Financial Guidance and Claims Bill [ Lords ] (Second sitting)

Debate between Alex Burghart and Yvonne Fovargue

Thursday 1st February 2018 Public Bill Committees

[Yvonne Fovargue]

I thank the Minister for his letter about breathing space and the other issues, but it gave me another question for him. He mentioned a six-week breathing space period. I have said this many times: please, please talk to debt advisers. Six weeks is really not enough time.

[Alex Burghart]

I appreciate the point the hon. Lady is about to make, because I heard her make it in the Chamber the other day, but does she acknowledge that the six-week breathing space in Scotland has been effective? That is an interesting example of effective legislation coming out of the Scottish Parliament. Although a longer breathing space may be preferable, six weeks has been shown to be effective up there.

[Yvonne Fovargue]

It may have been shown to be effective, but it has not been shown to be the right amount of time. The average debt in Scotland takes four months to handle, so six weeks is not the right amount of time. People have regularly asked for extensions to the six weeks.

--- Later in debate ---

[Alex Burghart]

To re-emphasise the point—I promise not to come back on it again—that the six-week breathing space in Scotland has led to a reduction in bankruptcies. It has been successful in that respect. It is wrong to suggest that six weeks is wholly inadequate.

[Yvonne Fovargue]

The number of bankruptcies is not the issue; they are actually quite rare. A very small proportion of the people who go to debt organisations are made bankrupt. It takes most people with the average amount of consumer debt four to six months to deal with it. Those are not people who would ever have looked at bankruptcy. Bankruptcy is not appropriate for them and would not even be considered.

The average number of consumer debts is rising, and creditors are slow at responding. People often forget to bring in a debt, and so they have to write to all the creditors and redo the statements. Six weeks is just about better than nothing, but I would say, from my long experience of dealing with debts, that four months is probably the minimum. We want to prevent creditors from delaying it until the six weeks is over and people have to go for extensions, which may or may not be granted. Some creditors—I have to be honest—delay it simply so they are not part of the solution.

Although I still think the length of time is inadequate, I welcome the proposal for a breathing space. Another issue with the length of time is that it is very difficult for people who suffer from depression or low-level mental health problems to make regular appointments, and they are often asked to come in all the time to deal with their debt. That needs to be taken into account. I welcome the move, but please do not be wedded to six weeks.