Select Committee on Social Security Minutes of Evidence


Examination of Witnesses (Questions 222 - 239)

WEDNESDAY 15 SEPTEMBER 1999

MR JAMES PIRRIE

Chairman

  222. Can I welcome James Pirrie from the Solicitors Family Law Association. Thank you very much for the submission that you have made which is very interesting. I wonder if you could just say a few words at the outset about what your own Association feels about the White Paper and what the key points from your perspective are that we should concentrate on in our inquiry.

  (Mr Pirrie) I think a quick seven points. First, thank you very much from the Association and I think from all of us here for the effort that you are putting into this, it is terribly important. Point two, picking up on what you said yesterday, I think this is the last chance saloon. I think that should inform the approach and Parliament should be cautious and if there is a safe option it should adopt it. Point three, our perspective is a contrast really. We are a small area of the CSA pot but we are also part of a wider perspective and what we are worried about is a situation where we have the CSA tail wagging a much larger dog. I say we are a problem that cannot be put to one side and if you do not resolve it then we will cause enormous amounts of problems. It is at the interface between the court and the CSA. Point four, the tragedy is that this is a missed opportunity. The courts need badly the bureaucratic enforcement measures on the routine case that the CSA can provide and the CSA needs the forensic abilities of the court. There is no attempt to learn from each other's jurisdiction, we are almost effectively in our bunkers. Point five, the Association broadly sees that we are led to this system of a crude formula. The existing formula was supposed to be very fair, it took in all sorts of matters and it was designed to balance needs on the one hand with ability to pay but it does not, it is not fair. I can see the argument for discarding the attempt to be fair altogether but that means we must have a discretionary review system. Unlike Mr Mostyn I think that the tribunal system—I have got no evidence of this, it is my instinct—would collapse under the weight. If you have a system that allows the difficult case to go to the tribunal, then because every case is difficult, every case will go to the tribunal and it will not work. I say that the best we can do is to take away from the whole CSA process a large proportion of those difficult cases, that we do it by not focusing on the characteristic of the family, we do it by focusing on the process. If the family is not receiving welfare benefits, (and we need to define what that is), then if it goes to the court the court has exclusive jurisdiction. If we have any other system all we are doing is we are limiting the ability of the court based system, (by which I mean really the lawyers negotiating within that system), to craft appropriate resolutions. That means bigger legal bills and worse settlements. In summary, we say Parliament is looking to fix the CSA because it is broke. The divorce dog is not broke, it is alive and it does not want to be wagged by its tail. What we fear is that the White Paper reforms will fix it and they will fix it good and proper.

  223. In that case why do you not just take the whole thing into the court process?
  (Mr Pirrie) It would be a better system but I am trying to tailor the Association's response to what is politically acceptable. My Association can only really talk about its experience of cases coming through the door on a day to day basis. I do not have experience of the people who have been talked about so far on the housing estates and so on, that is not where I work at the moment. I have done but it is not where I am now. I can see that in the welfare system there is not the incentive to go to the court process and I think the taxpayer is entitled to be protected. That is the fundamental issue. The CSA came along to protect the taxpayer and so it is that characteristic which should set up the extent of its jurisdiction. Where the taxpayer is not involved—where it is not a tripartite arrangement between mother, father and taxpayer—it is not for the Government to say "we are going to impose a solution on you regardless".

