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Parents Clubs Scotland

Parents Clubs Scotland

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The Scottish Government have launched their new Parents Club Scotland website, to help support families raising young children in Scotland and to promote child and parental welfare.

Designed to take a holistic approach to family well-being, Parents Club Scotland aims to provide information on new Scottish Government benefits, including the Baby Box Scheme and the newly launched Pregnancy and Baby Payment Grants.

It also contains information on how to ensure your children are receiving a healthy diet and offers, day to day, practical tips on how to entertain your children and how to help get them to sleep.

Financial Health Checks

However, the site is not all about children, it is also about parents and recognising they need information, advice and support.

To that end, Parents Club Scotland is also seeking to promote uptake of the new Scottish Financial Health Check, which the Scottish Government has launched with Citizen Advice Scotland.

The new Financial Health Checks will support parents by providing them with benefit and budgeting advice and showing them how to access their credit reports, whilst also providing them with holistic advice on all their options when dealing with problem debts, including providing information on

For more information on Parents Club Scotland, visit the site here, or to get a Financial Health Check call 0800 085 7145.  Alternatively, browse Advice Scotland for more information.

The Good, the Bad and the Ugly

The Scottish Government have released their response to the consultation they held earlier this year on bankruptcy law reform. Alan McIntosh takes a look at the implications.

After 10 years of progressive modernisation of Scotland’s debt laws and increased debtor protections being introduced by the Scottish Parliament, the current Government have now set out a number of proposals that can best be described as the good, the bad and the ugly. Considered as a whole, the proposed reforms can only be viewed as a backward step and instead of reforming our current system to ensure its fit for an era of austerity, will only likely exacerbate the effects of that austerity on many Scottish consumers and creditors.

The Good is the length of payment holidays in debt payment programmes under the Debt Arrangement Scheme will be increased as will the accessibility of the scheme for joint applications to be made; a new 6 week moratorium period will be introduced for all of Scottish formal debt remedies that will see interest , fees and charges on debts being frozen at an earlier stage and debtors will be provided with protection from enforcement action; there will be earlier discharges for those debtors who qualify for a new “no income” route into bankruptcy; and there will be a common financial tool introduced to harmonise how much debtors pay, regardless of the remedy they use.

The Bad is there are the proposals for a new route into bankruptcy, which will be known as a “no Income product” and be far less accessible than the current Low Income, Low Asset route; there will be an increase in the length of time that debtors will have to pay contributions in Protected Trust Deeds and Sequestrations, from three to four years; there will also be no automatic discharge after one year and debtors will have to apply for this, which will be linked to financial education and co-operation with trustees, increasing uncertainty; the power to make income payment orders will be taken off sheriffs and transferred to the Accountant in Bankruptcy’s office, creating Article 6 issues under the ECHR in relation to the right to a fair hearing as the Accountant in Bankruptcy will also be the trustee in most cases.

The ugly will be the exclusion of debts accrued within 120 days of the debtor entering a protected trust deed or bankruptcy, which will benefit the payday loan companies and others who prey on distressed debtors and only force debtors to delay in seeking protection; there will also be the introduction of a statutory minimum dividend for Protected Trust Deeds, which will limit accessibility to a wealthy few and force thousands more each year to become bankrupt.

To understand the thinking behind these policies, the temptation may be to think it’s the fear of creating a moral hazard that the Government is guarding against, which may lead to people believing it’s too easy to just not pay their debts; but this is unlikely considering it was this Government in 2010 which made it easier for debtors to go bankrupt; and where is the need to guard against such a hazard in a system where the numbers going bankrupt each year has been in decline for the last three years?

More plausibly, at the heart of the Scottish Government programme for reform is the need for the Accountant in Bankruptcy to be fully self funding. Already their level of public funding is at a 20 year low and saw 40% of cuts this year on top of the 37% of cuts the year previous to that.

In actual fact, it’s only when you place the events that surrounded the announcement of this consultation and its execution in this context, does any of it make sense.

In August last year, the Scottish Law Commission at the behest of the Accountant in Bankruptcy began a consultation on consolidation of bankruptcy law. All the indications were the Scottish Government were getting ready to let this much reformed area of law bed in. Then in December, unexpectedly it was announced there would be a root and branch reform of Scots law on bankruptcy to make it fit for the 21st century. No-one had anticipated such a move, especially as the implementation of the Bankruptcy and Diligence Etc (Scotland) Act 2007 and Part 2 of the Home Owner and Debtor Protection (Scotland) Act 2010 had only been implemented; but then it was probably around such times the decisions were made to further slash their public funding.

Then the consultation was hurried. It ran only between February and May this year. There was no underlying, unifying theme underpinning the consultation and when the eventual 124 page consultation document was released, it was made up of what some described as a ragbag of ideas that you wouldn’t expect to appear in the same strain of thought. There was no clear analysis of what was wrong or what the challenges were for the future.

