Select Committee on Social Security Minutes of Evidence

Examination of witnesses (Questions 20-39)



  20. It needs improving.
  (Mrs Boardman) I think it is quite accurate to say that up to a relatively short time ago it was common practice for our customers to have to ring up on several occasions before they got through and to find that the person answering their telephone call was not able to actually access all the information from the IT system to answer their query. We have been working on both of those aspects and will go on doing so. We have made progress over the last six to nine months, I think it is fair to say, and we are now at a position where 74 per cent of telephone callers are actually answered on the first occasion that they call us. We have begun to introduce a number of the IT improvements, and will do more over the next year, to make sure that that information is available and that they can be answered promptly once they get through.

Mr Swayne

  21. Can I take you back to the selection of the aim and the maintenance of the aim, and can you attach relative priorities for me to the positive questions of the policy, such as cost reduction, efficiency and delivering more money to children at the end of the line, as against what might be regarded as the normative aspects of the policy, namely, that parents should be responsible financially for their children and that this reform should be part of an overall architecture of incentives and disincentives that actually discourages family break-up in the first place?
  (Baroness Hollis of Heigham) I am not seeking here to make any moral statement about types of family or family breakdown, or whatever. Children clearly thrive if they have a happy, secure and stable family life, but that happy, secure and stable family life can take many shapes. What I do believe is that you cannot easily separate the issue of child poverty from the situation of where a father (and it is usually the father who is the non-resident parent) walks away from his financial responsibilities to the child. You asked me to prioritise them. I would actually suggest to you they are two sides of the same coin; that where a father fails to maintain a child, as a result that child is likely to be poor. Therefore, we see these two aspects of policy—tackling child poverty and ensuring that both parents continue to accept their responsibilities (whatever may happen to their marriage their commitment to their children must remain until their children are adult)—as two sides of the same thing. What I would say, thirdly, is that, as you can clearly see, this is not Treasury driven. The fact that the £5 that is currently taken by the Treasury—he is on benefit, she is on benefit—is going to the mother, the £10 premium and the full sum going to somebody who will be on Working Families Tax Credit, would not be consistent with the Treasury trying to screw money out of it. It is obviously right that we should not ask other fathers and mothers who are taxpayers on modest means to support children when other parents walk away from them. So it is part of that package. What it is not about is the Treasury driving us to screw down benefit levels. Our concern is to tackle child poverty by ensuring that fathers—and they are largely fathers—support their children in the way they should. In the process we hope both to spring lone parents back into work and ensure that children, actually, have a sense that fathers are an important and worthwhile part of their lives.

  22. Can I explore, therefore, one area where those two sides of the same coin may, actually, be in conflict with one another? The White Paper says that " ... on balance we think the new scheme should show a slight preference to the children of the first family", but it is undoubtedly the case that the system actually gives more attention to the children of the second family than was hitherto the case. More account is taken of that. We are all aware, I am sure, of fathers who come and say "Mr Swayne, I know I have got to pay something but this is ridiculous. Don't they realise I have got another family now?" One is tempted to say "That is something you should consider, whether you are wealthy enough to enjoy that luxury." There is a normative issue there as to whether we should be providing a disincentive for people to simply get it and go and father—or acquire by some other means—another family. So the intention to give only a slight preference to the first family may undermine the normative or moral message that the system is intending, I suppose, to give. Equally, it may give rise to a practical difficulty, in that there is a high turnover in the rate at which many fathers actually acquire and discard responsibilities for step-families. That may well have a practical consequence in the need for continual assessments.
  (Baroness Hollis of Heigham) I think it is very difficult to assume that all second families are the same. I think, for example, you may have a situation where the first family has been one where a couple were married and lived together for 15 years or so, the children are in their early teens, then they divorce and he goes into a new family and he already has a long experience of supporting his children and considerable emotional investment. That is where we find that fathers who are supposed to pay most are most likely to pay it, actually, because they tend to be the older, divorced men with investment in their children. Against that you may have a situation where he may have had a one-night stand, or whatever, but the substantive family in his life is the girlfriend that he went on to marry and then had children. A third situation may be that he broke away after a co-habitation relationship and then moved in with a woman who is bringing step-children into the family and there is, so far, no biological children. The financial and emotional experiences of those three family situations are very, very different. We are saying two things, really: if you have a child, in whatever circumstances—a one-night stand, or in a long marriage—you continue to have responsibility for that child, as a father, until that child is an adult and you do not walk away from it. That responsibility takes priority over everything else, including your housing costs, your travel-to-work costs, your holidays and all the rest of it. However, we are also saying—and here you are right, there is some tension and we would try to make a judgment on how to balance that—that we do not want to undermine his capacity to have a good, secure and stable second family, because if you are not careful all you do is produce a series of dominoes—walking away from family after family, and because he cannot support this one he will go on to another. Nor do we want to see children in the second family impoverished in order to support the children in the first family. So, yes, there is going to be some tension. At the end of the day, the fact is that some men have more children than they can financially support. The dilemma then is if you "punish him" the children in the family he is currently looking after pay the bill. So we are trying to get that right; we are saying the first family comes first and all other responsibilities you take on, including having more children in other families, housing costs and so on, come after that. What we are also saying is that you should not impoverish some children to help others. We are trying to get that balance right. It is a tension, I think that is right. We think we have got it right and certainly the consultation exercise suggests we have got it right, but obviously Parliament would scrutinise it.

