Chamber
Plenary, 01 Mar 2007
01 Mar 2007 · S2 · Plenary
Item of business
Illegal Moneylenders
Members have made some very good speeches on an issue that we are all concerned about, even if we have slightly different views on how to solve it.
Unlike Patrick Harvie, I managed to find information on the subject quite easily on the internet. In the UK, the total value of advances made by illegal moneylenders has been estimated at £40 million per annum, whereas repayments to those lenders are of the order of £120 million per annum. I am sure that, like me, many members watched "Dragons' Den" last night. If so, they would have seen the dragons decline to invest on the ground that they would not get a decent return on their investment from what was on offer. The dragons would kill for a return like that. I use the word "kill" deliberately, given that that is what many illegal moneylenders do to their clients—if not in actuality, then virtually.
We can only guess at the effect of borrowing from illegal moneylenders. In my efforts to find out the scale of the problem in my constituency, I discovered the difficulty of doing so. The activities are performed illegally and under cover, in back closes and wherever else. They are about terrifying people and taking control, a lack of clarity and therefore uncertainty. Illegal moneylenders offer something to people who are in desperate straits and then intimidate them for the repayment of the loan.
During the passage of the Bankruptcy and Diligence etc (Scotland) Bill, we heard evidence from the citizens advice bureaux and Money Advice Scotland, and from money advisers in my constituency. We heard horror stories about the tactics that are employed by legal money lenders—the banks, the Provi and other such lenders, as members have described in the debate. The witnesses talked about people getting calls on their mobile phones at 3, 4 and 5 o'clock in the morning. They also spoke of the intimidation of families in which the debtor was in hospital for an operation—the lender would call family members and say, "We don't believe you. Get him to the phone now or we are coming round."
I heard evidence that illegal moneylenders' enforcement tactics can include furniture being tossed over balconies and set on fire—even, on one instance, an individual being tossed over a balcony. I heard of broken limbs and people driven almost to suicide. Debtors' children can be threatened on the way home from school and, even with all the security measures that are in place, benefit books are still being taken and kept. Whether or not we control the credit end and can deal only with enforcement, we must be concerned about that. Indeed, the minister said that he was working with Westminster colleagues to deal with some of those issues.
The Executive has sought to put solutions in place. For example, there are the changes to the way in which debt is dealt with, particularly for the no-income-no-asset group, with the passing of the Bankruptcy and Diligence etc (Scotland) Act 2007. There are also the improvements to the debt arrangement scheme, with the freezing of debt at the point at which the DAS is made, access to advice and help, and representation in court by money advisers. I am aware that some colleagues have difficulty with the land attachment element of the act. However, the minister not only gave guarantees on the way in which the provision would be used, but made a commitment to review implementation, including a promise to come back to the chamber.
Jackie Baillie and I did a considerable amount of work, together with the minister, on credit unions. I congratulate Johann Lamont on her work as Deputy Minister for Communities in that regard. Johann Lamont, who is a fellow member of the Scottish Co-operative Party, introduced expanded powers for credit unions in order that they could more easily offer loans to members, including loans with a shorter savings time. Credit unions now have the ability to expand their activities in areas of deprivation. For example, after 18 months, my credit union—the Glenrothes and Levenmouth Credit Union—has some 2,000 members and the number is still growing every week.
Much has been done. I agree with Trish Godman and Patrick Harvie that a cap on interest rates would go a considerable way to preventing people from falling into the hands of illegal moneylenders. However, such a cap would not help everybody; those who find themselves needing to go to illegal moneylenders often tend to be the sort of individuals to whom we would not lend money, easily or readily, because of their inability to repay. It is essential that we deal with poverty and its causes, and deprivation in terms of jobs and educational attainment. That is the wider policy framework within which the Executive and the Government at Westminster are working. That is what we need to support.
From the briefings that I have received and from reading the DTI report, I note the evidence from the pilots that suggests that a time lag will emerge between getting rid of the illegal moneylenders and introducing alternatives. In the minister's summing up, I ask her to discuss some of the areas in which the Executive hopes to shorten that gap. Any gap in the availability of credit is likely to let in the next criminal.
I have pleasure in supporting the Executive motion. I hope that all members will support it at decision time.
