House of Commons - Explanatory Note
          
House of Commons
Session 1999-2000
Publications on the internet
Other Bills before Parliament
Arrangement of Clauses (Contents)

Child Support, Pensions And Social Security Bill


 

These notes refer to the Child Support, Pensions and Social Security Bill
as introduced in the House of Commons on 1st December 1999 [Bill 9]

Child Support, Pensions And Social Security Bill


Explanatory Notes

introduction

These Explanatory Notes relate to the Child Support, Pensions and Social Security Bill as introduced in the House of Commons on 1st December 1999. They have been prepared by the Department of Social Security in order to assist the reader of the Bill and to help inform debate on it. They do not form part of the Bill and have not been endorsed by Parliament.

The notes need to be read in conjunction with the Bill. They are not, and are not meant to be, a comprehensive description of the Bill. So where a clause or part of a clause does not seem to require any explanation or comment, none is given.

Structure of the notes

The notes start with a brief overview of the Bill as a whole, outlining the different measures and setting them in context. The notes are then divided into five parts that provide the background to the changes and detailed commentary on the clauses for each of the areas covered by the Bill. Certain overarching issues (for example, the Bill’s financial effects) are grouped at the back of the document.

Terminology

At the end of the notes there is a glossary of some of the terms that are referred to in the notes. These are marked in the text with an asterisk. Other definitions or explanations of terms are given in the main body of the notes. Social security benefits are referred to by their common names and abbreviations (for example, “Jobseeker’s Allowance” or “JSA”, rather than by the terms that appear in the legislation (for example, “a jobseeker’s allowance”).

Financial effects

Unless otherwise indicated, figures are expressed in 1999/2000 price terms.

CONTENTS

OVERVIEW OF THE BILL

3

PART 1: CHILD SUPPORT

4
Background
Commentary on clauses

PART II: PENSIONS

50

Background
Chapter 1: State Second Pension56
Commentary on clauses
Chapter II: Occupational and Personal Pensions65
Commentary on clauses
Chapter III: War Pensions
Background
Commentary on clauses
PART III: SOCIAL SECURITY ADMINISTRATION
Loss of benefit for breach of community order92
Background
Commentary on clauses
Investigation powers99
Background
Commentary on clauses
Housing Benefit: recovery of benefits108
Background
Commentary on clauses

PART IV: NATIONAL INSURANCE CONTRIBUTIONS

110
Background
Commentary on clauses
PART V: MISCELLANEOUS AND SUPPLEMENTAL115
Commentary on clauses
SCHEDULES117
FINANCIAL EFFECTS OF THE BILL117
PUBLIC SERVICE STAFFING EFFECTS123
SUMMARY OF REGULATORY IMPACT ASSESSMENT123
EUROPEAN CONVENTION ON HUMAN RIGHTS125

GLOSSARY

126

OVERVIEW

Background to the Bill

1. In March 1998, the Government set out its broad welfare reform agenda in the Green Paper entitled New ambitions for our country: A NEW CONTRACT FOR WELFARE (Cm 3805). The central principle espoused in the Green Paper was “work for those who can, and security for those who cannot.”

2. Since then, the Government has legislated for a number of reforms in the Welfare Reform and Pensions Act 1999 and has published two main documents of relevance to this Bill, to take forward that broad agenda:

  • Green Paper A new contract for welfare: PARTNERSHIP IN PENSIONS (Cm 4179), published in December 1998. Some of the proposals for reform have already been taken forward in the Welfare Reform and Pensions Act 1999. These include the introduction of stakeholder pensions and changes to occupational and personal pensions.

  • White Paper A new contract for welfare: CHILDREN’S RIGHTS AND PARENTS' RESPONSIBILITIES (Cm 4349), published on 1st July 1999.

3. In addition, the Government has reviewed the operation of the National Insurance system, the way in which the appeals system for War Pensions operates, enforcement of community punishments, and the powers held by fraud inspectors.

The measures in the Bill

4. The main elements in the Bill are:

Part I: Reform of the child support system

Part II:

  • Reform of the State Earnings Related Pension Scheme by way of the State Second Pension;

  • further reform of the regulation of occupational and personal pensions; and

  • measures to extend appeal rights for war pensioners and the introduction of new time limits.

Part III:

  • measures to withdraw or reduce benefit entitlement where an offender has breached the terms of a community sentence;

  • clarification and alignment of the powers of benefit fraud and which currently differ between different benefits and between DSS and Local Authority investigators; and

  • removal of the discretion of Local Authorities to recover overpayments of Housing Benefit resulting from tenant fraud from a landlord (other than in cases of collusion) where the landlord has reported the alleged fraud.

Part IV: Aligning the treatment of benefits in kind for employers’ National Insurance Contributions with their treatment for Income Tax purposes.

PART 1: CHILD SUPPORT

BACKGROUND

The current system

5. The current system dates from 1993, established by the Child Support Act 1991 (the 1991 Act). In the preceding decade, while the number of children living in lone-parent families increased substantially, the proportion of children receiving maintenance fell – in 1989, 23% of lone parents claiming *Income Support were receiving maintenance, compared to around 50% in 1979. The new child support system was intended to reverse this decline, by providing consistent rules for assessing maintenance liability, and a readily accessible means for collecting and enforcing payment that was due.

6. The 1991 Act set out the structure of a maintenance formula for calculating child support liability. This formula, which took into account the income, housing costs and family responsibilities of both parents, replaced the largely discretionary decisions on maintenance taken by the courts. A system was built up around this formula, administered by the new Child Support Agency (CSA) to ensure the correct calculation of the liability, the collection of maintenance, and enforcement if payment was not forthcoming.

