Examination of witnesses (Questions 1-19)
TUESDAY 14 SEPTEMBER 1999
BARONESS HOLLIS
OF HEIGHAM,
MR MIKE
STREET and MRS
FAITH BOARDMAN
Chairman
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
|