Mr Dismore

  23. Can I pick up on that last point about the first family having a marginal benefit? I am not sure if I was reading the White Paper right but it seems to me to have the opposite effect, in that if the 15 per cent to the second family is taken off the net income before you calculate the 15 per cent for the first family, what you take the 15 per cent from for the first family is smaller than from what you deduct 15 per cent for the second family. Is that right?
  (Baroness Hollis of Heigham) If you think about one child in the first family and one child in the second, you can either put them together and say "Right, ten and ten" and take 10 per cent off his 100 per cent income to give to the first family, or you can say "Take 15 per cent off" and take 15 per cent off the 85. Fifteen per cent of 85 is higher than 10 per cent of 100.

  24. I will play with the arithmetic later. Can I ask you about the £10 disregard for Income Support. Would that also apply to Housing Benefit?
  (Baroness Hollis of Heigham) It is a £10 disregard of maintenance before the Income Support is deducted.

  25. Would that also apply to Housing Benefit?
  (Mr Street) There is currently a £15 disregard in Housing Benefit.
  (Baroness Hollis of Heigham) So it is covered.
  (Mr Street) There are no proposals in this White Paper to change it.

  26. Can I then pick up one of the other points that Desmond was raising about the second family and all that sort of thing. Some of the papers we have had have raised the problem of serial families, where the father may have responsibilities for not just two families but three or even more. That is not dealt with, as far as I can see, in the White Paper. Has that been taken into account?
  (Baroness Hollis of Heigham) Certainly we have had quite complicated work done on what happens when he may have two non-resident families to support as well as a third family and we have done quite a lot of elaborate work on how his responsibilities in that case would be apportioned, what level of maintenance he would pay, what level of maintenance benefit she would get and so on and what we are really saying is in terms of his payments we would bring the children together so 15 per cent for the child in his existing family and then deduct off for the other two but as far as the parents with care are concerned, they are each treated separately so they would be entitled to their maintenance disregard so, yes, we have.

  27. One of the problems that has been identified in the White Paper is that 90 per cent of staff time is spent sorting out calculations and ten per cent on enforcement. When the new system is operational how would you see that balance changing?
  (Baroness Hollis of Heigham) I would hope reversing it. It is very interesting to see that staff at the moment take seven to ten weeks to train. Under the new system it will take seven to ten days because of the difference in complexity. At the moment it takes 20 to 26 weeks to get an assessment made and of course he is in arrears before you start. In future we are expecting the assessment to be done in days and the money to be flowing within four to six weeks. Given the simplicity of that the effort of the staff will not be so much in terms of enforcement as compliance. Enforcement is what happens when you do not get compliance. The effort of the staff will be in compliance and that will be getting money to flow early, getting her co-operation, getting his co-operation and getting the standing order set up and getting it to flow.

  28. When you say "reversing" you mean reversing at that level?
  (Mrs Boardman) I think, frankly, it is too early for us to be absolutely specific but it is quite clear that there will be a very significant shift and the shift I think is not perhaps so much to enforcement as such—

  29.—I take your point about compliance.
  (Mrs Boardman)—In terms of debt collection of the hard type using courts, which is right at the end and, frankly, we hope we will do as little as possible of that because we would prefer them to pay up front. It is more putting resources towards achieving compliance and undoubtedly we have spent something like a third of our resources at the moment in collecting the initial information for the initial assessment. That in itself is a huge amount of resources which is not going towards compliance or actually getting the money flowing and that is just one example of one key area of the processes and in future because we are moving from something like 104 pieces of information to something more like half a dozen, the number of staff that we will have to use simply to collect that type of information will drop dramatically and the whole emphasis will have to be on retraining, reskilling those staff so that their emphasis is no longer on collecting information and doing highly technical calculations to produce a piece of paper; it is much more to do with handling the customer and establishing the right sort of relationship with the customer, explaining to them much more and being much more proactive in keeping them up-to-date and generally managing the customers so that they are hopefully more willing to pay voluntarily but if necessary they can be chased hard if they are not voluntary.

