House of Commons - Social Security

Select Committee on Social Security Minutes of Evidence

Memorandum submitted by the Solicitors Family Law Association (CS 34)

THE "ONE PAGE SUMMARY"

(1) The critical flaws of the proposed scheme are:

(a) imposing Child Support Agency jurisdiction on all families, regardless of the agreement of the parties and whether the state is providing support through the provision of welfare benefits;

(b) fixing a "tax" without limit on the income of the non-residential parent (regardless of the needs of the child);

(2) The results will be:

(a) injustice because of the operation of a fixed formula which fails to take into account relevant circumstances;

(b) hardship as families negotiating comprehensive settlements must shoe-horn their arrangements around a fixed point given by the CS formula;

© a return to the custody battles (now "residence") of the 1970's and 1980s, causing damage to children as they are caught in the middle of financially motivated court applications to decide where they should live;

(d) a return to the access battles (now "contact") of the 1970s and 1980s, because of the financial impact of visitation on payment.

(3) The solution lies in:

(a) identifying the real justification for the crude fixed tax approach proposed. The Association says that where the tax-payer is funding the residential parent through welfare benefits then the Government is entitled to impose a fixed tax approach to protect the tax-payer. However, that means that the new scheme must differentiate between the welfare benefits family (where the proposed scheme will apply because it is the only viable scheme that can be developed) and the family providing for its future from its own resources (where the state does not have the moral authority to deny families the right to regulate their own affairs with the approval of the court). This must lead to:

(b) giving the court exclusive jurisdiction to fix child support payments where it is involved in finalising a package of provision;

(d) recognising that the costs relating to a child do not stop because the child stays with the non-resident parent. There is no overwhelming case for there to be a link between contact and payment. Creating that link is likely to:

There must be no link between contact and payment.

(4) There are many other issues of principle in the detail but it is inappropriate to address them until these fundamental points are resolved. The Association would welcome the opportunity for involvement over those issues as the process moves ahead.

INDEX


para no	topic

1-5	The SFLA and the scope of this presentation
6	In table form, the keys problems and suggested solutions
7	Characteristics of the proposed scheme
8	Key elements of the proposed scheme
9-12	Why a reformed CS scheme must mesh with other parts of the financial package
13-17	Placing children in the war-zone; the problem with linkage
18-19	The differing philosophies; choice for parliament
20-21	The detail of the solution—what are the options
22-23	Annex 1—a simplistic model of what lawyers do at divorce
26-38	Annex 2—a list of characteristics of families for whom the formula might work unjustly
39	Annex 3—bill wording to differentiate the "welfare" case from the "independent" case

THE SFLA AND THE FOCUS OF THIS PRESENTATION

1. The Solicitors Family Law Association is an association of about 4,000 practising solicitors in England and Wales held together by commitment to a code designed to promote the conciliatory, constructive and cost-effective settlement of all issues arising at family break-down. Where in this paper, court powers are referred to, generally what is being considered are the settlements negotiated by solicitors in the shadow of the court process.

2. Most solicitors holding themselves out as family law experts are members. Most of the work undertaken by the Association's members will generally relate to families where there are resource issues to address or where there is conflict as to arrangements for children. Many of our members are also mediators; the Association is committed to the promotion of mediation as a means of resolving issues when families separate.

3. The Association has had the benefit of many meetings with the Minister and her representatives and is grateful for the time that the Minister has given. The Association believes that the Government may have half a solution to the problem but is concerned at its refusal to adopt the Association's proposals which would provide the other half.

4. The Association recognises that it speaks a different language to government; government talks statistics. The Association can only relate its day to day experience of working with separating families. The evidence of this paper will therefore have an anecdotal feel. It is hoped that the members of the Committee will recognise that this perspective does nonetheless have weight and will consider carefully the views we expresses. The Association was involved as the 1991 Act arrived; it sees the new scheme as more flawed and more likely to attack than its 1991 predecessor.

