House of Commons Hansard Debates for 10 Feb 1994

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Points of Order

5.27 pm

Mr. James Couchman (Gillingham) : On a point of order, Madam Speaker. Would you give urgent instructions to the authorities of the House to provide monitors in the Central Lobby and in the Lower Waiting Hall? I did not arrive in the Chamber for the beginning of the statement by my right hon. Friend the Secretary of State for Health because I was snatching a few moments to collect some work from my secretary. I might as easily have been held up by a constituent. As a result of your decision not to call me, although I would not seek to question it and it seemed a shame that one person only was not called, my constituents were deprived of reassurance that they might have received from my right hon. Friend on the future of their health services.

Madam Speaker : If I may correct the hon. Member, there were two Members who did not hear the entire statement. Therefore, I could not call them. However, I know that the hon. Member is not challenging my decision on that point. The annunciator has clearly shown from about 1 o'clock onwards that the statements were to take place. The onus is on all Members to keep an eye on the annunciator and to be in their place if they are keen, as I know they are, to put questions. I am sorry that in this case I could not call the hon. Member, but I shall certainly look his way on another occasion in the near future.

WELSH GRAND COMMITTEE

Motion made, and Question put forthwith, pursuant to Standing Order No. 98(5) (Matter relating exclusively to Wales).

Education Standards

That the Matter of education standards in Wales, being a Matter relating exclusively to Wales, be referred to the Welsh Grand Committee for its consideration.-- [Mr. Patnick.]

Question agreed to.

ROYAL ASSENT

Madam Speaker : I have to notify the House, in accordance with the Royal Assent Act 1967, that the Queen has signified Her Royal Assent to the following Acts :

1. Social Security (Contributions) 1994.

2. Statutory Sick Pay Act 1994.

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Orders of the Day

OPPOSITION DAY

[3rd Allotted Day

]

Child Support Agency

Madam Speaker : I have selected the amendment standing in the name of the Prime Minister. As Members would expect, I have had to impose a 10- minute limit on speeches between the hours of 7 and 9. I seek co-operation outside those hours as there is a great deal of interest in the subject.

5.39 pm

Mr. Donald Dewar (Glasgow, Garscadden) : I beg to move, That this House believes a parent has a duty to contribute to the maintenance of his or her child, and that duty must lie at the heart of any system of child support ; recognises the widespread anger and dismay felt by thousands of families whose lives have been affected by the introduction of the Child Support Agency and calls for a further urgent review of its operation ; welcomes the changes announced by the Government and now approved by the House ; but believes these do not amount to the fundamental review that is required and fail to tackle key areas of concern such as the lack of an independent review procedure to deal with special circumstances to be defined in statute, which must be addressed if perceived injustice is to be eliminated and public confidence restored.

The House will be aware that about a week ago we discussed the Child Support Agency in the context of the new Government regulations. Some people may have been surprised that we have decided to return to it so quickly. By any standard, the decision is justified by the anger, dismay and sometimes the fear which have resulted from the change in the system of child support. People all over the country are worried about how they are to manage the unexpected consequences of the system. Arguably, they should have anticipated those consequences, but in many cases they did not and they have been left facing major problems.

Few hon. Members have not been startled by the strength of feeling which they have encountered in their constituencies and have not been left with the uncomfortable impression that the complaint which has been put to them so forcefully has some justification, yet redress is impossible.

It is important to stress that there are many more problems to come. It is difficult to get up-to-date figures in an organisation of such a size, but figures for 31 December 1993 show that 710,000 maintenance applications forms had been issued, of which only 210,000 cases had been cleared. In other words, there are at present about 500,000 cases in the pipeline on which final assessments are to be made. I fear that there is room for a great deal of heartbreak and anger in the figures.

Last week, we discussed the regulations--the Government's changes. It is not unfair to say that the view that was taken overwhelmingly on both sides was that the provisions did not go far enough and that more was required. I do not deride what was on offer. I made that clear on that occasion and I am pleased to say so again. I especially do not deride the increase in protected income. I recognise that the whole package, when fully

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implemented in 1996-97, will mean that about £95 million less will be ingathered by the Child Support Agency than would otherwise have been the case.

