Seòmar agus comataidhean

I will ask Graeme Cook to come in on the point around implementation in subcontracting and then I will come back in.

Again, it gets to the tensions that exist in procurement, which we spoke about earlier, and what we want procurement to do. In recent decades, we have come a long way with how procurement operates. In the past 10 years, we have seen real progress, partly in relation to what has been delivered by the act and partly through the broader work around procurement reform that the Scottish Government has been undertaking. I understand and share the appetite for seeing what more procurement can do—we touched on that with regard to community wealth building—but it always come back to the point about proportionality.

We are talking about the delivery of goods, services and works, which are essential for the functioning and operation of the public sector, but we want to do that in such a way that we can maximise the wider impacts. If we look at the report on 20 years of the sustainable procurement journey, we can see that those considerations went from being an add-on to being a golden thread that goes right through the process.

That speaks more broadly to the aspirations that we talk about for community wealth building, sustainable economic growth, sustainable development and a wellbeing economy—however one wishes to phrase it. That broader consideration of the social, environmental and specific economic outcomes has been a much more upstream concern. We are seeing that change happen in procurement.

It also speaks to the broader point about implementation. You will have heard from a number of witnesses who have appeared before the committee that we have policy and we have legislation, but culture and practice are important as well. That will take time but, 10 years on from the act being passed, we can see that we have made significant progress. That is reflected in the annual reports, as well as in the independent review of the progress that we have made over the past couple of decades.

I agree entirely. I visited a supported business yesterday, and I am visiting another one next week. Last autumn, Scotland Excel ran an excellent event on supported businesses, which I was privileged to attend and speak at.

The committee will be aware of what is set out in the legislation. I ask Graeme Cook to say a few words on some of the work that we are undertaking on dynamic purchasing.

I will ask Nikki Archer to contribute in a moment but, regarding the requirements for the strategies, I highlight the need to set out how bodies are engaging with their areas and the considerations that go into those strategies.

Your point is something that I will take away from this exchange. In the community wealth building consultation, one of the central questions concerned duties to be placed on public bodies to advance community wealth building. We are giving detailed consideration to that, and we are reflecting on the responses to the consultation, but I will certainly take away the point that you have raised about decision making being more informed by the considerations of those on the front line and in the community, leading to better outcomes, when thinking about how we take forward the propositions that we consulted on regarding community wealth building.

I would be happy to write with a summary of the engagement activity that my officials and I have been undertaking with contracting authorities, in time for the committee to consider that in its report, if that would be helpful.

I think that balance and proportionality are becoming the go-to words of this session. They are specific requirements that have to be met, both in the strategies and in the reporting.

Of course, there is nothing to preclude a public body from going beyond those requirements, and there is nothing to preclude a public body whose annual expenditure is below £5 million from also producing strategies and reports. It is important to have that flexibility to reflect the fact that different public bodies will have different focuses with regard to procurement. Of course, there are requirements that most public bodies will need to address through procurement, but there will also be things that are more sector specific.

This builds on Mr Doris’s line of questioning, and I am conscious that Nikki Archer’s answers highlighted the need for a proportionate approach. We want to support, encourage and enable businesses to go on that journey. If we have a set of requirements that small operators in particular do not have the capacity to comply with, we will be missing an opportunity to take them on that journey.

Nikki Archer might want to provide additional feedback on what emerged from the cumulative annual reports, as reflected in the ministerial report.

I thank members for their amendments in this group.

The amendments would amend the Debtors (Scotland) Act 1987, affecting the powers that allow creditors to obtain repayment of debts by arresting earnings from an employer or attaching funds deposited in a bank account. They are all intended to place some limitations on the use of those powers to protect debtors who are struggling to pay their debts. I ask the committee not to support the amendments at this stage, and I will explain my reasons for doing so. However, I hope to work with members and others to identify a way forward to deliver at least some of the intent of the amendments before stage 3.

I agree, in principle, that diligence needs to include sufficient protections for debtors from undue hardship. Those matters need careful consideration to ensure a balance between the interests of debtors and creditors and the impact on the employers and banks that are also affected by those changes of their application in practice.

