 Welcome everyone to the 28th meeting in 2018 of the Delegated Powers and Law Reform Committee. I apologize from Neil Findlay and Harrison Harris, who can't attend today. Welcome and then place Neil Bibby and Bill Bowman. Before we move to the main item of business, we've just got to decide on taking business in private. It's proposed that we take items 5, 6, 7, 8 and 9 in private. Those are consideration of delegated powers provisions in bills and in legislative consent memorandums relating to UK bills. Does the committee agree to take those items in private? Okay, so we'll move on to gender item 2, which is the formal stage 2 proceedings on the prescription Scotland bill. Can I welcome Ash Denham, Minister for Community Safety and her officials? Good morning, convener. Good morning, committee. For the purposes of stage 2, members should have copies of the bill as well as the marshaled list and groupings. The first thing to decide is that sections 1 and 2 be agreed to. Are we all agreed on that? Okay, so we'll now move to section 3 of the bill. Five year prescription exception for certain social security payments and tax credits. I'll call amendment 3 in the name of Mark Griffin, grouped with amendment 4. Mark to move amendment 3 and speak to those amendments. Thank you, convener. I move amendment 3 in my name. Amendment 3 and 4, lodged with the support of Citizens Advice Scotland, seek to reduce the prescription period for reserved and DWP benefits to five years. That will bring the period into line with the five year prescription period for the Scottish social security system. I move the Parliament back earlier this year to deliver greater dignity and respect in the Scottish social security system. My colleague Neil Finlay has lodged amendments to reduce the prescription period for council tax debts. There are no silver bullets, but I feel that they go some way to make sure that this Parliament is using its powers to bring fairness and to align with the principles that the law commission set out regarding the five year rule. Fundamentally, I want to raise concerns about the way that DWP believes that it needs additional leeway to manage its recovery and simply why it does not have its house in order. The issue is debated at length, as you will know at stage 1, with very clear contributions from Mike Daly and Mike Comiard that these periods should be and must be reduced to five years. In their evidence, they put it to committee that this is a simple matter of fairness that why should a claimant only have just one month to challenge a DWP decision but be liable for court action for 20 years. Some of the points that the DWP has raised in their evidence also have to be challenged. Today, I want to add some more detail to how those amendments fit into a jigsaw recovery policy, as well as setting out some of the DWP practices operational today. They said in their written evidence that the recovery of DWP benefit debt will often take longer than five years to recover due to the possibility of higher priority debts, multiple debts and the welfare considerations that limit recovery rates. The application of the five-year prescription would reduce our ability to recover public money and could erode some of the safeguards that we have in place to protect our customers from harsh or excessive recovery rates. They appear to infer that the consequence of the five-year prescription period is recovery of multiple debts. Within a shorter window would directly affect claimants who would be subject to more aggressive recovery procedures. I want to first point out those amendments and the bill relates to recovery, typically through the courts, an option that is costly, lengthy and infrequently used. The DWP does have other ways to recover its debts, direct deductions from benefits, or if a person returns to work for some time this deep pension as well as a bank and direct earnings attachments. Those powers that have no time limit are unaffected by this or the 1973 act and are ultimately reserved. Again, those amendments are not a silver bullet, but it is an improvement within the scope of this bill and within the scope of our powers within the Parliament. I am sure that the committee is already aware, but under current DWP rules, recovery processes are not as virtuous as the DWP evidence suggests. Under universal credit, the recovery rate can be as much as 40 per cent. We know that because advances have had to be requested 20,000 in my region since full service roll-out that many are suffering from such an excessive recovery rate. Secondly, by its nature, UC rolls together multiple benefits into one payment so that when deductions are made to UC, multiple benefits are recovered at once. I agree with the DWP evidence that distinction for legacy benefits is clear, but soon all and work benefits will be rolled together, so recovery will be rolled together too as soon as universal credit is fully rolled out. I disagree with its argument that it makes it harder to recover multiple debts from multiple sources of benefits when eventually they will all be rolled into one in-work benefit. Finally, on the DWP claims that the shorter window would require excessive recovery appears to be one based on misunderstanding. We know that the DWP would prefer recovery through its reserved powers, not through a costly court decree or document of debt. However, if it did exercise its right under the proposed amendment, it would have five years to take action. I am advised by Mike Homeyard