  30. Can I pick up on the point that Joan was making about the transitional phase. How long do you see it taking to transfer current cases on to the new system once the new system becomes operational?
  (Baroness Hollis of Heigham) Do you mean how long it takes to get them started or how long before they are paying the full amount?

  31. How long before we get the existing cases onto the new method of calculation.
  (Baroness Hollis of Heigham) We do not yet know. As quickly as we can as long as we are sure that the IT systems and stuff is all in place. Once on, of course, we then expect to phase people onto the new system by £5 if they are earning up to £200 or so and then by £10 for more than that so that 85 per cent will be on within five years. Again there is a balance here between complexity, which is the phasing of the system, and fairness to the individual who does not find himself going from paying £25 or £28 a week, if he has very high housing costs, to paying £60, so we are trying to get that balance right too.

  32. My concern about this following on from what Joan was saying is I can see people coming to my surgery and demanding to get onto the new system if it suits them and we end up with an even worse situation than we have got now. At the moment we can just slag off the old system rotten. If they can see a new system operating much more effectively and money being delivered as opposed to a system where arrears are accruing, we are going to have a nightmare in trying to advise these people. You talk about transferring in £5 or £10 tranches to get onto the new system but the statistics seem to show to me that a lot of people are not paying anyway, certainly not the full amount, under the old system and would it not be better to try and get those at least paying something under the new system? Can I develop the point in relation to paragraph 40 on page 28 of the White Paper which deals with the particular transitional problem of cases where procedures started under the old system, the new system comes in and even though the new system is operational the calculation is still continued under the existing arrangement. I put it to you in this way: supposing somebody just starts an application for child support a month before the new system becomes operational, potentially they are going to have to wait the six months before they see any money. If somebody applies under the new system the day after it comes into force theoretically they are going to get their money a lot quicker than the people who applied before. What I am concerned about is the arrears issue, as we mentioned before, but if you are not collecting arrears anyway and all you are doing is creating a liability and people are not paying under the old system but will be paying under the new system because it is more effective, would it not make more sense in practice for those transitional cases to go straight onto the new system at a much earlier stage rather than spending all this time and staff effort, 90 per cent of staff effort, calculating and getting all this information which really they do not need?
  (Baroness Hollis of Heigham) I am very happy to take back the point about transition cases and look at it again. I go back to Edward Leigh's question. Are we willing to take the risk of sending everybody onto a new system from day one? Given the experience of last time the answer is no. You asked me for guarantees about the computer system and I said what I believed to be the case, that we will not go live until the computer system is robust but we know that there are always unanticipated consequences of the introduction of new systems. We have our best chance of addressing those with as little pain and as much confidence as possible if we are just taking on new cases incrementally. If we take big bang I do realise it may be easier for MPs wearing one hat but I do fear the consequences for MPs under another if the system should not prove as robust as we hope. It is a judgment and that is the judgment we have made. But particular issues like transitional cases I am very happy to look at again and I am sure that Members of Parliament will press us on this as the Bill goes through.

  33. Supposing, for example, you know the date the new system is going to come into force, would it not make sense to say any case received X weeks or months before that will be treated under the new system when it comes in?
  (Baroness Hollis of Heigham) We can look at that.

  Mr Dismore: Then you do not have to waste additional staff time.

