Select Committee on Social Security Minutes of Evidence

Examination of witnesses (Questions 1-19)




  1. Good afternoon, ladies and gentlemen. May I declare the public evidence session open and, straight away, welcome Baroness Hollis, Mike Street, who is Policy Manager of the Child Support Department of Social Security and Mrs Faith Boardman, the Chief Executive of the Child Support Agency. We are particularly grateful to the Minister for coming because she has agreed to come twice in a week, which must be some kind of a record. That is extremely valuable for us because, for the first time, we have actually tried, over a two or three day period, to do the best we can to scrutinise the Government's White Paper proposals in advance of what we expect will be legislation within the Queen's Speech. Patricia, you might want to make a short opening statement and then we can go straight to questions, if we may.
  (Baroness Hollis of Heigham) Thank you very much, Archy. Could I say how pleased I am to be here and to be able to follow up the very helpful discussion we had last time,[1] and could I also apologise to those who were present at that time because I suspect you may find some of the things I say today slightly repetitious, if only because the White Paper was based on the responses that came from the Green Paper, which I shared with the Committee there. Because we have such overwhelming support for the Green Paper the changes in the White Paper have been, perhaps, somewhat less than might have been anticipated. I am trying to go for a pre-emptive apology to those who feel they have heard this before—and they almost certainly have. I would like to explain our view and, perhaps, just set it against some of the things that have happened over the last year. Our new contract, obviously, for child support forms an integral part of the reform of welfare and the strategy to support families and children. We are determined to end the scandal of child poverty in a generation, we hope, and we have already increased Child Benefit and set in place the new Working Families Tax Credit, which comes into effect in October. That has quite interesting and important implications for us, that you may wish us to explore as the hour goes ahead. We have also, of course, introduced the Minimum Wage. All of these should help children in the poorest families. However, children are poor not just because they are living in a low income family but, also, because they are living in a fractured family and lack the support that if both parents were with them they would normally give. As a result we have something like only 250,000 children getting any benefit from a non-resident parent, and of those only 100,000 see all the maintenance that is due to them. So these children are doubly disadvantaged: they are not only poor in the sense that the family is very often workless but they are also poor because the family is fractured. The system has, therefore, failed, because, we believe, of its complexity. It does not help those parents who wish to honour their responsibilities to their children, and the complexity serves as an alibi to those who wish to avoid their responsibilities. I do want to emphasise—and I tried to make this point last time—that we entirely agree with the philosophical approach of the previous Government on this. We supported the principle of the Agency and acknowledge the problems that subsequently followed, which was that the previous administration, in seeking to make it apparently more fair by tailoring the approach to individual circumstances, ended up making it more complex and, therefore, harder to deliver any money to anybody. However, it is a mistake, as I said at the time, that we, as an administration, could well have made ourselves. So there is no Party issue between us here; we are trying, in the light of what has happened over the last few years, to rectify those mistakes but to build on the previous philosophy. We are tackling that inheritance, therefore, by introducing what we believe will be a simple, new and effective system of child support, with reforms in four key areas. First, we want to get rid of the current formula and go instead for a simple, slice of income after tax, National Insurance and pension contributions have been paid. It should be simple, efficient and transparent. We have considered research on the amount that parents normally spend on their children and we are proposing percentage rates. The research is not sharp-edged—it varies—but there seems to be a general consensus that on an average income most parents spend about 30 per cent of their income on their child; slightly more if they have two children. That has contributed to the proposals that, therefore, if she pays half, his half would reflect 15 per cent for the first child, 20 per cent for the second, and 25 for the third. The rates would obviously be reduced where there are children in the non-resident parent's household and where care of the child is shared between parents. So the first thing we are doing is going for a very simple slice of income formula, available from ready-reckoner tables in the Post Office, in the library and in the MP's surgery, and the like. Secondly, we are transforming the Child Support Agency itself; doing different things in a different way. A lot of these reforms are already well under way, from the proposals for the face-to-face contact, the bringing in private sector experience on compliance and debt collection, and the like. Faith, I am sure, would be very happy to enlarge on that for the Committee. Third, we are introducing tough new measures to ensure that parents meet their responsibilities. Most parents want to and seek to, but too often in the past some irresponsible parents have been seeking to avoid paying the child support that is due. At the moment, for example, people can lie to the CSA and it is not even an offence. We are going to make it a criminal offence to lie or deliberately refuse to provide information to the Child Support Agency. As you know, we are also going to be working with the Inland Revenue so that, as the last resort, we can get access to the records of those who are self-employed and refusing to pay and where it is actually very difficult to access information because they have no employer. We are also proposing to tighten up the rules on determining parentage. Too often in the past non-resident parents have been able to delay paying the maintenance that is due to their children by denying paternity, yet in 95 per cent of cases they turn out to be the father. Fourthly, we are going to be introducing a child maintenance premium which gives extra help to children living in families on Income Support or income-based Job Seeker's Allowance. We have been very concerned that one of the reasons why women who should have stood to gain from maintenance have failed to co-operate with the Agency—something like 70 per cent initially—as we have said in the Green Paper, is that the CSA represents "no cash and lots of hassle". By going for a maintenance premium, we hope, by helping the children directly, she will seek to co-operate with the Agency and fathers—because they are mostly the non-resident parents—will also seek to co-operate because they will see direct benefit going to their children. We think it is important to get these reforms right. We need to change the culture of fathers—that they must continue to support their children; of mothers—that their children are entitled to rely upon maintenance; we need to change our policies, which we are doing, in terms of the formula, and we need to change our administration and our approach to client service and customer satisfaction. If we can do that, then I think that the CSA will command support, as it has done in the consultation exercise so far, and our reforms should have staying power and, as a result, we hope, very significantly be able to help lift children out of poverty.

