Select Committee on Social Security Minutes of Evidence

Examination of Witnesses (Questions 200 - 221)



  200. It is to do with the board and lodging of the child and not the education. It is the level playing field and I do not see any distinction there.
  (Mr Mostyn) You do see a distinction.

  201. No, I do not. My concern is that what you are proposing ends up so complicated that we end up with the continuing unfairness of the present system, which is delay and uncertainty. One thing that I think everybody agrees with that is coming out of the White Paper is that the delays will be coming down if all goes to plan and a lot of the uncertainties of the present system which leads to these horrendous arrears months afterwards will disappear. As I see it what we will end up with with what you are proposing is a lot more tribunal hearings, a lot more delay and the continuing problems. Injustice arises in a number of ways, we know that from the work that Lord Woolf did on the civil justice review in that we have there the trade-off between speed, ease and cheapness of the system, a cheap and cheerful system, as opposed to producing rough justice results for a number of litigants at the other end. The overall view that came out of that was that is a trade-off we would have to make to get things moving. Do you disagree with the basic philosophy behind those proposals?
  (Mr Mostyn) Lord Woolf's proposal was you have to strike a fair balance between administrative efficiency and the right of individual justice. I do not believe that the crude simplicity of this formula coupled with the extraordinarily restrictive grounds for departure does strike that fair balance. I do not quite follow where you say that you should draw complexity from my proposals. There is no complexity in my proposals whatsoever. I do not have any particular problem with the basic proposal for the formula, I am simply saying that in so far as the formula is concerned there should be two specific qualifications made, which is that there should be a cap on liability for the reasons I have explained, and it amounts to crude social engineering and in fact seems to me to be directly contrary to what Mr Field was saying in the debate on 8 February 1998, but be that as it may. The carer's income should be taken into account and that can be done in a very simple way as the Australians have proved totally successfully and without complaint in that regard since 1989. So there is no complexity there. In regard to departure, I am not suggesting any complexity, I am suggesting that perhaps in addition to the ones that have been proposed there should be four or five further heads of departure. I do not see why you have suggested I am suggesting complexity, I would have to disagree with you.

  202. The last point I want to put to you is the issue of the maximum ceiling. I see in your summary you summarise your view by saying that children do not have the right to share in their parents' income. I do not know where that comes from, perhaps it is your personal assertion or your Association's assertion. Could I put it to you that other people may think, for example, that children have a right to share in the prosperity of the family as the family's circumstances change.
  (Mr Mostyn) I would suggest that if you are going to invent a specific statutory right for the child to share in its parents' income you must be very sure that is what you are intending to do and you must be very clear of the consequences. Does it mean, for example, that when my youngest child, who is now one, turns 21 he can sue me for an account of the 15 per cent of my income that he says he should have received over the previous 21 years? The fact is, as Mr Field made clear in the debate, the principle that is enshrined in the CSA, and he said this: "Members are as committed to the principle enshrined in the CSA as we have ever been: a child's right to be supported—which is our first aim—is crucial." A child has no more right than the right to be maintained or supported. If you are going to push that further and say that the child has a right to share in the income of the parent, no matter how large, it may or may not be a good social thing but you should realise the consequences of what you are proposing. In terms of English law and social experience it would be a change of massive social profundity. It will go beyond, for example, the Roman law idea of legitim, which is your guaranteed right of inheritance. It will go beyond that because it would be inter vivos. It seems to me that you have got to understand the profundity of what you are suggesting.

  Chairman: Between living people, thank you.

Mr Leigh

  203. Congratulations on your paper which I think is very well argued and cogent. Can I just try and deal with one or two points. In paragraph 9.1 you say: "The Government has never explained from where its new rates of 15 per cent, 20 per cent and 25 per cent have derived. I suspect that they have been plucked out of the air." You go on to say: "The Government's own figures admit that there will be significant reductions in the average assessment from £38 to £30.50." This is what worries me because if this is true, and we have not yet had any evidence to this effect so far, there is going to be an enormous political row, people are going to see their level of maintenance reduced and they are going to become a greater charge on the state, are they not?
  (Mr Mostyn) That is self-evident. If you turn to my Annex A.1[57] I actually think the percentage reduction is going to be more than the Government says. I have done a lot of numerical work. I have taken a father who earned the mid point between the average male manual wage and non-manual wage in 1998, that is half way between the two figures, about £20,000 a year, so you could not have a more average earning, and I have assumed that the mother has no income at all. The rate of child support for one child who is aged seven under the present proposal is just under £80. The rate under the new proposal is £47. It is a reduction of 40 per cent in this very standard case. The child will be the person who suffers. If this is a benefit case it will be the taxpayer who suffers that £32 loss. I do not believe that the consequences of this have been considered at all.