Unlike Patrick Harvie, I managed to find information on the subject quite easily on the internet. In the UK, the total value of advances made by illegal moneylenders has been estimated at £40 million per annum, whereas repayments to those lenders are of the order of £120 million per annum. I am sure that, like me, many members watched "Dragons' Den" last night. If so, they would have seen the dragons decline to invest on the ground that they would not get a decent return on their investment from what was on offer. The dragons would kill for a return like that. I use the word "kill" deliberately, given that that is what many illegal moneylenders do to their clients—if not in actuality, then virtually.
We can only guess at the effect of borrowing from illegal moneylenders. In my efforts to find out the scale of the problem in my constituency, I discovered the difficulty of doing so. The activities are performed illegally and under cover, in back closes and wherever else. They are about terrifying people and taking control, a lack of clarity and therefore uncertainty. Illegal moneylenders offer something to people who are in desperate straits and then intimidate them for the repayment of the loan.
During the passage of the Bankruptcy and Diligence etc (Scotland) Bill, we heard evidence from the citizens advice bureaux and Money Advice Scotland, and from money advisers in my constituency. We heard horror stories about the tactics that are employed by legal money lenders—the banks, the Provi and other such lenders, as members have described in the debate. The witnesses talked about people getting calls on their mobile phones at 3, 4 and 5 o'clock in the morning. They also spoke of the intimidation of families in which the debtor was in hospital for an operation—the lender would call family members and say, "We don't believe you. Get him to the phone now or we are coming round."
I heard evidence that illegal moneylenders' enforcement tactics can include furniture being tossed over balconies and set on fire—even, on one instance, an individual being tossed over a balcony. I heard of broken limbs and people driven almost to suicide. Debtors' children can be threatened on the way home from school and, even with all the security measures that are in place, benefit books are still being taken and kept. Whether or not we control the credit end and can deal only with enforcement, we must be concerned about that. Indeed, the minister said that he was working with Westminster colleagues to deal with some of those issues.
The Executive has sought to put solutions in place. For example, there are the changes to the way in which debt is dealt with, particularly for the no-income-no-asset group, with the passing of the Bankruptcy and Diligence etc (Scotland) Act 2007. There are also the improvements to the debt arrangement scheme, with the freezing of debt at the point at which the DAS is made, access to advice and help, and representation in court by money advisers. I am aware that some colleagues have difficulty with the land attachment element of the act. However, the minister not only gave guarantees on the way in which the provision would be used, but made a commitment to review implementation, including a promise to come back to the chamber.
Jackie Baillie and I did a considerable amount of work, together with the minister, on credit unions. I congratulate Johann Lamont on her work as Deputy Minister for Communities in that regard. Johann Lamont, who is a fellow member of the Scottish Co-operative Party, introduced expanded powers for credit unions in order that they could more easily offer loans to members, including loans with a shorter savings time. Credit unions now have the ability to expand their activities in areas of deprivation. For example, after 18 months, my credit union—the Glenrothes and Levenmouth Credit Union—has some 2,000 members and the number is still growing every week.
Much has been done. I agree with Trish Godman and Patrick Harvie that a cap on interest rates would go a considerable way to preventing people from falling into the hands of illegal moneylenders. However, such a cap would not help everybody; those who find themselves needing to go to illegal moneylenders often tend to be the sort of individuals to whom we would not lend money, easily or readily, because of their inability to repay. It is essential that we deal with poverty and its causes, and deprivation in terms of jobs and educational attainment. That is the wider policy framework within which the Executive and the Government at Westminster are working. That is what we need to support.
From the briefings that I have received and from reading the DTI report, I note the evidence from the pilots that suggests that a time lag will emerge between getting rid of the illegal moneylenders and introducing alternatives. In the minister's summing up, I ask her to discuss some of the areas in which the Executive hopes to shorten that gap. Any gap in the availability of credit is likely to let in the next criminal.
I have pleasure in supporting the Executive motion. I hope that all members will support it at decision time.
In the same item of business
The Presiding Officer (Mr George Reid):
NPA
Good morning. The first item of business is a debate on motion S2M-5669, in the name of Des McNulty, on dealing with illegal moneylenders.
The Deputy Minister for Communities (Des McNulty):
Lab
We are here this morning to discuss the problem of loan sharks. By "loan sharks" I mean those who break the law by lending money, often at extortionate inter...
Stewart Stevenson (Banff and Buchan) (SNP):
SNP
I join the minister in unreservedly condemning the actions of illegal moneylenders. How successful have we been, under the Proceeds of Crime Act 2002 or othe...
