House of Commons Hansard Debates for 22 May 1995

Mr. Dewar: It may be true, but it is an unfortunate comment. It appears to me to make the case that I am trying--perhaps rather laboriously --to establish for a review body of the type suggested in the new clause.

After all, at the moment the number of maintenance assessments that show no employment income is 43.8 per cent.--a very large percentage indeed--and, if 60 per cent. of those parents make a nil contribution, it says something interesting about the way in which the scheme is proceeding. I do not know whether the Minister wants to comment further, but we can, and doubtless will, pursue those matters by letter.

In any event, I contend that the figures show how difficult it has been to establish the administration of the agency on a proper basis. I hope--as I quite often do--that I am wrong, but I suspect that there may be difficult passages ahead of us. I do not want to be ungracious for a moment about change that we demanded, and which is now on the way. It is not what we wanted; it is certainly not all that we wanted. However, we were keen to have a procedure whereby one could apply for a departure from the usual financial formula, and now it is important that that works well, that it responds quickly in cases where it is needed and that it is seen to be injecting a measure of fairness into a system that is perceived as unfair. Monitoring and adjusting will be key, and in that respect I envisage the child support advisory committee having a useful role.

That is also true of clean break settlements, which, as you will remember, Mr. Deputy Speaker, apply only to agreements made before April 1993, and which are based on what was reasonably directly called "a broad brush approach" in the White Paper. There is also the vexed question of travel costs. Those will throw up many difficulties. I hope that they will throw up, in the longer term, solutions to some of our problems, but in the teething period there will be frustrations and perhaps mysteries about the way in which the system works. Therefore the need for monitoring is repeatedly proved by experience, and will be proved again.

There are unexpected aspects in which policy advice from an outside source that perhaps was seen as not being contaminated by contact with the Opposition Benches might, one hopes, bring about some improvement.

I received a parliamentary answer--perhaps I should have updated it, and I apologise to the House. It is for 1994-95, but it runs from April 1994 to the end of January 1995. It produced what, to me, was another astonishing figure--that special payments for financial redress have been made only 34 times in that period.

I know the experience of Conservative Members because it has been voiced in the past. There is a very thin turn-out today, but in the past Conservative Members have expressed many complaints and anxieties about the number of angry scenes, confrontations, complaints and anxieties and the amount of stress and strain that the system has caused. It is remarkable that the compensation system is so hedged and circumscribed that it produced only 34 payments for financial redress.

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Select Committees have made many other criticisms of the way in which matters have developed, as has the Parliamentary Ombudsman for Administration, who, as my colleagues will remember, reached the conclusion that he could not take on any more cases unless they produced some new point of principle because of the flood of complaints that he was receiving. He made it clear, as did the Select Committee on the Parliamentary Commissioner for Administration, that he saw much of the seed of that discontent in mistakes by Ministers. I quote the Committee:

"We are in no doubt that maladministration in the CSA cannot be divorced from the responsibility of Ministers for the framework within which it operated"

and that

"any policy deficiency was cruelly exacerbated by administrative incompetence".

That is from paragraphs 27 and 35 of House of Commons paper 199. I hope that I have established that there is anxiety that the system needs a great deal of monitoring. It should receive that monitoring. Co-ordinated scrutiny is needed--we do not want the "dipstick" approach--and it should be carried out by a group of the type that we recommend, which will involve individuals of experience with a wide background and knowledge of the area.

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I am not trying to land the Secretary of State with professional critics; I seek tough, realistic assessors. I do not seek a hanging party, a lynch party--unless the circumstances justify that. There is every advantage in a committee that can examine things impartially, to lend some perspective to what I think everyone will see from the record has become the rather blinkered approach of those in command politically.

Mr. Timms: In supporting the case made by my hon. Friend the Member for Glasgow, Garscadden (Mr. Dewar) for a child support advisory committee, I wish to concentrate on one aspect of the system that has been created-- the formula by which maintenance assessments from absent parents are calculated, and especially the protected income provisions.

