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SP Paper 688

SL/S2/06/R44

44th Report, 2006 (Session 2)

Remit and membership

Remit:

1. The remit of the Subordinate Legislation Committee is to consider and report on-

(a) any-

(i) subordinate legislation laid before the Parliament;

(ii) Scottish Statutory Instrument not laid before the Parliament but classified as general according to its subject matter,

and, in particular, to determine whether the attention of the Parliament should be drawn to any of the matters mentioned in Rule 10.3.1;

(b) proposed powers to make subordinate legislation in particular Bills or other proposed legislation;

(c) general questions relating to powers to make subordinate legislation; and

(d) whether any proposed delegated powers in particular Bills or other legislation should be expressed as a power to make subordinate legislation.

(Standing Orders of the Scottish Parliament, Rule 6.11)

Membership:

Dr Sylvia Jackson (Convener)
Mr Adam Ingram
Gordon Jackson (Deputy Convener)
Mr Kenneth Macintosh
Mr Stewart Maxwell
Euan Robson
Murray Tosh

Committee Clerking Team:

Clerk to the Committee
Ruth Cooper

Senior Assistant Clerk
David McLaren

Assistant Clerk
Jake Thomas

Support Manager
Andrew Proudfoot

Bankruptcy and Diligence (Scotland) Bill as amended at Stage 2

The Committee reports to the Parliament as follows—

1. At its meetings on 21 and 28 November 2006, the Committee considered the inserted or substantially amended delegated powers provisions in the Bankruptcy and Diligence etc. (Scotland) Bill as amended at Stage 2. The Committee reports to the Parliament on such provisions under Rule 9.7.9 of Standing Orders.

2. Under Rule 9.7.10, the Executive provided the Parliament with a supplementary delegated powers memorandum1.

3. Evidence2 was taken from Executive officials on 21 November 2006. The Committee was grateful to the officials for the explanation and clarification offered during the evidence session. Subsequent correspondence with the Executive is published in the Annex.

Delegated powers

4. The Committee considered all of the powers as set out in the Supplementary DPM and is content with sections: 12, 14A, 64, 72, 81, 81(2), 81(5A), 85, 86, 156 (sections 15K and 15L of the 1987 Act), 160, (sections 9GA, 9K, 9L and 9M of the 2002 Act), 192 (sections 73A and 73MA of the 1987 Act), 195A (section 7A of the 2002 Act), 196, 197A, 197B, 197C, 198(2) and 198(6A).

5. The Committee particularly welcomes changes to sections 1, 17 (inserting new section 39A of the 1985 Act), 18, 43, 48 and 62, which were made in response to its concerns and those of the lead Committee.

6. The Committee had at stage 1 considered that the powers at sections 116, 117 and 133 should be subject to affirmative procedure and it noted that the Executive had not redrafted these provisions, which are subject to negative procedure, in the light of its concerns.  During oral evidence, the Committee heard that the Executive considered these to be “essentially housekeeping powers” which it did not envisage would be used to make policy changes.  The Executive therefore considered that negative procedure provided the appropriate level of scrutiny.  The Committee is content with the Executive’s explanation and the powers as drafted. 

7. The Committee had similar concerns in relation to sections 15H of the 1987 Act, and sections 162 and 172 of the bill but accepted the evidence heard from the Executive in relation to these powers.

8. The Committee sought clarification that the courts had been consulted in relation to the powers contained at 28A, 15K, 15L, and 73MA of the Debtors (Scotland) Act 1987, and sections 9GA, 9K, 9L and 9M of the Debt Arrangement and Attachment (Scotland) Act 2002.  The Executive confirmed that it had met with representatives from the Court of Session and the Scottish Court Service.  The Committee was informed that a joint implementation group will be established in January 2007 to examine the relevant powers.  The Committee is satisfied with the Executive’s response and has no other points in relation to these powers.

