Annual Report and Accounts 2023-24

Measuring performance – Business objectives

AiB’s primary strategic purpose is to ensure the efficient and effective delivery of Scotland’s statutory debt relief and debt management options – both those cases we manage ourselves, and those for which our role is a supervisory and regulatory one. We also aim to help Ministers ensure Scottish insolvency and debt management legislation and solutions effectively address the challenges society faces today.

There were 52,900 live cases at the end of 2023-24 (2022-23: 53,100), comprising bankruptcies, protected trust deeds (PTDs) and debt payment programmes (DPPs) under the Debt Arrangement Scheme (DAS). All PTDs are administered by insolvency practitioners, as are some bankruptcies. Most full administration bankruptcies are administered on our behalf by private sector insolvency practitioner (IP) firms working under contract. DPP’s under DAS are jointly administered. All Minimum Asset Process (MAP) cases and some full administration bankruptcies are fully administered “in house” by AiB.

AiB’s 2023-24 business plan set out six key changes we would deliver over the year alongside keeping track of the ongoing business. These six changes reflected the Advisory Board’s desire that we make our continuous improvement agenda more transparent and measurable.

This report reflects the success in delivering all six changes and maintaining our strong record of delivering our key performance indicators that track the casework that is our reason for being. Completing these objectives has put AiB in a stronger place to face future challenges. Our successes are testament to the AiB staff who consistently demonstrate their ability to rise to those demands.

Key change 1 - Moving our IT to the Cloud

The purpose of this work is to deliver greater resilience and faster system performance to users inside and outside AiB. In doing so, AiB have acted as a pathfinder for Scottish Government colleagues as all departments move away from physical hosting.

This work was split into 3 distinct stages to ensure AiB maximise the efficiencies of moving to the Cloud:  

• Stage 1 – System preparation and Cloud agreement
• Stage 2 – Proof of concept / cost estimation
• Stage 3 – Development of Cloud service and migration

To secure access to the SG Cloud Service, AiB and our IT partner, Leidos, completed a high-level design document and a statement of work which was accepted by Scottish Government. This enabled us to go on to the Cloud earlier than planned.

To meet support obligations, during the year AiB upgraded its case management services to ensure migration to the Cloud was moving like-for-like system specifications.

A full user acceptance training service was created and work on training and production environments completed within the year. The aim as at 31 March 2024 was to have all existing services on the Cloud by Autumn 2024.

Working in partnership, various cost savings were made throughout the year when compared to earlier estimates. AiB will continue working closely with the Scottish Government Cloud team to resolve issues should they arise.

AIB will only migrate necessary case material into the cloud. Development of system wide retention and destruction rules will be in place prior to the move. This will reduce the size of the databases being migrated and resultant cost. Ongoing decisions on the availability of each service will be made by AiB senior management.

Key change 2 – Policy - Implementing new legislation

A new Bankruptcy and Diligence Bill including taking powers to introduce a mental health moratorium was introduced to Parliament in late April 2023. This was to be followed by a number of sets of regulations taking forward proposals from the previous year’s stakeholder working groups. During 2023-24 AiB carried out significant development work on our IT systems to prepare for these coming into force.

The following timeline shows some key milestones covered during the year:

April 2023

A new stakeholder working group was set up to focus on the operational practices required to implement a mental health moratorium in Scotland. The group prepared a final report of recommendations for the Minister’s consideration.

August 2023

The lead Committee closed a call for evidence on the Bill. The responses and their impact on the Bill and regulations were reviewed.

September/October 2023

The Bill was considered by the Economy and Fair Work Committee of the Scottish Parliament and evidence from stakeholders was heard.

November 2023

The Minister and the Accountant in Bankruptcy gave evidence to the Committee. AiB launched a public consultation on proposals for the moratorium. This closed in January 2024 and received around 50 responses. This will be analysed and a report on the consultation will be published during 2024-25.

January 2024

The Committee’s Report on the Bill was published. The Report supported the general principles of the Bill and recommended it to Parliament.

January 2024

One of the commitments was to share draft regulations for a Mental Health Moratorium before stage 3 of the Bill.

February 2024

The Stage 1 debate took place in Parliament. The Committee’s Report made recommendations for changes to the Bill at Stage 2. The Minister sent a published response to the Committee, supporting some proposals and making a commitment to look further at the others.

February 2024

Regulations to amend the rate of statutory interest were laid.