  2. Thank you. That is a very useful statement, which sets the scene very well. Can I put it to you right away that the previous Secretary of State for Social Security was quite keen that we, as a Committee, get a chance to have a full-blown pre-legislative scrutiny of the legislation, and I think everyone accepts that the importance of some of these reforms comes, actually, in the details. It is the regulations that can cause the heartache. Why is it that we have not been able, as a Committee, to have access to that? I certainly do not blame your officials; I know Mr Street, in particular, has been very helpful in mounting the operation for this two- or three-day hearing, and we are very grateful for that, but why did the Government change its mind in terms of the earlier offer of a full-blown pre-legislative scrutiny for the Committee?
  (Baroness Hollis of Heigham) I think the reason that you have not seen it is for exactly the same reason that I have not seen it—that the proposed Bill has not been finally drafted yet.

  3. You have not seen the draft primary legislation?
  (Baroness Hollis of Heigham) No.

  4. You are dealing with the same White Paper, the same level of detail that we are?
  (Baroness Hollis of Heigham) Yes. Clearly, obviously, there are, within departments, a follow-up paper about the sort of detail that will probably go into the regulation, but the reason that we are not able to offer you the scrutiny that Harriet Harman suggested was simply that the Bill is not ready, and the reason for that is—as you probably know—there is a significant shortage of Parliamentary draftsmen and a significant backlog in some of their work. I do not think the DSS has been particularly penalised in this, I think this is across Government, and it may be that the new Government has had a heavier legislative load, or it may be a loss of skilled draughtsmen—it takes many years to train them—but that is the source of the problem, I understand.

  5. We are led to believe, from what we read in newspapers, that the Prime Minister's press spokesman has, a few days ago, let it be known that there is legislation in this year's Queen's Speech. If that is true, and you have not seen the final legislation, the worry that I would have is that we are going to go through the same kind of problems as we did with grabbing at the last reform in 1991, and implementing it in a way that is not properly considered. Do you think that is a problem?
  (Baroness Hollis of Heigham) I think, myself, that given that the proposed legislation will be so very closely based on the White Paper which we are discussing today and tomorrow and Thursday, I would have hoped that what we are doing over these next three days will have been a reasonably good proxy for a scrutiny of the proposed Bill. I think the more detailed scrutiny of the issues is, of course, a matter for the regulations, because they are the ones that do what I would call the "nitty-gritty", and that is where, I suspect, the legislation will ultimately stand or fall.

  6. Who scrutinises the regulations? As you know, Parliament has got a very, very limited amount of power to vary or amend secondary legislation. So you are asking the Committee to take the regulations, more or less, on trust.
  (Baroness Hollis of Heigham) I think it is the case for social security legislation, actually, that the detail and the nitty-gritty is in the regulations, primarily because if you are dealing with figures you would not want to put figures in primary legislation which you cannot inflation-proof without having to go back and change primary legislation. So it is custom and practice within the DSS (and I stand to be corrected but I believe there are something like 3,000 or so statutory instruments a year that come through the DSS), simply because its legislation is heavily "shaped", if you like, by a financial approach which needs to be easily updated by regulations. So I think that is not unusual for the DSS.