9. The Committee raised a drafting point in relation to 196(2A) and accepted the clarification offered by the Executive, as reprinted in the Annex to this report.   

Section 198 – Information disclosure

Section 198(1) – Information disclosure regulations

10. Section 198(1) provides that Scottish Ministers may, by regulation, make provision for the sheriff to obtain information about debtors, and provides for the disclosure of that information to creditors to facilitate diligence to enforce payments of debts due, by virtue of decrees and documents of debt. At stage 2, a new paragraph was inserted into section 201 of the bill, which provides that certain regulations are subject to affirmative procedure.  This includes the first information disclosure regulations made under section 198(1).

11. The Committee at stage 1 considered, due to the subject matter of the proposed regulations, that minor amendments might not need to be subject to affirmative procedure but considered that more substantial ones should require affirmative approval from the Parliament.  It therefore recommended an open procedure for regulations, whereby the procedure used would depend on the nature of the amendment proposed. 

12. On questioning, the Executive officials agreed that it could not guarantee that every exercise of the power would be for a minor change but considered that the use of affirmative in the first instance, followed by negative procedure thereafter was appropriate.  The Committee remained concerned and lodged stage 3 amendments to allow for the use of an open procedure.  The Executive in response lodged its own amendments to address the Committee’s concerns.  These amendments provide for both an open procedure and the use of affirmative procedure in the first exercise of the power.

13. The Committee welcomes the Executive’s stage 3 amendments to this section of the bill.

ANNEX

The Committee asked the Executive the following questions:

Section 196 – Amendments of the Debt Arrangement and Attachment (Scotland) 2002

1. The Committee seeks clarification as to whether the Executive considers that the provision in subsection 2A is necessary, given subsection (4) of section 7.

Section 198(1) – Information disclosure regulations

2. The Committee notes the Executive’s view that only the first exercise of the power in section 198(1) requires a high level of scrutiny and that this first exercise should be subject to affirmative procedure with subsequent regulations subject to negative procedure.

3. The Committee considers that, whilst it may frequently be the case that subsequent exercises of the power are minor, this may not always be the case.  The Committee agrees that minor amendments should not be subject to affirmative procedure but considers that more substantial amendments should require affirmative approval by the Parliament.  The Committee has therefore agreed to lodge an amendment at stage 3 whereby the procedure to be applied on any exercise of the power would depend on the nature of the amendment proposed.  The Committee seeks the Executive’s views on this proposed open procedure.

The Scottish Executive responded as follows:

1. Your letter of 21 November sets out the points relating to the provisions of the Bankruptcy and Diligence Etc. (Scotland) Bill (“the Bill”) on which the Committee is seeking an explanation.  The Executive responds as follows.

Section 196 – Amendments of the Debt Arrangement and Attachment (Scotland) Act 2002

2. The Committee has asked the Executive to comment on the need for section 196(2A) of the Bill in light of section 7(4) of the Debt Arrangement and Attachment (Scotland) Act 2002 (“the 2002 Act”).

3. Section 196(2A) of the Bill amends section 3 of the 2002 Act to make it clear that sections 3(1) and (2) of the 2002 Act are subject to contrary provisions in regulations made under section 7(1) of the 2002 Act. 

4. Section 3(1) of the 2002 Act requires a debtor to obtain advice from a money adviser in relation to certain issues, such as the debtor’s financial circumstances, prior to making an application for the approval or the variation of a debt payment programme.  Section 3(2) requires the application made by the debtor to contain a signed declaration by a money adviser and to specify the money adviser’s name and address.

5. Section 196(3A) of the Bill amends section 7(2) of the 2002 Act so that, inter alia, regulations made under section 7(1) of the 2002 Act can make provision about the circumstances in which some or all of the functions of a money adviser can instead be carried out by an approved intermediary and circumstances in which a debtor is entitled to make an application for the approval or the variation of a debt payment programme where the debtor has not obtained money advice under section 3(1).