I do not believe that the changes that the amendments propose and their consequences have been sufficiently considered. As we have heard, amendment 12 would increase the monetary threshold at which an earnings arrestment can take effect. When a person earns less than £1,000 per month, amendment 12 would remove the ability to recover the debt through an earnings arrestment altogether; for those people earning above the threshold, it would reduce the amount that a creditor can recover each pay period to repay the debt. That concern has been raised on several occasions, and I appreciate that the committee included a recommendation in its stage 1 report that the Scottish Government consider such a change. I reassure the committee that I have been exploring the issue and gathering information to allow me to assess the potential impact that such a change would have.

Ministers already have the power to change the earnings arrestment figure through negative procedure regulations, and that has been the method considered appropriate for the figure to be updated. The Scottish Government has reviewed the earnings arrestment tables in schedule 2 of the 1987 act every three years, with the exception of last year, when we brought forward the review, as we recognised the pressures that the cost of living crisis and high inflation were putting on families. That approach has sought to maintain the correct balance between protecting both those people who are in debt and subject to an earnings arrestment and the creditors seeking to recover the debt.

More than 90 per cent of earnings arrestments are served by local authorities seeking to recover unpaid council tax. Those local authorities have found diligence to be the most effective means of recovering debt. I have heard concerns from COSLA—I understand that it has written to the committee to outline them—about changes to the current system of earnings arrestment and the potential impact that those changes would have on the councils’ ability to deliver services to their communities. Local authorities are clear that they use earnings arrestment as a last resort when someone has refused to engage with them over the debt.

The Institute of Revenues Rating and Valuation has written to me to advise that around £30 million was collected from 34,000 successful wage arrestments last year. Although data is limited, if we assume that each of those arrestments affected an individual earning at least £1,000 a month—I offer this purely for illustrative purposes—the potential loss to local authorities could be around £26.5 million. That is an alarming amount, and very much a worst-case scenario, but the cost is substantial even with more cautious estimates.

We also know that the Scottish Courts and Tribunals Service is a major user of earnings arrestment for the pursuit of unpaid court fines, with 838 arrestments issued in the last quarter for which figures have been published—that is, from October to December 2022. The Society of Messengers-at-Arms and Sheriff Officers, when giving evidence, also raised concerns about the lack of evidence to support an increase of the monthly threshold of £1,000.

I hope that the committee will appreciate that I cannot simply ignore those representations, in the same way that I cannot ignore the call that earnings arrestments are too harsh. I need to find a good balance in this. If we make earnings arrestments ineffective, there is a risk that creditors will simply resort to pursuing bankruptcy more often, which is something that I would like to avoid—I think that we would all agree on that.

I have not yet found a solution, but I continue to look into it. This is an area that can be addressed through existing powers under the 1987 act, and regulations have regularly been made to increase the thresholds and bands. I would like more time to reflect on the matter and to bring forward any considered and appropriate proposals at a later date through regulations.

I have seen the recent letter from Dr MacPherson and Professor McKenzie Skene, which sets out some ideas that seem to me to be worthy of consideration.

The Scottish Government thanks Murdo Fraser for his proposed amendments 4, 5 and 6, which I will address shortly. First, I will talk to my amendments 13 and 14. The purpose of the amendments is to enable a creditor or an officer of court to serve an arrestment schedule, earnings arrestment schedule or current maintenance arrestment schedule electronically, where the arrestee or employer has expressed to the creditor or the officer of court that they are willing to receive documents in that way. That new option in serving an arrestment is in addition to existing methods of service by personal delivery and by post.

It has been brought to my attention by Alan McIntosh—whom I know the committee has had some engagement with—that amendment 14, as currently drafted, might have some potential unintended consequences by encouraging personal service, which was not the policy intention. I thank Mr McIntosh for that observation. I intend to remedy the issue at stage 3, to reflect the policy intention of providing an additional method of service by electronic means.

Electronic forms of communication are part of a modern society and it seems reasonable to extend that to the service of arrestment and earnings arrestment schedules. Arrestment schedules are predominantly served on banks, with creditors seeking to recover debt from a person’s bank account. It is hoped that introducing the amendment will help to simplify the process for banks where they choose to receive the schedules electronically. There is no change to how a debtor is notified about an arrestment.

