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House of Commons

Monday 7 July 2003

The House met at half-past Two o'clock


[Mr. Speaker in the Chair]


Committee of Selection


Oral Answers to Questions


The Secretary of State was asked—

Child Support Agency

1. Bob Russell (Colchester): If he will make a statement on the Child Support Agency reforms. [123519]

5. Mr. Huw Edwards (Monmouth): What plans he has to improve Child Support Agency procedures to recover arrears of maintenance owed by self-employed absent parents. [123525]

The Secretary of State for Work and Pensions (Mr. Andrew Smith): The new formula is clear, and has been well received by parents and staff. Performance on the new scheme is improving, with progress made in sorting out serious defects in its information technology, for which its suppliers are being penalised under the contract. We remain committed to getting average clearance by next April to six weeks, compared with more than 20 weeks under the old system. I am grateful for the efforts of CSA staff, including on enforcement, with compliance last year reaching 76 per cent. overall and 65 per cent. for the self-employed.

Bob Russell : I thank the Secretary of State for that reply. Any improvement is obviously to be welcomed, but does he accept that there is a fundamental flaw in the whole concept of the Child Support Agency? It was set up with the best of intentions, with all-party support, but surely the time has come to accept that the best reform would be the abolition of the CSA and the restoration of a family court system of payment.

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Mr. Smith: I believe that there is a growing consensus on both sides of the House that we need a Child Support Agency—one that is able to do its job properly so that children and parents with care who need the money actually get it. That was not happening under the family court system, which is why the CSA was introduced in the first place. Everyone accepts that the old system was much too complicated, with more than 100 factors having to be taken into account in the assessment. The new system is simpler and will work better. We will raise the rates of compliance on cash and cases.

Mr. Edwards : Does my right hon. Friend agree that many absent parents who are self-employed are evading their responsibilities to the parent with care and to the Inland Revenue? I should like to draw attention to the case of Deirdre Hilder, one of my constituents, whose former partner was, according to the Inland Revenue, apparently earning only £2.40 a week. The chief executive of the CSA has told me that he intends to ask the Revenue to investigate the case more thoroughly.

Mr. Smith: I commend my hon. Friend's industry and energy on behalf of his constituents, but obviously I cannot comment on individual cases here. However, my right hon. and noble Friend the Under-Secretary with responsibility for the CSA and I will be pleased to discuss individual cases further, where appropriate. I acknowledge what my hon. Friend says about the importance of improving compliance and enforcement, especially in relation to the self-employed. As I said in my initial answer, we have raised compliance for the self-employed to 65 per cent., and more resources are being put into enforcement. In the past couple of years, collection went up by £19 million and £44 million respectively. Stronger guidance has been given to staff, extensive use is made of Inland Revenue and other records, and arrears cases are being referred to specialist enforcement teams more quickly. I hope that that will help to address the performance issues that my hon. Friend has raised.

Angela Watkinson (Upminster): I have corresponded about a constituent, a postman on a modest income. Under the old system, he pays about 50 per cent. of his disposable income in CSA payments for his responsibility in respect of one child. The response from the Department is that he will not be reassessed under the new system for at least two years. This man is in danger of losing his home because of accumulated debts. Could the Secretary of State arrange for people making payments under the existing system to be fast tracked in cases of hardship and debt?

Mr. Smith: I cannot give that assurance and I do not believe that it would be fair to pick out cases for changing over to the new system on a faster track. We have made it clear that we cannot move over to the new system for existing cases until we are absolutely sure that it is working properly, and that remains the case. I extend to the hon. Lady the same offer that I made to my hon. Friend the Member for Monmouth (Mr. Edwards)—for the Under-Secretary and I to meet to discuss individual cases. However, it seems that the individual case that she raises has already been thoroughly gone into. The hon. Lady is right that the

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new system, with its simpler formula, will be more readily accepted by parents who have to meet their payment responsibilities as well as by parents with care.

Miss Anne Begg (Aberdeen, South): I hope my right hon. Friend will not take the advice of the hon. Member for Colchester (Bob Russell) to scrap the CSA, because the new system will be much simpler, fairer and quicker. However, I was dismayed to discover, when the CSA gave evidence to the Work and Pensions Committee last week, that the new IT system still faces major delays and problems. That inevitably means that existing cases will take longer to move to the new system, as my right hon. Friend has already said. I am looking for his assurance that he will do everything in his power to improve matters, including ensuring that EDS—Electronic Data Systems—which is responsible for the IT failures, is surcharged or otherwise held to account for its failure to have the system up and running as quickly as it should have been.

Mr. Smith: I welcome my hon. Friend's positive remarks and share her commitment to ensuring that the new system works as effectively as it should as quickly as possible. I confirm that under the terms of the contract, EDS is penalised for non-delivery and poor service performance. I cannot go into the figures, but I assure my hon. Friend that the penalties involved are significant, both in absolute financial terms and in percentage terms. EDS has changed its senior management with responsibility for the project, and that has resulted in a better working relationship. Our senior officials are doing everything that they can, with EDS, to get the system working properly, and I can assure my hon. Friend and the House that the system will be managed closely.

Mr. Oliver Heald (North-East Hertfordshire): I am sure that we all agree that we would like to see the CSA working effectively. Last week, its chief executive said that the situation with the new computer system was only slightly better than the worst-case position. A range of technical problems in the past few weeks have reduced productivity by up to 30 per cent. and the Public and Commercial Services Union has said that the system is so bad that it prevents CSA staff from performing their jobs properly. What are the implications of all those problems for CSA customers? Will the existing cases be put off even further into the future? Can the Secretary of State give an assurance about when the information technology at the CSA will be working satisfactorily?

