Examination of witnesses (Questions 1 - 19)
WEDNESDAY 22 JULY 1998
BARONESS HOLLIS
OF HEIGHAM,
MR MIKE
STREET and MRS
FAITH BOARDMAN
Chairman
1. Good morning, ladies and gentlemen. May
I formally declare the public evidence session open on the Select
Committee's report on child support and begin immediately by welcoming
warmly Baroness Hollis of Heigham, the responsible Minister, who
has with her in her team this morning Mike Street, Policy Manager
at the Child Support part of Social Security, and Mrs Faith Boardman,
who of course is the Chief Executive of the Child Support Agency.
You are all extremely welcome. This is the beginning of what will
probably be quite a long journey for us all and we were particularly
pleased that the Secretary of State committed the Government to
allowing us the opportunity of engaging in a pre-legislative stage
at an appropriate time in the course of the new policy. The Green
Paper certainly has given us a lot to think about. It has caused
a lot of comment and interest and we I think this morning would
like to try and focus on the future but we will have to draw I
think on some of the lessons of the past as well, so we have got
the ministerial forward-looking brief as well as the Chief Executive's
experience of the past and that is extremely valuable for us.
Perhaps, Baroness Hollis, you would just like to make a short
opening statement and say what is in your mind and how you intend
to approach the consultation period of the Green Paper and perhaps
a wee bit about the timetable thereafter.
(Baroness Hollis) Thank very much. I think the
first thing to emphasise obviously is that it is a Green Paper.
There are a couple of things in it which we believe are strictly
non-negotiable. [The paper is meant to be gender free but most
non-resident parents are fathers and most parents with care are
mothers and if I use that language I hope people will find that
acceptable. Ninety-five per cent of parents with care are women,
and of the five per cent who are not, of the men, quite a lot
of them are widowers, obviously, although some are separated and
divorced fathers.] What is non-negotiable—and here we entirely
subscribe to the principles of the original Child Support Act—is
that both parents must and should support their children and children
are entitled to the support of both parents. That we believe is
not negotiable. However, what did happen in the 1992 Act was the
setting up of an agency which was based on a formula which, with
the best intent—and I do believe it was the best intent—tried
to take into account as many considerations as possible in the
effort of trying to make it fair. The result, it seemed to me,
was that it lost the simplicity of a bureaucratic formula but
failed to have the tailored effect of a court settlement and it
was neither one thing nor the other. All subsequent changes which
tried to make it more fair by bolting on departures or different
forms of assessment simply added to the complexity, and at that
point when a system becomes so complex, people cannot tell whether
it is fair or not because they do not know whether it is accurate
or not. That was I think the situation we arrived at. The result
is a CSA that I think is largely regarded as not working. We know
that 70 per cent of non-resident parents are either not complying
or are only partially complying. We know that 70 per cent of parents
with care are refusing, at least initially, to co-operate with
the Agency. We know that the formula is so complex that despite
the heroic efforts of the staff—and they have been heroic—they
cannot deliver the service they want. One staff member told me
for example that there were 58 different sorts of mortgages and
every time one of them changes by a percentage or so the non-resident
parent may seek a review which may or may not be valid. The result
is that the staff spend 90 per cent of their time on assessment,
10 per cent on enforcement, and of course the assessments, the
reviews, the appeals, never catch up on each other. As a result
a non-resident parent may be hit with three printed out letters
in one week, all on different assessments, all with different
figures, and he not know which of those is the right one to pay.
The consequence—and this is what really matters—is
that only one child in six is currently getting maintenance and
that is actually the real condemnation of the set-up. As I say,
it is easy to be wise with hindsight. There but for the grace
of God could have been a Labour Government in the same situation.
It is not a party issue at all. What we do believe is that it
is getting better. I think Faith and her team have made, as I
say, heroic efforts, but though there is incremental improvement
in service, the caseload is going to outpace in our view the quality
improvement in service. As a result the first option which was
available to us, which was to seek to go for incremental change,
I just do not think is available to us. I hoped it was; I do not
think it is. The case load means that the quality of service will
not ever in my view be good enough. The second option facing us
was to go for the courts. I retraced the steps of the previous
Government, and I have to say I came to the same conclusion on
reading some of that evidence that the previous Government did,
that the courts could not deliver the system for four basic reasons.
