Warrant Sales (Hansard, 2 June 1981)

§ Mr. James Dempsey (Coatbridge and Airdrie)
I preface my remarks by thanking Mr. Speaker most gratefully for the opportunity given to me to raise this sensitive matter even at this early hour of the morning. I felt compelled to do so after listening to a reply from the Solicitor-General for Scotland to a question that I raised only a few weeks ago.
The Solicitor-General said in his reply that so far as he was aware the bargain basement prices to which I referred and the market prices were the same. It is because there is such a substantial difference between bargain basement prices and market prices, arising out of the procedure known as warrant sales, that I sought to raise the matter today. I am advised that I may talk about the impact of legislation but not about the legislation itself, and I do not intend to do so.
I believe that the Solicitor-General must have been under a considerable misapprehension to make the statement that he made on that occasion. When a warrant sale is granted by the sheriff court, the sheriff's officers come to the home after advertising the sale and they poind, to use a Scottish word, the different items and price them. Their only concern in pricing them is to ensure that the global sum required to pay the debt owed by the debtor shall be recovered. In the pricing of the items, there is no relation whatever to the actual price that would be obtained on a fair market.
I have studied this matter for many years. Having been brought up in the distributive trade, I hope that the Minister will respect the knowledge that I have gained as a result of practical experience during my working life in dealing with this problem.
To give the House some indication of what is involved, I decided to look back at some of my notes and some of the events that I had noted. As I wished to give as clear a picture as possible of what the debate involved, I decided to relate the percentages of the original costs for which items were sold in warrant sales. For example, a 4-yd by 3-yd carpet was sold at 16 per cent. of the cost paid by the debtor involved. A three-piece suite and a gas cooker were sold at 12.5 per cent. of their original cost. A television set was sold at 11 per cent. of its original cost. A washing machine and a hearth rug were sold at 8 per cent. of their original cost. I have mentioned only a few items. I could cite double or treble that number of items from my experience of the injustice imposed on the unfortunate debtor as a result of this procedure. Sheriffs' officers are concerned only with getting sufficient money from the items to pay the debt.
In one case—well known to me—a person received a warrant sales notice for £300. The sheriff's officers moved in. They itemised enough commodities in the man's small business to raise £300. After they had done so, the individual involved brought in valuers to estimate the value of the goods and effects pounded by the sheriff's officers. The value turned out to be not £300 but slightly over £3,000. That is 10 times as much. Therefore, the sheriff's officers are not qualified to deal with the pricing of household goods. They are not employed in that trade. For long and wearily I have felt that auctioneers should be 904 brought in in such circumstances. They should auction the items, because they would get a fair return for the items which bore more relation to their price.
As a member of Lanark county council, I know that we had our own sheriff's officer. I spoke to his assistant only this week. He assured me that in his 15-year association with the sheriff's officers' department the goods arid household effects of debtors had been substantially underestimated by sheriff's officers in warrant sales. As a result, the sheriff's officers' employed by the county council constantly used to call the auctioneer. It was possible not only to pay the debtor from the sale of the goods but to pay the auctioneer's fees and the cost of transport whilst still retaining a surplus. The surplus was then handed to the unfortunate debtor as a bonus.
I appeal to the Minister to consider that aspect of the case and to remember that no country within the EEC adopts that system. Indeed, England and Wales do not even use that system. In England and Wales, through the bailiff arrangements, auctioneers are brought in to auction the goods to ensure that the unfortunate debtor gets a fair deal and a fair return for the goods and household effects that he has sacrificed in trying to pay his debts.
There is one way, without legislation, in which the scale of the problem could be reduced, and I ask the Solicitor-General for Scotland to use his good offices to prevail upon the credit concerns to curb the enthusiasm of the slick doorstep salesmen who prevail upon naive and weak-willed housewives to accept credit facilities beyond their ability to pay. If he could curb that activity, it would reduce the need to rely on the warrant sales procedure. The amount or irrecoverable debt would then be minimal and could easily be absorbed in the trading account of an undertaking.
Throughout my earlier life I was involved in a large-scale credit undertaking, and never once did we have to adopt the iniquitous practice of warrant sales. I hope that the Minister will take appropriate action to end this form of exploitation of unfortunate people who are tortured in soul and conscience by their liability to pay their way.

