House of Commons Hansard Debates for 2 Dec 1993

Mr. Spellar : Will the Minister give way?

Mr. Burt : I am sorry, but no. Before I deal with the detailed matter, I should like to say a few words about

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some of the fundamental issues that are at stake. It might be helpful if I were to remind the House of the purpose of the child support scheme and its provisions.

The purpose of the Child Support Agency and the Child Support Act 1991 is to obtain maintenance for children and to improve on a discretionary court- based system, which had failed to stem a decline in the payment of maintenance. The scheme is designed to ensure that, wherever possible, parents pay for the maintenance of their own children, rather than making other people, including other parents, do so through their taxes. This principle was widely welcomed, as was the move away from the courts, by hon. Members from all parties and by the relevant lobby groups when the Child Support Act was introduced in 1991, and is unchanged.

The principle is not a new one. Parental responsibility for children has long been enshrined in the law of this country. However, before 1991 fewer than one third of lone parents received maintenance from the child's other parent. By 1997 our aim is to have raised that proportion to half. Maintenance payments are a valuable income which lone parents can take with them when they return to work--which many wish to do. It will ensure that many will no longer have to rely on income support as their main source of income.

The Child Support Agency has figured prominently in the media in recent weeks. However, much of the coverage has been misleading and one-sided. The majority of comments have centred around the amounts of maintenance that absent parents are being asked to pay. Little attention has been paid to the substantial benefits for children to be derived from regular payments of maintenance.

We said in the White Paper, "Children Come First", that the new scheme was expected to increase the amounts of maintenance paid by absent parents. We repeated this in debates on the Child Support Bill and the regulations and continued to make the point on numerous other occasions. We recognised that there would be concerns expressed by absent parents, which we are now seeing as the measures begin to bite. We must, however, remember that there are two sides to every coin : yes, absent parents are being asked to pay more, but parents with care are now receiving realistic amounts of maintenance for the first time.

It is understandable that absent parents, some of whom have previously paid little or nothing towards the maintenance of their children, and others who may have paid less than the formula now requires, would not welcome being made to pay more--I understand that--but many of those absent parents, wittingly or unwittingly, made settlements which involved any maintenance that they paid being supplemented by the taxpayer. It is clearly reasonable that those absent parents who can afford to do so should make a more realistic contribution towards the cost of maintaining their children, without such taxpayers' interest.

Contrary to some media reports, the amount of maintenance to be paid is determined not on an arbitrary basis by the Child Support Agency or by faceless bureaucrats, but by a formula which was extensively discussed both inside and outside Parliament and put into legislation. It ensures that both parents, where they can afford to do so, contribute to the maintenance of their child.

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It produces predictable and realistic levels of maintenance for children, taking account of the fact that they do not look after themselves, and at the same time ensuring the children share in their parents' increasing income. This important principle has not been brought out in media stories.

Another crucial factor rarely mentioned is that the vast majority of absent parents will be left with 70 to 85 per cent. of net income after paying maintenance, and those with low incomes will usually be left with an even higher percentage. In fact, it has to be said that some of the media coverage has been unbalanced, with journalists being selective, to say the least, with their presentation of the facts, very rarely taking the trouble to research fully the true circumstances of the parents with care and their children. In the vast majority of cases in the papers, such research would reveal a parent with care and a child on benefit. One particular documentary, ITV's "World in Action", presented a series of cases, subsequently researched by The Sunday Times, which was heavily critical of the programme. The Sunday Times reporter who spoke to the ex-wives said that "World in Action" had made little effort to examine the full circumstances of the absent parents interviewed. The producer admitted to the newspaper that he had not contacted former partners.

In sensitive matters such as these--I appreciate the sensitivities on both sides--a greater willingness to present both sides of a difficult case would be better for everyone than merely putting a partial case. It would please me immensely if other sections of the media were to follow the lead of The Sunday Times so that the public could see some of the true benefits to children that are being derived from the scheme.