Mr Dismore

  224. Just following on from that I should say that James and I used to be partners in the same law firm until relatively recently and I am a member of the Law Society, but that is relevant for the next witnesses. Can I pick up the last point that James made and that was this: you are taking a snapshot in time but there will be a position where one parent or the other parent, or indeed both parents, will drift in and out of benefit and that will therefore have an impact not only on the family finances but also potentially on the original settlement agreed by the court. How would you accommodate that in a system which draws that very clear distinction you have made between those at the time of the settlement who are either in or out of the system?
  (Mr Pirrie) I have tried to explain this to the Minister a number of times. To me the whole solution is so blindingly obvious that I think I must be explaining it badly, so could you stop me if you are in that situation. As the lawyers negotiate the settlement they look at whether this is going to become a benefits case. If I am negotiating a settlement and I see that my opposite number, representing the wife (with the children) is going to drop on to benefits, I am not going to move away from the CSA figures, I would be crazy to because what happens is I agree a low figure and pay more capital and then lo and behold a year later she is on benefits and my client, the husband, is suing me because his maintenance has increased. It is a self-regulating system. That is really the beauty of it. The other point I failed to put across is this: that it is not profound what I am suggesting. Case law at the moment requires the courts to pay regard to the CSA calculations. The courts and the lawyers negotiating around the courts are going to be applying these percentages day in, day out. There are going to be the exceptional cases where it is not done. I have done one this week where the child is worth through (various parents—she is now adopted—dying on her) £ million, and her adoptive father can probably not be relied upon to pay maintenance, so the deal has been negotiated whereby the father releases more of the assets to the mother to rehouse the child and is providing the maintenance in a capital payment so as to reduce the mother's mortgage costs. It is those sorts of case and they are going to be exceptions, but the importance is that by this approach you take away all the hard cases. I think that the bit where I get so stuck is that fairness required taking into account a number of things. It is not just the payer's income, but it is his—let's assume his—overall financial situation. It is how much capital he has, whether he has mortgage payments, whether he has a new partner or whether he should have a new partner who would contribute towards the resources. It is not what he chooses to earn, but it is what he is capable of earning and then you have got exactly the same issues on the other side and all the re-partnering points. It is only when you bring together all of those factors, maybe eight of them, that you begin to come up with a solution that feels fair and that is why it is so frightening to be focusing entirely on payer's income and crafting a settlement entirely on that. It is not going to be fair and that is why we must have departures. We cannot have tribunals dealing with departures because they will be overloaded and, therefore, we must move many of these hard cases into the courts (where they will be dealing with the rest of the package anyway).

  225. Just to pursue the point quite briefly, you are making the assumption that you have got a crystal ball when you do settlements, that one partner is likely to end up on income support or whatever. What happens when you have done your settlement and at a later date when unforeseen circumstances come along, one partner ends up on income support?
  (Mr Pirrie) I could have answered the question terribly easily, I am sorry. Then it becomes a CSA case.

  226. So you would unstitch the court settlement?
  (Mr Pirrie) No, you would not. The parties went into it with their eyes wide open. They knew that if the taxpayer got involved, the wife, say, and the children, then the taxpayer would come knocking on, say, the husband's door and say, "Right, I am entitled to look at this percentage level which is 15, 20, 25 per cent" or whatever. It is only really if we do not go down this approach that basically the floor drops out from beneath my feet and I think we then have an enormous number of questions to look at. To me this is the simple way of solving the problem. I was here yesterday and I jotted down 25 crucial points and there are 25 major policy issues for you to look at if you do not go down this route and I think this route can sit well with the FLBA. I say we do have a wide tribunal discretion, but it will not be overloaded because so much of its work will be dealt with by the courts and the courts are dealing with the cases anyway and it is only when the courts are dealing with a package of arrangements that they will have this exclusive jurisdiction over child support.

  227. How will that situation also be dealt with as far as the courts are concerned where it is not a divorce case, but simply a case of a co-habiting couple where there is no divorce?
  (Mr Pirrie) I am going to try and give the 30-second answer, but it is actually a much longer one. We do have Schedule 1 applications which is where the residential parent, say, makes an application for the transfer of capital. The footnote issue obviously is that Parliament must look at rights for co-habitants. At the moment it is an accident of what happens and we need to actually recognise that co-habitants have needs as they emerge from relationships and that is a separate statutory reform and I would say you should not do it through the back door using children as the vehicle for the transfer of wealth. It is just too dangerous and you have actually got to focus on the real issue and what happens to the co-habitant who has no children? We cannot try and deal with it through the children route.

  228. There is what Baroness Hollis called the one-night stand case which she referred to yesterday. How would that be dealt with within what you are talking about where there is even no co-habitation?
  (Mr Pirrie) If there is a great deal of wealth, the residential parent makes an application for capital sums and then the court has exclusive jurisdiction to create a package of capital and income. The child is entitled to be supported from the father's capital whether or not it was a one-night stand or a 15-year relationship, so it is the same principle: `if the court is dealing with capital, then let it deal with the income as well.'

