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As the convener has said, amendment 12 is absolutely in line with the calls from the committee to update the outdated level of protection from arrestment of earnings, given that, at the same time, the Government is talking about a cost of living crisis. The minister referred to COSLA’s concerns, pointing out that arrestments are used only as a last resort, but I have to say that I take the figures that he quoted with a huge pinch of salt. It would take an enormous leap of faith to believe that increasing the protected minimum amount will have the impact that the minister has referred to, not least because local authorities have other methods of recovering debt other than through earnings arrestments. Most earnings arrestments will remain effective as a means of recovering debt, even with an increase to £1,000, but local authorities will continue to use bank account arrestments, attachments, exceptional attachment orders, charges for payments, direct deductions from benefits and, ultimately, sequestration to recover debts.

Moreover—and this point has not yet been made—I believe that increasing this protection would encourage a collaborative approach between councils and advice agencies and provide more of an incentive to refer on debtors to ensure that their benefits are maximised, to help them pay their debts and reduce their liability for council tax arrears and to help them enter into repayment plans with creditors. It will, I think, have those positive effects.

The discussion has very much focused on the impact on councils, but another factor that has not been mentioned is the impact on residents themselves. Increasing the protected minimum amount will make more wage arrestments affordable to far more people and will make them an awful lot more sustainable. It is also likely to reduce the number of people having to refer to solutions such as sequestration, as a result of which creditors usually receive a nil dividend; protected trust deeds, which also produce very low dividend; or debt arrangement schemes, in which creditors receive only 78p in the pound. Ironically, in many cases, increasing the minimum protected amount could also increase the amount of overall debt that many councils recover from individual debts.

Another factor that has to be considered is that by increasing the protected minimum amount and making earnings arrestments more affordable for people, we will allow more to escape that vicious cycle of debt, in which they cannot pay their current or on-going council tax and therefore accrue more arrears. The effect of that will be increased in-year collections of council tax, which will reduce the funds that local authorities require to service debts.

Crucially, failing to increase the level that is protected to a reasonable level—and, indeed, doing so annually—skews the balance very much in favour of the creditor, because the level that is protected will fall in real terms, unless increased on an annual basis. However, I take on board the view that it might be desirable to make additional changes, and some of the correspondence that we received late yesterday suggests a number of improvements to mitigate the impact of my amendment, such as increasing the percentage recovery rates beyond the protected amount. That is something that I will certainly look at for stage 3.

On amendment 25, I think that it has been accepted that the current law is not robust enough, and I have not heard any argument against strengthening it. The principle of the amendment is robust, but I take on board the need, perhaps, for further changes, and I am happy to discuss such changes with the minister in the hope that we can find a way forward with this amendment and, indeed, amendment 12.

I very much welcome amendment 26, in the name of Paul O’Kane. There seems little point in having a minimum protected balance if the value of that is eaten away over time. Amendment 26 would provide that ministers must “bring forward regulations” to adjust the minimum protected balance in line with inflation when the sum is considered to be

“materially below its inflation-adjusted level”.

That seems a common-sense approach.

It is interesting that the minister, in his response, talked about recent increases in the figure related to bank accounts. That backs up my point regarding amendment 12 that we have not seen a similar approach to the level for wage arrestments. At this stage, I will not press my amendment 12, in the hope that we can find a way forward to, at the very least, bring those wage arrestment figures in line with those that we have for bank accounts.

Amendment 12, by agreement, withdrawn.

Amendment 25 not moved.

Section 6—Arrestment and action of furthcoming

Again, I am not clear on whether the minister is committing to including safeguards on public registers in the bill, but I welcome the opportunity to have further discussions about whether they can be added at stage 3, so I will not move the amendment at this stage.

Amendment 17 not moved.

Amendment 12, in my name, would increase the protected minimum earnings amount in earnings arrestment to £1,000, which would bring it into line with the amount for bank account arrestments. That would give much-needed respite to those who are in debt at a time when many families are facing a cost of living crisis.

The committee received significant evidence of people experiencing severe hardship because of funds being taken off their wages to pay debts. One survey from Advice Scotland that was provided to the committee highlighted cases in which people were unable to pay for the essentials, had fallen into arrears and were left unable to pay other debts. Respondents to that survey reported a deterioration in their mental health. One woman said that she was struggling to keep her head above water because of the amount that the courts were taking off her wages. Another person reported being

“stuck in the vicious circle of being unable to pay current year’s council taxes due to wage arrestment to pay off previous years”.

Some people had considered leaving their jobs to escape arrestments.

Unfortunately, advice agencies are increasingly finding that earnings arrestments are unduly harsh on people who are in debt. For example, they do not discriminate between the composition of the household that those who have their earnings arrested live in, so the arrestments apply whether someone belongs to a single-person household or a household where there are three children and only one earner. Raising the minimum threshold to £1,000, which I stress would be in line with the protected minimum balance for the arrestment of funds in bank accounts, could make a real difference to people. It is important to point out that that would not reduce the amount that creditors can recover; it would just affect the time period over which they can do so.

Amendment 25, in my name, relates to bank account arrestments and clarifies the position in relation to whether social security benefits can be attached by a bank account arrestment. My clear policy aim in the amendment is to protect funds deriving from social security payments automatically and without the need for any challenge by a debtor.

There is currently a mechanism by which a debtor can challenge unduly harsh arrestments, and that should extend to funds deriving from social security benefits. However, that necessitates an application to court, and we know that, in such cases, benefits have not always been protected. There is well-known case law that shows that to be the case, such as Woods v Royal Bank of Scotland. I accept that that case was some time ago, but there are more recent cases such as North Lanarkshire Council v Crossan in 2008, in which it was confirmed that benefits were attached, and more recently—last July—Edinburgh Sheriff Court held that to be the case in McKenzie v City of Edinburgh Council.