I have learnt from a parliamentary answer that I received only a few minutes ago that, from the Government's point of view, about £50 million will be offset because of the reduction in the tax allowance to 15p on maintenance payments from 1995-96. However, all that will be little consolation for those who are paying maintenance because they will feel that they are in double jeopardy. They are paying their increased requisitions to the agency and they will get less tax relief to set against that. That will do nothing to improve the atmosphere.

Ministers must face the fact that, the other week, speaker after speaker rose to say that there was a need for further action. The Under-Secretary of State, the hon. Member for Bury, North (Mr. Burt), apologetically defiant, but totally isolated--that is often his role these days--did his best, but he did not satisfy anyone. There is an urgent need to persuade Ministers to believe that they cannot close the file and tough it out.

I make it clear that I am certainly with the majority on this issue. Today, we should concentrate on positive proposals, some of which I listed last week when I did not have the time or the opportunity to argue in any detail. I make one general point which may command a good deal of agreement although it is, in a sense, a little academic now. Looking back--I accept that hindsight is a fine thing--it is unfortunate that we made the system retrospective. I have talked to a number of people with experience of Australia. Australia will certainly crop up in my speech and I suspect that it will crop up in the deliberations of the House. In Australia, as many hon. Members will know, the Child Support Agency system applied to couples who separated on or after the introductory date of 1 October 1989 and to partnerships in which the youngest child was born on or after that date. It meant that there was a far longer transitional period as settlements made under court orders faded away. It also meant that there was not the pain and difficulty associated with our system in which long-standing arrangements and court settlements were torn up and in which settled arrangements were disrupted.

Mr. Peter Thurnham (Bolton, North-East) : The hon. Gentleman is saying with the benefit of hindsight that the system should not be retrospective. Does that explain why his party is making a U-turn on the issue? Labour Members were in favour of the CSA in principle ; when they found that there were difficulties, they wanted to run away. All they want to do is to throw the burden back on the taxpayer.

Mr. Dewar : I hope that I am not making a partisan speech. I am interested in the problem and I do not think that the intervention by the hon. Gentleman is helpful or typical of someone who takes these matters seriously. I make it clear that our support is for the general principle, which commands everyone's support, that a parent has a duty to contribute to the maintenance of his or her child. As the hon. Gentleman knows, if he was present at or has read the debates, there was a reasoned amendment dealing with the practicalities, on which we divided, which with remarkable perception identified and pointed to many of the difficulties that now haunt the system.

It is a little remiss of hon. Members--I am sure that the Minister will not do this--to say that because we approve of the principle that lies behind the Child Support Act 1991

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and will have no compromise on it, we are therefore bound to everything that has happened and to every detail of the way in which the CSA operates. That is not the case. We should now concentrate on looking for solutions and at ways in which we can rebuild public confidence in the system, which has been greatly shaken.

There is nothing dishonourable in adjustment and change. The present system is not graven in tablets of stone. There were doubts in high places--I hope that this point is not thought to be partisan--from the very beginning. I draw the attention of the House to page 630 of "The Downing Stree Years" in which Lady Thatcher talks about her feelings. She writes :

"I was also appalled by the way in which men fathered a child and then absconded, leaving the single mother--and the taxpayer--to foot the bill for their irresponsibility So--against considerable opposition from Tony Newton, the Social Security Secretary, and from the Lord Chancellor's Department--I insisted that a new Child Support Agency be set up".

I do not say that to make a cheap point, but to illustrate the fact that there have been doubts on both sides of the House about what was happening and about how the new policy was implemented. Unusually, I advance Lady Thatcher as evidence of that-- [Interruption.] It may not be the only time that the Leader of the House has been right and Lady Thatcher has been wrong. That is a more general political point.

I have been urging for some time the possibility of a review procedure. Hon. Members who attended our previous debate will remember that I briefly described it. An independent review officer would have the power to consider exceptional circumstances, to test the representations made to him against criteria defined in statute and, when the test was passed, to order a departure from the standard formula. I suggest that because of the fundamental concern, shared by both sides of the House, there is a great lack of flexibility in the system.

Mr. David Shaw (Dover) : Will the hon. Gentleman give way?

Mr. Dewar : I shall give way to the hon. Gentleman in a moment, which shows a certain charity.

