Hansard

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 regulations. I accept the Economy and Fair Work Committee’s recommendation that it should scrutinise those details ahead of stage 3 of the bill.

We have recently completed a consultation on proposals for the regulations and the feedback is being analysed. At a high level, I confirm that the majority of respondents were in favour of most of the proposals, subject to the caveats that responses were qualified by respondents’ narrative comments and that we have agreed to allow a short extension to accommodate stakeholders who have asked for additional time. However, it is clear that comments on the eligibility criteria for the moratorium, on which there are a range of views, will need to be considered carefully. That is noted in the stage 1 report of the Economy and Fair Work Committee.

The protections that could be offered to someone who is eligible for the scheme are significant. Therefore, I want to be cautious about setting the eligibility criteria too widely. We do not want to discourage creditors from lending to the group whom we are most trying to help. I am keen to avoid that, so I will look to find a good balance. We already have in place a standard moratorium that gives people who are struggling with debts six months’ protection from creditors. It provides them with time to decide how best to deal with their debts. For many people, that standard moratorium will be sufficient.

The committee’s report recommends that we should increase the protection for persons under a mental health moratorium, specifically in relation to eviction and the installation of prepayment meters. We already have measures in place in Scotland to protect people from eviction. Those include a statutory requirement for the Scottish Courts and Tribunals Service to consider the reasonableness of granting an eviction in all cases, including when there are arrears of rent. However, I will look into the matter to provide assurance on that point. The installation of prepayment meters might be more difficult to address, but I am writing to the UK Government on that and am happy to consider what further action might be needed on it. I will keep the committee fully informed.

The working group recommended that the moratorium would not be appropriate where a debtor lacked the capacity to consent. I note that the committee has recommended that that should be reconsidered. The issue was discussed in the recent consultation, and I will reconsider it in the light of the committee’s views once I have had the chance to consider the consultation responses.

I will also look at the committee’s concerns about the public register and consider how it can be introduced in a way that addresses those concerns. I am mindful of the fact that, as well as protecting the interests of the individuals who enter a mental health moratorium, we need to protect the legitimate interests of creditors. I will continue to look for a solution that can meet both those objectives.

I appreciate that concerns have been expressed about the extra pressure that may be placed on the advice sector by introducing a mental health moratorium. The sector has been helping to shape the proposals, and I will continue to consider the potential impact on it as we seek to finalise the detail behind the scheme. I also confirm that the Scottish Government will work with the advice and mental health sectors to develop clear guidance and training to enable them to deliver the mental health moratorium. We will work with them to ensure that the tools that they need are available.

When I gave evidence to the committee, my colleague Kevin Stewart recommended that we should seek input from the lived experience forum on the proposals for the mental health moratorium. I confirm that we have engaged with that forum and are arranging an event with it to seek such input.

Other provisions in the bill make minor and technical amendments to the Bankruptcy (Scotland) Act 2016 that would serve to provide clarity and improve the operation of the bankruptcy process. The bill will provide more efficient recovery processes to assist businesses and local authorities to collect debts from those who can pay, while, importantly, protecting those who are unable to pay.

The bankruptcy and diligence provisions in the bill implement measures that were supported by stakeholders in response to a consultation that was carried out between August and October 2022. That consultation sought feedback on proposals from members of the working groups in stage 2 of the Scottish Government’s review of the operation of existing statutory debt solutions.

I am pleased to note the Economy and Fair Work Committee’s support for the measures that are set out in the bill. I have noted the committee’s recommendations that amendments should be introduced at stage 2 to allow for the discharge of trustees when debtors have not co-operated in their bankruptcy, the charging of statutory interest and the recall of bankruptcy, and to extend the time in which a sheriff’s officer can serve a warrant to cite a debtor in a petition for sequestration. I will look at those matters further in the light of the committee’s report and consider whether amendments might be appropriate.

There are some other matters that stakeholders raised in their evidence to the committee that we will look at, but which can be addressed through secondary legislation. Those matters include the minimum period for reapplying for bankruptcy under the minimum assets procedure and the minimum income for earnings arrestment. As I said to the committee, when issues can be addressed in secondary legislation, that is often the best way in which to address them. I am committed to further engagement with stakeholders on those matters, because, as the committee notes, some concerns about unintended impacts were raised in the evidence sessions. The working groups that were involved in looking at each of the statutory debt solutions also made recommendations that can be dealt with through secondary legislation.

The bill is therefore part of a package of legislation. Together, we will make important changes to our debt solutions. I expect to start bringing forward regulations later this month, and I will bring forward further regulations in the next few months. Those regulations will include important changes to protected trust deeds.

As I have said, the bill is part of a wider programme of reform. We have commissioned an independent review to assess how far current statutory debt solutions meet the needs of a modern economy. That work is being taken forward by Yvonne MacDermid OBE. Yvonne brings a wealth of experience to that work, having served as chief executive at Money Advice Scotland for many years. She has been setting the foundations for the review and will shortly commence a set of stakeholder meetings to help to inform her work.

In summary, the bill will make small but important changes to bankruptcy and diligence. The introduction of a mental health moratorium is an important step that will help those with the most severe mental health conditions and financial challenges.

I look forward to hearing members’ views this afternoon, and I ask them to support the bill at decision time.

I move,

That the Parliament agrees to the general principles of the Bankruptcy and Diligence (Scotland) Bill.