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|Child Maintenance And Other Payments Bill|
These notes refer to the Child Maintenance and Other Payments Bill as introduced in the House of Commons on 5th June 2007 [Bill 118]
CHILD MAINTENANCE AND OTHER PAYMENTS BILL
1. These explanatory notes relate to the Child Maintenance and Other Payments Bill as introduced in the House of Commons on 5th June 2007. They have been prepared by the Department for Work and Pensions in order to assist the reader of the Bill and to help inform debate on it. They do not form part of the Bill and have not been endorsed by Parliament.
2. The notes need to be read in conjunction with the Bill. They are not, and are not meant to be, a comprehensive description of the Bill. So where a clause or part of a clause does not seem to require any explanation or comment, none is given.
3. The current system of child support maintenance is administered by the Child Support Agency ("CSA") and dates back to 1993. It was established by the Child Support Act 1991, and developed further by the Child Support Act 1995 and the Child Support, Pensions and Social Security Act 2000.
4. The CSA was set up to help ensure that parents take financial responsibility for their children. However performance has fallen short of expectations.
5. In February 2006, Sir David Henshaw was asked to consider proposals for the fundamental redesign of the child support maintenance system. His report 'Recovering child support: routes to responsibility' was published in July 2006 and set out recommendations to improve both child support maintenance policy and its delivery. Bill 118EN 54/2
6. The Government's response to Sir David Henshaw, 'A fresh start: child support redesign - the Governments response to Sir David Henshaw' accepted many of his recommendations and agreed to investigate others further. This was followed by a period of consultation and more detailed policy proposals were then published in the White Paper 'A new system of child maintenance', in December 2006 (hereafter referred to as 'the White Paper') which was followed by a further consultation period.
7. The House of Commons Work and Pensions Committee reviewed the proposals contained in the White Paper. The Government's response to the Committee's report, together with its summary of the White Paper consultation, were published on 15 May 2007.
8. In July 2006 the Secretary of State announced a number of interim measures to ensure faster compensation payments to sufferers of mesothelioma, and his intention to put in place a long term solution to pay compensation in life wherever possible.
9. A consultation followed this announcement, a summary of which was published by the Government in March 2007.
10. In March 2007, the Secretary of State announced proposals to provide faster compensation to all those diagnosed with mesothelioma, providing up-front financial support within six weeks to those who were exposed to asbestos outside the workplace.
11. The Secretary of State also announced that the cost of this proposal would be met through compensation recovery whereby payments under the Pneumoconiosis etc. (Workers' Compensation) Act 1979 and the newly proposed scheme are recovered if a civil claim for compensation is subsequently successful. Payments under the new scheme would initially correspond to what can be afforded out of the projected compensation recovery amounts, and would increase as those funds allow.
Child Maintenance and Enforcement Commission
12. The CSA was established in 1993 to assess, collect and enforce child maintenance payments from non-resident parents. The CSA was to replace court arrangements, which were seen as cumbersome and failing children and their parents. The original scheme was introduced by the Child Support Act 1991. This was amended by the Child Support Act 1995 and the Child Support, Pensions and Social Security Act 2000. The 2000 Act introduced significant changes including the introduction of a new scheme for calculating child support maintenance (the 'new scheme'), and changes to section 6 of the Child Support Act 1991, under which the CSA could treat parents with care in receipt of prescribed benefits as having applied for child support maintenance.
13. The CSA was established as one of the Executive Agencies of the Department of Social Security. Executive Agencies were first established following Sir Robin Ibbs's 'Next Steps' Report in 1988. The intention was that they would take responsibility for, and bring a new more customer-focused approach to, individual executive (service delivery) functions within Government. This would leave their parent Departments to concentrate on policy development.
14. Executive Agencies operate as part of their parent Department under powers that are delegated from Ministers, as they do not hold statutory status as bodies corporate in their own right. Executive Agencies have a Chief Executive who reports to the Department and Minister against specific targets, and they are staffed by Civil Servants. The Chief Executive of the CSA is supported by an advisory board of executive and non-executive members.