The lack of flexibility has led to perceived injustice and on occasions, to real injustice, which has been embittering. The introduction of a review officer, a proposal that unashamedly leans heavily on the Australian experience, is well worth considering. I am convinced that there is a strong case to answer.

Mr. Shaw : I am grateful to the hon. Gentleman for giving way, thus allowing us to continue the debate we have had on previous occasions. If he feels that there should be an independent review procedure for child support cases, does he feel that the Inland Revenue tax system should have a similar independent review procedure in which independent officers could assess cases in which taxpayers felt that they were paying tax unfairly and wrongly? How would such a procedure be administered?

Mr. Dewar : I understand the point made by the hon. Gentleman ; he is arguing by analogy. I have not considered that proposition. I have considered the difficulties that we face with the CSA and especially the breakdown of confidence in the system. I recognise that no one likes paying tax and that the Inland Revenue is unpopular when one gets a tax demand. Fortunately, I do

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not detect as yet the growing crisis of confidence that exists in the CSA system. That is why I want to speak briefly about the system in Australia and its relevance to this country.

As hon. Members may know, the Child Support Agency system was introduced in Australia in October 1989. It progressed until 1 July 1992 without the review officer system. It was then decided that a review officer system was an advantage. The Australians made the change because they were running into problems not dissimilar to, although not on the same scale as, the problems that we face now. They built on their experience and they moved into the review officer system because they felt that it would defuse the situation and would help people who had a perception of injustice. The system changed successfully to accommodate those aims.

I have inquired into the Australian system and I have been told that the review officer system is seen as speedy and effective. There is no legal representation, although the parties can meet the review officer and make their representations. The system is used sensibly and has not led to some of the practical difficulties that we have been invited to contemplate when such a system is suggested. I am not saying that we should adopt the Australian system with every dot and comma ; it is not a lift and take argument. We may want to alter and argue the grounds, for example, on which a referral may be made to the review officer, and the test that he applies. It is important that we take this seriously.

Mr. Bernard Jenkin (Colchester, North) : The hon. Gentleman is making an important proposal, and we accept that he is making it in all sincerity. The crucial point about the Australian system is that the appeals have tended to raise the amount that is contributed by the absent parent, rather than reduce it. It is incumbent on the hon. Gentleman to explain to people outside the House exactly who and what proportion of absent parents will be entitled to appeal, and on what grounds. If we are talking about confidence in the system, it is the constant demands for review which will undermine that confidence more quickly than anything else.

Mr. Dewar : Certainly I am conscious, and cautious, of the points made by the hon. Gentleman. I tried to address them briefly in my previous speech on this subject, and I shall turn to them genuinely in a moment. I take what he says seriously.

All I shall say on the general point is that review within the present system is based largely on change of circumstance and error in calculation. There is no independent scrutiny ; at the end of the day, people who are discontented find that they are imprisoned within the iron walls of the present system. That builds frustration, which is dangerous.

The Government have clearly and fairly stated their objections. The first is--the Under-Secretary, the hon. Member for Bury, North, has said this on many occasions--that the Australian system is different, and there is no parallel, it is a broad-brush approach and it is much cruder than the sophisticated and, by implication, comprehensive and effective assessment formula that we use. I do not accept that. The similarities are much more important than the differences. The Australians were grappling--and I will not go into detail--with social problems, the growth in expenditure on

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single parents, an increase in the number of single parents and the same sort of social phenomena with which we are familiar in this country. They have developed a somewhat different method of calculating the maintenance assessment. I take the point that there is no equivalent to the protected income. I agree that the formula of gross taxable income less exempt income to produce the adjusted amount is different. The Australians produced a system that relies on a set percentage of that sum as the final arbiter of the money to be paid. It is simpler but it seems to be similar.

I have been told by people who are wiser in the ways of the system than I am, and who have spent a good deal of time on this, that if we apply the Australian formula and the United Kingdom formula to families with exactly the same circumstances, we end up with comparable results. I do not accept, therefore, that we have no parallels and no common identity of interest or that the experience in Australia cannot at least be seen as relevant to our experience. The second argument that was advanced can be put most crisply by quoting Viscount Astor speaking in another place yesterday : "The plain truth is that there are two options : discretion or a formula. These options are mutually exclusive ; you may have one or you may have the other, but there is no middle road."--[ Official Report, House of Lords, 9 February 1994, Vol. 551,

c. 1682.]