I am grateful for work that has been carried out by Christopher Allen of the London Business School, which he has shown me. He has considered the maintenance formula system as part of the taxation system and drawn some conclusions about it, many of which are striking. I wish to draw them to the attention of the House. The protected income provisions in the formula are intended to ensure that an absent parent is better off working than on income support. The formula assessment compares the maintenance demand with that protected income figure and, if necessary, the maintenance assessment is reduced to allow the absent parent to retain their protected income level.

The protected income provisions were made considerably more generous in February 1994, the last time that the attempt was made to repair that system. Since then, the arrangements have allowed for £30 earned income in excess of income support levels, plus 15 per cent. of a new partner's income. The provisions have undoubtedly had some impact because, as the figures provided in the parliamentary answer to which my hon. Friend the Member for Garscadden referred show, about

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10 and a half per cent. of full maintenance assessments for non-benefit cases are now assessed at a zero contribution. That is considerably more than was the case when the social security statistics were published, the date to which those apply being June 1994.

Paradoxically, that increased generosity has considerably worsened the poverty trap for those people who earn slightly more than the protected income threshold, because the post-maintenance income of people earning between £30 and £60 above the exempt income level will be reduced to the protected income level. That represents a 100 per cent. marginal tax rate on their income. Remarkably, the figures in the written answer show that about one third--32.8 per cent.--of the non-benefit cases with which the agency is dealing fall in that category.

I can explain how that system works. The research paper 94/20, which the House of Commons Library produced last year before the changes were made last February, states:

"If paying the proposed maintenance would reduce the absent parent and any new family to a level of income below the protected income, the child maintenance payable is decreased so that the absent parent is left with the protected level of income."

Conversely, if the absent parent's income increases because of additional overtime payments or other such factors, the child maintenance payable is increased. The marginal increase in income--all 100 per cent.--is taken away by the formula. That is an extraordinary system, and, taken together with the benefit system, it means that absent parents are no better off, and may be worse off, if they take a better job or work additional overtime.

I wonder how that position has arisen. It was suggested earlier that the Treasury had intervened in some aspects of the system. The Treasury certainly has not intervened in the formula. The arrangements that have been reached appear to be entirely contrary to the Government's normal taxation policies.

A large proportion of maintenance assessments--one third of them--fall within the range. If we take 100 per cent. of the marginal income increases of people on relatively low and modest incomes, the system becomes insupportable. I have no confidence that we will not be here in a year's time trying to do yet another desperate repair job on a system that is breaking down. For that reason I strongly believe that we need the monitoring arrangements described by my hon. Friend the Member for Garscadden. We need a committee that can investigate what is going on and that can propose changes to create a sustainable and supportable system. We have not yet achieved such a system.

I shall say a few words about those who fall beyond the £30 to £60 band. The effect of the protected income system are clearly the most aggressive aspects of the maintenance system, but even without those provisions the system is extremely regressive. Up to the payment in full of the maintenance allowance, the marginal rate on take-home income is 50 per cent. If we take into account national insurance contributions and the 25 per cent. income tax level, the overall marginal tax plus maintenance rate over that range is 77 per cent. The absent parent will keep only 23 per cent. of additional earnings. The position might be acceptable if the money represented a transfer of money to improve the children's welfare, but, as we have heard, it does not. That is one specific example, but it is by no means the only one.

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The system towards which we are moving still contains severe anomalies and insupportable elements that will require further attention. The changes that are proposed in the Bill are helpful, but as I understand it, they increase the scope of protected and exempt income and push the problems that I have been describing up the income scale. There will still be a large proportion of agency cases who suffer 100 per cent. marginal payment rates in maintenance plus tax. That problem and others like it require the monitoring arrangements proposed by my hon. Friend.

Mr. Burt: The hon. Member for Glasgow, Garscadden (Mr. Dewar) introduced the new clause in an entertaining manner and tried to divert the attention of the House away from the excellent press release that my right hon. Friend the Secretary of State published today. On this occasion, as on all others, I wholly subscribe to the views of my right hon. Friend. The easiest way for the hon. Member for Garscadden to clear up any confusion about what his party intends to do and how it intends to finance it is for him to come clean now about my right hon. Friend's statements and deal with the matter once and for all. I suspect that we will be unable to deal with that matter simply today, as we have been asking for a long time for evidence of what the Labour party intends to do should it come to office, and the answers are always fudged.