I recognise that people have genuine concerns about how the detail of the scheme has affected them, and I do not minimise the effect that this must have, but I have undertaken, as have my right hon. Friends the Secretary of State and the Prime Minister, to examine those concerns and we are continuing to do so. I remain convinced, however, that the basic principles of the new scheme are sound and stand up to scrutiny and are supported by the vast majority of people in the country. If it is apparent that the scheme can be improved further, I will obviously ensure that that is done.

The hon. Gentleman made some specific points and I shall do my best to cover as many as possible. He said a lot, however, and I may not be able to cover it all.

The hon. Gentleman mentioned the take-on strategy. Given the number of families involved and the need to ensure that each case is handled fairly and accurately, it was not possible to implement the new arrangements for all families overnight--but it was never our intention to do so. The agency aims to take on its full work load by the end of March 1997, but until then we have to prioritise the cases that it handles.

This year, the agency is giving the highest priority to all new cases, which have nowhere else to go. Newly divorced or separated parents who have care but do not have a court order or written maintenance agreement and who are not on benefits are no longer able to seek maintenance through the courts.

The second priority is parents with care who make a new claim to income support, family credit or disability working allowance. After these cases, the agency will cover, over the next three years of operation, cases where

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the parent with care was already getting income support in April. Less than a quarter of such cases are receiving maintenance. The agency has always made it clear that, within this group, priority would be given to the parents with care receiving maintenance, and this strategy was set out in the leaflet, "Parents Who Live Apart", which was published in January 1993 and sent to all hon. Members. The agency will also consider sympathetically, in the light of individual circumstances, any existing benefit client who seeks to be taken on early, including those where the absent parent has been avoiding paying maintenance.

The hon. Member for Warley, West mentioned targeting, which has caused much concern. It is simply not true that the agency is concentrating solely on absent parents who are already paying maintenance. We have always made it clear that all types of cases would be dealt with. The agency expects to deal with just over 1 million cases during the year, almost 640,000 of which will involve absent parents who do not currently pay any maintenance.

In the seven months up to 31 October, the agency took on 616,000 cases and estimates that more than 50 per cent.--some 330,000--were not receiving maintenance. This proportion will increase as the year progresses. I advise the hon. Gentleman that in nearly a third of assessments the absent parent has been assessed as either not liable to pay maintenance or to pay a nominal amount. That is hardly commensurate with targeting payers.

The agency has had considerable early success, which has not received the publicity that it should have, in finding missing absent parents--those parents who, unlike many others, have shirked their responsibilities and, in many cases, disappeared without trace. In the cases completed so far, it has managed to trace more than 9,000 absent parents where the parent with care did not know their whereabouts a success rate of more than 90 per cent., which was unmatched by the previous court system.

The hon. Gentleman raised the issue of clean-break settlements. Much attention has been paid to what are widely known as clean breaks. There can be no clean break between parents and children, and there never has been under the court system. It has always been possible for the parent with care to return to the court to reopen the need for child maintenance if circumstances changed.

Where a parent with care has gained sizeable equity in a property, the true effect in most cases being dealt with has been that she has acquired a material asset while the taxpayer has supported her children's basic living costs. It must be remembered that for many parents with care this transfer of property is not one of a free-standing asset but one with an associated level of debt through the mortgage. In those cases where the parent with care is reliant on income support, the interest on this debt falls to be paid by the taxpayer.

Advocates of that approach overlook a real problem. In the vast majority of such cases, there is insufficient information to determine what proportion of any settlement was attributable to spousal maintenance, which is not dealt with by the agency, and what is attributable to child maintenance, which is dealt with by the agency.

It should be emphasised that the child support formula provides for the practical consequences of a clean break settlement because it allows for the absent parent's housing costs. For example, in not taking any equity from the family home the absent parent may well incur greater

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expenses in re-establishing himself in a new home. The formula allows for those costs, and the amount of maintenance that he will be asked to pay will thus be reduced.

The hon. Gentleman made the allegation that the Child Support Agency only benefits the Treasury. That is not the case. I emphasise, first, that the services of the agency are available to parents who are not in receipt of any benefit, so it is wrong to suggest that the scheme is purely a money- saving measure. The question which should be asked is not, "Should we have introduced an Act to save the taxpayer money?" but rather, "Should the taxpayer have been involved in the first place?" Where the absent parent can afford to pay, I think that the answer should be no.

