Wednesday, 28 September 2011

Personal insolvency within the Finance, Employment and Sustainable Growth portfolio

Our new, majority, SNP government has been in place for 5 months now.  One of the more interesting allocations – well, interesting to the insolvency community at least – is that while Mr Fergus Ewing retained responsibility for the development of policy and law in personal insolvency, this is now being developed under the umbrella of Mr Swinney’s Finance, Employment and Sustainable Growth Portfolio.  Mr Ewing is responsible for Energy, Enterprise and Tourism.

Perhaps strangely, in shifting responsibility from the Justice portfolio to Sustainable Growth, the new SNP government paralleled the position in the Westminster parliament, where responsibility for all aspects of insolvency lies with the Department for Business, Enterprise and Skills. Perhaps this is a sign of a maturing Scottish Government, a government not afraid to acknowledge where Westminster has actually got things right.  But has it?

The positioning of Bankruptcy within the Enterprise portfolio in England and Wales is a bit of a hangover from  Mr Mandelson’s love affair with all things American in the insolvency arena. The reforms he put in place, actualised in the provisions of the Enterprise Act 2003, were based on the premise that entrepreneurism could only thrive if it were supported by a ‘friendly’ or ‘soft’ insolvency regime (amongst other things of course).  However, our colleagues south of the border recognised very quickly that personal insolvency has very little association with entrepreneurism or even self employment.  It is all about consumerism.

So, would it not be more mature of the Scottish Government to recognise the error of Westminster’s ways and move Personal Insolvency back into the Justice portfolio and concentrate on developing a fully internally coherent regime for Scotland’s consumer debtors?  Or, if our government genuinely believes that Personal Insolvency belongs in Mr Ewing’s Enterprise portfolio, why not spend some time developing a workable insolvency solution for all our hard working joiners, electricians, publicans and so on – a Scottish version of the English Individual Voluntary Arrangement (IVA), rather than waste time on further watering down the rights of creditors in the existing regime?

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