The first was that the courts were a lottery in the sense that
both parents would not know what they might have to pay until
the determination by the court, and therefore they could not make
their financial arrangements and get on with their lives until
that court settlement had been determined. That was a lottery,
that they did not go in with any pre-knowledge of what they were
likely to come out with. The second reason why it was a lottery
was that at the same level of income and with three children,
25 per cent of settlements were under £12 a week and 25 per
cent of settlements were over £40 a week. These are the stats
we have, so it was random and dependent to some extent on the
quality of your hired gun and the sympathy of the magistrate or
the judge as to whether you were in the bottom 25 per cent or
the top 25 per cent. No-one knew what they were going to get.
The third reason I did not feel it was right that we should revisit
the court settlement was that essentially, though of course a
new family court principle might modify this (one hopes it would),
the court system is based on an adversarial principle and one
did not want to see high noon over the bodies of the kids in which
children saw their fathers contesting that they should not support
their children. We did not think that was the right atmosphere
in which to talk about child support. Finally, as a court settlement
is based on every circumstance being taken into account, if any
circumstance changes either parent could seek to go back to the
courts. That the CSA now makes something like four to five changes
in the first year of the maintenance assessment (or four to five
seeking of changes), about asking the courts similar to take on
something like five million extra visits a year to the courts,
and we think the load would break the system. I do not think this
would be welcomed by the Lord Chancellor's Department. So we did
not feel it right under the circumstances to revert to the courts
because it was a lottery, because it was adversarial and because
of the administrative complexity and load. We followed the principles
of the previous Government and thought this was correct. That
left us with our third option, which was to scrap the formula
and replace it with a simple percentage rate which is at the core
of the Green Paper, with a simple read-across table as in the
back of the document with copies in the local post office, in
the local library, the local CAB and the local MP's office. People
would read it and know if they were thinking of breaking up a
relationship what broadly speaking the financial implication would
be before them. They would know where they stood, they could contest
it if they thought it was inaccurate. The simplicity itself is
part of its fairness because if it is so complex that you do not
know whether it is accurate, you cannot tell whether it is fair
or not. The consequence is that the new system should work. Instead
of taking six months for the initial assessment we expect it to
take four to six weeks, maybe less, so the simplicity is part
of its fairness. One reason it will work is because all the CSA
needs and wants to know when they have the name of the non-resident
parent is his earnings and the number of his children. The earnings
they can get from the employer. If he refuses to tell us about
his children he will end up paying more because we will know what
the number of children are in the first family. He will simply
be withholding the number of children in the second family, and
that will be to his financial disadvantage. What that means, however,
if it is to be simple, is that we are stripping out of the assessment
all the considerations that currently go into the formula, like
housing costs, like travel to work costs. We are saying to him
that he takes responsibility for those costs because every individual
has different responsibilities and it is not immediately obvious
why you should build in housing costs into a formula but not,
say, the care of an elderly relative which it might be equally
socially desirable that you should support. But if we are doing
that, it is only fair and decent that the maintenance assessment
that he is asked to pay should be lower because we are asking
him to take on more of the responsibilities out of his pocket
rather than build them into a formula. The average assessed maintenance
under our proposals, the 15, 20 or 25 per cent, will come down
from £38 to £29. The unsuccessful parent is left as
an adult with more disposable income to make his choices as he
sees fit and the CSA does not try to double-guess what he should
be paying and what he should not and build them into a formula.
It is also fair to him, we hope, because we are probably taking
into account a second family, though you might want to explore
that. We recognise that you should not seek to impoverish one
set of children in order to support another. We hope it will be
regarded as fair by non-resident parents. As for the parent with
care of the children, there is the £10 maintenance disregard
obviously going to those on income support. The children as a
result will see their father paying directly for their maintenance.
We hope the mothers and the fathers will both have an incentive
to co-operate with the Agency, and I think we will do something
genuinely real to tackle child poverty. Because it is simple,
because we hope he will comply as a result of the reduced assessment,
because we hope that she will co-operate because of maintenance
disregard, we expect increased compliance. We currently have 66
per cent cash compliance. The Treasury accept that we should be
able to get up to 75 per cent; we think we may be able to get
up to 80 per cent or more. At 75 per cent it is cost neutral so
the fourth part of the equation, (the father, the mother, the
children and the Treasury), the Treasury, is protected. The proposals
are cost neutral over the five year period. We hope therefore
that more fathers will pay but will pay a somewhat lower assessed
maintenance because they are asked to take on their additional
responsibilities out of their disposable income. The majority
of the parents with care will gain and most of the rest will have
a "no lose" situation because of maintenance disregard.