The hon. Gentleman mentioned the subject of second families and the difficulties caused to them. I understand his worries. The formula includes, as he is aware, a protected income calculation, which is designed to ensure that absent parents are not asked to pay maintenance at a rate which would take them down to income support levels. That is an especially important safeguard for absent parents with second families. The calculation takes account of the expenses, not only of the absent parent, but of his new partner and any stepchildren. It is in that part of the calculation that the absent parent's new partner's income is taken into account, because the entire household's income and expenses are compared to ensure that they keep a margin of income above income support levels. That calculation can only reduce the amount of maintenance that an absent parent is required to pay. Absent parents will never be required to pay full maintenance to the first family if it would reduce the living standards of the second family below the protected level. To that extent the second family takes precedence over the first. The hon. Gentleman has mentioned the issue of phasing. As he is aware, some absent parents will have the formula amount introduced in two steps to help them adjust. He is aware of the provisions. It has been said that that matter could be reconsidered and that is one of the subjects that the current Select Committee is considering. The hon. Gentleman mentioned the important issue of policemen, service men and others and I am anxious to make a comment about that. We have spoken to the Home Office and the Minstry of Defence about that issue. They are quite categorical. Policemen and service men will not lose their jobs because of increased liability for child maintenance. Counselling will be available for individuals who experience difficulty in managing debts and help will be given in dealing with creditors. The police force and the services are well aware of the problems that can arise from an unexpected debt and it is not fair to suggest that in all those cases, or in any of those cases necessarily, people will lose their jobs solely because of the matter that the hon. Gentleman has mentioned.

The hon. Gentleman also mentioned expenses. It has been suggested that the assessment formula should take account of the absent parent's expenses, such as the costs of travel to work, contact with children and debts. The formula does make provision for essential living expenses and, additionally, absent parents are left with a significant proportion of their net income after paying maintenance. That ensures that they have choices about how to spend their disposable income.

However, as I put as strongly as I could to the Select Committee, we do not think it right to allow for other

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expenses in the formula, as that gives them precedence over the basic needs of their children. To do so would create pressure for more and more expenses to be defined as essential and for child maintenance to be pushed further and further down the list of priorities. The ultimate result would be a return to the unrealistically low sums which were common under the previous system and indeed the conditions that inspired the House to make a change from the previous system, because it did not adequately deal with the situation affecting the children.

The hon. Member has again called for the suspension of the operations of the Child Support Agency, as he did last week. Even if it were warranted-- which it is not--to suspend the operations of the Child Support Agency, it completely ignores the impact of such action on many thousands of children, often in situations in which no maintenance had previously been paid. If the hon. Gentleman thought through the consequences of such a suggestion, he would realise that it would result in great hardship. Many parents with care would find that established maintenance payments would suddenly cease, and many would, therefore, be forced back to benefits. I am afraid that only a failure to understand both sides of the issue could have led the hon. Gentleman to make such a call.

I shall briefly make two or three final points. First, as to

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shared access, where an absent parent looks after a child for a period, the hon. Gentleman knows that that is catered for in the formula. Secondly, in relation to the question of overtime, the agency well understands that earnings can fluctuate and it can take account of that. Indeed, one of the benefits of the previous system was that it was difficult to go back to court to deal with variation orders. Under the new system, that can be done and it can be done without any increase in fees. If one went near a court in the past and one was charged new fees by a lawyer, it would turn out an awful lot more expensive than the fees charged by the agency.

Lastly, the hon. Gentleman made arguments about the support offered by his party, in one way or another, for the principle of the Child Support Act 1991. As far as I am aware, the Third Reading of the Act was not opposed by the Opposition. The Labour party conference of 1992 urged repeal ; the Labour party conference of 1993 did not urge repeal. I am still not quite sure whether the Labour party has now changed its view in any way.

The hon. Gentleman has advocated a return to a court-based system in what he said at the end of his speech. If that is now the view of Opposition Front Benchers, I would be very interested to hear it. Question put and agreed to.

Adjourned accordingly at half-past Ten o'clock.

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