Examination of witnesses (Questions 468
- 479)
THURSDAY 16 SEPTEMBER 1999
BARONESS HOLLIS
OF HEIGHAM,
MRS FAITH
BOARDMAN and MR
MIKE STREET
Chairman
468. Can I welcome again Baroness Hollis and
Faith Boardman and Mike Street for our second session. We are
particularly grateful that you have agreed to appear. We have
not tried this before, this is the first time that we have done
this all in one piece. It has been particularly useful because
as the evidence we have had has unfolded we have been able to
tuck away ideas for clarification knowing that you were coming.
It really does make the whole process a lot more meaningful. I
know that there is never enough time in ministerial diaries so
we are indebted to you for that. Can I just perhaps set the scene
a bit from the Committee's point of view. Certainly when I first
read the White Paper in its entirety and studied the series of
events from the Green Paper I think I put it down thinking "that
is most of it sorted" but I have to say over the last couple
of days I am beginning to ask myself "and yet is it sorted?"
The first question I really want to put to you is, having listened
to the very good and powerful evidence we have had, are you really
satisfied that you have taken this opportunity, this last chance?
There was 1991 legislation, 1995 legislation, this is going to
be the last piece of legislation that we are going to have to
allow Parliament to really fix some of the things that everybody
agrees need to be attended to. Are you really confident that you
have taken the opportunity to stand back and look at the other
options? It seems to me that the White Paper is very plausible,
well argued, there are some very good things in it that starts
from where we are and tries incrementally to make progress and
you may say that is all you were attempting to do. Did you really
take the opportunity to talk to the Lord Chancellor's Department,
to look at the possibilities of using the court system? Again
I confess to you that it was a bit disconcerting to have the Liberal
Democrat spokesman quoted back at me approvingly, this is not
something that happens to me very often. Personally I have been
very sceptical about the role of the courts but we have had some
quite powerful evidence that perhaps the courts do have a role
in some aspects. I wonder are you yourself satisfied that the
force of momentum just to start from where we are and incrementally
improve it to try to address some of the short-term problems has
really given you a chance to take a step back and look at the
wider picture in the longer term?
(Baroness Hollis of Heigham) I think that is entirely
fair. When I was asked to do this job some two years ago I actually
came with an open mind. I was perfectly willing to go back to
the courts if that seemed the right way forward. I had an instinctive
preference for incremental change because I knew the costs of
major change. What I first did was actually read some of the research
evidence that had informed the previous Government's thinking
on which they had set up the Agency. That persuaded me that to
go back to the courts was not viable, it was that evidence. For
example, the evidence that was in the Government's original evidence
showed that on the same income of £140 a week a quarter of
non-resident parents with three children were assessed for £15,
a quarter were assessed for £40. Identical income, identical
circumstances and the lottery of which judge, which lawyer, what
day, etc., etc. Firstly, the courts seemed to me to be a lottery
and this seemed to come up in the previous research. Secondly,
it did not collect the money. From only 22 per cent of those on
income support were they collecting any money, they were only
collecting £126 million in 1988 compared with what we are
doing now. Thirdly, and I think this is a point Andrew Dismore
made when cross-examining Nicholas Mostyn, if that is the right
word, if one were to go back to the courts now something like
30 per cent of all lone parents have come out of divorce; and
most lone parents are single never married or single ex-cohabitation.
Of those who have gone through a divorce only a proportion have
significant property. To extend the court system across the board
to all those would mean something like one million cases extra
coming into the courts. There are usually something like two to
three changes in circumstance in the first year, so you would
be asking the courts to cope with something like three million
visits. At the moment ten per cent of all non-resident fathers
seek a change of circumstance every month although I have to say
65 to 70 per cent of those still fail to pay. Given that, the
fact that it was a lottery, the fact that it did not collect money
and the fact that it would put huge pressure on the system, that
meant that I agreed with the position of the previous Government.
