Examination of witnesses (Questions 20-39)
TUESDAY 14 SEPTEMBER 1999
BARONESS HOLLIS
OF HEIGHAM,
MR MIKE
STREET and MRS
FAITH BOARDMAN
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 policytackling
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
Treasuryhe is on benefit, she is on benefitis 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 fathersand they are largely fatherssupport
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 fatheror acquire by some other meansanother
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 circumstancesa
one-night stand, or in a long marriageyou 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 sayingand here you are right, there
is some tension and we would try to make a judgment on how to
balance thatthat 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 dominoeswalking
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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