Examination of witnesses
(Questions 20 - 39)
WEDNESDAY 22 JULY 1998
BARONESS HOLLIS
OF HEIGHAM,
MR MIKE
STREET and MRS
FAITH BOARDMAN
20. We have not got time to continue this
argument at the moment.
(Baroness Hollis) Spoilsport.
21. I am not running away from it either.
All I am saying is that the Government are willing to contemplate
arguments that would look at different rates of payment, if I
can get an assurance from you that that is still possible.
(Baroness Hollis) Put it this way. I do think
that if that argument is advanced also what has to be advanced
is where that money is to be found. What we are saying about our
formula is that if he has a child in the first family, a child
in the second family, he is left with 87 to 88 per cent of his
take home pay in his pocket. I do not think myself that is an
unreasonable rate to pay for your child in your first family,
but that is what our formula would deliver. By all means—obviously
we will expect representations. I am quite sure some of the non-resident
parent groups may wish to see a lower figure and it may well be
that some of the lone parent groups would wish to see a higher
figure, but anybody making those representations do need to tell
us how that triangle is going to become a circle.
(Mrs Boardman) If I might just add something from
the operational side of things, our experience is that it is not
just a matter of how much they are asked to pay in terms of how
compliant they will be. One of the major issues is quite clearly
how quickly we can actually provide the assessment and therefore
how much of a debt do they start with. The fact that we can take
up to six months at present means that the majority of non-resident
parents are starting with quite a sizeable debt and because the
formula is so complex they are not well able to guess in advance
what that will be and put money aside, and that is one of our
worse compliance issues because you start from the wrong position.
(Baroness Hollis) One final point: the absent
parents at the moment who have the highest assessment are the
ones most likely to pay because they tend to be the older men
who are divorced, in jobs, possibly with a better education, stronger
investment perhaps in their children, are coming out of a divorced
relationship rather than from a cohabiting or more casual relationship,
so it is not true that those who have the lowest assessments are
more likely to pay. In fact the reverse is true.
Ms Hewitt
22. Can I say that I particularly welcome
the starting point of this Green Paper because the principles
are all about families as well as finances. The first principle
you set out is that all children have a right to emotional and
financial support from both their parents wherever they live.
That seems to me absolutely right. But I think it may well follow
from that in practice that if the culture changes in a way that
leads people really to accept the truth of that principle, we
are going to see more arrangements for joint custody, joint residence,
and I must say I am disappointed that the Green Paper actually
says almost nothing about the fact that parents, although they
live apart, share the care of their children. There are two paragraphs
on page 27 about it. What I am not clear about and what I would
like to probe is, what happens in a situation where the parents
are both in legal terms the resident parent; they have joint custody,
joint residence of their children, and in practical terms the
care is shared 50/50 or thereabouts and the children are spending
roughly equal amounts of time staying in each parent's home? What
is the effect of this proposed reduction in the formula? How much
maintenance would be payable, if at all, from one parent to the
other in that situation?
(Mr Street) Under the formula as set out there
we would offset the non-resident parent's maintenance payments
by one seventh for each night that he has care of the children,
so if it is exactly equal he would pay three and a half sevenths
of his maintenance to the first parent, normally to the mother.
There is an argument which says your starting position should
be that joint custody means that no maintenance passes from one
to the other and you could achieve that by allowing a deduction
of two sevenths for every night that the non-resident parent has
the child. That clearly is an option that Ministers may want to
consider during the consultation process. The difficulty there
it seems to me is what happens when the first parent, the mother,
is on income support and the father is actually in full time work
and earning a decent salary? Is it right in those circumstances
that no maintenance should pass from one to the other? If you
then start to say, well, no, in those circumstances we will look
at the mother's income and the father's income and we will then
do some balancing act, you start to get back into the complexities
of the current formula and you end up back where you started.
