HC Deb 26 October 1992 vol 212 cc789-99

`(1) Section 32 of the 1985 Act (Vesting of estate, and dealings of debtor, after sequestration) shall be amended as follows.

(2) After subsection (1) there shall be inserted the following subsection— (1A) A determination by the sheriff under subsection (2) below—

  1. (a) may be made on the application of the interim trustee or the permanent trustee; or
  2. (b) may be made by the sheriff of his own volition."

(3) In subsection (2), leave out "The sheriff, on the application of the permanent trustee, may" and insert "A determination under this subsection shall".

(4) After subsection (2) there shall be inserted the following subsection—

"(2A) A determination by the sheriff under subsection (2) above may be made—

  1. (a) in the circumstances in paragraphs (b) or (c) of subsection (1A) above, when the sequestration is awarded; and
  2. (b) in the circumstances in paragraphs (a), (b) or (c) of subsection (IA) above, at any time thereafter during the period of sequestration.".'—[Mr. Bill Walker.]

Brought up, and read the First time.

4.20 pm
Mr. Bill Walker (Tayside, North)

I beg to move, That the clause be read a Second time.

Madam Speaker

With this, it will be convenient to take new clause 2—Vesting of estate, and dealings of debtor, after sequestration (No. 2)—

`(1) Section 32 of the 1985 Act (Vesting of estate, and dealings of debtor, after sequestration) shall be amended as follows.

(2) After subsection (1) there shall be inserted the following subsection—

"(1A) A determination by the sheriff under subsection (2) below—

  1. (a) may be made on the application of the interim trustee or the permanent trustee; or
  2. (b) may be made by the sheriff of his own volition, and
  3. (c) shall be made on the application of a person representing not less than one quarter in value of the creditors."

(3) In subsection (2), leave out "The sheriff, on the application of the permanent trustee; may" and insert "A determination under this subsection shall,".

(4) after subsection (2) there shall be inserted the following subsection—

"(2A) A determination by the sheriff under subsection (2) above may be made—

  1. (a) in the circumstances in paragraphs (b) or (c) of subsection (1A) above, when the sequestration is awarded; and
  2. (b) in the circumstances in paragraphs (a), (b) or (c) of subsection (1A) above, at any time thereafter during the period of sequestration.".'.

Mr. Walker

My comments today will be directed largely at new clause 2, so I want to remind the House of what was said in Committee on 9 July. The point at issue then, although in a slightly different context, was whether a debtor should be required to file details of income and outgoings when lodging his or her petition.

My hon. Friend the Member for Edinburgh, West (Lord James Douglas-Hamilton) made some extremely helpful and reassuring remarks. He said: I certainly agree with my hon. Friend that there is much to be said in favour of adding details of the debtor's income and outgoings to the information that the debtor must lodge with his petition."—[Official Report, First Scottish Standing Committee, 9 July 1992; c. 291.] The Minister will be aware that the information required of the debtor under subsection (6A)(a) can be added by regulations. With such a power available, the need to specify the information required in the Bill would be diminished.

I emphasise the importance that the credit industry in the United Kingdom places on those remarks and the comfort that it draws from them. The new clauses are designed to rectify what I see as an operational shortcoming in the existing law. The objective of new clause 2 is straightforward.

Mr. John McAllion (Dundee, East)

Has the hon. Gentleman tabled the new clause on his own behalf or on behalf of any other organisation? If the latter is the case, should be not bring that to the attention of the House?

Mr. Walker

As is the case in such debates, we all take advice and receive recommendations. We all listen to that advice. Yes, I have received advice and I have never made a secret of that. I have no interest to declare and I hope that the hon. Member for Dundee, East (Mr. McAllion) will understand that. My only interest is that I hope that we can include in legislation something that will benefit the debtors and creditors and all those who are interested. If the hon. Gentleman would care to listen to me, he will learn that I intend to quote several contributions that were made in Standing Committee not by Conservative Members, but by Opposition Members.