  204. I think this is a question that we need to put to Baroness Hollis tomorrow. I think it is a very important point.
  (Mr Mostyn) I should say what Baroness Hollis's response will be, because when I put it to her she said that the simple formula will lead to more compliance and so the higher rate of compliance will mean that the Treasury take will be more. My response to that is "what about Australia?", as I have already indicated. I think there is a risk here that the taxpayers, by which I mean people living in unfragmented families, are going to end up paying more for the support of children of fragmented families than they are at the present time.

  205. Thank you for that. On this question of compliance, everybody else seems to be saying to us "well, any kind of social security system is hopeless, you are never going to get compliance with it, it is a lost cause" but you seem to be arguing against this. In 9.4[58] you say: "Research in the USA has shown that the rate of compliance is much more reactive to the robustness of the enforcement procedures, and that where imprisonment, removal of driving licences and publicity in the local media are deployed against defaulters the rate of delinquency falls dramatically." Are you suggesting that perhaps one thing we should do, therefore, before we have any dramatic reform is that we should increase the resources available to the CSA for compliance given the extra powers that are envisaged in the White Paper and see what happens? We might find that there would be a dramatic fall in the level of people who pay nothing.

  (Mr Mostyn) Before you make root and branch reform you should be considering very carefully whether you do not need to make more minor reforms. In fact, we have done all this before in child support when we were considering capital settlements. There was a big argument with regard to capital settlements, should we have a departure system to deal with them, and the Government, in my view wisely, said "why do we not see if we can insert an allowance into the formula to deal with the problem before we go down the route of primary statutory reform?" In fact as it transpired, and as I think the statistics show, the improvements that were made to the formula by that dealt with the problem. It seems to me that the enforcement procedures and powers do not go nearly far enough as presently constituted. If you are in PAYE employment there is no problem because deduction from earnings will address the problem without difficulty. If you are not in PAYE employment the enforcement procedures that are available are basically the same that are available for people who do not pay their Council Tax or their television licence, they are ultimately brought before a magistrate's court, a liability order is obtained and then in the last order a period of imprisonment could be imposed but it is a civil period of imprisonment. In the United States of America it is a specific criminal offence not to pay child support, it is a crime, you get a criminal record in certain states, in Utah and Ohio I believe, if you do not pay your child support. You can be tried by jury with imprisonment of up to five years if you do not pay your child support. You can have your driving licence taken away and your passport impounded. Research has shown that where you have draconian measures the rates of compliance have gone up considerably. All I am saying is I am not at all convinced that there is necessarily a causal connection between the complexity of the formula and the rate of compliance. I think that more research has to be undertaken in that regard.

  206. Thank you. Carer's income left out of account: again we are told by the Government "oh, this is all far too difficult, you cannot possibly take account of the carer's income or the spouse of the carer, the new spouse". You have referred to the Australian system in 10.4 and I think this is very important because, as I said earlier, these are the constituency complaints that we are constantly getting all the time, "I've been asked to pay, but no account is taken of my ex's income". Can you just explain how this Australian system works?
  (Mr Mostyn) It is terribly simple. They have a percentage system, although it is done on gross income rather than net income. It is done on the gross income that is reported to the Tax Office in Australia, but the father's gross income is reduced if the mother's income is above a certain level. That level is the average national wage. If the mother's income is above the average national wage, the father's income is reduced dollar for dollar by every dollar that her income exceeds the average national wage. It is simple really.

  207. So when you put this to the Government, what has been their response?
  (Mr Mostyn) They said it was too complicated.

