 House of Commons |
Session 2006 - 07 Publications on the internet General Committee Debates Child Maintenance and Other Payments Bill |
Child Maintenance and Other Payments Bill |
The Committee consisted of the following Members:Chris
Shaw, Committee
Clerk
†
attended the
Committee
WitnessesMr.
James Plaskitt, MP, Parliamentary Under-Secretary of State for Work
and
Pensions
Lord
McKenzie of Luton, Parliamentary Under-Secretary of State for Work
and
Pensions
Stephen
Geraghty, Chief Executive, Child Support
Agency
Hilary
Reynolds, Director, Child Maintenance Redesign
Programme
Public Bill CommitteeTuesday 17 July 2007(Morning)[Mr. Christopher Chope in the Chair]Child Maintenance and Other Payments Bill10.30
am
The
Chairman:
Before we begin, I have a few preliminary
announcements. Hon. Members may take off their jackets during Committee
meetings, if they wish to do so. Hon. Members should please ensure that
all electronic devices are switched off throughout our proceedings.
There is a money resolution and a Ways and Means resolution in
connection with the Bill, and both are available in the Room.
First, the Committee will
consider the programme motion on the amendment paper, for which debate
is limited to half an hour. We will then proceed to a motion to report
written evidence, and then to a motion to permit the Committee to
deliberate in private in advance of the oral evidence sessions.
Assuming that the second motion is agreed, the Committee will move into
private session. Once the Committee has deliberated, the witnesses and
members of the public will be invited back into the room and our oral
evidence session will commence.
I am afraid that members of the
public who are present will be disrupted at the beginning, but I hope
that it will not be too long before they can come back in and hear the
oral evidence session. We will hear oral evidence this morning and this
afternoon. On Thursday we will proceed to clause by clause scrutiny of
the
Bill.
Ordered,
That—
(1)
the Committee shall (in addition to its first meeting at 10.30
a.m. on Tuesday 17th July)
meet—
(a) at 4.00 p.m. on
Tuesday 17th July;
(b) at 9.10
a.m. and 1.30 p.m. on Thursday 19th
July;
(c) at 10.30 a.m. and 4.00
p.m. on Tuesday 24th July;
(d)
at 10.30 a.m. and 4.00 p.m. on Tuesday 9th
October;
(e) at 9.10 a.m. and
1.30 p.m. on Thursday 11th
October;
(f) at 10.30 a.m. and
4.00 p.m. on Tuesday 16th
October;
(2) the Committee shall
hear oral evidence in accordance with the following
table:
TABLE
(3)
the proceedings shall be taken in the following order: Clause 1;
Schedule 1; Clauses 2 to 12; Schedules 2 and 3; Clauses 13 to 16;
Schedule 4; Clauses 17 and 18; Schedule 5; Clauses 19 to 39; Schedule
6; Clauses 40 to 52; Schedule 7; Clause 53; Schedule 8; Clauses 54 to
58; new Clauses; new Schedules; remaining proceedings on the
Bill;
(4) the
proceedings shall (so far as not previously concluded) be brought to a
conclusion at 10.00 p.m. on Tuesday 16th
October.—[
Mr.
Plaskitt.
]
Ordered,
That,
subject to the discretion of the Chairman, any written evidence
received by the Committee shall be reported to the House for
publication.—[
Mr.
Plaskitt.
]
Ordered,
That,
at this and any subsequent meeting at which oral evidence is to be
heard, the Committee shall sit in private until the witnesses are
admitted.—[
Mr.
Plaskitt.
]
10.33
am
The
Committee deliberated in private.
10.47
am
On
resuming—
The
Chairman:
We will now hear oral evidence from
representatives of the Department for Work and Pensions. I welcome the
witnesses and ask them to introduce themselves, starting with the
Ministers.
Lord
McKenzie:
My name is Lord McKenzie of Luton. I am the
Minister with responsibility for the Child Support
Agency.
Mr.
Plaskitt:
I am James Plaskitt, a Minister in the
Department for Work and Pensions and the Bill
Minister.
Hilary
Reynolds:
I am Hilary Reynolds, the programme
director for child maintenance
redesign.
Stephen
Geraghty:
I am Stephen Geraghty, the chief executive
of the Child Support
Agency.
The
Chairman:
I remind hon. Members and witnesses that we are
bound by the internal knives agreed in the programme motion. The first
evidence session must therefore end at 1 o’clock at the latest.
The second must end at 5.30 pm at the latest and the third no later
than 7 pm. I hope that I do not have to interrupt hon. Members or
witnesses in the middle of their sentences, but if that is required by
the decision of the Committee on the programme motion, that is what I
shall do. Before the first question, I remind hon. Members that
questions should be limited to the provisions of the
Bill.
Q
1
Andrew
Selous (South-West Bedfordshire) (Con): I start by asking
the Ministers why we do not have draft regulations, unlike the Welfare
Reform Bill? We have a Prime Minister committed to a new environment of
open parliamentary scrutiny, but we are considering the broad
architecture with very few details laid out.
Given the previous difficulties
that the CSA has had—hon. Members on both sides of the House are
extremely worried about this—why was the Bill not brought
forward at the same time as the regulations so that we could have
scrutiny leading to possible amendment? That will not be possible when
the draft regulations come in. When the regulations come in by
statutory instrument, they can be only accepted or
rejected.
Mr.
Plaskitt:
May I try to help in answering that? It is
sensible to approach the regulations in different categories. First,
much of the Bill is framework architecture for work that the Child
Maintenance and Enforcement Commission will do subsequently. It is
important to stress that we are moving from an agency model to a
commission model. It is right, in many respects, to allow the
commission to devise its own systems. Therefore, it is right and proper
that the commission be established first and then for it to think how
it wants to proceed in respect of various areas—some of those
things will eventually emerge via regulation. Logically, the
regulations will not come forward until the commission has done that
work. Examples of operational regulations that need to await Royal
Assent and the establishment of the commission are those that relate to
fees, maintenance assessments, and the transfer of cases.
However, I may help the
Committee by pointing out that other regulations will relate more to
the setting up of the new system, and they will come forward sooner.
For example, regulations relating to CMEC as a legal entity, the
extension of the £10 disregard to old cases, the repeal of
section 6 of the 1991 Act—that is the compulsory engagement of
benefit recipients into the system—and the new enforcement
powers will come forward earlier. We suspect that that will take place
in the spring of
2008.
There is a third
category where we hope to bring forward draft regulations during the
procedure of line-by-line scrutiny in Committee. For example, those
draft regulations that can be proceeded with in a timely fashion relate
to clauses 29 to 31, which cover debt management, clause 34, which
covers the recovery of arrears from estates, and clause 35, which deals
with the disclosure of information to credit reference agencies. I
expect draft regulations on those clauses to come before the Committee.
In respect of those for which we cannot put draft regulations before
the Committee, we will produce a dossier for it to consider, which will
provide an explanation about regulations that are still
forthcoming.
Q
2
Andrew
Selous:
I have a brief supplementary question. Why is CMEC
being set up as a non-departmental public body rather than an executive
Government agency? Surely the past 10 years tell us that parliamentary
scrutiny will become much more important. Many people have put it to me
that only an MP’s letter has made the CSA jump to try to sort
out often intractable cases. As a non-departmental public body, it will
be much more at arm’s length, and a number of hon. Members on
both sides of the House are concerned about our ability to scrutinise,
to hold Ministers to account and to get answers from CMEC.
Lord
McKenzie:
Perhaps I may answer that question. It is
very important that the body is more at arm’s length, and that
we do, indeed, have a clear break from the current situation. A key
part of Sir David Henshaw’s analysis is that we need to change
operational matters as well as the policy framework. Having a
non-departmental public body with separate governance arrangements and
with greater operational flexibility is a key part of the reforms. It
is needed to distance the future from the legacy of current and past
failure and the culture of
non-compliance.
Lord
McKenzie:
It is more difficult. A key part of the
non-departmental public body is that it is has a non-executive board to
lead the strategy and focus of the operation. That is much more
difficult to do under an agency arrangement. There will be operational
flexibility, which will allow the commissioning of the range of
services that CMEC needs. Parliamentary scrutiny is still available.
The NDPB will have to report on an annual basis, and the report will
deal not only with its accounts, but with the extent to which it has
contracted out its services. There will still be accountability through
Ministers. There are processes for the new commission to be held fully
to account through Select Committees and other routes. I do not believe
that the engagement of MPs in that process will
change substantially. We want to ensure that those links are strong and
enshrined in the new arrangements, particularly with regard to the
ability to follow up individual
casework.
Q
4
Mr.
Mike Weir (Angus) (SNP): When the Minister was talking
about regulations, he did not mention minutes of agreement. They have
been welcomed throughout the House, but there is a painful lack of
detail about how they will work. Will he introduce regulations covering
such matters as whether the agreements have to be in writing, whether
there will be a register and whether there will be any quality control
of the nature of voluntary
agreements?
Lord
McKenzie:
The issue of whether there should be a
register of agreements is something that we want the commission to
determine in due course. It might wish to arrange pilots to enable it
to make that decision. There are arguments both ways about a register
of voluntary agreements, and there are practical issues concerning the
extent to which it could be kept up to date and the resources that the
commission would have to deploy in keeping it current. I think that
minutes of agreement are the Scottish equivalent of consent orders, and
they will proceed on their current basis. The one key change will be
that, once the section 6 compulsion goes, a claim for benefits by one
or other of the participants will not break the agreement. It will
continue, subject to the 12-month rule, under which either party can
elect to come out of the agreement.
Q
5
Mr.
Weir:
But is it not important that the regulations
concerning how people go about making a consent order, or minute of
agreement, are in place at an early stage? I am bit concerned that
there does not seem to be any proposal to bring forward such
regulations until a fairly late stage, when the commission is up and
running.
Lord
McKenzie:
The information and support service will be
an important component. It is important that that is up and running
robustly by the time the section 6 compulsion goes. As you would
expect, the role of that service is to encourage and help to facilitate
voluntary agreements, as well as to help people access the statutory
service. That will be in place at an early stage, by the time the
section 6 compulsion goes. That resource will be there to help and
guide people. The full range of information and support that will be
given has not yet been fully worked out, but we would expect a standard
maintenance agreement to be on offer, which people can use to put in
place voluntary arrangements. That support will be
there.
Q
6
Mr.
Tim Boswell (Daventry) (Con): I have two questions,
although the first is perhaps more of an observation. It is interesting
that another Department has recently introduced lasting powers of
attorney, which are registerable before operation. Given that there is
bound to be an interaction with the total income levels of participants
in the process, it might be relevant to consider
that.
My question relates to the
assurances about accountability that the Minister has given us. I
understand his arguments, particularly for operational flexibility and
even for a degree of discretion. Against that, one has to weigh the
need to ensure that what is prescribed in the law is carried out, that
practice is consistent between different cases and that discretion is
effected in a reasonably principled way. Will the Minister assure us,
first, that if we have individual casework, in practical terms we will
be able to pursue the matter in almost exactly the same way and,
secondly, that if we have what might be termed systemic concerns about
the way in which CMEC is to operate, we can at least raise them rather
than waiting for the off-chance of an annual report debate in
Westminster Hall or
elsewhere?