The Treasury's position is protected. The result we hope is a
virtuous spiral reinforced by the quality of service that Faith
I am sure will be happy to talk about, which offers a 3 step process
not only the immediate assessment but a local interview in a local
office by a locally named official to which either parent can
go to sort out any queries, any difficulties about paying over
time, and finally with the right to a tribunal on the very narrow
ground that he is already contributing properly to child maintenance,
perhaps through higher contact costs, perhaps through supporting
a mortgage on the former family home. It would be right and decent
and proper then for the tribunal to substitute a new maintenance
assessment. We hope with all that we can change the culture. We
will know we are successful not only if children are getting the
maintenance they should but also if, when he goes down to the
pub, he is no longer a hero but an outcast if he boasts about
ducking his responsibilities to his children. I emphasise: it
is a Green Paper. A lot of the detail will come as a result of
consultation, a lot of help I am hoping will come from this Select
Committee when they do the pre-legislative scrutiny, and we hope
as a result we will get a new system in place that has robustness,
staying power and consent and in which children above all are
the gainers.
2. Thank you for that. It was delivered
without hesitation, deviation or repetition. All we can say is
that if your enthusiasm is matched by the speed of the delivery
we will have this fixed in a fortnight.
(Baroness Hollis) I apologise!
3. That is a very helpful opening statement.
Could I ask you just to say a word about timetable and implementation
because of course there is the conflict that exists between the
recognition that things are not right at the moment and I do not
know if we would like to say a word about that because we are
still getting some pretty bad reviews, angry reports, Ombudsmen
and what-have-you in the current situation, but on the other hand
it is going to take maybe three years. Maybe it is right to take
time and get it right because it was clear that the implementation
was badly bungled last time round. Maybe you could say a word
about how flexible that three years might be and perhaps Faith
Boardman would like to say a word about current levels of practice
and customer service. We have got quite a chunk of territory to
go through.
(Baroness Hollis) You are absolutely right. The
choice was that we could not have gone for decent consultation
given the length of time we spent in taking soundings before working
up our proposals. We could not have gone for consultation and
also get it into the Queen's Speech this autumn, there was no
way, let alone coming before this Committee. In any case we think
it is very important to try as far as possible to get it right
to build the consent. There is an educational exercise to be done
on all sides as well as actually seeking support for the proposals.
What we are expecting is that the consultation period will end
at the end of November. We will obviously be receiving both representations
and meeting organisations continuously through that period. We
would hope to make a draft Bill (and following that probably a
White Paper or a document) coming to this Committee, April/May-ish,
that sort of timetable. We do not think it could be ready before
that. We are in the hands of parliamentary counsel and I cannot
tell you what the pressures would be but say perhaps realistically
May, which would allow this Committee time therefore to consider
that over the summer and the expectation, providing we got consent
to our proposals and support from yourselves and so on, of a Bill
in the Queen's Speech after next with therefore implementation
the year after. I do not see how we can go faster than that and
do it properly.
4. I am not pressing you, but have you got
anything you would like to add on the current customer service
practice questions before we go into the questions?
(Mrs Boardman) I think I would like to emphasise
a point you have already made which is that part of the difficulty
on the first occasion was the speed with which the current scheme
was implemented and there were operationally speaking a number
of quite serious difficulties with the IT systems and with having
the staff ready and trained in sufficient numbers on day one.
I would be very anxious that we do not repeat those mistakes,
particularly given the load which we will have to carry and our
customers will have to carry over the transitional period between
the current system and the new one, which obviously will impose
an extra level of work during that period.
5. Have you got extra resources to make
sure that the backlog will be dealt with before the new system
is introduced?
