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The next item is the Abolition of Poindings and Warrant Sales Bill. I welcome Alan Adams of Glasgow City Council protective services. The procedure is that after you give a presentation, I will open the meeting up for questions. I will sum up at the end.
Good morning. I suspect that members will have copies of the letter that I sent to the clerks some weeks ago. As I mentioned to the committee clerk in a recent telephone conversation, there is not much that I can add to the text of that letter, but as an introduction I will remind members of my background. I work in the consumer and trading standards division of Glasgow City Council protective services. The division has a statutory responsibility to enforce a wide range of consumer protection and fair trading legislation, which more and more we try to do in partnership with legitimate trade in the city.
Perhaps when we are asking questions, you might use the case studies as examples.
Right.
Thank you very much. Before I open up the session to the rest of the committee, I want to ask a couple of questions.
In fact, it is a case of "can't pay and would like to".
Furthermore, the general public do not seem to be aware of a system on the basis of a summary warrant whereby a person can go back to court and offer to pay off a debt by a certain amount every week or through regular lump sums. Do you have any thoughts about that?
Sadly, most people who come to us come too late. That is the common experience of agencies involved in money advice and debt counselling. People come to seek advice because the crisis has already happened. It is very difficult for clients to come to us and tell us that they have failed. However, the fact that they have come means that we can do something with them; usually we can resolve the problems.
Many people have argued for warrant sales rather as others do for the atomic bomb: one would never use it, but it is useful to have. If warrant sales were scrubbed—accepting the argument that those who will not pay are still a minority—would there be a need for a stick to compel people to pay?
I am not sure that I like the word "stick", although I know what you mean. Mechanisms to enforce payment are fine when folks have the wherewithal to make payment. It may be that in the area of commercial debt there should be mechanisms to redress the balance between creditor and debtor. I can only reiterate that, in our experience, this system has no effect.
I was very interested in what you said about the Office of Fair Trading. I think that banks and all sorts of other people who lend money act in a totally immoral and wicked manner by making it far too easy for people who should not borrow money to do so. Could we try to make lenders act more responsibly, whether it is the Bank of Scotland or a wee man in a wee office in Muirhouse?
I think that that issue needs to be addressed and I have been talking recently to the media about the ease with which credit is available in the high street. However, I do not think that that problem is the same as the one that we are talking about. Although instant credit is available in a number of high street stores, a bank card or a credit card must first be produced. That means that the people who are given that credit are of a certain financial standing. Most of the people with whom we deal do not have bank cards. They get credit from the local moneylender or a mail order catalogue. We can deal with moneylenders, legal and otherwise, through the mechanisms of the Consumer Credit Act 1974, but there might have to be a decision taken on the ease with which credit can be obtained.
Councils have a statutory right to collect debt. It seems to me that it is the threat of the warrant sale, rather than the poinding, that makes people pay. Nobody seems to have come up with a humane yet effective replacement for the process. Have you any ideas? You seemed to suggest that some commercial debtors use poindings and warrant sales almost as a first step in debt collection: people receive goods, do not pay and are immediately poinded. If that is the case, I would be interested in examining that further from a legal point of view.
Other mechanisms exist by which debt can be collected but they are sometimes not used. Experience has shown us that someone in financial trouble will place a summons from the sheriff court behind the clock on the mantelpiece along with the other bills. It will be ignored because the person feels that they cannot do anything about it. Our job is to get to those people before the summons arrives. We can negotiate with creditors to arrange a repayment programme that will satisfy both parties and will avoid the need to go to court along with the expense and the distress that that causes. We need to intercede at an earlier date than we are able to in most cases.
It seems to me that information about that should be given to people when they first make a contract with the creditor. People should be made aware as early as possible that they can contact someone if they get into trouble.
The information does not appear on the contract, but there is a requirement under the Consumer Credit Act that a statutory notice must appear on any default notices that are sent out. The notice states that advice can be obtained from a local citizens advice bureau or a local trading standards department. However, I suspect that people see the notice simply as another bit of the form.
It will be in terribly small print, I imagine.
There is a requirement that it should be legible and of the same size print as the other text.
But all the text is small.
It is also formal. Most people will not know about their local trading standards department.