Lord
McKenzie:
Yes, I believe that I can give an assurance
on each of those points. Stephen may want to amplify on the first, but
it is clearly important that there is an ongoing route for dealing with
casework, and that there is no intent to change or diminish access and
the opportunities that currently exist.
So far as concerns with
systemic problems that are perceived as CMEC gets up and running, there
are clearly a variety of routes to raise—for instance, through
the Secretary of State and the Minister with that particular
responsibility. It will bubble up to the surface in a variety of ways,
and it will be clear to all and subject to appropriate challenge and
scrutiny in Parliament. Do you want to say anything,
Stephen?
Stephen
Geraghty:
I agree with you, Lord McKenzie. It would
be remiss of CMEC and unwise for it not to take seriously the
involvement of Members of Parliament in their constituents’
cases, just as the agency has put in place mechanisms to do it now. It
would be bizarre if it did not.
Q
7
Sarah
McCarthy-Fry (Portsmouth, North) (Lab/Co-op): We heard
Lord McKenzie use the phrase “clean break”, which has
been used many times and especially on Second Reading, and we heard a
great deal from witnesses about structural change. Miss Reynolds, will
parents notice a clean break, or will they think of it as the CSA by
another
name?
Hilary
Reynolds:
Once CMEC is established under the Bill, it
will take responsibility from the Child Support Agency for all the
clients on both existing schemes. Those people will start to see a
difference in October 2008 or thereabouts, when we introduce the repeal
of section 6. If they are on benefit they will start to be given a
choice. They will have the possibility of experiencing the information
support service in 2008, subject to the passage of the Bill.
Thereafter, those who wish to move to a voluntary arrangement or to the
new statutory scheme set out in the Bill will start receiving
communications about their options and the support
mechanisms.
That will
happen between 2008 and 2010, when, as set out in the White Paper, we
expect the commission to be ready to move people to where they want to
go. On an individual basis, people will be asking how much money they
will get and whether it will be paid. They will not see anything
happening immediately, but from October onwards, subject to detailed
planning, they will start to see changes that could affect them should
they choose to take them as the new regulatory scheme and information
support come into play.
Lord
McKenzie:
May I just add one other change? It will be
the extension of the £10 disregard to the old scheme cases,
which would be an early part of the
scheme.
Q
8
Sarah
McCarthy-Fry:
Could all that have happened within the CSA,
or do you feel that it needs a completely new
structure?
Lord
McKenzie:
I believe that it does. It is an important
point. It is not only a change of structure and governance
arrangements; the remit of the commission is to maximise the number of
effective maintenance arrangements, be they voluntary or made through
the statutory service. That broad remit to maximise maintenance
arrangements is given for reasons that I am sure will be
familiar—tackling child poverty and getting more money to more
children. It will also have a remit to promote child maintenance and to
create an awareness among the public about the importance of such
matters. That will be a key part of its remit.
It is right that these things
should be bundled together, along with the new assessment and the
change in relation to the disregard, into a new entity, in order to
establish a break with the past. Despite the hard work of lots of
people, there is no doubt that although the CSA is improving under the
operational improvement plan it is not delivering what we would expect
of it. That legacy is going to be very difficult to shake off, but it
is important that we do it. Breaking the culture of non-compliance is
certainly important, and I think that a new commission with new
enforcement powers will be a key part of
that.
Q
9
Dr.
Desmond Turner (Brighton, Kemptown) (Lab): CMEC is going
to be responsible for information and guidance, collection and
enforcement and, although this is not spelt out, for the assessment of
maintenance too. That does not sound so very different from the CSA in
its present form. A potential issue arises here. As Mr.
Selous pointed out, this is a non-governmental body rather than an
Executive agency. At least there is a degree of clarity at the moment.
When the CSA makes a mistake, or is held to make a mistake, which has
filled several filing cabinets in my office over the years, we have
recourse to the appeals tribunal and the social security commissioner
and it is fairly clear. This would be the first example that I know
of—there may be others—of a non-governmental body being
open to the workings of the appeals tribunal and the social security
commissioner. I seek total clarity from the point of view not only of
claimants, but of Members of Parliament who may get called upon to help
them out.
Hilary
Reynolds:
There will be a range of appeal routes,
just as now, from decisions made by the non-departmental public body.
We can certainly supply a clarification note for you on what decisions
lead to which first and second-tier appeal routes. We do not plan to
remove any current appeal routes at
all.
Q
10
Dr.
Turner:
Okay, but can you also give clarity about advice
and guidance that will be offered between the third and private
sectors? How will that relate to CMEC?
Mr.
Plaskitt:
This is about the information and support
services?
Mr.
Plaskitt:
Obviously this is an important new part of
the scheme and it is another part of the clean break from what has gone
before. One of the drivers here is to try to encourage separating
couples to come to their own voluntary arrangements wherever possible.
After all, such arrangements have a higher chance of sticking than ones
that are forced through a system. As part and parcel of moving to a
system that facilitates more voluntary arrangements, it is right and
proper to offer advice and support services to help couples to come to
the right decisions about what arrangements they are going to make for
child maintenance.
It
is up to CMEC to develop those services and there will be a key role
for third and voluntary sectors in providing those services. After all,
it will be very close to many types of advice and support that those
organisations are giving already. It will be a natural fit in that
sense. We must also think about where parents will turn to
instinctively when they are unfortunately embarking on a separation.
This advice and support service needs to be parked in exactly the
places that they will turn to so that they do not have to think about
where to find it. It needs to be there at the point to which they
instinctively turn.
That is how we see these
services evolving. They will have many dimensions to them. Potentially
there will be face-to-face advice for couples who are finding it a
struggle to reach a voluntary arrangement. Behind that there will be
more passive advice in the form of a website and a contact centre which
parents can call to get over-the-phone advice about setting up their
own voluntary arrangements. It will be multidimensional, but largely
for the commission to determine in the end how it will
operate.
Q
11
Dr.
Turner:
So, for instance, couples might turn to a body
like the citizens advice bureau and expect some advice. What
arrangements would you set in place to ensure the competence of that
advice?
Mr.
Plaskitt:
It is important to stress that what we
envisage setting up is a stand-alone specialist service, primarily
contacted through a call centre. It will have its own unique identity,
its own dedicated staff, highly trained in providing that service, and
organisations such as CAB and others will be able to signpost people
towards that service. They will say to separating couples who want help
and advice on how to come to a voluntary arrangement that there is this
body with a freephone number that can help them. We are not going to
ask all the other agencies to be the only centres of specialisation; we
envisage setting up back-up behind
them.
Q
12
Mr.
Boswell:
On the reassurances that we were given, and the
offer of a note on the appeals process, could we also have a comment on
the potential—one hopes that it will not happen—for a
judicial review on points of law, as it applies in this case, as the
law will be changing.
On the issue of the service, I
may not have focused on it as much as others might have done, but I
take it from what has been said that there is no question of there
being, for example, a local tendering whereby a non-governmental
organisation might take over offering the service locally rather than
simply having an impersonal helpline. I appreciate that it will help
people, but would there be the possibility of face-to-face meetings
where people could get local advice as well as distant advice, if they
prefer that route.
Lord
McKenzie:
There is a tendering process, which is
beginning to start, with respect to the service generally. Hilary may
want to update us more specifically on that. In relation to the
face-to-face component of it, and possibly the opportunity of outreach
services, those services do not exist at the moment and will have to be
built. It may be possible within that framework for there to be local
providers as part of that overall
arrangement.
Q
13
Andrew
Selous:
Could I seek some clarity on what rough proportion
of the advice service will be provided by CMEC, and what by voluntary
and private organisations? I ask the same question in terms of the
funding of that
advice.
Lord
McKenzie:
In relation to the funding of advice, we
are currently going through tendering processes, so we ought to keep
confidential the scope of the funding. We see the core
service—the contact centre, the website, the provision of
leaflets—as being contracted out to the private sector and the
voluntary sector. Clearly, CMEC itself will have a role in
disseminating some of that information, but we see the core of it being
commissioned.
Hilary
Reynolds:
It is probably useful to say that the
legislation gives the commission the responsibility to ensure the
provision, whether it is directly delivered or commissioned from
elsewhere.
Q
14
Mr.
Weir:
Just on the point that I made earlier, if we are
doing a system over the telephone, with, as Lord Mackenzie mentioned, a
standard minute of agreement available over the internet, will there be
any quality control over the nature of agreements entered into? Worries
have been raised by some that, for example, women could find themselves
under pressure to agree a minute of agreement that may not be in their
best interests.
Lord
McKenzie:
It would be a part of any agreement that we
enter into that there is proper monitoring, reporting and evaluation of
the outcomes of those agreements. The point that you raise is very
important; we need to ensure that in encouraging people to enter into
voluntary agreements, which we believe have generally proven to be more
sustainable and better for parents, we do not force people into
unacceptable and inappropriate agreements. The obligations imposed on
people who are delivering the service will be clear in that respect. We
will need to build monitoring arrangements into those
contracts.
Q
15
Paul
Rowen (Rochdale) (LD): I am interested in what you say
about how this is going to be a clean
break. One of the current issues with the Child Support Agency is the
fact that when people use the phone, they are dealing with umpteen
different people. They never actually get a case officer who is dealing
with their particular case. What steps are you going to take to ensure
that there is some consistency and that people have somebody who is
directly responsible for dealing with their particular
case?
Stephen
Geraghty:
The CSA is currently moving to having
groups of people, not always individuals, dealing with particular
cases. To do that, we need to make changes to the computer system,
which we will have done by the end of the year. Particularly complex
cases, complaint cases and cases where we take legal action already
have an individual owner.
By the end of the year, we will
have groups of about 20 to 30 people who have a case holding between
them. Having an individual case officer for every case does not work
because our people work, on average, only about a third of the time
that the CSA is open. A person could not ring the agency and expect to
speak to the same person; we are open 68 hours a week, but our people
do not work all of those hours. Therefore, some sort of group
arrangement is needed.
I envisage that the Child
Maintenance and Enforcement Commission would build on that start and be
able to take forward, wherever possible, individual case
responsibility, which is very popular with clients. Indeed, those who
work in the CSA would prefer to be able to see the good that they do in
the cases that they
handle.
Q
16
Mrs.
Nadine Dorries (Mid-Bedfordshire) (Con): I want to go back
to the point made earlier about pressure and the online agreement. If
there are no individual case workers and no named personal key worker
that a woman can talk to, what process is in place to eliminate the
pressure and obligation that she may feel under to accept the
agreement?
Lord
McKenzie:
We envisage that there will be both a
face-to-face and an outreach component of that service, so there will
be opportunities for that. We should, however, be clear that the
information and support service should be there to ensure that people
are properly supported to understand fully the consequences of the
arrangements that they are contemplating entering. Therefore, part of
the service should be support when there is a risk that someone is
being forced into a voluntary agreement that is not in their best
interests.
Q
17
Mrs.