I do not accept that. It seems that the noble Lord, or the person advising him, has an over-tidy mind. There is a touch of absolutism about tht view which is not justified.

I shall turn from the theoretical position to the practical. This is where we come to the point made by the Under-Secretary of State and to what happened in Australia. The practical results of what happened in Australia are the best advertisement for the case that I am advancing. There are many people in the world of law who certainly would not agree with Viscount Astor. Perhaps I shall quote only one of them. Recently, Mr. Michael Clancy, the deputy secretary in charge of law reform at the Law Society of Scotland, wrote to me in these terms. I quote :

"I should mention that the Society considers that the Australian model of the Child Support Agency represents a more acceptable structure. It is unfortunate that the United Kingdom version did not adopt more of the flexible aspects of the Australian system." I could quote that sort of opinion from sources who would be seen as having relevant expreience and expertise over a wide range. I turn to the point made by the hon. Member for Colchester, North (Mr. Jenkin). I accept entirely that there is a danger that if we talk about a review procedure, people will see it as an open door--a court of second recourse rehearing the case from the beginning --and that that could lead to real problems. I give the hon. Gentleman an assurance that I will not represent it in that way, certainly not in any sophisticated argument or serious debate about this matter. It is right that we should have some form of independent review that can look at situations where there are genuine facts that are relevant to the care of the children and the situation of the absent parent, which cannot be taken into account at present. I have a notice of determination by the

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review officer in Perth, Western Australia. He has before him all the grounds of application which are defined in statute. I quote : "I have a duty to maintain another child or person has special needs.

I have necessary commitments in supporting myself High costs of access to the child.

Special needs of the child",

and so on. How they are interpreted is a matter of argument. One issue which has worried Tory Members from the south-east is commuting costs. Previously, the hon. Member for Gillingham (Mr. Couchman) talked about being devastated by the impact of the Child Support Agency on his constituency, although he was a strong supporter of the system when the legislation reached the statute book. I will not say hard and fast--it will be a matter for further discussion--that commuting costs can be covered by those grounds.

The Secretary of State for Social Security (Mr. Peter Lilley) : For the purposes of clarification, the Australian system does not take into account travel costs. We have confirmed that with the Australians.

Mr. Dewar : That is fair enough. Undoubtedly, it will be a matter for argument. Some people may think that it will have to be argued under the heading :

"I have necessary commitments in supporting myself."

The point is that there could be discussion about exactly how the grounds are interpreted. I am arguing the structural case--the need effectively to tackle the justice deficit that is perceived in the system.

Mr. Oliver Heald (Hertfordshire, North) rose--

Mr. Dewar : I want to finish this passage.

I have tried to make inquiries into the use of this system in Australia. I am grateful to Nicholas Mostyn--he is well known for his work in this field --for the facts and figures that I shall give the House. In steady state terms, there are about 120,000 assessments annually in Australia ; 12,900-- about 11 per cent.--of them have got into the review system. Of that, 6 per cent. have been successful. It may be of interest to the hon. Member for Colchester, North that in 4 per cent. of the cases, the absent parent-- normally the father--got a reduction in assessment. In 2 per cent. of the cases--this is significant--mothers managed to get increased assessments. Therefore, the system has not been overused, and it has not been abused since it settled down. It has been used by both parties--both sides of the equation.

Having talked to people who are familiar with the system, I have to say that it is seen as effective, speedy, sensible and a necessary safety valve. I have talked not just to academics and lawyers here ; I have had the advantage of discussing the issue with one or two Australian lawyers who specialise in family law, who are in the United Kingdom for a number of reasons and have the practical experience that I value. All of them have repeated that message and underlined it. I hope that the House will not slough off the arguments in this area. If we do so, we will do a great disservice to the agency and what it is supposed to stand for--and, indeed, what it potentially still stands for.

The final argument--I shall deal with it quickly--used by the Under- Secretary is a reprise of what I mentioned before : the system is unfair because it raises false hope.

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That cannot be right. Even if only a few people are suffering real injustice--I suspect that there will be a significant minority--we cannot erect a system that defies them and stops them from getting justice because it may lead to disappointment for others who do not have a good case. That is a dangerous--one might say

pragmatic--argument and one that I hope will not find favour with the House.