Would it be possible for a court to notify your organisation or a citizens advice bureau when it sends out a notice? I take your point that most people ignore the well-meant notice telling people to speak to trading standards. If the court were to send a duplicate to you, would that work, or would you sink under the burden?
We would sink. We explored with the clerk's office of the sheriff court the possibility of sending out information with the summons, but that is not possible because the summons has to appear on its own in a brown envelope; they are not allowed to put any extraneous material in with it. That might have been a useful way of getting the message across. Please do not suggest that the sheriff courts send us copies of all the summonses.
I am very interested in what you had to say about catalogue companies and the way in which people get credit from them. It is almost as if the less money people have, the more expensive the credit they get. They also get pursued for a smaller amount of debt. As the mother of two young children, the idea of anybody taking my video recorder fills me with dread. Families without resources are losing the very thing without which they cannot entertain their children.
Yes. That is exactly the situation.
Would it be right to say that there is no correlation between threatening those who will not pay and treating those who cannot pay harshly?
No distinction is made between the two when the civil diligence mechanisms come into play.
But there must be in the statistics.
We are using the same tool—the same weapon, the same stick—to beat both parties. With one it may work, but with the other it certainly does not.
I agree with everything that Johann Lamont has said. The innovative ways in which those who can but will not pay get rid of their money make it difficult to establish whether in fact they have the money. It is very difficult, for example, to find out how much someone has in their bank account. The idea of having poindings and warrant sales for those who can pay but will not and not having them for those who genuinely cannot pay and find themselves in deep trouble is difficult to implement, is it not?
It certainly is.
If we are going to move forward with this bill, we will need to establish that the process does not affect people with big debt who can pay. Ultimately, this is not the process by which money is got from them, as they are rarely in the circumstances in which it applies.
That may well be the case, but those folks are not coming to us.
It is the threat of poinding and warrant sale that makes the people who can pay eventually pay up. That takes me back to my original point: unless we have something that is as "threatening" as the poinding and warrant sale for those who can pay, it will be difficult to collect that debt.
You may be right, but the threat is perceived as very real. That may be a wrong perception on the part of someone who has nothing, as there is nothing that can be poinded and sold, but the threat is there just the same. The sword of Damocles is still hanging over people.
However, people who can pay but will not have things that can be poinded. The problem is getting to them.
Yes.
It is almost an upside-down argument. In its memorandum, which you may not have seen, the Executive stated that the board of Customs and Excise obtained summary warrants for more than 30,000 items of debt, but there were only 36 sales. That means that the ultimate measure was taken in only one case in 1,000.
I have forgotten what the first point was.
The first point was about a cut-off point.
Our experience indicates that it would make no difference. Folks who have nothing sometimes owe large sums of money and sometimes owe small sums. The effect of poindings and warrant sales is exactly the same—it has no effect.
That is clear.
There may be other considerations where commercial lenders are involved. At some level, it becomes commercially prudent simply to write off the debt and many commercial organisations do that. However, we cannot do that with council tax.
If you do not think that there should be a cut-off for the amount borrowed, what about household income? If the present legislation were not to be abolished completely, should there be a cut-off so that, if a family's income is below a certain level, the legislation will not be applied?
The family income does not come into play in poindings and warrant sales.
But do you think that it should, especially as the poorest people are the ones who suffer?
Yes, which brings us back to the point that I made earlier: family income could be brought into the equation only if advisers can be brought in to consider the problem before the legal processes start.
Given that—whether we like it or not—an element of threat will always be necessary for some people some of the time, who are not all well intentioned, and given that poinding seems to be a threat that works in some circumstances but that clearly does not work when people have nothing, can you think of a substitute threat, which does not have the same punitive effect on the people who are least able to pay?
I suspect that minds greater than mine have been thinking about that for some time but have not come up with anything. Neither have I.
Can you give us a summary of what the minds greater than yours have come up with?
Not really.
Thank you very much, Mr Adams, and I apologise again for keeping you waiting. You have been very helpful.
Thank you.
Right, comrades—[Laughter.] The next speaker is Madge Adams from Braendam Link. Welcome to the committee, and again I apologise that, because we are running a bit behind time, you have had to wait. I hope that what went before was interesting to you. I saw you nodding your head a few times, so you were obviously agreeing with some of what we were saying.