Earnings arrestment and current maintenance arrestments are used by creditors to recover a debt through a person’s earnings. The person’s employer is notified of the arrestment through an arrestment schedule, which is currently either hand-delivered to the employer or sent by post. Sheriff officers have reported that it is becoming increasingly difficult to serve an arrestment schedule personally because of the hybrid working models that have resulted in offices being staffed less frequently, which provides fewer opportunities for a sheriff officer to serve the relevant documents.

Introducing the ability to serve those documents electronically will provide an alternative method of service, which I understand that employers have indicated to sheriff officers they would welcome. Most employers use technology, and receiving an arrestment electronically will make that simpler for many employers.

Amendment 14 will also introduce a technical amendment to section 70(5) of the Debtors (Scotland) Act 1987 to ensure that an earnings arrestment schedule or current maintenance arrestment schedule can be competently served on an employer on a Sunday or public holiday if service is by post or electronic transmission.

Amendments 4, 5 and 6 would remove the requirement for the arrestee—often a bank—or the employer to notify the creditor in all instances when no property has attached or an earnings arrestment has been unsuccessful and replace it with a requirement to notify the creditor only where the creditor specifically requests confirmation. The amendments would also remove the requirement for the notification to be sent within a defined period of the arrestment schedule being sent, and replace it with a requirement to notify

“as soon as reasonably practicable”

following receipt of a request from a creditor. I caution against agreeing to amendments 4, 5 and 6, as they have the potential to delay creditors in receiving important information, which would not be the case under the current drafting of sections 6 and 7 of the bill.

The bill, as introduced, will strengthen the effect of section 70A of the 1987 act. That will be achieved by requiring the employer to notify the creditor, when an earnings arrestment has been unsuccessful, within 21 days of the arrestment schedule being served. It will also strengthen the effect of section 73G of the 1987 act, by requiring the arrestee to notify the creditor as to why no property has attached within three weeks of the arrestment being executed.

In both circumstances, under the bill as introduced, the employer or arrestee would be required to respond only once. We would anticipate that they would do that at the time when they are actioning the arrestment and learn that it is unsuccessful. For a creditor, learning that an arrestment has been unsuccessful is invaluable in helping them to determine what their next steps should be.

The member’s proposed amendments 4, 5 and 6 would also remove the defined deadlines that have been set for the arrestee to confirm to the creditor why nothing has attached and for the employer to notify the creditor of an unsuccessful earnings arrestment. That would leave the period of response open to interpretation by different arrestees and employers, to the detriment of the creditor.

Government bodies such as HM Revenue and Customs and councils, which use summary warrant procedure, would be prevented from requesting information under proposed amendment 4. I would caution against that as, without access to information, some actions that could be stopped may continue when that is not in the interests of any party.

The Scottish Government wants to have diligence procedures that are fair to all parties involved. The effect of the current wording at sections 6(2) and 7(2) of the bill will ensure that creditors are provided with the information that they require within a defined time frame. That will enable them to decide whether further action is necessary and remove the need for speculative repeat service of arrestments on third parties.

The Accountant in Bankruptcy will continue to liaise with banks, employers and sheriff officers in order to minimise the burden on the arrestee and employers, while balancing the information requirements for the creditors.

For those reasons, the Government does not support amendments 4, 5 and 6, and I ask Murdo Fraser not to move them.

I move amendment 13.

Yes, but I would add, with regard to how the Accountant in Bankruptcy operates, with its statutory responsibilities, that there is a continual process of review, given how the landscape can evolve. When a new measure such as a mental health moratorium is introduced, careful monitoring would of course be part of that, so that would be happening anyway, as routine business.

This point could inform conversations ahead of stage 3, if members are agreeable, on what enhanced parliamentary scrutiny would look like. I would be happy to consider proposals for a requirement to review within a defined period, if there is a desire for that. In making commitments to review legislation, there is always a need to ensure that we do not commit ourselves to review prematurely, which would just be an exercise in conforming to statute but without adding real value. I recognise, however, that there might be a desire for that to take place within what would be regarded as a reasonable timescale. I do not think that it is strictly necessary, but, if there was an appetite from the Parliament, reassurance should be provided, specifically on the regulations and formalising the approach.

I will close on this key point. I ask members not to press or move their amendments in this group but to work with me ahead of stage 3 to identify a suitable process of parliamentary oversight of and engagement on regulations, so that we can retain the flexibility that regulations provide while ensuring that the Parliament has the opportunity to engage.