While the top priority for so many politicians and journalists in Scotland is the debate around what powers the Scottish Parliament ought to have, ugly storms are brewing on our shores, which will cause real, not hypothetical, harm to the people of Scotland. I want to focus on three areas of detriment, and what we can do to avert or alleviate them.

From next April, tenants of social landlords will have their housing benefit reduced if they have a least one spare bedroom. This has been described as a ‘bedroom tax’ and the Scottish Federation of Housing Association estimate up to 42,900 tenants will be affected in Scotland, with an average loss of £11 in housing benefit each week. The Welfare Reform Act 2012 will spawn other punitive changes, but the implications for eviction and homelessness from this particular reform is self-evident.

Mortgage repossession in Scotland has yet to rocket through the roof because of the unprecedented low interest rates and lender forbearance; the first thanks to the Bank of England’s base rate, the later due to UK Government pressure on lenders. It is only a matter of time before these two pillars crumble and when they do what safety nets will Scotland have in place? This year the Scottish Government slashed the funding to Scotland’s innovative Mortgage to Rent Scheme by almost half, and tightened up eligibility rules, yet again. Our net is threadbare.

Finally, as Scots feel the economic squeeze, many continue to turn to payday lenders, with interest rates up to the equivalent of 5,000% APR, with various roll over charges and fees. Payday lending is one of the fastest growing areas of financial service in the UK, yet remains largely unregulated and free to entrap customers in repetitive cycles of debt with no added value or genuine service to the consumer in the medium to long term.

In dark times you need good ideas to bear in mind. My favourite Roman emperor, Marcus Aurelius, wrote a book called ‘Meditations’ in the Second Century, which was essentially his aide memoire of ideas. One of those was: ‘if a thing is humanly possible, consider it to be within your reach’. At a time when the Scottish Parliament has been attacked for undermining Scottish criminal justice and legal aid, let’s consider what the Scottish Government and Parliament might do here?

In advance of the ill conceived ‘bedroom tax’, the Scottish Government needs to consider setting-up an additional fund with local authorities to prevent needless homelessness. Extra money has been allocated to the Discretionary Housing Payments fund, but it is highly likely this will need to be supplemented.

Spending a few hundred pounds a year is cheaper to taxpayers in Scotland than the cost of households being evicted for rent arrears created by UK Government policy. Where is our Scottish Government strategy on countering this UK Government policy? Whining about the Tories and LibDems, or how it would be different under ‘independence’, won’t keep a roof over the heads of Scots next year.

In Norway mortgage debt was written down for many citizens in 1997 as part of a policy that has been supported by the International Monetary Fund in other countries over the years as targeted debt reduction for economic stability and growth. Indeed, in the USA in the 1930s Roosevelt introduced the ‘Home Owners Loan Corporation’, which bought distressed mortgages with Government bonds, later to be restructured into affordable lending. The Scotland Act 2012 will permit the Scottish Government to issue its own bonds. Where is our innovation, our strategy?

A more immediate and practical solution would be to follow Ireland’s new Mortgage to Rent Scheme where social landlords can now buy out a distressed consumer mortgage at the market value of the home (not the higher value of the secured debt), with the bank writing off the excess lending. Up to 3,500 Irish households and families will be helped by this new scheme. Meanwhile Scotland’s scheme has been rendered impotent, feeble and not fit for purpose.

And what of payday lending in Scotland? Consumer credit remains a reserved power, yes, but debt is not. Scotland could introduce a ‘mini-Debt Arrangement Scheme’ for payday lending whereby impecunious consumers entrapped in roll-over payday loans could get out of them quickly, and speedily by fairly repaying the sum borrowed with interest re-set at an equivalent of 8% per annum – as part of a new ‘Payday lending Debt Arrangement Scheme’. A condition of entry would be taking free financial and money advice and access to a credit union.

Scotland already has the power to do all of these things in terms of the Scotland Act(s); they are humanely possible, and within our reach. What’s stopping us?

Mike

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