Meeting of the Parliament

Meeting date: Wednesday, December 18, 2013

Official Report 832KB pdf

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12 Days of Debtmas Campaign

The final item of business today is a members’ business debate on motion S4M-08431, in the name of John Wilson, on the 12 days of debtmas credit union campaign. The debate will be concluded without any questions being put.

Motion debated,

That the Parliament welcomes the Scottish Government’s 12 Days of Debtmas campaign, which aims to encourage people to use credit unions rather than opt for high-interest short-term loans during the 2013 festive period; understands that, recently, there has been a growth in payday lending and that such loans have plunged many people and families in Central Scotland and throughout the country into financial hardship; notes that, across Scotland, credit union membership continues to grow, with over 350,000 people using their services, which, it believes include providing borrowing at much more affordable rates; understands with caution that some credit unions might be unable to provide the level of support required, and notes the calls for the Scottish Government to ensure that every credit union is provided with the necessary tools to act as a practical alternative to the high-interest borrowing and payday loans that many people could be vulnerable to during the festive period.

17:05

I thank the members across political parties who signed my motion and are here to listen to the debate. I refer members to my entry in the register of members’ interests. My interest in credit unions is long standing, although it has been clearly assisted by the fact that I am the convener of the cross-party group on credit unions in the Parliament.

In many ways, the debate is timely. It is one of those debates that are like Edinburgh Corporation buses: three come along in a week. I am grateful to Kezia Dugdale for her members’ business debate last Thursday lunch time, which was part of the overall discussion about how we deal with debt in Scotland.

The debate also acknowledges the important work that the Scottish Government undertakes, not least with its 12 days of debtmas campaign. It is vital that the role of credit unions and the approach that they take are considered in contrast to the approach of payday lending firms.

The thrust of the campaign is people not being pressured, especially at this time of year, into taking out expensive loans—especially high-interest, short-term loans—at the expense of good financial decision making. Only last week, the Office of Communications stated that television viewers were exposed to nearly 400,000 payday loan adverts last year alone. In 2011, there were 243,000 such adverts, but, within the space of a year, that increased by 64 per cent.

The Scottish Government campaign at this festive period is therefore essential in offering serious balance and engaging with the public. Furthermore, according to the minister’s speech in the debate this afternoon, almost 18,000 people have visited the campaign website, with almost 1,300 having engaged in internet searches for their local credit unions.

It is important that the Financial Conduct Authority, which takes over the regulation of payday loans in April, examines advertising, especially pester power. Ofcom stated that, on average, children watched more than 70 adverts from payday lenders.

It is important to acknowledge that credit unions have evolved over the years and that they are expanding and growing. I come to the debate having witnessed at first hand the work that they do in Central Scotland. I regularly try to meet up with credit unions throughout Central Scotland during the year to find out what new developments are taking place.

The work that credit unions do in Central Scotland is assisted by the fact that they can demonstrate a real difference for many communities and get people, especially those in deprived areas, to develop the savings habits that are necessary for, and consistent with, good credit union practice, in contrast to the position of payday lenders.

Credit unions need the necessary framework to develop in a practical sense. They are distinct bodies. There are both large and small credit unions in nature and operation. We must ensure that smaller credit unions are given the necessary support to provide the assistance that their current and future members need and to deliver real benefits to those who need them.

Furthermore, when we talk about necessary expansion and more services being offered, we must acknowledge that volunteers and staff in credit unions need to be upskilled to meet the requirements of the growing sector.

I am sure that John Wilson will agree that some credit unions simply do not want to be involved in offering alternative payday loans and that nothing about what we create or ask them to do should force them to get involved in that.

I will try to deal with that point later.

Accredited training programmes could offer staff and volunteers the opportunity to be credited with meaningful qualifications to progress the credit union and individuals’ development. I understand that the Scottish league of credit unions has been discussing such a matter with the Scottish Qualifications Authority and hopes to move that forward in the new year.

