Scottish Churches Parliamentary Office, Edinburgh - Briefing Document Eight

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Parliamentary Officer:Rev Graham Blount
Phone:
0131 558 8137

Briefing Document No 9 - Page 4 of 4

Debt on our Doorstep - Continued.

Recently, there has been some pressure for reform of bankruptcy law, in the direction of encouraging entrepreneurial risk-taking by making business bankruptcies easier (but not personal bankruptcies). The informal debt recovery working group will be looking at possible changes re personal bankruptcy. Key issues are around avoiding fraud and abuse of the system, and whether different rules might apply to personal and commercial bankruptcies. However, the Executive have stated that, despite changes being made in England, there is no likelihood of change during the four-year term of this Parliament.

7. Debt on our Doorstep Campaign

This campaign was launched in April of this year in Westminster by Church Action on Poverty, the Money Advice Association, the Church Urban Fund, the Association of British Credit Unions and others. It is intended as a response to levels of personal debt in the UK which are becoming unsustainable. Over three million households are estimated to be reliant on the services of moneylenders, who routinely charge between 100% and 500% APR for cash loans. Over 700,000 Income Support claimants are having an average of £9.32 deducted from benefits each week to repay Social Fund loans; and in Scotland alone, almost 100,000 earnings arrestments are served each year.

The key objectives of the campaign are
(a) To develop policy proposals and initiatives to help reduce and eradicate irresponsible and extortionate lending;
(b) To campaign for reform and/or replacement of the Social Fund to ensure adequate access to grants and loans;
(c) To promote socially responsible service provision by high street banks; and
(d) To promote credit unions and other community finance initiatives.

Although most of these deal with reserved matters, for the UK Parliament, plans are under way for a Scottish arm of the campaign, taking account of Scottish developments, to be launched in the autumn. The Scottish Churches Social Inclusion Network has given its support to this.

8. Theological Context

The Sabbath and Jubilee year provisions for debt relief are not isolated examples. The social concern of OT law for rectifying injustice took debt very seriously indeed, eg with careful rules to stop people profiting from someone's misfortune by taking interest on a debt. That is the basis of the ban on usury which was a key part of the church's moral teaching for 1500 years.

Since debt was a major problem in first century Galilee, it is hard to imagine that when Jesus spoke of debt it was merely as a metaphor for sin; he spoke of more than money debt (not less), and did not neglect the real problems being faced by the people he met. While not offering a package of solutions which can be readily translated for Scottish debt in the 21st century, the Bible deals with debt within a horizon of justice, the creative justice of God which goes further than the simple truth that debts must be paid.

In dealing with debt, legal systems do little more than ensuring that basic justice of enforcing contracts; they struggle to cope when the due pound of flesh is simply unavailable. We must find new ways of reflect the Biblical determination to avoid the exploitation of poverty, and to enable and empower people for a fresh start. Bankruptcy (which is the glimpse of very restricted and highly conditional forgiveness within the system) may be exploited as a soft option - cheap grace, which is an evasion of justice rather than a way towards justice. But ultimately it is debts rather than debtors that need to be written off if people are not to become trapped in hopeless debt.