Dr Naysmith

  34. I wanted to say first of all that it would be churlish to have you here, particularly Faith Boardman, and not say that things have improved over the last year or so. Certainly the relationship between the Agency and MPs has improved a lot and I think that also applies to clients as well, but there is still a very big problem and you are not legislating because there is not a problem, so quite clearly something has got to be done about it. Despite the improvements, that is the case. There have been lots of people asked their views on this. We have got a huge pile of reports from people suggesting things which need to be done. Everyone says that the formula has got to be changed because it is too complicated but almost everybody says that is not enough. It is not just that. We have already touched on a lot of this but one of the things I am particularly interested in is the ability of the Agency to check and verify information. That is not just with absent parents, it is also with parents with care, although that is not going to required to anything like the same extent under the new system, but checking things about income and lifestyle and also checking whether or not payments are actually being made. In the present system those are really big gaps and not enough resources are devoted to them. You are talking about introducing penalties for giving false information and little bits of encouragement to give the right information. Do you really think that you will be able to devote enough resources to that aspect of things under the new system?
  (Mrs Boardman) I think we will given time. I think we have a balancing act over the next two or three years because undoubtedly we have some real strains that we have to deal with which will restrict the amount of resources that we can put into those type of activities. Those extra strains are really two or three main things. First of all, we have a very large on-going increase in our workloads which is running at something like 20 per cent extra cases each and every year and at present we are not expecting extra funding to help us cover those extra cases so that will clearly put large efficiency strains on us. The second thing is obviously we have to get ready and develop numerous things like the IT and put a lot of skills and resources into doing that. The third thing is we will then have a very large element of extra work actually in the year of transition to educate the customers and to physically move their documents from the current system to the new system and I think until we get through those safely we have to be realistic and we cannot promise more than we can deliver in terms of getting extra resources into those areas. However, I think the legislative proposals will both give us more opportunity to get the information in a number of areas, more penalties if it is not forthcoming, but also more opportunity to divert resources at that stage. I am not promising it tomorrow but I think there is a good bet we can do it over the medium term.

  35. The area where this tends to be of most importance is when people are self-employed.
  (Mrs Boardman) Yes.

  36. Or claim to be self-employed. It is really quite difficult sorting it out. Do you think that the Inland Revenue link will help you?
  (Baroness Hollis of Heigham) Yes please!

  37. How do you intend to use them?
  (Baroness Hollis of Heigham) Effectively!
  (Mrs Boardman) It undoubtedly is quite a key to making real progress on the self-employed and I think we have worked very hard and indeed our colleagues in the Revenue have over the last few months partly in connection with the run-up to the introduction of the working families tax credit but partly in the context of the self-employed and we are developing much closer relations with them at all levels. Within the Agency we are looking very much, I suppose, at two aspects. One is to make sure that we get the right IT requirements because we need these interchanges with other departments to be as automatic as possible and to take as few resources as possible and to strictly follow the letter of the law and, secondly, to put in a number of specialist teams that are looking at the self-employed in particular. We are rolling out such specialist teams in all our six regions in the course of this financial year and those teams consist of people in our main centres working in partnership with face-to-face officers and where, for example, there is a difficulty in obtaining information from the self-employed person prompting a visit to his work premises and helping him to actually give us that information and if payment is not forthcoming in following that up as well. And the results from the early pilots and the ones we have put in so far are very encouraging in that respect. Compliance rates have gone up significantly.
  (Baroness Hollis of Heigham) I think Plymouth has gone up from 20-odd per cent to nearer 70 per cent of the self-employed which is remarkable.
  (Mrs Boardman) So there are things we can do but I cannot promise you the earth until we have the new system.

Miss Kirkbride

  38. We all have an interest in making the Child Support Agency work more effectively both for the children and for the taxpayer but it seems to me for all of us round this table our hearts are sinking at this idea of two different systems being in place at the same time and I just wonder when you get the person desperate in your surgery and he is paying 30 per cent of his income under the old regime and I could not give him a timescale under which he will be reassessed and he tells me that the chap down the road in identical circumstances is paying half what he pays.
  (Baroness Hollis of Heigham) But you would say to him he is not in identical circumstances because he has only experienced the break of his first family since the new system has became law is what you would say to him, would you not, Julie?

  39. I do not think he would take that as a satisfactory response.
  (Baroness Hollis of Heigham) If I can be frank, you are pressing us quite hard on that. The only way, I suspect, we could do it is to defer the implementation of the whole thing for another year, 18 months or so on, and I suspect that will be a price too high to pay.
  (Mrs Boardman) Even then, there would be significant risks, it has to be said.
  (Baroness Hollis of Heigham) You would still have to phase. You still could not expect people to go on to the new income right away, they would still have to phase. So your man, for example, if he was a new parent, would go straight on to his new figure, but if he was currently paying £60 a week it would be unreasonable to the parent-with-care, if she was receiving it, to find, the next day, she was only going to get £30, when she has built her lifestyle around £60. You would still have to phase, even if new cases and the existing caseload came on stream at the same time. So you would still, I suspect, have your problem. I do not think we can help as much as we would like to on that.

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