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'( ) Where paragraph 39(3) (implementation of voluntary arrangement) applies, the persons who may apply to the court include the Authority.
( ) If a person other than the Authority applies to the court under that paragraph, the Authority is entitled to be heard on the application.'.--[Mr. Pope.]

Order for Third Reading read.

6.47 pm

Dr. Howells: I beg to move, That the Bill be now read the Third time.

The Bill contains all the provisions necessary to deliver what we intend. In particular, it will ensure that the rescue of a small company will not be lost for the want of a short breathing space within which a rescue plan could be agreed. When there is agreement between the Secretary of State and an unfit director, disqualification can be achieved without the need to involve the courts.

The Bill contains other important provisions, but I shall not detain the House by repeating them. Those provisions were considered by a range of interested parties before the Bill was introduced in Parliament. The Trade and Industry Committee also considered them closely and they were scrutinised carefully in debate in the other place and in this House. As a consequence, the Bill has been amended as it has progressed through Parliament. It is better and more effective legislation because of that scrutiny and amendment.

I thank all Members on both sides of the House who participated in our good-humoured and interesting debates on the detail of a very technical Bill.

6.48 pm

Mr. Burnett: I, too, shall not detain the House for long. The Bill's main thrust is to introduce a moratorium, which is welcome, although the approach is pretty half-hearted. If creditors disagree with members, the courts will decide. Obviously, the strength remains with creditors, and the moratorium could be said to be too short. Nevertheless, we agreed in Committee that our business culture is particularly creditor friendly. The Bill represents a small step in the other direction and, as such, is welcome.

6.49 pm

Mr. Chope: I should like to make only a few brief remarks--particularly on the retrospective element remaining in the Bill after the Minister's insistence on rejecting amendments moved in Committee and, today, by my hon. Friend the Member for South-West

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Hertfordshire (Mr. Page). I hope that we will see the Bill again in this Session, after amendments are passed in the other place to remove that retrospective element. That element vitiates what is otherwise useful legislation, piecemeal though it is.

6.50 pm

Mr. Page: We broadly welcome the Bill, which obviously aims to widen the range of rescue provisions available to small business. However, we have made it perfectly clear that, as anyone listening to today's debate will know, we have considerable reservations about some of the Bill's detail--including the significant matter, with which my hon. Friend the Member for Christchurch (Mr. Chope) has just dealt, of retrospectivity.

It is not clear from our debates whether Department of Trade and Industry Ministers really understand how small businesses work and the effects that the Bill may have on the practices of those who lend to small businesses.

As we said, this is only half a Bill. We wish that there had been another half, to create a full picture and to endorse some of the amendments moved by the hon. Member for Great Grimsby (Mr. Mitchell). Although we are worried about how some of the provisions may work, we will support any action to try to help small business and companies in need of rescue. As such, we support the Bill's passage.

Question put and agreed to.

Bill accordingly read the Third time, and passed with amendments.

DELEGATED LEGISLATION

Mr. Deputy Speaker (Sir Alan Haselhurst): With permission, I shall put together the motions relating to delegated legislation.

Motion made, and Question put forthwith, pursuant to Standing Order No.118(6) (Standing Committees on Delegated Legislation),

Social Security


Railways (Safety Case) Regulations

That the Railways (Safety Case) Regulations 2000 (S.I., 2000, No. 2688) be referred to a Standing Committee on Delegated Legislation.--[Mr. Pope.]

Question agreed to.

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16 Nov 2000 : Column 1167

CSA Deductions (Ministry of Defence)

Motion made, and Question proposed, That this House do now adjourn.--[Mr. Pope.]

6.51 pm

Caroline Flint (Don Valley): I am grateful for the opportunity to initiate this short but important debate, which arises from a case that I took up on behalf of one of my constituents. I have subsequently realised that the issue at stake affects many families who have a former partner employed in the United Kingdom armed forces. Today, before I entered the Chamber, I conducted a straw poll at my table in the Tea Room, and two other hon. Members--my hon. Friends the Members for Erewash (Liz Blackman) and for Gedling (Mr. Coaker)--confirmed that they had had similar problems in their constituencies.

My hon. Friend the Minister for the Armed Forces is acquainted with the case that I shall use to illustrate the problems created by current armed forces minimum pay regulations, and I appreciate his co-operation in not mentioning the name of my constituent--to whom I shall refer as Mrs. X--to protect the identity of the children. I have made a similar request to the media.

My constituent was married for more than a decade to a serving Army non-commissioned officer, a staff sergeant. Like any Army wife, she followed her husband's career, which included postings in Europe and the far east. Unfortunately, as is the case with many married service personnel, their relationship broke down: they separated and, in December 1996, Mrs. X gained full custody of their two children.

In August 1997, the Child Support Agency imposed an interim maintenance assessment, but no payment was received. Eventually, in December 1997, a deduction of earnings order was imposed for £530 per month. The first payment was received in February 1998. After a total of four payments had been received, the CSA informed Mrs. X that the Army's minimum pay regulations prevented the withholding of more than 25 per cent. of the father's pay. An arrangement whereby Her Majesty's armed forces can use one regulation to undermine a court order imposed under other legislation must make them unique among employers nationwide. Every month that that arrangement applied, the arrears grew. That means that minimum pay regulations established in 1955 to guarantee a minimum income to a service person's family now have the perverse effect of limiting financial support for dependants.

