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David T.C. Davies (Monmouth) (Con): I must say that I agree with every word that the hon. Gentleman has said. Does he share my concern at the fact that, in some cases, Government agencies are refusing to take complaints from very poorly paid people who actually want to give the money back to the agency? They do not want it sitting in their bank account, given the obvious temptation, but they are encountering a great deal of intransigence on the part of the authorities, who seem not to want to reclaim that money immediately.

Mr. Laws: I am afraid that I recognise precisely the issue that the hon. Gentleman raises. In recent months, a number of people have pointed out to me at my constituency advice centre that, on suspecting that they had received an overpayment of tax credits, they had contacted the Inland Revenue, said that they wanted to repay the money and were told that there was no problem. However, they were contacted six or nine months down the line and told that there had indeed been an overpayment. Of course, by that stage the Inland Revenue is already recovering the money automatically. When the recovery takes place in-year, there is no protection of people's income in the way that the money is withdrawn. That is causing a lot of problems for people on low incomes.

Steve McCabe (Birmingham, Hall Green) (Lab): Given the hon. Gentleman's dissatisfaction with tax credits, will he be advising those of his colleagues who avail themselves of the tax credit system to stop taking advantage of it, just as he advised them to stop taking advantage of the pension system—a policy announced today?

Mr. Laws: Given that hundreds of thousands of people are being driven into real poverty by the failure of, and maladministration of, the tax credit system, it is very sad that the hon. Gentleman seeks to make a rather cheap party political point about what is a very small number of claims. This issue affects his constituents, as well as mine. Hundreds of thousands of incredibly vulnerable people are making claims, and he would not be taking this matter so lightly if he had sat in the same advice centre that I did a couple of weeks ago. I heard a string of people on very low incomes—£10,000 to £11,000—explain that they face frightening repayments of £5,000 or £6,000, often as a consequence of errors caused by people other than themselves.

The second issue, which has not been discussed much today—it certainly was not discussed much by the Secretary of State, or by the right hon. and learned
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Member for Kensington and Chelsea, perhaps because of his party's connection with this debacle—is the problem with the Child Support Agency. Since its introduction in 1993, its operation has been a disaster. Given that we have known that it was failing for a long time, and given that the Prime Minister acknowledged that it was a mess back in 1998, it is surely astonishing that nothing has been done to make the system work more effectively. As a result, billions of pounds in maintenance due to some of the poorest families in the country has not been paid, and an unbelievable backlog of a third of a million cases are sitting in the CSA. Indeed, 80,000 of them have been sitting there for more than two and a half years without being processed. That demonstrates not only that the CSA has been a failure since it was established, but that it continues to be so. It is managing to collect only £1.85 for every pound spent on administering the system. In countries such as Australia, the collection rate is approximately £8 for every pound spent.

We Liberal Democrats were interested to hear the Prime Minister say last week that the CSA is not fit for purpose. We thought that out of that might come the serious prospect of radical reform, be it reform of the existing arrangements, or the transferring of the CSA's responsibilities to the Inland Revenue—several Members from all parts of the House have suggested that—to enable the information that we currently collect on people's incomes to be used more effectively, and to enable a much greater deduction from the earnings of those who are determined to evade their responsibilities.

Journalists and others such as the right hon. Member for Birkenhead (Mr. Field) left the House in a state of excitement that day, thinking that the Prime Minister had announced a policy on the CSA. However, when journalists phoned the Department for Work and Pensions and the No. 10 press office to check, they established that there was no such policy. It seems as if the Prime Minister was making up policy on the hoof in this area, as he seems to have done since 1998. That is why it is particularly important that there be an early opportunity for the Secretary of State to introduce proposals that tackle these problems, which have existed for many years, in a fundamental way, rather than simply seeking to gloss over them.

Mr. Peter Bone (Wellingborough) (Con): As a new Member of Parliament, I have been shocked to discover the distress that the CSA has caused families. I understand where the hon. Gentleman is coming from, but can he outline where improvements could be made, or is it too late? Does the CSA need to be scrapped?

Mr. Laws: I see the same desperation among constituents that the hon. Gentleman sees. I am particularly concerned about the fact that many of our constituents seem to have given up all hope that the CSA will ever work. I have noticed in the past year or so that, while tax credits have taken off as an issue raised at constituency advice centres, the number of CSA cases raised seems to be going down. However, that reduction does not mean that such problems do not exist; rather, I suspect that many people have been bashing their heads against a brick wall for so long that they have given up.
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The hon. Member for Wellingborough (Mr. Bone) asked what the solution to this problem is, and it is clear that it consists of a number of elements. First, the CSA's computer system is not working properly. Given the amount of detail with which it has to deal, if it is not effective, major problems will arise. Secondly, there are simple administrative failings. That is staggering, given how long the CSA has been around and the number of attempts that must surely have been made to reform the system. I was astonished to be told a few weeks ago by an expert on the CSA that there is currently no obligation on non-resident parents to notify the CSA of a change of job or of address. That is one of the most obvious, common-sense, miniscule proposals that could possibly be made. However, it has since been confirmed by a DWP Minister that there is no such obligation.

Mr. Jeremy Hunt (South-West Surrey) (Con): Does the hon. Gentleman agree that one big problem with the CSA is its complex relationship with the benefits system? People who go on to benefit have their CSA case de-prioritised; if they then come off benefit, it is re-prioritised. That complex web makes it very difficult for people to know where they stand with the CSA.

Mr. Laws: The hon. Gentleman is right. In fairness to the CSA, the hard core of cases that it is trying to deal with involve some of the most difficult families in the country in terms not only of their willingness or otherwise to make the assessed maintenance payments, but of the number of changes in their circumstances. That argues for introducing a simple system and—to us—for folding the CSA into the Inland Revenue, so that it can use the large amount of information that the Revenue already holds on people's incomes. It probably also argues for greater use of deduction at source from the earnings of those who are unwilling to pay, which is the Australian approach. The Australian deduction-of-earnings-at-source rate is about twice the UK's. As a constituency MP, I am often amazed by the reticence of the CSA to put deduction-of-earnings orders in place, despite the fact that people are often not willing to meet their maintenance liabilities.

Miss Begg: I am somewhat confused about Liberal Democrat policy in respect of the CSA. The party used to favour returning that agency's responsibilities to the courts, but the hon. Gentleman seems to be proposing that they should be handed over to the Inland Revenue, even though he has spent a large chunk of his speech criticising that agency for its failure to deliver on tax credits. Alternatively, is he just going to tinker at the edges of the problem? After what he has said, I am totally confused about where his party stands.

Mr. Laws: The hon. Lady should pay more attention to Liberal Democrat policy statements. Perhaps she would like a standing invitation to the conferences that my party holds around the country, as that would enable her to track the development of our policy on these matters. However, I can assure her that my party's policy is to fold the CSA into the Inland Revenue. That is because the Inland Revenue already collects a lot of
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information about the incomes of people who evade their responsibilities, and because it would be easier to deduct the money owed at source.

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