March 2024

The Bill passed stage 2 of Parliamentary scrutiny. Some government amendments were added to the Bill to address matters raised by stakeholders during Committee debate and to address technical issues.

The Committee did not accept the non-government amendments on matters relating to the administration of the mental health moratorium or introducing additional protection for diligence, but the Minister was supportive of the principles behind these amendments and agreed to consider the matters further.

April 2024

Regulations to amend the rate of statutory interest came into force. AiB are currently working on regulations to make amendments to protected trust deeds and to set out a process for the mental health moratorium. Later in 2024 we will produce regulations on the value of assets in minimum asset procedure bankruptcies.

May 2024

Regulations to amend Protected Trust Deeds laid in Parliament, these will come into force in July 2024. This build on work with stakeholders carried out during 23-24.

June 2024

Stage 3 debate on the Bill.

There will be a programme of commencement orders to implement the Bill and additional secondary legislation bringing in other measures recommended by stakeholders, but which do not require primary legislation. It is expected the Bill will complete its parliamentary progress this year, with a view to coming into force in April 2025.

Independent review

AiB is providing secretariat support for the independent MacDermid review of statutory debt solutions. The review held its first roundtable discussion with stakeholders on 15 March 2024. A consultation was launched in May 2024.

Key change 3 - Telephony

We implemented a new telephony system after a review was carried out in the early part of 2023. The new system now allows colleagues to respond to calls regardless of location - replacing the reliance on traditional desk phones with a system based on use of our laptop computers.

This solution allows AiB to have greater control over the answering and handling of calls and was implemented in the early part of the financial year. Monitoring of the new telephony process has taken place throughout the year to review its effectiveness. Further reviews will take place annually to confirm that the solution remains fit for purpose.

Key change 4 - Paperless office

Our aim in 2023-24 was to move further towards a digital first approach, increasing efficiency alongside reducing environmental impact. We wanted to create a digital mailroom which directs correspondence to appropriate case management work queues automatically and utilises existing system functionality to reduce paper submissions and responses.

Yearly progress, including key milestones:

An upgrade of the software used by the mailroom to digitise incoming mail was carried out in the early part of the year. This ensured we could continue using the digital mailroom.

The finance team moved several processes to electronic only for invoices and statements. This drive saw a reduction from 64% in December 2023 down to 30% of customers in January 2024 still requiring paper correspondence to be issued. AiB subsequently made an operational decision to cease all paper invoicing and statements. The Finance team contacted all customers to advise.

AiB has also been reducing the number of remittances sent by post to our suppliers with the majority of these now being sent by email.

We developed functionality on our BASYS case management system to make the Debtor Contribution Order for Trustee cases process fully digital.

An analysis of printing across AiB was undertaken. This looked at the types of documents being printed to identify those that could be reduced or stopped. The analysis identified that a significant element of our printing costs related to the Debt Advice and Information packs. Work was undertaken to reduce the document’s content without detriment to the information provided. The new AiB website project drove further reductions in paper usage through a commitment to make common documents available online only.

The completion of this work has now provided a baseline figure for print volumes which will be used in developing longer term sustainability targets.

In January 2024, a digital mailroom working group commenced. Initial scope was agreed for process reviews of manual processes, review of further technological opportunities, determining mailboxes to receive electronic correspondence, and a review of all customer letter templates to ensure they can be processed digitally. This work features in AiB’s 2024-25 Business Plan.

Any changes are intended to streamline services, improve efficiency and contribute towards sustainability goals.

Key change 5 (Part 1) - Shared Service

AiB relies on Scottish Government corporate systems for both HR information and financial management and reporting. The Scottish Government is replacing both these systems, with the scope for significant improvements in processes and provision of management information. We will integrate the new systems both with AiB’s own IT systems and our working practices to make best use of the new capabilities offered - with much preparatory work in advance of the target go live dates.

Yearly progress, including key milestones:

During the reporting year, Scottish Government amended the go live date for the full Oracle system to October 2024. AiB have been working in partnership with business readiness groups and have had appropriate involvement at all stages of the new system development.

The key benefits of Oracle Cloud will include:

• a joined-up service with a modern HR, finance and purchasing platform, where users enter information once
• more efficient, effective smarter working across government and the wider public sector
• joined up and improved data and insight to drive data-driven HR, finance and purchasing decisions at all levels of the organisation
• HR self-service options - you will be able to self-serve day-to-day HR processes for yourself and your team and create, manage and change your own information requests
• improvements to how we manage our people, finance and procurement functions
• a future-proofed system - a modern system that is frequently updated and will deliver a service for how we live and work today

Scottish Government are preparing a full suite of virtual training and guidance. AIB staff have had regular opportunities to be involved in user testing of the new system. Regular internal communications are shared advising staff of progress and expectations. Key roles within the organisation continue to have weekly review meetings with the core project team to ensure everything is on track, to address any common or unique issues identified, and to provide general support.