The sector in this country is relatively small compared with the sectors in the United States and Australia, where credit unions serve almost a third of the country’s population. It is to be welcomed that many employers support their employees’ credit union membership. I know that a good many employers do that here, but the approach needs to be promoted more robustly. The potential of credit unions has been recognised by both Scottish and United Kingdom Governments, which have emphasised the role that they can play in countering payday loan companies.

I acknowledge the good work that credit unions do in encouraging people to save and take out loans with them, offering a real alternative to expensive payday loan lenders. Figures from StepChange Debt Charity show that the average monthly income of a StepChange client in Scotland is £1,190 compared to the average payday loan debt of £1,400. That level of monthly repayments leaves people with no money to live on and pushes them further into debt. It must be remembered that behind those statistics there is a human face to the financial pressures.

Credit unions can take a longer-term view, rather than offer a short-term fix, when compared with the approach of the existing banks and building societies. Glasgow Credit Union has recognised the real problems in the traditional banking sector and is now able to offer mortgages to its members that are tailored to second steppers. That relates to the point that Kezia Dugdale raised. Not all credit unions have the financial wherewithal to provide such loans, and we must cater for both large and small credit unions.

The Scottish Government’s new banking strategy recognises that credit unions can and should compete with commercial banks in the financial services sector. I am aware that the regulation of financial services is a reserved matter. Nevertheless, the Scottish Government clearly has a role in developing solutions, particularly with regard to legal matters that have an impact on credit unions, and in ensuring that the partnership role is maintained.

I recognise the good work that is being undertaken by credit unions throughout Central Scotland and beyond, and I welcome the fact that the Scottish Government has placed a high priority on assisting credit unions to deliver not only an alternative but mainstream financial provision that will assist many communities throughout Scotland. However, we must ensure that credit unions have the resources and support to play a meaningful role into the future.

I am afraid that the debate is heavily subscribed and I may not be able to call everyone as I cannot extend the debate this evening. If members could take less than four minutes, I would be obliged.

17:13

I point members to my entry in the register of members’ interests, as I am a member of Capital Credit Union.

I congratulate John Wilson on securing the debate. It is the third time in the space of a week that we have been able to debate the issues around payday loans, and that is to be greatly welcomed. I also commend him for the role that he plays in the cross-party group on credit unions and I look forward to joining him on the journey going forward.

I very much welcome the 12 days of debtmas campaign. Members might not be surprised to hear that, given that I asked the Scottish Government to run a campaign against payday loan companies specifically in the run-up to Christmas. I first asked the Scottish Government to do that on 29 May 2012, when I wrote to Fergus Ewing, asking him to run a publicity campaign against payday loan companies. He wrote back:

“It would not be appropriate for the Scottish Government to undertake an advertising campaign to advise the public of the issues in the high-interest, short-term loan market.”

Not being somebody who takes “No” for an answer, I wrote back to the minister in August 2012 and received a similar reply. The Scottish Government said:

“It is not appropriate for the Scottish Government to discourage people from obtaining credit which is offered to them in a legal, fair and transparent way.”

It was therefore with a wry smile that, last week, I enjoyed listening to the Minister for Energy, Enterprise and Tourism tell the Parliament that it is

“the Scottish Government’s view that the uncontrolled growth of payday lending in Scotland ... has been one of the causes of extreme social misery and hardship in our times.”—[Official Report, 12 December 2013; c 25695.]

The minister needs to give credit to the thousands of people across the country who have been actively campaigning against payday loans for several years, because they have put the issue on the agenda. The minister has not always been a diehard opponent of payday loans and to suggest otherwise does the debate a disservice. However, I very much welcome the action that he is taking, and I ask him to think about what will happen after Christmas, because the campaign should not be just for Christmas. For example, a lot of families experience tremendous debt and financial pain in January because that is when a lot of bills come in.

