have pressed their request-to-speak buttons. We move to the open debate. 15:13
Colin Beattie (Midlothian North and Musselburgh) (SNP)
SNP
I am pleased to have the opportunity to speak in the debate on the Bankruptcy and Diligence (Scotland) Bill at stage 1, particularly as I am a member of the ...
Stephen Kerr
Con
Does the member share the concerns that I and other people have expressed about the Government’s stated intention to create a public register of those who wo...
Colin Beattie
SNP
I recognise the sensitivity of the public register, and there will be further debate and discussion on that. Other concerns exist that the mental health mo...
Stephen Kerr (Central Scotland) (Con)
Con
It is a pleasure to follow Colin Beattie, who gave a considered and thoughtful speech that highlighted many issues of concern about the bill that I wish to r...
Alasdair Allan (Na h-Eileanan an Iar) (SNP)
SNP
Will the member give way?