that, should they secure a repayment on record through the reserved powers that they will have unchanged by any of the amendments here, that five-year clock would restart. Every single payment that they received, that five-year clock would reset. Every time they sent a letter or started enforcement action, that five-year clock would reset. It is not a hard five-year limit on the time that they have to recover that debt. It is a five-year limit for them to take action to start the process or to take a single payment. I hope that the committee would agree with me that if the DWP is not able to identify and begin recovery of its debt within five years, we should not ask them to get their house in order and start to set out processes that make that achievable rather than leave a 20-year period hanging over someone's head. As I have said, because the clock restarts when payment is made, the provisions under this bill are section 6, which ultimately will limit recovery to a hard 20 years. Can you hear these amendments cancel the existing rule in the 1973 act, which says that reserved social security debts can be pursued for 20 years and changed that rule to five years? That, I think, is far more reasonable than 20 years, and crucially it is in line with the position of this Parliament in relation to our own social security act. They would not prevent the DWP from using its reserved powers to make deductions from reserved benefits because the power to do that lies in reserved law. The DWP is right to pursue the debt through other civil mechanisms, through earnings attachments or direct deductions are preserved. It would align the powers of recovery in practical and operational terms because it would establish a near consistency with the six-year limitation rule in England, not to mention a far better administrative process. Finally, before I finish, I want to make clear that those amendments do not propose to remove child support or maintenance debt from the 20-year rule. Those are not social security paid by the state, although the DWP does administer it. The maintenance is recovered by DWP from the absent or non-resident parent and is provided to the parent with care. I think that retaining the power to recover that vital support until the child is an adult is something that we should all seek to preserve. We do, though, have a chance to use Scottish powers of prescription, not to impede the DWP's work to protect the public purse, nor to make a constitutional point, but instead to deliver greater dignity and respect. I hope that the committee will support those amendments today and move amendment 3 and ask committee members to also support amendment 4 in my name. Thank you, Mark. Any other members want to come in at that point? Thank you, convener, and good morning, Mr Gryffin. Welcome to the committee. We seek to clarify one or two points. You made reference to support from Citizens Advice Scotland. What direct engagement have you had with the DWP in composing those amendments? No direct contact with DWP other than reviewing the evidence that they have made to the committee. You would also recognise that this Parliament has no jurisdiction over the DWP, while it may be desirable for many members in here for the DWP to get its house in order, as you described it. We have no means of making that a reality, as functions of the DWP are reserved to Westminster. While the functions are reserved clearly, if we impose a five-year prescription, I would hope that that would mean that the DWP would get the house in order and collect those debts within a five-year period, rather than leaving those spending on for 20. So there is a practical step that we can take. You would hope that it would incentivise the behavioural change within the DWP, but you can see that that is not guaranteed. If they did not act, they would lose that ability to collect debt beyond five years. You referred to the courts as being a last resort and that would incentivise action within five years, whereas under 20-year prescription, other methods could be explored and exhausted beyond five years prior to taking court action. Would you accept that as correct? No, the advice that I have been given from external advisers who have given advice to this committee as well is that, as soon as any payment is made, as soon as any effort is made to recover the debt that that five-year period starts again, there is a hard limit on 20 years. So, effectively, the DWP could leave debt uncollected through this process until four years and 11 months, start again and have another five-year roll-over period, start again at four years and 11 months and do that four times up until the point where the hard limit of 20 years is met. So, anytime they took a payment, anytime they sent a letter to someone who was in any debt to the DWP that this five-year limit would reset and start again. You have stated, and I mention this again, about desiring the DWP to get their house in order, as you put it. If you wish to see an expedited process, would you require additional resources to be applied to the persons of debt? There are so few debts pursued in this way through legal action that the vast, vast, vast majority of debts are pursued through reducing the benefits that people currently receive or an earnings deduction. However, I cannot see that having a massive impact and a need for greater expenditures from the DWP. But setting aside the scale, the corollary of your argument is that there would have to be an expedited