I remember the celebrated exchange in Committee when the hon. Member for Manchester, Withington (Mr. Bradley) asked the Government to provide more substantial child care support through family credit--a subject to which he might return today. I asked him how much and he gave an extremely evasive answer. I suspect that my right hon. Friend the Secretary of State's efforts to get answers on the subject will have limited success. However, that subject is not the substance of our discussions today and I shall hurry on to deal with the new clause.

The hon. Member for Garscadden also described some of the advice groups that give information to all of us about the effects of the Child Support Agency. He was right to draw a distinction between some of the groups that give us reasonable and straightforward advice and some that appear to have gone slightly too far in some of their activities and the way in which they object to the CSA.

I am grateful that the hon. Gentleman dissociated himself and his party from some of the more extreme activities that we have seen. I am afraid that those activities still continue. The group, Network Against the Child Support Act, in its current periodical clearly suggests to its members that they should lie to the agency to get information and that they should seek to make life difficult for the officers of the CSA simply in order to disrupt the system. They then wonder why we feel aggrieved at such action and suggest that it does not help anyone. I am grateful to the hon. Gentleman for dissociating himself from such groups and hope that he continues to do so. As the hon. Gentleman has explained, the new clause provides for an advisory committee to advise the Secretary of State on the workings of the child support scheme. We value consultation; there was a wide-ranging consultation exercise before regulations were made under

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the 1991 Act. We have always taken careful note of the advice of the Select Committee on Social Security and the views of other interested parties in developing the improvements to the child support scheme of which the Bill's provisions form a key part. We have also had a constructive dialogue with many representatives of absent parents, parents with care and those with experience of family law issues. In developing the changes that we announced in January, we consulted eminent family lawyers and we correspond frequently about the child support scheme with many organisations, including the National Council for One Parent Families, Child Poverty Action Group, citizens advice bureaux and the Law Society. Whatever problems we may have had with child support, they have not been for lack of consultation and it is not clear how the new clause can assist. The Government's main concern is not so much that the new clause and its implications will add to consultation, but that it will obscure existing responsibilities--the hon. Gentleman acknowledged at the beginning of his remarks that that was the main flaw in his argument.

In addition to the function of overseeing legislation--analogous to that of the Social Security Advisory Committee--the proposed child support advisory committee would be required to monitor operational aspects of child support. It is on that subject that the committee's proposed annual reports would focus. In that respect, the committee would duplicate the role, not only of the Select Committee on Social Security, but of the Parliamentary Commissioner for Administration, the National Audit Office and the chief child support officer. Both the Select Committee on the Parliamentary Commissioner for Administration and the National Audit Office have reported on the operation of the child support scheme. They have drawn attention to problems with those operations and, in response, Ministers have indicated the steps that are being taken to address those problems--in particular, by improved methods within the agency for measuring accuracy, additional checking and enhanced training for staff. The hon. Gentleman concentrated briefly on the report of the chief child support officer and he was correct to deal with the shortcomings of the agency which the chief child support officer found. However, I remind all hon. Members that, although comments were raised in 86 per cent. of the sample, that does not mean that the assessment was incorrect in every case. We agree that the accuracy rate has been poor and inadequate and we are exerting a great deal of effort to put it right. The agency aims to reduce that comment rate, which was previously 86 per cent of the sample, to 40 per cent. of the sample as soon as possible. That is a particularly demanding target which has been chosen to reflect the importance that the agency attaches to the judgment of its performance by independent bodies.

There is great determination to reach that target in 1995-96 and to deal with the problems that have caused that high figure. Action taken to date includes remedial action on accuracy and quality initiatives. The agency's second-year plan has dealt with many problems. There has been a reorganisation of reviews and appeal work and we have developed staff training further. We have taken serious notice of the reports by the chief child support officer. He is part of the vital monitoring equipment that is built into the work of the Child Support Agency. That

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is his job, and it is another reason why we do not believe that the superfluous committee that has been mentioned this evening is necessary.