6. Section 7(4) of the 2002 Act enables regulations made under section 7(1) to modify any enactment including the 2002 Act.  This power could therefore have been used as an alternative to section 196(2A) to modify section 3 of the 2002 Act when making regulations under the new powers set out in section 196(3A) of the Bill which affect the requirements in those provisions.

7. Even although legally the Executive could have relied upon the power in section 7(4) of the 2002 Act, the Executive considers it preferable for section 196(2A) to be included in the Bill for the sake of clarity.  This provision will make it clear on the face of the 2002 Act that there is a power in section 7(1) of the 2002 Act to make regulations to limit or modify the requirements for money advice.

8. There is precedent for this approach in the 2002 Act at section 2(4) where it is provided that an application for a debt payment programme is to incorporate the consent of all of the debtor’s creditors, subject to any contrary provision in regulations made under section 7(1) of the 2002 Act.

9. Section 196(2A) not only therefore provides a greater measure of clarity than reliance upon section 7(4) of the 2002 Act, but is also consistent with the current drafting of that Act.

Section 198(1) – Information disclosure regulations

10. The Committee has advised that it has agreed to lodge an amendment at Stage 3 of the Bill so that the procedure to be applied on any exercise of the power to make regulations set out in section 198(1) of the Bill would depend on the nature of the amendment proposed.  The Committee has asked the Executive to comment on the proposed “open procedure”.

11. The Executive can advise that the “open procedure” referred to by the Committee has tended only to be available in exceptional circumstances and has been rarely used.  As an open procedure entails Parliament delegating the decision on the appropriate procedure to be used to Ministers, any application of the open procedure requires to be made only where particular criteria applies.

12. It can be found, for example, in section 2(2) of the European Communities Act 1972, an act of particular constitutional importance.  The powers in section 2(2) of that act are extremely wide.  They may be used to make a whole range of provisions from very minor provisions to substantial provisions of the type which are contained in primary legislation.  Moreover, they cover several different areas of law. 

13. Whilst the power contained in section 198(1) of the Bill is not of the same width as that contained in section 2(2) of the European Communities Act 1972, the Executive recognises that it can be described as relatively substantial and dealing with matters of a particularly sensitive nature.  It can be distinguished from other powers relating to data sharing on the basis that it is capable of being used to set up a whole new court based information disclosure scheme which will impact directly upon the rights of several groups of people such as creditors, debtors and third party information holders.  It is therefore capable of having a wide effect.

14. The first set of regulations made under this power will set out the details of the information disclosure scheme and should, without doubt, be subject to affirmative procedure.  The power could be used subsequently to prescribe other types of information which may be obtained by creditors, the terms of disclosure of that information and any other provision as Scottish Ministers think fit.  The Executive accepts therefore that subsequent regulations could also deal with matters of a particularly sensitive nature and might merit affirmative procedure.  Conversely, subsequent regulations could alter a minor detail of the information disclosure scheme.  Such regulations would not be considered as sensitive in nature and would accordingly be more suited to negative procedure.

15. The Executive recalls the SLC’s recommendation in its stage 1 report that due to the sensitivity of the powers involved, all regulations made under this power ought to be subject to affirmative procedure.  It is grateful for the Committee’s further consideration of this power and its recognition that, in fact, some regulations made under this power may simply tweak an existing information disclosure scheme and would therefore be more appropriately dealt with by negative procedure. 

16. In this context, and in light of the particularly sensitive nature of the power contained in section 198(1), the Executive agrees that there are exceptional circumstances which merit the use of an open procedure.

17. The Executive notes that the Committee has lodged its own amendments, however, on the basis that those amendments do not preserve affirmative procedure for the first set of regulations under section 198(1) (which the Executive and the Committee have both agreed is appropriate) the Executive has lodged its own amendments.  Those will provide for such an open procedure but retain affirmative procedure for the first set of regulations made under section 198(1).


Footnotes