AiB Cuts its Costs to the Public

Accountant in Bankruptcy (AiB) released its Annual Report and Accounts for 2008-09 today, 20 October 2009, noting a 25 per cent drop in overall cost to the public purse on the previous year.

When AiB launched its Business Plan for 2008-09, a key aim for the Agency was to reduce its reliance on Government funding through more effective methods of recovering operational costs from its service users - meeting expectations to find intelligent solutions to managing public services.

This has been achieved at a time when recorded levels of personal bankruptcies continued to increase year on year, most notably following the introduction of the Low Income Low Asset (LILA) route into bankruptcy.

Official figures show the number of bankruptcies for 2008-09 increased by 140 per cent to 14,777 awards compared with 6,158 in 2007-08; Protected Trust Deeds (PTDs) also rose marginally by 1.7 per cent to 7,633 registered PTDs.

Under the Debt Arrangement Scheme (DAS) the number of Debt Payment Programmes (DPP) received almost doubled to 939 (from 470 in 2006-07).

Consignation funds held also increased for 2008-09, with a 50 per cent rise on 2007-08 to £17.322m. AiB have invested in technology to allow the Agency to identify the creditors to repatriate these funds and reduce the need to consign funds in the future.

Welcoming the report, Minister for Community Safety, Fergus Ewing said:

"This Report clearly evidences the AiB's success in meeting the Government's commitment to achieving sustainability in public service delivery and greater efficiencies where needed most. To achieve such savings to the public purse while at the same time processing more cases and helping more people deal with debt is deserving of praise.

"These achievements are proof of the hard work and application of all the staff at the AIB office - and the strong leadership and drive provided by the AiB, Gillian Thompson, who is now standing down. We in the Scottish Government recognise her outstanding work.

"These improvements are in line with our aim to use technology more effectively to deliver faster and more effective results that benefits people and businesses in Scotland.

"It is no surprise that many families are facing severe financial problems in the current economic climate. However it is imperative that those who need help with debt get appropriate help. In some cases, bankruptcy may offer the best route towards debt relief. That is why the new LILA route into bankruptcy was introduced - not to make it easier for people to walk away from their responsibilities but to help remove the stigma often associated with such a move for those in greatest need.

"The increase in the number of DPPs is to be welcomed for it represents an increase in individuals and families receiving structured help in getting their finances back on track.

"There is no magic cure for anyone's financial woes. But there is help available and the Government and the AiB will continue to offer the best possible advice to those facing difficulty."

Background

1. Accountant in Bankruptcy (AiB) is responsible for administering the process of Personal Bankruptcy and recording Corporate Insolvencies in Scotland. The Annual Report is available at www.aib.gov.uk

2. The LILA route into bankruptcy came into effect on 1 April 2008 - it provides individuals with no other means of accessing bankruptcy as a necessary means of debt relief.

3. A Protected Trust Deed is a voluntary agreement between a debtor and their creditors to repay part of what they owe. A PTD is binding on all creditors, meaning they can take no further action to pursue the debt or to make the debtor bankrupt.

4. The Debt Arrangement Scheme (DAS) is a statutory scheme run by the Scottish Government to help debtors to pay multiple debts by giving them more time to pay without hassle or threat of court action from their creditors. DAS freezes interest, fees and charges on their debts from the date the DAS payment programme is approved.

5. Consignations are monies belonging to creditors at the close of bankruptcies which have not been able to be paid by the trustee (both the Agency and private Insolvency Practitioners, including dividends from PTDs).

6. Consignation funds do not contribute to the recorded revenue of the Agency and do not contribute in any way to the Agency's reduced reliance on Scottish Government funding.