Dorries:
I understand the point that you are making about
the outreach and support services, but experience shows that, in such
circumstances, case workers tend to read out a tick list. It is almost
a process of saying, “Have we informed you of this? Have we
informed you of that?” If a particular case worker will not be
involved with the same client the next day or the following week, there
is not the same obligation to carry out the process, either in person
or on the telephone, as effectively as if the caseworker were to deal
with the same person on an ongoing basis.
Lord
McKenzie:
I should stress that we are still in the
process of designing and building the service; it does not exist at the
moment.
Hilary
Reynolds:
We are trying to think about the new
service to ensure that it will enable CMEC to meet its statutory
objectives, and we are talking to both clients and the voluntary and
third sectors about the design. Therefore, in a telephone survey that
we have just completed, we have been asking clients how they would like
to access such a service, what sort of information they might find
useful and from where they might find it easiest to get it. We are
asking the voluntary and third sectors what sort of scope and
specialisms they might have, so that the information service is
designed from the client’s point of view, not from what we
believe might be true. It is clear already that the survey data varies
according to whether the separated parent is a parent with care or a
non-resident parent. They seem to be attracted to different access
channels and types of
information.
Q
18
Mrs.
Dorries:
Is priority given to the parent who has the
child—the parent with care—and would the information that
you are getting back from that particular group take precedence over
information from the group who do not have
care?
Hilary
Reynolds:
The objective of the commission is to
maximise the maintenance arrangements, and that involves both parents.
When planning information and support, we have to think about how the
child can best be supported, and that is by providing information for
both parents. Parents with care are an important part of
that.
Q
19
Albert
Owen (Ynys Môn) (Lab): Lord McKenzie, you mentioned
that you did not envisage the role of MPs changing significantly from
that which they have for the current system. Do you envisage that there
will be a MPs’ hotline—or a lukewarm line for some
cases—and, if so, will the MPs have the same caseworker so that
there is that
continuity?
Lord
McKenzie:
I defer to Stephen again on this matter,
other than to say that in general terms we do not see any of the
changes diminishing the access that MPs are entitled to have on behalf
of their constituents.
Q
20
Albert
Owen:
But you accept that the MP is often the first port
of call for advice, rather than people going to the different agencies,
which can be confusing. The direct contact and the hotline are
therefore very
important.
Lord
McKenzie:
Indeed. It seems to me that we ought to
ensure that the ability of MPs to interface with the information and
the support services available to them is built in. I think that
Stephen touched earlier on how the operation improvement plan is
reorganising how cases are handled. Do you want to add anything to
that?
Stephen
Geraghty:
Only that the detail of what we are talking
about will be for CMEC to determine and the commissioner would take a
view on such things. It would be unwise and surprising if he or she
decided not to provide at least as good a service to MPs as the CSA has
offered. Clearly you have mixed experiences and views on that level of
service, given the early problems that have been
acknowledged.
Q
21
Albert
Owen:
I must emphasise the lack of continuity. Sometimes
the CSA cannot bring up the information for a long time on the
MPs’ hotline. One of the problems is that we cannot get the
information
quickly.
Stephen
Geraghty:
I could make all sorts of excuses, but I
realise that that is a problem and as we improve the computer
system—which we are doing steadily and we have a major upgrade
this year—it should
improve.
Q
22
Mr.
Boswell:
Turning back to the advice and guidance
service—I assure you that I am not looking for trouble, but
things will occasionally go wrong—who will carry the legal
responsibility or will be suable in a case of misguided advice to a
party who accesses the commission? Will it be the commission or its
contractors? What steps will be available to establish some kind of
audit trail as to what kind of advice had been tendered, because that
is the subject of argument in social security cases for our
constituents?
Lord
McKenzie:
The overall responsibility rests with CMEC.
As Hilary said earlier, it will have the legal responsibility to
deliver the service. If there is a breakdown in service and
difficulties arise, we will need to analyse the particular
circumstances of the case to see who is at fault, but CMEC has the
responsibility to deliver the
service.
Q
23
Andrew
Selous:
On a broader issue of financial scrutiny, I
understand that there is the ability, with an Executive agency such as
the CSA, to ask parliamentary questions to get data. Will that be the
case with CMEC as a non-departmental public
body?
Mr.
Plaskitt:
Yes.
Mr.
Plaskitt:
As is the case with other non-departmental
bodies.
Q
24
Dr.
Turner:
The Bill makes provision for charging for
services. Do you propose to do that for CMEC immediately or wait until
it has established some sort of a reputation for effective and
efficient service—in other words, when it has advanced itself
beyond the public view of the CSA? Will there be charges directly or
will it
wait?
Lord
McKenzie:
No decision has been made on charging yet.
Before it is introduced, the Secretary of State will lay regulations
and do so on the advice of the commission. There is quite a lot of hard
thinking and work to be done before we get to the stage of introducing
charging. Whatever those arrangements are, they must not force
people—particularly low-income families—out of the system
and prevent them from entering into proper and effective maintenance
agreements. Before any regulations are laid, people must be comfortable
that the situation is working as we envisage it will and must believe
that it will continue to do
so.
Hilary
Reynolds:
In the White Paper, we said that we thought
it highly unlikely that charging would start before 2010, when the new
statutory scheme is planned to begin, but the Bill will give us the
power to make provisions for charging.
Q
25
Dr.
Turner:
What is your thinking on the level of charges? For
instance, do you contemplate setting the charges at a fairly steep
level to encourage people into private agreements and thus avoid
charges?
Lord
McKenzie:
Clearly we would wish people to be
incentivised to use private agreements if appropriate, but no decisions
have been taken and no detailed work has been done that I am aware of
on the broad thrust and basis of charging. That work has yet to be
done.
Q
26
Dr.
Turner:
Sir David Henshaw argued that if we were to levy
charges we should charge not only the absent parent but the parent with
care. Is that fair, or do you think it could be an undue burden on the
parent with
care?
Lord
McKenzie:
We would need to be careful to ensure that
if there was charging on parents with care it would not be an undue
burden. We also need to recognise that there could be circumstances in
which the non-resident parent was perfectly happy and willing to enter
into a voluntary arrangement that may have been forced through by the
commission—perhaps unnecessarily. There may be a case for
charging the parent with care, but I stress that this work and thinking
needs to be developed. We are not there
yet.
Q
27
Dr.
Turner:
It comes back to the intention and purpose of
charging. If the fairly considerable cost of operating the CSA is a
measure of the costs that will be involved in running CMEC, and if you
were seeking to recover some of those administrative costs, the
implication is that charges would be pretty high. What is the thinking
behind it? Why charge at
all?
Lord
McKenzie:
The thinking behind charging is to do what
we can to encourage and incentivise people to enter voluntarily into
appropriate and effective maintenance arrangements if
suitable—and therefore, I suppose, not to use the system
unnecessarily if it can be avoided and if it is not appropriate. We do
not envisage that charging will necessarily be set to recover costs, or
that it will be based on that sort of
calculation.
Lord
McKenzie:
Yes.
Hilary
Reynolds:
And clause 6(3) explicitly provides that it
is not necessarily a cost recovery thing.
Q
28
Mr.
Weir:
You mentioned earlier the contracting out of
information guidance services, but the Bill also gives the power to
contract out other services. What proportion of other services you
envisage being contracted
out?
Lord
McKenzie:
No decision has been taken; it would be
very much an issue for the commission once it is up and running. The
Bill provides for any part of the service to be contracted out, but the
commission will make those decisions in due course and over
time.
Q
29
Mr.
Weir:
Do you see the core services of maintenance
calculation and collection as candidates for being contracted
out?
Lord
McKenzie:
I do not think that they are precluded, but
that is not the same as saying that it will happen. It is very much
part of the new body’s remit
that it should make its own judgments about delivering efficient and
effective services, and that can be done in a variety of ways. Stephen,
do you wish to
comment?
Stephen
Geraghty:
The power exists for the current agency to
contract out pretty much anything. That is a relatively recent power.
We have contracted out things for which we do not have capacity, when
the problem was the overall capacity of the agency generally. However,
specialist trace-work for finding some non-resident parents has been
contracted out to people who are better equipped. Looking around the
world, 2 or 3 per cent. of the enforcement is contracted out in the
USA. Some counties in Virginia and some judicial districts in Tennessee
have contracted out completely, and their performance is similar to
those that are still run in-house, which is why it has not taken off as
a broader movement in America. It is something that the commission
would consider, but only if it was likely to be effective in the
individual circumstances, given the commission’s capacity and
how efficiently each part was running.
Q
30
Mr.
Weir:
CMEC has one fundamental difference from the CSA,
which is that the calculation is based on information obtained from
Revenue and Customs. I just wonder, in these circumstances, whether
contracting out maintenance calculations should even be
considered.
Lord
McKenzie:
Yes, that is a good point. The gateways
that will be available will enable that information to come to CMEC. As
for the extent to which those gateways would be open onwards, perhaps
Hilary can
respond.
Hilary
Reynolds:
One of the schedules lays out all the
information gateways that will be available. Those are fairly wide
gateways to allow CMEC to have the facility to take and receive
information from a wide variety of sources. There is a specific clause
about use of information, and a whole schedule laying out the various
gateways.
Q
31
Andrew
Selous:
I want to ask about the scope of CMEC. This is
perhaps an opportunity to set a slightly different direction in terms
of the objectives of what we do. Mr. Geraghty talked about
one or two things that happen in America, for example. If you look at
the Australian Child Support Agency, one thing that it is much better
at, and which frankly the CSA has never done here, is trying to deal
with the human side of break-up and to ensure that the ongoing
emotional support, as well as the financial support, for children
carries on from both parents going forward.
I had a look at the Australian
CSA’s website yesterday evening, and on the front page it says
“Support for Separated Parents”. You can download these
excellent documents. I do not know if you have seen them. One is
“Me and my kids: parenting from a distance”; the other is
“Me, my kids and my ex”. They are full of incredibly
practical help, information and support to try to make life better for
children. That is what we are talking about: the money plus a better
situation in terms of parental involvement, where it is safe, from both
parents going forward.
The CSA has never really done
the human side of what we are talking about. My contention—my
argument to you—is that if you get the human side
right, by which I mean the emotional support, that could not be a better
aid in helping us all achieve what we are seeking, which is a regular,
reliable supply of financial information.
This is a new
opportunity. The Bill is before us, and I am really asking you to look
very carefully at what the Australian CSA did. It may be that you do
not want to provide it as CMEC because of some of the past history, but
in terms of the purchaser-provider split, are you going to ensure that
some of this help and support is provided, which other CSAs around the
world in societies pretty similar to our own are providing? I urge you
most strongly to look at that as a way of helping us to achieve what we
are all trying to
achieve.
Stephen
Geraghty:
The initiative that you describe, and the
change of the strapline of the Australian agency to “Supporting
Separated Families”, is something that we are aware of. It is
something new for them too. It is in the last six months or so that
they have adopted that
line.
Q
32
Andrew
Selous:
With respect, I went there with the Select
Committee in the middle of the last Parliament. There was plenty on it
then. I brought back this biro saying “Staying
connected”. It was actually doing that then, but no doubt it has
done more since.
