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Mr. Dewar : I do not want to get into a barrack-room lawyers' argument with the hon. Gentleman. I fear that he would win that. If he wants some guidance on the matter, he should perhaps read the interesting speech made by the Chairman of the Committee in the Chamber last week. I hope that the hon. Gentleman would not obstruct a wish to have another look at the matter.
I recognise the difficulties with a disregard. However, I believe that a disregard of some benefit for the purposes of maintenance should be considered and should be on the agenda. I said it last week and I shall repeat it. There is one overwhelming reason for it. Ministers proudly introduced the system as being about getting more money from more parents for more children. In fact and in practice, it is not. One of the difficulties is the notorious estimate that, of the first £530 million that was expected to be gathered--we understand that the expected figure is lower now, because of the changes that are being introduced, if nothing else--£480 million would go to the Treasury and only £50 million would go to families and children.
Dr. Spink : Does the hon. Gentleman recall that the cost of a £10 a week disregard would be £340 million? The hon. Gentleman is a genuine man. Will he tell us two things? First, which taxes would he raise to meet that £340 million? Secondly, is he happy with the impact that the disregard would have in breaking up families?
Mr. Dewar : I shall come to that in a moment. I was hoping that the hon. Gentleman would repeat his points about the difficulties in his constituency and the unfairness of the system, but I suppose we have to live with these disappointments.
Column 493The children who are most economically deprived--those in families living on benefit--are the least likely to gain any advantage from the operation of the Child Support Agency. I do not believe that that was the intention of the system. I recognise that it is a matter of balance and that the Government and the taxpayers have a legitimate interest in reducing bills. However, the balance is wrong and many people will see it as wrong.
The arguments are simple. One is that a disregard is unfair because it is something of a lottery whether the absent partner of Mrs. A is traced and pays. Mrs. B's partner may not be traced or, if traced, may not pay. So it is argued that it is unfair that one should be advantaged over the other. It seems an odd caricature of the position to argue for misery all round in order to preserve equality. If money is being paid, there is a strong moral case for saying that at least some advantage--however much goes to the Treasury and the taxpayer--should go to the children who are most economically at risk.
I do not accept the disincentive for work argument. I recognise that it is a factor, but although a small disregard might be important cumulatively over a year, it would be a poor job if people were stopped from taking up work by a £5 or £10 disregard. The real argument is about cost. I do not believe that anyone has any doubt about the morality of helping the poorest families and children. I do not see the issue as a matter of tax, and the hon. Member for Castle Point (Dr. Spink) did. The Government make a decision about how the money gathered is split. They do not increase the total amount of money by refusing to allow a disregard. It is a matter of to what extent the Treasury is prepared to forgo some of the revenue collected to help children.
Surely no one in the House will say that, in a system that is about the care of children and is supposed to be child centred and child based, there is not a case for considering a disregard and putting it on the agenda, especially in view of the figures that are emerging. The figure to which the hon. Member for Castle Point referred came from a parliamentary answer to a question that I tabled. I do not believe in dealing in generalities if I can get the information. The decision about a disregard depends on some difficult calculations and on the size of the disregard. The cost of a £5 disregard, which might still be of some importance, is £160 million or £170 million, according to the latest estimate. There are many variables. I am simply putting the issue on the table. The argument about a disregard is important and we should not sweep it aside in the way that Ministers could be tempted to do.
In its recently published ninth report, the Social Security Advisory Committee said that it had examined the possibility of a disregard several times and believed that there was a case for a disregard. I have received representations from a range of opinion in favour of a disregard. At the end of the day, it boils down to how we see the system, where the priorities lie and how we want to arrange these affairs. There is a strong case for putting children rather higher up the list of priorities than has been possible until now.
Column 494I regret what happened to the Under- Secretary, the hon. Member for Bury, North when he was closing the previous debate. Hon. Members who were present will remember that he was cut short dramatically. He had just come to the pregnant phrase, "And now for the future", when the lights went out--metaphorically, you understand, Mr. Deputy Speaker, not literally. We did not learn about the future on that occasion and we were left to wait and wonder. We cannot afford to wait and wonder much longer. The issue will not go away. There is a justice deficit, and it has to be tackled.