The object of new clause 2 is quite straightforward. It has proved impracticable under existing law for creditors to seek reasonable contributions from any excess income that the debtor may have. However, the clear intention of section 32 of the Bankruptcy (Scotland) Act 1985 is that such a mechanism should exist.

New clause 2 is designed to ensure that section 32 becomes workable and viable. The principle of reasonable contribution from income is agreed on both sides of the House. I draw the attention of the House to comments made in Standing Committee by the hon. Member for Falkirk, East (Mr. Connarty). He said: I think that the hon. Member for Tayside, North wants more detailed information to be provided. A list of assets, liabilities, income and outgoings would show whether someone was genuinely insolvent. We often hear of people who have declared themselves bankrupt yet still drive a Jaguar and have a house in a salubrious part of the city. Something is missing in the inspection process. I hope that the hon. Member for Dundee, East will understand that that view is shared across the Chamber.

The hon. Member for Glasgow, Garscadden (Mr. Dewar) said in Committee: In a way, this is a Tayside, North point. It is a pity that the hon. Member for Tayside, North is not present to hear me support his general approach, because there is concern that sequestrations are sometimes used in circumstances that are not always appropriate. The hon. Member for Glasgow, Garscadden also said: Let us take the case of a person who is properly going through the sequestration process on the basis that he is in receipt of public benefit and nothing else. If that person, happily, is able to get a job with a substantial salary it is clearly right that a reasonable contribution, leaving enough for livelihood, is made available to the creditors. We might quarrel about where the line is drawn, but clearly the principle is correct."—[Official Report, First Scottish Standing Committee, 9 July 1992; c. 293–348.]

Mrs. Margaret Ewing (Moray)

Under the new clause, would not the hon. Gentleman seek immediate involvement of the debtor's income? At present the normal process is to allow a period of two to three months for the sheriff or trustee to take account of the debtor's income and requirements. Why is the hon. Gentleman trying to create a situation in which that period of consultation and negotiation is removed from the debtor?

Mr. Walker

The hon. Lady is right to some extent. I hope that I have shown in the speeches from which I have quoted that there is concern across the Chamber about the fact that the operational mechanics are suspect. While I do not pretend that anything that I introduce will be legislatively perfect, the intention of the new clause is clear. If the hon. Lady will listen to what I have to say, I shall demonstrate what the intentions are.

There seems to be general agreement that debtors should be required to make some reasonable contribution from their income if they can afford it. To require debtors to disclose not only their assets and liabilities but their income and outgoings when they file their petition will make the process of determining whether they ought reasonably to contribute much more straighforward. That is what the new clause seeks to achieve.

4.30 pm

An important deterrent effect is also likely to arise from such a system of disclosure. It will not surprise anyone to know that I am a great defender of deterrence. Those "non-genuine" debtors who previously would have used sequestration, safe in the knowledge that their income would probably not be scrutinised, will be likely to think again. To put it another way, the mere requirement to disclose income and outgoings is likely to weed out unmeritorious cases. In turn, the measure will have important cost-saving implications because such cases will be less likely to enter the system. I should have thought that that would be of interest to the Government. I am always looking for ways to save taxpayers' money.

Mr. James Wallace (Orkney and Shetland)

The hon. Gentleman deals with an important point. Does he have any idea of the extent—for example, in the past two or three years—of the abuse that he describes?

Mr. Walker

The evidence that I can produce today is based largely on the information that I have received within my constituency. The hon. Gentleman must also face cases in which people say, "Are you aware that So-and-So has gone bankrupt and is still living the life of Riley?" That is the difficulty to which the hon. Member for Garscadden drew attention. We all have such cases. There is a feeling that something is not right, but the matter can be put right. Those people who should not be in that particular category because they have funds and can contribute towards the debt should be made to do so.