Many of the changes announced in the White Paper entitled "Improving Child Support" are also aimed at improving the operation of the child support scheme. I have no doubt that both the Parliamentary Commissioner and the National Audit Office will continue to provide valuable information about areas where we can improve the scheme and that Ministers will continue to respond positively to that feedback.

Hon. Members will be aware that the post of the chief child support officer was set up under the Child Support Act 1991 to advise child support officers on the performance of their duties. His functions, which he discharges independently of Ministers or the Department of Social Security, include monitoring child support adjudication and reporting annually on performance. His annual reports contain much that is of use in identifying areas where further work is needed and I know that he and agency managers are committed to working together to improve performance.

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The Department and the agency are involved in an on-going process of evaluating the effectiveness of child support policy and operations. That goes beyond responding to external comment and advice; the agency is seeking the views of key stakeholders by means of regular meetings and it has set challenging charter standards that will be monitored carefully. Officials will continue to monitor the policy, particularly the changes introduced in April and those introduced in the Bill. In addition, the departure system will be piloted before its full introduction in order to identify and solve any unforeseen complications.

There is already considerable overlap between the functions of those who advise about child support and the tasks of a proposed child support advisory committee. In my view, the inevitable overlap would seriously hamper the effectiveness of an advisory committee in the child support field. There is simply no distinct role for a new quango such as the child support advisory committee, either in advising about areas where legislation could be improved or in monitoring the performance of the Child Support Agency.

There was an exchange across the Floor of the House in relation to a question raised by the hon. Member for Newham, North-East (Mr. Timms). He referred to a table that he had particular difficulty following. It would be a cheap shot if I were to say that I cannot see where his difficulty lies. I will not say that, because the table requires quite careful interpretation. Once the hon. Gentleman spots the key, he will find it easy to understand; but one needs to spot the key first. I shall try to assist the hon. Gentleman and other hon. Members who may wish to examine the table in more detail. The table seeks to illustrate the total number of parents with care--488,000--and to show how many of them are in receipt of benefit. That figure comprises the 391,000 parents with care who are on income support, 63,600 on family credit and 33,400 who receive no benefit. The table then relates each of those figures to the absent parents and their benefit status. For example, of the 391,000 parents with care who are on income support, 77,800 absent parents receive income support, 18,200 are on invalidity benefit,

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138,900 are not on benefit and for 156,100 the benefit status is unknown. That is how the table works: it seeks to relate parents with care to the benefit status of absent parents. The benefit status of absent parents is the column on the right and the parent- with-care column is on the left. I must admit that I can see where the hon. Gentleman's confusion lies at first glance. However, I hope that I have made the situation a little clearer. If he wishes to take up the matter with me later, I shall explain it further.

The hon. Member for Newham, North-East raised some questions in relation to protected income and the like. He did not give me previous notice of the figures, which I shall examine. I make it clear that protected income is designed to ensure that there is adequate support for the absent parent and his family. That is not the element that ensures that he is better off in work; the element that ensures that the absent parent is better off in work is the amount over and above that element which is built into the formula to make sure that the parent is not simply existing on benefit. The marginal deduction rate is not as high as 100 per cent. when one adds in that figure--it is something like 85 per cent. That is a high figure, but it is not the 100 per cent. figure that the hon. Gentleman cited. I will examine the figures that he has cited tonight and give him a full answer.

The fact that those questions can be asked and answered by the agency and by Department of Social Security Ministers together with the other equipment that is already built into the system to monitor and control the operations of the Child Support Agency demonstrate that there are enough mechanisms to deal with any queries. The House seeks to ensure that the system works. After two and a half years of live running, we know much more than we knew at the start of the process. Hon. Members have said many times that those who have established agencies similar to ours in other countries have faced similar difficulties. One cannot know a great deal until one gets started.

We are now determined to make sure that the system works better and more efficiently in order to deal with the problems that our constituents raise. I take each problem extremely seriously and the monitoring process to which hon. Members contribute is extremely important to the future of the agency. I ask hon. Members to recognise the monitoring equipment that is already in place and to accept my assurances that an extra committee is not necessary. I ask the House to reject new clause 4.

