Friday 6 December 2013

Don’t punish the poor and those in financial crisis in Scotland – Scrap clause 4

In two weeks time, the Bankruptcy and Debt Advice (Scotland) Bill will undergo its Stage 1 vote in the Scottish Parliament.  Clause 4 of the Bill would break with almost 30 years of Scots law history by requiring a debtor in bankruptcy to make payments to his creditors over four years instead of three. It also gives the Accountant in Bankruptcy – an agency of the Scottish Government – a new power to decide the level of payments in all cases by way of a ‘Debtor Contribution Order’.

Why make people in crisis pay more now?
Last year, the UK economy was in recession and our recovery this year is very slow, with Gross Domestic Product (GDP) bumping along at just over 0.5% growth. In real terms in Scotland, incomes and wages have been eroded by inflation, the cost of living has increased, fuel costs have increased by over 10% year on year, and UK austerity measures have seen a massive cut to public services and welfare benefits. Why then change Scots law to make those in financial crisis pay more and pay longer?

GLC believes clause 4 of the Scottish Government’s Bill is ill-considered and-ill advised. It presents a solution to a problem that does not exist. It has no support from the Scottish advice sector, and even most creditors do not support it. It will mean Scots have to pay longer than anyone else in the rest of the UK – and for those in financial crisis this equates to greater hardship.

Last month’s ‘Maxed out’ report examined the impact of problem debt in the UK and found that “The costs to those affected, in stress and mental disorders, relationship breakdown and hardship is immense. But so too is the cost to the nation, measured in lost employment and productivity and in an increased burden on public services”. 

Scotland’s laws on bankruptcy were designed in 1985 to provide respite and relief for citizens in financial crisis; an opportunity to get their life back on track. Why is the Scotland Government proposing to punish debtors when we ought to be helping them?  A recent Money Advice Service survey confirmed that Scotland has some of the worst ‘debt black spots’ in the UK, with 30.9% of people in Inverclyde in debt, 29% in Glasgow, 28.8% in Dundee, 27.6% in East Ayrshire and 26.9% in West Dunbartonshire.

GLC’s Principal Solicitor, Mike Dailly said: “We see no case to force all Scots in financial crisis to pay more and longer in bankruptcy, particularly at a time of austerity when families are struggling to make ends meet”.

“To compound matters the Bill would also replace the helpful ‘Low income low asset’ (LILA) expedited form of bankruptcy with a new procedure with a £10,000 debt level cap. This will exclude many Scots with no assets and push them into a four year repayment plan through ordinary bankruptcy. Alternatively it will exclude them from debt relief altogether, exposing them to ongoing debt collection, none of which makes any sense”.

“GLC believes that forcing poor and insolvent Scots to pay more and longer to access the lifeline that bankruptcy provides is a regressive and mean spirited policy than even the Grinch would shirk at. GLC hopes the Scottish Government will reconsider this departure from 30 years of Scots law history. We intend to launch a broad church campaign to scrap clause 4, so that impecunious Scots in financial crisis are not punished at a time when they need help”.



  1. Very ill conceived idea. Many people are struggling to keep up with payments for 3 yrs as is. Who have they consulted on this? I back your campaign whole heartedly. I am a CAB Volunteer advisor and every day we apply for Sequestration for at least one person, the numbers of people going down this route is increasing, usually the lowest income families too.!

  2. Thank-you for your support. We intend to work with CABx, the wider advice sector and civic Scotland to challenge clause 4.