Stephen
Geraghty:
I think you looked then at a plan for some
family relationship centres, which are now open. It has opened 50 now,
with another 15 or so to go. The information and support services are a
step in that direction. There are different theories about, and
different political dimensions to, the matter—whether it is
about dead-beat dads or about supporting the family. The Australians
have very clearly come to the conclusion that it is about supporting
the family, and we are making a move in the same direction, through
information and support. The sort of questions that we had on charging,
and where that goes, will also reflect an attitude of where we place
ourselves on that spectrum.
Q
33
Andrew
Selous:
There has been a lot of talk about changing the
culture. That phrase comes out in the White Paper, and it was used on
Second Reading. Do not any of you see this sort of initiative in
Australia as a key part of changing the culture and going forward, and
not just viewing the non-resident parent as the provider of cash? That
would be a help towards the aim of ensuring a steady, reliable source
of financial maintenance.
Lord
McKenzie:
That is a hugely important point. In its
early stages, the information and support service will be primarily
focused on issues of maintenance. Again, the point you make about
arrangements that are entered into voluntarily and consensually rather
than fought out acrimoniously is absolutely right. Any support that can
be given to move in that direction has to be right. We see the
information and support service initially as perhaps signposting other
available services. This is a step along the way to building a more
holistic service.
Hilary
Reynolds:
We have been working quite closely with CSA
Australia. We have various copies of things. I spent some time there in
a family relationship centre to
learn how it set it up, what difficulties it had, how many people it
helps, at what cost and to what sustained outcomes. The more we can
learn, the more likely we are to set up something here with CMEC that
works for the
children.
Q
34
Andrew
Selous:
May I take it from Lord McKenzie’s answer
that there is at least a commitment to signpost where this type of
support and help can be found for separated parents? I am not asking
you to make a budgetary commitment, but if it is not out there the
implication is that we will have to do some capacity building so that
it can be
provided.
Lord
McKenzie:
It is certainly something that we are
aiming to design into the
service.
Q
35
Mr.
Boswell:
I want to ask a couple of questions about the
transfer of staff in a moment. First, may I just comment on some
exchanges earlier with Mr. Weir about information and point
to one of the underlying concerns? I assume CMEC will have the
information, but I hope it will not abuse it by allowing it to leak out
further. We know how sensitive the Revenue is on this and, indeed, how
sensitive our constituents are.
My questions relate to the new
structure of employees when the commission comes into force. Could you
give us an idea of the percentage of current CSA staff who will be
required by CMEC and the fate, if I may put it that way, of the
transfer? There will be some who will come across, and I take it that
they will be covered by Transfer of Undertakings (Protection of
Employment) Regulations 1981 in relation to their entitlements. Some
may be made redundant and, equally, there will be some new recruits who
may have different and more appropriate skills for the mix. Could you
comment on that general picture? Can I also ask you about training for
the new commission? It seems that not enough was initially invested in
the CSA. There are still difficulties with people understanding what
are very complicated formulae. That all feeds into morale and the
likely attitude of staff to the new
organisation.
Lord
McKenzie:
Under the Bill, at the point that functions
transfer from the CSA to CMEC, there will be a TUPE transfer of all
staff. There is provision for the Secretary of State to carve out some
people who will not, which is envisaged to be some contractors who may
be working at that stage. So everybody moves in at that stage with the
opportunity of remaining in the civil service pension scheme, too, and
with the prospect of vacancies arising in the Department being
available to them as if they had not transferred. Those are quite
important
protections.
In
relation to head count, Stephen may wish to comment in more detail.
Obviously, as we are expecting a lower level of use of the commission
than is currently part of the CSA’s casework, and with
improvements to IT systems, fewer staff will be required eventually
than will be needed at the start of the process.
You asked
about training. Clearly, with potentially new or enhanced bases of
assessment and new responsibilities relating to ensuring effective
maintenance arrangements generally, training for staff will need to
be properly provided for. Stephen or Hilary might be able to comment on
the extent to which we are developing that.
Mr.
Plaskitt:
Before Stephen comes in, I should like to
pick up on your comment about morale, because it is an important
matter. Bill and I, along with other Ministers in the Department for
Work and Pensions, have done a series of visits to the large CSA
offices around the country, to discuss the reform process with staff.
On those visits, we have always found that staff morale in the agency
in surprisingly high. I say surprisingly because of all the criticism
they receive, most of which is inappropriately directed. We have all
tried to stress that issues of systemic failure in the agency are not
the fault of its staff, because they have to work with a broken system.
The reason for such high morale is the interest in this reform and the
belief that it is what is needed for the staff to be part of a
successful child maintenance operation. We find a lot of good will and
commitment to making it work. That is worth
stressing.
Q
36
Nia
Griffith (Llanelli) (Lab): I should like to ask two
questions. First, if a significant reduction in numbers is required,
how do you propose to handle that? Secondly, to what time scale are we
working for both the transfer of staff and the training
programmes?
Lord
McKenzie:
I reinforce what James has said about
morale. People in the agency generally are a little bit worried about
the future, because it looks uncertain. We have just done a survey,
which we do regularly, and apart from that uncertainty, people think
that we are going in the right direction. We now help 130,000 more
children every month than we did two years ago. People are pleased that
we are putting more emphasis on enforcement, taking more action,
clearing the unassessed cases and so on. They feel progress. I agree
with James that morale is surprisingly but consistently high. The staff
tend to be slightly angry that they are held responsible for the lack
of tools that they have had, but they are not depressed by it, which is
a good thing.
I shall
now come on to the numbers. We plan to transfer everybody under
TUPE-like terms in July, or shortly after the Royal Assent once CMEC is
established as a body corporate. By then, we will have reduced the
number of people that we have, because under the Department’s
Gershon efficiency target, we have to manage a 15 per cent. reduction
by the end of this business year. We are dealing with that largely
through natural wastage, supported by some voluntary redundancy
programmes, which we will announce shortly. We do not envisage having
to make any compulsory redundancies.
As we move into the early years
of the commission, we will have the same case load and the same rules
for a period. The number of people that we will need will be broadly
similar, with perhaps some more to start off and manage the information
and support service and to do some of the planning work. Around 2010,
we will enter a new phase, in which we start to transition cases. For a
while, each case will become two cases, if you like. The existing case
will need to be moved to a new
assessment, but we will still have debts to manage from the old scheme.
During the transition period between 2010 and 2012-13, which is
outlined in the papers, we will require similar numbers of people,
although we should have made efficiency gains in the interim on the
assessment and on the computer
system.
When we have
largely sorted out the legacy of the past—our debt
problems—and we have everyone on the new assessment, we envisage
two results. First, we will have a much simpler assessment process. At
the moment, about a third of our caseworking resources go into
calculating and recalculating the assessment, which we change as
people’s net weekly income changes. We will be able to go to one
source for most of our assessments and the assessments will last
longer, so we should need fewer people for those reasons.
Secondly, because we are making
the system voluntary, rather than compulsory, it will not be awash with
benefit claimants. At the moment, 250,000 benefit claimants are referred
to us each year, of whom only a third become a case. We put work into
the rest, which does not benefit anybody in the long term because they
have either gone off benefit by the time we get to an assessment, or
they made a private arrangement before they came in and are resistant
to moving it.
For
those two reasons, we envisage having fewer people in the longer term,
and we are talking about some two thirds of the current numbers.
Clearly, that is sensitive to how many people use the service and how
effective the new enforcement powers are at achieving the outcomes
without having to put in more activity—that is, that the powers
provide sufficient incentive.
I envisage, given the length of
time, that it would be possible to achieve that through similar methods
to those that we are using this year—natural wastage and some
voluntary redundancy. However, we are talking about a long time in the
future, and, again, it would be for the commission rather than for us
to make any firm
statements.
Q
37
Mr.
Mark Harper (Forest of Dean) (Con): Sir David Henshaw
envisaged that the new system would be significantly different, and
that the Government service would deal with a smaller set of more
difficult cases. The regulatory impact assessment’s analysis
estimates that the number of parents with care would fall from the 1.4
million that use the CSA to about 1 million. One could view that as a
significant reduction, but equally one could say that 1 million people
were still using the state system. I am not sure that I would say that
that was a significant
change.
The other
question—recognising what Stephen Geraghty just
said—relates to the analysis that has been undertaken to get to
those numbers. Of the current caseload of 1.5 million cases, 500,000 of
those have nil liability. It could be argued that removing those cases
with no liability would save some bureaucracy but not really change the
amount of money that ends up with families and children. I am trying to
understand what assessment you have made of the robustness of the
figures, and the extent to which we are moving to a completely
different system rather than moving to Child Support Agency version
3.
Stephen
Geraghty:
The people who were assessed at nil under
the current systems are largely on the original 1993 scheme, under
which the threshold at which maintenance was paid was higher. When the
assessments were done under that scheme, slightly more than half of the
people concerned had a nil assessment, but under the new scheme about
10 per cent. do. Were those 500,000 people to move on to the
new assessment, a lot of them would get money—probably close to
90 per cent. of them would have a positive assessment. It is probably
not safe to think that those people would be the ones to move away from
the scheme.
Of the
current book of assessed cases, about half are private—they are
not on benefit and are therefore with the scheme voluntarily. The
working assumption is that they will remain with the scheme because
they have made a choice and not sought private arrangements, and a
similar proportion of the available market—that is the people on
benefit—having free choice, will now choose to be with the
scheme. That is where the figure of 1 million comes from. Although it
would have worked mathematically as Mr. Harper deduced, that
is not the basis of the calculation.
How robust is the calculation?
That will depend on the reputation of the agency, how successful it is
seen to be and whether people make the choice to join. It will also
depend on how successful the information support service is in
encouraging people, perhaps including some of the current clientele, to
make private arrangements. Some research is under way to predict the
likely outcome, and I hope that Hilary Reynolds will be able to provide
some detail on
that.
Hilary
Reynolds:
We have done the first extensive survey of
separated parents this spring, we will start to receive the emerging
results in the back end of this year and we will publish them probably
very early next year. I say “separated parents”, because
the matter involves not only CSA clients, but others. We are starting
to ask how people would prefer to be treated, because the big unknown
is what clients and parents will do when they have choice. We have
tried to conduct telephone surveys and family research to get our first
estimates, refining that through the responses to a fairly large client
survey. So far, research suggests that about one quarter of parents
with care would prefer to make private arrangements than use a
statutory scheme, whereas some 50 per cent. of non-resident parents
would prefer to make private arrangements than use a statutory
scheme.
We are already
starting to get information that enables us to start making an estimate
of what might happen, given the demographics and how many people enter
separation each year. We are having to do an evolving piece of
research.
Q
38
Mr.
Harper:
Picking up Sir David’s point, given that
work and the quality of the information, do the Government have a view
on the number of separated parents whom they want to use private
arrangements rather than a statutory scheme? Do they have any view on
that, or will they just let the system settle down and see where it
falls?
Lord
McKenzie:
Our view is that it should be a matter of
choice for the parents involved.
Q
39
Mr.
Harper:
Those choices will depend, to some extent, on the
parameters that the Government and the commission set. They will depend
on charging, on the effectiveness of the body and on the equality and
scope of the information. Although you say that you want it to be a
choice, those choices will be guided by policy decisions. Picking up
the point made by Dr. Turner, I did not know whether a view would be
taken about the fees, for example. The level of the fees, for the
non-resident parent and the parent with care, will drive decisions to
some extent and the Government will have to have a view about the
decisions they want people to make when those fees are
set.
