First Standing Committee
on Delegated Legislation
Monday 3 February 2003
[Miss Ann Widdecombe in the Chair]
Draft Child Support (Miscellaneous Amendments) Regulations 2003
The Chairman: Order. Before I call the Minister to move the motion, I remind the Committee that I expect the proceedings to be whirrless, ringless and bleepless. All communication devices must function silently, or not at all.
The Parliamentary Under-Secretary of State for Work and Pensions (Malcolm Wicks): I beg to move,
That the Committee has considered the draft Child Support (Miscellaneous Amendments) Regulations 2003.
I must say, Miss Widdecombe, what a pleasure it is to serve under your chairmanship for the first time to a discuss a subject that, as I recall, is not unfamiliar to you or to other members of the Committee.
As their name suggests, the regulations cover many aspects of the new and existing child support schemes. They also cover the regulations that cover the transfer of cases from the old scheme to the new one. As my right hon. Friend the Secretary of State told the House last week, the new child support scheme would be introduced on 3 March. That will mean that a non-resident parent's case will be calculated under the new rules where his liability begins on or after 3 March. Some existing cases will also convert to the new scheme between that date and the date that we set for the bulk transfer of existing cases to the new scheme. That early conversion would happen where a new rules case is found to have links to an existing application for maintenance. The Secretary of State will announce the common date from which all remaining cases will convert to the new scheme when he is satisfied that the new scheme is working well.
I am sure that hon. Members will join me in welcoming this step forward in delivering an effective child support system. At this point, it is appropriate to say that the use of ''he'' and ''she'' throughout the regulations, and in today's debate, is not intended to indicate that the provisions apply to either men or women exclusively. Either men or women may be non-resident parents or, in the jargon, parents with care.
The amendments cover arrangements for the current system, the new scheme and the transitional arrangements. It is necessary to amend provisions that have not yet come into force to reflect the fact that the world has moved on since we originally made regulations for the new scheme. The introduction of new tax credits is an example of that. The amendments are mostly consequential on changes to the social security and tax credit system, which are being made to strengthen the Government's welfare to work programme. The child support reforms introduce a simpler scheme, so the Child Support Agency will be able to concentrate more resources on enforcement
Column Number: 004
and fewer on simply gathering information. That will help to achieve our aim of getting more money to more children.
To receive maintenance is a powerful work incentive: the latest research shows that parents with care who receive regular maintenance are twice as likely to take up work as those who do not receive maintenance payments. The introduction of the new credits in April this year will increase the reward for taking work. They continue to disregard child maintenance entirely. The new child support system is designed to help lone parents make the transition into work through the provision of regular maintenance.
The amendment made by regulation 2 is part of the delicate balance between—
Mr. Oliver Heald (North-East Hertfordshire): The changes in policy during the years in which the scheme has been in place were one of the reasons for the delays in implementing the computer project. Before the Minister explains the detail of the regulations, will he say what the further changes will mean for the computer system? Will they create the need for additional software, and will that lead to further delays in the date for the introduction of new cases, linked cases or the bulk of the cases—the 1.1 million cases—that are awaiting transfer?
Malcolm Wicks: As the hon. Gentleman will know, the changes have been thought through for a good many months, and are part and parcel of the system that we have been testing, so they do not affect the judgments made recently in the House by my right hon. Friend the Secretary of State.
The amendment made by regulation 2 is part of the delicate balance between ensuring that a non-resident parent complies with his child maintenance obligations, and that work pays. The amendment made by it to the collection and enforcement regulations relates to both the current and the new schemes. Working tax credit will be paid directly to an employee along with their wage. The amendment provides that an employer cannot deduct child support maintenance from working tax credit under a deductions from earnings order. It must be deducted from earnings. The earnings, not the tax credit, must contribute to maintenance. Such an arrangement mirrors the provisions for the current tax credits. It helps to ensure that the effectiveness of deductions from earnings orders as a compliance tool does not undermine the work-incentive effect of tax credits.
Provisions in the current scheme enable parents to apply for an adjustment to the standard assessment. That is called a departure. Regulation 4 makes a couple of straightforward amendments to the departures regulations. It replaces references to working families tax credit and disabled person's tax credit with references to working tax credit. That provides that certain types of departure will not be given where the parent with care is in receipt of working tax credit, mirroring the current approach to working families tax credit and the disabled person's tax credit.