7. Further regulations and the Child Support Act 1995 (the 1995 Act) built upon the 1991 Act. In particular, the 1995 Act introduced the Child Maintenance Bonus, intended as an incentive to encourage parents with care into work, and also introduced the departures scheme which allows for the assessment of child support liability to take account of exceptional circumstances not recognised in the formula-based assessment.

The proposals for reform

8. The Government’s plans for reform of the current system are set out in the White Paper A new contract for welfare: CHILDREN’S RIGHTS AND PARENTS’ RESPONSIBILITIES (Cm 4349) published on 1st July 1999. Proposals were first published in July 1998 in the consultation document CHILDREN FIRST: a new approach to child support (Cm 3992). Over 1500 written responses were received which have informed the current plans.

9. The White Paper identified a number of problems with the current system:

  • while the CSA has almost 1.5 million children on its books, only around 300,000 gain financially from child support payments. Of these 300,000, only around 100,000 see the benefit of all the maintenance that is due.

  • the complexity of the current formula leads to long delays in assessing liability. This in turn makes it difficult to ensure that child support is paid regularly. Because the assessment process is complex, the CSA has less time to help parents understand what they should pay or to chase up non-payment.

  • families living on Income Support do not gain from the payment of maintenance as their benefit is reduced by an amount equal to the maintenance paid.

10. The key changes proposed in the White Paper to address these issues were:

  • simplification of the way in which child support liability is assessed by replacing the current complex assessment formula with a simple percentage of the non-resident parent’s net income;

  • the introduction of a child maintenance premium in Income Support and income-based *Jobseeker’s Allowance that will enable families receiving these benefits to keep up to £10 a week of the maintenance paid for their children. Under current rules, maintenance reduces these benefits pound for pound;

  • strengthening the sanctions regime by building on existing powers contained in the current scheme, and introducing new measures, to improve compliance;

  • reform of the CSA’s service to its customers by increasing use of the telephone and face-to-face contact, directing a greater proportion of its resources to making sure maintenance is paid on time and sorting out disputes about liability or payment arrangements as soon as possible and, wherever possible, without the need to refer the dispute to an appeal tribunal.

11. Not all of the proposed reforms require primary legislation. For example, the child maintenance premium can be introduced through amendments to the relevant secondary legislation. And, to implement the reforms, substantial changes to the way that the CSA operates will be necessary, including the introduction of new computer systems.

The measures in the Bill

12. The provisions in the Bill, which replace the existing formula with a simpler system of rates and clarify the responsibilities of parents, cover in particular:

  • the processes for applying for child support and the way in which child support liability will be decided;

  • the rates used for calculating maintenance liability, based on 15% of the non-resident parent’s income for one child, 20% for two and 25% for three or more;

  • what is to count as income;

  • clear penalties for parents who deliberately misrepresent their circumstances to the CSA - and for those who refuse to provide the information needed to calculate liability and collect maintenance;

  • the variation of the normal rate of maintenance liability to recognise certain exceptional costs and sources of income;

  • rights to dispute and appeal decisions on child support liability and the processes by which liability will be kept up to date;

  • the formation of a complete and comprehensive collection scheme with financial and other penalties for late and non-payment;

  • improvements to the provisions for establishing paternity;

  • transitional provisions and phasing processes to allow movement from the existing scheme to the new scheme; and

  • other matters such as:

    • the relationship between court orders for child maintenance and the child support system;

    • liability for certain non-resident parents living abroad;

    • the introduction of fees for child support services when these reach an acceptable standard; and

    • benefit penalties when a parent with care on Income Support opts out of child support arrangements without good cause.

COMMENTARY ON CLAUSES

Maintenance calculations and interim and default maintenance decisions

Clause 1: Maintenance calculations and terminology

13. A central part of the Government’s reform of the child support system is a new way of working out child support liability. In place of the existing formula, which includes a wide range of income and expenses in the assessment, will be a simpler system of rates, based solely on:

14. It is intended that the maintenance calculation should be based on one of three rates:

15. These rates can be modified in shared care cases, that is, if the non-resident parent has any child for whom he is liable to pay child support living with him for at least one night a week. Provision for shared care is set out in Schedule 1, paragraphs 7 to 9. Maintenance liability can also be varied in exceptional cases – the provisions for varying the liability are in clauses 5 to 7 of this Bill.

16. Sections 4 and 7 of the 1991 Act provide that persons with care, non-resident parents and, in Scotland, qualifying children, can apply for a maintenance calculation. Section 6 of that Act (amended by clause 3) provides that parents with care who claim Income Support or income-based Jobseeker’s Allowance can be treated as having applied for a maintenance calculation. It is the duty of the Secretary of State to reach a decision on any application for which he has jurisdiction.

17. Sections 4(10) and 44 of the 1991 Act provide circumstances in which there is no jurisdiction. These provisions are amended by clauses 2 and 21 of this Bill.

18. Clause 1 provides the basis for the maintenance calculation and the rates that will be used to determine maintenance liability.

19. Subsection (1) substitutes a new section 11 (dealing with the rules for maintenance calculations) in the 1991 Act.

New section 11: Maintenance calculations

20. This section places a duty on the Secretary of State to make a maintenance calculation. It provides, for the purposes of revision, supersession and appeal, that the outcome of the calculation is a decision about whether child support maintenance is payable.

21. Subsection (2) amends the 1991 Act to replace existing child support terminology where it appears in the 1991 Act with the new terminology to be used in the reformed child support scheme.