Lord
McKenzie:
There is no intent from the Government to
use those mechanisms to reach a particular target or split of cases. We
want to use them to encourage people to make choices that leave them in
a position that we and they believe is right. We do not wish to set a
target for cases that we want in a statutory system or in voluntary
arrangements, and therefore we will not use those
mechanisms.
Q
40
Mr.
Harper:
Finally, do the Government share the vision that
Sir David Henshaw outlined of the statutory system being aimed
primarily at a small number of more difficult cases and the rest of the
maintenance arrangements going through private
arrangements?
Lord
McKenzie:
It is true to say that we do. That relates
in part to the point that Mr. Selous made about creating an
environment where, when relationships break down, people seek to
proceed by agreement over a whole range of issues. That seems to me to
be fundamentally good and something that the Government would wish to
encourage.
Q
41
Andrew
Selous:
Professor Nick Wikeley’s memorandum drew
the Committee’s attention to this year’s Department for
Work and Pensions research report No. 444, which suggests that slightly
fewer parents with care are likely to take advantage of the private
arrangements. Has that research report altered the findings of the
regulatory impact assessment on the number moving
over?
Hilary
Reynolds:
I cannot say when it came in the timetable,
but it is one of the pieces of research that we have considered
alongside
others.
Q
42
Albert
Owen:
Lord McKenzie, you mentioned the benefit disregard.
At what level do you plan to set the significant increase in the
disregard and on what assumption have you based that
decision?
Lord
McKenzie:
The level has not been determined yet, as
the Secretary of State said on Second Reading. There will have to be
negotiations with the Treasury before it is finally determined.
Initially, we have done some desk-top research on the impact of various
levels of disregard—not only for child maintenance, but for
housing benefit and council tax—on work disincentives as well as
on the impact on child poverty. Further work has been commissioned and
is under way at the moment. That will help to inform us as to where we
want to end up on this matter.
Lord
McKenzie:
There is a clear commitment to do so from
2010 in the White
Paper.
Q
43
Albert
Owen:
The disincentive to a lone parent could be
considerable if, for instance, there was a full disregard. Does that
not negate the Department’s attempts, on the other hand, to
encourage people back into
work?
Lord
McKenzie:
Some of the initial research that has been
collated struggled to find a relationship between the level of
disregard and work disincentives, and I think that there also have been
some studies undertaken overseas, but really we need to do more work
and research on that to see how we should
proceed.
Lord
McKenzie:
Indeed it is, although they do not all work
in the same way. For example, levels of disregard for housing benefit,
which are in-work benefits as well, have a potentially different impact
on the levels of disregard for child
maintenance.
Q
44
Albert
Owen:
On timetabling, existing benefit claimants are
expected to reapply to the new system or to opt for private
arrangements in 2008, yet any increase in benefit disregard will not
occur until 2011. Why is that, and why not run them together? I presume
that that is because you do not have the
information.
Lord
McKenzie:
In any event, there will be the extension
of the £10 disregard to the old scheme cases from 2008, and that
will be moved forward. The reason is because we had that further work
to do and have further negotiations with the
Treasury.
Q
45
Albert
Owen:
One of the main aims of the Bill is to alleviate
child poverty, and the regulatory impact assessment states that a
significantly higher disregard would lift approximately an additional
100,000 children out of poverty. I am finding it difficult that you do
not have the figures, but how did you come to that
conclusion?
Lord
McKenzie:
The 100,000 figure is related to more than
changes in the disregard. We think that an additional 80,000 children
could be lifted out of poverty by having more maintenance arrangements
generally, extending the £10 disregard, having more effective
enforcement and increasing the flat rate from £5 to £7.
We believe that that collection of measures will have a significant
impact.
With regard to
the impact on child poverty at various levels of disregard, we have
answered a number of parliamentary questions and looked at a range of
levels. In deriving the 100,000 figure, we have assumed something
towards the lower end of that scale, but on a prudent
basis.
Q
46
Mrs.
Siân C. James (Swansea, East) (Lab): I want to turn
to the maintenance calculations. Will you outline how you reached the
new formula figures on maintenance calculations, which take into
account the change from net income to gross income? Do they
actually represent the cost of raising a child, and why are the new
proportions set out in schedule 4 different from those proposed in the
White
Paper?
Lord
McKenzie:
We sought to align the new rate on gross
income so that the outcome mirrored as closely as possible the outcome
that someone in the same circumstances would have when entering the
system at present. We tried to align those so that broadly the same
maintenance obligation would come from those two calculations. The
rates are different to those in the White Paper because, frankly, we
refined them as we conducted more detailed work on the scale of
incomes, on what the outcome would be under the current system and on
what rates we needed to apply to ensure that the gross basis had the
same
outcome.
Lord
McKenzie:
Yes, it was simply a case of refining the
original
figures.
Lord
McKenzie:
Again, I think that that simply carries
forward the level that we currently have in the system, but recognises
that it is applies to gross income. It is simply to mirror
that.
Q
49
Andrew
Selous:
One of the main problems that the agency faces is
the inaccuracy of the assessments, which leads to massive problems for
your staff; they tear their hair out, as do parents with care and, no
doubt, the non-resident parents, too. Obviously the move to use Her
Majesty’s Revenue and Customs data is widely welcomed across the
House. Frankly, we should have done that years ago, so it is excellent
that it is coming in. Why can we not have that from day one, and why
can we not move to using HMRC data as soon as possible? The
introduction of that data is rather staggered and set back in the Bill,
so why cannot it be fast-tracked and brought
forward?
Lord
McKenzie:
It will take some time to get the new
processes and procedures in place to deal with things such as changes
to the IT systems and converting net figures to gross ones. Lots of
other changes will be needed at the same time—for example, in
relation to the disregard. It cannot be done simply at the flick of a
switch. We need to ensure that systems are in place to cope with those
changes.
Q
50
Andrew
Selous:
I do not follow that. The provision of income from
Revenue and Customs could presumably be provided today. HMRC must have
those data, although perhaps they are stored in several places. The
calculations done by the agency are, I accept, a separate matter.
However, making arrangements to gain immediate access to accurate
information, rather than having to wait for it from a recalcitrant
non-resident parent, would surely be better started
now?
Lord
McKenzie:
The information that we routinely get is
gross. The current basis of assessment is net of tax data, which need
to come from NRPs generally, as you suggest. If we were to use that
gross tax information, we would need to apply the new rates in
order to ensure a fair outcome. You cannot just plug in the gross figure
and then run the system as we have it at the moment, because you would
need to provide for the new rates.
Stephen
Geraghty:
There are also different ways of doing the
figures. For instance, tax credits are sometimes taken into account
now, but will not be in future. As Lord McKenzie said, it is not as
straightforward as substituting one data source for another. At the
moment, we inquire of the Revenue about income levels when we cannot
get the information elsewhere—about 80,000 inquiries were made
last year, and HMRC is now our third source of information. Having
failed to get an answer from the NRP and the employer, we now go to the
Revenue.
Q
51
Andrew
Selous:
Is the Department generally seized of the need to
move as fast as it can, especially with the directions that you are
giving your computer software programmers and so on, to make the change
happen as quickly as
possible?
Lord
McKenzie:
Absolutely. Hilary may want to say a little
more, but ensuring that the systems are ready to cope with the change
is hugely important. We have learned from the past not to do things too
quickly and not to try to start before the systems are up and running
and properly tested. However, it is a key part of the planning for
which Hilary has responsibility.
Hilary
Reynolds:
We have learned an awful lot about how not
to do things. We are working very closely with the Revenue, because it
is not only our systems that have to be ready—its systems have
to be ready to give information in a form that we can take. A lot of
detailed planning is already going on so that we can make it happen
smoothly, so that existing clients do not suffer a discontinuity of
service and so that the new arrangements work
effectively.
Hilary
Reynolds:
I am very happy with
it.
Q
53
Dr.
Turner:
The whole assessment formula is based on gross
weekly income, which is fine for many; but some people’s incomes
vary an awful lot from week to week, especially manual workers on
variable rates of overtime and so on. Indeed, many of my constituents
in the acting profession go from feast to famine. Against that
background, I wonder how you came to select the figure of 25 per cent.
to cope with income variation and how you intend to apply it in
practice.
Lord
McKenzie:
For those whose income varies within the
year, we will get annual data. Whatever calculation runs from that, I
suppose that individuals will be faced with the same issues that they
would have in relation to budgeting generally for household expenses.
Those who have no income one week but do the next will, in a sense,
have to plan and budget for that.
As for the
figure of 25 per cent., we have tried to pitch it that so that
significant changes in circumstances can be adjusted in-year, and
certainly if someone went from
being in work to claiming benefit, or if there were other changes in
circumstance, it would derive a change in the calculation. It is trying
to set it at a level that will prevent an endless flow of changes of
circumstance that gummed up the works in the past. We believe that a 25
per cent. threshold still leaves scope to adjust for significant
changes in circumstances, but screens out more modest changes and
therefore makes the process more efficient. Using HMRC gross data means
that calculations can be updated, in a sense for the first time, on an
annual basis. One of the bugbears of the current system is that data,
once in, are used endlessly and sometimes never updated. The
information will be more current and, therefore, if there has been a
dip or an increase in income, it will feed through into a subsequent
period’s
calculation.
Q
54
Dr.
Turner:
Will you review annually everyone’s
assessment, or will it be triggered by a request to take account of
change of income, or
what?
Lord
McKenzie:
If there is a change of circumstance and,
for example, someone says that their income for the year will be less
than 25 per cent. of what HMRC data for appreciating periods suggest,
it would trigger an adjustment. What it is not proposed to do, and the
regulations and the detail on this are still being worked out, is at
the end of every year to take stock and to say, “This is the
figure we used, this is the figure we ended up with and we are going to
adjust
it.”
Q
55
Mr.
Weir:
One of the problems that MPs often get at present is
with self-employed people. There seems to be a huge difference between
what their alleged income is, as given to the CSA, and the lifestyle
that the parent with care will say they are enjoying. Do you believe
that the provisions in the Bill sufficiently address these issues,
particularly with reference to self-employed
people?
Lord
McKenzie:
We propose that, as for employed people,
the assessment for self-employed people will be based on tax data. I
suppose that if someone is cheating on their partner they will cheat on
HMRC as well. Therefore, we will look to the safeguards in the tax
system to support the basis that we use. There will still be a
variations arrangement, under which someone who believes that the
income reported for the non-resident parent does not properly reflect
their lifestyle can seek an adjustment.
One of the things that we are
working on is to see whether that variation process can be made more
accessible. In the past, it has operated on quite a restrictive basis.
We are trying to open that up a bit. Basing these calculations on tax
data is a pretty solid footing. What we have also done, and we did this
quite recently, was to adjust the result of the Smith case and we fed
back capital allowances into the system. That was the right thing to
do.
Q
56
Mr.
Weir:
But then again, self-employed people are very good
at reducing their income through accountants and such like for tax
purposes. If there is a variation with child support, will there be a
knock-on effect, with HMRC looking again at self-employed
people’s tax returns?
