Enterprise and Culture Committee
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ENTERPRISE AND CULTURE COMMITTEE Tuesday 7 November 2006 Session 2 £5.00 Parliamentary copyright. Scottish Parliamentary Corporate Body 2006. Applications for reproduction should be made in writing to the Licensing Division, Her Majesty’s Stationery Office, St Clements House, 2-16 Colegate, Norwich NR3 1BQ Fax 01603 723000, which is administering the copyright on behalf of the Scottish Parliamentary Corporate Body. Produced and published in Scotland on behalf of the Scottish Parliamentary Corporate Body by Astron. CONTENTS Tuesday 7 November 2006 Col. INTERESTS ......................................................................................................................................... 3435 BANKRUPTCY AND DILIGENCE ETC (SCOTLAND) BILL: STAGE 2.................................................................. 3436 ST ANDREW’S DAY BANK HOLIDAY (SCOTLAND) BILL .............................................................................. 3448 ST ANDREW’S DAY BANK HOLIDAY (SCOTLAND) BILL: STAGE 2 ................................................................ 3451 BUDGET PROCESS 2007-08.................................................................................................................. 3452 BUSINESS IN THE PARLIAMENT CONFERENCE 2006 .................................................................................. 3458 ENTERPRISE AND CULTURE COMMITTEE 26th Meeting 2006, Session 2 CONVENER *Alex Neil (Central Scotland) (SNP) DEPU TY CONVENER *Christine May (Central Fife) (Lab) COMMI TTEE MEMBERS *Shiona Baird (North East Scotland) (Green) *Richard Baker (North East Scotland) (Lab) Susan Deacon (Edinburgh East and Musselburgh) (Lab) *Murdo Fraser (Mid Scotland and Fife) (Con) *Karen Gillon (Clydesdale) (Lab) *Mr Stew art Maxw ell (West of Scotland) (SNP) *Mr Jamie Stone (Caithness, Sutherland and Easter Ross) (LD) COMMI TTEE SUBSTITU TES Mark Ballard (Lothians) (Green) Donald Gorrie (Central Scotland) (LD) Fiona Hyslop (Lothians) (SNP) Margaret Jamieson (Kilmarnock and Loudoun) (Lab) Dav id McLetchie (Edinburgh Pentlands) (Con) *attended THE FOLLOWING ALSO ATTENDED : Dennis Canavan (Falkirk West) (Ind) Tom McCabe (Minister for Finance and Public Service Reform) Allan Wilson (Deputy Minister for Enterprise and Lifelong Learning) CLERK TO THE COMMITTE E Stephen Imrie SENIOR ASSISTANT CLERK Douglas Thornton ASSISTANT CLERK Nick Haw thorne LOC ATION Committee Room 4 3435 7 NOVEMBER 2006 3436 Scottish Parliament Bankruptcy and Diligence etc (Scotland) Bill: Stage 2 Enterprise and Culture Committee 14:02 Tuesday 7 November 2006 The Convener: The second item on the agenda is what should be the final session of our stage 2 consideration of the Bankruptcy and Diligence etc [THE CONVENER opened the meeting at 14:01] (Scotland) Bill. I welcome to the meeting the Deputy Minister for Enterprise and Lifelong Interests Learning, Allan Wilson, and his team. We will go through the amendments as set out in the The Convener (Alex Neil): As it is now 1 marshalled list. minute past 2, I welcome everyone to the 26th meeting in 2006 of the Enterprise and Culture Section 193 agreed to. Committee and ask you all to switch off your mobile phones. We have received no apologies. Section 194—Abolition of sequestration for rent and restriction of landlord’s hypothec Item 1 is a declaration of interests. I welcome to the committee Stewart Maxwell, who replaces The Convener: Amendment 487, in the name of Michael Matheson. At this point, I should, on the the minister, is grouped with amendments 488 to committee’s behalf, pay tribute to Michael’s 491. valuable contribution to the committee’s work. The Deputy Minister for Enterprise and I ask Mr Maxwell to declare any interests. Lifelong Learning (Allan Wilson): The bill abolishes the common law diligence of Mr Stewart Maxwell (West of Scotland) (SNP): sequestration for rent. Such a diligence has Thank you for that welcome, convener. Although I nothing to do with bankruptcy. Indeed, it works in have no relevant interests to declare, I point much the same way as the old diligence of members to my declaration in the register of poinding, except that, in practice, it is much worse members’ interests. than poinding ever was. It is used by landlords to The Convener: I should also tell the committee recover unpaid rent by selling certain types of that one of our advisers from the Scottish goods kept in leased property. Parliament information centre, Stephen Herbert, Sequestration for rent allows landlords to get has been recovering from a serious stabbing into property without giving notice to tenants; to incident that happened while he was overseas for sell the goods that they find there, even if they a football match. I am sure that every member of belong to someone other than the tenant; and to the committee sends their best wishes to Stephen, have tenants ordered to refurnish the property so who is a very valued contributor to the committee’s that the whole process can start again. Such a work. mechanism has no part to