The minister will remember that when we last met in June I asked him to consider a proposal for a loan guarantee fund that I had written jointly with the Association of British Credit Unions Ltd. The proposal would help credit unions to develop their capacity to grow and offer an alternative to payday loan companies. He promised me an answer to that proposal by the end of June, but the summer came and went.

I thought about challenging the minister to ask whether he had come up with a response, but I spoke to a number of people in the credit union sector and they asked me not to do that because they had heard warm soundings from the minister’s department and the people that he works with that he was taking the issue very seriously. It has been six months since the minister said that he would respond to my proposal, but I have not heard anything yet.

Will the member take an intervention?

I am sorry, but I have fewer than four minutes and I am desperately trying to please the Presiding Officer.

What I am trying to say to the minister is that, if he does not think that the loan guarantee fund is a good idea or the answer to improving credit unions’ capacity to offer an alternative, I urge him to come to the chamber and lay out a route map and a series of ideas and ways in which we can help credit unions who want to offer a credible alternative payday loan to do so.

Credit unions are seeing tremendous numbers of people coming through their doors, including people who have heard the 12 days of debtmas campaign on the air waves, who want to join a credit union. However, there is a great fear among credit unions that desperately want to do the work that they cannot meet that capacity or fulfil the potential that they have to offer an alternative, and they are looking to their Government for answers.

I will leave it there to save you some time, Presiding Officer. The challenge to the minister goes on into 2014 and I look forward to hearing what answers he has.

17:17

I, too, congratulate John Wilson on securing the debate and Kezia Dugdale on securing her members’ business debate last week. I apologise to members as I may not be able to stay to the end of the debate.

It is obvious that the two topics are inextricably linked. As suggested by Archbishop of Canterbury, Justin Welby, credit unions can compete payday loan companies out of existence. A key reason behind the debtmas campaign is to entice people away from the high-interest, modern-day Shylocks—if I may use that term—that offer too-good-to-be-true, instant cash deals.

We all know the drawbacks associated with companies such as Wonga, whose chief executive admitted in 2010 that their practices would be classified as illegal in some countries and that, on occasions, the company will charge £6.57 to borrow £1 for one day. However, people taking out the loans do so because of an urgent, short-term cash crisis. Regardless of the sum being taken out, it is a zero-sum game for the customer and one in which only the loan company can win, particularly with the exorbitant fees that they charge.

Although we would all welcome substantially stricter regulations on those companies, the power to introduce them unfortunately remains reserved to Westminster. However, even if the UK Government acted, there would be no point in doing so in isolation as that would effectively be closing the stable door after the horse had bolted.

We clearly need alternative money lending and credit schemes that do not cynically target those in need of help in order to make a fast buck. Although they exist, they need to be more widely advertised and available. Therefore, I am delighted that the Scottish Government has followed up on January’s members’ business debate in which a number of my colleagues asked the Government to support credit unions, and that it has launched its 12 days of debtmas campaign, encouraging people to ignore payday loan companies’ advances and instead consider other options, including the services of credit unions.

We all know that money can get tight around Christmas, with extra money spent on heating, presents or perennial nights out. The costs all add up and can leave many families struggling into the new year, when they know that it will be five or six weeks until payday.

It will be difficult to combat the multi-billion pound business of payday loan companies—which, as John Wilson mentioned, saw 400,000 of their adverts broadcast last year, with adults seeing an average of 152 and children 70 of them—but it is essential to spread the message that there are alternatives and it is worth while promoting the fairer, cheaper alternative of credit unions.

Although I doubt that credit unions run to the same ethos as George and Mary Bailey’s building and loan association in the iconic film “It’s a Wonderful Life”, in which they famously offered people their honeymoon money after a run on the banks, credit unions are undoubtedly a better alternative than those of payday lenders.

