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There has been a particular moment of trepidation for me in relation to the debate, although it is not so much to do with the debate as with the fact that I imminently expect to receive a message that my wife is on her way to hospital to give birth to our first child,
due on Saturday. If that message arrives, my hon. Friend the Member for Edinburgh, West (John Barrett) has offered to step in to replace me.
Mr. Hain: The hon. Gentleman has my congratulations and those of the whole House on that big event. If he feels like giving me his speech and trotting off to help his wife, I shall be happy to read it afterwards. He could then get on with more important things.
Danny Alexander: I am grateful to the Secretary of State, but my wife is not yet on her way to hospital. He can rest assured that if she were I should certainly not be hereimportant though the debate is.
As the Secretary of State said earlier, the interests of children must be at the forefront of our minds. Whatever disadvantages they may face because of their circumstances, it is important that financial disadvantage is not added to the list. That is the context for our debate on the Bill.
The Liberal Democrats have some deep concerns about the Bill, but we welcome some of its core principlescertainly, the idea of encouraging more private arrangements in all classes of case where that is appropriate and where it can be ensured that the arrangements can be carried out consistently, especially where benefit payments are involved. The Bill frees people to make private arrangements and that is welcome. The increased focus on tackling child poverty is an important aspectthe measures are no longer simply about reducing public expenditure on claims for child maintenance.
The Liberal Democrats and the Conservatives have signed up to the Governments aspiration to abolish child poverty by 2020 and it is good that the presentation of the Bill took that aim into account. The provisions on greater effectiveness in the collection of maintenance and the enforcement of maintenance orders are important, but that approach should also apply to the Governments attitude to the £3.5 billion of outstanding arrears. That point has not yet been made today, so I hope that when the Minister winds up he will make clear the Governments plans for recovering that huge amount of historical debt. The Governments figures suggest that they regard £1.9 billion as possibly uncollectable, which is a worrying statistic. We have not yet heard from Ministers what they anticipate the CMECs attitude will be to that debt.
The debate is not just about principles; it is, importantly, about practice. As we have seen, since the CSA was established the devil is in the detail, in particular the administration. Perhaps unlike the hon. Member for Epsom and Ewell, I approach the Bill with a certain pessimism, which is shared by at least some outside organisations. The citizens advice bureau briefing for the debate said that
there must be major doubts about whether the Bills proposals will in practice resolve the seemingly intransigent problems afflicting child support, which mean that only one in three children who should be benefiting from some child support are actually receiving anything.
The CAB also pointed out that the pace of reform was disappointingly slow. As has been said, we need to consider the proposed reforms against the background of administrative failure and the huge backlog of uncleared cases in two systemsshortly to become three. The backlog is getting longer and the average time for an assessment is now 500 days.
Mr. Weir: I agree entirely. The fact that two or three systems are operating in the agency undermines confidence. Does the hon. Gentleman agree that the Government should have cut the Gordian knot and put everybody into the same system to show that there was a new fairness in child maintenance?
Danny Alexander: I thank the hon. Gentleman for that intervention. He makes an important point. The continuation of three systems will be a ball and chain on the new agency. We have heard from the Secretary of State and from the hon. Member for Barnsley, West and Penistone about the aspirations for a change of culture, but the ball and chain effect of those old systems will be a serious problem for the new agency to tackle.
There are IT problems and questions about the administrative competence of the organisation. Furthermore, when the CSA was established and again when the 2001 reforms were implemented in 2003, there was over-optimism about how quickly things could change. We have to counter those problems, especially given the fact that in the 1.4 million cases being handled by the CSA, only 455,000 of the 750,000 non-resident parents liable for maintenance actually pay anything. I am deeply concerned that the mistakes may be repeated in the new system, so I counsel the House that the reforms are doomed to failure in meeting the aspirations that have been set out unless there is a rapid change of course to address some of the administrative problems.
Both the Government and the Conservatives made the point that many of the CSA staff are hard working and have a sense of commitment. I associate myself with those remarks. A large number of the staff are trying their best in incredibly difficult circumstances, not least those imposed on them by the systemfor example, the phone and IT systems. However, the Secretary of States justified praise for many CSA staff needs to be put into the context of the Governments plans for significant staffing reductions at the agency. By March 2008, over an 18-month period, there will be a staff reduction of 20 per cent. About 2,000 staff will be taken away from the CSA at a time when I and, I hope, the whole House, would have expected a real effort to be made. To refer to the point made by the hon. Member for Angus (Mr. Weir), if we are to clear the backlog of cases and get the new agency off to a good start, such a dramatic cut in staff is completely the wrong approach.
Mr. Weir: To emphasise that point, another problem is that when people phone the CSA, they never speak to the same person twice. If we are to tackle the problems, the same officer should deal with the case from start to finish, which will not happen if staff numbers are being cut to the extent proposed for the existing CSA. I suspect the situation will be the same for the CMEC.