process. That is what you would define as a DWP getting their house in order. Ergo, if there is to be an expedited process, there would have to be some additional resources. Surely that is logical. I would accept that. As far as I would see, it would be minimal, but it would be agreeable to those extra resources if it removed a 20-year sentence over someone's head that the DWP were able to only have five years to carry that out, rather than having 20 years to pursue someone when an individual himself only has one month to go back to the DWP. As long as we are clear, we accept that this could lead to the DWP prioritising resources for persons of debt. I think that we need to make this more of a debate rather than a cross-examination of Mr Griffin. Mr Arthur, have you got any substantive points that you want to make? I do thank Mr Griffin for taking those questions. I sympathise with what is a well-intentioned amendment. However, my concerns are the unintended consequences that could lead from this, such as the DWP has highlighted in its memorandum to the committee earlier this year. I conclude by saying that this is a fairly short piece of legislation with a clear purpose, which is to clarify the law of prescription. Before looking at issues of reserved benefits, that would merit far greater consideration and consultation. As such, I will be unable to support the amendment. Any other members want to come in? Thank you, Mr Griffin, for taking the questions. You will have a chance to come back afterwards. Can I call the minister to say something? I would like to begin by addressing amendment 3. If it is Mark Griffin's intention to remove the exceptions for obligations to reserve benefit overpayments from section 3 of the bill, I would point out that amendment 3 is unnecessary. Amendment 4 will achieve this effect because the exception would be removed from the bill and the obligations would therefore fall to be caught by the new general rule. Reserved benefit overpayments do not explicitly need to be listed in paragraph 1 of schedule 1 of the 1973 act, as amendment 3 would do. Turning to the intent of Mark Griffin's amendments, section 3 of the bill provides that all statutory obligations to make payments will prescribe, after five years, with a few exceptions. One of those exceptions is obligations to repay overpayments of certain reserved benefits, including social security and tax credit overpayments. This exception preserves the status quo for those reserved benefits. In their response to the Scottish Law Commission consultation, the DWP made the point that recovery of social security overpayments often takes place over long periods of time and they would be concerned were the five-year prescription period to apply rather than the 20-year prescription period. That point was also made to the committee at stage 1. The DWP's view is that having a 20-year prescription period for recovery of reserved benefit overpayments allows them to protect the most disadvantaged in our society from harsh recovery methods. I would like to finish my statement well at the end. As an indication of the scale, DWP have, over the last few years, recovered an average of around £120 million per annum from debts that are over five years old. In their evidence to the committee, the DWP have been clear that making recovery of reserved benefit overpayments subject to the five-year prescription would impose greater hardship on the most vulnerable members of our society. They have informed the committee that they have a public duty to protect public funds and to collect arrears. It seems clear that changing the prescription period by reducing it would result in the DWP taking more money more quickly from those who would least likely to be able to afford it. Any move to a five-year prescription period would impact their ability to recover debts where recovery rates have been reduced on account of hardship or where the customer has a number of debts and recovery of later debts is on hold whilst the earlier debt is recovered. Ultimately, the DWP's policy and respect of reserved social security payments is a matter for them. This bill is about prescription generally. It is not the place to make any substantial policy changes in other specific areas. For those reasons, I would urge Mark Griffin not to press his amendments. Mr Griffin, you indicated that you had a question for the minister. I will allow a question, but you then get a chance to wind up. Thank you, minister, for taking an intervention at the end of your statement. It was simply to ask you to repeatedly talk about the DWP's view as to why five-year prescription was not appropriate and the impact that that could have on claimants and debt. What is the Scottish Government's view? Why do the Scottish Government feel that it is appropriate to have five-year prescription for Scottish social security debts? On the other hand, I agree with the DWP that five-year prescription is not appropriate. The Scottish Government's position is that we have accepted the view of the Scottish Law Commission on this matter, that we believe that this is a matter for the DWP, that it is a matter for them and that, more widely, this bill is a bill about prescription to improve clarity. It is not the place for this type of change that would be more far-reaching. I have much sympathy with the member's intention behind the amendments, but I do not think that, at this stage, it would be something that is appropriate to change things in this way