  • Maintenance calculation will replace maintenance assessment.

  • Default or interim maintenance decision will replace interim maintenance assessment. (This is covered in more detail at clause 4).

  • Decision will replace assessment wherever it occurs in connection with a default or interim decision of maintenance.

  • Calculation will replace assessment wherever it occurs in connection with an assessment of maintenance except where it refers to a default or interim decision.

22. Subsection (3) introduces a new Part 1 of Schedule 1 to the 1991 Act.

Schedule 1: Calculation of weekly amount of child support maintenance

23. This Schedule replaces Part I of Schedule 1 to the 1991 Act with a new provision that sets out the way that the weekly amount of child support maintenance will be calculated.

Paragraph 1: General rule

24. This paragraph provides the foundation on which child support liability is based.

p>Paragraph 2: Basic rate

25. This paragraph provides the rules for determining the basic rate for child support liability.

    Sub-paragraph (1) provides for the basic rate to be calculated at a set percentage of the non-resident parent’s net income. Where the non-resident parent is liable for maintenance for one qualifying child, the basic rate is 15%. For two children, the basic rate is 20% and for three or more children, the basic rate is 25%.

    Sub-paragraph (2) provides for the non-resident parent’s net income to be reduced by 15, 20 or 25% where he has one, two or three or more children living with him (relevant other children) before the provisions of sub-paragraph (1) are applied.

Paragraph 3: Reduced rate

26. This paragraph provides the rules for determining which non-resident parents will have a liability calculated at the reduced rate.

    Sub-paragraph (1) provides that a reduced rate is payable where the non-resident parent’s net income is less than £200 but more than £100 unless the non-resident parent is liable for the nil rate or flat rate of liability.

    Sub-paragraph (2) provides for the reduced rate to be prescribed in regulations. The intention is that regulations will provide for percentages to be applied to net income so that liability increases in proportion to the amount by which net income exceeds £100.

Example: Neil has one qualifying child. His earnings are £150 and his liability is £18. When his earnings increase to £170, his liability increases to £23, in proportion to the amount by which his earnings exceed £100.

Paragraph 4: Flat rate

27. This paragraph provides the rules for determining which non-resident parents will have a flat rate liability.

    Sub-paragraph (1) provides for the flat rate to be payable where it applies and sub-paragraph (2) does not. Sub-paragraph (1) applies where the non-resident parent has net weekly income of £100 or less; or he is in receipt of any prescribed social security benefits, a pension or allowance, or he or his partner (if any) is in receipt of prescribed benefits. The flat rate is not payable in a case where a non-resident parent has a nil liability (see paragraph 5).

    Sub-paragraph (2) provides for the flat rate to be payable at a different amount where the non-resident parent’s partner is also a non-resident parent with a maintenance calculation in force and either the non-resident parent or his partner is in receipt of a prescribed benefit, which are intended to be Income Support or income-based Jobseeker's Allowance. It is intended to provide for the non-resident parent’s liability to be one half of the flat rate amount.

    Sub-paragraph (3) provides for the prescribed social security benefits, pensions and allowances in sub-paragraph (1)(b) to include those paid to non-resident parents under the law of countries other than those in the United Kingdom, for example a state retirement pension paid to an EC national.

Paragraph 5: Nil rate

28. This paragraph provides that the non-resident parent will be liable for a nil rate where he has a net income of below £5 or is of a prescribed description. It is intended to prescribe full time students in advanced education and prisoners for this purpose.

Paragraph 6: Apportionment

29. The provisions of this paragraph deal with cases where there is more than one person with care and more than one qualifying child in respect of the same non-resident parent. In these circumstances, the maintenance liability of the non-resident parent will be apportioned between the persons with care. The non-resident parent’s liability is divided by the number of qualifying children and then shared between the parents with care in proportion to the number of qualifying children in each family.

Example: David has three qualifying children, one being cared for by Dawn and two being cared for by Rebecca. Dawn would receive one-third of David’s maintenance liability, whilst Rebecca would receive two-thirds.

Paragraph 7: Shared care – basic and reduced rate

30. The provisions of this paragraph set out the rules for adjusting maintenance liability where the non-resident parent shares the care of a qualifying child (see paragraph 9) and the maintenance liability is calculated at the basic or reduced rate.

    Subparagraph (1) restricts a reduction in liability for shared care under this paragraph to maintenance payable at the basic or a reduced rate. Paragraph 8 (see below) provides for the effect of shared care on a flat-rate liability.

    Subparagraphs (2) to (4) provide that where the non-resident parent has overnight care of the child for at least 52 nights in total during a prescribed 12 month period, the basic or reduced rate will be decreased by one-seventh for care on 52 to 103 nights, two sevenths on 104 to 155 nights, three-sevenths for care on 156 to 174 nights and one-half for care on 175 or more nights. Where a period of 12 months is not available, regulations allow the Secretary of State flexibility to use a period other than 12 months, or to take account of future arrangements (see paragraph 9).

    Sub-paragraph (5) provides that where the parent with care is caring for more than one qualifying child of the same non-resident parent then the reduction will be the sum of the relevant fractions divided by the number of such qualifying children. For example, where the non-resident parent shares the care of two children, one for an average of one night a week, and the other for an average of two nights a week, his liability is reduced by 3/14ths.

    Sub-paragraph (6) provides for the maintenance liability to be reduced by a further £7 for each qualifying child for whom care is equally shared.

    Sub-paragraph (7) restricts the amount by which the provisions of this paragraph can reduce liability so that the non-resident parent cannot have a liability of less than £5.