Chairman

  229. There are a million cases that we have got on the books just now. Your system could cope with that?
  (Mr Pirrie) I think there is a major issue over winners and losers which is a separate discussion and I do not quite know how the transitional case works because clearly families have done deals on one basis, the mothers are going to be on benefits, they have an assumed level of payment which may radically increase or radically reduce, but I am not proposing that every case now is stripped from the CSA and brought to the courts. What I am talking about is prospectively, if you go to the court for a capital settlement, then the court has jurisdiction. Retrospectively, you are stuck within the CSA, and I think, but obviously I have not got statistics, in most cases in London they have all opted for the court option. Nobody uses the CSA and we all convert our child support arrangements into a court order and the court then has exclusive jurisdiction. The door shuts on the CSA administration entirely until the residential parent falls on to benefits.

Mrs Humble

  230. I was interested in your statement about people going into discussions in the courts with their eyes open. I have to say to you that some of the most difficult constituency cases I have had have actually been those where people have not gone into the courts with their eyes open, but they have been men who have been poorly advised by their lawyers and who have made a generous capital allocation, and I have to ask for forgiveness with all the lawyers present when I make that remark, but they have made a very generous capital allocation to their former wives and have accepted debts, often credit card debts, which are then not allowable within the CSA formula and they end up really not being able to pay, especially if they get a second family. They are the most intractable cases, and that is not what we are arguing now, but I am just pointing out that in my experience the courts have not always been there working for the benefit of the parents involved, so I do have a doubt about how efficiently they would operate in the future. My question to you though is why are you so fearful that the courts may, in making child maintenance awards, seek to mirror the new CSA formula if that formula is seen by the majority of people to be fair and equitable? Everybody who has given evidence to us has talked about the need for the formula to be seen as being fair and certainly from the consultation I have had with my own constituents, they do see it to be fair. Most of the people who have replied to the Government's consultation see it to be basically fair, although they might want to alter it a bit here and there. Why are you so fearful, therefore, that in private cases the courts might seek to mirror the CSA formula?
  (Mr Pirrie) I am not fearful about it, what I am saying is that there are exceptional cases, and I have listed a number in Annex 2 to my memorandum, where you look at this and think, "This simply does not work, the particular characteristics of this family make a nonsense of applying the 15, 20, 25 per cent route."

  231. But there is an allowance for exceptions to that 15, 20, 25 per cent.
  (Mr Pirrie) Which is totally inadequate to reflect the complexities of families.

  232. So is your argument then that you would want to build in more complexity?
  (Mr Pirrie) No, because then the bureaucracy falls apart. We are stuck with a simple levy because that is the only approach that the CSA can deliver. What I am saying is, there must be discretion for the difficult cases. The court will actually apply these percentages in most of its work and we, negotiating the deals, would apply those percentages too. There will continue to be bad cases coming out of the system and unfortunately MPs see most of them. It is only when the case has gone badly wrong at law that you go to your MP, so it is a slightly self-selective group that you see.

  233. How would you like the discretion to be operated, bearing in mind we have had evidence from some organisations that they are fearful of discretion being in the hands of CSA officials? How would you like that discretion to be operated?
  (Mr Pirrie) In a sense, maybe I am walking away from the problem because my jurisdiction is over the CSA-court interface. I am saying that in almost all those cases, apart from the welfare or benefit ones, the court rules apply and therefore they have control over the arrangement. I have not focused, and this is one of my 28 points, on the complexities of the departure system but clearly we have a problem in that the tribunal must have real discretion. At the moment it does not, it just puts a new figure into the formula and pushes the figures through the machine again, and it must have adequate gateways. What I am saying is that the gateways will be so wide they will accommodate everybody unless you actually manage to move some of these cases across into the court process. I think if you went with me over the court process route, you would find your gateways could be narrower, therefore fewer cases at tribunal, and the tribunals could actually cope and deliver. Have I answered the question? No!

  234. I am not sure. Will not the courts in any case be dealing with more cases because there will be more private cases, simply because with the introduction of Working Families Tax Credit those people will be deemed to be private cases and could take that court route themselves?
  (Mr Pirrie) We would need to talk about whether the Working Families Tax Credit is a benefit or not. It could be argued either way in terms of this scheme. You can either say, "This makes it a welfare benefit case and therefore the court has no discretion", or you could say, "Working Families Tax Credit does not really matter, we will call it an independent case regardless." I say that the need for Parliament to be cautious means that it should offer to the Working Families Tax Credit case the discretion of the court, because if it does not I think the CSA version 2001 will collapse.