Parliament has established in law a father's responsibility to contribute to the financial maintenance of his children, and created the Child Support Agency to uphold those rights. Her Majesty's armed forces, however, can choose to ignore the best efforts of the CSA and the courts, all in the name of family welfare. In Mrs. X's case, the result has been that, from 1998 until now, her child support payments have been paid at a lower rate than the CSA and the courts have requested. By September 2000, the arrears had reached £7,000.

In all such cases, the Ministry of Defence and the relevant commanding officers have consistently maintained that, although they are bound by the 25 per cent. ceiling on deductions, they will encourage service men to honour their CSA payments. Well, honour has not

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got my constituent very far. Indeed, deductions of earnings orders would not be imposed at all if honour had anything to do with the case. Deductions of earnings orders involve compulsion, because the payments are not volunteered. That compulsion is being undermined by the minimum pay regulations.

My constituent can confirm that not one voluntary additional payment has been made since the deductions of earnings order was introduced. I wonder how the Army encourages service personnel to honour such obligations. Are personnel encouraged by a stiff talking to, or by a quiet word, to open their cheque books for their children? Whatever form that encouragement takes, I can tell my hon. Friend that it has not produced tuppence extra for my constituent, and every month the millstone of underpayment grows.

What will the agency do if the deductions of earnings order fails Mrs. X and her children and other former Army, Navy and Air Force families? Baroness Hollis, the Under-Secretary of State for Social Security, informed me that a liability order or bailiff's action is the next recourse even in the case of service personnel, except that no bailiff will be allowed on to an Army base to seize the goods owned. "Join the Army and escape the CSA" is hardly a great advert for the armed forces. Morally repugnant it may be, but the financial incentive is clear.

I cannot understand why the maximum deduction in the Army is 25 per cent. I understand that that can now also be extended to 50 per cent. in certain circumstances--I shall say more about that later--yet in the Royal Navy, for example, the figures are 43 per cent. and 75 per cent. respectively. Why the difference? Are rates of pay so different between the forces that the Navy needs to allow a greater slice of pay to be deducted?--I think not; it is another historical anomaly.

I have been informed that the minimum deduction can be 50 per cent. in certain circumstances. To determine whether it is 25 per cent. or 50 per cent., we have to look at the Army's marital status categories, of which there are five. For example, marital status 4 includes service men who are divorced or separated without care of children but who are providing support under a court order, including CSA awards. Under that category, 50 per cent. can be applied, but under category 1, which includes those who are married with children, only 25 per cent. can be applied. My constituent's former husband appears in both categories, as he has since remarried and has another child.

In some respects, if category 4--50 per cent.--were applied, my constituent's problem would appear to be resolved, but the Army has chosen not to apply that category. It seems odd that CSA payments from a previous relationship do not take precedence over, or have any parity with, a second marriage and subsequent dependants. That favourable interpretation has cost my constituent dear.

I am also advised that the Department of Social Security and the CSA were under the impression that only up to 25 per cent. could be removed. There needs to be discussion between the Ministry of Defence and the DSS to ensure that everyone is clear about which payments can be applied and which amounts can be deducted.

What are the Government going to do about all this? In March 1999, the Minister for the Armed Forces informed me that Parliament would review armed forces legislation

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by 2001; that there would be full consultation with other Departments; and that the need to amend the legislation would be considered in the light of any concerns expressed. In April this year, the Minister confirmed that those matters were under review. In July 1999, my right hon. Friend the Secretary of State for Social Security stated that he was


He promised to keep me informed of progress. In October this year, a letter reaffirmed the Department's desire to amend the position and stated that the matter was still under consideration.

Are the minimum pay regulations included in the review of forces legislation? What stage has that review reached? What is the outcome of discussions with the DSS, among others, to bring the child support legislation and Army, RAF and Navy regulations into line? Does my hon. Friend agree that minimum pay regulations were never contrived to thwart obligations for child support payments? Indeed, they make specific reference to them, but they are in need of an overhaul.

This is a modernising Government. I have welcomed their willingness to take a new path and their ability to act across Whitehall Departments to ensure joined-up thinking. I welcome their family policies, which represent a radical improvement on the past. However, the Ministry of Defence has something to prove in that respect. I have no doubt that, with application, the Ministry can honour the moral obligation to parents with custody who are the former partners of service personnel. Given the rates of family breakdown in the armed forces, it is too great a problem to be overlooked. It is also too great a problem to hide behind red tape--or, even worse, behind Army red tape, exempt as it is from the full legal redress of the courts, which can be applied to almost any other employer in the land.

It being Seven o'clock, the motion for the Adjournment of the House lapsed, without Question put.

Motion made, and Question proposed, That this House do now adjourn.--[Mr. Pope.]


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