Paragraph 8: Shared care – flat rate

31. The provisions of this paragraph apply where the non-resident parent has a flat rate liability because he is in receipt of a prescribed social security benefit, pension or allowance or he or his partner are in receipt of prescribed benefits or he and his partner receive prescribed benefits and both are non-resident parents.

    Sub-paragraph (2) provides that where a non-resident parent shares the care of a qualifying child for at least 57 nights, his liability to the parent with care of that child will be nil. However, his liability to any other parent with care to whom he is liable to pay maintenance will remain.

Example: a non-resident parent has two children living with different parents with care. His flat rate liability is £5 and this is apportioned amongst the parents with care at £2.50 each. The non-resident parent shares the care of a child in the first parent with care’s household and therefore pays nothing to that parent with care. However, his contact with the child living with the second parent with care is limited and does not meet “shared care” criteria. He therefore pays £2.50 to the second parent with care.

Paragraph 9: Regulations about shared care

32. The provisions of this paragraph allow the Secretary of State to use regulations to set the parameters of what counts as shared care. Regulations will provide for what nights count for this purpose, what counts as care in these purposes and the use of periods other than 12 months to set the reduction for shared care.

Paragraph 10: Net weekly income

33. This paragraph enables the Secretary of State to specify in regulations the items to be taken into account in calculating the net weekly income of the non-resident parent. The intention is to take account of income tax, National Insurance contributions, contributions to an Inland Revenue approved pension scheme and other types of specified income. Sub-paragraph (2) allows the Secretary of State to estimate a non-resident parent’s income, or make an assumption as to any fact, if he feels that the information he has is incomplete or not truly representative.

Paragraph 10A: Regulations about rates, figures, rounding etc

34. This paragraph provides a regulation-making power enabling the Secretary of State to adapt the percentages and amounts used to set the maintenance rates, to revise the number of nights and fractions used to adjust the maintenance calculation where care of a child is shared, to round up or down the amount apportioned to parents with care from a single non-resident parent, and to provide the figures to be used if the apportionment calculations referred to in paragraph 6 produce, in aggregate, a figure different from the non-resident parent’s overall liability. The intention is that the non-resident parent’s overall liability will usually be rounded to the nearest pound.

Paragraph 10B: Regulations about income and capital

35. This paragraph provides the Secretary of State with regulation-making powers to enable him to define what will and will not count as income. For example, where the Secretary of State is satisfied that a non-resident parent has intentionally deprived himself of income, by, for example, working for a relative and not being paid, the regulation-making power will allow him to include that income for the purposes of calculating his maintenance liability.

Paragraph 10C: References to various terms

36. The provisions of this paragraph set the definitions of various terms used in this Schedule.

    Qualifying children: Children who are living apart from one or both parents and for whom the maintenance calculation falls to be made.

    Relevant other children: Children in respect of whom either the non-resident parent or his partner receives *child benefit, or in respect of whom certain other prescribed conditions are met. For example, it is intended to prescribe for a child to be a relevant other child where child benefit entitlement conditions are not yet met because the child has not been resident in the United Kingdom for more than 26 weeks.

    A person “receives” a benefit, pension or allowance for any week for which it is paid or due to be paid.

    A person’s partner: the other member of a couple. Or, in the case of a marriage under a law which permits polygamy, another party to the marriage who is of the opposite sex and is a member of the same household.

    A couple: a man and woman who are married and members of the same household or not married and living together as husband and wife.

Clause 2: Applications under section 4 of the Child Support Act 1991

37. The White Paper Children Come First published in 1990, stated that the current child support system would be available to all parents. However, it was recognised that a staged programme of implementation would be needed. Priority would be given to those who needed child support most. The take-on of applications from parents who had existing maintenance arrangements was deferred and the jurisdiction of the Child Support Agency (CSA) in cases where either parent or the child was living abroad was specifically denied.

38. The phased take-on of applications from parents with existing maintenance agreements was set out in regulations (SI 1993/966). Section 44 of the 1991 Act excludes cases where the parents are not habitually resident in the United Kingdom from the CSA’s jurisdiction.

39. By 1995 it was clear that the CSA was not in a position to take on such a high volume of cases and an amendment was introduced. Section 4(10), inserted by the 1995 Act, deferred applications for child support for an indefinite period where, for example, there was a written maintenance agreement in force made before 5th April 1993, or there was any maintenance order. These cases would continue to be subject to the jurisdiction of the courts.

40. The term ‘maintenance order’ is defined in section 8(11) of the 1991 Act as an order requiring periodical payments to, or for the benefit of, a child under specified legislation. Written maintenance agreements, which are registered in Scotland in the Book of Sessions, are also treated as ‘maintenance orders’.

41. This clause provides for the Secretary of State to accept applications from parents who have a maintenance order made after the reforms are introduced provided that the order has been in force for at least a year. Parents with maintenance orders in force at the time that the reforms are introduced – and those with written maintenance agreements made before April 1993 – will, as now, use the courts for enforcement and variation of child maintenance liability.

42. The clause amends section 4(10) of the 1991 Act, which prevents the CSA from accepting applications from parents with maintenance orders.

43. Subsection (2) amends this exclusion to refer only to maintenance orders made before a prescribed date. The Government intends to prescribe the date that the reforms come into effect for this purpose.

44. Subsection (3) adds a new exclusion to cover maintenance orders made after the prescribed date if they have not been in force for at least a year.