I am conscious that the Government are anxious not to place barriers in the way of those in genuine difficulty, for whom sequestration is the only option. None of us is suggesting that we should put barriers in the way of genuine cases. This concern was demonstrated by the significant Government amendments to clause 2(b), which ease the requirements for a debtor's petition. Such a disclosure system as I have described would not constitute a serious barrier. I will explain why.

I have been fortunate to see a copy of a book written by Mr. Jim Gray, who is well known to Opposition Members as he has written to them about the Bill. Mr. Gray is a solicitor, and manager of the Drumchapel money advice centre. He is a prominent member of the money advice industry. The book is entitled, "A Guide to Money Advice in Scotland". I understand that it was published in May or June of this year, although the introduction is dated January 1992. The book is, in effect, a handbook for money advisers.

Before dealing with the main point, I should like to make three important observations on what Mr. Gray has to say. The first relates to credit references bureaux. In Committee I stressed how a person's ability to obtain further credit would be adversely affected by the credit reference record of a sequestration. We had some interesting debates on that aspect. That is of secondary importance to Mr. Gray, but I believe that it is vital. I remind the House briefly of what I said in Committee. If a young man in his late teens or early twenties decided to go into sequestration and later married, he would not get a mortgage—with all the related problems that that could cause. That would not be a good route to travel for a young man with prospects of a good income.

Mr. Michael Connarty (Falkirk, East)

Will the hon. Gentleman clarify that? He said that someone who had been sequestrated would not get a mortgage if he married. My understanding is that there is a time limit on the person's lack of ability to get credit. I presume that the hon. Gentleman means that he would not get a mortgage within a fixed period.

Mr. Walker

He would not be legally entitled to a mortgage within a fixed period, but after that he would also have difficulty in obtaining credit. Let us not underestimate the importance of one's track record. I am anxious that people should not go into sequestration if they would be well advised not to go down that route. It is not always the best option. I am drawing attention to the weaknesses in the way people have been directed and I do so not out of malice, or in an attempt to prove one side right or wrong, but out of genuine concern.

We have all met constituents and looked into the history of their problems, only to find that they are linked with something which happened some years earlier. It is important that we bear that in mind.

Mr. Brian Wilson (Cunninghame, North)

I have no problem with the general thrust of the hon. Gentleman's argument, which I support. It may be appropriate to enhance what he is saying by recalling that a crucial failing of the Bill is that it removes one of the filters which protect people from precisely the problem that he describes. Insolvency petitioners, far from hastening people into personal bankruptcy procedures, stop many people from going down that road because up until that point they have been badly advised. Does he agree that the Government must take that on board, or they will increase the number of personal sequestrations in Scotland, which is contrary to their stated aim?

Mr. Walker

I have no argument with what the hon. Gentleman says. There is general agreement on both sides of the House that we want to ensure that when the Bill is enacted it will not encourage people who should not go into insolvency to go down that route. People who can afford to pay should make a contribution. More importantly, those people who have prospects of increased earnings in the near future would he well advised not to go down that route.

I am merely drawing attention to the book "A Guide to Money Advice in Scotland".

Mr. Connarty

There is a fixed time after which people are supposed to return to creditworthiness. I understand that it is three years. The hon. Gentleman said that he had been given advice by organisations in the credit industry, which he did not name. My concern—and, I think, that of the House—is that he may be reading into the minutes of the House the idea that credit companies may hold a Secret extended blacklist beyond the statutory three-year period. I should like him to make the House aware whether that is the case.

Mr. Walker

In real life, if I have money and want to lend it, I shall be selective about whom I lend it to. There is nothing sinister about that, and one must recognise it if one want to borrow—whether from a bank, building society or some other organisation which lends money—to buy goods or whatever. I ran department stores before I came to the House. We never made any secret of the fact that we vetted everyone who wanted credit, and there is nothing wrong with that.