without appropriate consultation, because this would be quite far-reaching. With regard to Scottish social security, that is the benefit of devolution. Scottish ministers can decide to make changes or to make a system that is completely different to the one in the UK and one that fits the Scottish context, and that is why the two things are different. I invite Mark Griffin to wind up and press all withdrawal. Given the minister's comments on amendment 3 and the necessity for that, I am happy to go away and look at that ahead of stage 3. I think that the minister has relied or overlaid on DWP evidence when it comes to this issue, rather than taking the principles at the heart of the Scottish Government's policy on dignity and respect. She mentioned that that is one of the beauties of the devolved system in which we are able to take different decisions. That applies also to the prescription bill in which we are able to take different decisions on prescription 2, but I am happy to seek committee's permission to withdraw amendment 3 and not press amendment 4. Are the members happy with that? Thank you, Mr Griffin. I will then move on to the next one, which is a five-year prescription exception for council tax. I will call amendment 5, which is in the name of Neil Findlay, grouped with amendments 6 and 7. I believe that Neil Bibby is poised to move amendment 5 and speak to all amendments in the group. Thank you, convener. I will move amendment 5 and speak to amendment 6 and 7 in the group as well. It is important to say, first of all, that it is not Neil Findlay or my intention to reduce the amount of money that councils have access to. We will continue to argue for sustainable and meaningful solutions to the chronic underfunding of Scotland's local authorities. Although I have not heard the evidence directly, the evidence that I have seen from removing the exemption of council tax from the five-year prescription rule is compelling. The removal of the exemption has been supported by many stakeholders. I know that committee members will be aware of that. There are a number of reasons that the law society has given for why the current exemption in the bill is problematic. Non-payment of council tax attracts a high penalty charge around 6 per cent. That could in fact act as a disincentive on the collecting council as the returns from the penalty will rise above inflation and therefore the effective value grows on non-payment. The payment practitioner has identified potential situations where people might in good faith believe that they had paid the council tax. That is further compounded by the joint liability for council tax, which means that a person could have paid their share of council tax but face a claim for payment again with significant interest because a joint tenant has not paid his or hers. It could prove prejudicial to the interests of justice to incur such high penalties many years later if no steps to collect the tax or enforce an order have been taken in the interim. In many cases it might be expected that uncollected sums are quite small and if the council is not sought to enforce within five years there may be a little practical appetite to pursue them many years later. At this committee, Mike Homeyard from Citizens Advice Scotland also told the committee that the position was unfair, citing problems with obtaining sufficient and adequate evidence from both the debtor and the local authority collection systems. He explained the way in which council tax is collected, exacerbates the difficulties debtors have in understanding their council tax debt and that citizen advice advisers see clients who have built up council tax debts over 10, 11 or 12 years. There is apparently without the council having taken any previous action to collect those debts. The clients cannot understand how the council apparently goes from inaction to drastic action that will have an impact on any property that they own. A five-year prescriptive period would force all creditors actively to try and enforce their debt, which would perhaps put off the need for things such as sequestration by councils. There is a wider point to be made about the cost of living and the affordability of council tax debt. Charity step changes recent report Scotland in the red 2017. Increasingly clients are in debt because they are falling behind on essential bills. In particular, council tax is a growing problem. Among those who contacted step change in Scotland, 41 per cent were in council tax areas up from 37 per cent in 2013. The amount of council tax areas owed also increased drastically by 45 per cent from 1,368 in 2013 to 1,981 in 2017, making council tax areas a much larger proportion of average debt. As members will know, my party is called on the Scottish Government to scrap and replace the council tax as it promised to do in 2007. Until then, we need a wider debate about the meaningful reform of local government and tax-raising powers. I move amendment 5, and I will seek to answer any questions that members have been closing. I will pick up on a few points. I am not getting any specific questions, but there are some areas that I want to highlight. In Mr Bibby's remarks, he spoke about councils being incentivised to delay seeking repayment due to the agreement of interest. It is interesting to know that, in the causal submission, they highlight the potential for a behavioural change if we move to a five-year period of prescription, which we argue would incentivise individuals to seek