45. The Government intends to use its powers to prescribe the effective dates of maintenance calculations in paragraph 11 of Schedule 1 to the 1991 Act to set the effective date of any liability resulting from an application covered by the new section 4(10)(aa) to two months after the date of application. This will allow both parents time to consider whether they wish to renegotiate the maintenance order before child support liability begins. The ‘effective date of any liability’ is the date when the court order ceases to have effect and child support is payable.

Clause 3: Applications by persons claiming or receiving benefit

46. Currently a parent with care on Income Support or an income-based Jobseeker's Allowance or any other prescribed benefit can be required to authorise the Secretary of State to take action to recover child support maintenance. She is not required to do so if there are reasonable grounds for believing that if she were to do so there would be a risk to her, or any child living with her suffering harm or undue distress. This is known as ‘good cause’ for not claiming child maintenance.

47. Under the reformed child support system, parents with care who get Income Support or income-based Jobseeker's Allowance will be treated as having applied for child support, unless they specifically request the Secretary of State not to recover child support maintenance. Where a parent asks the Secretary of State not to pursue maintenance the Secretary of State will decide if she has ‘good cause’ not to do so and if he concludes she does not, her benefit will be reduced by a prescribed amount, currently 40% of the adult personal allowance. This benefit penalty will apply until she asks the Secretary of State to pursue maintenance or shows good cause, as now. The current definition of good cause will be retained.

48. Clause 18 of this Bill substitutes section 46 of the 1991 Act, which provides for a benefit penalty for parents with care to whom section 6 applies if they refuse, without good cause, to agree to child support action for their children. While the current section 6 includes a consideration of good cause before requiring the parent to apply for child support, the amendments in clause 3 will allow parents to opt out of the child support process under any circumstances. The consideration of whether there is good cause for opting out now forms part of the consideration of a benefit penalty, and so is placed in an amended section 46 in clause 17.

49. The policy intention is that, having been told by the parent with care that she wishes to opt out, the Secretary of State will ask for her reasons. The parent will have four weeks to provide reasons. If at the end of this time, it is accepted that there are reasonable grounds for believing that pursuing child support would cause harm or undue distress to the parent with care or her children, no further action will be taken. If the Secretary of State decides that there is no good cause, he will impose a benefit penalty.

50. Clause 3 provides that parents with care on Income Support or income-based Jobseeker's Allowance are to be treated as applying for child support unless they choose to opt out. This clause substitutes for section 6 of the 1991 Act, a new section 6 under which the parent with care is treated as applying for child support and clause 18 substitutes section 46 in relation to failure to comply with obligations imposed by section 6.

New section 6: Applications by those claiming or receiving benefit

    New section 6(1) to (3) provide that a parent with care who claims or who is receiving Income Support or income-based Jobseeker's Allowance will be treated as having applied for child maintenance. Subsection (1) contains a power to prescribe other benefits for the purpose of this section: for example, should another income-related benefit be introduced in the future.

    New section 6(4) requires the Secretary of State to notify the parent with care of this, of her ability under subsection (5) to request him not to act, and of the power to impose a reduced benefit direction under section 46(5).

    New section 6(6) sets out that this will apply whether or not she receives the benefit in respect of that qualifying child. This provision is contained in the current section 6 (see subsection (8)). A parent with care can claim benefit for herself and the qualifying child, but benefit for the child will not be awarded in circumstances where the child has earnings, a trust fund or settlement, or capital of more than £3000.

    New section 6(7) follows closely the wording in the current subsection (9). It requires the parent with care to provide the Secretary of State with the information to enable him to identify or trace the non-resident parent so that a child support maintenance calculation can be made and payments collected. She is not required to comply with this section if she has asked the Secretary of State not to pursue child maintenance.

    New section 6(8) provides a power to make regulations specifying the circumstances in which the requirement to supply information will be waived. This carries forward a power (which has not been used) in the current section 6. This power is retained because it may provide protection for parents with care in as yet unforeseen circumstances.

    New section 6(9) allows a parent with care who is no longer entitled to a benefit to which this section relates to stop child support action. It makes it clear that, until the parent indicates that she wants child support to cease, the Secretary of State may continue to pursue maintenance.

    New section 6(10) of the substituted section 6 requires the Secretary of State to comply with a request under subsection (9) to cease acting. Regulations under new section 6(11) can provide for the detail of how this will happen.

    New section 6(12) reflects the current section 6(14). It provides that the provisions in this clause will apply even when there is a maintenance calculation already in force. For example, in situations where there is a change in the parent with care’s circumstances, and she claims good cause or makes a new application.

Clause 4: Default and interim maintenance decisions

51. There will be circumstances in which a final maintenance calculation cannot be made straightaway, for example, when sufficient details are not made available, or need to be verified. The reformed scheme will allow for maintenance to be collected:

  • where the information needed to complete a maintenance calculation is not immediately available, using a default rate; and

  • where the calculation cannot be completed because an application for a variation is outstanding, using an interim rate.

52. The system of default rates will allow the CSA to get maintenance flowing quickly where there is no information about the non-resident parent's current earnings. It is intended that these will be set at 15%, 20% or 25% of average non-resident parent's weekly earnings (currently around £200) according to the number of qualifying children.

53. It is intended that, when the information needed to complete a proper assessment is provided, the default rate will be superseded by a new maintenance calculation. It is intended that maintenance liability for the past will only be recalculated if the full rate is higher than the default maintenance rate. This will both provide an incentive to non-resident parents to provide information quickly and avoid creating overpayments which have to be recovered from the parent with care.

54. The interim rate will be set at the same level as the normal maintenance calculation pending a decision on the variation application. If a variation is allowed, the interim rate will be superseded to put into effect the new rate of maintenance liability resulting from the variation.

