I am delighted that James Dornan has given us the opportunity to debate the excellent work that the charity StepChange performs for people in Scotland and throughout the UK. Reference was made to the fact that Gillian Thompson of StepChange is listening to the debate. She is the former Accountant in Bankruptcy, with whom I worked for many years. Sharon Bell, who also works with StepChange, used to be an advisor to the Scottish Government and would sit in the seats up at the back of the chamber during debates such as this one, which I have spoken in since 2007.
I will focus on StepChange’s work and its report, “An Action Plan on Problem Debt”, which is one of the best reports that I have seen for a long time. It focuses on practical solutions to what is one of the most deep-seated problems in Britain, which is so often hidden from view.
StepChange points out:
“In the UK over 2.4 million dependent children live in indebted households. These children suffer hardship and mental distress ... More than half of children aged 10-17 in families with problem debt are embarrassed because they lack the things that their peers have, and nearly one in ?ve have been bullied as a result.”
StepChange also points out that
“Personal consumer debt in the UK stands at £168 billion”.
Debt is not a problem in itself when it is managed, controlled, affordable and repaid. It is necessary for many purposes—for example, buying a house or a car. However, when it becomes a problem, I am afraid that things become very different indeed.
The problem is very often not triggered by fault or by profligacy, but by things that occur in life—losing a job through being made redundant, illness in the family or relationship breakdown. That became evident to me in the somewhat distant past, when I ran a small legal practice, where I routinely acted for the debtor and specialised in trying to preserve the family home. That experience left its mark on me and gave me an insight into the human cost—the human misery—of debt problems.
What does StepChange recommend in its report? Its first recommendation is that every family should have
“£1,000 in savings to cover a sudden cost or income shock”.
There are many shocks for people who have no spare cash. The washing machine may break down. If people have children, they need a washing machine, but going out and buying one with a payday loan can be the start of the problems. Mr Dornan gave an example of a payday loan.
It sounds like an ambitious policy, but the recommendations in the StepChange report go some way towards showing how it could be made to work through nudging and changing behaviour—for example, through deductions and links to the automatic payroll pension. That would not deal with self-employed people or people who have incomes below £10,000, but members should read the report because it sets out a fascinating proposal. I hope that it will receive the attention that it deserves across the parties.
The second recommendation is that we
“Ensure all low income households can access low cost credit products”.
As James Dornan pointed out, StepChange advises an enormous number of people in Scotland and the UK, and in a great number of cases its advice is efficacious. In other words, it works. Of course, not everybody takes advice, as I well remember. Many people choose to ignore it. However, many people take it and benefit therefrom, and their lives change substantially for the better.
The third recommendation is that we
“Scale up free debt advice so that it reaches the 1.4 million people who urgently need advice”.
We want to do that, and that is why among the reforms that we have made is making debt advice mandatory in certain circumstances. That has led, in turn, to greater uptake of advice.
The fourth recommendation is that we
“Ensure everyone dealing with their problem debt gets the protection against interest, charges, enforcement and collections they need”.
In Scotland, we have taken forward the debt arrangement scheme proposal—I am not sure that there is a counterpart in England—and it works well, providing a diligence stopper. The fear of debt action being taken and sheriff officers coming to the door is huge. Unless people have been in that situation or spoken directly to people who have, it is difficult for them to understand that. In our comfortable lives, we can be unaware of the pressures.
DAS’s diligence stopper of six weeks provides a breathing space. Three members said that the period should perhaps be extended. I confirm that we will undertake a policy review of all the BADAS—that is a piece of legislation, Presiding Officer—reforms, including the moratorium period, next year. I say for the uninitiated that BADAS is the Bankruptcy and Debt Advice (Scotland) Act 2014. It trips off the tongue, does it not?
The fifth recommendation is that we
“Protect children and families from the harm of aggressive debt collection practices”.
I am pleased that payday loans are now subject to caps of £15 default fees and 100 per cent interest but—goodness me—is a cap at 100 per cent interest right? I do not think so. The first members’ business debate that we had in the current session of Parliament was on that topic, and I have pressed the UK Government on it time and again. First, it said, “We are not doing anything about it.” Latterly, it did something, but I do not think that it or the Financial Conduct Authority have gone far enough.
I see that I am into my last minute. If StepChange did not exist, we would have to invent it. It is a great charity that does terrific work. Mr Macintosh’s practice of referring constituents to StepChange is one that we can emulate. Maybe we can encourage MSPs and MPs to do that, because their constituents will receive good advice.
We are doing a lot on education. We have a financial health service policy that 35,000 people have benefited from and we are working on credit union availability, about which I have 18 seconds left to impart information. That is not enough—perhaps I can do it on another day.
In Scotland, there is a broad consensus that the recommendations from StepChange in its excellent report “An Action Plan on Problem Debt” are things that we want to do and that we want to happen. If we do them even only partly, we will make a tremendous difference to the lives of many people in this country—lives that are scarred by the misery of problem debt.
12:59 Meeting suspended.
14:30 On resuming—