The question is whether people who have gone down a certain route were best advised to do so. Sequestration may be the best possible route for many individuals, but the Bill must ensure that the checks and balances are right. What is written in statute does not necessarily mean that an individual can demand credit. One can have credit only if those who are lending are prepared to give it. I see nothing sinister in that.

Mr. Jimmy Wray (Glasgow, Provan)

It is a bit hypocritical of the hon. Gentleman to suggest that he is looking after the interests of people who have got themselves into debt when the Government had a borrowing rate of 6 per cent. and, before long, people had to pay 16 per cent. You are responsible for about 90 per cent. of the current insolvencies and are now trying to get people out of trouble.

Mr. Walker

I trust, Mr. Deputy Speaker, that the hon. Gentleman was not suggesting that you got people into debt and were now trying to get them out of trouble. Part of the problem with our discussion is that the hon. Gentleman is sending dots and I am receiving dashes. That is equally true of almost every discussion about personal problems. It is awfully easy to say that Smith and Bloggs are responsible. In real life, we all enter agreements believing that we can honour our commitments, but sometimes people enter agreements which they would have been well advised not to get into in the first place.

Paragraph 10.6.1 of "A Guide to Money Advice in Scotland", entitled "Advantages", says: —In most cases, all debts are wiped out after three years. —The trustee's fee can be paid by the court where there is a small assets sequestration". Paragraph 10.6.2 goes on to discuss disadvantages and says: —The trustee has wide ranging powers over the debtor's assets. —The undischarged bankrupt is disbarred from holding public office. In most cases, only the trustee's powers will worry debtors". Later, under the heading "When can the debtor start a new life again?" the author glibly talks about how much credit the bankrupt can obtain. That is misleading people.

My second observation on Mr. Gray's book is that nowhere in the entire chapter on sequestration does he mention advice being sought from the insolvency practitioner. I hope that that answers the point which the hon. Member for Moray (Mrs. Ewing) interjected earlier. We spent many hours in the summer listening to descriptions of the value of such advice, yet Mr. Gray's approach seems to be that the decision is for the money adviser alone. That is curious in the light of all that we have heard to date.

My third observation is on a passage in paragraph 10.2 of the book, which says: Personal bankruptcy has given rise to much debate amongst money advice practitioners. Some have felt that it offers the best solution to intractable cases where creditors are unwilling to accept that the debtor simply cannot afford to pay off even a fraction of the total debt. Others have argued that no-one should be paying off debts for over 3 years—the period of most personal bankruptcies. A few have argued that debtors on income support cannot afford any debt repayments and that in the absence of debt being written off, personal bankruptcy is the only option. Other advisers feel that bankruptcy should not be used as an easy option avoiding the need for the detailed money advice work set out in earlier chapters". The whole passage is agonised. Money advice workers seem to have many different views on what bankruptcy if for and some, judging by the last sentence, may be using the process just to save themselves work. All in all, it paints a disturbing picture. Those are, however, simply observations—albeit observations that throw further light on our committee hearings.

4.45 pm

My main point is that Mr. Gray's book makes it clear that the key function of all money advice work is to establish the debtor's income and outgoings. For example, paragraph 1.4 lists matters which should be included in the money process, including: … information gathering … recording and analysis of client's expenditure … preparation of financial statement". Appendix 2 contains a pro forma financial statement to assist the money adviser to establish the client's income and outgoings. If a debtor has sought money advice, his income and outgoings will already have been established. It would be a simple, cost-effective matter to transfer that information to the document that is to be lodged anyway in the court. A requirement on a debtor to lodge details of income and outgoings with his or her petition would not be onerous because the investigative work would already have been done by the money advice people who are routinely involved in sequestration cases.

Mr. Wilson

Does the hon. Gentleman intend that that should become a public document?

Mr. Walker

The new clause says that that information should be available to the sheriff at the time of sequestration. It is already available and would therefore add no additional burden of work. However, it would avoid making people go down that route and would have a determined value, which would certainly do something to help the complaints that we get about the chap driving round in his Jaguar, to which the hon. Member for Glasgow, Garscadden (Mr. Dewar) drew attention.

