Chamber and committees

The Executive intends to reformprotected trust deeds so that they offer better value for all creditors, includingcredit unions. There is therefore no plan to prevent debtors with loans from creditunions obtaining debt relief through a protected trust deed.

The Executive undertook to reviewthe Debt Arrangement Scheme one year after implementation. The information gatheringphase of the review was completed at the end of January 2006, and we are consideringvarious amendments to the scheme.

One possible amendment is theintroduction of debt relief. Different ways of delivering debt relief are thereforeunder consideration, and they include both freezing of interest and compositionof debts.

The issue of implementation doesnot arise as a decision has yet to be made on including any form of debt reliefin the scheme.

The Executive intends that thereforms in the Bankruptcy and Diligence etc. (Scotland) Bill will strike a fairbalance between creditors and debtors.

As part of striking the rightbalance, the intended new diligence of land attachment already includes robust debtorprotections that will apply where homes are attached, including a power for thecourt to refuse to agree a sale that will have an unduly harsh effect, and a dutyon the court to look at whether there is suitable alternative accommodation.

Also, land attachment is a diligenceand debtors can therefore stop an attachment by getting help and support from thenew Debt Arrangement Scheme

The Executive nonetheless notesthe recommendation in the stage 1 report that the main dwellinghouse should be exempted.We will therefore consider carefully whether or not to make changes at stage 2 of the bill.

The Scottish Executive has keptin close touch with the Big Lottery Fund on the £257 million investment that thefund will make in Scotland’s communities over the next three years.

In partnership with the ScottishExecutive, the fund carried out an extensive consultation last year to inform thepolicy directions which have now been issued by Scottish ministers. In developingthe investment framework to implement these directions, the fund has worked closelywith a range of stakeholders, including Scottish Executive Departments.

Scottish ministers welcome thefund’s investment approach and its undertaking to make 60% of its funds availableto support voluntary sector activity. The fund’s investment framework, which waslaunched by ministers on 22 November 2005, was opened to applications on 2 May 2006.

We are in early discussionswith banks and other finance providers to promote a range of financial productsincluding basic bank accounts. We are also in contact with Treasury colleaguesand the Financial Inclusion Task Force who are working with the bankingindustry on a GB-wide level to reduce the number of people who are “unbanked”.

In addition, I currently chairYoung Scot’s Money Advisory Group whose remit includes reviewing the provisionof financial products and services available to young people.

Membership of credit unions inScotland has increased since 1999 to just under 5% of the Scottish adult population.Credit unions have become a pivotal part of the social economy and we are fullycommitted to supporting them in their work to help and serve our communities, byoffering affordable savings and low cost loans to their members.

The Scottish Executive isproviding funding of £400,000 in each of 2006-07 and 2007-08 to credit unionswhich are approved to carry out financial inclusion activities as a Service ofGeneral Economic Interest (SGEI), which can include the provision of credit unionbudgeting accounts. Through the SGEI we are compensating credit unions forproviding a suite of financial products and in addition we are also in contactwith Treasury colleagues and the Financial Inclusion Task Force who are workingwith the banking Industry on a GB-wide level to reduce the number of people whodo not have bank accounts.

The Financial InclusionAction Plan, published in January 2005 sets out what the Executive is doing nowand its plans for the future. It also outlines what we expect from localauthorities, credit unions and the money advice sector on an individual basisand through working together.

Initiatives include:

£5 million towards face toface money advice.

Over £1 million towardsfinancial literacy projects (Young Scot, GEMAP and 6 CAS pilot projectsScotlandwide).

£10.6 million FinancialInclusion Funding to the 11 most financially excluded local authorities.

Working with Money Advice Scotland andCitizens Advice Scotland on the Debt Arrangement Scheme.

Setting up the ScottishCredit Union SGEI scheme – this scheme is an approval process to allow ScottishCredit Unions to be compensated for providing financial inclusion products.

Financial Inclusion is part of the Executive’s wider Closing the Opportunity Gap approach to overcoming povertyand decisions on how this will be evaluated will be made in due course. Individualinitiatives currently being measured include the number of front line money advisersin post in each local authority area, the growth in credit union membership andnumbers receiving financial literacy training.

The Scottish Household Surveyhas found that, in the first three quarters of 2005, a bank or building societyaccount was held by the respondent or partner in 91.1% of households, compared to85.7% in 1999. In the most deprived 15% of areas the increase was from 67.5% in1999 to 81.6% in the first three quarters of 2005.

These figures do not includepost office or credit union accounts. If they are included then 94.9% of householdsin the first three quarters of 2005 had an account with either a bank, buildingsociety, post office, or credit union. A comparable figure for 1999 is not availablefrom the Scottish Household Survey.