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Mr. Laws: My hon. Friend is exactly right. We were discussing earlier the IT problems that have plagued the tax credit system, and they are obviously endemic in the child support system, too.

We could commit a large part of this relatively short debate simply to examining the deficiencies of the agency. I want to reflect briefly on the fundamental problems of the agency, and then examine possible solutions.

Mr. Adrian Sanders (Torbay) (LD): Fathers are not obliged to tell the agency when they change jobs, which contributes to enormous problems in the CSA. If the scheme were managed through the Inland Revenue, surely that would no longer be a problem.

Mr. Laws: My hon. Friend is exactly right. When I was told by an expert in the Child Support Agency that absent parents had no duty to notify the agency of a change in job or residence, I was amazed. It was only when I tabled a question to Ministers that I discovered not only that that was true, but that the Select Committee had made recommendations on the matter in its report a year ago. It also recommended that there should be a mechanism through which it could be ensured that an individual's deduction of earnings order could be transferred, because such orders are currently lost if people lose their job or decide to resign, which is bizarre.

Mr. Pat McFadden (Wolverhampton, South-East) (Lab): Will the hon. Gentleman give way?

Mr. Laws: I shall give way one last time and then I must move on.

Mr. McFadden: Will the hon. Gentleman give us a little more detail about his point on staffing? If he is proposing to transfer the CSA's functions to the Inland Revenue, is he guaranteeing that all the current staff of the agency would be able to keep their jobs? If he thinks that the current staff numbers are too low, how many more staff would he hire when transferring the functions to the Inland Revenue, and what might be the cost of that?

Mr. Laws: I am happy to say that I am making the point that it is absolutely potty—I hope that the hon. Gentleman agrees—that one in eight of the CSA's staff should be taken out over two years when the agency has a backlog of a third of a million cases, 73,000 of which
 
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have been in place for more than two and a half years. I   should have thought that that would be absolutely clear to every hon. Member.

Jenny Willott (Cardiff, Central) (LD): Will my hon. Friend give way?

Mr. Laws: My hon. Friend tempts me into taking one further intervention, and then I must move on.

Jenny Willott: Does my hon. Friend agree that the combination of a heavy work load and reducing staff numbers has led to the CSA not investigating cases properly? Two of my constituents have told me that they notified possible benefit fraud relating to their cases to the CSA, but neither matter was investigated. Does he agree that that is yet another example of how an overworked CSA is unable to function properly?

Mr. Laws: I would be very surprised indeed if every Member of the House did not recognise the problem to which my hon. Friend draws attention. Many people whom I have seen in my constituency advice centre in recent months have had precisely that problem.

I shall touch briefly on the fundamental problems of the Child Support Agency before I examine some of the solutions. It is clear that the CSA is not an agency that commands respect. Many people see it not as an agency that is primarily about getting money to children, but as a means of saving money for the Exchequer. Its case load is not only heavy, but often bogged down by complex cases that might be better dealt with in the courts because of associated matters that are related to them. It is clear that the CSA cannot cope with its work load and that it is unable to link in with other agencies, including the Inland Revenue, to share information that is critical to not only making assessments, but ensuring that the money that is due is collected.

As my hon. Friend the Member for Torbay (Mr.   Sanders) said, it is clear that non-resident parents should have the duty to notify changes of job and of address. It is clear to every hon. Member that there is too little emphasis in the agency on compliance and an unwillingness to use middle-order sanctions, including immediate deduction from earnings, to deal with problems. In the United Kingdom, some 19 per cent. of the CSA's cases involve a deduction of earnings order. The figure is about double that in Australia, which has a far more effective system. If we were to deal with that problem, it would have far more impact on the money raised for child support than some of the gimmicks that the Government have trailed.

Steve McCabe : I am interested in the hon. Gentleman's point about not making effective use of middle-order sanctions. Can he tell me what his hon. Friend meant when he referred to existing enforcement powers being "draconian attacks on liberties"? Are not such powers middle-order sanctions?

Mr. Laws: The hon. Gentleman has not made it clear what comments he is referring to. My point, which I am sure he is wise enough to take, is that the CSA's objective is to raise money to help to tackle child poverty and it is   the agency's failure to do that—not implementing enforcement mechanisms except in a desperate
 
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last-ditch attempt to get the money—that we really need to address. Although the agency already possesses tough enforcement powers, it rarely uses them.

Mr. Weir: Will the hon. Gentleman give way?

Mr. Laws: I must make some progress.

We believe that the CSA should be scrapped and its functions transferred to Her Majesty's Revenue and Customs. We are pleased that the right hon. Member for Birkenhead (Mr. Field) has adopted a similar position—in fact, he advised the Prime Minister to do that as long ago as 1998, unfortunately without effect so far.

Chris Bryant (Rhondda) (Lab): Will the hon. Gentleman give way?

David Taylor (North-West Leicestershire) (Lab/Co-op): Will the hon. Gentleman give way?

Mr. Laws: I shall make some progress, then take more interventions.

Transferring the CSA's functions to HMRC would be a dramatic and fundamental change, but there comes a point where a failing agency can no longer be patched up. That is surely the conclusion that the Prime Minister has reached, which would explain his comments in November. The switch to HMRC is not only about securing a new culture and better management—although, my goodness, we need both after the past 13 years. It is about making sure that there is effective transfer of information on the incomes of absent parents who are not willing to pay, and about making sure that we can more effectively deduct money from those absent parents' earnings when they show determination not to   pay. HMRC is in a far better position than the CSA to gather that information and to deduct money at source.

The CSA must retain a simple tax-like formula for assessing maintenance and we give the Government some credit for their efforts to simplify the formula since 1997. Simplicity is vital if maintenance calculations are to be made quickly and reliably.

Miss Anne Begg (Aberdeen, South) (Lab): I have not had a chance to read the Liberal Democrat document that sets out their proposals—it might have been better to state them in the motion. Will the hon. Gentleman clarify his party's position? Responding to the National Audit Office report on the complexity of benefits, his hon. Friend the Member for Inverness, Nairn, Badenoch and Strathspey (Danny Alexander) said that it was their party's policy to separate the benefits system from the tax system, yet today the hon. Member for Yeovil (Mr. Laws) appears to be arguing that the element of the benefits system administered by the CSA should be part of the income tax system. I am confused.

Mr. Laws: I am happy to enlighten the hon. Lady by showing her a copy of the documents, but I suspect that she has got her wires slightly crossed. I believe that she has in mind the comments that my hon. Friend the Member for Inverness, Nairn, Badenoch and Strathspey (Danny Alexander) rightly made pointing out that Her   Majesty's Treasury is precisely the wrong place for
 
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the administration of means-tested benefits—which is what tax credits are, after all. I am sure that the hon. Member for Aberdeen, South (Miss Begg), as a member of the Select Committee on Work and Pensions that produced the excellent report a year ago and signed up to fundamental changes, including scrapping the CSA if it was not sorted out, understands the point that I am making today.

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