A presentation[60] limited to the crucial issues

5. The members of the Social Security Committee face a daunting number of presentations from a wide range of bodies. The detail of the legislation will require careful thought and the Association hopes that it will be given an opportunity to help over any bill and subsidiary legislation. However at this stage, it is only broad principles that will be addressed. The detail cannot be focused upon until the crucial issues are addressed. The Solicitors Family Law Association aims to avoid covering points that are likely to be addressed by other speakers it therefore focuses on the simple solutions that could be brought to avoid a second child support debacle.[61]

6. PROBLEMS WITH THE PROPOSAL—SUGGESTED SOLUTIONS


Problems with the proposal	The Association's "Solutions"

1. The philosophy of the new scheme will render unworkable for many separating families the other financial arrangements made at separation eg by the divorce courts.	A Differentiate between the family depending on welfare benefits in the future (the state supported family) and the family providing for its future from its own resources (the independent family). Allow the independent family the freedom to make its own arrangements (as is the case at present) B Impose a ceiling on the percentage "tax" taken from the Non-resident parent income. Retain for the court the jurisdiction to make "top-up" orders in these higher income cases.

2. The scheme will encourage the old style "custody battle" by its increased linkage between staying with one parent and what that parent pays	C Abandon this aspect of the proposal entirely.

THE CHARACTERISTICS OF THE PROPOSED SCHEME

7. The Association sets the government's proposal against the scheme of the 1991 Act in broad strokes:


Characteristic	The 1991 Act	The New scheme

Transparent and understandable	Absolutely not.	Certainly.
Swift	No.	Capable of producing prompt results.
Accurate	Often not.	Potentially high degree of accuracy.
Effective	Insufficient resources seem to have been made available for enforcement so that many are able to avoid their obligations.	The reduced effort required in information gathering and in calculation might well enable resources to be committed to enforcement, which is to be welcomed.
Fair	Often not, but the scheme was an endeavour to develop a formula reflecting on the one hand need and on the other ability to pay. (Indeed it was these efforts that led to the labyrinthine complexities, backlogs and errors which still dog the current scheme).	The new formula will be rough justice indeed. Parliament may conclude that this is acceptable in some cases.Where the tax-payer is supporting the family through the payment of welfare benefits, then perhaps a fixed rate "tax" on the earning and non-residential parent is appropriate. The Association hopes that parliament will recognise that where the tax-payer is not concerned the government should not impose its scheme against the will of the family.

8. KEY ELEMENTS OF THE WHITE PAPER PROPOSAL AS THEY RELATE TO THE ASSOCIATION'S CONCERNS

The scheme will involve:

— a fixed percentage levy (referred to in this paper as a "tax") . . .

— on all income after income tax, national insurance and pension contributions

— without limit or ceiling (that is, the tax is applied at the percentage rate however high the earnings) . . .

— but reduced by 1/14th for each night the child spends with the taxed parent . . .

WHY A REFORM MUST MESH WITH OTHER PARTS OF THE FINANCIAL PACKAGE

9. Divorce lawyers assist separating couples to solve the conundrum of funding two homes from resources that were often stretched just meeting the needs of one. Where there is no reliance on welfare benefits, families will need to:

9.1 struggle to adjust the eight variables to find a viable outcome. The variables are:

What capital needs each has (each can be housed for a greater or lesser sum, for example)

What each will spend on legal costs (there is therefore an urgency to find settlements in most cases, before outlay on legal costs erodes what can be purchased with what is left)

What earnings each will have

What outgoings each will budget to spend

9.2 find a balance between the way each side is resourced to ensure that the settlement "feels fair"; and

9.3 recognise that there is a link between capital and income.

(A model that helps to show how settlements are looked at is set out at Appendix one)

10. Imposing a formula to fix maintenance may happen to work for some families. The formula though sets maintenance for just the children which entirely disregards spousal maintenance and the other elements of the package and the Association believes it will not work for most. At Appendix two is a focus on the sort of family where justice dictates that a more careful look be given before the proposed scheme is imposed.

11. The Association's argument is that there is no need to impose the new formula on all separating families. The job of finalising financial arrangements for them is hard enough without having a fixed formula around which the variables must be shoe-horned. The Association fails to see who benefits by denying families their existing right to work out these arrangements for themselves.

12. If the scheme proposals are based on research then it is not research that has, so far as the Association is aware, been released. The reality is that the proposals are a leap in the gloom, if not the dark. Even if the Government insists on pressing ahead with the scheme in its current form, it must pilot the scheme to identify and give a chance to address problems[63].

