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26 Oct 1998 : Column 129

Child Support Agency

Motion made, and Question proposed, That this House do now adjourn.--[Mr. Betts.]

10.13 pm

Mr. Tony McNulty (Harrow, East): I am grateful to have the opportunity in this short Adjournment debate to raise the problem of the Child Support Agency and self-employed absent parents. I want briefly to discuss many general concerns that I and many others have about the way in which the CSA treats such parents and to refer to a specific case in my constituency, the details of which I gave my hon. Friend the Minister in advance.

I want to make two introductory points. First, I have no animosity towards the self-employed sector and would deprecate any attempt to suggest otherwise. My brother is self-employed, as was my father before he retired, and so are many of my friends. Secondly, it is in some ways a matter of profound regret that I must refer to the case of my constituent, Theresa West, not least because it was the subject of an Adjournment debate introduced by my predecessor, Mr. Hugh Dykes, on 31 January 1994--four years ago. I also note with interest that, after I was notified on 14 October of my success in securing this Adjournment debate, the first question to the Secretary of State for Social Security on Monday 19 October concerned precisely this subject matter: the CSA and the self-employed. I welcomed the response from my right hon. Friend the Secretary of State regarding that matter.

I turn briefly to the case of Theresa West. Theresa sought a maintenance variation order in 1993 and the CSA rather than the courts took on the case. I hasten to add that that was not of Theresa's choosing; she would rather have seen the matter stay with the courts. She had accepted £300 a month maintenance for her two children following her divorce in 1986. The CSA took nine months to determine an assessment and reduced her agreed maintenance to £200 a month. She naturally appealed against that assessment. While awaiting the outcome of the section 18 review, changes in the law meant a reassessment of her maintenance, which was reduced to £100 a month.

The overall review was completed by March 1994 and, as a result, Theresa's payments were reduced to nothing and she was ordered to repay overpayments. That assessment was based on her ex-husband's claim that his salary was only £14,393--a claim that the CSA happily accepted. However, Theresa knew differently. Theresa's ex-husband is a self-employed record producer of international repute. In 1993, he purchased a house worth more than £300,000 and stated clearly on his mortgage application to the Queen's bank, Coutts, that his joint income with his new wife was almost £200,000 a year--at the same time, he had declared his income as £14,000 to the CSA. He also explained that he could easily access and repatriate overseas funds to the value of £160,000. He owned a Porsche, two BMWs, his two children from his second marriage attended private schools and he employed a cleaner and a gardener. He also paid himself a £28,800 dividend through his own company--but forgot to tell the CSA about it.

We have this information only because Theresa would not accept that her ex-husband's bank had, in its words, "lost" his mortgage application. With perseverance and

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temerity, she obtained a copy of the application from the bank. To achieve that, she had to involve the Serious Fraud Office and the fraud manager of Coutts. At the tribunal hearing in July 1996--this is regarding the 1993 assessment--the CSA revised her assessment from nothing to £1,250 a month.

Her ex-husband appealed to the child support commissioner, who reported his determination on the July 1996 hearing of the 1993 assessment in August 1998. The ex-husband's appeal was refused and, in outlining the reasons, the commissioner stated:

that is, the tribunal's--

    "express finding that the applicant had over a long period failed to disclose the true level of his income was justified having regard to the evidence before them."

I remind hon. Members that that evidence existed only because of Theresa's own work, and not that of the CSA. The commissioner continued:

    "In particular, the admitted and inadequately explained failure to disclose his £28,800 dividend from his company, the failure to disclose any overseas earnings or income at all through his tax return . . . and the inability to give any satisfactory information about the level of overseas or other income"

justifies the tribunal's decision.

Mr. Bill O'Brien (Normanton): In the scenario that my hon. Friend describes, was the Inland Revenue contacted? Its records should be available to the CSA too.

Mr. McNulty: They should be, but they are not; and when they are, the CSA constantly says that it is beyond its discretion to go beyond what each party gives it.

Therefore, five years after the CSA became involved, a final assessment of the 1993 maintenance level was arrived at--in 1998. The process of getting to that point involved a suitcase of paperwork, thousands of work hours by the CSA, the appeals tribunal, the child support commissioner and legal staff, seven tribunal hearings, three High Court subpoenas, the cost of legal aid for counsel's opinion and a written determination by the commissioner--all simply for the 1993 maintenance assessment.

Theresa made numerous requests to the CSA for the collection of the arrears for 1993-94--a total of more than £10,000--but the CSA refused to pursue that because of her ex-husband's appeal to the child support commissioner.

In 1996, the CSA requested information to complete the periodic review for 1994. The 1994 assessment reduced the maintenance to £380 a month, largely because Theresa's ex-husband claimed that his income for that year was only £34,000--a drop of more than £150,000 from the now accepted level of the previous year. However, although the CSA recognised that this was unusual, it said that, without her ex-husband's co-operation in producing additional evidence, it was bound to accept his accounts.