Key change 5 (Part 2) - IT system development

We set out to enhance our eDEN case management system and refine supporting process after considering the results of a detailed business analysis of the current DAS function, allowing us to improve the user experience, bringing customer benefits including new annual statements showing progress towards debt freedom.

Yearly progress, including key milestones:

During 2023-24 there were over 150 enhancements to the eDEN system that has improved the user experience and efficiency of the system. The following points are examples of some of the enhancements made.

A key improvement was to change the way direct debit payments were recorded and processed which made the process more efficient and removed the risk of funds not clearing prior to payments to creditors being made.

There was also the introduction of a new variation type to allow for a more straightforward process to adjust balances on a case making a significant efficiency saving of staff time.

For clients there was an upgraded case summary page and the annual review letter now contains an annual statement showing the previous year payments made as well as expected payments for the following year and expected end date of the debt payment program. New payment break letters were introduced at the end of the break to ensure clients are aware a payment is due reducing the number of missed payments.

As a result of AiB introducing a new website, a new guidance section was introduced to eDEN to contain all system guides and training material making it easier to obtain these documents form the appropriate system.

Key change 6 - Making best use of our office space

We aimed to draw benefit from additional space freed up by our hybrid working model to provide more creative spaces and make our building a more effective and enjoyable working environment. We planned to create collaborative zones to allow teams more opportunity to work together to solve issues or discuss ways of improving processes. Meeting rooms and social meeting places would be refurbished to create a more relaxed environment.

Having done this, we then planned to review our use of space to make sure teams sit alongside those with whom they work most closely – and to replace the office lighting both to improve the office environment and to save energy.

Yearly progress, including key milestones:

The first phase of the redevelopment was completed in May 2024. Four collaboration booths were installed and informal meeting zones created throughout the office. The canteen was also fully refurbished to also function as meeting space.

The second phase examined team locations and how we could best use the available office space. Following staff consultation it was agreed to move all staff to one floor of the building. This has created an empty wing on the ground floor for which options are being progressed.

The main option involves Scottish Government who are currently undertaking a full review of their estate. Representatives from the estates team attended AiB in November. This was to discuss potential sub-letting/co-location of our office space. Further scoping work was undertaken in March 2024 and these plans will be taken forward in 2024-25.

During the year a feasibility study was completed for our office lighting. The LED upgrade project commenced to tender following the feasibility study and design phase. AiB did not receive grant funding through the Scottish Government’s Energy Efficiency Grant Scheme and tenders were received at a higher cost than previously budgeted which put a hold on the project.

In the meantime we continue to investigate the best lighting options and await Scottish Government’s facilities management provider MITIE’s white paper for procurement guidance of circular economy. This is expected mid-2024 and will reflect and meet new standards for lighting.

Procurement and contracts

The Procurement team have worked closely with internal and external stakeholders to develop and deliver contracts that maximise competition, provide auditable value for money and ensure fulfilment of AiB’s functions and purposes. This year the Procurement team have awarded four regulated contracts including our credit referencing, postal services, legal services and sheriff officer services contracts.

Stakeholder engagement

Our communications team has continued to engage with stakeholders to ensure they have the information that they need. Business related information and operational updates continued to be added to the AIB website as well as emails sent to the required stakeholder groups. Based on both internal and external stakeholder feedback, discovery work has commenced on improving and replacing the existing website.

The communications team remain central in ensuring staff are well informed about business updates and news via internal communication channels including Saltire intranet and Yammer.

Cyber security and IT resilience

The focus on Cyber Security remains and the cyber security team continues to grow in numbers providing flexibility to adapt to the ever-changing cyber landscape. Quarterly reports are presented to the Advisory Board and Audit Committee advising of progress made and any major cyber issues that have had an impact on the functions of AiB. Cyber security remains the highest risk on the AiB corporate risk register and forms part of all risk management discussions. During the year, monthly vulnerability scans have been carried out along with frequent scans on public facing infrastructure.