Mr. Wilson

rose—

Mr. Deputy Speaker (Mr. Geoffrey Lofthouse)

Order. The question is that the clause be read a Second time. Mr. Allan Stewart.

Mr. Bill Walker

rose—

Mr. Deputy Speaker

Order. I apologise to the hon. Gentleman. I thought that he had finished his speech.

Mr. Walker

I was giving way to the hon. Member for Cunninghame, North (Mr. Wilson). He and I seem to be involved in a dialogue which will, I hope, clarify my points.

Mr. Wilson

I wished to make a specific point. I accept that the record of income and outgoings is already prepared for the money adviser and that it then goes to the sheriff, and I see no great principle involved there, but I am concerned about whether it then becomes, by definition, a public document, as that would intrude on the rights of the individual.

Mr. Walker

I should have thought that that would be unnecessary because the sheriff has that information, so the circumstances would be simplified and improved.

A requirement on a debtor to lodge details of income and outgoings with a petition would not be onerous because the investigative work would already have been done by the money advice people who are routinely involved in sequestrations. I am aware that, in dealing with those matters, I have been re-travelling ground that we covered in Committee. However, I felt that it was essential to do so, particularly now that I am clearer about the Government's general approach to those issues.

On new clause 2, the reality of the position under current law is that the debtor keeps all his income. Simultaneously, all his debt repayments stop. The effect can be dramatic and may seem to the creditor to be unfair.

I have an example which is extreme but makes the point. Let us imagine that, before sequestration, the debtor's income was £1,800 per month and his debt repayments were £1,400 per month, making his net available income £400 per month. After sequestration, the debtor's income would be £1,800 per month, his net debt repayments would be nil and his net available income would be £1,800 per month. Is that fair? From the debtor's point of view it would seem very fair, but it definitely would not seem fair to the creditor. Any objective bystander would say that the debtor should make at least some contribution from his income.

In theory, under section 32 of the Act the debtor can be required to make a contribution, but section 32 has a fundamental defect: it relies on two separate individuals taking two separate decisions to the effect that the debtor's ability to contribute should be considered. The individuals involved are the permanent trustee and the sheriff. The Act seems to give those individuals no guidance as to when and in what way they should make their decisions.

The permanent trustee may apply to the sheriff, but no one can force the trustee to do so. The sheriff can act only if the permanent trustee applies. But if the permanent trustee applies, the sheriff appears to be under no obligation to take action. Any reluctance on the part of the permanent trustee or the sheriff is fatal to the operation of the section.

The credit industry is aware of no case—out of a total of 12,000 sequestrations per annum—in which section 32 has been used. A criticism of the current system frequently made by creditor organisations is that they frequently have no way of triggering the section even if they have relevant facts. They see cases in which any reasonable observer would agree that the debtor should make a contribution, but the creditor organisations have no way of requiring the court to explore the issue.

In the interests of fairness and balance, I believe that creditors should have the right to trigger the section. That is the core of new clause 2. To prevent frivolous applications from being made, I have included a requirement that at least 25 per cent. by value of creditors must agree to the trigger.

The other key element of my new clause is that it should be possible to consider contribution by the debtor from his income at the hearing of the sequestration award. The new clauses, particularly new clause 2, give a balance and make it possible for the sheriff to take action that he may not currently be prepared, willing or able to do. The reluctance to which I have drawn attention creates problems.

I think that the House will accept that the views expressed, some of which I have quoted, show that there is a consensus that we should examine the issue carefully. I hope that when my hon. Friend the Minister responds he will agree on two matters: first, that the Government could probably save money and, secondly, that the law surrounding sequestration could be tidied up and is currently most unsatisfactory.