6. We are confident that we can deal with
the backlog and what we are trying to do is really to press on
and to make as many improvements as we can in the period between
now and when the new service comes in. On the particular issue
of the backlogs we did manage to clear something over half of
the maintenance assessment backlogs (which we take to be cases
which are outstanding for more than a year) during 1997/98, and
we are confident that we are on track to clear those remaining
backlogs by the end of this financial year. Obviously, when we
have done that, that will, as the Minister said, release quite
a lot of resources to improve other levels of customer service,
but we are not waiting until we have dealt with the backlogs.
We have already put in extra resources to some of the key areas
that we know are causing customers concern, like the telephones.
We are training all of our operational staff in telephone techniques,
not just in terms of how to handle calls but also when it would
be helpful to customers to use the telephone proactively in the
process by the end of this December. We expect, as I say, to have
finished the backlogs of the maintenance assessments by March
of next year. We intend to bring in the changes in the decisions
and review systems (which are another current complication) under
the decision making and appeals legislation which has just gone
through the House. We expect to be able to bring in that in June
1999. We then intend to have a series of improvements such as
more of the face to face staff that again the Minister has already
mentioned, so that we get a continual cycle of improvements leading
up to the new system rather than waiting for a big bang.
Mr Wicks
7. Since the Act came into force this must
have been one of the most scrutinised pieces of public policy
by a series of Select Committees. Since I have been in Parliament
more than one Chief Executive of the CSA has assured us that there
is a new trick coming. There has been some staff training or a
new bit of IT or a change here and a change there and things can
only get better, and yet the most startling fact we have heard
recently is that only one in six children are getting the maintenance
that they deserve. Can I put it to the Minister that in addition
to the reform package what we have somehow got to do in Britain,
and it is really difficult, is to have a kind of cultural change,
perhaps to re-invigorate the public consensus which exists that
if you have a child, whether as a mother or a father, you should
financially support your child. That consensus was very clear
when this proposal was first proposed by the then Prime Minister
all those years ago. I think there is still a consensus about
parental responsibility but many people now, if you talk about
the CSA, shrug their shoulders or, worse, curse and say what a
shambles, how dreadful that these men are being so badly victimised.
How do we get the public debate about this so that when the new
system is in force everyone will be saying, "Yes, we have
got to get this right", because we have so many of our children
spending so much of their childhood, sometimes all their childhood,
away from one of their parents? If we do not get this right the
results are truly, I think, catastrophic.
(Baroness Hollis) I think that is absolutely right.
I think we have got one opportunity to reform the child support
system in this country and we must not blow it. I also think that
there are no saints or sinners in this story. It is true that
far too many non-resident fathers have failed to pay. They have
also been able to shelter behind the shambles of the Agency. They
have been able to shelter behind the fact that the access or the
contact to which they are entitled has been thwarted by the parent
with care, and as for the parent with care, as we say in the Green
Paper up to 40 per cent of them admit on some occasions thwarting
access, so there are no saints or sinners in this. What we are
hoping is that as a result of our consultation exercise, as a
result of all the work we seek to do over the next couple of years,
we can persuade both parents with care and non-resident parents
that children need both the financial and the emotional support
of both parents. She may divorce him. Neither of them can divorce
the children and even if she has a new boyfriend that is not a
good excuse for wanting her to cut off contact with him. Equally,
he may have a new partner who wants to concentrate on the second
family. That is not a good excuse for him neglecting his responsibilities
to his first family. That bond, that obligation, that commitment
must remain, but it needs both parents to work together to co-operate
for the benefit of the child. I actually do believe that being
a good non-resident parent or being a co-operative parent with
care is extremely difficult because you are dealing with a very
fraught area of human relations, you are asking for more negotiation,
more co-operation, more mature behaviour than many of us for much
of the time can measure up to, but we have got to try and use
this child support system to support that sort of behaviour. If
we do not we will have failed. That is what we have got to do.
If we do not then all that happens is that the CSA becomes a debt
collection agency and it will have failed to turn the culture
round which is that it is about child support.