55. Clause 4 substitutes a new section 12 of the 1991 Act which provides for decisions to set liability at a default or interim rate. The clause provides the power to make regulations which will define the way that these decisions are made and subsequently altered.

New section 12: Default and interim maintenance decisions

    New section 12(1) provides for a default maintenance decision that will establish a maintenance liability calculated in accordance with regulations made under subsections (4) and (5). This decision may be made where there is insufficient information to decide maintenance liability.

    Decisions on maintenance liability are covered by section 11 of the 1991 Act (as substituted by clause 1 of this Bill) which requires Secretary of State to make a decision on an application for a maintenance calculation, and by sections 16 and 17 of the 1991 Act which provide for the revision and supersession of maintenance decisions.

    New section 12(2) provides for interim maintenance decisions in cases where the non-resident parent has made an application for a variation which has not yet been determined.

    Sections 28A and 28B of the 1991 Act, inserted by clause 5 of this Act provide for applications for a variation and the preliminary consideration of such applications.

    New section 12(3) provides that an interim maintenance decision will be fixed in accordance with Part 1 of Schedule 1.

    New section 12(4) and (5) provide for regulations to define the way that default and interim decisions are made. The Government intends to provide by regulations that default rates will be £30 per week for one qualifying child, £40 for two children and £50 for three or more children

Applications for a variation

Clauses 5: Departure from usual rules for calculating maintenance

56. The new child support rates set out in Part I of Schedule 1 to the Child Support Act 1991, substituted by Schedule 1 to this Bill, are intended to provide a fair maintenance calculation in the vast majority of cases. Nevertheless, the Government recognises that there will be exceptional cases where the child support rates do not properly reflect a non-resident parent’s ability to support his children. For example, a non-resident parent may need to spend an exceptionally large amount of money keeping in touch with the children, or the net income used in working out his liability may not properly reflect the resources available to him.

57. Accordingly, the Government has decided to allow for the variation (both upwards and downwards) of the rates payable under the replacement scheme in certain exceptional cases. However, the Government is concerned to avoid simply re-introducing the complexity of the existing formula by another route. The exceptional cases in which a variation will be possible will therefore be clearly defined.

58. The structure of the new legislation follows the broad lines of the departures scheme which was introduced by the Child Support Act 1995. In particular:

  • the consideration of a non-resident parent’s application for a variation may depend on his continuing regular payment of maintenance (section 28C); and

  • maintenance liability will only be varied if it is just and equitable to do so.

59. However, unlike the provision for departures, the revised legislation is drafted to deal specifically with an application for a variation made before the maintenance calculation has been completed. In these circumstances, where the maintenance calculation is made without taking account of the variation application, an interim maintenance decision will initially determine liability. Section 12(2), inserted by clause 4, provides for this decision. Regulation-making powers will provide the rules for handling an application for a variation made after the maintenance calculation has been completed.

60. This clause provides the general rules governing the application for a variation before a final maintenance calculation has been made and how the application is to be considered and decided.

61. Subsection (2) replaces sections 28A, 28B and 28C of the 1991 Act.

New section 28A: Applications for variation of usual rules for calculating maintenance

62. This section provides the rules governing applications for a variation. It specifies who can apply, in what circumstances and in what manner the application can be made. The amended Schedule 4A, introduced by clause 6, supplements this section.

    New section 28A(1), (2) and (3) provide that the person with care (or, in Scotland, a child) and the non-resident parent can each make an application for a variation at any time once an application for a maintenance calculation has been made and before a maintenance calculation decision under section 11 (a normal calculation) or 12(1) (a default decision) has been made. Unlike the departures scheme, therefore, they do not need to await the outcome of the maintenance application itself before being allowed to apply for a variation.

    New section 28A(4) and (5) provide that, unlike applications for departures, applications for a variation need not be in writing unless, exceptionally, (for example, having regard to the complexity surrounding the case) the Secretary of State considers this to be appropriate. When making an application, the applicant will be required to state the ground on which they are applying. The Secretary of State may impose other conditions. Where appropriate, he may, for example, require a dedicated application form to have been completed properly before he will accept that an application has been made.

    New section 28A(6) provides that application for a variation may be made even where an application has already been made for the revision or supersession of a decision made under section 12(2) (an interim maintenance decision).

    New section 28A(7) cross-references to the amended schedule 4A (as inserted by clause 6) which provides additional regulation-making powers relating to the handling of variation applications.

New section 28B: Preliminary consideration of applications

63. This section provides for a preliminary consideration of the application. This is intended to sift out at the earliest possible stage those applications which have no prospect of success.

    New section 28B(1) provides that, having received an application, the Secretary of State may carry out a preliminary examination (known as a “preliminary sift”) to check that it merits further consideration.

    New section 28B(2) provides, in particular, that an application from any source will be rejected where it has not been made on one or more of the recognised grounds or where a default maintenance decision (section 12(1)) would be made. The full list of the criteria which the Secretary of State will consider under the preliminary sift will be prescribed in regulations. The intention is to sift out applications from non-resident parents in the circumstances where, for example, for the whole of the period from which any variation given in response to the application could take effect and the date of determination of the maintenance calculation, they had either a nil liability, or a flat-rate liability, or a liability which has been reduced to the equivalent of the flat rate on account of any shared care adjustments. In these circumstances, the non-resident parents could not benefit from the effect of a variation.

New section 28C: Imposition of regular payments condition

64. This section provides for the imposition of a regular payments condition. This condition requires a non-resident parent who has made an application for a variation to continue paying maintenance regularly while the application is being considered. This is intended to ensure that children receive maintenance regularly and reliably and that unnecessary debts are not built up during the variation process.

