Hansard

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 has been a considerable problem in Scotland for far too long. I will return to many of the points that the minister made.

However, Scotland has additional problems that we have to recognise. First, there is a distinctive debt problem that is worse in Scotland than elsewhere in the UK, and we have to take that on board and address it. Secondly, I am reminded of the Donald Rumsfeld phrase about known unknowns and unknown unknowns, because as well as illegal moneylending we have legal moneylending, which, even if it is not illegal, is predatory—the phrase that the minister used—and immoral. We have to address that point. We cannot simply deal with the spivs and wide boys who are operating illegally as loan sharks in our schemes; we have to address the legitimate companies that are a bigger problem in our society. We need to tackle consumer credit legislation and the threats that were brought in—wrongly, we believe—under the Bankruptcy and Diligence etc (Scotland) Act 2007.

The minister is quite correct when he says that loan sharking, as it is often described, is not some form of social service—it never has been. Those of us who have read Jimmy Boyle's biography know that it is not some benign act of kindness with a higher rate of interest than is available from a high street bank. It is related to organised crime and is tied in with criminal gangs and drugs. Even in Mr Boyle's day, moneylending was related to violence, intimidation, slashings and broken arms and legs. It was unacceptable then and it is equally unacceptable now. It is a social evil that we must tackle.

As the minister has pointed out, the police and the Crown Office and Procurator Fiscal Service need to have the laws and resources to address the problem. We must stamp out those who prey on individuals who, for whatever reason, find themselves going to moneylenders. Whether someone has lost their wage packet or giro, or whether they have spent or squandered it, as happens in some cases, we have to protect people from hardship and, sometimes, we have to protect them from their own foolhardiness.

We are not just talking about legal enforcement, as the minister correctly pointed out. Credit unions are one way of addressing the problem, especially in areas of poverty and multiple debt where high street banks—despite their huge profits, such as those that have been announced recently—are no longer prepared to provide a service when there are bigger pickings to be made elsewhere, including through predatory lending. Where they are not prepared to service areas, credit unions are required.

In members' business debates, the minister rightly has contrasted the situation with the one in the Republic of Ireland, where the credit union system is historically far better developed. There are good reasons for that. We need to drive our system further and faster.

Money advice must be made available. There must be attitudinal change in Scotland. We have dined out on the reputation of the thrifty Scots, and sometimes we have resented the implication that we have short arms and deep pockets. However, Scotland prided itself on being a nation in which there was not simply probity but some element of thrift. Now we find ourselves in a significant situation: we are more in debt than people south of the border. As I will go on to say, some of the reasons for that are understandable, but we must warn people against getting into debt. We also have to legislate sometimes to protect people from themselves. Some might say that that is the nanny state, but sometimes we require a nanny state to protect people from their own stupidity. It is a matter of balance. Given the levels of debt and the need to stop people being taken to the cleaners by either illegal or legal loan sharks, action needs to be taken.

In the SNP amendment, we state that the problem in Scotland is worse than elsewhere in the UK. The most recent statistics are clear—the average Scot's unsecured borrowing now amounts to £7,848, which is 31 per cent more than the UK average. That is unsecured borrowing rather than being mortgaged to the hilt.

When I embarked on my career as a young solicitor, we were told that if someone wanted to borrow money to buy property they could have two and a half times their wages. Now, people are borrowing four or five times their wages. They are also borrowing to get the initial deposit. Given the level of secured and unsecured borrowing in our society and what might happen to interest rates, a considerable problem could come back to haunt us. That is why we require to address debt.

Part of the solution is attitudinal change. We live in a world in which many more consumer and material goods are available and people aspire to own property, have cars and go on foreign holidays. Sometimes, debt arises from necessity when a property is the only property that a person can afford and they have to borrow extensively against it. On other occasions, debt is caused by simply trying to keep up with the Joneses. Whatever the reason, we need to take action.

The problem comes back to the fact that although illegal moneylenders and loan sharks need to be stamped out, predatory lending is also a significant problem in Scotland. Many predatory lenders are front companies, sometimes making vast profits for the major high street banks. They operate by postcode targeting, and target areas in which they know people are desperate for a variety of goods. One of the common tactics is to work with car dealers and offer people a variety of vehicles for £999 and instant funding. They say, "You can have this vehicle. Take which one you want and we will lend you £999." Of course, they do not point out that the interest rate is not 80 per cent or 90 per cent but sometimes 100 per cent or 140 per cent. Predatory lenders know that it is not 5 per cent or 10 per cent of debt that will go bad and be called in but upwards of 40 per cent. They then repossess the car and take whatever action is necessary.

We need to take action against predatory lenders who deliberately target postcode areas, whether in Edinburgh or Glasgow and whether they work with car dealers or other high street retailers. Such lenders target vulnerable people, often in the run-up to Christmas. We saw the problems that befell people involved with Farepak. Even when people are involved with legitimate companies, they find themselves unprotected by consumer credit legislation when things go wrong. We have a distinctive problem in Scotland that is not being addressed adequately by consumer credit legislation from Westminster and it needs to be tackled. That applies to companies such as Farepak, but more so to the predatory lending of a variety of companies, some of which, sadly, are front companies for major high street retailers.

This Parliament has to address the consequences of debt. We have to deal with the matrimonial problems, the crime problems, suicides and all the health problems that are a result of debt wearing people down. They turn in on themselves, they turn to alcohol or drugs, or they turn on and beat the wife. The problems of debt become magnified. Although we have to address the consequences of debt, we do not have the power to address the causes. This Parliament cannot properly address the needs and requirements of our people until such time as we can address adequately the causes as well as the consequences. Until such time as we can do that, we will be letting our people down.

Last year, this Parliament passed the Bankruptcy and Diligence etc (Scotland) Bill. We fully agreed that a great deal of its provisions were necessary. The law in Scotland was out of date and we needed to move it forward. However, in terms of section 185, we allowed for a land attachment order to be attached to somebody's principal dwelling house. That was the reason why we voted against the bill, notwithstanding the huge array of provisions that we recognised would be beneficial. We knew and we said so in Parliament that land attachment orders would be used by predatory lenders. We knew that those high street companies would say to individuals, "You have a debt of £3,000. If you do not pay it, we will take your house through a land attachment order."

We accept that in many instances such orders may be used as a threat rather than as a reality, but the threat remains. The Jimmy Boyles of this world threatened to slash people's faces or break their legs. Many of the predatory high street companies will seek to take back their money at huge interest rates, such as 80 per cent, 90 per cent or 100 per cent, and they will do so by threatening to take away family homes.

The only way in which to address the problem is to remove the threat of someone's house being taken from them by a land attachment order. That is why this Parliament must commit to repeal that provision of the Bankruptcy and Diligence etc (Scotland) Act 2007. We do not need to use primary legislation; it can be done by ministerial edict. The Scottish National Party has committed to so doing when we are the Administration.

I move amendment S2M-5669.1, to leave out from "welcomes" to end and insert:

"notes the significant debt problem in Scotland, a problem that is more serious than in the rest of the United Kingdom; recognises that a main cause of Scotland's debt crisis is the irresponsible actions of legal money lenders; believes that the causes as well as the consequences of unmanageable debt must be addressed; regrets that current consumer legislation at Westminster is inadequate in protecting vulnerable groups from predatory lending; calls for the Parliament to have appropriate powers to deal with Scotland's distinct debt problem, and further calls for the removal of dwelling homes from the land attachment method of debt recovery, thereby ending the draconian situation of a person's home being at risk over a small amount of debt."