PLACING CHILDREN IN THE WAR ZONE

13. Parents seeing the link between contact and payment will be brought into conflict over parenting arrangements. To date these issues have been resolved (by the courts, by solicitors negotiating in the shadow of the courts and now more commonly in mediation) by promoting a focus on what is in the child's best interests. The proposed scheme will mean that parents may focus instead on the financial impacts of any arrangement.

14. The non-resident parent may seek contact—or more contact—because of [his] reluctance to pay. The resident parent may oppose contact or increased contact because [she] cannot afford to see a reduction in her maintenance receipts.

15. It is not accepted that the resident parent's costs are likely to reduce merely because the child is staying with the other parent overnight. The mortgage costs that she must pay to provide the roof over the child's head will continue, as will the outgoings on the home, the hire purchase payment of the car that provides the child's "taxi service" and the child-care payments which enable her to go out to work to provide an income to be put towards the child's needs and to provide for her, the mother's, longer-term financial security.

16. The government says there is contact-payment-linkage already and this is not a new proposal. The Association disagrees. The practicalities seem to be that there are not the malign effects of linkage because of the complexity of the current formula and the bureaucratic inefficiencies of the CSAgency. Parents cannot calculate how an increase or reduction on contact would affect their payments. They see no real link between a change in their circumstance and a change in the formula because changes to the assessment are so slow.

17. A visiting American professor reports shock at the prospect of the UK adopting the US mistakes. She has researched how children are caught in the middle of "the visitation battle" in US jurisdictions and observes that the continued presence of this phenomenon owes itself to the linkage which exists in most of those US states[64].

— Why should the father who reluctantly respects his child's desire not to see him at this stage be then further penalised by the payment of increased maintenance?

— How can we set up a system where substantial maintenance payments can be reduced by 20-25 per cent and then not expect parents to fight over where their child will spend the night and put inappropriate pressure on the child to co-operate?

THE DIFFERING PHILOSOPHIES—A CHOICE FOR PARLIAMENT

18. Summarising the clash of cultures one might see the following:

Government philosophy Association philosophy

Taxpayers should not be responsible for the financial support of children where parents are able to provide Agreed—but this does not form the base for a scheme applied to all separating families, regardless of the wishes of the family where the tax-payer is not involved.

Children should be used as a vehicle for the transfer of wealth Where there has been a marriage, child maintenance is a small part of the overall scheme to provide for the reasonable needs of both parts of the separating family.

Children do not manage the finances of the home; it is parents who do this for them and parents should not be denied the opportunity to agree what best meets its particular needs.

Children should benefit from a fixed percentage of a parent's income Such an approach does not reflect realities in the intact family. There is a level at which all the reasonable requirements of a child have been met and to require payment of a greater sum will create injustice and increase the likelihood of contests over where the child should reside (which is likely to cause damage to the child) or other avoidance action.

Only the paying parent's income needs to be taken into account—with an adjustment for staying contact. Provision should reflect all the circumstances of the case, to include the particular needs of the child, other resources available for him/her, resources of each of the parents and educational requirements. Parliament may conclude that there is no viable alternative to the simplistic formula for the benefit case (eg to protect the tax-payer from an inappropriate burden) but this should not be used as a reason to impose on other families an inappropriate level of payment.

To separate out the non-benefit "court" case would be to create one law for the rich and one for the poor. The court carries out a different job from any CSAgency, creating a package of provision to meet need. It performs this task regardless of the resources of the family[66].

19. In essence the Government's proposals ignore the complexities of families. The proposal may be a scheme that appears workable when families are looked from the distance that statistical analysis imposes. It is not a scheme that will work on a daily basis for the families that make up the work-loads of the members of this Association or the families that are likely to make up the post-bags of MPs.

THE DETAIL OF THE SOLUTION—WHAT ARE THE OPTIONS?

20. THE "BENEFIT" V THE "INDEPENDENT" CASE

Option Comments

Provide the court with exclusive jurisdiction to settle issues of child support wherever the court is also making orders for substantial spousal maintenance or for the transfer of capital. The CSA would then be excluded unless the residential parent fell onto welfare benefits —The Association's preferred solution.

—The difference in payments are unlikely to be significant (see footnote 7 page 7).