What is frustrating for advice agencies is that, when funds in bank accounts are arrested, the creditor often still refuses to release funds, despite the law saying that benefits do not lose their character as benefits when paid into a bank account. People therefore often need to go to court to get their funds back, as was the case in McKenzie v City of Edinburgh Council. That is despite most social security law containing specific inalienability clauses that say that benefits cannot be alienated from the person for whom they were intended and cannot be attached.

My proposed amendment would aim to restate that law in the Debtors (Scotland) Act 1987. It would basically state that, where the funds in an account come wholly from social security benefits, they cannot be attached. Where the funds are not wholly benefits and are mixed in with other income such as earnings, they could still be attached, and people would need to use the existing remedies under the 1987 act to apply to the court for some, or all, of the funds to be released.

It would also protect banks that attach funds in good faith without knowing that they were benefits, so those banks would have no liability to the person to whom the funds were owed. The provision would be especially helpful for people on benefits and advice agencies, as it would clarify the law for creditors, and in particular for local authorities, which are responsible for the vast majority of bank account investments. They would know in the future that, where people can show that the funds in the account are wholly benefits, the funds should be released to the person who owns the account.

Although the first £1,000 in bank account investments is protected anyway, where people’s benefits amount to more than £1,000, which may be the case if they are receiving housing costs or adult disability payments, the provision would ensure that their full benefits are protected. Equally, it would protect people who may receive backdated benefits—for example, adult disability payments—when they win an appeal. I believe that that was always Parliament’s intention, and the courts have always taken that approach. My amendment would reinstate that position.

I move amendment 12.

If, as the minister has said, the Government’s view is that a register should not be fully publicly accessible, what is wrong with having safeguards in the bill to prevent that from happening?

I take on board that amendments 13 and 14 would allow the use of, for example, electronic means as a way of serving arrestment schedules. That is understandable and a better use of technology, but I ask the minister to say more about how he intends to tackle the unintended consequences that Alan McIntosh has highlighted.

Mr McIntosh identified that the amendment removes the requirement that an earnings arrestment schedule can be issued personally only if there is a reason why it cannot be served on an employer by registered post or by recorded delivery. That is important because the current cost to do so by post is £42.91, whereas the cost of using a personal delivery service would be £86.02, which is more than double the cost. Given that more than 50,000 earnings arrests were served in 2022-23, the cost implications of that change are significant and would ultimately land on the debtor.

I hope that the minister will confirm whether he is considering reintroducing the requirement that the use of postal services should remain the preference ahead of personal delivery, and that personal delivery should be used only if postal services or electronic means cannot be used, given the cost of that to the debtor.

I am not clear from the minister’s comments about whether the Government is committed to setting out sanctions for creditors in regulations. However, in the light of the commitment that we will see those regulations before stage 3, I will not move the amendment.

Amendment 16 not moved.

Amendment 16, in my name, provides that, when regulations are made under section 1(2)(e), they must provide for sanctions for creditors who do not abide by the moratorium and for a complaints process for debtors.

Section 1 provides that the Scottish ministers

“may by regulations make provision”

about

“the consequences (if any) for creditors”

who abuse the moratorium. There must be a firm commitment to introduce sanctions for those who ignore the mental health moratorium. The existing plans advise that a debt adviser may inform the relevant authorities or regulatory bodies about a creditor’s misconduct, but there is no detail on who those authorities or regulatory bodies would be. The Scottish Government must set out what the practical consequences will be for creditors who do not adhere to the obligations and advise which relevant authorities or regulatory bodies will be responsible for enforcing the consequences. Without proper sanctions, the integrity of the moratorium may be compromised, as we have seen in England and Wales.

Amendment 17 provides that, when a mental health moratorium is established by regulations, those regulations may not make provision to make information about applicants publicly available. That would mean that there could not be a public register and that such information could not be published in another way. Serious concerns have been raised with the committee that creating a public record of people’s significant mental health issues could create undue stigma. Going through a mental health crisis can be daunting enough for someone without the added worry that that information could be made public. That could deter people from applying for the scheme and, therefore, severely limit its effectiveness, which might already be very limited, given the very tight proposed criteria.

The initial mental health moratorium consultation highlighted that the Scottish Government was considering the development of a public register of people who accessed the mental health moratorium if that could

“be done in a way that does not unduly stigmatise the individual.”

However, it is not clear how that would be achieved, and there is scepticism that there is any capacity to build a public register in a way that would not cause undue stigma.

Furthermore, mental health moratoriums that operate across the rest of the United Kingdom do not use a public register and, in my view, there is no requirement for one in Scotland.

I am very supportive of the other amendments in the group from Paul O’Kane and Daniel Johnson, who have highlighted the real concerns that the committee has heard. Their amendments very much speak to the committee’s view that the current criteria relating to a mental health moratorium are far too restrictive. That should change, either in the bill or through a process that allows the Parliament to properly scrutinise the criteria.

I will follow up on the point about monitoring fair work. It is fair to say that you assess the fair work commitments from the main contractor but, if you have awarded a contract, you do not monitor anything beyond that when the contractor subcontracts. Is that the case? Is that entirely a resource issue?

I presume that that is the case for the other witnesses, too.

Melanie Mackenzie indicated agreement.

Lynette Robertson indicated agreement.

I have a final question about resources. Craig Fergusson has already touched on the resource challenge that you would have when going beyond primary contractors. You are having to make millions of pounds of savings every year. Has there been a drive to use procurement as part of those savings? Are local authorities absolutely pushing procurement as a way to save money? If so, that is, I presume, in tension with buying fair trade goods. Is that fair to say?