15. In the White Paper, the Government proposed that a non-departmental public body (NDPB) should be established to deliver child maintenance and replace the CSA. This Bill establishes a body corporate to be called the Child Maintenance and Enforcement Commission which is referred to, in the Bill and in these Notes, as 'the Commission'. The Commission will have a role in the processes of national Government but will not be a Government Department or part of one. It will operate at arms length from Ministers in its day to day decision making. Although Ministers will set high level principles, the Commission will have full autonomy to run the child support maintenance system.
16. The main objective of the Commission will be to maximise the number of children living apart from one or both of their parents for whom effective maintenance arrangements are in place. This objective will be supported by the following subsidiary objectives:
17. Most of the functions that fall to the Secretary of State under the Child Support Act 1991 will be transferred to the Commission. In addition to these functions the Commission will have further responsibilities for raising awareness among parents of the importance of taking responsibility for the maintenance of their children and making appropriate arrangements for the maintenance of children of theirs who live apart from them. To support this process, the Commission will also be required to provide a service that provides information and guidance to both parents for the purpose of helping to secure the existence of effective maintenance arrangements.
18. The CSA currently commissions external service providers to help enforce maintenance payments. The Commission will have more flexibility to commission external providers to carry out its functions in order to deliver services in the most efficient and effective way.
19. The structure of the Commission will consist of a Board with the following members:
20. The Board will be able to employ staff to carry out the day to day functions of the Commission.
21. Under section 6 of the Child Support Act 1991, if a parent with care is paid or has claimed income support, or income based jobseeker's allowance, (or one of those benefits has been claimed or is paid in respect of that parent), they are treated as though they have applied for child support maintenance.
22. Parents with care who do not wish to be treated as applying for child support maintenance need to demonstrate good cause: for example, that applying for maintenance could put them, or any child living with them, at risk of harm or undue stress. If they do not demonstrate good cause, section 46 of the Child Support Act 1991 enables the Secretary of State to make a decision to reduce their benefit.
23. The Bill will repeal sections 6 and 46 of the Child Support Act 1991. This will mean that parents with care in receipt of (or applying for) the prescribed benefits will not be treated as applying for maintenance, and therefore they can not be subject to a reduced benefit decision.
24. Once this change occurs existing parents with care whose application for child maintenance was made under section 6 (and was therefore compulsory) will have a choice of withdrawing from the statutory scheme should they wish to do so.
25. Under the current 'new scheme' legislation, the information used to calculate maintenance includes: the non-resident parent's net weekly income, the number of qualifying children, and the number of 'relevant other children' (those living with the non-resident parent whether or not they are children of that parent). The maintenance calculation can be adjusted if a change in circumstances is reported to the CSA, although a change of less than 5% in net weekly income would not result in an adjustment.
26. For the purposes of child maintenance, net weekly income is a non-resident parent's income from employment or self employment, tax credits, or from an occupational or personal pension after deductions for income tax, national insurance, and contributions to an occupational or personal pension have been applied.
27. Once enough information is provided by the non-resident parent, a calculation is performed to establish how much maintenance is payable to the person with care. The basic rate of maintenance takes account of how many children the non-resident parent is required to pay maintenance for, and is based on a percentage of their net income, up to a maximum of £2,000 per week, which is:
28. A flat rate is payable by non-resident parents who are in receipt of benefit or earn less than £100 a week, and is an amount up to £5 per week.
29. The Bill will make several amendments to how a maintenance calculation is arrived at and maintained. Gross weekly income details from the latest available tax year will be used to calculate maintenance instead of net, and this will usually be based on information already held and made available by Her Majesty's Revenue and Customs ("HMRC").
30. Alongside this, the percentages applied for the basic rate in relation to earnings of a non-resident parent between £200 and £800 per week, will change to:
31. New percentages will be introduced for non-resident parents whose earnings are over £800 per week. The percentages will apply in relation to earnings between £800 and £3,000 per week. They will be:
32. Percentages for relevant other children will also change to the same level as those for basic rate.
33. The level of flat rate maintenance for non-resident parents in receipt of a prescribed benefit, or earning less than £100 per week, will also be increased from £5 to £7 per week.
34. The Bill will enable restrictions to be imposed on how often a maintenance calculation is changed. Annual reviews will take place to ensure the calculation reflects any changes in income or circumstance, specifically the income figure for the latest available tax year will be updated. Between annual reviews, the calculation will be revisited only where there has been a large change in income, or a fundamental change such as a child or children moving to live with the other parent.