23. That is very helpful and I think there
is a real problem where one parent is in full time work and the
other is on income support because it is not obvious in that situation
that the parent in full time work should not be paying the full
bill as it were for child support, but if you take the situation,
which may well be more common in future, where both parents are
in employment and both parents have in legal terms residence,
this is joint residence, how will you decide who pays 50 per cent
to the other parent, or will both parents pay 50 per cent to each
other?
(Baroness Hollis) We have obviously discussed
this previously. These are some of the questions we are going
to have to work through in greater detail later on, but at the
moment the rate that we are proposing is based on sevenths such
that if somebody spends one night one seventh comes off, two nights
two sevenths comes off, which is why I say on three and a half
that half would come off, which is what Mike was expressing. Given
that just under 70 per cent, 65 to 70 per cent, of the existing
parents with care are on income support and the next 15 or so
are on family credit, then we are only talking about 10 per cent
of parents at the moment who are not on benefit at all to whom
that could apply, of whom some are in work, others have re-partnered,
and of those in work only a very small proportion would be going
in for parallel parenting, to describe your situation, and have
broadly equity of income. We would want to look at that but clearly
what we do not want to do is re-build in a lot of complexity for
a very tiny number of situations. There are different approaches
and one of the points of having a Green Paper is to test what
the support is for different kinds of approach.
24. That is helpful, and I would encourage
you to go back through that process and indeed to invite further
views on it because I do think there is a problem. The starting
point here is absolutely right, but it is a starting point that
underlines the desirability of shared residence and shared care
and that is not then a kind of tricky little exception to the
rest of the system. It actually ought to be the starting point
for how you want maintenance to work and yes, it is a minority
of parents at the moment but it ought to be, given the starting
point of the Green Paper, a growing number of parents in the future.
(Baroness Hollis) We might be talking of one per
cent or something like that. That is perfectly true.
25. I think it will get higher than that.
The other issue I wanted to raise (which is a slightly different
one) on the formula comes back to how we move the existing cases.
My surgeries, like those of my colleagues, are such that I now
get more CSA cases in a typical surgery than any other subject,
which is very depressing. It has really increased in the last
year. So far I have been able to say to people, "The Government
is in the process of sorting this out. I will let you have a copy
of the proposals when they come." But of course I am now
having to tell them that it is going to be several years before
the new system takes effect and, given that most of us recognise
that these are typically couples or halves of couples having very
good reason to complain, they are often people who have got substantial
arrears, usually because of the delays of the Agency. It appears
that in most cases the arrears are wrongly calculated. Is there
any scope for or would you be willing to consider enabling couples
to opt in to the new system, and I mean by "couples"
the two parents concerned, providing that the parent who has to
pay the maintenance signs up for a direct debit or attachment
of earnings order or something that guarantees you are going to
get the payment, and provided there is agreement about the arrears
which in my experience normally the CSA reduces substantially
and it comes up with a more realistic figure?
(Baroness Hollis) I will ask Faith if I may to
comment on the new situation, but if you have people opting in,
clearly they have a choice as to whether they opt in now if they
are not on benefit because there is no—I was going to say
public policy; no Government public policy interest in the level
of maintenance that they negotiate. Therefore, I am not sure that
we could say, I mean, I do not think one could say as Government
that parents have a right to opt in if they agree that he should
pay only a small sum because it made no difference to her because
she was on benefit anyway; the taxpayer would then be picking
up the bill.
26. That is not what I mean. I mean opting
in——
(Baroness Hollis) From the existing formula. Yes,
forgive me. Again, I think the problem there is that there are
three parties: the two parents and the Treasury. Our expectation
would be that if parents were on benefit we would have to expect
them to go on to the new formula but if they were not on benefit
they could choose whether they went on to that formula or not.
What one would not do is have a situation in which he wants to
go on to the new formula because he pays less and she does not
want to go on to the new formula because she will as a result
get less. That is our dilemma. If somebody is on benefit we do
not think it is an option whether they opt in or not because if
it is to the two parents' advantage that they opt out of it, it
is to the Treasury's cost, but once you are dealing with what
we call private cases then it is indeed a personal choice and
they need not choose the CSA at all.