Phishing

One key cyber risk for AiB has been phishing and the potential impacts associated with phishing emails. Training and education sessions have continued throughout the year and forms part of the induction process. In January 2024 AiB held a bespoke cyber security week for all staff which covered most cyber issues and related areas such as fraud.

AiB carried out several phishing simulations during 2023-24 and these have been supplemented by regular phishing simulations provided by Scottish Government Cyber and Defence team. AiB will continue to raise awareness of phishing and how to spot potential attacks.

Estates strategy

AiB is well-established in Kilwinning, having moved to its current premises in 2006, and a high proportion of AiB’s staff are drawn from the local area. AiB holds a building lease until October 2035 with an option to break the lease in 2030.

Staff continue working from the office on a hybrid model with at least two days working from the office to encourage collaboration between colleagues and teams. Last year we re-designed some of the office space to add more collaborative workspace. During 2023-24 we commenced discussions with Scottish Government Estates on our contribution to the SG Estates Strategy. This focused on the rationalisation of the SG estate and whether the Kilwinning office could be used as alternative accommodation for staff in another leased building. The business case is being prepared and sets out Kilwinning as the preferred option, offering savings from ceasing the other lease as well as an opportunity to share Kilwinning office lease costs and overheads and maximising the use of the office space to its full potential.

AiB explored energy efficiency projects with our facilities management supplier in 2023-24 and reports were provided on the feasibility of installing solar photovoltaic array and installation of LED lighting. During 2024-25 we will continue exploring these options to identify and progress the most suitable environmental and cost-effective project.

Finance report

In December 2022, the Auditor General appointed Stephanie Harold, from Audit Scotland, as the external auditor to AiB for the period 2022-23 to 2026-27.

For the financial year ended 31 March 2024 AiB were again issued an unmodified opinion on the annual report and accounts.

This is supported by assurances from internal audit on the Scottish Government corporate systems used by AiB.

These accounts were prepared under the Accounts Direction by Scottish Ministers detailed at Appendix A. They were prepared on a going concern basis, which means AiB intends to continue its business for the foreseeable future and is able to do so.

Budget, resource and financial performance

The cost of operating AiB is met predominantly through income raised from fees and charges as set out by the Bankruptcy Fees (Scotland) Regulations 2018. AiB follows guidance set out in the Scottish Public Finance Manual which states ‘the standard approach to setting charges for public services is full cost recovery’.

Revenue expenditure for the year of £10.2 million was funded by income of £9.0 million with the remaining net expenditure of £1.2 million required to be covered from the Scottish Government. Capital expenditure for the year was £0.7 million and this was covered in full by the Scottish Government. As the capital allocation for the year was £0.8 million this resulted in an underspend on capital of £0.1 million.

Employee costs

Employee costs are £0.7 million higher than last year. This is mainly due to the payment of a pay increase from 1 April 2023 as part of the two-year deal agreed last year. A pay award of 5% effective from 1 April was paid followed by a further pay award of 2% from January 2024 for all grades except for C3 grade. The C3 uplift was 5% in April and 0.5% in January. 

There was also a pay increase of 5.5% for senior civil service effective from 1 April 2023.

Case related costs

Case related costs relate to the administration of bankruptcies where AiB is the Trustee. The costs have decreased by £0.3 million since last year as low levels of bankruptcy cases continued.

Other operating costs

Other operating costs have increased by £0.7 million since 2022-23. The main factors contributing to this increased spend has been an increase in our IT spend because of higher IT support and minor development costs for our case management systems, a new AiB website and preparation for Cloud. We also experienced higher energy costs this year as a result of increased tariffs. 

Non-cash expenditure

Depreciation and amortisation on our owned assets has increased by £0.3 million reflecting the additional investment in our systems last year.

Income

2023-24 income is showing an increase of £0.4 million from the previous year.

Communications and engagement

Social media

AiB’s Communication team continues to use X (formerly twitter) as AiB’s sole social media channel, promoting headline business activities and important operational updates. At the end of 2023-24, AiB had 1,314 followers on X. This remains a key platform to keep stakeholders up to date with Scottish Parliament Committee activities, consultations, stakeholder announcements and statistical releases.

The launch of the new AiB website in 2024 brought additional stakeholder reach. All users have the option to sign up to an AiB mailing list which also shares key updates from across the organisation.

Global reach

The Chief Executive continues to serve on the Executive Committee of the International Association of Insolvency Regulators (IAIR), and has this year been appointed to their Diversity and Equality Committee. The Executive Director of Case Operations presented at the IAIR’s Annual Conference in Serbia on the digitisation of insolvency services, showcasing AiB’s strong record on “digital by design.”