If I can just take you to how we got there. We then spent the
first year when we came into Government through to the publication
of the Green Paper having an inter-departmental committee on which
sat Lord Chancellor's Department, Treasury, Inland Revenue, the
Home Office I believe and certainly senior staff of the DSS, which
I chaired. We must have had something like three to five feet
of research papers on a regular basis, on a fortnightly or monthly
basis, on which we explored issue after issue after issue. Then
by about December/January it was clear that we were beginning
to feel comfortable. We had looked at the court system and rejected
it. We had looked at the way in which the Inland Revenue handle
it and rejected that. We looked at the Australian system, the
New Zealand system, the Canada system, the Wisconsin system, we
went through that. We had the advantage of having experience of
annual conferences with the chief executives of all those agencies
on a regular basis. We fed in all of the research that we read,
some of which is in the papers.[9]
We therefore had a shape of where we thought we should go by about
January 1998. I then started having informal discussions with
some of the organisations like NACAB and NACOPF and so on to see
whether they felt that we were on the right tracks. The result
of that was we then published the Green Paper some 12 months ago.
Following the Green Paper we then had an extensive consultation
exercise, we had 1,500 replies, and I had the benefit of a lot
of help from MPs, many of whom sent me very detailed reports from
their constituency cases when they sent the Green Paper out, had
done a summary of replies and so on. In the meanwhile I was talking
to colleagues in Lord Chancellor's Department, including my political
colleagues as well as at official level, colleagues in the Inland
Revenue as well as at official level, colleagues in the Treasury
as well as at official level and, of course, the Welfare Reform
Committee. Following all of that we then went for publication
of the White Paper. So we spent the first year building up a fairly
deep research background, both modelling and testing foreign examples,
all current research. We then published the Green Paper which
we then put out to consultation, 1,500 people replied, I met some
40 organisations around the table and MPs. Following that we published
the White Paper. I hope people do not think that this was knee-jerk
policy thinking.
469. So any allegations that the discussions
surrounding the development of the policy have been research-free
zones are not justified?
(Baroness Hollis of Heigham) I was mortally wounded
by that—mortally. The point was we were putting out a policy
document which we were trying to put in accessible language to
be read not just by MPs and by academics. It was not a research
document for academics, it was a document for MPs to be able to
pass to their constituents and get their comments back and, therefore,
we stripped out the footnotes. It hurt me deeply to strip out
the footnotes but we stripped out the footnotes and tried to keep
it direct and accessible. To be criticised for not producing a
document which was not the document we had intended to produce
anyway, ie a research document as though we were some extra members
of a research institute, seemed to me to be deeply unfair. It
was supposed to be a policy document setting out what we believed
to be the appropriate skeleton, if you like, for proposed legislation
but accessible so that people could come back in and say "we
are uncomfortable about this, what should we do about that?"
470. So if I put the charge to you that in the
process of that comprehensive approach—it is very useful
to have all that on the record—you have lost some of the
child centredness some of our witnesses were looking for in pursuit
of administrative simplicity, what would be your comment?
(Baroness Hollis of Heigham) I think in the Green
Paper there was much more purple prose about the need to ensure
the wellbeing of children, that it is best to ensure a happy,
secure family life and so on and children need fathers in their
lives. Whether their fathers remain associated with their mothers
is another matter but children need them. We put a lot of that
into the Green Paper but when it came on to the White Paper I
was guided by officials that with a White Paper you change the
language, it becomes a more authoritative statement of legislative
intent as opposed to a consultation discussion document. So there
was less philosophising, if you like, in the White Paper and rather
more of it in the Green Paper but that was deliberate—we
were closing down the issues we had raised in the Green Paper—we
were trying to move the discussion on.
471. In the process of the simplification, the
courts' rough justice approach, are you satisfied that the kind
of families, some of whom might have on paper quite big incomes,
but have got commitments that match them, the kind of families
in a situation where they want to pay but cannot without disrupting
their housing arrangements, do you think that the rough justice
is properly taken into account, the financial pressure that we
may be placing some of them under who in good faith want to pay,
but cannot?
(Baroness Hollis of Heigham) I think one has to stand
back and say, "Where do the responsibilities for your child
rank in your order of priorities?"
472. Above housing costs?
(Baroness Hollis of Heigham) Yes.
473. So you move house?
(Baroness Hollis of Heigham) I am actually saying
that, for example, when you come to pay your National Insurance
and your taxes, you do not get an exemption or a reduction because
you say, "I have got very high housing costs". There
may or may not be tax allowances, as there have been in the past
for maintenance, but that is an order of priority and what we
are saying is that when it comes to responsibilities for your
children, you leave your children first and you take on new responsibilities
in the light of that. What we are trying to establish is that
change in culture. You pay your taxes, you pay your National Insurance,
you have your pension deducted and on your net pay the first priority
is the support of that first family, and then you take on the
rest of your responsibilities in the light of that knowledge.