to get beyond that five-year period so that we were no longer liable for taxies. It is another point at the causal race, which I think is very significant with regard to the autonomy and status of local government. It is that this would remove a parity that exists between taxes owed to the Crown and taxes owed to local government. I have two more practical concerns. It is analogous to the issues raised by Mr Griffin's amendment that additional resources would be required to expedite the process of collecting debt. Mr Bibby alluded to the financial circumstances of local government. That is, again, an issue raised in the submissions from local government that this would require additional resources to expedite the process and these resources could be better spent elsewhere. The final point that I will make again is just with reference in the context of this bill. This is a short bill with a very specific purpose to clarify the law of prescription. Throughout stage one and another inquiry, the committee has explored a range of areas and a range of interests that this bill has provoked. However, what has become very clear is that, while areas such as council tax and a DWP do merit further consideration as a bill is not the place to do it, I would suggest to members who have an interest in those areas to consult and explore further. To bring forward, most substantive proposals that have been constructed following substantive consultation and engagement are not sticking simply to piggyback on the legislation that it is not designed for. I would like to directly address amendment 5, and I would make the same point to Mr Bibby Neil Findlay that I made to Mark Griffin on his. If the intention is to remove the exception for the obligation to pay council tax from section 3, then amendment 5 is unnecessary, as amendment 6 alone will achieve this effect and for the same reasons. The bill does not seek to change the position of council tax and its aim is simply to maintain the status quo as we understand it. Local taxes form a substantial source of income for local authorities paying for essential services like education, housing, roads and so on. The Scottish Government accepts the considered view of the Scottish Law Commission on this matter. At stage 1, COSLA told the committee how a 20-year prescription period for recovery of arrears allows local authorities to quickly begin the recovery process at minimal cost to taxpayers, all the while protecting those who owe arrears by entering into long-term arrangements. All of this would be jeopardised by changing and shortening the prescription period. I note that the committee has written to all 32 local authorities seeking further information on this point and received responses from 26 of them. It is important to note that not one of those agreed that changing the prescription period was appropriate. Instead, they are all adamant that no change to the status quo should be made. Among the points made by local authorities were that the policy reasons, which justify accepting taxes payable to the Crown from the five-year prescription, apply equally to taxes payable to local authorities. That is, there should be no distinction between taxes owed to central government and those owed to local authorities. Highland Council said that it would place local authorities at a disadvantage to HMRC and ordinary creditors. It is inconceivable to believe that this is actually what is at stake. Local authorities continue to recover a significant amount of arrears each year. More than £2 billion worth of council tax debt is currently owed across Scotland and £1.2 billion of that relates to debts that are more than five years old. That is money that would be spent on local services. Making the prescription period for those debts five years would likely force a change in the way councils recover the debt to the detriment not only of the debtor but to all of us who use local services. Local authorities have told the committee that they would have to depart from the summary warrant process, meaning more costs for the debtor and a diverting of local authority resources to collection of arrears. The 26 local authorities that have responded to the committee are all deeply concerned about the impact of any change to the prescription period by shortening it from 20 years to five years and the effect that that would have on their funding. Not only are they concerned about the ability to recover arrears that are already owed to them, but they are also concerned that reducing the prescription period may create an incentive to those who wish to avoid paying their taxes in the first place. If council tax is subject to the five-year prescription period, it is all taxpayers who will suffer as a result as they will have to pay an increased amount of council tax in order just to maintain the current level of services. Finally, this bill is about prescription generally, the point that I made about the earlier set of amendments, and it is not the place, therefore, to make substantial policy changes in other specific areas. Any change to the current position would need wider consultation, particularly in light of the views expressed by so many local authorities, by COSLA and other issues, such as ones raised by Scottish Water, that were brought up earlier in the stages to the committee. Because of that, I urge Neil Findlay, who is represented by Mr Bibby, not to press those amendments. Neil Bibby, to wind up and press or through. Thank you, convener. I