Column 503existing cases. Tens of thousands of people will receive lower assessments as a result of the formula changes in the next few days. In addition, those who may benefit from phasing will receive a letter shortly about the new arrangements. I believe that there will be a significant shift in the atmosphere as the changes filter through. I shall now deal with the specific proposals of the hon. Member for Garscadden. He called particularly for a discretionary appeal mechanism. That was considered as the original proposals went through Parliament. I believe that the Select Committee considered it, too. It decided against, because it would lead us back to precisely the problems that we experienced before under a discretionary system. Of course, we have given parents the right to opt for a second tier review, by another officer, to ensure that their case has been properly handled. But that officer does not have discretion to override the formula. The trouble is that if anybody--be it a court or administrator--is given the discretion to transfer the cost of child maintenance to the taxpayer, people will increasingly resort to that. That is what happened under the court-based system. Any open-ended review will amount to a return to the system that clearly failed us as a whole.
The list of items that can be given priority over the parents' duty to their children will be progressively lengthened. I recall a case that was in the newspapers a little while ago of a lady whose case was taken under the court system. The court gave priority over the cost of maintaining the children that she was looking after--those of her former husband--and gave precedence to the cost of his holiday in Bermuda and the cost of his pet food. I believe that children are more important. Indeed, they are the top priority.
Mr. Derek Enright (Hemsorth) rose --
New Zealand has allowed appeal to the court to override the formula--albeit on what they thought would be restricted grounds. Huge numbers have resorted to it. The courts have been swamped, and the system seems to have become unworkable and is having to be reviewed. The hon. Member for Garscadden holds up the Australian system as a model. That is very far from allowing a review body discretion to override the formula in the light of circumstances that the rules might not have foreseen.
On the contrary, the Australian system allows adjustments in only a few highly specific and foreseen circumstances. Indeed, the Australian Government have made it clear that the whole purpose is to limit the use of discretion and to uphold the integrity of the formula.
In a recent report that they gave to their Select Committee, the Australian Government said :
"The child support legislation provides certain specified grounds for departure from formula assessment. These grounds are based on certain costs and are deliberately and closely prescribed. This is to ensure that the integrity of the formula is preserved and that there is not a reversion to a highly discretionary process for determining child support amounts based on the views and values of an individual judge, or an individual child support officer. That is important in protecing fiscal savings and the taxpayers' interests."
Mr. Heald : Does my right hon. Friend agree that the system and the formula in Australia is far cruder than the system in this country, and that one of the reasons why they have a right of appeal is to deal with that problem? In this country we have a much more sophisticated approach through the CSA.
Mr. Lilley : My hon. Friend is absolutely right. The formula in Australia is based on the gross income of two years ago. It makes no specific allownace for tax, national insurance, pension or housing costs. Nor does it set a floor of protected income for second families, let alone stepchildren. The main task of the Australian system of overrides is to adapt their formula to take account of many of the features that are automatically assessed by our formula. Their overrides can be more limited than what we provide for automatically.
For example, in Australia, an absent parent will have to ask to have his child support reduced to take account of his housing costs. He may well not succeed. We provide automatically for housing costs in our formula. Nor does the Australian system allow any appeal for travel-to-work costs, any more than ours does.
Another factor that the hon. Member for Garscadden failed to mention about the Australian system is that, on balance, it increases the burden on absent parents, raising maintenance awarded to the mother with care. Fewer than half of fathers' appeals are upheld, but nearly 90 per cent. of mothers' appeals are granted. Moreover, reductions in maintenance costs awarded to absent fathers result in only a £5 a week diminution. Yet increases awarded to the mother average three times as much.
It is all very well for the hon. Gentleman to say that he wants an appeal system, but would strictly limit the grounds of entry. He thereby holds out to everybody the hope that their special circumstances would be taken into account. Yet in his fine print he admits that most would be excluded. Until he is forthcoming about the grounds on which the formula could be overridden, he is trying to sell us a pig in a poke.
Mr. John Spellar (Warley, West) : Will the Secretary of State confirm that the Australian system is not retrospective? That question goes to the root of most of the problems that we encounter in our surgeries.
Sir Jim Spicer (Dorset, West) : Few hon. Members want an open-ended appeal system ; but we have all encountered several cases that no formula would fit. People on both sides of such cases are unhappy, and they desperately need to be catered for. Will my right hon. Friend assure me that such difficult cases will be dealt with sympathetically? Will he also assure me--I know that such an assurance has already been given, but it is worth asking for it again--that the entire process will be kept under review continually? The current system has been operating for only six months ; it will take a long time for it to settle down, and for the rough edges to be smoothed.