As a direct result of the debtmas campaign, almost 1,500 people and counting have already asked for details of local credit unions, such as North East Fife Credit Union, which is fully regulated by the FCA and operates out of Cupar and Springfield. Without credit unions, people would face an impossible choice between an unapproved overdraft extension that would incur expensive charges and a payday loan that would also incur expensive charges.

I am certain that every member who is present will have been approached by constituents with money problems. I am pleased that I can point my constituents to a local credit union that might be able to assist them, but I am disappointed by the number of people on low incomes who say that banks will not help them.

If more organisations paid a living wage and we could ensure that the lending system in Scotland was fairer, far fewer people would struggle for money at Christmas and throughout the year. However, credit unions fulfil a very real need, and I am pleased to support the motion.

17:20

I congratulate John Wilson on securing the debate. It is timely for us to be having it in the run-up to Christmas, when people are under huge pressure to buy gifts and expensive food to make Christmas special for their families.

The key aim of the debate is to encourage people to use credit unions instead of payday lenders. With wages falling and prices rising, very few people—only the very rich—are better off. The poorest in our society are bearing the brunt of that. We have seen a fourfold increase in the number of food banks, which are struggling to meet the needs of people in our communities.

People in areas such as the Highlands and Islands, where employment can be seasonal or temporary, are at high risk of payday loan debt, because banks are reluctant to lend to people who do not have a secure income. Those that will lend charge the worst-off inflated rates of interest.

Only last month, it was revealed that the Skye, Lochaber and Badenoch constituency in the Highlands has the second-highest level of individual payday loan debt in Scotland. The average payday loan debt level in Scotland is £1,398.07, whereas in Skye, Lochaber and Badenoch it is £2,418.50, which is more than £1,000 more than the average for the country as a whole.

Payday lenders charge astronomical rates of interest, which quickly become unaffordable. That leads to people rolling over their debt. Such lenders also take repayments directly from borrowers’ bank accounts without having any regard to what those people will live on.

I recently issued a debtbusters survey to homes in Wick in the Highlands and Islands. The results indicated that around 90 per cent of respondents are supportive of the campaign to increase awareness of the risk of using payday loan companies, of the promotion of credit unions and of increasing awareness of where to get debt advice, but only 9 per cent of respondents told me that they are members of a credit union.

Credit unions provide an alternative. All other lenders increase interest rates for the least well-off, whereas credit unions treat all people in the same way. In the Highlands and Islands, we have a credit union that covers the whole area: HI-Scot Credit Union is a community-based financial co-operative that is owned, run and controlled by its members, of which it now has more than 2,000. Interest in the credit union has continued to grow since it was first established around six years ago. It now offers a range of products, from prepayment debit cards that can be used in shops and at cash machines to short and medium-term loans at preferential rates of interest, as well as saving schemes and life insurance.

We all have a role to play in promoting credit unions, and I very much hope that the Scottish Government will offer support to those organisations so that they can provide their valuable services to those who desperately need them, especially this Christmas.

17:23

I congratulate John Wilson on bringing the issue to the chamber. It is a timely moment in the year to discuss household debt and how to deal with it.

When we consider the broader issue of borrowing—domestic borrowing, in particular—it has to be said that, as I have said previously in the chamber, it is ironic that quite often the people who do not need the money can get it most cheaply, while those who need it most find it most expensive and sometimes almost impossible to obtain. The result is that many people are forced into the hands of payday lenders. I believe that that is also a function of the marketplace in which we find ourselves, which it is not beyond the powers of politicians to influence.

Going back to John Wilson’s speech, I note that in the United States of America up to a third of the population has an account with a credit union not because of any particular demand but because the credit union sector has developed more quickly and effectively in that part of the world. The result is that people who in this country might rely on banks, credit cards or, in the worst possible cases, payday lenders have an alternative.