I have listened to what the Government have been saying. I have heard a selection of reassuring utterances, some of which offered a prospect of change. I draw one to the attention of the House because it is the most optimistic that I have heard, although it has not held the line. The Yorkshire Post of 27 January 1994 had a front-page story containing an interview with the Prime Minister, in which he said :
"Where the operation of it"--
the Child Support Agency--
"was inadequate--as people believed it to be--we have sought to make changes. I hope we have got it right now. I can only repeat that we can't be certain. If it turns out not, we will have to look at it." That certainly suggested something of an opening and a softening of attitudes. I was particularly interested in the phrase
"Where the operation of it was inadequate--as people believed it to be".
It was as if there was now evidence that people no longer had that belief.
I fear that if that is the Prime Minister's position, he is being over- optimistic. Since then, I am afraid that the evidence has turned against us. At Prime Minister's Quesion Time last week he said : "we stated that it would be kept under review. We are still true to that pledge--it still applies."--[ Official Report, 3 February 1994 ; Vol. 236, c. 1019.]
That is a ministerial form of words. I make no complaint about that, as every ministerial team uses it ; it is a sort of placebo for worried Back Benchers. We are told that everything is under review--a good Government always keep their eye on developments. That is a way of putting off action, rather than promising early action or taking action that little bit earlier.
The debates in the Lords yesterday, the interviews given today by the Under -Secretary of State for Social Security and others and the amendment on the Order Paper hold out little hope for movement in the short term, but we need movement. We cannot wait and see. We do not have the time, nor has the system. If we do not act, consent--which is the foundation of the law--may be eroded. Without consent, the law becomes unenforceable. The problem is serious and Ministers have to recognise it as such.
One day, a Tory who was sitting below the Gangway said, with great simplicity :
"It has gone horribly wrong. We have got to put it right." I do not dissent from that view, and if it takes primary legislation and there is broad agreement on the principle behind such legislation, we will do everything to expedite it in the minimum time.
Mr. Dewar : I can give the Secretary of State that promise. If he introduces legislation that commands general support, I am happy to say that we will be helpful ; I hope that he will take that offer seriously.
The motion is unashamedly narrow in focus ; it does not have any general attack ; and it is not decorated with political accusations of one sort or another. It states an important principle and restates what all hon. Members believe--that parents have a duty to maintain their children. The motion also welcomes the announced changes. I have repeatedly made it clear that I welcome them, despite my reservations about their scale. However, the motion also recognises that there is a problem, urges further reform and instances the need for an independent review procedure, which would go to the heart of the discontent--it is not the end of the list or the end of change, but it is a proper symbol of what we ought to be trying to do in the House and that is why it was included.
It is never easy for Conservative Members to vote for a Labour motion on a Supply day, but if the motion is approved it will be a strong sign--perhaps even a direction to Ministers--that the mood of the House is for further reform and change. It would not be dishonourable for Conservative Members to approve the motion because they would be reflecting the mood of the country and the troubles and anxieties in every Member's constituency.
The motion is fully justified and worthy of support. Many people will watch anxiously for a sign tonight that the House will not merely worry, agonise and do nothing. I hope that both sides of the House will support the motion, as it will have the support of people in every part of the country.
welcomes the support of the all-party Select Committee on Social Security for the principles of the Child Support Act ; reaffirms its own support for those principles, in particular that every parent has a duty to contribute to the maintenance of his or her child, that the amount of maintenance paid for children should be increased, and that the cost of bringing up children should fall on other taxpayers only if parents are unable to maintain their children themselves ; recognises the inconsistency and arbitrariness of the previous court-based system, which gave insufficient priority to parental support of children and left many children on benefit ; welcomes the important changes recently introduced by the Government in response to early experience of the new scheme and the Select Committee's report on its practical working ; and approves the Government's intention to keep the arrangements under continuing close review as further experience is gained.'.
I apologise for the slightly groggy tone of my voice. I applied to the BBC for an actor's voice-over, but was told that I would have to join Sinn Fein.
I commend the hon. Member for Glasgow, Garscadden (Mr. Dewar) for resisting the temptation to abandon his support for the Child Support Agency, which I know that some hon. Members will have tried to persuade him to do, and for the essentially non-partisan tone of his remarks today and when he has handled the issue previously. Although I must take issue with some of his points, despite the fact that this is an Opposition Supply day I shall respond in an equally non-partisan vein.