    New section 28C(1) provides that, where the Secretary of State has made an interim decision pending the determination of a non-resident parent’s variation application, and has not rejected the application at the preliminary sift stage, he may require the parent in question to make regular, ongoing payments of maintenance as a pre-condition of having the application considered. This is called a “regular payments condition”.

    New section 28C(2) provides that the rate may either be at the rate of the existing maintenance calculation or at a lesser rate which might anticipate the effect of a successful variation application.

    New section 28C(3) provides that, in these circumstances, the Secretary of State will notify the person with care (or child) and the non-resident parent of the imposition of the condition and the effect of failing to comply with it.

    New section 28C(4) provides that the regular payments condition will cease to have effect either when, in response to the variation application, the Secretary of State replaces his interim maintenance decision with a decision under section 11 (whether he agrees to variation or not) or where the variation application is withdrawn.

    New section 28C(5), (6) and (7) provide that, if the Secretary of State determines that the non-resident parent has failed to comply with the regular condition, the Secretary of State should proceed to replace the existing interim decision on the basis that the variation application has failed. Regulations will provide for deciding what constitutes a “regular payment”. For example, there will need to be scope for taking some account of occasions where payment is unavoidably late, for example, where a bank fails to operate a direct debit. Where the Secretary of State is not satisfied that the regular payment condition has been met, progress on the variation application will be suspended to allow the non-resident parent the opportunity to comply. If within the period of a further calendar month, he has still failed to do so, the application will fail. In this event, the Secretary of State will not vary the maintenance calculation and will notify the person with care (or child) and the non-resident parent accordingly. In these circumstances, the non-resident parent will have to make a fresh application if he again wishes to have special circumstances considered.

65. Subsections (3) and (4) make minor consequential amendments to the wording of Sections 28D and 28E of the 1991 Act (which deal with “determination of applications” and “matters to be taken into account”, respectively), substituting references to “departure directions” with references to “variations”. With respect to section 28D, the intention is that where the variation application has not failed, been withdrawn, or been rejected at any preliminary stage, the Secretary of State may elect either to determine the application himself or, exceptionally, to refer it direct to the appeal tribunal for determination. This represents no change from the options currently available to the Secretary of State under the departures scheme. Cases which the Secretary of State might refer to the tribunal are those which are particularly complex or contentious and which he feels unable to resolve locally.

66. Subsection (5) substitutes the wording of section 28F of the 1991 Act (which relates to the determination of departure applications) with equivalent wording – with some modifications – relating to the determination of applications for variations.

New section 28F: Agreement to a variation

    New section 28F(1) provides that a variation may be allowed only if it has been made on one or more of the recognised grounds, and if, having regard to all the circumstances, it would be just and equitable to allow a variation in any particular case.

    New section 28F(2) provides that, in determining whether it would be just and equitable to vary the normal rules in any particular case, the Secretary of State must have regard to the welfare of any child who would be affected by the variation, and such other factors as may be prescribed in regulations. The Secretary of State will need to consider, for example, whether any variation in the amount of child support liability would be likely to result in either parent giving up work.

    New section 28F(3) reaffirms that an application from any source will be rejected where the Secretary of State has insufficient information to enable him to make a decision as to maintenance liability under section 11, such that he has to make a default decision under section 12(1). The full list of the other circumstances that will automatically debar the award of a variation will be prescribed in regulations. In particular, the intention is to disallow applications from any source where a non-resident parent has been in receipt of (or the partner of someone in receipt of) a prescribed income-related benefit for the whole of the period between the date from which any variation given in response to the application could take effect and the date of determination of the maintenance calculation.

    New section 28F(4) provides that, where the Secretary of State agrees to a variation, he has to determine the basis on which the child support maintenance is to be calculated, and proceed either to make a decision under section 11 which takes account of the variation from the outset, or to replace any existing interim maintenance decision with a decision under section 11 which reflects the variation.

    New section 28F(5) provides that where the Secretary of State has made an interim maintenance decision and subsequently makes a decision under section 11, the interim maintenance decision is to be treated as having been replaced by his decision under section 11. This replacement does not apply for the purposes of an application to have the interim maintenance decision revised (under section 16) or superseded (under section 17) or in connection with an appeal against it under section 20.

    New section 28F(6) requires the Secretary of State to comply with any regulations made under the controlling powers of part II of the new schedule 4B, which is inserted by clause 6.

Clause 6: Applications for a variation: further provisions

67. This clause substitutes the wording of both Schedule 4A to the Child Support Act 1991 (which provides additional regulation-making powers relating to the procedural handling of departure applications) and Schedule 4B to the same Act (which specifies the cases in which a departure direction may be given and the regulatory controls which govern the operation of the departures scheme) with the equivalent provisions in relation to variation applications.

Schedule 2

68. Schedule 2 substitutes Schedules 4A and 4B to the 1991 Child Support Act.

New Schedule 4A: Applications for a variation

69. This Schedule contains detailed provisions supplementing the rules governing applications for variations in section 28A. In particular, it provides for:

  • regulations to specify the procedure to be followed by the Secretary of State or a tribunal in considering an application (paragraph 2);

  • information to be supplied within a specified period to enable an application for a variation to be determined (paragraph 4);

  • two or more variation applications to be considered together (paragraph 5(1));

  • a tribunal to be able to consider any variation application which has been referred to it for determination under section 28D(1)(b) at the same time as any appeal under section 20 which involves the same parties (paragraph 5(3)).