  235. So you are saying we need to have greater clarity in what are independent private cases as opposed to what are automatically CSA cases, and make sure we all know the rules we are operating within?
  (Mr Pirrie) Yes, although I am not sure I have made it clear. Just to be clear, there will be no more cases going through the courts. Either you have got capital and spousal maintenance issues or you have not. We will have the same number of cases going through the courts, the question is whether the court has jurisdiction to say, "Sorry, this CSA percentage is a nonsense, we will impose a different figure", higher or lower. Going back to some of the fears I have had about whether we impose this CSA percentage—which actually was the question you asked me to answer—I think it is largely about women in poverty. If you have a fixed percentage—and I have put some examples in the appendix—you can see the maintenance levels are so low you cannot afford to pay for child care, therefore the woman cannot go out to work, therefore she cannot provide for her independence once the children go. Alternatively, in the very high income cases, there is a level of income need she has, if it is provided entirely by 25 per cent, by the high percentage take, the woman's spousal maintenance is zero and therefore in those cases again she is losing out and is vulnerable.

  236. Thankfully, we are not here to talk about spousal maintenance as well as child maintenance, Chairman.
  (Mr Pirrie) That is the point, that this tail does affect the whole dog.

Mr Leigh

  237. As I understand it, what you are trying to aim for, which I think I agree with, is that we have to move people out of the CSA if we can, move more people back into the courts, use the introduction of the Working Family Tax Credit to say that a whole new chunk of the population is no longer on benefit and therefore can be dealt with by the courts, which can deal with them far more sympathetically and far more flexibly than the CSA? Is that right?
  (Mr Pirrie) Nearly. I think I am talking about a symbiotic relationship where courts help the CSA. I think there is also a way of feeding court information back into the other. I am not talking about restricting the CSA jurisdiction so much as saying that the CSA should not impose itself where the court is dealing with the case anyway, unless it is to protect the taxpayer. I think you summarised it better actually!

  238. I do not agree with your criticism of linking child maintenance with contact. I know you say that this could result in more conflict but this is inevitable, it is part of life. If the absent parent has more contact with the child, he should pay less.
  (Mr Pirrie) Not in my cases. The residential parent's costs go on pretty much the same—okay, a bit less Dairylea out of the fridge but the mortgage still has to be paid, the hire purchase on the car still has to be paid. It is so dangerous, and I do not know how to emphasise it enough, to say to a family, "Here is the formula we are going to impose on you, by the way if you want to go off and manipulate the variables you have two choices. You can go off and manipulate your income or you can argue about contact." At the moment members in my association think we can keep the lid on parenting issues because we can go on saying over and over again, "It is about the welfare of your child." The second that we are having to accept, "It is about the welfare of your child and by the way there is a financial knock-on", it is much more difficult and it is vastly more difficult when you have the mother and father facing those issues. That is the conceptual problem, actually how it works in practice is frightening. Do we have tribunal hearings focusing on what contact was ordered or agreed or what actually took place? Do we have Mum, if Little Johnny stays with Mum, saying to Dad, "It is all right, you can see your son for the day but only if you bring him back by 6 o'clock because I want to clock up the next night"? How it operates in practice means you will have enormous conflict. I refer in my paper to the research done in the States where they have this linkage and it goes back to this issue about caution. This would be a radical new step because we have been focusing on the needs of the child since before 1989 and the system is beginning to work now, we do not have Kramer v Kramer cases very much, they are the exception although a lot of people have had experience of them, but now we are enabling people to focus on the needs of the child and this will blow a hole through it.

Mr Pond

  239. Just to raise a question mark over that last statement, the needs of the child, we have said throughout that children need not only their parents' income but their parents' time as well, and it is the reality, is it not, that in many cases where families break down it is sometimes difficult to encourage, normally the father, the parent without care, to spend time with their children. We know this is very important. By doing this, by encouraging shared care in this way, are we not benefiting children through the process even if it means the parent with care is perhaps receiving less than, normally, she otherwise would?
  (Mr Pirrie) I can see that argument. I would just say that I would prefer it to be an educative experience saying, "Boys and girls need their Dad", rather than saying, "Here is a tenner for going round and seeing them."

  Chairman: Thank you very much for a very thought-provoking session. Thank you for your help.


 
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