Now, if you are in an in-tact family, that is exactly what you
would do. If you were choosing or thinking about having another
child, you would say, "Can we afford it? Is the house big
enough? Do we need to move? Does this mean my wife will have to
stop working?" or whatever. You make that judgment in an
in-tact family whether you can afford to have another child, whether
you can afford to move house, whether you can afford to increase
your housing costs. We see no reason why we should not expect
non-resident parents at the point when they are breaking up to
know they will have a permanent commitment to that child until
that child is an adult. They should bear that in mind when they
judge what the rest of their priorities and competencies for spending
are. We say they are an adult. We are not saying, "We will
allow you so much for your housing and so much for your car, but
we will not allow you anything for looking after an elderly parent".
We say, "We are reducing the amount we take from you, but
we are going to require you to pay it and we are then going to
free up more to remain in your pocket to spend as you, non-resident
father, see fit. Whether you want to spend it on a larger house,
that is up to you. Whether you choose to have more children, that
is up to you. Whether you choose to spend it on holidays or cars,
that is up to you. We are not going to second-guess you. We will
leave more money in your pocket and you, as an adult, will make
the decision as to how you spend it, but what you cannot walk
away from any more than you walk away from your responsibility
to pay taxes is your responsibility for your children".
474. I cannot resist just the additional comment
that if we are really serious about getting the enforcement mechanisms
an awful lot more efficient, then some people will end up in jail.
(Baroness Hollis of Heigham) I hope not. We will have
failed if that is the case.
475. I hope not. In fact it might be a very
easy way of extinguishing your arrears; you do 90 days and you
are given a clean sheet.
(Baroness Hollis of Heigham) What we are seeking is
compliance. Enforcement kicks in if compliance has failed and
everything we do is in terms of lowering the levels of assessment
for him, giving it to him quickly, doing the assessment within
seven to ten days and sent on to him in a couple of weeks, for
we know that unless he starts to pay within six to eight weeks
of the break-up, he is unlikely to pay. It is not surprising if
he does not get an assessment until 26 weeks or six months on
and it is a huge sum and he does not pay. With everything we are
doing, there is simplicity; add to that a maintenance disregard
in the hope of acquiring her co-operation in tracing him, and
the reduction in assessment which means we hope, as a result,
he will actually pay it and that she will actually end up getting
more for the children. All of these things are about actually
getting voluntary compliance as quickly as we can, but if at the
end of the day there are a few people who duck and weave, and,
as I say, the people who declare a change of circumstances and
still do not pay are doing that, then obviously we will get tough
on enforcement, but to that extent it is a failure of our compliance
system. We do not look at that with any pleasure.
Mr Pond
476. Can we talk about the precise point, Minister,
for a moment on housing costs in relation to shared care because
one of the issues that was raised by a number of the witnesses
was that there may here be a trade-off between the income that
is transferred from the non-resident parent to the child effectively
and the time that they can spend with them. The point was made,
I think, that in order for shared care arrangements to work properly,
then the non-resident parent really does need to have the accommodation
necessary to be able to offer proper overnight accommodation,
and I think there was a feeling amongst some of the witnesses
that there was not really equal treatment between the non-resident
parent and the parent with care and that in that admittedly minority
of cases where there were real shared care arrangements, then
in fact that clear division between the non-resident parent and
the parent with care was one which was not appropriate, that for
part of the week the parent might be non-resident and for the
other part of the week might be the parent with care and perhaps
there should be some symmetry between the two in both the treatment
of housing costs and also perhaps in the maintenance payments.