Lord
McKenzie:
If CMEC became aware of information that
suggested someone’s tax data were not correct, there would be
obligations to deal with
that.
Q
57
Mr.
Weir:
From what you are saying, it does not seem that
there will be a great departure from the present system, under which
you can already go to the CSA and say, “I do not think this
income is correct.” My experience, 99 times out of 100, is that
the CSA does not look at it properly, it takes for ever or it tries to
get information from the other parent, which never comes. It just goes
on and on and on. Even getting HMRC data, I do not see a great
difference in this. It still seems that there will be a problem with
self-employed
people.
Lord
McKenzie:
It is that variations process which we are
looking to revamp, to see whether we can ensure that it leads to
changes, where they are appropriate, and is not as restrictive as it is
at the moment. There is still work going on on
that.
I would hang on
to the point that using tax data is as solid a foundation as we can
have. If we did not use that, what would we use? CMEC would have to
make its calculation of what somebody’s earnings are, what data
it should use and whether they are any different from those supplied by
HMRC, which I doubt. We would complicate the system. A key thrust of
the changes is to simplify it and make it more
effective.
Mr.
Plaskitt:
I think that you might also bear in mind
some of the new enforcement powers that we are planning to take as a
result of the Bill. There are some measures in it that will cause
self-employed, non-resident parents to think much harder before
considering not complying with their obligations. For example, there
are the current account deduction orders and the referral of
information to credit reference agencies, which can have quite a tough
effect on someone who is self-employed and depends on credit lines. Put
those alongside what we are saying about having more robust sources of
information about income to start with, and add that to the tougher
enforcement powers, and I think that the regime for self-employed NRPs
will be much more robust than at
present.
Q
58
Mr.
Weir:
I accept what you are saying, but it still does not
get round the problem of assessing what someone’s actual income
is at the first stage. I appreciate what Lord McKenzie says—it
is very difficult to do so, and HMRC is possibly the best that we can
get. But I still foresee the problem that we have at present continuing
under the new system—the difference between lifestyle and
declared
income.
Hilary
Reynolds:
About 7 per cent. of the current case load
of the CSA is self-employed cases, and they are by and large the more
complex cases. That is the nature of the income. We have tried to
design the system for the majority of our cases—a key design
principle for us has been trying to make a simpler system for both
clients and staff, to give a better outcome to clients and children.
The self-employed will continue to be one of the more difficult areas
for us to take account of, but we are trying to avoid designing for
every single conceivable eventuality in the
Bill.
Q
59
Mr.
Weir:
I appreciate that, but it seems that you are saying
that the cases that are difficult now will continue to be difficult in
the
future.
Hilary
Reynolds:
And we have a couple more powers, a better
date, better information on income and better enforcement powers. Those
are the things that we have added
in.
Stephen
Geraghty:
I think that from the agency perspective,
your point is absolutely right. When we get a challenge from the parent
with care, who says, “Well, he earns more than that
really”, we go to the Revenue and get an assessment. If that is
consistent, that is as far as we can go. If somebody has evidence,
rather than saying, “Well, I think it’s wrong,” we
can take it further. Of course, the parent with care can appeal against
the assessment, but you are absolutely right in saying that, if the
assessment basis is the tax details, which are what we currently go to
as an arbitrator between the two views, we are in a similar position
and the onus will still be on the parent with care to provide proof, if
he or she has any. I agree with Lord McKenzie that for the agency now
or CMEC in the future to set up a rival income-assessing machine to the
Revenue and Customs would not be a good use of taxpayers’ money
or the right thing to do. Whether the Revenue should use it more as an
investigation trigger is something that we could discuss with
it.
Q
60
Mrs.
James:
Just quickly, on the transfer of cases to the new
system, I am concerned because I know of a number of fathers who are
still trapped in the original system and have never quite made it over
to the interim system. They are now facing a third system. Are you
convinced that you have sufficient resources vis-Ã -vis personnel
and so on to make the successful step into the third system—the
son-of-son-of the
CSE?
Lord
McKenzie:
The answer to that is that we believe we
have, but the measure of the task is reflected in the fact that we are
looking to make that transition over a three-year period. Some have
said that we should seek to do it earlier but, as Hilary said, we have
learned some lessons from the past. The journey for somebody on the
original system will be that when section 6 goes, they will have a
choice whether to stay in, but there will not be an opportunity to
transfer to the current system. There will be an opportunity to
transfer to the new system during the process of transferring cases
between 2010 and 2013. By March 2013, we will have one system, one
basis of assessment and one client case load on that system. If they
wish to stay in the system in the interim, it will be on the old
basis.
Q
61
Mrs.
James:
My problem is that more and more people are
choosing to go to the ombudsman about the CSA, and I envisage another
group of people being unhappy, dissatisfied and left behind. I want to
avoid that at all
costs.
Lord
McKenzie:
Indeed. Originally we said that we would
transfer people to the current system when it was fit for purpose. It
has emerged that it is not, and therefore it would be crazy to do that.
We are looking
at a three-year transition period to ensure that the new system can
deliver for people. I accept that that leaves a number of years in
which there are still difficulties, and in which people will feel
aggrieved because they are trapped in the old system. Their only route
out is to go out of the system altogether, but that will not
necessarily be right for
everybody.
Q
62
Mrs.
James:
Given that people will be making their own private
arrangements and the particular difficulties and challenges of that,
which we have heard about, will there be sufficient personnel and
resources to deal with the particular problems of those
people?
Lord
McKenzie:
Do you
mean—
Lord
McKenzie:
Yes, the information and support service
must be robust enough to cater for the volume of cases that we will
have. There are going to be particular challenges around the point at
which section 6 compulsion goes. It will be a key part of planning for
the service to ensure that those people who wish to exit the system are
properly supported at that
point.
Q
63
Andrew
Selous:
On the enforceability of private voluntary
agreements, the move to CMEC is, as I understand it, predicated on a
reduction in the number of people coming to the organisation, because
you hope that they will form their own voluntary agreements. There is
general support for that, but is it not the case that people will form
voluntary agreements only when they think that they are worth the paper
they are written on in terms of being enforceable? Would you, as CMEC,
not be helping yourselves if people were able to call on the
enforcement powers of CMEC to ensure that an appropriate voluntary
agreement was enforced? This seems to be a key issue. We touched on it
earlier with the Scottish minutes of agreement issue, but it is much
bigger than that and is definitely a UK-wide
issue.
I get the sense
from the Department—from what the Secretary of State said on
Second Reading—that you do not want to have anything to do with
enforcing private agreements. You see that as more work, and you are
trying to shed work. I make the counter-claim that CMEC’s having
some role in ensuring that appropriate voluntary agreements are
enforced would help to achieve your objectives. What do you say to
that?
Lord
McKenzie:
We are not planning for CMEC to be involved
in enforcing private agreements. The protection for people who enter
private voluntary agreements is that if they break down, they have
access to CMEC, or currently the CSA. That is the safety net. Going
down the path of CMEC enforcing the range of different agreements that
people will enter into to suit their circumstances, which may be
formalised in a range of different ways, would be an administrative
nightmare at the
least.
We are trying
to achieve circumstances in which two parties who have had a breakdown
in their relationship can try to enter into agreements voluntarily. If
the starting point is, “If this doesn’t work, we want to
sue,” it will peel away the ethos of what we are trying to
create. We are right not to seek to enforce private
agreements.
Q
64
Andrew
Selous:
If I were a vulnerable parent with care who wanted
not to become embroiled with CMEC, but to do what you are encouraging
me to do and hope I will do, would I not need some reassurance that the
voluntary agreement that I entered into would be honoured?
Lord
McKenzie:
The assurance is that if it breaks down,
there is access to the statutory system. You know what it will deliver
and that it can be enforced. That will be people’s protection
and assurance.
Q
65
Mr.
Harper:
To pick up on the point about voluntary
agreements, you have made it clear that you do not see a role for their
enforcement, so what about monitoring and recording their existence,
given that the Bill’s objective is to maximise
maintenance arrangements for the whole marketplace? If you do not know
how many separated families have maintenance arrangements in place, and
you know only about those with which CMEC is dealing, do you really
have any idea about whether the legislation’s objective is being
reached?
Lord
McKenzie:
There has been a debate about whether there
should be a register of voluntary or private agreements, and there are
arguments on both sides. We want CMEC to take a view on it in due
course, and it may wish to test it out at some stage. However, it is
not necessarily very easy, because there will be a range of different
voluntary agreements, and CMEC will be charged with ensuring that they
are current and robust. There are a range of issues surrounding that.
We do not preclude the register, but we leave it to CMEC to take a view
on it in due course.
Q
66
Mr.
Harper:
In that case, though, how do you have any way of
knowing whether the commission is achieving its main objective? You
will have some data collection, and it cannot just be the cases that
use the statutory process, because to some extent, the most important
cases are those that do not use it. Not that I am one to increase
burdens, but unless you have some data-gathering and some way of
knowing what is going on, you have no way of knowing whether it is
successful.
Lord
McKenzie:
There is a whole range of data: the family
resources survey, the family children’s survey and the household
survey.
Lord
McKenzie:
Yes.
Q
67
Mr.
Weir:
May I take it from what Lord McKenzie says that
there will not be a prescriptive agreement? For example, in the
Scottish system, you can enter a minute of agreement, record it in the
books of counsel in session and have it enforced by sheriff officers.
Will that continue after CMEC is set up?
Lord
McKenzie:
Absolutely. Minutes of agreement will
certainly continue. We envisage that the information and support
service would provide a standard agreement for people to use if they
wished. Obviously we will not force anybody to use the agreement.
Consent orders in England will continue, too.
Hilary
Reynolds:
It is worth noting that when we have talked
to some clients about what they find important in a voluntary
agreement, sometimes it is not regular payments, but lump sums,
mortgage or school uniform payments, or whatever. What suits the
parents of the child or children will be a variety of things, not just
the standard x amount per
period.
Q
68
Albert
Owen:
Is it your intention to use the deduction
from earnings orders on existing arrangements as well as new
ones—even when the arrangements are working perfectly
well?
Lord
McKenzie:
At the moment, it is used only as the first
administrative stage of enforcement. The proposal is to test whether we
should use it as the basic method of collection. The idea is that there
will be a pilot to see how it works.
Lord
McKenzie:
We envisage that people who already exist
in the system and pay in by other means would not be included in that
pilot. At the end of the day, the pilot will need to be evaluated.
There are issues there for employers, particularly small employers,
with whom there is current engagement. We need to test it, and to
evaluate the cases where we would, for good reason, see people outside
of those arrangements, if that is the basis on which we move
forward.
Q
70
Albert
Owen:
That answers that point very conclusively. The Bill
includes a provision that the orders should not be used where there is
good reason not to. Can you give some
examples?
Lord
McKenzie:
There might be an issue of privacy around a
certain arrangement, so I concede that that might be one of the issues.
However, we need to see what happens in the pilot and what other issues
are thrown up by
that.