Ms Stuart
8. I have a supplementary to Faith Boardman.
In a written answer to a question you wrote on the 29 June that
the current backlog, because you make this reference to backlog
of cases, was 110,000 cases which are over 52 weeks old and some
173 which are under 52 weeks old. You also said earlier that you
were confident that the backlog may be cleared by the end of the
financial year. I understand from the CSA office in my area in
Dudley that they would not think that they have got a capacity
for clearing more than about a thousand cases a month of the backlog
cases given their current workload and they alone have got 15,000
cases, so on their current staffing they would not be able to
deal with the backlog in less than 15 months. I also understand
that there has been a reduction of field offices in the CSA. I
accept what you say but I would like to have some details as to
are you going to employ extra people, are you training any extra
people, are you simply expecting all your fairly overworked staff
to take even more responsibility? How do you in practice intend
to deal with that backlog?
(Mrs Boardman) We are doing it by a mixture of
ways and I can well understand that individual staff who are working
extremely hard throughout the Agency may have given you that sort
of very local view. The national view is actually that we are
ahead of our profile for this year. We have dealt with more of
the backlog cases in the first quarter than we expected to, so
we are doing better than we intended to at this point in the year
in a national sense. All the business units—we have six
major ones round the country—are actually profiling and
are confident that they can clear it. They are using a variety
of means. Some of them are special task forces, some of them are
using experienced staff who come from our field offices, and some
of it is around using the staff which we have in the field in
a better sense, although you are quite right that we are closing
a number of the purely paper processing small offices that we
have had in the field, that is actually to allow us to employ
more staff in a more cost efficient way in a smaller number of
larger centres doing that paperwork rather more efficiently and
retaining a larger number of face to face staff who will be scattered
in a larger number of locations. We are in the middle of that
reorganisation and I think it will release quite significant resources
all of which will help not just with backlogs but also with keeping
on top of our much increased targets for current work clearance.
As I say, at the end of the first quarter we are actually ahead
of where we expected to be.
Chairman: One of the key issues through
the core of the Green Paper is the new assessment structure and
that involves percentage rates. Chris Pond has some questions
in that area.
Mr Pond
9. Just before we do come to the new formula
I want to dwell for a few more moments on the impact of the current
situation because I do not think any of us can underestimate the
impact that the inefficiencies and the complexity—the two
problems that face the current situation—are having on the
lives of people. Every Member on this side of the table knows
from his or her constituency postbag, much of which comes through
to the Chief Executive and perhaps also to the Minister, the impact
this does have. It is destroying people's relationships, relationships
between parents. It is therefore making it more difficult for
them to fulfil the sorts of responsibilities which Baroness Hollis
outlined and in many cases it has resulted in a situation where
neither parent has sufficient financial resources to be able to
do that proper job of parenting. Very often the parent with care
ends up without the resources made available by the parent who
has not got care and the non-resident parent finds that the resources
demanded are so huge partly to repay arrears that they do not
have the resources to be able to do a proper job normally as the
father. I think we do have to underline that, that there are two
channels here. One is to reform the formula, which we will talk
about in a few moments, but the other is to deal with the real
inefficiencies and many of my constituents find it frankly puzzling,
as I do, that they get certain letters, some with the same date
at the top but with different assessments, and they are expected
then to meet their responsibilities and I think they say, quite
rightly, "What about the CSA meeting its responsibilities?"
The final point I just want to ask is a specific question. We
have also had staff of the CSA coming to Members of Parliament
and saying, "We are not happy about the way things are working"
and we have been told that they have been instructed by management
not to discuss these matters with Members of Parliament. Could
you comment on the first point about the inefficiencies but also
give us a clear answer: has that instruction gone out to staff
that they should not talk to Members of Parliament?[1]
(Mrs Boardman) If I may answer the
last one first, no, it has not. We follow entirely the normal
rules which apply to civil servants and activities generally.
On the inefficiencies, I think it is important to remember that
what you are seeing in your postbag and I see in mine—and
I think concern us equally—are essentially those cases which
lead to a complaint. It is fair to say that there are a lot of
cases which are actually being dealt with entirely correctly within
the limits which are placed on us by the current formula. That
is not to say that even those cases are being dealt with at as
high a level of service as we would like because of the basic
problems that are inherent in the formula. You and other Members
do basically see those cases which go wrong—and rightly—which
constituents want you to take up on their part. Overall the figure
that is our live case load is now at some three and a half times
what it was at the start of the Agency. It is about 770,000 live
cases. The number of complaints which we get has actually gone
down compared with what it was two years when it was in the order
of 30,000. It is now in fact about 28,000, despite that sort of
increase in the basic work load. That is not to suggest at all
that there are not some very valid complaints or that we do not
need to tackle a large number of things but it is simply to put
it in that wider perspective.