  7. A final question from me: you give us an assurance that in ten years' time you will not be seen on television programmes about the CSA, in soft focus beside a potted plant, saying "This was all the Treasury's fault and nothing to do with me"?
  (Baroness Hollis of Heigham) Let me put it this way: if Parliament does its job in scrutinising and we do our job in listening to what Parliament says, and if we can command the same sort of consensual support and constructive criticism through the Parliamentary system that we have had so far in the consultation exercise—with the help, indeed, of some of the people around the table—then I think this is the best chance we have of getting money to children and lifting them out of poverty.

  Chairman: Some might say it is the last chance the CSA has. Chris Pond?

Mr Pond

  8. I hope very much that the Bill will be based on the White Paper. I think it is a very good White Paper and a tribute to you and your team in the way that it has been put together. In the forward to that document the Prime Minister reminds us of his target of eliminating child poverty within 20 years. Do you believe that the proposals in this White Paper will make a significant contribution towards achieving that target?
  (Baroness Hollis of Heigham) Yes. Firstly, if the parent with care is on income support she will have an additional £10 premium disregard if he is paying maintenance of more than £10 a week and is in work. If he is on benefit she will get the £5 that currently goes to the Treasury which will go to her. So if he is on benefit she will get £5 and if he is in work she will get £10. If she goes to work herself and she is currently on family credit she keeps £15. As of October we were able to negotiate with the Treasury, and I am so pleased and let me pay tribute to the Treasury for responding to this, that every penny paid to her as maintenance on working family's tax credit she will be entitled to keep, not just the £15 but the full sum which may be £30, £35 or £50 indeed, according to his earnings. So if you put that together, £5 for him on benefit and her on benefit, £10 if he is in work and she is on benefit and the full sum, which on average once the scheme is introduced will be £30 a week but obviously for higher earners will be more, she can keep every penny as of next October. When you think how many years it takes to get an extra £15 going into the family for child benefit we can do that at one swoop in October, and I think this could be a dramatic lift. If you are on modest incomes of £85 or £90 a week, another £10 makes a huge difference. If you are going into work and getting £140-£170 a week, an increase of £30 a week is a big difference so, yes, I believe what we are doing is a crucial part of the assault on child poverty.

  9. As a cash figure will that £10 be uprated over time? When I think about it most other social security disregards are not uprated. Will it be uprated in line with associated benefits over time?
  (Baroness Hollis of Heigham) I think that will be a matter for decision by the Secretary of State at the time but certainly we are not closing that option down.

  10. The very welcome disregard arrangement for the working families tax credit does of course have a down side in terms of the potential reduction in co-operation by those parents with the Agency because of the fact that perhaps the incentives would not be as great as they would otherwise be because of that disregard?
  (Baroness Hollis of Heigham) What I am hoping certainly is that if fathers stand to see that every penny of maintenance they pay goes directly to their children and not a ha'penny to the Treasury if she is on working families tax credit, then they will be incentivised to pay. If she knows that by maintaining civilised adult relationships with him, whatever the rights and wrongs of that relationship may have been in the past, that she is more likely to see that money count, then I hope they will see that their children will stand to gain and hopefully it will be a very positive incentive for co-operation.

  11. There is one ghost, is there not, if not a poltergeist which is haunting these new proposals for the CSA and that is the amount of arrears in the old system. Referring to the Benefit Fraud Inspectorate Report Securing Child Support it does say in there that the need to clear backlogs has hampered the effectiveness of anti-fraud work and led to the adoption of lower verification standards for all cases. There is the related problem that of course many parents without care are facing such huge arrears in the amount that they owe that they really cannot afford it. Are there ways of dealing with those backlogs and perhaps with the huge arrears on individual cases which could help smooth the transition towards the new system?
  (Baroness Hollis of Heigham) Three points. The first one is when we started doing the preparation for the Green Paper and then the White Paper I too was tempted by this thought of an amnesty on arrears and we explored it. The trouble there is what message are you sending to those fathers who have paid even though it has been a struggle and therefore, on reflection, we thought it was not fair to those fathers with identical income who had struggled to pay that other people should be having an amnesty. The second point that we were anxious to establish in terms of arrears was that we should give a positive incentive to fathers to get into a regular arrangement and what we have is a system that if they pay their current liability regularly we will only ask them to pay off the last six months of arrears where the Agency contributed to the delays and the other 12 months can go into a holding account. Only if they fail do we then bring in the full amount of arrears. We are trying not to make it too hard a cliff to climb. The third point is that at the end of the day although some of that money is owed to the Treasury a fair amount is owed to the mothers and their children and it is not necessarily morally right for the Treasury or for us to wipe out money that may be owed to children in struggling families. Given all of that we thought it not right to go for an amnesty on arrears. We thought if we had fathers would probably stop paying now because we would have nothing to chase them for in the next two years, but we did want to make it a soluble problem by collecting only the last six months where the Agency had contributed to those arrears and of course what we are hoping is at least for the new cases when people come into the system (because we will be able to turn an assessment around within six to ten days and have the money flowing we hope in seven weeks rather than the 20 weeks or more at the moment) then we should not have the problems of arrears we have had in the past. It is an old problem. We expect it not to be a problem that is taken into the new system.