Mr. Dewar: I am grateful to the Minister for his courtesy in trying to deal with the various points that I raised. Even when offered the key, I still find the table somewhat complex. The Minister will be glad to know that he has helped me; he will be able to enter the field of education after the next election if he does not wish to return to his solicitor's office--we dream dreams. I now understand that parents with care are in the first column of the table and that that column is then broken down across the other four columns. I am glad that I now understand the table.

Mr. Burt: No charge.

Mr. Dewar: I am sure that there is no charge. I pay taxes which help to pay the wages of the civil servants who instruct the Minister. I do not need to feel at all guilty. I will not continue this rather informal conversation as I am sure that it would test your patience, Mr. Deputy Speaker.

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I am still unclear as to where in the table we find those parents with care who work. The Minister says sotto voce that there are "very few". The benefit status of 203,000 absent parents is not known. Does that figure include parents who work? Presumably, quite a number of absent parents are in employment. That seems to be of interest.

Mr. Burt: The whole point of the statistics relating to the parents with care is to emphasise that more than 90 per cent. of parents with care who are in the system are in receipt of benefit. That is a measure of the extent of the burden being carried by the community at large, and of why a contribution from absent parents to improve the position of those parents with care is so desperately needed. It was one of the major reasons why the agency was set up in the first place.

Mr. Dewar: I am tempted to say that that sounds like a good argument for a disregard, but that would relate to the previous amendment and I must not stray into that.

I assume that there must be a number of absent parents in work. Presumably, they appear in the "benefit status not known" column, which seems a little odd as the figure is so high.

The mysteries can be pursued at another level and on another basis. I remain unconvinced by the Minister's arguments. I recognise, however, that quangos are not popular and that Governments introduce quangos, advisory bodies, non-departmental public bodies and so on only when there is a clear case and a clear need for them. I began by saying that I thought that it was a special case and the somewhat arcane discussion about parliamentary answers was an attempt to establish that. It could probably be more effectively established by the cries of pain from the many people who feel ill-used by the system. Some of them may have a special point of view, but there is no doubt that there is still a perception of injustice about, and that alone would have merited at least consideration of the committee proposed in the new clause.

The Minister, however, possibly because he wishes to be at one with his senior colleague, has hardened his heart. I was touched by his assurance that he supported everything that the Secretary of State did. I believe that politicians ought to have two personae. Inevitably, one has to support loyalties and collective decisions, but one should not commit oneself heart and soul laminated to one's senior colleague, however admirable one may consider him to be. I shall not inquire into quite how admirable the Minister thinks the Secretary of State is, but it seemed that a moral absolute was being proclaimed that will do the Minister's reputation no good. The Under-Secretary of State has always been seen as a little wet and well intentioned. Although it may be an embarrassment within the Department, it stands him in good stead, at least with public opinion, and he should not sacrifice it too easily.

In any event, I have listened to the arguments and I do not wish to divide the House. We can return to the matter on another occasion, and no doubt we shall do so. As my hon. Friend the Member for Newham, North-East (Mr. Timms) said, I do not believe for a moment that this is the last time that we shall debate the Child Support Act. I am certain that we shall return to it many more times

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and I look forward to that pleasure. No doubt the Minister, having noted we are not taking the matter to a vote will note that amendment No. 20 on the Secretary of State's list had better be deleted. Question put and negatived.

Schedule 1

Departure Directions

Amendment made: No. 38, in page 24, line 21, leave out from beginning to end of line 27 and insert--

`8.--(1) Regulations may provide for two or more departure applications with respect to the same current assessment to be considered together.

(2) A child support appeal tribunal considering--

(a) a departure application referred to it under section 28D(1)(b), or

(b) an appeal under section 28H,

may consider it at the same time as hearing an appeal under section 20 in respect of the current assessment, if it considers that to be appropriate.'.-- [Mr. Burt.]

Clause 6

Departure directions

Amendment made: No. 12, in page 5, line 21, leave out from `(1)' to `the' in line 22.