Mr. Smith: Like the whole House, I want to see the system working properly as soon as possible. As I told my hon. Friend the Member for Aberdeen, South (Miss Begg), every step—including improving the management and invoking the penalty clauses—is being taken to lever up performance. Notwithstanding the shortfalls in performance, which are acknowledged and for which EDS accepts it has technical responsibility, the system is improving. More than 1,000 cases a week are being cleared and I shall shortly report further performance details to the House, from which the hon. Gentleman will be able to draw further conclusions.

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Mr. Brian Jenkins (Tamworth): The question that my right hon. Friend has just answered is very similar to the one that I was about to ask, so I shall just ask him whether he is aware of the extra stress that the system's failure to comply with contract is placing on the work force?

Mr. Smith: Yes, I am. The technical defects, including the system going down or disappearing for periods, introduce into day-to-day working elements of unpredictability that have been difficult for staff to cope with. As I said earlier, I am grateful for the efforts made by the staff, but progress is being made and improvements in operations are being achieved notwithstanding the technical defects in the system. Further training is being provided to assist the staff in coping with the challenges.

Pension Credit

2. Mr. David Amess (Southend, West): How many pensioners will be in receipt of means-tested benefits as a result of the introduction of the pension credit by 2004–05. [123520]

The Secretary of State for Work and Pensions (Mr. Andrew Smith): The planning assumption is that around 3 million pensioner households will be receiving pension credit by 2006. Pensioners who qualify will be on average £400 a year better off, without the need for a weekly means test. We also expect an additional 250,000 pensioners to become newly entitled to housing benefit and council tax benefit from October as a result of the improved income and savings rules in pension credit.

Mr. Amess : Does the right hon. Gentleman agree with the right hon. Member for Birkenhead (Mr. Field) that the means-testing strategy on which the Government have embarked, with the best of intentions, is not sustainable?

Mr. Smith: No, because we are replacing a regime where savings were penalised by pound-for-pound withdrawal with one where savings and modest occupational pensions are rewarded.

Mr. Peter Pike (Burnley): Will my right hon. Friend confirm that the pension credit will in fact help many people with modest savings or a modest second income who were barred from additional help in the past? It will be a welcome boost to that group. Will he also confirm that publicity and preparations for the scheme are well under way and that people who do not receive the credit until October 2004 will have it backdated to the start date? I understand that that is one of the provisions of the scheme.

Mr. Smith: My hon. Friend is right on all counts. There is, as he says, a big improvement, in that the £12,000 ceiling on savings is being removed and savings below £6,000 are being disregarded. That gives much greater reward to people with modest levels of saving and occupational pension income, and is an incentive to save in the future.

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Mr. David Willetts (Havant): The Secretary of State has just said that he expects 3 million pensioners to be receiving the pension credit in 2006. Will he confirm that 5.1 million pensioners will be eligible in 2006? If so, he will have just admitted that 2 million pensioners will not be receiving the benefits to which they are entitled. Will he admit that take-up of means-tested benefits is low and that one reason for that is the stigma still attached to them?

Mr. Smith: I think that, in his question, the hon. Gentleman may be confusing pensioners and pensioner households, but I shall examine the figures that he mentioned. If he wants to know the equivalent take-up rate for the 3 million planning assumption, it is 73 per cent. However, I stress that we want pension credit to go to all those who are entitled to it, which is why we are writing to all pensioners and why we shall be mounting an extensive publicity campaign later this year.

Mr. Willetts: Does the Secretary of State agree with a report that states

to them? That document was produced on the No. 10 website last week, signed by the No. 10 strategy unit, the social exclusion unit and the Office of the Deputy Prime Minister. It has not been sexed up, it is not dodgy; those are the facts. Does the Secretary of State agree with that analysis?

Mr. Smith: No, I think that if anything promotes and entrenches wholly outdated and wrong concepts of stigma it is the hon. Gentleman and the Conservative party, who keep talking about the take-up of these entitlements as though they were a stigma. Those people were awfully stigmatised by the previous Conservative Government. The introduction of the Pension Service and the fact that pensioners will receive their money from the Pension Service and not from social security is a big step forward in tackling stigma. Making it easy for people to receive their entitlement, as we are doing, removes barriers and reminds people that it is their right and not something that they are being given as a favour—the hon. Gentleman is wrong to suggest that it is.

Mr. Steve Webb (Northavon): The Government have made much of the fact that under the pension credit a pensioner has to contact the Pension Service only once every five years. Can the Secretary of State clarify the position of a typical pensioner with a basic pension and a company pension who receives the pension credit in year one? In year two, what does the scheme assume has happened to the company pension? If it assumes that the pension has risen when it has not, there is risk of an error, and if it is assumes that it has not risen when it has, there is risk of an error—or does the person have to phone and report the change in circumstances?

Mr. Smith: People can take advice from the Pension Service on those matters at any time, if they want to do so. The way the system operates means that they do not have to be reassessed for five years unless there has been

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a significant and material change. It does not sound as though the hon. Gentleman was putting to me a significant or material change.

Annabelle Ewing (Perth): In the light of recently highlighted problems about the take-up of means-tested benefits by pensioners in Scotland, and as many pensioners unfortunately do not receive their entitlements, can the Secretary of State tell us whether a specific take-up target will be set for Scotland for the new pension credit?

Mr. Smith: All regions and Scotland and Wales will be trying to get as many people as possible to take up pension credit. Of course, there will be extensive publicity in Scotland and through the Scottish media, as well as the work being undertaken by the Pension Service, including the local pension service. I went out with the local pension service in Scotland, visiting pensioners in a sheltered housing scheme, so I could see just how much help those people gave pensioners and how readily it was received. I am confident that such efforts from our first-rate staff will increase take-up in Scotland, as elsewhere.

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