§ Mr. Dennis Canavan (West Stirlingshire)
I support my hon. Friend the Member for Coatbridge and Airdrie (Mr. Dempsey) because tomorrow I have a Private Member's Bill under the Ten Minutes Rule procedure. The purpose of the Bill is to abolish the system of warrant sales and to introduce an alternative system of debt collection.
I am glad that the Solicitor-General for Scotland is here tonight to reply to the debate. I hope that he will respond to the points raised by my hon. Friend and also to the points that I shall put to him.
If there are only 300 warrant sales taking place annually in Scotland, that is 300 too many. Many more such sales are advertised, and many more poindings or official evaluations and earmarkings of articles take place than warrant sales. It is a terrible threat to many people, their families, their relatives and others who just happen to be in the place of domicile at the time when the sheriff's officers arrive and use their threatening tactics.
I believe that the Solicitor-General is—or, at least, was—a member of the Faculty of Advocates. Early this year the faculty made some reformist proposals. Edo not accept that they were satisfactory, but at least the faculty came out in favour of the reform of the present legislation 905 concerning warrant sales. I hope, therefore, that the Solicitor-General will listen to the views of the faculty. Even the Tory Party reform group has made proposals on similar lines. Perhaps the hon. and learned Gentleman will say whether he will be supporting my Private Member's Bill.

§ The Solicitor-General for Scotland (Mr. Nicholas Fairbairn)
The House is indebted to the hon. Member for Coatbridge and Airdrie (Mr. Dempsey) for raising this matter on the Adjournment because it gives rise to public concern frequently as a result of public misunderstanding. I hope that I may put in proportion the concept of warrant sales.
In our society almost everybody uses credit. People use credit for electricity and gas and for many things that they obtain from retail organisations. They use credit perhaps from banks, perhaps from credit card companies, or from hire purchase. They ask a tradesman to come quickly to mend a pipe or stop a leak. They use credit for their motor car. So credit and debt are a universal manifestation of how people carry on their business.
One in four of all retailers' accounts requires pursuit, as does one in six of all lending organisation accounts. There is no civilised country that has abandoned the concept of compulsory sale as the eventual stop for the adjustment of credit and debt. Let us be clear about this. The creditor may be just as lowly and poor a person as the debtor; indeed, he may be poorer. The small plumber may be in a much more difficult situation in having to stay in credit that he cannot recover for a year than a debtor who owes him money. So let us understand that there is no balance between the creditor and the debtor—the creditor being presumed to be rich and wrong and the debtor to be poor and right.
Let me put the matter in proportion. In 1979 there were in Scotland 226 warrant sales, of which two-thirds were in domestic situations and one-third against businesses or offices which did not pay their debts. That means that there were approximately 150 warrant sales, in which in 90 cases the goods were adjudged. That is to say, they were not sold off but were adjudged to the creditor. In many cases the poinding creditor does not even bother to collect or remove the goods. We start with more than 100,000 decrees, so we are down from 100,000 decrees of debt to 226, which reduce to 150. That filter effect is important. As the hon. Member said, it goes through the poinding, the instruction of sale and the advertisement of sale, all the way down from over 100,000 to 226, because between 90 and 99 per cent. of all debts are eventually adjudicated by informal debt procedures. That results in a very small proportion of warrant sales.
It takes up to a year for the procedure to arrive at a warrant sale. Were the situation to be, as the hon. Member for Coatbridge and Airdrie said, that a person with a carpet worth £3,000 had it sold for £300, within the year he could easily have raised funds to settle that debt on the basis of selling some article that he owned. For every 350 decrees there is at most one warrant sale.
Who asks for warrant sales? Local authorities ask for them; public utilities ask for them; professional services ask for them; personal services ask for them. Central Government ask for them.

§ Mr. Canavan
Your Government.

§ The Solicitor-General for Scotland
Central Government. It is important to understand that the number of warrant sales that any one retail outlet will ask for in a year will be very rare. It is a very rare procedure for any organisation to undertake, but it is undertaken in the ultimate by a very large number of undertakings, both public and private.

§ Mr. Canavan
Tell us about the advertisements.

§ The Solicitor-General for Scotland
Of course there are advertisements. As I have said, the filter effect from the decrees down to the warrant sales results in between 90 per cent. and 99 per cent. of debts being recovered——

§ Mr. Canavan
It is intimidation.

§ The Solicitor-General for Scotland
—or adjusted as a result of this procedure.
The hon. Gentleman may speak of intimidation, but a person is owed money and a person owes money, and the procedures result in over 90 per cent. and up to 99 per cent. being satisfied as a result of those procedures.

§ Mr. Canavan
And some people commit suicide.