If we look at the development of financial institutions over hundreds of years, we will find that some of what at their formation were the smallest and most insignificant organisations have become some of the largest banks in the world. Unfortunately, perhaps, our building society sector, which at one time played such a key role, was largely absorbed by the banks, which then misused their position and found themselves having to be bailed out with public funds. The credit union sector has tremendous potential in two respects. First, it has the capacity to develop its market and find ways of providing loans at a competitively economic rate to people who need them and have no alternative. Secondly—and more important—it has an opportunity to influence and educate those who cannot find credit elsewhere because of their borrowing record. Bringing people into the fold, giving them the necessary education to be more financially responsible and letting them go forward and take advantage of their better credit rating to participate in the broader market is a bonus that many credit unions could, in the long term, afford to give.

I, too, congratulate the Scottish Government on its 12 days of debtmas document, which I downloaded from the internet. It must have taken the team in question quite a while to come up with all those suggestions but, nevertheless, this is an issue that people need to take seriously. We have to remember that Christmas is about many things—and not necessarily conspicuous consumption—but it is our duty in this Parliament to concern ourselves with how best we might serve people who find themselves in debt at this difficult time of year.

I support John Wilson’s motion.

17:27

I, too, congratulate John Wilson on securing the debate and on his thoughtful and considered speech. As others have pointed out, the debate follows last week’s excellent debate led by my colleague Kez Dugdale on the regulation of payday lenders. It is fair to say that Ms Dugdale has led the debtbusters campaign in Scotland to considerable effect, highlighting the scandal of payday lending with companies charging extortionate rates of interest and taking advantage of people in recouping that loan. Clearly, as far as the minister is concerned, persistence works but I encourage him not to wait quite so long before responding to Ms Dugdale’s letters, emails and suggestions.

In the past year, a number of payday lenders have sprung up in my local area—in fact, it is about the only growth in the high street—and they are charging a frankly outrageous annual percentage rate of almost 4000 per cent. We are facing a huge cost-of-living crisis of a kind that we have not seen for very many decades. Incomes are declining in real terms, costs have risen by more than 30 per cent in the past five years and people are in difficulty.

There are alternatives, but we need to do more to raise awareness and point people in the right direction. As a result, I very much welcome the Scottish Government’s 12 days of debtmas campaign, which highlights credit unions’ valuable role in providing access to low-interest loans. The two credit unions in my area—Dumbarton Credit Union and the Vale of Leven Credit Union—do a fantastic job. Very much rooted in their communities, credit unions are member-owned co-operatives whose aim is to develop a responsible approach to money and encourage all of us to save. With their low-interest loans, which are usually repayable over a long period, they are growing all the time. Across Scotland, there are 108 credit unions, some based on a workplace, others based on where people live, and as many as 350,000 people have joined them. However, they have so much more potential, and that is the issue that I want to explore with the minister.

I will digress for a minute, however, and mention that in the House of Commons Gareth Thomas MP has tabled a 10-minute rule motion that seeks to create a credit union for military personnel who are increasingly turning to payday loans to get by. I hope that Scottish National Party MPs and, indeed, Conservative MPs will support that, as it is particularly important.

In my local area, we asked the council to advertise the credit union on its council tax notices, which are received by every household. It is considering that. We have also asked it to promote the super savers scheme, which gives every primary school child a credit union account with a small sum of money—£10, say—to kick off their saving habit. That, coupled with financial education that is provided by the credit union, can be a powerful tool to change habits in the next generation. A small sum of money could prevent a future spiral into debt. The Scottish Government should consider ways of promoting credit unions, perhaps on television or radio, that would support local activity at this time of year and all year round.

I recall that the previous Scottish Executive had in place a credit union development plan entitled “Unlocking the Potential: An Action Plan for the Credit Union Movement in Scotland”, which was backed by considerable resources. I suspect that the current Scottish Government has also provided funding, but if we are to make a quantum difference to financial exclusion, we need to do much more to sustain credit unions.