Mrs. Ewing

I have listened with care and courtesy to the comments of the hon. Member for Tayside, North (Mr. Walker), but I must disappoint him and say that he has not persuaded me by his arguments that there is consensus on his new clauses. I believe that the rights of the creditor and the debtor deserve equal attention, but I do not believe that the new clauses address the problems.

I have carefully read the two new clauses and section 32 of the 1985 Act that they seek to amend. It seems that the hon. Gentleman has missed some of the salient points of section 32 and the sheriff's role. I understand that in a sequestration case all property belonging to an individual, apart from those possessions exempted for the purposes of warrant sales, become the trustee's property. In small business cases, any income derived from the business or a substantial bank or building society account also becomes the trustee's property. New clauses 1 and 2, particularly new clause 1, have a more serious impact on ordinary employees who are not likely to receive a high income but would be severely penalised.

Under section 32, the 1985 Act gives the creditor the right, through the trustee, to ask for a contribution. The system is similar to divorce settlement cases where an agreement is eventually reached on aliment. The normal procedure is that, after a few months, when the initial sequestration has been agreed and the person declared bankrupt, everyone can consider the assets, the family's requirements and its income, and reach a sensible agreement on what proportion of the income should go towards paying off the debt. That seems a sensible approach and one that I should certainly like to see maintained in the legislation, but I suspect that new clause 1 would largely remove it.

I understand why the hon. Gentleman argues the case of the creditors. He has argued the case in principle, but in practice it is impossible to have an immediate assessment of the debtor's needs. I believe that the breathing space is very important. An analysis of the figures shows that very few of the creditors have benefited as a result of sequestration. In 1989, out of 2,344 bankruptcy cases, ordinary creditors received dividends in only four cases. In 1990, out of 4,364 cases, dividends were paid in only 11. The hon. Gentleman's proposals would do nothing to resolve that problem. His new clauses would penalise those people with the least assets and income.

The Minister, like me, is not involved in legal practice, but his colleague the Under-Secretary of State for Scotland, the hon. Member for Edinburgh, West (Lord James Douglas-Hamilton) may be able to advise him. I am worried that the powers contained in the new clauses—

Mr. Connarty

As the hon. Lady has carried out research into who receives the money from the sequestration, will she say how much money goes to those who work in accountancy?

Mrs. Ewing

We dealt with that point at length in Committee. I suspect that the Bill has come before the House due to inadequacies in the previous legislation, and I take some credit for having consistently asked questions for two years to draw attention to that fact.

The sheriff has an important role to play in making decisions about bankruptcies and sequestrations. The proposals of the hon. Member for Tayside, North would seem to impose a new role on the sheriff. If a sheriff were to take an immediate decision at the time of sequestration that a proportion of income should come from the debtor, the sheriff would have to adopt an inquisitorial role. He would not previously have adopted such a role in the cases which came before him, when he would have listened to the applications made and passed a form of judgment.

Under the hon. Gentleman's proposals, the sheriff would have to take on an inquisitorial role and pass a verdict as though he were a judge. That would need a legal amendment and should not be covered by the new clause, which I hope that the Minister will not accept.

The Parliamentary Under-Secretary of State for Scotland (Mr. Allan Stewart)

My hon. Friend the Member for Tayside, North (Mr. Walker), as he did in Committee, has done us a service with his well researched and well considered contribution. He invites the House to reflect on where the balance should lie between the interests of the debtor and those of the creditor. I find myself in the unusual situation of having a great deal of sympathy for the motives of my hon. Friend and of finding a great deal of persuasiveness in the practical arguments advanced by the hon. Member for Moray (Mrs. Ewing).

5 pm

There is no doubt that the new clauses raise an important issue. A debtor's estate can comprise not only his or her assets, but also such contributions from that debtor's income as the sheriff may determine under section 32 of the 1985 Act. In making such a determination, the sheriff must decide what income the debtor needs to meet his basic living expenses and his obligations to his family. Only if the sheriff decides that a debtor has income in excess of that required to meet those needs will he fix an amount to be paid to the permanent trustee for the benefit of creditors. The machinery therefore already exists to ensure that contributions from income can be used to meet the costs of administering the sequestration and to provide a dividend to creditors. However, I accept that that machinery is rarely used at present.