Mr. Bradley: I beg to move amendment No. 39, in page 5, line 23, after `State', insert--

`(a) shall give a departure direction, if he is satisfied that the case is one which falls within the provisions relating to child care costs as set out in paragraph 1A of Part I of Schedule 4B; or (b)'.

Mr. Deputy Speaker: With this, it will be convenient to discuss also the following amendments: No. 5, in page 5, line 25, after `in', insert

`paragraphs 2 to 4 of'.

No. 6, in page 5, line 30, at end insert--

`(1A) Subsections (2) and (3) below shall not apply to departure directions relating to child care costs to be made in accordance with the provisions of subsection (1)(a) above and paragraph 1A of Schedule 4B.'.

No. 7, in page 5, line 47, at end insert--

`(3A) The Secretary of State shall, by regulations, make provision as to the circumstances in which he would have just cause to decline to make a departure direction under the provisions of paragraph 1A of Schedule 4B.'.

No. 8, in schedule 2, page 25, line 12, at end insert-- `Child care expenses--

1A. Unless the Secretary of State can show just cause to do otherwise, on the application of a person with care, a departure direction shall be given with respect to expenses of the applicant necessarily incurred to provide child care required to enable the applicant to take up, or remain in, full- time or part-time employment, which were not, and could not have been, taken into account in determining the current assessment in accordance with the provisions of, or made under, Part I of Schedule 1.'.

No. 9, in page 27, line 21, leave out `special'.

No. 10, in page 27, line 22, leave out `paragraph' and insert `paragraphs 1A or'.

No. 11, in schedule 3, page 29, line 30, after `insert" `, insert `28F(3A),'.

Mr. Bradley: The amendment relates to schedule 2, entitled "Departure Directions". Although we welcome the main thrust of the Bill, to introduce departure

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directions for special cases, the amendment seeks to include the cost of child care in the six-point menu of items in schedule 2 that identifies the special expenses that can be used by absent parents, and also by parents with care, to seek a departure direction. The amendment specifies the parent with care, but it could apply equally to the absent parent. Throughout our deliberations on the Bill, we have always tried to strike a balance between the interests of parents with care and the so-called absent parent, and amendment No. 39 attempts to strike that balance on a measure that may be used, particularly by the parent with care, for the departure direction. 7.15 pm

Throughout the passage of the Bill, we recognised that the emphasis should remain on the formula for the maintenance assessments and that the departure direction should be used only in special cases. However, we do not believe that adding child care costs undermines that principle. It could be argued that the items already in the menu of special expenses are more likely to be used by the absent parents, whereas child care costs are more relevant to the parent with care; therefore, the amendment represents another attempt to redress the balance between those competing interests and to introduce equity and fairness to the departure direction system.

There are many reasons why the Government should accept the amendment. It is clear from our debates earlier today that they consider that the most appropriate way to alleviate family poverty is for the lone parent to return to work, hence the arguments behind their rejection of the child maintenance disregard and their proposal to introduce the child maintenance bonus. However, it seems to us that they want it both ways by denying the fact that child care costs are a significant element in a decision to return to work. If the Government were consistent in their argument that the best way to alleviate poverty is for people to return to work, they should examine every possibility of enhancing that opportunity, and particular to that is the need to take into account child care costs in the departure formula.

It is a similar argument to one that the Government rightly accepted--that travel-to-work costs should provide a ground for departure, in addition to the provision currently available in the formula. The argument of trying to avoid work disincentives, and even to increase incentives, applies to child care costs in the same way as it does to travel-to-work costs, which the Government accepted. The issues raised by the amendment were well explored in Committee, when the Government set out their objections to the proposal, but, as we made quite clear in Committee, that did not stop our attempts to change the Government's mind. We hope that they gave the matter further consideration in the period between the end of our deliberations in Committee and those on Report and that, on reflection, they consider it relevant to include child care costs in the list of special expenses.