What specific measures will the minister implement to do so? In the short term, what about providing credit unions with assistance through a loan guarantee fund to enable them to offer more instant loans? In the long term, how can we encourage community credit unions to have people from all walks of life as their members? I look forward to the minister, in the spirit of Christmas, outlining the further measures that he will implement now to support credit unions.

17:31

I congratulate John Wilson on securing the debate. Its timing is perfect because, as Charles Dickens famously realised, the festive season is a time when we should consider those who are vulnerable or in difficulty. It is a time when the contrast between the haves and the have-nots in our society is rendered in stark terms, the engine of consumerism is at maximum revs, and already stretched budgets are under severe pressure.

It is therefore no surprise that people are driven to borrow at this time of year and it is no surprise that, when the high street banks will not offer facilities to those with slender resources, people turn to other sources of credit, or that payday lenders are ready to pounce on such unsuspecting and vulnerable borrowers. I say particularly to the Labour members whom we have heard that that is what 300 years of the union and the failure of the UK Government to regulate the payday industry have brought us to.

Thankfully, there is an alternative. Credit unions offer unsecured lending in a responsible and fair-minded way. Loan applications can be fast and can be done online, but they are always accompanied by prudent advice and there is always a system of checking to ensure that loans are affordable for borrowers. That is the essence of responsible lending, and it is by following responsible lending practices that the cost of borrowing can be kept to a minimum.

Credit unions offer far more than unsecured lending. They encourage saving and offer a variety of savings products, because saving even modest but regular amounts is perhaps the best way to help to meet expenses such as those that we are all faced with during the festive season. Saving is the best way to lay in a contingency fund to deal with the emergencies that we all face from time to time, when some ready cash is necessary. It is the way to get out of the debt cycle and ahead of the game.

In researching for the debate, I found out that some credit unions even offer mortgages. Members have referred to that. Those credit unions offer a full and comprehensive alternative to high street banks; the difference is that they are not solely motivated by chasing high and unsustainable profits. That ethos is all-important, and it ensures that a careful balance will always be struck in delivering a sympathetic and responsible service for savers and borrowers.

In conclusion, I am delighted that the Scottish Government has launched the 12 days of debtmas campaign to foster greater awareness of credit unions, which offer a much better alternative to payday loans and, in many cases, a better service than high street banks do. The more people there are who use credit unions, the more they will grow, and the more they grow, the more people can benefit from their excellent range of financial services.

17:34

First, I declare an interest: I am a councillor in Fife.

I am grateful for the opportunity to speak in this debate and I add my support to that of others for John Wilson’s motion. Through my work on the debtbusters campaign in Fife, I know the misery that is brought about by payday loan companies and the excellent work that credit unions do to alleviate that misery.

As the changes to welfare start to bite, individuals and families will face increasingly basic choices. It is those choices that are the most difficult and the most unfair, such as parents deciding whether to feed their children or themselves; and whether to pay off the loan that they took out to pay the electric bill last month or whether to pay the electric bill this month. Scotland has the highest level of payday loan debt in the UK, with people from Mid Scotland and Fife owing an average of £1,200. Those people are not irresponsible or financially incompetent; it is just not possible to stretch the money from one month to the next without help.

Citizens Advice Scotland recently published research that looks at payday lending. Such loans are often given to people who have been refused credit elsewhere and they can come with interest rates as high as 4,000 per cent. What can seem like a lifesaver one day can turn into a nightmare the next. People are struggling and as public sector cuts start to take hold the number of people needing to borrow to survive will increase. Mainstream consumer credit has become increasingly difficult to access, which means that the speed at which people can access easy—in inverted commas—loans can seem an attractive option. It takes 15 seconds to apply for them and they can tide people over the last few days of the month.

If we want people to know what the real cost of payday loans is, we must ensure that they know what support is available to them. That is not about patronising people or blaming them, but about ensuring that they know what they are entitled to and how to maximise their income.