Stephen
Geraghty:
Half of the employers’ case load is
on deduction of earnings now. We have 75,000 new ones a year, and
140,000 people who hand them in. However, we do not get them until they
have been non-compliant for a while, although every other country uses
it as a standard—it is like paying one’s tax and national
insurance. In Australia, the US and New Zealand it is the first way of
collecting it. Here, there is a stigma because it shows that people
have been non-compliant. If it were universal, there would be no stigma
any more. From an operational point of view, it would be a great help,
although I understand the Government’s position that it should
be piloted
first.
Q
71
Albert
Owen:
Does that not contradict what Lord McKenzie is
saying—that we must be sensitive and have pilot
schemes?
Stephen
Geraghty:
It explains why that would help the
commission. It does not necessarily say that it works. That is why we
are going to pilot it first and see how it
works.
Stephen
Geraghty:
Perhaps.
Q
73
Mrs.
Dorries:
I want to return to something that you mentioned
a moment ago, which probably links to the question that I want to ask.
I want to talk about the record of accuracy in calculations. You
touched on that, and on the voluntary agreements. However, something
that you said about the voluntary agreements concerned me. You talked
about the client surveys, and how you were asking people what suits
them: whether it was the mortgage payments, or a payment directly to a
child. However, there is no specific monitoring of that. It immediately
occurred to me that a voluntary agreement might be entered into, part
of which is that the mortgage payment is covered, but if it is not, and
the parent defaults on those payments, that leaves the parent who is
caring for the children in a very vulnerable position. Do you not think
that if people are entering into those voluntary agreements, and
allowing parents to take on voluntary responsibilities which would have
such immense consequences, it is appropriate for such provision to be
voluntary, and not obligatory?
Secondly, I have a number of
cases where there have been inaccurate calculations of the amount that
the father was due to pay or receive. That causes all MPs a huge amount
of problems and work, as well as distress to parents. What will happen
to ensure that we no longer have that huge margin of discrepancy? It
has been a shambles. The record of accuracy in calculating payments is
poor. I wish to highlight the accuracy in calculating payments, and the
vulnerability of a parent with children who is in a voluntary
arrangement with somebody else paying the
mortgage.
Hilary
Reynolds:
I was simply trying to share some of the
ways in which parents have made voluntary agreements that suit their
circumstances and those of their children. The interest that we have as
a policy, and which CMEC will have as a statutory objective, is to
maximise the maintenance arrangements that are in place and working.
However, people will interpret their provision of that maintenance
through different sources, and that may vary according to the different
parents. It is not about us saying, “Thou shalt pay mortgages
instead of an up-front sum,” which is what some people have
suggested might suit their circumstances.
Q
74
Mrs.
Dorries:
I understand that, but personal circumstances
change. A couple on one day may think that it is appropriate and
suitable, for example, for the absent father to pay the mortgage on a
house lived in by the mother and two children; that may be suitable on
day one. However, six months later he may default on that and the
relationship may have broken down further. The agreement may not be as
harmonious any longer. Should there not be some kind of monitoring to
ensure that the voluntary agreement is adhered
to?
Hilary
Reynolds:
There will be an information support
service, and the statutory scheme will be there at all times to act as
what I think Peter Hain called an escape route. There will be
negotiation in the shadow of a maintenance and enforcement
commission.
Lord
McKenzie:
In terms of the inaccurate calculations,
Stephen may want to comment further but I think it is right to say that
there have been significant improvements under the operational
improvement plan, which is only just through its first of
three years. Under the new basis of assessment, fewer bits of
information are needed to make the calculation. The key bit of
information, which is the income, will in most cases come from Her
Majesty’s Revenue and Customs. It will not be necessary to rely
on the non-resident parent to do the calculation. That will greatly
assist with accuracy
also.
Stephen
Geraghty:
Accuracy is clearly important, but
sometimes we make too much of it. We measure accuracy to a penny. Our
new assessments, on the last decision, are currently about 80 per cent.
accurate to a penny. That includes procedural things. For instance,
with the much quoted 65 per cent. of liability orders that were
inaccurate, the sample consisted of 54 cases, 11 of which involved a
mathematical problem so that they were a penny or more out. Most of the
other problems were such things as taking too many days to pass on the
file, or not taking legal follow-up action to get missing information.
The accuracy statistics include procedural matters.
That is not to say that
accuracy is not important. For the enforcement work that we are now
doing we have just done a very big sample. An external auditor did 700
cases and we did 42,000 internally before we passed them on to debt
collectors. The accuracy to a penny is more than 90 per cent. People
have a chance to appeal to us and then to a social security and child
support appeals tribunal if they think that the assessment is
inaccurate. Mechanisms are there. I am not minimising the problems; I
would like 100 per cent. accuracy and procedural adherence, but the
monetary amounts of inaccuracy are relatively
small.
Q
75
Mrs.
Dorries:
You said in your opening statement that too much
could be made of accuracy, but that does not apply to a parent who is
not receiving the correct
payments.
Stephen
Geraghty:
It might be threepence short but they get
it; or it might be accurate to a penny, but not enforceable because it
is a penny
out—
Q
76
Mrs.
Dorries:
I assure you that none of the cases that I deal
with is accurate to a penny; I deal with cases that are thousands of
pounds out, so there are serious margins as well as narrow
ones.
I understand
what you say about the three-year improvement plan, which is 12 months
in, because I served on a Statutory Instrument Committee six months ago
when the issue was discussed. I understand that improvements are being
made, and am happy to agree with that. However, we are going into
another new system. Most of the inaccuracies of the previous system
came about in the initial set-up and rolling out, and we are just
beginning to put the problems right, 12 months into a three-year
improvement plan; what guarantees are there that we will not incur
problems with the new system? It is great that there is 90 per cent.
accuracy, but that is now, with a system that you know, which has been
operational for years and has been assessed, and which has an
improvement plan. We are now going straight into a new system. Are we
in danger of falling through the same trapdoors as
before?
Q
77
Mr. Plaskitt:
The first formula that the CSA launched with in the 1990s required more
than 90 different bits of information to achieve an assessment.
We are moving now to a system that requires three core pieces of
information. That is the best guarantee that we have a chance now to
achieve far higher accuracy.
Lord
McKenzie:
To be fair, we are not moving straight into
it. We are going to use the time to 2010 to make sure that we can do
what you rightly ask for, and make sure that we are fit to run the new
system.
Stephen
Geraghty:
Two big causes of numerical rather than
procedural inaccuracy are the effective dates—the date on which
a change should take effect—and the definition of income, which
might involve asking whether we should have averaged five or six
weeks’ overtime to get the amount. One of those will go with the
revenue source data. Effective dates may still be an issue. Clearly
there is a role for training, checking and system checking to minimise
the problem that we
have.
Q
78
Mr.
Harper:
I have a quick point. In our questioning we have
talked about the use of the quite rightly tougher enforcement powers.
Given that those powers are available much earlier than the new
assessment systems, will they be used looking very carefully at the
assessments that have been made? Tougher enforcement is very good, but
not if we are trying to toughly enforce an incorrect assessment. We
need to link the accuracy of the assessment to the enforcement powers;
otherwise, a number of cases will be made much of in which those
powers, which are rightly available, are being used when the assessment
is wrong. That will not get the new commission off to a good
start.
Lord
McKenzie:
I agree absolutely. It is absolutely right
that we do what you say and ensure that the assessment is right before
we use the enforcement powers. The challenge has been that in the past
the CSA has not used the powers that it has, but I think that that is
changing under the operational improvement plan. Part of the reason
that it is changing is that not only are more resources being deployed
in enforcement, but there is improved accuracy on
assessments.
Stephen
Geraghty:
Even before we transfer the debt to a debt
collector, we rework the case and produce a breakdown of the account,
which is available to the non-resident parent to challenge. Sometimes,
people will view an inaccurate assessment as one that we should have
recalculated because there was other information. For the privacy of
the non-resident parent we do not always give the parent with care the
full reasons that an assessment has changed, and there can be quite a
big change if new information comes to light. But of the liability
orders that we go for in the magistrates court, less than 1 per cent.
are turned down. There is a fair degree of comfort in
that.
Q
79
Mr.
Harper:
I do. Very quickly, on the enforcement powers,
clause 25, on disqualification for holding or obtaining travel
authorisation, allows the commission itself to make an order. Under
clause 28, which talks about disqualification for holding or obtaining
a driving licence, the commission has to seek
a court order. Why the difference? Furthermore, given that
“travel authorisation” means also identity cards—I
do not wish to rehearse the arguments about those—and that the
Government’s vision is that, at some point, ID cards will have a
role beyond travel and allow access to other public services, is the
ability to disqualify someone from holding an ID card limited to the
travel nature of that card, or will it include access to other public
services?
Mr.
Plaskitt:
We feel that there is a difference between
those two sanctions—the driving licence and the travel
document—which is why we have pursued different routes. Let us
take the driving licence first. We feel that the consequences of
withdrawing a driving licence are markedly and quantitively different
from those that could follow on from the removal of travel
documentation. For example, if we take away a driving licence but the
person still drives, there are implications for insurance and any third
party that might then be involved—let us say that there is an
accident or injury on the road. Because it has a much wider circle of
ramifications, it is appropriate to pursue an order through the courts.
Travel documentation, however, requires rather more discretionary
activity with no potential third party impact. It is a decision on
whether a non-resident parent goes on
holiday.
Q
80
Mr.
Harper:
What about if it is connected to their employment,
and the withdrawal of their travel authorisation affects, either partly
or severely, the ability of the non-resident parent to earn a living
and, therefore, to provide for their family? Many people nowadays, as
part of their employment, are required to travel internationally. If
you do that and the consequence is that the person loses their job or
has a significantly reduced level of income, you will affect the
family. If those are the consequences, is it appropriate that the
agency can do that, or should it seek a court
order?
Mr.
Plaskitt:
The biggest effect on the family is the
non-payment of maintenance. That is why the sanctions are there. People
need to think about the consequences of incurring one of those
sanctions. If it is likely that it could jeopardise their employment,
it should actually underline the sanction. That is that way that I
would look at
it.
Mr.
Plaskitt:
On all of it,
yes.
Lord
McKenzie:
There is also a specific provision in the
Bill that says: “Before making an order under this section
against a person, the Commission shall consider whether the person
needs a travel authorisation in order to earn a living.” So
there is a specific need to address that
issue.
Lord
McKenzie:
Under clause 25(4) of the
Bill.
Q
81
Mr.
Weir:
The Bill includes provisions for the write-off of
historic debt in some instances. In many cases that go back years,
parents with care have been trying to get money from other parents
without great
success, and large sums have drawn up. There is provision for
part-payment of arrears to be accepted in full settlement. Will the
parent with care be involved in discussions about whether that would
proceed?
Lord
McKenzie:
Absolutely. The provisions are particularly
focused on situations where there was an interim maintenance assessment
because it was difficult to get data, and often the suggestion is that
the arrears are inflated over what the liability ought to be. But it is
clear that we would only write off where we had the consent of the
parent with care, and only when the commission recommended to the
parent with care that it might be appropriate. So any inappropriate
offers would be screened out by the commission, and only in those
circumstances and specifically with the consent of the parent with care
would the debt be written
off.