  208. But if the Australians do it, why is it too difficult here?
  (Mr Mostyn) You may well ask why.

Dr Naysmith

  209. Are you putting this forward as a model?
  (Mr Mostyn) Yes, I have.

  210. Even though you also said earlier on that the rate of compliance was much lower than in this country?
  (Mr Mostyn) I am not suggesting that the Australian system should necessarily be adopted lock, stock and barrel, but I am suggesting that aspects of it should at least have been looked at and you will not find a reference to any part of the Australian system, which is in a sense the paradigm, and it was the first agency-based system. I have suggested that that particular aspect, or I have made a suggestion as to that aspect of the Australian system being adopted here, but what I am saying is that it may well be appropriate to adopt the Australian system or something like it. My own view is that the Australian system has not got a proper rate of compliance because their enforcement measures are not robust enough. Like ours, their enforcement measures are not robust enough. My strong view is that compliance is causally connected directly to the robustness of the enforcement measures.

Mr Pond

  211. You suggest when we ask Baroness Hollis tomorrow those questions what she would say about the Australian system, so, like other Members of the Committee, I would like to dwell on that for a moment. You have kindly appended to your submission to us a letter from Mr Justice Kay, a judge in the Appeal Division of the Family Court of Australia. Now, I assume that his letter is appended because he is generally critical of the system there, but he does say, "Looking through your Green Paper I observe and applaud a move to a simpler formula", although he does say that we need ways of tying it to the complexity of particular circumstances, and he does say also in the letter, "There is no doubt that child support payments have increased dramatically in quantum since the system was introduced. There is no doubt that collection rates are way up." Now, is that precisely the point that Baroness Hollis, you tell us, will be making, that in fact although the average payments on an individual basis will go down, there will be far more of those individuals who will be receiving the payments?
  (Mr Mostyn) You made a number of points there, if I might respond to as many as I can. Firstly, I am not critical of the concept of simplification of the formula and if you sense that I am critical of the proposals to simplify the formula, I am not critical of that at all and I think the present formula has become Byzantine and is incapable of sensible management. You need a computer program to do the calculations and that is not acceptable, in my view, and I concede that, so I want to make that clear, but Baroness Hollis, I do not know what she is going to say and I cannot speak for her of course, but her response to me when I spoke to her was that the Australians had a lower rate of compliance. Now, what I infer from that is that more people are refusing to pay in percentage terms than are refusing to pay here.

  212. I do not think that is what Mr Justice Kay is saying in his letter.
  (Mr Mostyn) Mr Justice Kay is saying that the rates of compliance in Australia have improved since they introduced it in 1989 to what the position was under the court-based system prior to that.

  213. Do you believe that the reverse experience will be the case here?
  (Mr Mostyn) No, I believe that an agency system has improved rates of compliance to the court-based system because the courts' methods of enforcement were Victorian and hopeless, so I have no problem with an agency-based system and the agency doing the enforcement at all and there is no doubt that more people are paying child support now than they were under the old court-based system in this country and in Australia. That is true, but we have an agency system, the Australians have an agency system, their formula is very simple, ours is very complicated, but more Australian customers of the system fail to comply than ours.

  214. Could you give us an indication either now or in a note as to why it is that you believe your figures on the reductions in payments are so different from the Government's and indeed perhaps you could just explain to us now why you use this odd formula of taking somewhere between the average, the mean earnings of male manual earners and of non-manual earners when in fact the figures are readily available for mean earnings for all earners together? Why did you take a median point between two averages in that way as part of your submission?
  (Mr Mostyn) I was trying to apply Occam's razor here in a sense and take a very simple example and I was trying to choose the father on the Clapham omnibus and it seemed to me that the father on the Clapham omnibus could equally be a manual worker or a non-manual worker and so for the purposes of illustrating the reduction that the new formula will achieve, I took the mid point between the average earnings for a manual worker and the average earnings for a non-manual worker.