Good morning. My name is Madge Adams and I am the home visitor with the Glasgow Braendam Link. The link works with families who are living in poverty. It is committed to bringing about change in the structure of society, so that the voice of the poor is listened to and the issues of the poor are addressed. I am very privileged to be here this morning representing the families with whom I work.
Thank you for that contribution. Before I open up the meeting to questions, I would like to raise two issues that arose from something that I asked a previous speaker. You have experience of debt being repaid through stopping state benefits at source.
I am not saying that that is the answer. I do not know what the answer is. All I know is that people are traumatised and frightened. When push comes to shove, people want to pay. As Alan Adams mentioned, people go to moneylenders and put themselves into further debt.
Would you agree that the information that people can pay something up every week, or that there may be the facility to pay so much every so often, does not get to them quickly and clearly enough?
The information is not clear enough. Many of our families also have problems reading and writing. I do not know how to ensure that the information gets to people. We encourage people to use citizens advice bureaux, Money Advice and welfare rights officers.
You mentioned CAB and Money Advice. In your opinion, how big is the gap in what is presently on offer and what should be on offer—for example, in the cases that you outlined?
There might be a four to six week waiting period for an appointment to see someone at the CAB, depending on the office. That adds further stress. A person may know that court proceedings have been put in motion, but they cannot stop it if they do not get an appointment. We encourage our families to contact their local councillor. There are not enough resources available to meet the needs of the families.
To take on board Colin Campbell's point about the alternatives, the beefing up of CAB, Money Advice and local government services is closely linked to what we are talking about today.
It is important to make more resources available.
The better use of welfare rights officers in local authorities is also necessary.
That service is very limited.
Yes, there are not as many welfare rights officers as there used to be.
A councillor who has experience of people with problems paying their council tax told me that one difficulty is that, when the recovery of the debt goes out of the hands of the council, things become less flexible and there is less ability to negotiate. Is that your experience? You described a case in which an unreasonable demand was made for a payment that the woman had already said that she could not pay. We could require that, once the matter goes to a debt recovery agency, there should be an obligation on that agency to be more flexible and willing to meet someone with difficulties to arrange a reasonable repayment. What you say shows the importance of getting help and advice when the matter is still at a stage at which people can be more reasonable.
We must also consider the message that that gives to the children.
You must have experience of youngsters who take all the worry and anxiety on themselves.
Yes, I do. We work with more than 150 families. Another issue is that youngsters cannot have the designer gear that some of their friends have. That is because the majority of our families are on state benefit.
That also explains why families take on catalogue debt—it is often because of the pressure put on children. I know of youngsters who were bullied and would not come to school because they did not have the right gear. That sounds silly, but it is a real experience for children. Families can get themselves into serious debt because of it.
Councillors and council officials argue that, in pursuing council debt for non-payment of council tax or poll tax, they bend over backwards to ensure that the payment is only £2 if that is all that the person can afford. That is the picture that they paint.
I cannot comment on what you say about catalogue companies, as the majority of our families do not have access to catalogues. They might have access to Provident, perhaps, or to Crazy George's, where they pay back more than a third of the original cost in interest. Most of our families are pursued for council tax debts.
Do you agree with the defence that councils use when they say, "We rarely go as far as poinding and warrant sales. Before things go out to sheriff officers, we are in dialogue with people. There is a payment system?"
No, I would not agree with that.
That is interesting.
You talked about council tax arrears, but are many of your families being pursued for poll tax arrears?
Yes.
Do you think that poll tax arrears should be written off in Scotland, as they have been in England and Wales?
If you are asking me personally, my answer is yes, as I have seen the trauma that those debts have caused.
What proportion of the 150 families that you deal with have poll tax arrears?
I would say that more than half do.
Therefore, writing off those arrears, as has happened in England and Wales, would relieve a lot of debt.
Definitely.
As there are no further questions, I thank Madge Adams for attending the meeting—her evidence has been helpful and interesting. I am aware of the Braendam Link—I visited the organisation while wearing a different hat. We may call you to another meeting, Madge, if we think that we need more information from you.
Meeting continued in public until 12:20.
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