I have recently been working very closely with the Co-operative Party in Fife to take forward the debtbusters campaign, which tries to help keep people out of debt and support those who get into debt by signposting alternatives like credit unions. Its biggest success so far has been to secure the Scottish Government’s support for wealth warnings on the dangers of payday loans in its 12 days of debtmas campaign, which we are debating today.

We have taken the debtbusters campaign out and about in Fife and have visited several towns with our roadshow. We have handed out information about credit unions and where people can get advice if they are in debt, and have pointed out some reality checks about payday loans. We have been astonished by the response that we have had. For example, general practitioners have come up to me in high streets and said, “Can I get a pack of your postcards? I could put these in my surgery. People need them.” People from Gamblers Anonymous have come up to us and said, “This is a huge issue for us. High street bookies and online gambling are fuelling the debt crisis. We need to help our members to help themselves.” People from private sector landlords associations have come up to us and said, “Can I get some of your cards for our tenants, because they are struggling?”

The response to the campaign has been much more widespread than I thought it would be, and people really want to support the campaign. They recognise that there are three gaps: a gap in knowledge about where to get help; a gap in knowledge about where to get advice about credit in general; and a gap in knowledge about credit unions. We are lucky in Fife because we have several credit unions, ranging from small community-based ones to big ones such as the Kingdom Credit Union, serving thousands and thousands of savers. However, they all have the same problem, which is that they all struggle to promote themselves—it is as if credit unions are a secret society. I sometimes think that rich people get cars and banks while poor people have to struggle along with public transport and credit unions—it feels like that a wee bit.

The challenge for us all is to help promote credit unions and I think that debtbusters in Fife has shown that there is a real appetite for doing that. Once we get Christmas out the way, we will continue that fight.

Getting back to Christmas: kids are not daft, because they know when their family is struggling to make ends meet. They do not ask for much for Christmas, because they know that their parents cannot afford food, never mind presents. Perhaps it is those kids who live in poverty throughout the year and do not want to put their parents under pressure at Christmas who most deserve to be on Santa’s “nice” list. Their parents certainly believe that and they would willingly bankrupt themselves to ensure that their children get the Christmas that they deserve, even if that is only a warm house and a nice Christmas lunch. It is that, not the desire for a Ferrari or a 60-inch television, that drives people to phone the payday loan companies.

We can help those people. We can take action today to stand side by side with those families who face impossible financial choices at Christmas and every other day of the year. In supporting the motion, we can give people the knowledge to help them avoid the so-called easy-fix payday loans and find somewhere to turn that will not lead to the grinding reality of a cycle of inescapable debt.

Thank you, and I thank most members in tonight’s debate for their seasonal goodwill with the length of their contributions. I ask the minister whether, in that spirit, he will respond to the debate in a maximum of seven minutes.

17:40

I thank John Wilson for lodging the motion and for all the work that he does in the cross-party group on credit unions, which is one of the best attended and most active cross-party groups in the Parliament. Members from across parties have taken this opportunity to highlight the problems, misery, unhappiness and difficulties that can be caused to those who get into unsustainable debt, especially that associated with and caused by payday loans. The festive period can be a time of enormous financial strain for families throughout the country, with the pressures to buy presents for children and others. The 12 days of debtmas campaign aims to prevent people from getting into debt, especially at this time of year.

The campaign was launched at the Grampian Credit Union in Aberdeen on 18 November. I take this opportunity to thank its chief executive, Gill Mathieson, for hosting a very successful launch event. I also thank her staff and the volunteers who were there in force. I had some interesting engagement with them and, during that time, which was punctuated by television cameras, radios and so on, the staff still took calls and were still advising people.

The campaign is a bold one. It highlights the dangers of taking out payday loans. Last month, the Money Advice Service published its annual Christmas spending survey results, which showed that almost one in five people admitted that they were still paying off debts from last Christmas, and that 6 per cent planned to turn to payday loans to cover the costs of this Christmas. Like Rhoda Grant, I save with HI-Scot, which is an example of a credit union that is achieving a great deal, as are many credit unions throughout the country.