Mr. Heald : Does the hon. Gentleman agree that what he is describing --the right of appeal in only exceptional cases--will not do anything for the people who are complaining? Those include people who would like existing debts and the fact that the divorce happened many years ago taken into account. The hon. Gentleman is offering a narrow right to a small number of people. Is not that a bit of a con on the public, who may think that the Labour party is battling today for most of the fathers, when he is just talking about a handful?

Mr. Dewar : I think that the hon. Gentleman is a lawyer.

Mr. Heald : A what?

Mr. Dewar : A lawyer. [Interruption.] I did not catch what the hon. Gentleman thought I said, if I may put it in that rather Irish way. I tremble to think what was in his mind, and I hope that it was not the result of a guilty conscience.

In any event, I understand that the hon. Gentleman is a lawyer. I quoted the figures from the rather controlled Australian situation, where 11 per cent. of cases went to a review officer and 6 per cent. succeeded. If one makes that 6 per cent. of the much larger figures in Britain, there is a significant constituency for the appeal procedure. Many of those involved would be the worst cases. The hon. Gentleman may want to argue the opposite of what I suspect Ministers will argue, and say that the scheme ought to have wider scope. I am grateful for his intervention, because it shows that there is an area of debate as to how narrow the gate should be. The Minister and the hon. Gentleman may disagree about that if we get to that stage. The important thing, however, is to accept that there is a need for that safety valve. That is what I want to argue tonight.

Dr. Robert Spink (Castle Point) : Will the hon. Gentleman give way?

Mr. Dewar : I must move on. It would not be fair to the many people who wish to speak.

Mr. Lilley rose --

Mr. Dewar : There are two other points on which I want to speak, but I will of course give way to the Secretary of State.

Mr. Lilley : The hon. Gentleman must not leave the House in confusion. Is he proposing a narrowly prescribed system which would help few people? Does he want to open the system up for wider use by discretion, which would inevitably take us back to the system which failed before and transferred all of the burden on to the taxpayer?

Mr. Dewar : I do not want to leave the Secretary of State in confusion, and I am sorry if I have. The balance reached in Australia looks not unreasonable to me. I have made it clear that I would be open to argument from other hon. Members if we get to that stage of discussion.

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The Under-Secretary said in a broadcast this morning that my motion was defective because it did not specify exactly what the grounds of appeal for the review procedure would be. I am not trying to argue that case arrogantly at the moment. As I have explained, I am trying to put a point of principle to the House, and I hope it is one to which people will respond.

Mr. Thomas Graham (Renfrew, West and Inverclyde) : Will my hon. Friend put this point to the Minister? A constituent of mine who has never been in debt in his life and has always paid what the court told him to pay is now lumbered with more than £700 in debt. The agency has doubled the amount to £38 a week. The young man asked me how he was to get the money--should he rob a bank or disappear off the face of the earth? Is not that the situation into which the Government are putting people?

Mr. Dewar : Many people feel that they are in a cul de sac. I hope that my hon. Friend advised his constituent against both courses of action. I sympathise with the serious point that my hon. Friend makes.

I now turn to clean break settlements and to the situation in which a property or financial settlement has been made but cannot be taken into account. There is a great deal of anger over that, and a feeling of betrayal. The feeling very often is that good intentions are being ill- rewarded now that the system has been introduced. People have acted for the best, and have sometimes acted generously in difficult circumstances, and they are now being hit hard as a result. There has been recent litigation with the Crozier case. I understand from those with whom I have talked that that was perhaps not the strongest case to take as a test to court. Be that as it may, I suspect that there may be more litigation before too long, with people suggesting that a reference to the CSA is a unilateral abrogation by one party of a contract between two parties. In any event, the Crozier case has decided the issue for now.

I again look to the Australian experience. There can be an agreement between the parties, and if there is a financial or property settlement which both parties agree will affect the maintenance award, they can specify how it is expected to affect that award. If it is lodged with the CSA for collection, that will be honoured. More important, if the parent with care ends up on benefit in the future and the CSA is making an assessment, it is possible to vary the assessment according to the recognition of the property transfer up to a maximum of 25 per cent.

