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10.25 pm

The Parliamentary Under-Secretary of State for Social Security (Angela Eagle): I congratulate my hon. Friend the Member for Harrow, East (Mr. McNulty) on having the good fortune to secure this debate, which he has used to great effect. He has drawn the House's attention to an important issue: how to get adequate child support from self-employed non-resident parents. The case that he mentioned shows up in stark relief many of the failures of the current system, which has often let parents down. However, we must remember that the self-employed present some of the most difficult cases with which we have to deal.

Because we guarantee confidentiality when we take on an application for child support, I cannot go into the details of Mrs. West's case on the Floor of the House

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tonight, although I will of course be happy to meet my hon. Friend to discuss more privately the handling of Mrs. West's maintenance assessment. Tonight, I shall address some of the key matters of concern to my hon. Friend. Before I do so, it may be helpful if I briefly set the problem in the context of the Government's reforms of the welfare state, as my hon. Friend did.

We are determined to reshape the welfare state to meet the needs of the future. The proposals set out in our Green Paper on child support are one part of those reforms. Child support has a key part to play in our determination to tackle child poverty: 1.8 million children are living with a lone parent on income support or family credit and receive not a penny in maintenance from the non-resident parent. It cannot be right that the separation of parents takes away their responsibility to support their children financially and emotionally. A child support system that works with parents to enable them to provide the support that their children need can help many to escape poverty and dependence on benefit.

That is why we are seeking to renew the way in which child support is delivered. Our Green Paper sets out how we intend to address the many problems of the current scheme. The on-going consultation is open and is due to end on 30 November. We must create a child support system that is practical to administer, enjoys the support of our society and delivers effective help to children and parents with care. I shall take on board my hon. Friend's comments and suggestions for dealing with the self-employed, which I shall regard as part of the consultation procedure.

Child support liability is, sensibly, based on the amount that a parent can afford. That means that there will always be the problem of determining how much money a parent has available. The case that my hon. Friend mentioned appears to be a particularly severe example of the problem, with the child support liability varying widely according to differing accounts of the non-resident parent's income.

We all accept that the rules of the current scheme are far too complicated to be workable. In the case of many self-employed non-resident parents, the current system is also too easily manipulated by those who wish to minimise their liabilities. We shall try to simplify the system to minimise any chance of abuse, and we have proposed introducing penalties for those who lie about the money that is available to them in any income-based assessment. However, there are real difficulties with the self-employed, and changes in the child support rules, although they help, cannot entirely overcome them. In other words, the self-employed were always the most difficult cases to assess when the courts were responsible for child maintenance, and after the creation of the Child Support Agency that unfortunately did not change.

In order to establish the income available to pay maintenance, we cannot simply ask the self-employed for wage slips, as we can with most employees. Indeed, simply providing proper accounts is often difficult for many small traders. There are undoubtedly some self-employed people who will always seek to minimise their declared income. Those people present difficulties to all agencies charged with collecting money, including the Inland Revenue.

This is not a new problem or a problem particular to child support. However, it is worth bearing in mind the fact that one in five self-employed non-resident parents

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pay all the maintenance that is due. That means that 80 per cent. do not, so clearly we must try to create a more effective system.

The means available to the CSA to pursue queries over income declarations are not adequate. Steps have been taken to address that problem. A task force set up to deal with self-employed cases has been successfully piloted. Specialist teams have focused on working with the self-employed to encourage them to comply. This approach has proved very successful in the pilots, with substantial reductions in clearance times and significant improvements in compliance. These special units will therefore be implemented nationally by 1 March 1999.

We are also looking to see whether we can make any improvements to current legislation to widen the access that the CSA has to essential information collected by other agencies. That is something that my hon. Friend emphasised.

Experience has shown that tribunals are able to look at the earnings of the self-employed more in the round. They have reached assessments based on evidence that cannot currently be used by child support officers. Occasionally, tribunals have used their powers to summon witnesses, another avenue not available to the CSA.

As part of our reform of the child support scheme, we are seeking to build on the provisions that allow us to depart from the usual formula assessment. That would enable us to make greater use of the tribunals' broader scope. This scheme can allow a parent with care to apply for what is called a departure from the actual maintenance assessment on the basis that the level of income declared by the non-resident parent is inconsistent with his life style.

We are examining the possibility of making changes to the treatment of self-employed earners. We are considering a method of calculation that is more aligned with Inland Revenue provisions. In that way, non-resident parents could give the same information to the CSA that they give to the Inland Revenue.

That would make things much easier for parents, encouraging compliance as well as speeding up assessments. It would reduce the possibility of unscrupulous non-resident parents hiding the true level of their income, to the detriment of their children. Simplification of the rules would allow officials to spend more time enforcing maintenance and less time trying to work out the assessment.

Child support offers a real route out of poverty for many lone-parent families and particularly for children, many of whom currently live in needlessly difficult circumstances. To make child support work, we will ensure that we close the many loopholes that allow some parents to escape their responsibilities. We will make sure that the self-employed cannot hide from their duties to their children behind false accounts and administrative confusion.

This is why we have made the reform of child support a feature of our welfare reforms, and why we are pressing ahead in the meantime with the short-term improvements that I have outlined tonight, which I hope will begin to address the problems that have been raised by my hon. Friend.

Question put and agreed to.



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