This is too sensitive a matter for any of us to want to play politics. In any case, there is a wide measure of all-party agreement on the issue. The Act was passed with
Column 496all-party support and all parties agree on three key points. The first is the basic principle that parents are responsible for their children, that that responsibility continues even if, sadly, they should split up, and that the taxpayer should be involved only if the parents lack means to support them themselves.
Secondly, none of us really wants to return to a system which failed-- failed our children, failed the taxpayer and failed to uphold the principle of parental responsibility. There are about 1.3 million lone parents and 1 million of them depend on income support. Three in four receive not one penny of regular maintenance, many of the one in four with such an agreement are often paid late, irregularly, or not at all and the amounts are often inadequate and inconsistent. Sue Slipman, of the National Council for One Parent Families, put it very well recently when she said :
"Before April last year, only 30 per cent. of lone parents got any maintenance for their children whatsoever in this country. Most of it was at derisory levels. And I will tell you what happened when you went to court to get someone to pay maintenance. Maybe he would turn up to the hearing. But maybe he wouldn't. And if he didn't it would be postponed for 6 months. You would then get a whole range of debts that would be presented and a whole range of other excuses for why maintenance could not be paid. You might then at the end of that get an order, and it might be paid for two to three weeks. No-one even enforced it, and no-one was ever interested. And as a result of that the experience of over 1.7 million children in this country was abandonment by one parent and a life in poverty with the other."
Mr. Harry Barnes (Derbyshire, North-East) : The people who are contacting their Members of Parliament with detailed complaints are not the people whom the Minister is describing. They are respectable, responsible people who have always paid their maintenance, but who now find themselves in devastating circumstances because of the operation of the provision. What is to be done for them?
Mr. Lilley : I entirely agree with the hon. Gentleman. We must distinguish between people who were not doing anything to meet their responsibilities and those who have been honourable throughout. We have tried to reflect that in our changes.
Mr. Graham rose --
Thirdly, we are all agreed that we want to make the Child Support Act 1991 work as Parliament intended when it was passed unopposed. We want to make it work fairly. We want to be fair to parents who care and to absent parents, to first and to second families, and to parents and taxpayers. Surely that is a common objective on both sides of the House.
Mr. Graham : I have here all the letters that I have received from people who feel that they have been unfairly treated. They want an appeals procedure. Why does the Secretary of State not listen? He does not seem to understand that Opposition Members desperately want the right of appeal and review. We might then get some common sense.
Mr. Lilley : I shall come to that matter in due course. We have tried to respond to the obvious concerns that all hon. Members have experienced in their surgeries. Obviously, one of the healthy aspects of our political
Column 497system is that we all have contact with our constituencies. Ministers also have direct experience of what their constituents are saying.
We have said all along that we would keep the matter under review. We responded rapidly to the concerns voiced by Members of Parliament, which were considered by the Select Committee on Social Security and reflected in its well-thought-out recommendations. We rapidly introduced some important changes, which I shall come to shortly. I assure the House and my hon. Friends that we will keep the system under review. We will monitor it closely, will study how our reforms work and will respond to any new problems which emerge as a result of those changes.
Mr. David Tredinnick (Bosworth) : Does my right hon. Friend accept that the overriding problem is the scale of the change that parents have suddenly found themselves facing, for a range of reasons? The solution must be some easing of those circumstances. We have already had some helpful changes, but surely the mood of the House is that the process should be taken a stage further so that the system is perceived to be fair. Action of that kind would, I think, carry the House.
Mr. Lilley : My analysis overlaps with that of my hon. Friend. We felt that we had to make some changes that would be reflected in the scale and speed of the impact. I shall be considering the changes--from which, of course, no one has yet benefited. Surely it is worth waiting to see how they work out and affect our constituents. That is what I shall spell out in a moment.
Mr. Robert Jackson (Wantage) : My right hon. Friend has moved quickly to make some changes, and I accept that they ought to be given some time so that we may see how they work in practice. I hope that when my right hon. Friend discusses the further review that is mentioned in the Government amendment he will give some indication of the time scale involved. Indeed, he might even set a date. I hope that he will address also the question of the efficiency and responsiveness of the Child Support Agency bureaucracy, which is very unsatisfactory from the point of view of Members of Parliament and, a fortiori, much more unsatisfactory from the point of view of the clients.