There is always room for argument, but there is virtue in that and it is at least something which we ought to consider. I was interested--I know that the Secretary of State will remember this--to re-read the White Paper "Children Come First" which was published on 29 October 1990. Paragraph 4.12 states :

"There remains the issue of whether there should be some reduction in the formula award of child maintenance to reflect the fact that the absent parent has foregone permanently some or all of his share in the family home. If such reduction in the formula amount were to be permitted, the value of the reduction would be calculated by using standard accounting techniques for converting a lump sum into an equivalent weekly amount over a number of years."

I draw attention to the fact that there is no suggestion in the White Paper that that was impractical or that there was some barrier which made it impossible. Clearly, it was an option in contemplation and the machinery, if it was to be implemented, was being outlined and defined.

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The then Secretary of State for Social Security and the Lord Chancellor jointly produced that White Paper. Two months later, for reasons to which I am not party, that was not incorporated when the Bill was published. I believe now that it would have been sensible so to do. I have been told that it is not necessary to do that. I find those arguments perhaps the most implausible in this whole range of exchanges.

The Minister says that if a parent has transferred a house or has settled a large financial sum on the parent with care, he is probably creating a situation in which he must buy another house. That is reflected in his housing costs, and therefore everything is all right and he has come out at least with justice and honour satisfied. I do not believe that is true in a financial or a property settlement. I need hardly say that an awful lot of people agree with that point of view.

I do not often get annoyed with the Government's documents, or at least not in the way in which I did on this occasion.

[Interruption.] There are exceptions when the personal authorship of a document sometimes riles me. On this occasion, I was rather miffed by paragraph 7.31 of the discussion paper on divorce law reform which we have before us. The document says that the CSA formula "takes account of each parent's income and essential outgoings at the time of assessment and, because it deals with the financial consequences of any property transfer, takes account of the practical outcome of clean break' settlements."

I do not think that that can be justified or held to be true when we look at the practical reality.

I cannot resist saying that I recommend that any hon. Member with an interest in the curious should read the Lord Chancellor's introduction. It must be the first time a Lord Chancellor has justified law reform by referring to what Jesus said to the Pharisees about Moses, as recorded by St. Mark. I cannot help thinking that the good Lord Mackay of Clashfern is remembering his roots.

Be that as it may, the quotation which I have given does not stand analysis. Therefore, it is wrong to say that it is not necessary to consider clean break settlements. There are thousands of cases which testify to that up and down the country.

My other argument--I will try to hurry this--is that the Minister commented on the Select Committee, and what it says in paragraph 74 of its report. The Committee has become the buckler and shield for the Minister in all the arguments and debates, and it is summoned twice to the aid of the party in the amendment to the motion. That is unfair, because it has been made clear that the Committee was making an interim report about the financial workings of the formula, and that it would return later to the matter in more depth. If we are praying in aid Select Committees, the Minister will certainly remember that, when the Bill was first published, the Select Committee on Social Security published two reports. Both argued that there must be a mechanism properly to reflect clean break settlements.

The Minister spouted paragraph 74 of the current report. Even it says :

"We can see no sensible way of attempting to place a current value on settlements made in the past in order to give some notional figure for current income which could be taken into account in the formula."

That may be so, but it does not rule out some formula or arrangement of the type that I have mentioned, even at its most modest, to deal with settlements in the future.

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The Parliamentary Under-Secretary of State for Social Security (Mr. Alistair Burt) : The hon. Gentleman missed the little bit before, which states :

"Having examined the issue, we have to agree with the Minister."

Mr. Dewar : No. I am sorry. I did not mean to be unfair. In his eagerness to find a lone supporter somewhere--a prop on which to lean--the Minister is building too much on the words that I am quoting. The report said :

"Having examined the issue, we have to agree with the Minister." The issue in question is the paragraph that I quoted beginning, "We can see no sensible way". The Select Committee was referring to the difficulty of dealing with the past. On any reasonable interpretation of the text, it did not necessarily rule out the future.

I leave the matter to the Minister. It is of great concern and one to which we should turn our minds, as I am sure the Select Committee will-- collectively, I hope, not individually--at some future date.

Mr. Thurnham : On a point of order, Mr. Deputy Speaker. May I point out that the report from the Committee is not an interim report? It is a first report and the duty of the Committee is to report "from time to time".

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