Mr. Lilley : I hope very much that many of the cases that have caused us most concern will benefit from the changes. I repeat that we will keep the system under review, and examine cases brought to us by hon. Members to ensure that we have got it right.
The hon. Member for Garscadden mentioned the clean break principle. He rightly reaffirmed that there cannot be, never has been and should not be a clean break between parents and children : the courts have never accepted that, and the Crozier case confirmed the point. It was stated at the time of that case that, precisely because it had always been possible for both parents and the Department of Social Security to seek changes in maintenance orders, no fundamental change had been made in that respect ; the only alteration had been in the mechanism whereby maintenance assessments were updated, in connection with recipients on income support.
The asessment relating to the applicant in the Crozier case, in fact, had been increased as a result of a DSS application under the old system. It happened then, and it can happen now. [Interruption.] The statement did not apply solely to that case ; its import was that, because the possibility existed, the position was as the judge decided it had to be.
The hon. Member for Garscadden suggested that we should adopt the Australian system, because it would allow a reduction of up to 25 per cent. in maintenance assessments to take account of the impact of property transfers between husband and wife as part of a clean break settlement. Under our system, it is possible to secure a larger reduction : if an absent father earning, say £20,000 a year transfers his £40,000 equity in the jointly owned house, and must therefore take out a further £40,000 mortgage to house himself subsequently, our formula--taking account of the effect on his housing costs--may reduce his maintenance assessment by more than 25 per cent. I agree with the findings of the Select Committee, which specifically stated that my hon. Friend the Under- Secretary of State was right : our formula could not take account of the impact clean break settlements in a better way.
I have already dealt, essentially, with the hon. Gentleman's proposal for a disregard. According to him, a £10-a-week disregard would cost the taxpayer £340 million. Every penny would come from the taxpayer, and not a penny would go towards helping the absent parents who are responsible for the problems that we now encounter in our surgeries ; perversely, such a move would create an incentive for parents to split up by increasing the amount that they would receive as a result of such action, relative to the amount received by parents who stayed together, and would also create a disincentive to work.
Maintenance is valuable to mothers : even when it does not directly remove their dependence on benefit, it provides them with the stepping stone back to work that many of them want. We have responded rapidly to problems that the whole House has recognised, having considered the well-thought-out proposals of the Select Committee. I believe that the impact of the changes that we have made will be far greater than many hon. Members perceive ; but we need to let those changes take effect. We must be careful to ensure that we do not empty our surgeries of angry absent fathers, and fill them with angry mothers who have been left to care for their children.
We have shown our willingness to respond to problems. We will fulfil the promise that the Prime Minister and I have made and will continue to keep the system under
Column 506close review. I believe, however, that the changes should be allowed to bed down. We will keep the system under review, having given a gauge of our good intentions and our willingness to respond when difficulties emerge. I hope that the House will take this opportunity to reaffirm its support for the underlying principles of an Act that passed through the House unopposed, and--I believe--retains the support of the majority of British people.
Several hon. Members rose--
Mr. Nigel Jones (Cheltenham) : Of course I accept the underlying principles of the Child Support Act 1991 ; but Liberal Democrats welcome the chance to debate the issue again, especially in view of the Minister of State's wholly inadequate response last week. Like many other hon. Members, since last summer I have received what has seemed to be a never-ending stream of visitors to my weekly surgeries--people complaining of the workings of the Child Support Agency. The National Association of Citizens Advice Bureaux regards 1,000 evidence forms a year on any one subject as a sign that something is pretty seriously wrong ; on this subject, it received 290 evidence forms in October, and 430 in November. That suggests that something is indeed seriously wrong, and that the Act requires a fundamental review.
Mr. Heald : During last week's debate on the new regulations, the Liberal Democrat spokesman said that his party would support the Government. When it came to the vote, that did not happen. What is the party's position today? What changes should be made? Tell us.
Mr. Jones : I shall come to that later. As for my party's reason for opposing the Government, the Minister of State had given a totally inadequate response : when asked about the future, he did not reply, so we decided to register our protest.
The spell-checker on my word processor rejects the initials "CSA", suggesting an alternative. It must be American, because its proposed alternative is "CIA". Some of those affected by the workings of the Child Support Agency have thought up some interesting names of their own, including some not very polite ones--for instance, "Complete Shambles Agency" and one that I particularly deplore, "Lilley's Gestapo".