10. Could we move on to the question of
the formula now and I think all of us are delighted that there
is going to be a less complex method of dealing with this. I think
the Minister is quite right to explain that we need that sort
of formula. Can I ask about the percentages that have been put
in, the 15, 20 and 25 per cent, why those particular figures were
chosen as the appropriate percentages for the first, second and
three plus children?
(Baroness Hollis) I think there is both a rationalised
answer and an instinctual answer. The instinctual answer was that
it felt about right from what we knew. It was supported by a fair
amount of evidence about what net income people get left with
in, say, Australia, New Zealand, Canada, the United States, as
well as by some of the research that has gone into, for example,
the Middleton Study, Small Fortunes which illustrated what parents
in different financial income bands spend on their child support.
On average about a third of a couple's income tends to go on the
support of their children, so 15 per cent from one parent in a
separated family seemed about right and it fitted our perceptions.
But it was also that at the moment you have a system with a protected
formula, in other words a protected income in which we build in
all the complexities, and then there is effectively a 50 per cent
deduction rate thereafter, with all of the problems of disincentives
and so on that arose. We felt that by going for a 15 per cent
figure, which was lower than the current figure, we left him with
more income, as I say, to pay for all the things that we will
not be building into the formula, that still could allow us to
finance the maintenance disregard, still effectively have an assessed
maintenance figure than was higher than the average maintenance
currently paid so that parents with care should not on the ground
be actual losers for the most part, and kept it cost neutral from
the Treasury point of view. It was a mixture of what felt right,
informed by the research that was available, informed by the balancing
act between the three parties if you like. That was why we came
to that figure. If we dropped the figure down to say 10 per cent
for him, either the parents with care lost out or the Treasury,
that is, other parents as taxpayers were having to pick up that
responsibility. If we increased it we felt it was unreasonable
for him given the extra responsibilities we were asking him to
carry, so it was in that sense a negotiated figure between those
pressures.
11. The Green Paper says that 70 per cent
of fathers who are currently paying— this is the figure
you underlined earlier—will gain from the change. How robust
is that estimate?
(Mr Street) What we have done is to take the current
case load and look at the amounts of maintenance paid then apply
the new formula to a sample of the current case load and then
gross that up. It is reasonably robust in relation to the current
case load. What we have not attempted to do is to throw numbers
forward to the numbers that might apply in 2001 for example.
12. What about those currently not paying
if that is just for those who are paying?
(Mr Street) This is for those that have an assessment.
The modelling is around assessments. As the Minister said, one
of the key factors here is that under a simpler system we would
expect to get a higher cash compliance figure, so that although
the assessments may be lower, we may expect to get more actually
paying. The gainers and losers, the 70 per cent figure, is around
assessments rather than amounts actually paid. It also does not
take account of the increased case load that we might expect to
get from a simpler formula. At the moment only around a fifth
of all lone mothers on income support are having maintenance paid
in respect of their children. A factor there is that a significant
number come on to the books and go off the books before the Agency
has actually got round to making an assessment. We think with
a simpler formula we can get the assessment in place much more
quickly, we can get the maintenance flowing, so we would expect
the current 200,000 figure to more than double over a period of
time. Again, you might describe those as non-resident parent losers,
but essentially they are people who are not paying at the moment
but who we will get paying under the new system. There are those
two elements.
13. Perhaps this is for Baroness Hollis.
What do we say to the 30 per cent of those who are paying at the
moment who we expect to pay more?
(Baroness Hollis) I think we are actually saying
at the moment that only about just over half of all non-resident
parents are assessed though. We want to bring the rest back into
the system. Of those who have been assessed about 40 per cent
are actually paying, about 30 per cent are paying partially and
about 30 per cent are not paying at all. We need to get them to
pay. What we will be saying to them is that those who will be
paying more—and this is where the swings and roundabouts
come in—will tend to be those who currently have high housing
costs. That is the biggest differential because housing costs
can vary between nought and £150 obviously, and at the moment
we do not propose to build that into the projected formula. We
say two things: first that for the new case load you would be
taking on your housing costs in the knowledge already of what
your rate would be for your child support and you would do what
every other married couple has to do: determine what you can afford
in housing knowing what your income and what your responsibilities
and what your outgoings are. We do not think that is unreasonable.