Mr. Lilley : We have demonstrated willingness to respond in a timely fashion to the need for change. That must be the best assurance that I can give hon. Members. It is better than setting out a specific time scale.
With regard to the second point in my hon. Friend's intervention, I should say that it is clearly important that the agency be made to work effectively, efficiently and responsibly and that it be sensitive to the needs of those affected by it and take account of the concerns expressed, either directly or through Members of Parliament, by them. We have drafted in extra resources for the purpose of dealing with queries and complaints.
However, it will be helpful if we can get the changes bedded down and under way. Continual change and turmoil will not help. The changes that are currently being introduced involve a major effort. If the agency were to suspend its normal operations every few months for this purpose, that would not help in the provision of the sort of service that we all want.
Several hon. Members rose --
Mr. Lilley : I should like to make a little more progress. I have no doubt that I shall be dealing with some of the points that hon. Members have in mind. In any case, I shall give way in a little while.
I shall elaborate later on the changes that I have made. But it should be no surprise to anyone that the implementation of this legislation aroused opposition. Every similar agency in every other country--Australia, New Zealand, various states in the United States and Scandinavia--has met strong initial opposition from absent parents who have been asked to bear an increased share of the cost of supporting their children. But the fact that opposition is inevitable does not mean that it should be ignored--and we have not ignored it. Our task is to distinguish the genuine grievances and unintended consequences of the Act from an understandable reluctance to pay or to pay more. That is what I have tried to do, and I think that it is what the Select Committee tried to do. To be fair to the hon. Member for Garscadden, I have to say that he too has distinguished between, on the one hand, genuine and remedial concerns and, on the other hand, what he described last week as the inevitable problems and difficulties from which there is no escape.
Mr. Roy Hughes (Newport, East) : The Secretary of State will realise that my experience in this field is different from that of many other hon. Members. Half the cases with which I dealt at the last interview session in my constituency related to problems arising from the Child Support Agency. Some of the men I interviewed were in a quite distressed state. I am approached also by young, unmarried women with one or two children. I ask, "Who is the father? Who should be financially responsible?", and I am told, "I don't know where he is." Surely the Child Support Agency should be paying more attention to irresponsible young people rather than concentrating on people who are trying to meet their responsibilities.
Mr. Lilley : That is a very good point. There is no doubt that the hostility towards the agency has been heightened by a number of misconceptions, concerning which I want to set the record right. There is a misconception about whether the agency is pursuing people who are not paying maintenance. We are certainly not pursuing only those who are already paying some. In a clear majority of all the cases that have been taken on so far, the absent parent is not paying a penny of regular maintenance and has not even agreed in principle to do so. In 96 per cent. of all cases so far, the child and the mother are living on benefit, yet the vast majority of absent fathers and any new family they may have are living significantly above that level, even after making any maintenance payment.
There is a third misconception. We are enjoying more success in tracking down absent fathers--men who have disappeared, leaving no address and making no contact. Indeed, the agency has been more successful than most people expected in tracing such people through national insurance numbers and information from Inland Revenue records. Indeed, in 90 per cent. of cases that we have
Column 499pursued so far--15,000 cases, in which there was absolutely no indication of where the fathers had gone--we have managed to track down the individuals.
Hugh Dykes (Harrow, East) : Will my right hon. Friend have discussions with the Treasury about the ex-husband who creates a one-man company or a sole-trader organisation, thereby pushing the weekly expenses of his household above the line for accounting purposes, reducing the assessable income and depriving the former wife of support for her children?
Mr. Lilley : My hon. Friend raised that matter in an Adjournment debate, and it is still being considered by my hon. Friend the Parliamentary Under-Secretary of State. It is always difficult to ensure that one has a proper income assessment in the case of a sole trader, but we have to do our best in the interests of fairness. There is a final misconception. It is that child support officers are paid a bonus related to the amount of money they secure from absent parents. Let me put the myth to rest. That is not true. Agency staff receive an element of performance- related pay in exactly the same way as do all other civil servants. That means that they are assessed by their line manager every year as to accuracy, adjudication, clearance times and service to customers. They are not assessed on the basis of how much money they have collected. There is no element of bounty-hunting. I hope that I have put the myth to rest.