When the issue was first debated in 1991, my hon. Friend the Member for Roxburgh and Berwickshire (Mr. Kirkwood) said that he considered the concept that parents should be responsible for their children's maintenance "entirely unexceptionable". That is still the case ; we support the principles behind the Act. My hon. Friend, however, was worried by the possibility that the DSS had adopted what he described as a "somewhat knee- jerk approach", pointing out :
"Civil servants will always look for a quick administrative fix, but in doing so they may create difficulties for the child support officers for which the Bill provides".--[ Official Report , 4 June 1991 ; Vol. 192, c. 211.]
How right he was. It is symptomatic of recent legislation that we are constantly debating, and the Government are
Column 507constantly amending legislation that was enacted only in the past few years, or, in the case of the Child Support Act, the past few months.
Much of the debate on the Child Support Act in the House and outside has focused on the problems of fathers faced with high demands for maintenance.
There is a fundamental problem with the modern Conservative party : it underrates the amount that people can pay in taxation, and overrates with equal consistency the amount that people can afford out of the other pocket, which is labelled private.
The alleged Labour tax bombshell in the 1992 general election was £1,250 a year. My noble Friend Earl Russell has an interesting formula : when he hears of someone's maintenance assessment being increased by £2,800 a year, he says that his assessment has been increased by 2.3 bombshells. When the Leader of the Opposition was shadow Chancellor, had he proposed to increase people's taxes by £2, 800 a year, the Conservative party would have gone apoplectic and used the term "tax holocaust".
At the last general election, the Liberal Democrats proposed increasing tax by 1p to pay for better education. One of my constituents has had his maintenance increased to 150 per cent. of his income tax. I cannot imagine what Conservative Central Office would have said if the Liberal Democrats had proposed a tax rate of 37.5 per cent.
The amounts being demanded by the Child Support Agency will have to come down. No one should be expected to pay more maintenance than income tax. There are many worthy causes for complaint and we have heard some examples today, but we cannot escape the fact that having families is an expensive business. I have three demanding children so I know about that. Maintaining two families is even more expensive. Because of or perhaps despite that, the difficult obligations of fathers must not become more important than the rights of children. We must not lose sight of the fact that children must come first. The Government must act once and for all to bring about a fundamental review to clear up the problems surrounding the Child Support Agency. They must make clear tonight exactly what they plan to do. Shilly- shallying and saying that they plan to keep it closely under review are just weasel words. Too many families are suffering. Last week, my hon. Friend the Member for Roxburgh and Berwickshire warned that the Government risk losing all-party support not for the fundamental principles of the Act but for the operation of the Act if they refuse to take prompt action. The Liberal Democrats are one step away from calling for the Act to be scrapped and for a fresh start. The Government can save money in other ways. They should make a serious attempt to help marriages survive. It is a staggering fact that at some time in their lives, 50 per cent. of children under 16 will live in a home without both biological parents.
Last week, my hon. Friend the Member for Roxburgh and Berwickshire, in one of the bluntest speeches I have ever heard from him--he is normally a mild- mannered man of the Clark Kent newspaper reporter variety--said that there would have to be a properly funded conciliation service. Organisations such as Relate are scratching around for money to provide counsellors for those whose relationships are in difficulty.
Proper child care services and nursery education might
Column 508help to save marriages and remove the need for the CSA to step in. Research in the United States shows that every dollar spent on nursery education is worth seven dollars later.
The Social Security Select Committee has already suggested several changes to the Act and the Government have implemented 3.5 out of 13. The Government must allow greater flexibility in the formula. It is simply not possible to put people in the straitjacket of a formula and expect the right results every time. We are dealing with human beings, and all individuals are different. We have all heard of ludicrous demands being made on absent parents who do not have sufficient disposable income.
Absent parents who have made a commitment to their children in non- pecuniary ways, risk losing touch with their children because the cost of travel is not taken into account.
What will happen to the clean break settlements entered into in good faith by both parties. Since the Child Support Act, clean break settlements are effectively dead, yet when relationships break down, it is often in the interests of children that they can remain in the same home and school and keep the same friends. The Government should compare the system with that in Australia.
What about travel-to-work costs? Surely the formula has to include an assessment of disposable not gross income. Travel-to-work costs bite deeply into people's available income. The Government must make a choice either to treat as allowable expenses certain activities they do not wish to stop-- and I suggest that they should encourage people to go to work--or they must accept that some people will give up such activities.
Each case is different and the effect on second partners cannot be overstated. There is bound to be animosity between first and subsequent partners. Why does not the Department of Social Security talk to the Inland Revenue? It would be another way of saving money. Most of the information about the income and outgoings of a household is held by the Inland Revenue and computers are clever enough to avoid the unnecessary duplication of form filling demanded by the CSA. Why should taxpayers pay for the CSA to investigate absent parents who are on income support?
