Child Support, Pensions and Social Security Bill

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Angela Eagle: We need some flexibility. We discussed this issue at the beginning of our deliberations on the Bill. We should approach legislating in this context humbly. Other tweaks may be needed. We do not know in advance. We need to see how things work out. I am describing to the Committee the principles that will govern the Government's reaction when the system comes into being. I hope that I have done that, and explained our intention that the variations should be tightly drawn. However, I am not so arrogant as to say that we have thought of everything that will be relevant for all future time, and that we are utterly convinced that in making the regulations we need no flexibility to provide a balance between simplicity and allowing for exceptional cases.

The new approach would result in a fair calculation of maintenance for almost all parents. There will always be exceptional cases in which the child support rates do not properly reflect a non-resident parent's ability to support his children. For example, he may need to spend a great deal of money keeping in touch with them, or the net income used in working out his liability may not properly reflect the resources available to him. We therefore intend to provide for a variation from the normal rules in such truly exceptional cases and circumstances.

Hon. Members will recall that the current scheme attempts to allow for expenses not covered by the formula assessment. The existing departures scheme was introduced in December 1996. Departures were heralded as introducing added flexibility into a rigid formula and were widely welcomed. However, the departures scheme has resulted in an already over-complex system becoming even more complex. It adds further delay and confusion to a system governed by detailed rules and procedures.

Our new scheme removes much of the existing formula's complexity from the standard maintenance calculations. We want to make reasonable allowance for exceptional cases in which the rates do not produce a decent and fair result for the non-resident parent or the parent with care. However, there is no merit in allowing that to reintroduce complexity through the back door.

We have examined the matter closely and carefully. The hon. Member for New Forest, West asked whether we understand what we are proposing. Yes, we do. The hon. Member for Bromsgrove (Miss Kirkbride) asked a similar question. We spent almost two years consulting on the matter. We did not pull our proposals out of a top hat. We did not say, ``That's the last word on the matter. We thought of this yesterday—there you are''. We had a long, complex, open consultation. The settlement and balance are not the result of a quick fix: we made a genuine attempt to establish the CSA on a fair, workable basis for the future.

We have made a clear distinction between expenses which a non-resident parent should cover from income after meeting his responsibilities to his children—such as housing costs and travel-to-work expenses—and primarily child-related expenses. The non-resident parent still has 75 per cent. of his net income to meet other costs.

We intend to allow variations to increase liability when income on which the maintenance calculation has been based does not reflect the non-resident parent's true ability to pay. That has been widely welcomed. We are determined that the grounds on which a variation can be allowed should remain tightly focused. All the rules of the new scheme are intended to ensure that.

New schedule 4B, as introduced by schedule 2, provides details of cases and circumstances in which a variation will be allowed. Many hon. Members spoke about such cases in today's debates. The majority of the amendments would add further grounds to the Bill—widening the variations scheme—or would extend the nature of expenses under each ground. Some of the proposed provisions are already included in the Bill. The provision in amendment No. 102 for recognising debts of the relationship as special expenses appears in paragraph 2(3)(c). A mortgage is a debt, so when a non-resident parent has a liability to pay the mortgage on the property where he used to live with the parent with care, we propose that those payments should be recognised as legitimate exceptional expenses under paragraph 2(3)(e).

Equally, as capital and interest will no longer feature in the normal calculations, paragraph 4(2)(a) provides that cases in which the non-resident parent has assets exceeding a value to be prescribed will be examined. Otherwise, the parent with care in such cases may end up being short changed by the simplified formula.

As a whole, the amendments would extend beyond all measure the nature and extent of what may reasonably be classed as exceptional. Indeed, they would open the floodgates. Amendment No. 86 is possibly the worst offender, as it would enable every non-resident parent to claim a variation due to his housing costs. We have calculated the costs of that. The programme costs would be £100 million; administrative costs would be £8 million in the first year; second-year costs would be £170 million; and third-year costs would be £27 million. I make that a little over £300 million for one little Liberal Democrat amendment. A pattern has emerged, which I draw to the Committee's attention without further comment.

Amendment No. 226 goes even further, because it would allow the non-resident parent who maintained contact with his child to claim a variation in respect of any and all of his expenses, regardless of whether those expenses were in any way related to the period of contact. That seems completely absurd and would wholly defeat the object of the Bill.

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That said, we intend to extend the nature of contact-related expenses that we are prepared to recognise, albeit not as widely as amendments Nos. 82 and 226 propose. The allowance for contact costs in the departure scheme is restricted to travel-related costs only: that is, fares, petrol costs or tolls. No allowance is made for the cost of overnight accommodation. We intend to prescribe that non-resident parents with particularly difficult or arduous journeys will be able to claim the costs of essential overnight stays in appropriate cases. That is evidence of our commitment to shared parenting.

I move to amendment No. 113. Under the new percentage-based approach, non-resident parents will, as I said, normally be left with at least 75 per cent. of their disposable income out of which to meet travel-to-work and any other expenses. If we allowed costs on the grounds of long-distance travel to work then, as the amendment suggests, we would also have to consider recognising the higher housing costs of non-resident parents who live close to work but in an expensive area. Yet again, the floodgates yawn open. All those proposals would reintroduce the complexities from which we are trying to get away.

Amendments Nos. 218, 219 and 220 would allow the non-resident parent to offset part of any costs that he incurs in providing an education for his child against his on-going maintenance liability for that child. They propose far more generous provision for school fees than we intend to allow. Although we think that it is reasonable to recognise the costs that non-resident parents incur in meeting the maintenance element of boarding school fees—because that is intended to cover the normal living expenses of the child while at school for items such as food, laundry and accommodation—we do not intend to allow the costs that a non-resident parent may incur in providing an education to be treated as a special expense. The child's primary need is for on-going maintenance, and there is no obligation in child support legislation for a non-resident parent to pay for the child's education. Where the maintenance element of fees is not separately identifiable, it will be assumed to be 35 per cent. of the overall fees charged.

On amendment No. 225, the position is that non-resident parents who apply on the grounds of being certain about the prescribed special expenses will, as now, need to establish that the costs that they incur exceed, either singly or in aggregate, a threshold below which a variation cannot be considered. That ensures that only unusually high costs should be considered a good enough reason for a parent to reduce his child maintenance payments.

As hon. Members will know, the threshold under the current departure scheme is £15 a week. In the new scheme, however, we plan to apply a two-tier threshold: £15 per week for parents with a net income of £200 per week or more, and a new, lower threshold of only £10 a week for parents with net earnings below that level. That will give parents who are less well off more help towards their special expenses.

Mr. Burstow: I am conscious of the time, but I wanted to ensure that before the Under-Secretary sat down she addressed, if only briefly, amendments Nos. 84 and 85, which raise the issue of non-resident parents who have an interest in the matrimonial home. I listened closely to the hon. Lady when she dealt with paragraph 2(3)(e), but I did not hear her mention that. It would be helpful if she did.

Angela Eagle: I did address that point when I referred to paragraph 2(3)(e). If the non-resident parent has mortgage payments on a property in which the former partner and qualifying children continue to live but in which he no longer has any interest, that will also be considered a ground for variation.

In conclusion, I want to move to a child support system that is simple, efficient and easy to understand with minimum complexity and scope for dispute. Realistic variations of liability will be tightly drawn. They are a key feature of the new scheme and will recognise exceptional cases. We must keep the list of variations tightly drawn, otherwise, despite all the legislative work, consultation and wracking of brains to see how we can make the system work, we will end up back where we started. I ask that the amendment be withdrawn or that the Committee reject it.

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