Sadly, more and more people are turning to payday loans. In six months, StepChange Debt Charity has helped 30,672 people with payday loan debts, which is nearly the same amount as it helped during the whole of 2012, and 800,000 people in Scotland are in serious debt. Plainly, it is vital that we do everything we reasonably can to ensure that people who need to access money and debt advice do so, and that they know where to get it. I am pleased that the credit unions are supportive of the Bankruptcy and Debt Advice (Scotland) Bill, which we have just debated. I very much look forward to that bill becoming law for the provisions that the credit unions generally welcome therein.

We take our responsibility for raising awareness very seriously. That is why we have undertaken not one but three campaigns this year to seek to prevent people from entering into unmanageable debt. As Alex Johnstone said, there is no foolproof way of doing that. The power of Government is not absolute, and those who are taking out payday loans today will not be listening to this debate. We must therefore remember that, out there in the real world, people are making their own decisions, right or wrong, and we want to get across to them the alternatives that are available. That is why we decided that the 12 days of debtmas was a good, popular way of doing that.

For the second time this year, we have worked in close partnership with the Daily Record, as we did when we produced the “Deal with your debt” publication, and the help out of the hole advertising campaign, which raised awareness of the debt arrangement scheme and directed people to money advice rather than to payday lending. Earlier, I advised members that 18,000 people had responded to the 12 days of debtmas campaign, but I inadvertently misinformed them. We are supposed to put that right as soon as possible and I have this fortunate opportunity so to do right now. I have been informed that there were 19,000 visitors to the website, not 18,000, and more than 2,000 people have searched for details of their local credit union. That has been a reasonably solid result.

The other point that I make, in response to one of Kez Dugdale’s questions, is that the second phase of the campaign is to run from the third week in January, so the campaign is not a one-off event and activity will go on after Christmas. It is important that the campaign should be sustained. The Scottish Government has allocated £250,000 to the campaign for the year, which is split into the two phases that I mentioned.

We must ensure that we get value for the taxpayers’ money that is used. We must evaluate campaigns and ensure that they are efficacious, which is their purpose. There is a reasonable balance to be struck: we need to use the money carefully, but we have a duty to promote the risks of payday lending, and we will continue so to do.

Kez Dugdale asked about a loan guarantee fund. We have examined the idea closely and I will write to her with full details on the matter. Our examination took some time, because we asked the four main trade associations to consult their members and gather views. The results were inconclusive and polarised; members of the Scottish League of Credit Unions remain strongly opposed to the suggestion. The trade associations provided information that was based on the views of 72 credit unions, of which 37 were supportive of a loan guarantee fund and 35 were not.

I make no judgment here, but it might be that the reason for that division is that many credit unions want to inculcate the ethic of saving and thrift. That is an important factor for some.

Will the minister give way on that point?

I will do so in a minute, if I have time—I am sorry, but I do not think that I will have time. I will write to the member with more detail, because she and Jackie Baillie raised the issue.

We have not ruled anything out at this stage and we are happy to consider all advice, but there are mixed views on a loan guarantee fund. I think that many credit unions think that there are many other ways in which they can be helped in the short and long term. For example, public sector organisations, such as the Scottish Government, can encourage employees to sign up to credit unions. That is going on and it does not involve a great deal of money. I pay tribute to the people who are involved.

The Bankruptcy and Debt Advice (Scotland) Bill is another short-term measure but, in the long term, as Mike MacKenzie said—and I do not make this a political point—given the consensus in the Parliament that payday loans should be properly regulated, it would be best if the Scottish Parliament were able to do that. The first thing that we would do is bring forward a cap on interest rates, which I think could be done by April 2014. That would really help people to avoid the iniquities of payday loans at Christmas 2014.

I thank all members who have taken part in the debate.

Meeting closed at 17:47.