Column Number: 005
Regulation 5 amends the maintenance assessment procedure regulations under the current scheme. It is also consequential on the introduction of new tax credits, and its provisions are mirrored in the amendments made by regulation 7 for the new scheme. It rightly continues the consideration given by the House to the particular vulnerability of families with disabled children. It covers a family that is in receipt of income support or income-based jobseeker's allowance and the disabled child element in child tax credit. It provides that no reduction may be made to benefit when the parent with care refuses to co-operate with the Child Support Agency when required to do so by law.
Hon. Members may wonder why we are removing the sanction from those parents with care who do not co-operate with the CSA without satisfying the provision of the good cause test. The decision to apply a reduced benefit direction, which cuts benefit by 40 per cent., is never taken lightly by decision makers in Jobcentre Plus. Due consideration must always be given to the welfare of any child involved. Through the amendment, we continue to make it explicit that it could never be in any disabled child's interest to have their family's benefit reduced.
The amendments made by regulation 6 to the maintenance assessments and special cases regulations under the current scheme are mostly technical and relate to the introduction of the new tax credits. The regulation largely mirrors the present treatment of the working families tax credit. A parent with care who is entitled to working tax credit will be treated as having no income for assessment purposes.
If a non-resident parent is awarded working tax credit, it will be counted towards the assessable income calculation only where he is the main earner in a household. In the protected income calculation, which considers the income and needs of the non-resident parent's current household as a whole, any payment of working tax credit in that household will count as income.
Mr. Heald: The Minister will recall my earlier point. Is it not the case that some of the support currently provided as part of the working families tax credit will, after April 2003, be provided by the child tax credit? Given what he has just said, is it not correct that regulation 6 deals with the treatment of the new child tax credit in a particular way, in that it is not counted as assessable income? In regulation 6(5), however, it is taken into account as protected income. Is the Minister saying that the changes to arrangements as regards assessment and protected income have already been made? If so, how did the current computer system work in relation to the current rules in all its trials?
Malcolm Wicks: It may be helpful if I return to those precise IT points.
I was going on to talk about child tax credit because, as the hon. Gentleman implies, the rules for the credit are somewhat different. They reflect its status as support paid to the main carer throughout periods of work and non-work, and it is ignored when assessing the parent with care's income. For the non-
Column Number: 006
resident parent income, it is ignored in the assessable income calculation, but it counts fully in the protected income calculation. Regulation 8 makes similar changes to the maintenance calculations and special cases regulations to take account of new tax credits, but any payment of child tax credit, whether paid to the non-resident parent or his partner, will count towards the non-resident parent's income.
The rules for the treatment of child tax credit in both the current and new schemes reflect the fact that it is paid for children in the non-resident parent's current family. Allowance will already have been made in the maintenance formula or calculation for it, and the changes mainly carry forward the effect of current provisions for the treatment of money awarded for children in existing tax credits. The amendments also ensure that the personal choice of a couple as to who should receive the child tax credit for the children will make no difference to child support liability.
Under the new scheme, a system of variations will exist for parents who have special circumstances. It will be similar to the departure scheme in the current system, but it has been streamlined and will be more child-focused. Awarding a variation can alter a maintenance calculation either up or down to take into account certain child-related expenses or special circumstances. Examples include high costs of keeping in contact with the child, paying boarding school fees or when the non-resident parent has a lifestyle that is inconsistent with his declared income. Regulation 10 makes a straightforward update to the new scheme variations regulations and reflects changes brought in by the new tax credits.
The regulations package also contains amendments that are not related to the introduction of the new tax credits. It has been necessary to introduce some minor amendments to reflect changes elsewhere in the welfare system. Regulation 6, which amends the current scheme maintenance assessments and special cases regulations, covers the renaming of invalid care allowance as carer's allowance. It also makes provision for the new supporting people payments to be disregarded from the income calculation. Those cover housing-related support costs previously paid through the housing benefit scheme, which was automatically disregarded in full.
The transitional regulations make provision for how and when existing cases convert to the new scheme. They allow changes in liability to be phased in during a period of up to five years, depending on the non-resident parent's income at the time of conversion and the difference in the amount due. For example, a non-resident parent whose net income is £200 would have any change in liability phased in £5 steps. If he is currently paying £40 and is to pay £30 in the new scheme, he will pay £35 a week on conversion and £30 a week one year later. Phasing is intended to allow both parents with care and non-resident parents time to adjust their household budgets.