New Schedule 4B: Applications for a variation: the cases and controls

70. This Schedule details the cases and controls relating to variations.

    Paragraph 2 relates to the special expenses in respect of which a non-resident parent may apply for a variation of the normal rules by which maintenance liability is calculated.

      Sub-paragraph (2) provides that the Secretary of State may have regard either to all of the expenses, or, in prescribed cases, only to that element of the expenses which exceeds a prescribed threshold.

      Sub-paragraph (3) specifies the cases. The list is not intended to be exhaustive. The non-resident parent will be able to seek a variation in recognition of one or more of the following expenses: the costs incurred in keeping in contact with a qualifying child; the costs attributable to the long-term illness or disability of a relevant other child; the costs incurred in honouring debts which were incurred for the benefit of the child in respect of whom a maintenance calculation has been applied for ("the child concerned") at a time when both parents were living together; the costs incurred in meeting the boarding school fees payable in respect of the child concerned; and payments of the mortgage on the former home, where the former partner continues to live in the house with a qualifying child, in the circumstances where, exceptionally, the non-resident parent no longer has any interest in the property.

      Sub-paragraph (4) provides that the definitions of “illness”, “disability” and “long term” will be prescribed in regulations.

      Sub-paragraph (5) provides that the definition of “boarding school fees” and the elements of the fees which the Secretary of State may recognise, will be prescribed in regulations. Regulations will also allow the Secretary of State to make an estimate of the fees which he may recognise, in the circumstances where the relevant amounts are not otherwise readily identifiable.

    Paragraph 3 relates to property and capital transfers. This is an existing feature of the departures scheme and the ground rules and calculations remain unchanged.

      Sub-paragraph (1) requires there to have been a property settlement between the parties in pursuance of a court order or maintenance agreement which pre-dates 5 April 1993. A variation may be made in respect of the equivalent weekly value of that transfer (as determined in accordance with regulations).

      Sub-paragraph (2) provides that the Secretary of State will continue to take no account of transfers valued at less than a minimum figure. This figure will, as now, be prescribed in regulations and is intended to remain at £5000.

    Paragraph 4 provides further grounds on which any person with care (or, in Scotland, a child) may apply for a variation of the rules on the calculation of liability.

      Sub-paragraph (2) specifies the cases. The list is not intended to be exhaustive. The person with care (or child) will be able to seek a variation in recognition of one or more of the following grounds: where the non-resident parent has assets which exceed a prescribed value;( it is intended to prescribe cash or its equivalent, or property other that his normal place of residence which exceed a value of £65,000); where the non-resident parent enjoys a lifestyle which is inconsistent with the income to which the Secretary of State is able to have regard in the determination of the rate of liability; where the non-resident parent is in receipt of income to which the Secretary of State would not otherwise have had regard;( the intention is to prescribe for cases where the non-resident parent has a flat rate liability because he is in receipt of a prescribed social security benefit or war pension, or where he has a nil rate of liability, and to prescribe a minimum additional income threshold of £100 per week); or where the non-resident parent has unreasonably reduced the income to which the Secretary of State has had regard in the calculation of maintenance liability.

    Paragraph 5 provides additional regulation-making powers relating to variations.

      Sub-paragraphs (1) and (3) provide regulation-making powers relating to the manner in which the Secretary of State may modify the normal rules for calculating maintenance in the event of a successful variation application. The Secretary of State will normally give effect to a variation by offsetting the expenses against, or increasing the value of, the non-resident parent’s net income prior to any further adjustment in respect of relevant children (where appropriate). The only exception to the normal rules will surround pre-1993 property transfers, where the equivalent weekly value of the transfer (as calculated) will be deducted off the non-resident parent’s “bottom line” liability.

      Sub-paragraph (2) provides that no variation may be made other than in the circumstances prescribed

      Sub-paragraphs (4) and (5) provide that the Secretary of State may by regulations impose a limit on the amount of special expenses which he may take into account for the purposes of a variation, and that any regulation may provide for different provision with respect to different levels of income. The intention is that the Secretary of State will recognise expenditure on certain of the prescribed grounds only in so far as it exceeds £10 or £15 per week, depending on the non-resident parent’s net weekly income.

Clause 7: Variations: revision and supersession
5

71. This clause enables variation applications to be made after a maintenance calculation has been made under section 11 or 12(1). Subsection 28G(1) provides the power by regulations to modify sections 16, 17, 20 and 28A to 28F of, and Schedules 4A and 4B to, the Act for these variation applications. Subsection 28G(2) provides a power by regulations to permit the Secretary of State, when superseding a decision on his own initiative under section 17, to make a decision on the basis of a variation agreed to in respect of the decision being superseded. This is because some variation circumstances, such as property transfers, once accepted, will continue to be relevant to liability except in fixed rate or nil rate cases.


(1) "Non-resident parent" means a parent who is not living in the same household as the child in respect of whom an application for maintenance has been made (the "qualifying child").     Back

(2) "Parent with care" means a parent living in the same household as the qualifying child and who usually provides day-to-day care of the child. When the person caring for the child is not the child's legal parent, she is sometimes known as a "person with care" (PeWC).     Back

(3) An agreement for making, or for securing the making, of maintentance payments, or, in Scotland, aliment, to or for the benefit of any child.     Back

(4) A child who is living apart from one or both parents and for whom an application for child support has been made.     Back

(5) These terms refer to replacing decisions, either from the original date (revision) or a later date (supersession).     Back

 
contents continue
 
House of Commons home page Houses of Parliament home page House of Lords home page search Page enquiries

© Parliamentary copyright 1999
Prepared: 2 December 1999