The hon. Gentleman may have had the same experience as I haveof the most difficult cases being referred to the office in Bolton, which I believe does not take incoming calls. There may be good reasons for that. However, it adds to the sense of frustration, particularly for Members of Parliament who are pursuing
cases [Interruption.] I see that the hon. Member for Bexleyheath and Crayford (Mr. Evennett) is echoing that sentiment.
The staff cuts are taking place against a background of poor performance and uncollected arrears. Given that, the CMEC does not look like the clean break recommended by Sir David Henshaw; it seems to be much more like a rebadging of the existing operation. It will have to manage three maintenance systems simultaneously, as well as collect past arrears. I accept the Ministers good intentions, but despite them the staffing cuts mean that the new agency risks being crippled by the problems of the old one. I hope that the Minister will address that serious point in his closing remarks.
Heroic assumptions have been made about the extent to which the Government believe that large numbers of people will shift towards making private agreements. I support the objective of making them. However, there is the context of the staff reductions and if the aspiration for a large number of new private agreements is not met, either the CMEC will be overloaded and unable to cope or huge numbers will opt out of the system, not make a private agreement and therefore have no maintenance at all. That is a serious potential backward step.
Furthermore, the CMEC will have to process up to 600,000 benefit cases, which will automatically fall off the system next year. On top of even that, there will be an extra administrative burden if large numbers of people choose to withdraw their cases under the old system and reapply under the newand the hon. Member for Angus suggested that many would. That is the context that leaves me pessimistic.
I come to some of the specific elements of the Bill. I have said that the Liberal Democrats support the aspiration for private arrangements. However, the Bill does not make obvious how the Government expect large numbers of people to come to their own private arrangements. As I said, there is a risk that many will end up with no maintenance arrangement at all. Meanwhile, the Government assume that there will be an enormous decline in CMEC cases; an assumption is being made that there will be large numbers of private arrangements, and administrative costs are planned to fall by £200 million a year from the current £570 million. That would be a huge contraction in the budget. Clearly, if the reforms were successful both sides of the House would expect a reduction in the amount of money needed to run the system. However, to plan ahead to cut the budget before we have seen how the new system is performing seems to put the cart before the horseor perhaps that should be the other way round.
Mrs. Maria Miller:
Does the hon. Gentleman share my slight concern about the difference between the numbers that we were given by the former Secretary of State on how many people the Government expect to use the new system, and the numbers that appear in the regulatory impact assessment? I recall the former Secretary of State talking about a halving of the numbers of people using the CMECin other words, half the number of people currently using the CSA would use
the CMECyet the regulatory impact assessment says that there would merely be a 400,000 decline. Does the hon. Gentleman share my concern about that discrepancy?
Danny Alexander: I certainly do. I hope that that matter will be teased out in Committee. To a large extent, the underlying assumptions and the factual basis on which they are generated will determine how successful or otherwise the reforms will be.
The point about the 12-month rule has been madeparticularly in the Scottish contextby my hon. Friends, who are no longer in their places. There is a concern about the rule, which means that after 12 months of a private arrangement, the people concerned will be free to opt back into the CMEC system. In some cases, that is a disincentive to private arrangements. That is especially the case in the Scottish context, where, as the Minister will know, Scots law provides for a systemnot found in English lawof the registered minute of agreement, described perfectly by my hon. Friend the Member for Orkney and Shetland (Mr. Carmichael). There is a need to protect that, at least in Scotland, perhaps by extending the 12-month rule to a 48-month rule, for example. I hope that the Minister will be willing to consider that. Perhaps he could also consider the benefits of the Scottish system of registered minutes of agreement and whether that wisdom of Scots law could benefit people in England and Wales.
Mr. Weir: I thank the hon. Gentleman, who is very generous. There is also the point that if there were a problem, the CMEC, rather than sheriff officers or the courts, could be given the power to enforce the minute of agreement. That would short-circuit the process, and that is where we are all trying to get to.
Danny Alexander: The hon. Gentleman makes a good point. In the current legal position, I suspect that empowering the CMEC to enforce the agreements would involve a provision in each individual agreement. However, there are plenty of solicitors around who could make such an arrangement work.
The basis of the Governments approach to private agreements is the advice system that will be put in place. It is essential that there should be good quality advice, particularly face-to-face advice. Earlier, the Secretary of State said that he expected the CMEC to be the principal dispensary of such advice, although he said that function would not be exclusive to the new organisation. I note that in its excellent report, the Select Committee recommended a degree of separation between the CMEC and the advice function, not least because if the CMEC takes tough powers, people might be dissuaded from going to it for advice. Going to a neutral third party, such as a citizens advice bureau or another organisation of the sort mentioned by the Secretary of State, might be much better. It is important to ensure that the advice networks used for that purpose are properly funded and set up. Again, we need a clear statement from the Government about how they wish to establish such advice networks.