think that we have gone over a lot of the same arguments from the previous groups. I would just repeat that those amendments have been developed from the evidence that we have seen from the Law Society and the Citizens Advice Scotland, except what Tom Arthur said about their concerns from COSLA. We will continue to address them. Those there may be small additional resources required, but I do not accept that they would be substantial. I agree with COSLA and Tom Arthur that councils' resources are limited. In fact, they are chronically underfunded. We will continue to make the case for that to be addressed. Following the minister's remarks, I will not move amendment 5 on the basis of what the minister said about that not being necessary, but we will seek to move amendments 6 and 7. The amendment 4, in the name of Mark Griffin, you have already said that you are not moving that. Amendment 6, Mr Bibby, you are moving that. The question is that amendment 6 be agreed to. Are we all agreed? We will go to a vote on that. All those in favour of amendment 6, could you raise your hands? All those against amendment 6, that was disagreed to. Amendment 7, Mr Bibby, are you moving that one? The question is that amendment 7 be agreed to. Are we all agreed? All those in favour of amendment 7, are those against? That was 4-1 against, so it is disagreed to. The question is that section 3 be agreed to. Are we all agreed? The next question is that section 4-6 be agreed to. Are we all agreed? We will come on to technical and consequential amendments. Call amendment 1 in the name of the minister group with amendment 2. The minister to move amendment 1 and speak to both amendments in the group. Amendment 1 addresses the point raised by the faculty of advocates. The faculty and others raised concerns about the section 7 extension of the 20-year prescription period for some property rights, in particular servitude rights, as highlighted by the committee in their stage 1 report. The faculty made the point that the drafting of section 7, as it stands, suggests that when a creditor raises court proceedings in relation to a property right before the expiry of the 20-year period, and the proceedings extend beyond the 20-year period, the period in relation to that right ends when the proceedings end, with the consequence that the property right is extinguished. That amendment is to ensure that where the creditor is successful in the court proceedings, for example obtaining a declarator of the existence of the right, then the creditor should not be denied the property right by the 20-year prescription coming to an end at the end of the court proceedings. Instead, that amendment ensures that where the creditor's claim is successful, the property right is deemed to have been exercised or enforced. The outcome is that a new 20-year prescription period will start to run. Turning to amendment 2, recent changes to the devolution settlement have given the Scottish Parliament legislative competence over a range of benefit payments. The recent Social Security Scotland Act 2018 created a legislative framework that underpins a system of devolved benefits, creating a process in which people are given the assistance to which they are entitled. At the same time, the 2018 act makes clear that those receiving devolved benefits are under an obligation to repay overpayments of those benefits in certain circumstances. That obligation is subject to the five-year prescription period, and that is achieved by section 66, amending schedule 1 of the 1973 act. The bill being considered today inserts a general rule into section 1 of the 1973 act that all statutory obligations to make payments will be subject to the five-year prescription period, and this will cover the obligation contained in the 2018 act that I have just described. One of the main purposes of the bill is to increase clarity and legal certainty and to have two provisions in an already crowded schedule 1 of the 1973 act that achieve the same outcome does not achieve this aim. I move amendment 1. Thank you. Any members want to make comments on that? The purpose of the bill is to bring greater clarity and those amendments contribute to that, so I welcome the minister for bringing them forward. Minister, you can wind up, if you wish. I have nothing further to add, but I thank the committee for their consideration, and I would invite them, hopefully, to approve the amendments. The question is that amendment 1 be agreed to, or we all agreed. The question is that section 7 be agreed to, or we all agreed. The question is that sections 8 to 15 be agreed to, or we all agreed. Call amendment 2, in the name of the minister, has already debated with amendment 1 minister to move formally? I move, convener. The question is that amendment 2 be agreed to, or we all agreed. The question is that section 16 and 17 be agreed to, or we all agreed. The question is that the long title be agreed to, or we all agreed. That ends stage 2 consideration of the bill. I thank the minister and her officials for their attendance, and I will briefly suspend the meeting. Agenda item 3, instrument subject to affirmative procedure, no points have been raised on the draft common financial tools Scotland regulations 2018, is the committee content with this instrument? Agenda item 4, consideration of an instrument subject to negative procedure, no points have been raised on SSI 2018-272, is the committee content with this instrument? I will move the meeting into private session.