35. Another change relates to cases where both parents each have at least one child of the relationship living with them. In such cases, both parents are a person with care in relation to one child, and a non-resident parent in relation to another. Currently they would both be liable to make a maintenance payment. The changes will enable one liability to be offset against the other, so that only the parent with the highest liability actually makes a payment.
36. Child maintenance obligations of a non-resident parent under certain types of private arrangement will also be taken into account when calculating the amount of child support maintenance payable under the Act.
37. In the majority of cases an application for payment of child support maintenance is made by the person with care. The applicant supplies to the CSA details of the children for whom maintenance is sought, and sufficient details of the non-resident parent to enable the CSA to contact them in order to calculate a maintenance liability.
38. The CSA will then attempt to contact the non-resident parent and obtain details of income and any other relevant information. Once a calculation is made, arrangements can be set up with the non-resident parent for payment of maintenance.
39. In some cases the non-resident parent will refuse to provide enough information to the CSA, or if it has been made available and a maintenance calculation made, they attempt to avoid payment. In these instances the CSA will use enforcement powers available to it in order to collect maintenance.
40. The enforcement powers available to the CSA are as follows:
41. The Bill will introduce several changes to enforcement powers, with both changes to existing powers and new powers introduced. Changes to existing powers include:
42. New powers to be introduced include:
43. Since its inception in 1993, the CSA has collected over £5 billion in child support maintenance. At the same time, however, around £3.5 billion of debt has accumulated. The CSA has no statutory powers to write off debt.
44. Since August 2006 the CSA has held contracts with private sector debt collection agencies to pursue debt on its behalf.
45. The Bill will introduce new powers to enable the Secretary of State or the Commission to collect and manage debt:
46. There are two child support maintenance schemes in operation:
47. The Bill will provide a general power enabling the Secretary of State to set out a framework for existing cases to move to the new maintenance calculation rules so far as future accrual of liability is concerned. Once the Commission comes into existence it will advise Ministers on the regulations which govern that process.
48. The Bill will introduce powers to enable the disclosure of certain qualifying information about some non-resident parents to credit reference agencies, to be used by such agencies for the purpose of furnishing information relevant to the financial standing of individuals (determining their credit rating).
49. A piloting power will be introduced to enable new policies to be tested, and changes to the definition of "child" to align it with the Child Benefit Act 2005.
50. The Bill introduces information gateways between the Commission and the Secretary of State, the Northern Ireland Department and HMRC.
51. The Bill will prevent any further use of the social security provisions (which are now generally redundant) which provide that a person is liable to maintain their children, and that the Secretary of State may seek an order to recover amounts paid in income support where this has been paid as a result of failure to do so.
52. The intention of the Pneumoconiosis etc. (Workers' Compensation) Act 1979 ("the 1979 Act") was to provide a reasonable level of compensation to sufferers of certain dust related diseases, or their dependants, who are unable to pursue a civil claim because their former employers have ceased to carry on business. Mesothelioma is one of the diseases covered by the 1979 Act, and only people who receive Industrial Injuries Disablement Benefit are eligible to receive a payment under the 1979 Act.
53. The Social Security (Recovery of Benefits) Act 1997 ("the 1997 Act") provides for the recovery of social security benefits (as listed in the 1997 Act) which have been paid in respect of any accident, injury or disease to claimants who go on to receive compensation in respect of the accident, injury or disease, following a civil action claim. The intention of the 1997 Act was to ensure that a person does not receive double compensation, and that the Government could recover the listed social security benefit payments it had made, from the person deemed liable for the accident, injury or disease following a civil claim.
54. The Bill will enable a lump sum payment to be provided for those not eligible under the 1979 Act who:
55. In effect, the proposed new scheme will mean that all sufferers of mesothelioma, as a result of exposure to asbestos, will be eligible for a payment regardless of their employment status, provided they have not already received a compensation payment through a civil claim or a payment under the 1979 Act or new scheme.
56. In addition, the Bill will introduce the ability to recover payments made under the 1979 Act or the new scheme, where a person then goes on to receive compensation in a civil claim.
|© Parliamentary copyright 2007||Prepared: 7 June 2007|