The Child Support Act was and remains right in principle, but it is turning out to be a disaster in practice. Tonight the Minister must promise fundamental reform, or he will damage families and children alike. I know of a six-year-old child in my constituency--
Mr. Robert Hicks (Cornwall, South-East) : Like the majority of my parliamentary colleagues who were Members of Parliament in 1991, I supported the legislation. We all knew about unfortunate cases involving women who were desperate because they could get no satisfaction or payment of maintenance through existing court procedures. They were unhappy about the previous arrangements, and understandably so. As a consequence
Column 509the Government were right to introduce measures designed to correct a social injustice about which we all agree, irrespective of where we sit in the Chamber.
I accept the principles underlying the new system. Both parents should be responsible for maintaining their children and the state should be involved only when parents do not have the means to support those children. Having supported the legislation and the creation of the Child Support Agency, I am disappointed by the adverse practical effects.
All Members of Parliament receive scores of representations-- [Interruption.] Some of my hon. Friends say, "No." I can speak only for the south-west. During the past six months, the volume of representations to me has been almost as high as those on animal welfare. That may not be significant outside, but it certainly is among my parliamentary colleagues.
There is no doubt that people are anxious and annoyed. To be as fair and objective as possible, I should add that, although the majority of those representations come from constituents who feel aggrieved at the new financial arrangements, they are not alone. I have also received complaints from single mothers about the response, or the lack of response, from the CSA in chasing up errant fathers. That is the very set of circumstances that we were led to believe, when the legislation passed through the House in 1991, would be the prime target of the CSA.
It is also relevant, on the basis of my constituency experience, that some of the alleged errant fathers are employed by organisations such as Her Majesty's armed forces, so the CSA should have no problems associated with identification and location in those situations.
It would be fair to conclude that far too many people feel aggrieved. What is more--I have to agree with the sentiments that were expressed by the hon. Member for Glasgow, Garscadden (Mr. Dewar)--regrettably, people are experiencing an increasing loss of confidence in the operation of the CSA as a result of the way in which it has treated people whom all of us would regard as responsible and mature members of society.
Ministers must accept that the majority of complaints that I have received are genuine ones from individuals who not only pay their first wives on the basis of a court decision or mutually agreed private arrangement, but are attempting, in many instances, to establish a second relationship--a new life--with a second wife. Many of them have children of that second union. Of course, many of them, when breaking up with their first wife or partner, agreed a clean break solution, or what was perceived to be a clean break solution, between partners. We recognise, attempting to be objective about that situation, that there was always recourse to the courts in respect of the level of child maintenance payments.
The sad fact is that in certain instances the second permanent relationship, which may include children of that union, is placed in jeopardy, not only in financial terms but in personal terms. Mrs. Gorman indicated dissent.
Column 510not true. If she sits with me next Saturday week in my surgery in Callington, she will have tangible evidence to the contrary. The danger to the second relationship must be avoided. I believe, therefore--to return to the sentiments of the hon. Member for Garscadden-- that it is incumbent on all hon. Members, since we are all in this together, to find a satisfactory way forward.
How do we do that? First, we should change the formula for assessing child maintenance levels. Whatever may have been said by Ministers hitherto, it is evident to me that in its application it is too rigid and restrictive. The protected income element should be widened in some way. It should be remembered that in many instances the previous settlement was acceptable to both parents. We have all been told about the situation in which basic household costs--items such as travel-to-work costs and certain arrears and debts--are not included in the present assessment. There is therefore a strong case for extending the application of the assessment formula by including other regular financial commitments.
Secondly, in order to restore confidence in the whole system--whatever Ministers may say tonight--the Government's amendment says that they will continue to monitor the situation carefully ; they must not dismiss now all possibilities for amending the existing arrangements, whether it be widening the formula or considering the question of some reference or appeal procedure. I hope that, when my hon. Friend the Under-Secretary of State winds up, he will confirm that that is the Government's intention.
We must not rule out the possibility of introducing some type of review procedure. Any review officer, in my judgment, would also have to have some powers of discretion to bring a more human and sensitive dimenstion to the existing formula. Whatever may be said by some of my Conservative colleagues, in my judgment the present system is too mechanistic. I look to the Minister to introduce at some stage modifications that bring a greater sensitivity and understanding to what are delicate, and often sad, human situations.
Mr. Denzil Davies (Llanelli) : I wish to reflect the indignation, resentment and anger of many of my constituents at the Child Support Agency adn the legislation that begat it. One could mention many arguments, but in 10 minutes they could not all be included, so I will mention merely a few.
