Examination of witnesses (Questions 440
- 448)
THURSDAY 16 SEPTEMBER 1999
DR HELEN
BARNES, DR
GILLIAN PAULL
and PROFESSOR IAN
WALKER
Mrs Humble
440. Can I explore with you a little your concern
about the treatment of second families which you believe is too
generous, especially the proposal to include step children, indeed
any children, of the second family. Again, I was trying to follow
the statistical information about the impact of any changes on
second families. There is an assertion in the document, and you
made it yourself, about the absent parent being better off under
these changes and if there was an impact it would be marginal
on them. I was interested in the way that you were talking about
the absent parents in poverty being a smaller group than the parents
with care. Many of the constituency cases that I get are not absent
parents who are in poverty but absent parents who are in extreme
financial difficulty. They may actually have a very reasonable
income but their outgoings are such that it means when they are
required to make their child maintenance payments they have hardly
anything left to live on and that is obviously to do with the
individual circumstances of the case, often to do with how they
accepted debts at the break up of the relationship. I wonder if
in your research you have been looking at people who may on the
basis of their income appear to be well off but because you do
not know, I do not know how you can know, all of their outgoings,
in fact there are a lot of absent parents who are in financial
difficulty in making their child maintenance payments?
(Professor Walker) The figures that you have heard
are based upon DSS equivalisation methods which adjust only for
the family circumstances of the household. The concept of poverty
that we use is the HBAI before housing costs concept. We do not
allow for differences in housing costs to make a difference to
people's welfare levels, which we could do. We could redefine
these poverty levels to account for housing costs, but housing
costs are not that well recorded in the data so we would be introducing
some prospect of measurement error.
441. I am simply pointing out that there are
a lot of people out there who do not fit your statistical data
and they are likely to be the ones who come knocking on my door.
(Professor Walker) Sure.
442. Linked into that is again your concern
about dual earner households. Under the existing horrendously
complex procedure, as I understand it, the new partner of the
absent parent, her income is not taken into account in the assessment
of the child maintenance but it is taken into account in the computation
on the residual income that must remain to that second family.
So many of those new partners bitterly resent that their income
is taken into account, as they see it, in maintaining that first
family. You appear to be saying that it ought to be taken into
account. Am I right in saying that?
(Professor Walker) I think we have tried to step back
from normative judgments like that.
Chairman
443. Lucky you!
(Professor Walker) We are telling you what the implications
are in terms of people's net incomes. The source of those net
incomes is a separate issue. One of the things that we aim to
do in the next two years, funded by the Nuffield Foundation grant,
is to look at the wider incentive effects of child support design.
For example, asking questions, like "Is it the case that
by imposing a tax on new partner's income by making it part of
the child support formula that you change the incentives for re-partnering?"
Re-partnering is a choice that people make. It seems a little
odd to give a lot of weight to the implications of those choices.
Mrs Humble
444. There is also the important issue of fraud
and absent parents who do not declare that they either have a
new partner or that their new partner is earning any income so
that is not taken into account. The proposals in the White Paper
are to change the rules and regulations about giving false information
to the Child Support Agency. Can you take that into account when
you are looking at your statistics?
(Professor Walker) To a limited extent. Clearly the
existing formula is complicated and not only is it complicated
and requires lots of information, that information is often hard
to verify and perhaps easy for the individuals concerned to manipulate.
The additional enforcement resources that the CSA will have at
its disposal, to wage withhold and so on, seem to me to be a move
likely to promote compliance but we cannot precisely say how because
we have never had the evidence that allows us to draw that implication
from history.
Dr Naysmith
445. How about in America? You have got studies
in America saying that compliance does not necessarily increase
with simplicity.
(Professor Walker) That is right.
446. What about bringing in the kinds of measures
that Joan is talking about that are mentioned in the White Paper,
are they tried anywhere in America?
(Professor Walker) I do not recall any US evidence
specifically on that point.
447. It is variable, not just simplicity, there
are other things as well that would have a much bigger effect.
(Professor Walker) You are perfectly right. The incentive
implications of these things are going to be very complicated
because there is a large number of players who have an input into
these calculations.
(Dr Paull) One thing we did look at in our data was
to see whether compliance changes for individuals who have more
complicated assessments. For example, with absent parents who
have partners, we see a very different compliance rate because
in our survey data we do know what the new partner is earning,
so we can get a measure on whether compliance is partly due to
fraud or partly due to the fact that the absent father just is
not paying his full assessed liability. We can see that in the
survey data and we can look at that as well.
Chairman
448. It has been a very interesting session.
I am still struggling to try and work out what it is you want
us to do with all this important work. You used the phrase in
the penultimate sentence on the back of the sheet you have given
us, "Do not fudge the issues with transition arrangements".
What does this actually mean briefly?
(Professor Walker) There is a tendency when implementing
changes to take a very short-term view of evaluating the impact
of those changes and since people may be tempted to do that, politicians
may be tempted to place a disproportionate amount of weight on
people who are current losers under the reform, forgetting that
there are future generations of separated couples out there that
are also going to be affected by the reform. We are redesigning
child support for the long term and I think we ought to take into
account long-term issues, so it is important to get these things
straight in our minds without confusing the issue with short-term
considerations.
Chairman: Thank you very much for your attendance
this morning. It has been very interesting and we look forward
to getting copies of the data when they are ready.
| 