There has already been a debate about the maintenance disregard. I share the Governments view that the £10 figure is too low and should be raised. I do not accept the objections to that, which have been
raised in this debate. Clearly, there has to be a cap at some level and I hope that, before the Committee stage, the Minister will be able to make that level clear. It has to be there to prevent abuse. However, there is also a question of timing. The current plan is that the higher disregard will not be introduced until 2011, but existing benefit claimants will be expected to reapply under the new system, or opt out with a private arrangement, in 2008. That means that the existing £10 disregard will apply in those circumstances. I am concerned that not applying the higher disregard at the same time as benefit claimants are told to reapply will result in a disincentive for those who need to reapply, because they will not feel that they will get any major financial benefit. The timings should be the same.
The new assessment process will be based on income from the previous year. I welcome that fact that the Minister has taken on board the view that data from Revenue and Customs should be used for that purpose. That is a good start. The Liberal Democrats are of the view that that agency should also be responsible for collection, and I shall return to that point later. I hope that that point will be investigated before anything is settled on. None the less, the information will still be one or two years out of date and there will be an administrative burden of annual reassessment.
There is also a real concern about the percentage figures that the Government are recommending in respect of fluctuations of income before a reassessment is madethey are talking about a 25 per cent. fall in income or a 25 per cent. rise. The organisation Resolution, which specialises in such matters, has pointed out an example of a case in which a 24 per cent. fall in the income of the non-resident parent could lead to a rise in the amount of maintenance that they pay, from 29.2 per cent. of their income to 42.4 per cent., without, at the moment, any right of appeal.
I hope that the Minister will consider having an asymmetric rule to ensure that the figure that would trigger reassessment would be lower for a fall than a rise. Perhaps we could be talking about cases in which the non-resident parent has a fall in income of, say, 10 per cent., but there could be discussion of the figure. Clearly, the smaller the figure, the greater the administrative burden. However, in the case of a fall in NRP income, there is a strong case for having a lower figure and therefore an asymmetric rule.
The Government also propose to raise the minimum weekly payment in benefit cases from £5 a week to £7a 40 per cent. rise. I have some doubts about the fairness of that proposal against the general background of the low level of benefits and the upratings that we have seen in recent years. If such a change is to be introduced, it should be done only in the context of a wholesale review of the adequacy of the benefits system. We have to bear in mind that a young person on jobseekers allowance may be on only £45 a week, so that increase could well have a substantial impact on their standard of living. I hope that the Minister can deal with that important point of detail.
We are deeply sceptical about the proposals to allow the new agency to charge for its services. Previous powers that have been available have not been used and they should not be used now. They will be a disincentive to use the system. There may well be a case in future for charging in cases of non-compliance as an
incentive for the non-compliant personusually the non-resident parentto pay. However, in the general run-of-the-mill cases, charging for the services of the CMEC sends a bad signal.
We would prefer HMRC to be responsible for collection. The use of HMRC data raises the question of why a new agency is needed at all. HMRC already collects our taxes and has systems for making calculationsfor example, those used in tax credits. We need to know why the Government feel the need for an additional layer of bureaucracy. Why not let HMRC collect the money that absent parents should be paying for their children? That would be quicker, fairer and simpler. [ Interruption. ] Judging from the expectoration on the Labour Benches, I think that the hon. Member for South Derbyshire (Mr. Todd) wishes to intervene, and I am happy to give him his opportunity.
Mr. Mark Todd (South Derbyshire) (Lab): That resounding vote of confidence in HMRCs abilities to handle the collection and sharing out of money to our citizens is deeply encouraging. Obviously, the hon. Gentlemans experience of tax credits is far more positive than mine. Would he care to set out the context of his recommendation?
Danny Alexander: I am grateful for that intervention. My experience of HMRC in relation to the paying out of money under the tax credit system is not good, but my experience of HMRC in relation to the collection of money through the tax system is very good.
Jeremy Wright: Does the hon. Gentleman agree that another concern about the involvement of HMRC is that expressed by a number of voluntary bodies, who have no doubt been in contact with him as wellnamely, that HMRC will store its information in several different places? It is important that that information is co-ordinated so that it can be passed on to the CMEC and used for the purposes set out in the Bill. Does he share that concern?
Danny Alexander: The hon. Gentleman makes an interesting and important point. It might help to support the argument that I have just made, despite the objections of the hon. Member for South Derbyshire.
It is also important to make sure that the maintenance, once collected by the CMEC, is passed on. In my constituencyI am sure that other hon. Members have had this experiencethere are a large number of cases in which maintenance is collected by the Child Support Agency, as it currently is, but little or nothing is received by the parent with care. Sometimes the money seems to sit with the CSA and is not passed on. We need to make sure that there are mechanisms for passing the money on.
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