First, the fathers who have come to my surgeries and whom I have also met at meetings are not absent fathers. They resent being described as "absent fathers". They have legal access to their children. They exercise their rights of access ; they love their children ; they pay their maintenance payments, whether they are voluntary or court-imposed agreements ; they take their children out, usually at weekends ; they buy them presents and clothes ; and they try to do their best, in difficult circumstances, for their children.
It may seem an insignificant point, but I hope that Ministers will stop referring to my constituents--the people I have met--as "absent fathers". They are not absent fathers. They try to look after their children. Let us
Column 511not draw any moral conclusions as to the reasons why there are two families. We have learnt enough about that during the past few weeks not to moralise on those matters.
Secondly, this is not a men versus women issue, as a writer in The Guardian tried to imply the other day-- The Guardian, as we know, is out of touch about those matters. Most of the men who visit me are accompanied by their second wife. Most of the meetings that I have attended have been represented almost 50 : 50 by men and women. The second wife is often deeply resentful because she is a human being and a person in her own right.
As a result of the patterns of employment in the country, often she not only works but also earns more money than her husband. In constituencies such as mine, many are professional women. They therefore resent being hounded, as they see it, by the Child Support Agency. They also resent finding that up to one third of their income can be taken into account in making the assessment.
Dr. Lynne Jones (Birmingham, Selly Oak) : The Secretary of State quoted the example of a man with an income of £15,000 who would be helped by the changes in the review. However, if he had a new wife who had part-time earnings of £60 a week, he would be no better off. Mr. Davies rose--
Such women resent the fact that apparently up to one third of their income can be taken into account and, in effect, aggregated. They have been brought up under successive Conservative Chancellors who, in the taxation system, have made it clear that women should be taxed independently ; that there should be disaggregation of income. They understand their income as being their own, yet they find now that their income, or some of it, has to be taken into account. They resent the intrusion into their privacy when the Child Support Agency asks them for their income.
Several Hon. Members indicated dissent.
Mr. Davies : It is no good Conservative Members shaking their heads. If they will not give their income, a deemed income is estimated in order to get to the one third. Those are independent women, who work for their family and who resent the intrusion into their privacy that the legislation imposes on them.
My third worry is the element of retrospection. I am old-fashioned and I remember debates in the House when all parties agonised over retrospective legislation, not only in the case of the liberty of the subject but in property arrangements, taxation and other spheres. The modern Conservative party has thrown the rule of law out of the window. Such issues are no longer matters of concern to modern Conservatives. It is extraordinary that I should have to remind Conservative Ministers that retrospective legislation that overthrows property arrangements and agreements is apparently acceptable. Proudhon would have been proud of the Secretary of State, who is apparently a right-wing Member of the Government. He understands property matters, but he
Column 512stood at the Dispatch Box to defend retrospective legislation that overturns not only private property arrangements but arrangements imposed by and pronounced in a court of law.
One of my constituents understands the situation very well. He told me that, at the end of the day, he did not mind having to pay what a judge told him to pay. He had been to court and sat through an inquiry which cost him £4,000. It was a traumatic experience for him and his ex-wife, but the judge pronounced. He resented the fact that a civil servant, in accordance with a mere formula, could overturn the arrangement and tell him what he should pay.
Does the Secretary of State know of any other administrative agency that transfers money from one private citizen to another?
Mr. Davies : The hon. Gentleman has been making stupid comments from a sedentary position for a while, and he is getting even more stupid. The Inland Revenue does not transfer money from one private citizen to another ; it transfers money to an individual or takes money from an individual.
I repeat my question : do the Secretary of State or the Minister know of any administrative agency--not a court of law--that orders one private citizen to transfer his money to another private citizen? Mr. Burt rose--
The Government have imposed a monster--
Mr. Burt rose--
Mr. Burt rose--
Fourthly, I deal with travel to work, which is not a problem only in the south-east. A constituent of mine who is a lorry driver came to see me. At 4 am every day, he has to drive to a lorry park to pick up his lorry. His travel-to-work costs are 50 per cent. of his net take-home pay. There is no way he can afford what he is supposed to pay under the new child support arrangements, and pay to get to work to earn the money in the first place. It is ridiculous to suggest that the problem applies only to the south- east.
The hon. Member for Dover (Mr. Shaw), who mentioned the Inland Revenue, is knowledgeable about tax matters. If an individual can prove that his expenditure is fully justified, I do not understand why it cannot be allowed against his assessment, as happens with the Inland Revenue's calculations.
I end by referring again to my constituent, who resented being told by civil servants how much he would have to pay. He is not a professional person, but an ordinary working man. He queried whether the system--the