(Baroness Hollis of Heigham) I accept the issue. The
language I tend to use, if that is acceptable, is shared care
where one night a week may be spent with the father and equal
care where it is fifty-fifty because I think there are somewhat
different issues involved. On shared care, I think the figures
that FNF produced we broadly agree with. We positively hope that
we will get figures up to 22 or 25 per cent of children perhaps
spending every other weekend with their father and if it goes
better than that, that is great because the more contact, the
more maintenance will be paid and the more important the father
becomes in the child's life. Our problem is, and I put it to you,
that it would obviously be very attractive to non-resident fathers,
and might encourage them, if they were able to have housing accommodation
sustained possibly by housing benefit that was much larger than
they apparently needed for six nights of the week because the
seventh night of the week they had a child living with them. However,
that arrangement might break down after three months or six months,
but they are still getting housing benefit. Part of our dilemma
is that the Government is also anxious to see housing stock used
sensibly and not use housing benefit to supplement or subsidise
under-occupation, and that is part of the dilemma. In an ideal
world, particularly where he is not on benefit, he would have
generous housing space. I have to say that an awful lot of non-resident
fathers, at least to start with them, 50 per cent of them obviously
are not going into anyone else's home and they tend to be living
at home with their own parents and often then there is a place
for the child to stay over in the third bedroom in the council
house and so on and there it is a question of trying to get the
co-operation of his parents, the child's grandparents to make
that possible. I do accept that there can be a housing issue.
The problem with that is that the solution generates very severe
other problems which are about the relationship of the housing
benefit system to nominal under-occupation. It would effectively
mean that up to a million men could have larger accommodation
sustained by, for many of them, housing benefit that was not apparently
justified by customary occupation. That is the dilemma, but I
recognise the problem.
477. On shared care still for a moment, there
were questions raised about this, the derivation of the 15 per
cent figure and indeed the other proportions based on the 30 per
cent assumption that that was the proportion of net income and,
therefore, to share it between two parents, 15 per cent was the
appropriate figure.
(Baroness Hollis of Heigham) There are two things
there. The first thing I would want to say is that it is a judgment.
I am not saying that it is based on hard-edged research because
hard-edged research does not exist. The research that exists has
tended to be about the adequacy of benefit for lone parents vis-a-vis,
say, couple families on income support and that has been the broad
basis of the debate. All the available research is on that hand-out
I gave you, and I am familiar with it obviously. What research
there is suggests that parents on income support and benefit with
incomes of about £90 a week, will spend about £25 to
£30 of that on the child, maybe more if they can afford it,
or if they have two children, so certainly what academic research
there is suggests that this figure is about right. It is also,
however, confirmed by the international figures which perhaps
I could give to you, and obviously I am very happy to hand this
in. In Australia child support payments represented 18, 27, and
32 per cent of gross income after some of the non-resident parent's
basic living costs have been deducted, which again is broadly
in line. In New Zealand the rates are 18, 24 and 27 of gross income,
allowing for some living costs. In Wisconsin, child support payments
are based on gross income at 17, 25 and 29, though it has departures.
The Netherlands has a complex formula similar to ours while Austria
has a simple slice which is 16 per cent which increases as the
child grows older. Our figure is pretty close, and we were obviously
influenced by this, to the going rate of every scheme that we
know. Presumably they too have had that influenced by their local
research which seems to support ours. It is a judgment but it
is not a figure that is plucked out of the air, it is based on
the best information we have and international experience.
478. On the issue of poverty, which is what
we discussed in the first session on Tuesday, the comforting thing
is that most of the witnesses asked on this issue agreed that
as part of the package of measures this would have a significant
impact on child poverty and towards that target of a 20 year elimination.
This morning we got some figures from the Institute for Fiscal
Studies and the Family Policy Studies Centre which I think confirmed
that the changes, certainly combined with the move towards the
Working Family Taxes Credit, would have an effect even without
behaviourial changes by parents.
(Baroness Hollis of Heigham) Yes.
479. But that the main effect, putting aside
for a moment those behaviourial changes, was on income support
and the effect of the disregard which was widely welcomed. A number
of witnesses proposed that level should be £15 rather than
£10 which I know means an additional £40 million in
expenditure. The evidence we heard this morning suggested that
would not have an effect on incentives for lone parents but would
have quite a considerable impact in terms of the poverty reduction
effect of the changes. When we come to the behaviourial effect
that is where the really good news comes in. It does seem that
the changes, according to some of the calculations we heard this
morning, will mean a significant reduction in the number of lone
parents who are non working and quite a significant increase in
the proportion who are working mainly part-time, it seems to have
little effect on full-time employment. About half of that is due
to these reforms and the other half due to the move to the Working
Families Tax Credit.
(Baroness Hollis of Heigham) Yes.
9 See Ev. pp. 201-2. Back
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