Des McNulty:
Lab
I can give the member some figures in relation to the activities of the Glasgow illegal moneylending team. To date, 500 people have benefited from the prosec...
Christine Grahame (South of Scotland) (SNP):
SNP
Now there is an admission.
Des McNulty:
Lab
I hope that the SNP will support us in opposition. We will invite our partners, such as Citizens Advice Scotland, Money Advice Scotland and local authorities...
Mr Kenny MacAskill (Lothians) (SNP):
SNP
In moving the amendment in my name, I say that we do not disagree with anything that the minister said. Clearly, the Executive is flagging up an issue that h...
Margaret Mitchell (Central Scotland) (Con):
Con
I very much welcome this important debate, which focuses on what has become a huge problem throughout the UK—namely, consumer debt and the activities of ille...
Mr Jamie Stone (Caithness, Sutherland and Easter Ross) (LD):
LD
The debate is a worthwhile one. I am indebted to the Rev Graham Blount for all his work on the issue. He is known to all of us, and is the secretary of the c...
Bill Aitken (Glasgow) (Con):
Con
Is Mr Stone aware that much of the collection, intimidation and threatening behaviour that illegal moneylenders carry out is done on the streets and street c...
Mr Stone:
LD
I take that point, but my point is that those activities are not overt, but covert. The police work that is involved has to be much more detailed and clever ...
Christine Grahame:
SNP
From the member's comments, it seems that he supports the statement in the SNP amendment about the burden that legal moneylending puts on people. Is that the...
Mr Stone:
LD
I am attracted to the SNP amendment, but the trouble is that I do not support separation, as I have said elsewhere. The motion and both amendments have merit...
Trish Godman (West Renfrewshire) (Lab):
Lab
Some time ago—in 2002, I think—I was fortunate enough to secure a members' business debate on loan sharks. The Daily Record was running a campaign to expose ...
Ms Sandra White (Glasgow) (SNP):
SNP
The minister said that the debate is about loan sharks—illegal moneylenders who do not have a licence to lend money. However, does he believe that it is okay...
Members:
Oh, come on!
Ms White:
SNP
Members can intervene if they wish.
Cathie Craigie (Cumbernauld and Kilsyth) (Lab):
Lab
If we take the member's argument to its logical conclusion, is the SNP saying that it would make tenants pay for repairs to owner-occupiers' houses? Does she...
Ms White:
SNP
Owner-occupiers are quite happy to pay for repairs to their homes, but they simply cannot afford to pay £7,000 within a year. I want the minister to clarify ...
Patrick Harvie (Glasgow) (Green):
Green
I welcome the opportunity to debate this issue. However, I struggled to find any information about issues such as credit unions and the debt arrangement sche...
Christine May (Central Fife) (Lab):
Lab
Members have made some very good speeches on an issue that we are all concerned about, even if we have slightly different views on how to solve it.Unlike Pat...
Colin Fox (Lothians) (SSP):
SSP
I wonder whether the minister is familiar with the lines that Woody Guthrie sang:"Some will rob you with a six-gunAnd some with a fountain pen."In the motion...
Mr Stone:
LD
I mentioned it.
Colin Fox:
SSP
Mr Stone also mentioned it, but he underplayed it, too. I will tell members why.Today, the Royal Bank of Scotland declared profits of £9.7 billion and, yeste...
Helen Eadie (Dunfermline East) (Lab):
Lab
I join the minister in condemning illegal moneylenders unreservedly. He was right to say that there are many threads in the strategy to tackle the issue. The...
Bill Aitken (Glasgow) (Con):
Con
Despite there being two amendments to the Executive's motion, the debate so far has been largely consensual. The Conservatives acknowledge the efforts that t...
Christine Grahame:
SNP
I am interested to know how we can interfere with interest rates when we do not have the powers to do so in this Parliament. Is Mr Aitken suggesting that we ...
Bill Aitken:
Con
No—that is not what I am suggesting. I was careful in what I said so that no one would think that I was suggesting that. I was simply pointing out arguments ...
Colin Fox:
SSP
Perhaps Bill Aitken will unravel the great 21st century mystery of how the banks make their money. They lend at one rate and borrow at another. Is not that w...
Bill Aitken:
Con
That was a rather simplistic argument. On the basis of the equation that Colin Fox advances, the money that the banks make has not been made, to any great ex...