We think that is what people expect to do. For the existing case
load where obviously we are concerned that there should not be
a sudden impact because we are stripping out housing costs from
the projected formula, we are proposing—and this is in the
Green Paper—a cash phase-in. So that if for example something
like 50 per cent of all the losers would lose £10 or less
in additional payments, they would phase that in by £5 a
year, so it would take two years to reach that sum, and all of
the evidence we have suggests that people's incomes vary by that
much from year to year in any case. New people we would say go
into their housing costs knowing already what their prior obligations
for child support are. For the existing case load we would expect
to phase it in.
14. In terms of the treatment of second
families, the Green Paper refers to two possible formulae for
dealing with that. Do the Government have a preferred option between
those two?
(Baroness Hollis) I think the preferred option
may depend, and, as I say, this is very much a Green Paper issue
for us, on what you consider a second family to be. The two methods
are these. Obviously you can say that there is one child in the
first family and he has no other children. He will pay 15 per
cent of his income. If he has one child in the first family and
a natural child in the second family, only one, you can either
say that represents two children, 20 per cent, therefore he pays
10 per cent to the first family and the other 10 per cent is built
into his residual income, the second method is that you dock the
15 per cent off his income and you then charge 15 per cent on
the residual income after you have docked off the 15 per cent,
which would mean he would pay slightly more (12 per cent rather
than 10 per cent) under that system to the first family. We might
want, following consultation, to do a read-across to what counts
as a second family. In other words, if it is only his natural
children that are taken into account as second family, we might
prefer the system in which we add the two together, 20 per cent,
10 per cent and 10 per cent. If however it seemed better, decent,
simpler and fairer to include not just the biological children
but the stepchildren as well, then it might be sensible to do
the other formula, which is to build that into the income and
then slice off for the first family, which means that there is
a slight preference in the financial treatment to the first family
I think we could do the read-across between those two.
Chairman
15. I know that Patricia Hewitt has some
questions about joint custody which revolve around the formula,
but I always get a bit nervous with Ministers who are asked for
justification of a policy decision and say, "It felt about
right".
(Baroness Hollis) Yes.
16. Are the bands, the top slice bands,
negotiable within this Green Paper process? I tell you why, because
I actually think the Government got this wrong. This is my personal
view. I remain willing to be convinced, but I think that if you
are going to establish Malcolm Wicks's culture of paying within
the next year, which is what we have got in order to try and get
this done properly, I think that you would have a much better
chance of doing that if you set the rates at a lower level, do
away with tribunals, appeals, departures, reviews, every other
thing under the sun and just have it moronically simple, straightforward
and set at such a level that nobody can legitimately contest it.
(Baroness Hollis) What figure would you have in
mind?
17. Ten-ish.
(Baroness Hollis) Who is going to pick up the
bill? The parent with care getting less money or the Treasury,
that is, other parents paying for their children? Somebody in
that case has to pick up the tab and unless you are willing to
say to parents with care, including those not on benefit, "You
are going to get less money", or unless you are willing to
say to other parents as taxpayers on the same level of income,
"You will pay through your taxes for that support",
somebody has to pick up the bill. Why I say it was gut instinct
is that it was a balancing of those three points of the triangle,
reinforced as I say by quite a lot of detailed information about
what the situation is abroad as well as the research that went
into the debate about lone parents, and that was why we came to
that figure. If there is a different rate or a lower rate we have
to be given a steer as to who should foot that deficit.
Mr Wicks
18. If we could all pay 10 per cent I would
support the Chairman but some of us pay rather more.
(Baroness Hollis) That is our dilemma. It is a
dilemma.
Chairman
19. It is a dilemma, but there are ways
round most of the things you say. I admit that probably in the
long run it would cost the Treasury some money but the prize that
could be won for that is actually getting this culture payment
into the system which does not exist, and I think with rates of
25 per cent you are going to find people emigrating, finding ways
round, abusing the excellent idea of tribunals, support, and you
will end up with the same kind of difficulties that you have at
the moment.
(Baroness Hollis) May we argue?
1 See Ev. pp. 18-19. Back
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