But even without those misapprehensions, there have been genuine concerns about the impact of the system. I decided that the best way to address the concerns and ease the position was not to elaborate the formula to accommodate specific concerns but to try to leave parents with more of their own money with which to cope with specific needs. The Select Committee reached the same conclusion.
I have sought to tailor the easements that we are able to make to remove some of the roughest edges of the formula and to respond to some of the main areas in which there is a feeling of injustice with which one could sympathise. But it seemed that demands often fell too abruptly-- particularly where people had second families and an existing maintenance agreement, which they expected, rightly or wrongly, to continue for the foreseeable future.
So we have extended to all such families a phase-in period of up to 18 months. On a preliminary estimate, that should help a many as 100, 000 absent parents over the next three years. Letters will go out this week and next to all those who have already received assessments and may benefit from that phase-in, telling them how they should apply for it.
We have made three other permanent changes to the formula. They should help to reduce maintenance costs for 40 per cent. of absent parents who have so far received a maintenance assessment.
Mr. Patrick Nicholls (Teignbridge) : Does my right hon. Friend agree that one problem of perception is that, so far, we are seeing only cases where the women concerned are still on benefit and therefore see no direct result of the fact that the fathers of their children are paying an enhanced contribution for their
responsibilities? We may come to a time when women who are not on benefit but on the borderline find that their maintenance is increased. If
Column 500we are not careful, we may then find that many people come to our surgeries asking why we are campaigning to reduce a formula that could have made all the difference to them and their children. If the change had been made in tandem with the benefit of hindsight, it might have been a different story.
Mr. Lilley : Already, many women on benefit value and look forward to receiving their maintenance. It may lift them off dependency directly ; if not, it provides them with stilts with which to walk away from benefit, because it is a portable benefit which they carry with them into work. That is extremely important.
Several hon. Members rose--
Mr. Frank Field (Berkenhead) : Although it is important to think about how the reform will help hundreds of thousands of mothers in the long term, when their children are older and they can get work, the House and particularly the Secretary of State must deal with the short term. What the reform lacks is supporters.
When we discussed in the House the specific proposal which the Secretary of State has mentioned, I argued against mothers on benefit being able to keep any of the money. I said that it would lessen the incentive to return to work, it was unfair on those whose children's fathers could not be traced, and so on. My hon. Friends the Members for Eccles (Miss Lestor) and for Birmingham, Ladywood (Ms Short) argued against me.
The Government must accept the fact that most of the assessment forms to the millions of people affected have yet to be sent out. In the meantime, we must build up support for this reform in the country. The best way to do that would be to see whether mothers on benefit should keep a small part of the money paid. We must accept the fact that taxpayers have, primarily, been footing the bill, sometimes when they should not have been. We must be pragmatic about the matter. We shall be overwhelmed by fathers coming in to our surgeries. It will not be those who have never paid, because they will be too ashamed to turn up. It will be those who are paying and feel that they are getting a rough deal.
Against that, we must build up a band of people who can see the value of this Act. My hon. Friend the Member for Eccles was right from the word go and I was wrong. We should now seriously consider making that change.
Mr. Lilley : The hon. Gentleman has admitted to changing his mind. I am afraid that he has not convinced me that I should do so, and I shall explain why. Many people already know that they are benefiting from this system. Although they have not been vocal, my fear is that, once they realise that the changes that we are making will reduce correspondingly their entitlement to maintenance just as it reduces the maintenance obligation of the absent father, they will become more vocal. There will then be a redressment in the public's perception of the matter.
That is already beginning to show in newspaper correspondence columns. A letter in the Today newspaper said :
"I have even experienced my ex-husband saying on TV how unfair the system is to him and his new wife. The maintenance he pays for this two teenage sons is only fractionally more than the hire purchase repayments on his new hi-fi equipment."
Column 501The woman values that maintenance because she is on income support.
Mr. Dewar : This is an important aspect. Will the Secretary of State consider the statistic that he gave? Although it will change to an extent, he said that 96 per cent. of parents with care are currently on income support. That will not change dramatically because we know that 70 per cent. of lone parents are on income support. There is a strong case for saying that we do not want to unbalance the argument by listening only to the absent parent lobby, but it would help the majority of people in the system--parents with care--if we included a modest disregard. For many absent parents, it would also give more point to the process of paying if they knew that some benefit would go to the families in whose name the system was introduced.
