Report to the People
Towards a Fairer System of Debt Recovery
Coming out of my office in the Parliament one evening, I happened to overhear a remark made by one of the more well-heeled locals.
"Of course," he informed his companion "in Edinburgh when you see tables and chairs in the street we call it a pavement café. If you see the same sight in Glasgow, they call it a warrant sale."
Such disparaging witticisms could, though, soon be a thing of the past. A Bill to abolish poindings and warrant sales has been tabled in the Scottish Parliament and is currently being scrutinised.
Together with my colleagues on the Labour benches, I despise warrant sales. They are more about punishing the poor than recovering debt. Indeed, a 1999 Scottish Office Report on the subject revealed that, overall, warrant sales against individuals only recovered 22% of the outstanding debt. No warrant sale recovered the whole debt and 82% did not even raise enough funds to cover the cost of the case!
It is apparent, then, that warrant sales do not work. However, what we must ensure is that the proposals for their abolition do not make life worse for the very people they are intended to help. If a reform of the law is to be effective and fair, there are two points which must be examined closely.
The first is that, according to the Scottish Office report, only 3% of cases proceeded as far as the execution of a warrant sale. Therefore, the other 97% do eventually meet their obligations. Any reform of the law must not make life easier for the crooks who can easily pay, but just refuse to. I met workers in the local Credit Union who told me that they had debtors who, although they had a job, a car and no shortage of money, simply refused to pay up. It was only the threat of a warrant sale which made them honour their debt.
Those who can pay MUST pay. That is only fair to the majority of people who do clear their debts. However, only abolishing warrant sales and putting nothing in their place would render debts unenforceable, reducing them to a mere matter of personal honour. How would I explain that to constituent who had worked hard all his or her life, going without to make sure the bills are paid?
Infuriating as this would be to the hardworking people of Inverclyde, there is a more serious problem. Without a mechanism for recovering money owed to them, the traditional lenders such as banks and building societies will be taking a greater risk if they lend to poor people. They would then be forced into one of two courses of action: On the one hand they could hike up the already expensive lending rates for poor people. On the other, they could simply refuse to lend to poor people at all, making it almost impossible for them to obtain credit from traditional sources. And where to you turn when you cannot get credit? Loan sharks.
These people don’t take your sideboard and sell it on the pavement – they take your sideboard and smash it up in front of your face.
We must be careful that a genuine attempt to reform an outdated and unfair law does not drive Inverclyde’s poor into the clutches of moneylenders, or act as a charter for the selfish and lazy. Hopefully with proper, rigorous scrutiny, debt law in Scotland can finally be brought into the 20th Century.
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