Mr Leigh

  12. Can you give a commitment on behalf of the Government that the new computer systems and software will be ready on time?
  (Baroness Hollis of Heigham) I will do it the other way round and give you a guarantee as far as I can that we will not start running this until we are confident that the computer systems are robust.

  13. Are you saying that with your present level of knowledge you cannot guarantee that the computer systems will be ready by 2001 when you hope to make the payments in the new way?
  (Baroness Hollis of Heigham) We hope and expect that the new computer will be operating for new cases in 2001, yes we do, but if we had any doubt about this then there is no way we would run it because all the evidence is that if you go in with a half-baked computer system it implodes and all of the virtues of the simpler system would go out the window. We have every reason to believe that it will be ready by the end of 2001 but if it is not we must come back to you and tell you so.

  14. Because there are rumours that there have been problems but you are confident, are you?
  (Baroness Hollis of Heigham) There are problems certainly with establishing what I would call the "big bang" approach to one common architecture of information across the whole DSS of which the CSA is a subset, you are quite right. It may be that Faith could enlarge on this answer more effectively than I can. The response of the CSA has been that we are going for a separate computer system, a smaller one which will be able to interface with the big mainframe when it is ready. That way we think we have put some belt and braces into position. The fact that we need it is without doubt. A lot of our problems have come from the fact that people come off and on income support. They change their benefit status and swap to family credit. Because BA computers do not talk to CSA computers it has to be done manually between the two and we then end up with very flaky stats and no common basic information and very little ability to chase fraud. We will not go ahead until we are as confident as we can be that the systems are robust because otherwise we are wasting our time.

  15. There may be some commercial reasons why you would not want to make any criticisms of contractors in public but is there anything you would like to say to us perhaps in private on this issue?
  (Baroness Hollis of Heigham) I do not know whether Faith would like to add something.
  (Mrs Boardman) I think there are two or three factors here. First of all there is the need to replace the DSS systems at large and that I think is a very complicated set-up and I do not think it is surprising or worrying that that takes some time to actually do and to actually reach a stage where a contract is signed. The second issue is the CSA particular system which quite clearly needs to be right and we will be giving a great deal of attention to the IT development. We already are and indeed we have been for several months and we have been working extremely closely with the private sector potential suppliers for that and the indications at present are good, but clearly we would not be responsible, and our Ministers would demand it of us, if we do not keep a very close eye on it and flag up any difficulties if and when they should arise. At present, as I say, I think the signs are pretty optimistic. The third element is the one which the Baroness has also mentioned which is the need to think about other computer systems both within the DSS and potentially with our Inland Revenue colleagues and with other parts of government and clearly that is a matter of making sure the technologies will speak to each other and getting the necessary links in and clearly we need to talk to our colleagues in the other departments before we can be sure of the extent of any technical and other problems in doing that. We have begun those discussions and we expect to conclude them within the next few months. Basically this is something we need to take a step at a time. It is absolutely essential that we get it right and it is absolutely essential that we are honest and we own up to any difficulties if and when they so arise.

  16. I think that is very true because we have got bitter experience with DSS computer systems and I think that we would like to be kept fully informed of progress. Would it be possible for you, for instance, to give us the last operational note from the contractors on this matter?
  (Mrs Boardman) The sort of operational notes that we have are literally that sort of thickness and I think really would require a great deal of technical understanding, but we could certainly give you a summary if that would be of assistance of the sorts of things we are looking at and the sorts of requirements and the sorts of benefits we expect for customers.
  (Baroness Hollis of Heigham) Would it be confidential?
  (Mrs Boardman) Certainly any elements as regards costings and practical contractual issues of that sort would be confidential at this stage for commercial reasons, as I am sure you understand, but in terms of the type of requirements that we think are appropriate we can give a broad description of that.

