Seòmar agus comataidhean

Yes.

There are two things going on in parallel. As I said, we were keen to bring forward the uprating by two years from 2023 to 2025. We recognise the impact of inflation and the high cost of living, so I thought that it was important to do that. Of course, that can run in parallel with the consultation, which will collect information, evidence and views on where we proceed beyond that, with further uprating of the tables and the bandings.

I think that that is right—unless officials have any further comment on that. We do it at the start of April, at the start of the financial year.

Good morning, convener and committee, and thanks for asking me to come along to answer questions on the Diligence against Earnings (Variation) (Scotland) Regulations 2024. The regulations update statutory tables that dictate how much money an individual keeps before any payment can be taken from their wages to recover debts, and they set the scale of payments that can taken above that level.

The Scottish Government has reviewed and updated the statutory tables every three years since 2006, and it last updated them in 2023, which was earlier than the anticipated three-yearly uprating due to the cost crisis and high inflation rates at the time. The Scottish Government understands that many people who are subject to an earnings arrestment are the most vulnerable in society, and we know that many more people are struggling with debt due to the cost crisis and high inflation.

During parliamentary scrutiny of the Bankruptcy and Diligence (Scotland) Act 2024, we committed to update the tables again in April 2025 to help people who are struggling due to the continued cost crisis. The regulations fulfil that commitment and also make minor amendments to the tables that will increase protection for the lowest earners while, at the same time, allowing those individuals to repay their debts if their income increases above the protected threshold. It means that, if they are subject to an earnings arrestment, an individual will be able to retain more of their earnings after an earnings arrestment has taken effect, especially if they receive a low income.

I understand from the Official Report that the committee has wider concerns about council tax, mainly because earnings arrestments are most commonly used by local authorities that are seeking to recover council tax arrears. To promote the adoption of best practice on debt collection, the Scottish Government has allocated funding to Citizens Advice Scotland for an expanded council tax debt project, building on last year’s successful pilot, with a total of six local authorities participating. The pilot aims to identify how collection processes can be aligned with recognised best practice.

At present, the council tax reduction scheme is the Scottish Government’s primary means of protecting households from council tax payments that they cannot be expected to afford. The scheme is a sophisticated means of targeting reliefs based on income and need, and it continues to play an important role in helping households whose finances have been impacted by the cost crisis. Just under half a million households—roughly one in five in Scotland—now get some level of reduction through the scheme, which saves households on average more than £850 a year. We will continue to explore ways to ensure that people who are financially vulnerable are protected and that debt collection is handled sensitively and appropriately.

I acknowledge that stakeholders and the committee have recommended increasing the protected minimum amount to £1,000 a month, and reform of the bandings that are used to calculate earnings arrestment deductions. However, I have heard concerns from stakeholders including the Convention of Scottish Local Authorities and the Institute of Revenues, Rating and Valuation about the impact that such an increase to the protected minimum amount would have on local authorities, which are by far the biggest users of this type of diligence. I know that those stakeholders wrote to the committee about their concerns during the debates on the 2024 act.

During those debates, I made it clear that I could not simply ignore those representations, in the same way as I cannot ignore the call that earnings arrestments are too harsh. That is why I have committed to consult on the protected minimum amount and the bandings and to engage all stakeholder views. It is essential that we find a good balance. If we make earnings arrestments ineffective, there is a risk that creditors will simply resort to pursuing bankruptcy or direct deduction from benefits more often, which I would like to avoid. The consultation will be published next year.

I am happy to take any questions, convener.

As I have said, it is a balance. You could choose to set the number anywhere, but we think that the threshold is set at the right place. The cost to councils of increasing it to £1,000 would be significant—the number that was quoted is more than £20 million, I think. Frankly, there is also a balance to be struck between those vulnerable people who cannot pay and need to be protected and those who choose not to pay. That is an important point to bear in mind. We need to pitch it at the right level.

The changes that we have made mean that the amount that somebody who is earning £1,000 pays has been reduced to £37, which is down from the £65 that they would have paid previously. It is a significant reduction at that level. That is on earnings from an employer; they could also be earning through benefits, which are not impacted by the changes.

It is a question of getting the right balance. We need to set the threshold at the right place that ensures that councils can continue to collect council tax where that is the right thing to do.

The joint working group with COSLA is working on proposals for reform and collecting evidence, opinions and views on that. It is also looking at data collection and best practice and is, as I said, working with Citizens Advice Scotland on how we manage best practice for the collections process.

The formal process itself depends on what kind of council tax reform proposal comes forward, but if it was any kind of property-based scheme, you would still need to assess whether people were due relief or should be considered for relief as part of the process. By definition, the fact that you own or are liable for the tax on a property does not necessarily have a relationship to your ability to be able to pay that tax from your earnings. Whatever property-based system is in place, we would still need a system to assess people’s ability to pay based on other factors. I do not think that that kind of system would necessarily take us to a place where we would not need some kind of relief scheme in place, as well.

That is correct.

I do not disagree. If we can do that, either around decisions that have been made or in terms of evidence-based policy, I would be delighted to work with the committee on that point.

We can come back to you on the specifics on that, but there is absolutely a focus and a determination to address the challenge that you have outlined. To be clear, in terms of front-line services, we think that it is important that we have more doctors, teachers, midwives, nurses—

I have not used the word “lucky”.