It will be worth while briefly exploring the Government's reasons for rejection. It was never clear in Committee how the definitive list of six items in the special expenses list was determined. Schedule 2 shows them as the costs incurred in travelling to work; costs incurred by an absent parent in maintaining contact with the child; costs attributable to a long- term illness or

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disability of the applicant or of a dependant of the applicant; debts incurred before the absent parent became an absent parent in relation to a child with respect to whom the current assessment was made, with significant amendments; pre-1993 financial commitments from which it is impossible for the parent concerned to withdraw or from which it would be unreasonable for the parent to withdraw; and costs incurred by a parent in supporting a child who is not his child but who is part of his family.

I would be grateful if the Minister will elaborate on the basis on which those items were chosen. What research was undertaken on those exclusions-- and of child care costs, for them to be specifically excluded from the departure direction? The Minister said in Committee that there was considerable research. I hope that he will provide further information tonight.

The Government claim that an addition for child care costs would have little effect on the overall assessment. Many organisations, including the Law Society and Child Poverty Action Group, believe that pre-empts the way in which regulations may be framed and departure officers handle individual cases. The purpose of the appeal for departure is surely to consider special expenses in the context of the whole individual case, to ensure fairness to both parties. When the departure procedure is used, it is important to give genuine consideration to special expenses. There should be the opportunity for both parties to include child care costs.

The Government argue that child care costs are already represented by various components of the formula, and for family credit payments in the calculation of the benefit. Our amendment provides for taking into account only costs not already covered by the formula. Those matters are debateable and, as we pointed out in Committee, need to be clarified in the regulations. Although part or all of the adult personal allowance of £46.50 is included at the first step of the formula, only one quarter of persons with care receive that amount. The final level of the assessment and the family's disposable income, including any benefits received, are the relevant factors. We ranged over that aspect in some detail in Committee. The Minister held to the view that the £46.50 allowance was the contribution to child care costs. In fact, only elements of child care costs appear in the final assessment and they should be taken into account more significantly, by allowing the departure direction to include them.

The proportion of the £46.50 received bears little relationship to the child care costs of the parent with care. In Committee, the Government made great play of the child care component in family credit. Although we welcome that, there is strong evidence that the maximum payable has little relationship to real child care costs. I know that the Government will study the effect of the child care disregard in family credit, but I hope that, since Committee, the Minister has examined more carefully the wide variety of child care costs.

In many ways, the amount available through family credit does not meet the real costs. At this stage, we are asking only for those elements to be kept under review, and for a proper assessment of the way in which amounts in family credit are applied to child care costs--taking into account in the average figures the fact that many people make informal child care arrangements with other family members and friends, which rather skews the

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information available to help provide the amount of money needed for genuine child care, so that parents with care have the opportunity to return to work, as the Government insist that they do. Departure should be used in cases where the standard formula does not reflect the needs or expenses of a particular family. We hope that the Government will include child care costs in special expenses. One of the Government's aims is to help lone parents to take employment, by providing a floor of maintenance on which to build. The current formula acts as a disincentive to increasing hours or wages above a certain limit, when the income of the parent with care begins to reduce the maintenance payable. That is surely contrary to the scheme's intention and is particularly damaging to parents for whom child care costs represent a significant proportion of take-home wages. The amendment would ameliorate that effect and, coupled with other measures, would help to increase the disposable income of families in work.

Although we have attempted, as always, to be constructive during the passage of the Bill, in an attempt to restore public confidence in the agency, we met with few concessions in Committee. The argument for child care costs commanded support from all Opposition parties, and it would have a significant impact on furthering the Government's intention to alleviate family poverty. If lone parents' proper child care costs are met, that would allow them to go back to work. I hope that the Government will consider carefully how our proposal harmonises most effectively with other special expenses--particularly travel-to-work costs. The amendment would go a significant way towards redressing the balance between absent parents and parents with care, introduce further equity into the system and restore further public confidence in the agency.

Ms Lynne: The Minister opposed the maintenance disregard because he felt that lone parents ought to be encouraged to go back to work. This group of amendments would help lone parents to do that, but they deal with the parent without care as well. The formula is inflexible, but the proposal would free it up just a little. The Minister has acknowledged that there are problems with the Child Support Act 1991, as he has already brought forward departures in certain areas. The principle has been established, for instance, in travel-to-work costs. The Government have also recognised the principle in other social security legislation, particularly in the provisions on family credit. I know that family credit child care costs are not enough and do not nearly meet the real costs of child care, but the principle has been established there.