—This is a slight enlargement on the current regime; it avoids the uncertainty of parties continuing negotiations perhaps with one party withholding consent for a court order perhaps for tactical advantage[67].

Provide the court with power to make orders only by consent which then exclude the CSA unless the residential parent falls onto benefits —Is broadly in line with current jurisdiction

Provide the court with powers to make top-up orders in all cases —Does not have the feel of even-handedness but would at least avoid injustice for some families

Provide the court with powers to make top up orders in specific cases, eg:

1. High costs of child-care (eg where residential parent working)

2. For education or disability

3. (Assuming that there will be a ceiling to the level of tax) for broad requirements where assessment likely to be for a maximum sum[68]

—Items 2 and 3 are broadly in line with current jurisdiction; the government appears to propose their abolition.

21. THE CONTACT-PAYMENT LINK

Solving the problem of linkage is harder. It is of concern that the government proposes advancing with such a facet to the scheme with there being little research on the subject and what there is being negative. One might suppose that many families using the court as the backdrop for negotiating their financial settlement would benefit from opting out into the court system where the malign impact of linkage could be avoided. However this will leave exposed the children in many other families (eg those not using the courts or the family receiving benefits). The Association is left with the hope that Parliament will encourage the Government to think again on this proposal.

September 1999

60 James Pirrie is a solicitor who has specialised in family law since qualification in 1985 and a mediator. He is elected to the national committee of the Solicitors Family Law Association and has been involved as regards its policy on child support since 1990 and practises in central London and helps to lead the Child Support Practitioner's Group with NACAB and CPAG. Back

61 Where relevant and by way of short-hand, we have referred to the resident parent as "she" and the non-resident parent as "he". The principles would be the same were the sexes reversed. We have focused on the interface with the processes of divorce; this is not to ignore the parallel but different issues arising for the never-married separating family. However, these are complexities which are beyond the scope of this paper and time available at the presentation. Back

62 In fact the situation is a little more complex than this. The Government proposes allowing courts to continue to make maintenance orders where there is an agreement but then allow either parent to resile from the arrangement after the first year by giving three months' notice. This is merely a complex way of saying that there is no opt out. Who, properly advised would ever settle family financial arrangements on any basis other than the CSA formula which could be imposed after 15 months regardless. Back

63 Of greatest concern here is the "enfranchisement" of all non-benefit cases. The Association knows of no record but members are unaware of any practitioner in central London who routinely uses the CSA to calculate or collect child maintenance in the cases dealt with. The almost universal practice is for spouses to agree maintenance for children and have that provision embodied in a court order. In effect therefore the CSA is without experience of these sorts of case where there is more than just child maintenance in issue and practitioners and separating families can have no real understanding of the difficulties that a fixed formula will create because they have no experience of it. Back

64 Professor Mary-Ann Mason J. D Ph. D: "The Custody Wars" (Basic 1999) at chapter 4. Back

65 The Association's experience is that the "custody battle" of the 70's has given way to a process where parents try to find a "good enough" agreement by which to continue to parent their children. Conflict over children is no longer "which parent?" but "what arrangements need to be set up so that the child can continue to have both parents?". The attaching of a price tag to this co-operation may mean our separating families in the future have something very different to think about. Back

66 Case-law already requires the courts to have regard to the CS formula figure even where it has exclusive jurisdiction to finalise child maintenance. Parents too will use the formula figure as a starting point. Parents, their lawyers and the courts will only move away from the formula figure where circumstances dictate this as the best outcome. Giving the court jurisdiction in this way does not mean that there will be many cases imposing different levels of provision. What it will do is relieve the CSA of the responsibility for the hard case-the sort of case that would bring its operation into disrepute because of the ludicrous results it would impose. Back

67 It certainly avoids the court-CSA ping-pong, an increasing phenomenon where parties settle financial proceedings on the basis of a CSA assessment but then this is used as the basis for a departure application-which in turn fuels an application to vary the maintenance order. Back

68 The Association proposes a figure of about £5,000. Such a sum is likely to take most families out of the benefit zone and would require the payer to have a net income of above £33,000 p/a (such families are unlikely to be depending on benefits anyway). This is roughly in line with the current provision for top up order. Back