The new clauses focus on the fact that only the permanent trustee may apply to the sheriff for a determination under section 32 of the 1985 Act. They would introduce three principal changes. First, the right to apply for such a determination would be extended to include the interim trustee, the sheriff and, in new clause 2, creditors where at least one quarter in value approve. I accept my hon. Friend's point that he has sought to avoid the possibility of frivolous applications under this formula.

Secondly, an application could be made before the permanent trustee is appointed or elected, including at the time of the award of sequestration itself. Finally, the discretion that the sheriff enjoys as to whether or not to issue a determination is somewhat curtailed in new clause 2.

The right of application under the 1985 Act was deliberately left solely with the permanent trustee because he is the person charged by law with the ingathering of the debtor's estate for the benefit of all creditors. The permanent trustee is the person who is fully armed with all the information relating to the debtor's circumstances which would enable him to judge if an application was likely to succeed or was justified. He would not seek a determination unless there was the prospect of a reasonable contribution from the debtor's earnings which would justify the cost of collection.

It cannot be expected that creditors would have the information to make such an application, nor would it be appropriate for them to do so. Some creditors might be tempted to use such a power anomalously to pursue the debtor, not because they believed it was in the overall best interests of all—unlikely, perhaps, but a risk nevertheless.

It remains the Government's intention to require a debtor to provide information on his income and outgoings when presenting a petition for sequestration. Such information will need to be considered by the interim trustee and the permanent trustee before a full picture of the debtor's financial affairs emerges—sufficient to allow a successful application under section 32. I reassure my hon. Friend on this point, but I agree with the hon. Member for Moray in the sense that I do not believe that it would be workable for a determination to be made at the time of the award of sequestration by the sheriff. Even though information about the debtor's assets and liabilities had been lodged with the petition, it is unlikely that the debtor's full financial circumstances would have been properly investigated at the time sequestration was granted. In particular, the extent of any obligations to the debtor's family may not be readily apparent, so the sheriff would be acting in the dark to some extent.

Nor do I see any compelling reason to muddy the respective roles of the interim trustee and permanent trustee to allow the former to apply. The permanent trustee, with his much fuller knowledge of the debtor's financial affairs, is best placed to deal with such matters. I accept that limited use is made of the powers in section 32 at present. In the past two years or so, only 5 per cent. of debtors made any contribution from their income towards the estate. That is because many debtors are already on a low income or in receipt of state benefit and so are unable to contribute anything.

There may be scope to make greater use of the existing powers in some 10 to 15 per cent. of cases, but I believe that one must continue to rely on the professional judgment of the permanent trustee as to whether it makes sense to pursue a contribution from income, and leave the discretion with the sheriff. We should also bear in mind the fact that creditors already have the option of taking the trustee to court if they feel that he is not acting in their interest.

As so often in the course of our proceedings in the Bill, both sides are agreed on the need to strike a balance between the interests of debtors and creditors, although we have on occasion disagreed as to precisely how to strike that balance. My hon. Friend the Member for Tayside, North has done the House a service by raising these points today, but I must repeat that the basic structure and approach of section 32 is the correct one. Perhaps greater encouragement could be given to its use in future. I hope that, in the light of the practical problems that I have outlined, my hon. Friend will not press his new clause.

Mr. Bill Walker

I accept what my hon. Friend says about section 32. I imagine that these matters will be debated at considerable length in the other place. I do not want to detain the House by talking about what happens in a sheriff's court in other areas on which the sheriff does decide; nor do I wish to force these matters to a Division. Therefore, I beg to ask leave to withdraw the motion.

Motion and clause, by leave, withdrawn.

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