Seòmar agus comataidhean

Thank you, convener, and good morning, committee.

The Bankruptcy and Diligence (Scotland) Bill implements stakeholder-led recommendations to introduce improvements to current debt solutions and debt recovery processes. I accept that it is a small bill and that it does not propose radical changes. That reflects the fact that our system is, broadly speaking, acknowledged as an effective one. As you have heard from previous witnesses, there are no calls for fundamental change.

All the measures in the bill have been subject to at least one public consultation, and all have received broad support. Again, you will have heard from previous witnesses that they are seeking not so much to change what is in the bill as to add things to it.

The measures in the bill have been and are being very much designed with and by the stakeholder community. I pay tribute to the work of all stakeholders whose recommendations are being included in and enabled by the bill. In particular, I commend the members of the mental health moratorium working group. The members of the working group include mental health professionals who were able to contribute professional expertise in the field of mental health and draw lessons from the mental health crisis moratorium that was introduced in England and Wales in 2021.

As the committee will be aware, we are consulting on the details of what a mental health moratorium, enabled by the bill, would look like. I take the opportunity to apologise to the committee that it did not receive advance notice of the publication of the consultation. Officials have worked hard to publish it as soon as possible, which, I hope, will give the committee sufficient time to consider the consultation as part of its stage 1 deliberations. I also want to say to the committee that we will, of course, ensure that it has sight of the draft regulations prior to their being formally laid in the Parliament.

This bill is only one part of a programme of work to improve bankruptcy and diligence. We will introduce changes through secondary legislation, some of which I hope to lay before the Parliament during the progress of the bill.

We have also commissioned a longer-term review to assess how far current statutory solutions meet the needs of a modern economy. Committee members will know that Yvonne MacDermid OBE accepted an appointment to lead stage 3 of that wider review, and there will be some matters that merit further consideration as part of the review. On that point, I will conclude.

If I recall correctly, you raised the matter directly with the First Minister at the Conveners Group meeting. We will certainly endeavour to produce a draft of the regulations ahead of stage 3, while recognising that regulations could only be formally laid should the bill be passed by the Parliament.

I appreciate that we are likely to touch on a number of issues that witnesses have raised while giving evidence to the committee. I am keen to see the committee’s stage 1 report before considering what further proposals the Government brings forward. I want to give the commitment that the considerations that the committee shares through its stage 1 report will help to inform the process that we go through, along with the consultation and the drafting of the regulations. I am keen to consider those points further.

As I said, I set out the rationale of effectively starting small with an opportunity to expand, but significant further opportunity will be afforded for consideration of the detailed proposals in the regulations.

I am conscious that that area has been of substantial interest to the committee and that quite a bit of the evidence that it has taken has related to that. I have found that evidence very useful in enhancing my understanding.

Clearly, we want to ensure that there is the widest possible uptake of the scheme when it is appropriate for, and applicable to, an individual’s circumstances. I made reference to this being a stakeholder-led and collaborative process, which will, subject to the Parliament’s agreement, inform the process of implementation. We will want to continue to work very closely on that. The committee has recognised that, as has been highlighted by several of the expert witnesses from whom the committee has heard, it will be important to take a joined-up and collaborative approach. That will involve building on the skill sets and understanding of money advisers and mental health professionals.

We want to engage closely in order to fully understand what support can be provided. Of course, the key to that will be ensuring that there is the widest possible awareness of the existence of the scheme, should it be agreed to by the Parliament. That will be a clear priority in implementation.

That is an interesting question, and I recognise the nuance in it. If someone was in a standard moratorium and, during that process, met the criteria, they could, of course, benefit from that. The situation that you articulated, if I have understood it correctly, is someone’s being in a standard moratorium but developing problems with their mental health or wellbeing that do not meet the compulsory eligibility.

I recognise that it is a sensitive issue, and we specifically seek views on it in the consultation. I also recognise that, if an individual already experiences an element of compulsion with regard to treatment, we would want to have an additional element of compulsion with regard to their financial circumstances. As you recognise in your question, there is provision for the representative of the individual to take those decisions. However, we will reflect carefully on the views on the overall question of capacity that the committee brings forward in its report and those in the consultation.

Richard, do you want to add to that?

Yes. As the issue of severe mental impairment has been specifically raised, I note that it is an area that I have had correspondence on and that my officials in council tax have explored. My understanding—our understanding—is that the term is something that can be amended only via primary legislation. That is a frustration for me, as I am very sympathetic to the argument that it is an outdated and stigmatising term that we would want to see changed and brought up to date.

My position is that, should an opportunity arise for us to amend that term in primary legislation—we recognise that a very specific change is required—I will be very alert to that. We are looking for opportunities for it to be changed within the existing legislation. Looking forward to the wider work, I am conscious that we have a stage 3 review. The MacDermid review is being taken forward independently, but I will certainly be looking for opportunities to update and reform the language that we use.

I recognise that there are many aspects of the language that is used within bankruptcy and diligence. It is highly technical and can seem somewhat opaque and esoteric to those who are not initiated into and engaged with that area of law and specialism, which can perhaps create challenges and barriers in the use of such language. That point is addressed in the Scottish Parliament information centre briefing that was prepared at the introduction of the legislation, where it talks about the use of the term “debtor” and the stigmatising effect that that may have. I have had discussions with stakeholders on those issues.

I am conscious that there are long-standing reasons for the use of some of the terminology, and, in making any changes, it is important to ensure that we do not unintentionally create other adverse issues. However, I am very much in alignment with the central point that Mr Stewart has made.

I beg your pardon. To correct that particular point, I am conscious that the matter might be raised with the committee, and that there are other areas of suggested change about which COSLA has written to the committee.

I would like to have the opportunity to reflect on the position that the committee arrives at on this matter and to have further engagement with those who might have an interest in this particular area. I am sympathetic to what such a measure would be seeking to do, but it is important to hear a broader range of voices. I will have further engagement with stakeholders on the matter in the new year, when I have had an opportunity to consider what the committee has to say.

On that specific point, there has been some consideration. I will ask Richard Dennis to provide some of the detail.

Yes. We are going to have further engagement and discussion on that to see whether we can find a solution.