  17. We want to be reassured that there are no massive glitches now showing up. That is what we are really worried about.
  (Baroness Hollis of Heigham) All I can say is that Ministers seek the same assurances on a weekly basis.

Mrs Humble

  18. May I follow up from Chris Pond's earlier remarks about arrears and broaden the discussion out to changes in liability for existing claimants. One of the paradoxes that we face is that certainly from the overwhelming majority of my constituents who have contacted me that they very much welcome the proposals in the White Paper and look forward to the time when this new much simpler assessment procedure is put in place but, as the White Paper itself points out, many of the absent parents do feel that they are paying more than they ought within the existing system and so they feel some resentment that their cases and the change to the new system for them will be delayed. I just wondered what reassurances you can give them? I am sure everybody sitting round this table has constituents who have been to see them with some quite heart-rending cases, often not of their own making. A couple may have wanted to make a clean break and the father—and it is usually the father—will accept financial liability for debts in order to make that clean break but then finds the existing system of assessment does not allow for those debts to be included, and finds himself paying what he believes to be a disproportionate amount of income. He will come to me saying "Why should I be paying this amount now? When the new system of assessment comes in it will be much fairer." They need reassurances about their existing liability, about their arrears, and all that within the context of actually broadly welcoming what you are doing.
  (Baroness Hollis of Heigham) I think this goes back, if I may say so, to Edward Leigh's question. I do not think it would be wise to risk introducing a new system—a big bang—for both new customers and existing ones all at the same time. I think we would risk all sorts of problems with that. It seemed to us sensible to take on new cases first, and those will be done as they come into the system, and then, as and when we are ready and confident, we will take on the existing caseload. It seemed to us simply safer. If we get any glitches we can iron them out very quickly, as a result, if we take it on incrementally. That was the reason for our basic thinking. Obviously, if in the meanwhile people have very real difficulties, all I could ask is that we work through the new face-to-face system, with the customer contact. We will have, from January, 600 officers working on a face-to-face basis with people, perhaps, seeing to what extent they can overcome these individual problems. We did discuss this at some length and we thought, at the end of the day, we ought not to do the existing cases alongside the new cases. It seemed to us to be simply too high a risk strategy.

  19. May I follow up? The new face-to-face interviews have certainly been very much welcomed, because one of the problems with the existing system is that when people ring up the offices they often speak to different individuals on different occasions, they cannot remember conversations, cannot remember what they have been told, they are often told different things. The face-to-face interviews are very useful for actually clarifying what the assessment is and how it has been arrived at. Can you then confirm that if an individual wishes to have a face-to-face interview they will be allowed to have one? Will it become ordinary, accepted practice?
  (Mrs Boardman) Yes, it is intended that it should. Clearly, as we speak, we have not got all of those 600 staff actually in post yet, and we are bringing them in gradually in different areas of the country. However, the intention is that as from, certainly, by the end of March, they will be fully up and running in all parts of the country. The intention, quite clearly, is to move away from the traditional position within the Agency, which has been very much to discourage face-to-face interviews, to one where we still, frankly, expect the majority of customers to be content with dealing with us either on paper or on the telephone, but where they have difficulties, and certainly where they wish to have an interview, we should make that available. We also intend to use the face-to-face staff in cases where, perhaps, it has not been requested but we feel there is a problem; there is, perhaps, a long-term compliance issue, for example, or a difficulty and an unwillingness on the part of, perhaps, the self-employed non-resident parent to provide us with the initial information that we need. In those cases we will initiate a face-to-face interview. So it is intended to be a two-way service.
  (Baroness Hollis of Heigham) Could I just add to that? What we are saying, behind this, is that we seek, hope and expect to achieve a huge improvement in customer service once the new system is up and running. What we are saying is that we are not content, nonetheless, to do nothing between now and then; we are trying to introduce as much service improvement in the next two or three years as we possibly can that contributes towards the success, we hope, of the new system. This is obviously a major initiative.
  (Mrs Boardman) That includes not just the face-to-face but, also, a real blitz on improving our telephone system, because I do recognise many of the problems—

1   22 July 1998, HC 1031-i. Back

previous page contents next page

House of Commons home page Parliament home page House of Lords home page search page enquiries

© Parliamentary copyright 1999
Prepared 15 October 1999