Mr. Lilley : The 96 per cent. includes some mothers and parents with care who are on family credit rather than income support. There, a disregard exists because it acts as an incentive to work. It has the perverse effect of a disregard given to those on income support, as well as substantially reducing the benefits to the other beneficiaries from the system, whose interests should not be ignored--the taxpayers. They may be bringing up their families on incomes far less than those whose second families they are contributing to through the tax system.
After phasing in, my next priority was to ensure that people on modest income should not feel that it was barely worth their while working once they had paid maintenance. That is why I have sharply increased the level of protected income. We have quadrupled the margin above income support level at which the floor is set. That means an extra £22 a week for many absent parents. We are allowing them to keep 15 per cent. of income above that level before paying maintenance. That goes beyond anything requested in the Select Committee's report.
At the other end of the spectrum, I was concerned about some of the large maintenance payments sometimes demanded. Those can come about only as a result of the additional payment element. That is the share of assessable income over and above what is necessary and sufficient to pay enough maintenance to lift the child off income support. I am reducing that from a flat rate of 25p in the pound to just 15p in the pound for people with only one previous child ; 20p if they have two ; and 25p for those with three or more.
The other major change is the reduction in the carer's cost once the youngest child reaches secondary school age. It will be reduced by a quarter at the age of 11 ; by half at the age of 14 ; and it disappears entirely at the age of 16. That could help 130,000 absent parents a year, and every absent parent will benefit in due course as his or her children get older.
Some people have said that the basic £44 a week carer element is too high when the children are very young. But when we offer a £40 disregard in family credit for the cost of looking after chidren, the same people say that the amount is far too low. They cannot have it both ways. It costs money to look after children and someone must pay for it. In the first instance, it should be the parents concerned. I have included two other changes in the package. Henceforth, we shall include the entire cost of endowment mortgages up to £60,000, rather than trying to extract the with-profits element, which many people resented and
Column 502which was also an administrative hassle that slowed up the process of assessment. We are also remitting the collection fee where the agency does not collect money it is paid direct.
Mr. D. N. Campbell-Savours (Workington) : One of the more tragic aspects of this legislation is the fact that families are now arguing whereas previously they did not argue, which is causing many problems for children. Moreover, families are arguing and children are suffering as a result.
Another effect is this. I have talked to contract construction workers in my constituency. They talk about going on the black economy. We do not like that. We oppose it and do not want it to happen. Others talk about emigrating. Were all those factors considered when the legislation was introduced? If the overall impact at the end of the day is that families further deteriorate, surely there must come a point where Ministers begin to consider the whole legislation, and whether in principle it should be retained.
Mr. Lilley : The hon. Gentleman, who is an assiduous legislator, for which I give him credit, will have to tell us whether he considered any of those matters when the Bill was proceeding through the House. As to the black economy, he may be interested to know that, since the legislation was introduced, early evidence suggests that one of the successful consequences is that a number of people who were claiming income support withdrew their claim for it once their case was taken up by the agency and maintenance sought for them. One must assume that some were perhaps living with the alleged absent father--we call such cases collusive desertion--were living with someone else or were working and claiming at the same time. It is a benefit that such cases have been exposed. There are fewer of them now.
The overall impact of the changes is far more significant than many people realise. No one has yet experienced that benefit, but large numbers will soon experience a welcome reduction in their maintenance obligation. Let me give an example of how it will help in one or two specific cases. Take a father who is on £15,000 a year gross income, which works out at about £200 a week net after he has paid tax, national insurance contributions and half his pension contribution. Suppose that he has one 12 -year-old child by his former marriage, to whom he was paying £5 under a court order. He has remarried, and has a stepchild and a child of his own. Under the CSA rules prior to the changes, he would ultimately have had to pay £39 a week. Now, because of the changes that we have made, his maximum payment will be just £18 a week. So the new regulations will save him £21 a week.
If the same parent had twice the income--net weekly earnings of £400, or about £30,000 a year gross--and a £20 court order, he would have had to pay up to £111 a week before the changes. He will now benefit from phasing in and pay just £40 in the first six months, rising in £20 steps to a maximum of £87--a saving of nearly £24 a week. The agency is starting to implement those changes now. Last weekend it began the computer scan of all