§ Mr. Donald Dewar (Glasgow, Garscadden)
I hope that the Solicitor-General will not resent it if I say that he sounds a little complacent. His figures are no doubt accurate, but there is a great deal of anxiety engendered, and a great deal of cost is incurred to the individual by the filter process to which the hon. and learned Gentleman refers.
On 13 May the hon. and learned Gentleman said that it was impossible to separate out from the general review of the law of diligence the question of warrant sales. Will he reconsider that point? Only last week the Faculty of Advocates made a specific recommendation for the reform of procedures to remove some of these anxieties. The Law Commission produced three or four weighty reports making specific recommendations for the reform of the procedure. Even if the Solicitor-General does not agree with abolition, will he not accept that there is a genuine case for reform now, instead of waiting for the far-off general review of the law of diligence?
The Solicitor-General for Scotland: I do not consider that there is any case for abolition. No civilised country has ever abolished the ultimate concept of the compulsory sale of goods, and Scotland has no reason to be the first. It would give the ultimate right to be a debtor who had no necessity eventually to pay his debt.
The Law Commission has published five consultative memoranda upon which anyone may comment, so that people may make recommendations. The Law Commission has not at any stage made a report or recommendations of its own.
I do not suggest that the concept, because it is usefully used by the hon. Member for West Stirlingshire (Mr. Canavan)—and wrongly used or abused—is evil. I do not consider that that is a reason for tearing away a small part of the law of diligence and taking the Law Commission's memorandum as a diktat, as opposed to a consultative document.
There are enormous protections. When there was undervaluation in the case of Scottish Gas Board v Johnson in 1974, the sheriff did not allow the sale to proceed. In 907 SSEB v Carlisle, where it was held that the proceeds would probably not cover the expenses of the sale, it was not allowed to proceed.
A sheriff's officer has a difficult and unpleasant task in carrying out the will of a creditor who may have been grossly wronged. Whatever else the debtor may be—perhaps he cannot pay, or has fallen on hard circumstances—he has obtained services, goods or credit from someone else who is having to bear that burden.
The sifting process will take more than a year and only a tiny minority of cases end in warrant sales. Frequently a judgment results in the debtor being left with his goods. I emphatically dismiss the claim that there is universal hardship. Warrant sales are the tiny pinhead of a vast number of adjudications.

§ Mr. Dewar
The hon. and learned Gentleman is being far too dismissive of the troubles and pains of the procedure. It is not good enough to quote judgments from sheriff courts. The hon. and learned Gentleman knows that many people at the wrong end of undervaluation are unlikely to have the means to go to the sheriff court or the experience to deal with the processes that are required.
If the hon. and learned Gentleman holds unsympathetically to the line that nothing can be done until the final recommendations of the Law Commission on diligence are available, will he give us some idea when they are expected, and what guidance Ministers are giving the commission about the urgency of producing that report?

§ The Solicitor-General for Scotland
The hon. Member is exaggerating the situation. His references to undervaluation are not realistic. It has been suggested that one should go to the auction room. I could quote figures from auction rooms to answer the hon. Member for Coatbridge and Airdrie.

§ Mr. Canavan
Quote them.

§ Mr. Deputy Speaker (Mr. Bernard Weatherill)
Order.

§ The Solicitor-General for Scotland
If one goes into a shop and buys any article and then takes it to an auction room, one will get a fraction of its price.

§ Mr. Canavan
Quote the figures.

§ The Solicitor-General for Scotland
May I appeal to you, Mr. Deputy Speaker, to ask the hon. Member for West Stirlingshire not to interrupt from a sedentary position.

§ Mr. Canavan
Will the hon. and learned Gentleman give way and quote the figures that he says he can quote about——

§ Mr. Deputy Speaker
Order. The hon. Gentleman must not interrupt from a seated position.

§ Mr. Canavan
I got up from my seat.

§ Mr. Deputy Speaker
But the Solicitor-General for Scotland has not given way.

§ Mr. Canavan
The hon. and learned Gentleman is too incapable to do so.

§ The Solicitor-General for Scotland
It is, of course, a matter of great hardship and despair if a person eventually suffers a warrant sale. It is easy to become emotional about such matters, but they must be put into perspective. Of 100,000 decrees of debt, 99.9 per cent. are settled through the prescribed process and one must remember that for every debt there is a creditor. Any complaint of undervaluation or harassment—and none has been substantiated by those who have inquired into them—will always be investigated by the sheriff.
The ultimate equity that all countries take is the compulsory sale of goods, and I do not believe that, there is in Scotland any inequity that could be avoided in any other country. If improvements can be made, let them be proposed in the recommendations of the Law Commission. In the meantime, let us silence the emotional pretence that warrant sales are a widespread gross hardship.

§ Mr. Canavan
The Solicitor-General for Scotland's reply was a disgrace.