Alan McIntosh: Emergency debt laws should be extended, not repealed



Alan McIntosh

Alan McIntosh calls for an extension to emergency laws aimed at helping Scots who are struggling financially in the midst of the pandemic.

As Scotland enters phase 3 of the route map to exit the lockdown, there is a danger of being seduced into believing the Scottish economy will bounce back and begin to make a full recovery.

The case against this, however, is overwhelming. With more than one million Scots having been furloughed and think tanks making dire economic forecasts for the retail, hospitality, and tourism sector, the reality is more likely to be a tsunami of redundancies once the UK government pulls the plug on its financial support schemes.  The bounce back, as they say in stock markets, may be more like a dead cat bouncing.

It would, therefore, be premature for the Scottish government to even begin thinking about repealing the emergency measures introduced at the beginning of this crisis to help Scots struggling financially with this crisis.

This includes the measures that were taken to extend protection for people from sheriff officers from 42 days to six months, when they used Scotland’s statutory moratorium procedure for debt.  It also includes the decision to require landlords to give six months’ notice before initiating court action for rent arrears; and includes the steps to waive bankruptcy application fees for those in most need. 

However, unless the Scottish government acts, all these measures will be repealed on the 30th September 2020, when the sunset clause for the Coronavirus (Scotland) Acts No 1 and No 2 come into effect.

To allow this to occur now would be financially calamitous for many. As we have seen from previous economic downturns, financial fallout is often a lagging effect of an economic crisis and often comes later: not when the events leading to it occur.  This will particularly be the case with this one. 

The last thing the Scottish government should be doing now is pulling away the safety net from those people it was intended to help.  

In fact, there is a stronger case to be made that this is the time to strengthen that net and even extend its reach to provide greater protection for those most vulnerable. 

Already the UK’s large debt and homelessness charities, such as Shelter and Citizen Advice are lobbying the UK government to take further steps to protect tenants; and the UK government has now laid regulations for their own debt Breathing Space Schemes in England and Wales, which will commence next year.  Both of which are far more reaching than anything we have in Scotland. 

They not only protect people from bailiffs but freeze interest and charges on debts and prevent evictions and repossessions. They also include specific measures to help those struggling with a mental health crisis if they are receiving help from mental health professionals. In Scotland we have no such comparative measures. 

It may well be, that even in those areas where the Scottish Parliament has the power to make a difference, the UK government may now go further in introducing protections for the most vulnerable.

We can only hope that the Scottish government now focus on the financial fallout from this crisis and use the full powers of the Parliament to not repeal the measures they introduced, but extend them to March 2021, and introduce more permanent measures in their place.

If it does not, it is not legal powers they lack, but political will. 

Alan McIntosh is a money adviser. The opinion expressed are his own.

Tags: debt



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