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'4.--(1) Except in a case falling within sub-paragraph (2), a flat rate of £5 is payable if the nil rate does not apply and the non-resident parent's net weekly income is £100 or less.'.
No. 3, in page 84, line 2, leave out from "force;" to end of line 4.
No. 4, in page 84, line 5, leave out sub-paragraph 4(3).
No. 5, in page 84, line 11, at end insert--
Mr. Pickles:
The amendments address matters of great importance. On Second Reading, we made it clear that, although we support the notion of simplified banding, we believe that the Bill makes certain injustices likely.
Three great injustices have not been addressed. The first is the issue of rough justice and the lack of variations, which you, Mr. Deputy Speaker, kindly allowed us to debate briefly in connection with new clause 27. The other two relate precisely to the amendments, especially the first two in the group. They are the injustice of not having an upper limit for the purposes of assessment and the injustice that arises when the parent with care is wealthy and the non-resident parent is poor.
The Bill is a landmark measure because it creates a new right in law: that a child shall have a share of the parent's income during the lifetime of the parent. That legal right is unique, not only in British law, but anywhere else in the world, according to the advice that I have received from learned colleagues and counsel.
Mr. Swayne:
Although the right might well be unique, it does not strike me as unreasonable. My hon. Friend appears to dispute the right. Will he explain why he considers it unacceptable?
Mr. Pickles:
My hon. Friend must be patient: I was about to explain, but he will have to allow me a few oratorical flourishes before reaching that climax.
I understand that a similar right exists in Germany, but only in connection with inheritance--in other words, the parent has to be dead. Britain is the only place in the world that will give that right when the person who has the money is still living. The strange aspect is that the right is given only to children of a broken marriage or relationship; in addition, the right affects only the non-resident parent's wealth. Therefore, children do not have such a right in relation to the parent with care or if their parents live together. A child of a broken marriage has no such right in connection with the parent with care, who might be wealthy, but has it in connection with the non-resident parent, who might be poor.
Under the Bill, the child has no right to claim the money itself. Therefore, although we create a brand-new right in law that one child is entitled to 15 per cent., two children to 22 per cent., and three or more children to 25 per cent. of the non-resident parent's income, the children cannot get hold of the money themselves; it is paid over to the parent with care. No wonder the arrangement has been described as spousal redistribution by stealth. It is a way of re-examining a divorce settlement.
I know that you like transparency in such matters, Mr. Deputy Speaker. It is strange that the Government are reluctant to give a reason for the arrangement. All we hear
is a woolly statement that children have a right to enjoy and share in any increase in the wealth of the non-resident parent. That is all the explanation that has been given, so I hope that the Under-Secretary will provide some further explanation today.
I do not believe that a child has such a right. I believe that children have a more important right, which is to be maintained by each parent. Children have a right to maintenance and to their education, housing and other needs being met, but they do not have a right to an immediate share in their parents' wealth. There might be a presumption or an expectation that, as time passes, certain sums will be handed over to a child during its lifetime, or that it will receive some sort of inheritance after a parent's death, but the child has no right to receive such sums. The House should not be involved in carving up a person's wealth. That should be a matter for the individual parties to decide. Individuals have a right, a duty and an obligation to look after and support their children. They cannot palm their children off on to somebody else. That is the position in law.
We have been considerably helped, during the Bill's passage through the House, by the work of the Select Committee on Social Security. I shall quote from its recommendations, which I think are set out on pages xlii and xliii. The Committee states:
Select Committees sometimes fall down when the dirty hand of politics becomes involved, and that happened in this instance. There was an amendment to strike out the recommendation to which I have referred and instead to include the words
I am sure that Mr. Bill Gates of Microsoft leads a blameless life and that he would never shirk his responsibilities. However, let us suppose that he did, and that the CSA came after him. Mr. Gates is worth £53 billion a year. According to the formula that the Government seek to impose, if he had two children they would receive £10.6 billion by way of child maintenance. The House will be aware that the gross national product of Luxembourg is £8.9 billion. That is an illustration that the formula goes beyond maintenance and that it does not make sense.
I have used Mr. Bill Gates as an example because he is the wealthiest person whom I have heard of, and to ridicule the system. However, the Government's formula will have a more perverse effect. Another example is that of two houses side by side. In house A we have a parent with care on £9,000 and a non-resident parent on
£300,000. In house B there is a parent with care on £300,000 and a non-resident parent on £9,000. I have simply reversed the figures. Let us suppose that each house has one child. On the basis of 15 per cent., child A would receive about £45,000 a year in maintenance, and child B would receive £1,350. That is a difference of £43,650.
If there is no upper limit, the CSA will find itself increasingly taking over court order assessments. The Law Society and leading lawyers are warning us about that. [Interruption.] The Minister makes disparaging remarks about the legal profession, but it was not so long ago that it was suggested that the CSA should set up a counselling service under a leading judge to produce a far more judicial system. After all, the Minister is seeking to achieve a lawyer's playground. A great deal of money will be made, and we can be pretty sure that that will not be for the benefit of children.
As the Law Society and leading counsel have said, all that is required is 14 months' notice to be given by the parent with care, who can then take up to 25 per cent. of the non-resident parent's income. Even if there is a clean-break divorce, even if substantial child maintenance has been agreed, even if there have been deals with regard to the transfer of shares, pension rights, properties, the setting up of various trusts and various assets from the marriage being transferred, these events would be regarded as never having happened. It would be within the ability of the parent with care to go straight to the courts.
I know that Labour Members are reluctant to accept quotes from Mr. Mostyn. However, in his talk, to which I referred earlier, he made an interesting observation about the legal profession and about how judges would deal with these matters. He referred to substantial maintenance and said:
'; or
(c) he received any benefit, pension or allowance prescribed for the purposes of this paragraph; or
(d) he or his partner (if any) receives any benefit prescribed for the purposes of this paragraph.
(2) The benefits, pensions and allowances which may be prescribed for the purposes of paragraph 5(1)(d) include ones paid to the non-resident parent under the law of a place outside the United Kingdom.'.
In the final analysis, the child support formula should be seen clearly to be related to the cost of bringing up children and not as a straightforward "tax" levied on the non-resident parent. We recommend that the Government should re-examine the possibility of inserting in the legislation an upper limit on the automatic application of the revised CSA formula.
That was wise advice. The wording was chosen because it reflected the evidence as it unfolded.
continue to share in that parental wealth.
However, the Committee still felt able to include the warning that
there is a risk that a few high-profile cases involving payments about the maximum contribution may negatively affect public perception.
I bet they will. The social security system and the CSA will be brought into disrepute.
I think you are beginning to see--
He was addressing a bunch of lawyers--
how this is going to be a lawyer's beanfeast for us because we are going to be very clever working out ways to get round this and I will explain some of them later on. A certain High Court Judge has said to me that if that happens--
that is, if the proposed arrangements are made and are overturned by the CSA--
"I'm going to order spousal maintenance from the wife back to the husband to rectify the situation", but that won't work when they are unmarried.
In other words, this is about spousal maintenance. It is a back-door means of achieving precisely that. I believe that the Government's approach was regarded as being rather politically correct, it being about the rights of the child. It was armchair political correctness. It was included to make everyone feel good--"We shall do this and the added bonus is that we might be able to stick a few rich people as a bonus." However, the scheme will have an effect further down the process.
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