  Mr Pond: As a result, you ended up with individuals about 70 per cent way up the earnings distribution which I do not think would be the man or woman on the Clapham omnibus. Perhaps you could clarify for us in a note as that would be helpful.[59]

Mrs Humble

  215. First of all, I would just like to explore a little again the issue of the parent with care and whether or not his or her income should be taken into account. Unlike Edward Leigh, I think I have only had one constituent come to me complaining, one non-resident parent complaining about the parent with care and her lifestyle and the majority of my constituents fit into the statistics that we have here and they are on very low incomes. One of the issues about not taking the parent with care's income into account is to do with the lifestyle the child would have enjoyed if the two parents had remained together, so if the parent with care did actually have a substantial income and the non-resident parent also had a substantial income, when the two were living together the family enjoyed an even more substantial income and the child was the beneficiary of that. Now, we all know that there may be very wealthy people who are also misers and lead lives of austerity, but when I have raised this as a point, I have been told that one of the reasons why the parent with care's income is not taken into account is that lifestyle point, that the mother—we will say the mother for the sake of the argument -is contributing towards looking after the child and maintaining a certain lifestyle and if she had still been with the father, they would have been living as a family unit and the child would have enjoyed all the benefits of that family unit and that lifestyle. If you reduced the maintenance to the parent with care, the child would then no longer enjoy the full fruits of the lifestyle that he would have enjoyed if both parents were together. Does that make sense?
  (Mr Mostyn) I think it is basically the same argument that the Government has advanced to try and support this, what I regard as an extraordinary proposition, namely that the father should pay the same whether the mother is on benefit or whether she is earning an enormous salary in the City. We do not know whether the parent with care is going to shower the child with largesse from her income, which is the argument that the Government have adopted, that you should leave her income out of account, but at the end of the day, as I keep saying, a system will only work if it is perceived to be fair. Fathers will not perceive it to be fair if they have to pay the same whether or not the mother has no income or a massive income and fundamentally all of these proposals are part of a social contract between the Government and the people and it will not work unless the people perceive it to be fair. I have to suggest that this is manifestly unfair.

  216. So your arguments all centre around the parents? Should they not centre around the child and why should the child lose out because his or her parents have separated?
  (Mr Mostyn) Why is a child losing out? Because the maintenance is computed taking into account the income of the custodial parent.

  217. Because that maintenance may then be lowered as a result of that computation.
  (Mr Mostyn) But by the same token there is going to be more money in the residential household to make up the difference, so it balances. So the child is in the same position that he would have been had the mother had no income.

  218. Your argument, as I understood it, was that the parent with care would receive less maintenance from the absent parent if her own income was above a set level so that child would lose out because the absent parent would be paying less.
  (Mr Mostyn) The non-residential parent, as we are bidden to say now, would be paying less but the reason he is paying less is because the parent with care has more.

  219. We are going to go around in circles here.
  (Mr Mostyn) This leads to the same point: are you dealing with maintenance here or are you dealing with clandestine transference of wealth from parents to children? A child can only require a finite amount of support, that is recognised in the existing statute, there is a level above which you cannot pay. A child can only need so much maintenance. If the agenda here is, in fact, clandestinely, and I would regard this as of enormous social profundity, to achieve transference of wealth from one generation to the next mandatorily in circumstances of a broken family then your arguments may well be valid. If that is what is happening we ought to be told.

  220. I think we could talk about this for a long time but the Chairman will not let me. One last question. The letter from the Family Court of Australia makes reference to the fact that child support is based in the Australian Taxation Office.
  (Mr Mostyn) That is their Inland Revenue.

  221. We have heard earlier from other organisations who have put forward the notion that our Inland Revenue should be running the CSA. Do you agree with that proposition?
  (Mr Mostyn) Apparently when Mrs Thatcher hawked about the proposed Child Support Agency she said "Social Security can have it, the Lord Chancellor's Department can have it or the Treasury can have it" and the Lord Chancellor's Department and the Treasury said "we do not want it" and it ended up with Social Security. I think if it had gone to one of the two other organisations we would not be in the position we are now.

  Chairman: Thank you very much, this has been a very interesting session. Thank you very much for your written evidence as well which we will study with care in the course of the rest of our inquiry. Thank you very much for your attendance.

57   See Ev p 72. Back

58   See Ev p 63. Back

59   See Ev p 86. Back

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