Again, Theresa asked for a section 18 appeal, reminding the CSA that evidence already produced to the July 1996 tribunal showed that her ex-husband's projected income for 1994 was between £190,000 and £230,000. The result of that appeal was that the £380 a month assessment was confirmed, as although the appeal tribunal directed that her ex-husband's liability be calculated on

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the basis of the projected income figure, the CSA said that it did not have the discretion to use the projected figure as verified income. Sadly, there was no mortgage application or similar document that could be used to find out his real income level.

By October 1998--let us bear in mind that this process started at the inception of the CSA, in 1993--the picture is that Theresa's ex-husband is to pay almost £800 a month regular maintenance and £413 a month toward arrears. You might think that justice was served at last. The sting in the tail, though, is that the CSA is dealing with an outstanding periodic review of the assessment of maintenance from October 1996 and a further review of the period up to October 1998--and has said that it has no discretion to use projected income figures as verification. It says, therefore, that

the ex-husband's--

    "liability will reduce."

It would seem that the projected income is appropriate for the child support commissioner and adequate for the Queen's bank to advance a £250,000 mortgage, but not enough for the CSA to put food on a child's table.

Theresa's ex-husband is now claiming that his income is again around £14,000--despite the fact that he now has a third child in private education and that there is documentary proof that his mortgage payments alone total £28,500 a year. If the CSA used that figure for the two outstanding periodic reviews, the assessment of maintenance would be reduced to about £40 a month and he would be able to argue, on the basis of the assessment, that he is unable to pay any of the arrears, which now total more than £30,000.

This is indeed a sorry tale, and one that is not yet complete. It shows vividly how the CSA has not been adequately equipped to deal with the complexities of dealing with absent parents who are self-employed and who, in some cases, to say the least are unco-operative, if not downright misleading in a wilful fashion.

As I have said, I welcome the Secretary of State's response at Social Security questions on Monday 19 October 1998, when he said that a special unit had been established within the CSA to deal with self-employed people. I welcome the overall approach of the Green Paper "Children First: a new approach to child support" and many of its suggestions for the future.

However, so that we may ensure that the self-employed are dealt with fairly and efficiently by the CSA--in a way that is fair to the continuing parent as well as the absent parent--I should like the Under-Secretary of State for Social Security, my hon. Friend the Member for Wallasey (Angela Eagle), and the Secretary of State to consider areas such as the following, some of which are in the Green Paper.

First, I should like Ministers to consider the use of projected income as well as the most recent year's taxable profit in maintenance assessments, and all reviews should be based on verified and complete accounts. Secondly, as my hon. Friend the Member for Normanton (Mr. O'Brien) said, the Inland Revenue should be fully used--it does not always happen--to verify income levels claimed by the self-employed absent parent, including, crucially, overseas income and resources.

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Interest and compensation could be paid on overdue payments or arrears when determined. There could be a proper system of enforcement and collection of arrears, once initially determined, instead of the present constant to-ing and fro-ing round assorted areas of the legal or quasi-judicial system.

As the Green Paper says, there should be a firmed-up commitment that the giving of false or misleading information will be made an offence. I would go further and say that, where it has been proved that misinformation has been used, specifically in the case of the absent self-employed parent, the presumption should automatically then be based on projected income. Projected income is more often than not appropriate, and is used in normal commercial dealings; it is appropriate in other ways, and should be for the CSA as well.

If such a package is used, it will shift the burden of proving ability to pay fair maintenance on to the self-employed absent parent and eradicate the perverse incentives that litter the current system, especially for the self-employed. At present, it is in the interest of absent self-employed parents to play the system, avoid declaring real income and fail in their duties and responsibilities to their children. This package of measures, specifically geared towards the self-employed, is in tune with the spirit and ethos of the new Green Paper.

I formally request that the outstanding elements of Theresa's case are referred to and dealt with swiftly by the new CSA special unit on the self-employed. Clearly, that may not elicit an answer this evening. What my constituent has had to endure cannot be right or fair. The behaviour of her ex-husband has been deplorable. It is only her tenacity in the face of his mendacious behaviour that has meant progress for her case and ultimately for her children's welfare.

Five years after my constituent's dealings with the CSA began, the case still grinds on. That is not the fair, efficient and firmly enforced system of child support that our people need and that we seek. Currently, the CSA cannot adequately deal with the problem. I ask sincerely that, as part of our review, we sort out once and for all the way in which absent self-employed parents are dealt with.

It is a matter of profound regret that my constituent has had to endure this nightmare, but I know that she will agree that it will be made slightly more tolerable if lessons are learned from her case, and the scams, tricks and strokes pulled by some malevolent absent self-employed parents and their coteries of lawyers and accountants are curtailed because of her experiences. Sooner rather than later the welfare of the children must become paramount again.

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