Examination of Witnesses (Questions 200
- 221)
WEDNESDAY 15 SEPTEMBER 1999
MR NICHOLAS
MOSTYN QC
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 supportedwhich is our
first aimis 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 motherwe
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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