Then there was the bizarre events during the consultation when the AIB announced they were developing a triage advice tool, with funding from the Money Advice Service, despite the fact this was an issue still being consulted on; then an advertisement was sent out to money advisers asking them to apply to be seconded to the AIB to provide an in house advice service, despite the fact they was no statutory role for them to perform such functions.

Then with little notice, it was announced the bankruptcy application fee was to be increased by 100% across the board for debtors, which resulted in a 36% increase in debtor applications as debtors hurried to beat the fee hike and was followed by a 50% decrease in the latest quarterly insolvency statistics.

We now have a non cohesive programme of reform. The good are to be welcomed, but none are that urgent to justify the bill that is being proposed or the hurried consultation process. The bad clearly appears driven to help the AIB meet the financial needs of their service, largely caused by the funding cuts, and the ugly are just that, policies with no evidence underpinning them and almost definitely will have consequences that will harm the vast majority of creditors and debtors.

There was a hope, albeit a tentative one at the beginning of this process, that the Scottish Government was going to rise to the challenge of the economic crisis and use imagination and innovation to develop a system that would help Scottish consumers and creditors tackle the problems facing both.

That hope, I believe, was dashed yesterday with the Government’s response to the consultation on bankruptcy law reform. It’s not all ugly, some of it is good, but on the whole its bad and arguably we’d be better off with what we have.

 

Poll Tax 20 Years On: Still Not Paying

Poll Tax 20 Years On: Still Not Paying

As we approach the twenty year anniversary of the Poll Tax being abolished, Alan McIntosh looks at what happened to the debt.

The Community Charge, or the Poll Tax as it was known, was introduced into Scotland one year ahead of the rest of the UK. It was to be the final nail in Margaret Thatcher’s coffin and arguably also the Scottish Conservative Party’s. The tax caused huge resentment and many saw it as evidence that Scotland was to be nothing more than a testing ground for the Tories.

Where it destroyed some careers, it made others, throwing the limelight onto Tommy Sheridan, Jim Sillars and Kenny MacAskill, who became the SNP’s Anti Poll Tax spokesman.

It was eventually abolished in 1993 after a massive campaign, which saw at its height one million non payers in Scotland and culminated in some of the worst riots in UK history, mostly notably with what became known as the Battle of Trafalgar Square.

However, despite abolition nearly 20 year ago, information obtained by freedom of information request shows Scotland’s councils are still pursuing over £322 million in community charge arrears, with some taking the view that all debts owed to them can still actively be recovered.

In England most of the debts were legally written off more than 7 years ago, but in Scots law it takes longer to extinguish debts that are legally constituted. Many will only be due to lapse now, although some accounts will still be recoverable for many years to come. Section 7 of the Prescription and Limitation (Scotland) Act 1973 means debts that have been legally constituted only extinguish after 20 years, providing they have not been relevantly acknowledged in that time; or the creditor has not made a Relevant Claim. Relevantly acknowledged means either a payment or a written acknowledgement of the obligation has been made by the debtor. Where a debt has been relevantly acknowledged, the prescription period runs again. A Relevant Claim could be raising a petition for bankruptcy against the debtor or executing diligence (wage arrestment, bank arrestment, attachment etc).

Despite this many local authorities have already taken the view to write off poll tax debts, with Inverclyde Council taking such a decision for its 2011/12 accounts. Other councils, such as Falkirk, have gradually reduced the amount owed by annually reviewing and writing off accounts as uncollectable. Glasgow City Council, however, is still owed approximately 27 pence in every pound that was ever billed (approximately £125 million) and has now taken the view it will still pursue those debts which have not been prescribed under the 1973 Act. Other local authorities such as Edinburgh are owed over £70 million, but cannot say how much is still recoverable, demonstrating the difficulty of doing due diligence on the collectability of such old debts, with many debtors now being deceased or gone away. It also highlights another problem in that in some cases, with old paper filing systems and the fact few debtors still have receipts 20 years on, where there are legitimate disputes, trying to resolve them fairly is impossible.

Debtors, however, are still being pursued and it is not uncommon for debt advisers to encounter clients still facing diligence or sequestration for debts which include amounts for community charge. The recent Scottish Diligence report by the Accountant in Bankruptcy illustrated this point by evidencing the fact that of the 84% of diligences executed in 2011/12 by local authorities, the debts being collected were not just council tax arrears but also community charge debts.

The poll tax was Thatcher’s legacy to Scotland and was widely seen at the time as hugely unpopular and unjust, evidenced by the fact its lifespan was so short and contributed to her downfall. Many of those ministers and councillors now in power will have marched and protested against the tax and been non payers themselves. It’s now therefore, not unreasonable to ask they urge all local authorities to clear old poll tax debts from their books. It’s ironic that where Scots were first punished with the poll tax, we will also be the last.

There is also the other issue of why debtors can still be pursued twenty years on and have diligence executed against them and be threatened with sequestration for debts which they were unable to defend in court in the first place.

John Wilson, the MSP for Central Scotland in the last parliament proposed a new bill to align the powers of councils to pursue tax debts with those of other creditors. Maybe now is the time to dust off that proposal.