play in a modern enforcement system, not least because a landlord is able to use other diligences to recover unpaid rent, such as attachment, which we have discussed at length. Sequestration for rent can be used to sell only goods that are secured by a right known as the landlord’s hypothec, which arises automatically whenever there is a qualifying lease. The bill makes some changes to the hypothec, even though it is not a diligence. For example, it completes the process of abolishing the hypothec over goods in dwelling-houses that was initiated by the Debt Arrangement and Attachment (Scotland) Act 2002. It also abolishes the hypothec over goods owned by a third party. The amendments in the group are intended to clarify the effect of abolishing sequestration for rent and restricting the application of the hypothec. Amendment 487 clarifies that the bill does not create any new preference for the landlord when 3437 7 NOVEMBER 2006 3438 competing claims are ranked, and has the effect of will need to be resolved if the principle of having giving landlords preference only in a bankruptcy or debt relief in the DAS is agreed. Amendment 492 a similar process that follows from the fact that the seeks to give the Scottish ministers a new power hypothec continues as a security. to provide for debt relief, which will supplement the existing regulation-making power in section 7 of Amendments 488 and 489 clarify the effect of the 2002 act. the transitional arrangements in sections 194(10) and 194(11) that are needed as a result of the Debt relief raises important issues, not least of changes made by the bill. Amendment 490 makes which is the impact on creditors’ rights, and the a small change that is needed to reflect the fact committee rightly has an interest in the detail of that the hypothec is not created by the parties to a what the Executive would do with this power. As a lease but arises by operation of law. Finally, result, amendment 492 provides for the use of the amendment 491 clarifies that the hypothec does power to be subject to affirmative procedure. If the not arise over any part of a dwelling-house, amendment is agreed to, I plan to use the new including a garage or any outbuildings. power and to come back to the committee next year to ask it to approve regulations that will I move amendment 487. enable interest and charges to be frozen. Amendment 487 agreed to. If the freezing of interest is successful—as I Amendments 488 to 491 moved—[Allan believe it will be—I will consider using the power to Wilson]—and agreed to. cancel debt. Any such move will need careful consideration, as one of the major advantages of Section 194, as amended, agreed to. the DAS for debtors is that they can keep their Section 195 agreed to. homes and other assets. Indeed, we have discussed that matter at length. I will therefore Before section 196 continue to work with stakeholders to ensure that the DAS is an effective debt tool. The Convener: Amendment 492, in the name of the minister, is grouped with amendment 493. Amendment 493 makes a minor change to section 196 that will be needed if amendment 492 Allan Wilson: The debt arrangement scheme is is agreed to and a new section is inserted before a groundbreaking new debt tool that was created section 196. As that new section will make the first by the Debt Arrangement and Attachment amendment to the 2002 act, section 196 should be (Scotland) Act 2002. At the moment, the Executive read as making further amendments to that act. supports 80 DAS-approved money advisers, who cover most of Scotland and help 190 people to I move amendment 492. manage debts amounting to £2,867,000. Christine May (Central Fife) (Lab): I am sure As we know that the DAS can work, I want to go that the committee welcomes these amendments. further and make it even better. One way to do After all, we recommended the same measures in that—and one way to address one of the money our stage 1 report and were particularly anxious advisers’ main concerns about the scheme—is to that the Executive should implement them. stipulate that the debts in a debt payment However, subsection (3) of the proposed new programme do not need to be paid in full. At section states: present, during a programme, creditors can apply “The Scottish Ministers may, by regulations, make such interest and charges to the debt. However, the further provision as they think fit”. debtor’s payments may not be enough to cover accrued interest and charges, which means that The word “may” expresses doubt—something may they can complete a programme and still be in happen only if somebody has the will to do it. Will debt. As that makes no sense, there is a strong you reassure us that regulations will, rather than argument for freezing interest when a programme may, be made? is approved. The Convener: We will need to refer the bill as We could go further and cancel part of the debt. amended to the Subordinate Legislation For example, someone with a debt of £10,000 who Committee, because a new power to make pays £150 a month over five years will repay a subordinate legislation is involved.