Chairman: Time is progressing. Miss
Julie Kirkbride would like to ask some questions about appeals
and variations.
Miss Kirkbride: Before I come on
to that I do want to press a little bit more on some of the things
that have come up. First of all I very much appreciate your opening
remarks which I thought were very fair and I agree with them entirely,
but I do not envy your task nevertheless. I was a bit concerned
about the reasons why people go to their MP. Mr Street said that
50 per cent of the losers would lose only £10, and I just
wondered how big the loss might be for the other 50 per cent.
What is the highest loss you expect?
Chairman
27. If it is easier to use notes for these
things, please feel free to send us a note.
(Baroness Hollis) I shall let you have a note
on the breakdown.
Miss Kirkbride
28. Can you remember the proportion of it
and the scale?
(Mr Street) What was the breakdown you were after?
29. It is the breakdown of the losers that
you have calculated——[2]
(Baroness Hollis) Which ones? Parents
with care or non-resident parents?
30. The non-resident parent.
(Mr Street) The non-resident parents who are losers
and how much they would lose. There are some over £50.
31. A week?
(Mr Street) Yes, 800 out of a hundred thousand.
32. Eight hundred out of a hundred thousand
would lose——
(Baroness Hollis) Of a hundred thousand losers
800 of them would lose over £50. That is the high housing
cost ones.
(Mr Street) They are going to be predominantly
those with very high housing costs at the moment, so that because
of their high housing costs they pay very little maintenance if
any at all. If you move to a formula which does not explicitly
recognise housing costs they will become liable for more maintenance.
33. And how will they be dealt with?
(Baroness Hollis) Phasing in by £5 a year.
34. Five pounds a year, so it would take
a long time to pay, so their children would have grown up by the
time the deficit was paid.
(Baroness Hollis) It is a Green Paper. If there
is a better and more appropriate way to do it we would like to
know. Our difficulty is that if you do build in housing costs,
because housing costs are an urban problem you have to build in
travel to work costs, which is a rural problem. Once you do that
you have gone three-quarters of the way to re-inventing the current
CSA. That is our dilemma and that is why we thought phasing in
was the decent way to do it, but obviously we would take views
on this. Fifty thousand of the losers would lose less than £10
on this. We can give you the breakdowns.
35. That is interesting in itself.
(Baroness Hollis) Just 800 are at the very acute
end of all the total of non-resident parents.
Chairman: It is very difficult to
describe tables in a short space of time. If we could have a note
that would be extremely helpful because it is an important point.
Miss Kirkbride
36. Another thing was that the exemptions
from the minimum payment would be abolished and that would mean
that 60,000 non-resident parents receiving benefit would become
liable. Can you just explain what that is?
(Baroness Hollis) Yes, and these are the people
who are least likely to pay, those who are on JSA required to
pay £5 to support their first family, but if they have a
second family or if alternatively they are on, say, a disability
benefit which actually can be considerably higher than JSA, they
pay nothing at all. If they were in an intact family that increased
income that non-resident parent was getting would be shared equally
by the family. We therefore think it reasonable that they too
should come within the £5 slice if their income is under
£100 a week.
37. Does that leave anybody in a position
where they do not pay anything at all?
(Baroness Hollis) I do not think so. The expectation
is that every non-resident parent who has a child of a first family
makes a contribution however nominal to the maintenance of that
child.
(Mr Street) There will be some where they have
no income at all, maybe where they have re-partnered and they
have no income. In those circumstances clearly you could not take
the £5 but otherwise——
38. Those who have re-partnered but have
not got the benefit?
(Mr Street) Yes, re-partnered, their partner is
working and they have no income of their own. Clearly you could
not take a contribution. That would be the only exception.
39. I just wanted to press a little bit
further on how you are claiming this is revenue neutral because
in some ways it is more generous and I just wondered whether that
stacks up. Can you tell us at the moment how much money is raised
by the CSA and which goes to the Treasury in return for income
support benefit payments?
(Mr Street) Last year about £545 million
was collected. The benefit savings figure was £465 million.
2 See Ev. p. 19. Back
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