AiB subsequently hosted a delegation from Trinidad and Tobago, who are in the process of establishing their own personal insolvency regime. This year’s Conference is being hosted by the IMF and World Bank in Washington, showing the IAIR’s reach and influence over insolvency policy across the globe.

This year also saw close working with our counterparts in Northern Ireland, and England and Wales, as we continue to learn from each other’s approach and experience.

Freedom of Information and personal data requests

In 2023-24, AiB handled 66 Freedom of Information requests (22-23 – 30 requests). Twenty-four requests were completed within the 20-day period, 9 requests received on, or after 31 March 2024 were in the process of being responded to and are anticipated to be answered within the 20-day period. Ten requests were refused as the cost to provide the information would have exceeded limits. There were no reviews. No appeals were handled.

Complaints

The AiB complaints handling procedure distinguishes between six different categories of complaint. The complaint process was reviewed and revised procedures adopted from September 2023.

The main change has been to separate the process for dealing with complaints about trustees, where AiB is not the trustee. AiB has a statutory duty to investigate complaints about trustees, but these are not treated as complaints about AiB for the purposes of our complaints handling procedure. This has led to an amendment to the definition of category 3 complaints.

Category 1: Staff behaviour

In 2023-24, AiB received one Category 1 complaints about the behaviours of AiB staff or AiB provider staff. The complaint was not upheld.

Category 2: The Accountant (in Bankruptcy) as the appointed trustee

Thirteen Category 2 complaints were received in relation to a decision or action by the Accountant, in relation to their role as the trustee of a bankruptcy, or a decision or action by a provider, where the Accountant is the trustee of the bankruptcy. Ten of these were not upheld. Three were partially upheld.

Category 3: The Accountant’s statutory supervision functions

AiB investigates complaints about trustees (where AiB is not the trustee) under our statutory powers to supervise trustees. These are not managed under our complaints procedure because they are not complaints about AiB, and may take longer to investigate.

AiB received 25 Category 3 complaints during 2023-24. Two complaints about trustee behaviour were upheld, two partially upheld and the remainder not upheld.

Category 4: AiB as the DAS Administrator

There were no Category 4 complaints about the administration of DAS.

Category 5: Matters outwith AiB’s authority

There were no Category 5 complaints received.

Category 6: Policy and process matters

There were no Category 6 complaints received.

Analysis of development and performance in year

This section provides some key statistical information on the various debt solutions administered by AiB. A full and detailed statistical analysis of all products can be found in the Scottish Statutory Debt Solutions Statistics: 2023-24 published on the AiB website on 28 August 2024.

In 2023-24, total personal insolvencies, which include both bankruptcies and protected trust deeds, increased by 1.1% to 8,085.

There were 2,498 bankruptcies awarded, an increase of 6.0% from 2,305 in the previous year. There were 5,587 protected trust deeds registered in 2023-24 compared to 5,644 in 2022-23, a decrease of 1.0%.

There were 5,278 DAS debt payment programmes approved, an increase of 6.7% compared with 4,947 in the previous year. Around £41.1 million was repaid to creditors through the scheme in 2023-24. This means as at the end of March 2024 around £409 million of debt has been repaid to creditors through DAS since the changes made to the scheme in 2011. Just over 16,750 people have now completed a debt payment programme through the scheme with around 19,500 people currently in a programme.

The following chart shows the number of statutory debt solutions by type for the financial years 2014-15 to 2023-24:

Chart 1: Statutory Debt Solutions by type, 2014-15 to 2023-24

AiB are responsible for recording and reporting statistics on corporate insolvency of companies registered in Scotland. AiB play no other part in the administration of these cases.

The number of businesses registered in Scotland entering liquidation or receivership increased in 2023-24 compared with the previous year. There were 1,168 corporate insolvencies recorded, a 3.2% increase from 1,132 recorded in 2022-23.

This chart shows the trend in the number of corporate insolvencies and members’ voluntary liquidations in Scotland for the financial years 2013-14 to 2023-24:

Chart 2: Corporate insolvencies and Members’ Voluntary Liquidations, 2014-15 to 2023-24

Compulsory liquidations increased by 31.2% from 340 in 2022-23 to 446 in 2023-24.

There were 515 members’ voluntary liquidations, a decrease of 18.5% from 632 the previous year.

In 2023-24 there was 1 receivership of a company registered in Scotland recorded (2022-23 zero recorded).