The amendments seek to add a further departure. They propose that child care costs for the lone parent and for the so-called absent parent are taken into account. There is no difference between the costs in this group of amendments and travel-to-work costs. The amendments have been introduced to enable the parent with care to get back into work.

7.30 pm

If no child care is available, that parent will not be able to go back to work. It stands to reason that, if child care costs are not met, there is no way in which parents can

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start working again. So-called absent parents have difficulties because their child care costs are not taken into account when their assessment is made. The amendment would also encourage them to work. Often, those people have a second family, and both parents are working. Child care costs must be taken into account. It is only fair to treat the parent with care and the parent without care equally. The parent without care would be able to pay the assessed maintenance. The amendment would enable the parent with care to take up work and to get off benefit. Surely that is what the Government have been talking about. The amendment would help people to do that. The main reasons why lone parents-- parents with care--do not work is that they cannot find work or there is nothing that they can do for their children. They do not have relatives around or friends who can look after their child at no cost. If they could employ a child minder to look after that child, they could go back into the work force. That would help not only them but the absent parent. The Minister says that he wants to lift parents out of poverty. The amendment is a way to do it. I urge him not to reject it yet again. He rejected it in Committee and he keeps rejecting it, but he cannot reject the maintenance disregard and child care costs. It does not make sense. As I said, the proposal affects not only the parent with care but the parent without care. We need a child care cost departure to enable parents to work if they want to.

I am asking not for an automatic right to child care costs but for an application for departure. I am not saying that, if a parent with care has a highly paid job and expensive child care costs, those should be met; of course they should not. It would not be reasonable to expect them to be met within the maintenance formula.

As the Minister accepts, the majority of lone parents are on income support and cannot get back into the work place, so the floodgates will not be opened by the amendment, but it will help those who want to work. I stress again: surely that is what the Government want. We must avoid the situation where people are better off out of work. If the Minister did not agree to the amendments, he would be accepting the principle that people were better off out of work. I hope that he will change his mind and agree to the amendments.

Mr. Stevenson: In arguing for this element to be considered for departure, we aim to instil a further degree of fairness in the starting point, otherwise the whole system becomes the subject of further suspicion. The inclusion of child care costs would enhance that aim. As has been stated, in the main such costs are borne by lone parents. The Government may be worried that accepting the proposal will open the floodgates, but I do not believe that that will happen.

Many lone parents are not employed, but research shows that, of those lone parents who are employed, about 29 per cent. have the additional burden of child care costs--not an insignificant figure, so we are considering an important issue. Particularly for lone parents on low disposable incomes, those costs are not a marginal issue, but an extremely important one. Some would argue that it is a vital issue.

I find it a little perplexing that the Government seem to have accepted travel-to-work costs as grounds for departure, yet they resist child care costs. Travel-to-work

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costs as grounds for departure are in addition to existing provision. I assume that the motivation behind that is to avoid work disincentives. Surely the arguments apply equally to child care costs.

The Government seem to object to the addition on the ground that it may have little effect on overall assessments. At the very least, that argument pre-empts the form any regulations may take and the discretion that may be used by the departure officer.

The Government argue in terms of cost and say that child care costs are represented already in the components contained in the present formula. From reading the amendment, I understand that it is concerned with costs that are not covered by the present formula. The Government may feel that the amendment duplicates what is already there, but it does not.

If the Government were prepared to concede the amendment, there would be a need for clarification in the regulations--that is accepted--but it is the principle that is vital, and hon. Members have already referred to that. The final level of the assessment and disposable income, including benefits, are important factors in the equation. The current formula is a disincentive to work, because wages above a certain level become a penalty. Surely that is contrary to the Government's stated policies and objectives. The addition of child care costs to the disregard system would not, therefore, be contrary to what the Government are arguing for. It would enhance their objectives. It is also consistent with similar changes that they have made in other sectors, such as family benefit, and with the travel-to-work costs element, which, in certain circumstances, would be subject to the disregard.

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