Lord
McKenzie:
Indeed.
Lord
McKenzie:
No. The obligation to pay is on the
non-resident parent, so it is not appropriate for there to be
compensation in those
circumstances.
Q
83
Mr.
Weir:
Do you have any idea of the amount that you are
seeking to write off? Will you, for example, try to get rid of all
historic debt when the new agency is set up by coming to arrangements
in those
circumstances?
Lord
McKenzie:
We would like as many of those old debts to
be cleared as possible. Obviously, that is quite resource-intensive,
and Stephen may wish to comment on that. One of things that it is
proposed we do is, rather than write off debt, create a provision for
reflecting the effect of inflated or uncollectible debt in the account.
However, those debts would remain in being and would not be written off
until there is consent from the parent with
care.
Q
84
Mr.
Weir:
Will you look at the old cases to determine how many
of them are inflated? I appreciate the point about the interim
assessments, but most of those arose because the absent parent refused
to deliver the information, so they were used specifically as a
sanction in the first instance. There is some concern that by
effectively running around the agency for years, the absent parent will
get a reward by the writing off of what was originally supposed to be a
sanction. How will you look at that issue, as there may be some cases
where people simply have not paid for many
years?
Lord
McKenzie:
Perhaps Stephen can answer more
specifically about the programme that is being considered to address
that, but I understand that the total case load will be looked at and
worked through systematically to see which old debts can be cleared on
that basis. You are right, in the sense that we should only support the
writing off of debt where it has consent and where it is
reasonable.
Stephen
Geraghty:
The approach that we are taking at the
moment—and some of this is fairly technical—is that we do
sometimes broker deals between the parent with care and the
non-resident parent. For instance, in
two recent cases we assigned an Army pension from the non-resident
parent to the parent with care, which will clear the debt over a
period. However, the debt stays on our books.
In another case, the
non-resident parent transferred his interest in a property to the
parent with care, but, again, the debt will stay on our books. There
are cases now in which we broker deals that we need to be able to tidy
up in some way. There are also cases—usually where a solicitor
or a pair of solicitors is involved—where those concerned will
come to an agreement that there will be a payment, and we will not take
active steps to pursue the balance. We have some cases like that now
where both parents are happy, but the cases need tidying up.
We have
taken each of the cases that are above certain thresholds and allocated
them to people to pursue, to look at whether the debt can be reworked
and whether it is accurate, and to take whatever recovery action is
appropriate. There comes a point in any debt collection exercise where
it is a question of how much we can get. I think that we are a long way
from that, but presumably the commission and Parliament will, at some
point, want to consider whether they want to keep the debts going.
Debts owed by parents who have died are still on the books, which is
clearly absurd. It is a question of the commission putting
proportionate effort into collecting as much debt as it can while there
is still some benefit to be had—hopefully for the children, but
at least for the parent with
care.
Q
85
Mr.
Weir:
Given what Lord McKenzie said, it seems to me that
there is potential for slight conflict on this issue. We are going to
write off debt only where the parent with care agrees to it, but you
are effectively saying that some debt will have to be written off
anyway.
Stephen
Geraghty:
We are not going to get anywhere with
collecting some debt. The choice is between leaving that as debt that
everybody knows will not be collected, or writing it off. Experience
says that most parents with care
will—
Stephen
Geraghty:
Take a reasonable
sum.
Lord
McKenzie:
There will be instances in which the
non-resident parent has died and the money cannot be obtained from the
estate. In those circumstances, you would write it off without the need
for the consent of the parent in care.
Q
86
Andrew
Selous:
Would not parents in care who are worried about
this issue be more reassured if clause 2 included the collection of
debt as a primary objective of the commission? Why is it not there as
one of CMEC’s
objectives?
Lord
McKenzie:
One of the key objectives is to ensure that
maintenance arrangements are
effective.
Hilary
Reynolds:
And to secure compliance, which includes
debt dating back to
1993.
Q
87
Andrew
Selous:
So your interpretation of clause 2 of the Bill is
that it relates to the collection of historical
debt?
Hilary
Reynolds:
Yes.
Q
88
Mr.
Weir:
There is also provision in the Bill for the transfer
of arrears to private sector debt collection. Have you researched the
likely impact on vulnerable low-income families of factoring historical
debt to such
agencies?
Lord
McKenzie:
It is an interesting question. We thought
long and hard about retaining that power in the Bill. It relates to the
possibility of selling debts, to see whether more money can be raised
that way. I think that we know that the private sector would have an
interest in the debt book, although it would possibly be fairly
limited. We also know that it would be interested in what one might
term the low-hanging fruit—the debt that is easier to collect.
In any event, that would probably need liability orders attached for
the private sector to take an interest. The private sector would not
necessarily have the range of enforcement powers that CMEC will
have.
We saw that
there were pretty limited, if any, circumstances, in which the power
would be used, but we thought that, on balance, it was right to retain
it so that it would be available if market circumstances changed. If
some debt is taking an inordinate time to collect, there might be
circumstances in which the parent would prefer some cash immediately.
We do not foresee an early and robust use of that provision, however.
The power is clinging on in the Bill because we think that it might be
of some use in the
future.
Q
89
Andrew
Selous:
I should like to move on to computer use by CMEC.
The Public Accounts Committee report published the day after Second
Reading accused the Department of not maintaining the capability of an
intelligent IT customer. Could I have the name of the senior
responsible owner for the CMEC IT project? Will you give an assurance
that whoever that is will be in post the whole way through the
implementation of the IT that will be necessary to make CMEC
successful?
Hilary
Reynolds:
CMEC does not exist yet, so it does not
have any employees or directors. That is what the Bill will bring in.
The Department has responsibility for the contracts for the current IT
systems of which the CSA systems are part. We are working with the
Department and with the CSA to look at the IT systems and strategy that
we believe CMEC will need, so that the new board is in the best
possible position to understand what it is inheriting. I cannot give
you a
name.
Q
90
Andrew
Selous:
Okay. I want to be brief, because we need time for
part 4 of the Bill. Will you give me an assurance that, when CMEC is up
and running, one person—for whom the Public Accounts Committee
term is “senior responsible owner”—will be
nominated and will be in post for the length of the project, and not
moved to another Department every two years because they have done
well? Such movement is the reason why we have had a catalogue of IT
failures across the whole of government. We must start learning lessons
from what has gone wrong in the past, and I would have thought that the
Department would be keen to learn those lessons, so that this is
successful. I would like some reassurance on that point.
Lord
McKenzie:
I am not sure whether I can give you a
specific reassurance in those terms; that is a matter for CMEC.
Clearly, ensuring that the IT systems are fit
for purpose, robust, up to date and deliver what they should is a
central part of CMEC’s work. I do not see how it could possibly
be otherwise.
Q
91
Sarah
McCarthy-Fry:
Mesothelioma is a dreadful disease.
Portsmouth, my constituency, is one of the hot spots for it. The target
six-week period for getting money to people will be absolutely crucial.
Looking back, we can see that in other Departments, there is no history
of having to get money to people within six weeks. Where will you get
the resources from, and how do you know that you will have sufficient
resources to be able to deliver that tight time
scale?
Hilary
Reynolds:
We think that the costs that the Department
has set aside are sufficient to meet the needs of the process. My
Department processes quite a lot of things in six weeks, so we believe
that the resources are in place, both in skill and
money.
Hilary
Reynolds:
We will be
there.
Q
92
Sarah
McCarthy-Fry:
You will be there. Okay, I shall move on to
the next question. There is an assumption that you will be able to
recover the money from insurers and employees. What happens if you do
not, and what effect will that have on your financial projections?
Could it mean that you would have to reduce the awards that were
made?
Hilary
Reynolds:
The recovery assumptions in the regulatory
impact assessment use existing data on compensation payments and
industrial injury benefit payments, so we believe that they are
reasonably robust. The RIA gives indicative payment levels for a
cost-neutral scheme. If recoveries are lower than predicted, payments
might be lower; if recoveries are higher, payments could be higher, so
we have taken a central estimate.
Q
93
Sarah
McCarthy-Fry:
So it depends on how the money comes
through. What monitoring will you do over the next few years and do you
have monitoring plans in place?
Hilary
Reynolds:
I would expect us to have monitoring plans
in place to see what happens, and to have close interaction with the
insurance industry, among others.
Q
94
Sarah
McCarthy-Fry:
The delegated powers memorandum states that
there will be a significant change, and major changes and modification
to the Amendment of Social Security (Recovery of Benefits) Act 1997
because it is a significantly different form of recovery. That is all a
bit vague. Do you have any more
detail?
Hilary
Reynolds:
I think that what this is about is the
impact on employers’ liability insurance premiums. We expect
that the impact on employer liability insurance premiums will be a cost
of around £10 million a year.
That should be set in the context of the overall market for
employers’ liability insurance of around £1 billion.
While the cost is £10 million, that is a small amount in the
overall context. If you want further information, I can offer a note if
that would be
helpful.
Sarah
McCarthy-Fry:
A note would be helpful, but I would just
like to get my head around this. Surely, their liability is no
different from what it was before.
Hilary
Reynolds:
No, which is why the impact is fairly
small.
Hilary
Reynolds:
Yes.
Q
95
Paul
Rowen:
Moving on to the retrospective impact, will the
compensation recovery process apply only to relevant civil compensation
claims that settle after the date that the section in question comes
into
effect?
Hilary
Reynolds:
Yes. It is our intention that the recovery
process will apply to civil compensation claims that settle after the
date.
Hilary
Reynolds:
We have been working with
insurers—
Paul
Rowen:
So, you have a clear system in operation and you
know the number of clients that will be
affected?
Hilary
Reynolds:
I believe so,
yes.
Q
97
Paul
Rowen:
What about the circumstances in which the
amounts will be paid? You say that the amounts will vary. Can you tell
us what sort of amounts, and what the circumstances will be that will
determine those
amounts?
Hilary
Reynolds:
The Pneumoconiosis etc. (Workers’
Compensation) Act 1979 payments vary according to the age of the
claimant at diagnosis. We expect that to be a differentiating factor.
The payments also vary according to the claimant and the dependent who
is claiming. We envisage that to be one of the provisions that
vary.
Q
98
Paul
Rowen:
Will the system not take account of their
individual circumstances? You mentioned dependents, but there may be
other
circumstances.
Hilary
Reynolds:
There may be other
circumstances, but that might be suitable for debate later in
Committee.
The final question is whom the
provision might apply to. The Bill talks about people in the UK.
However, if someone was working on the docks in Gibraltar, or any
British naval dockyard not in the United Kingdom, would that affect
payment?
Hilary
Reynolds:
The intention of the power is to ensure
that people who have a connection with the UK, either through their
employment or because they live near an asbestos plant, are covered,
and to avoid the equivalent of benefit tourists—if I am allowed
to use that phrase. They are people with no connection to the UK who
travel here to gain a lump sum. People working in the dockyards in
Gibraltar would be covered because it is a UK
establishment.
Hilary
Reynolds:
We might need to go into more detail later.
It is people who have a connection with the UK. We are not trying to
exclude citizens of particular
countries.
Paul
Rowen:
It is a dependent territory. There could be
somebody working for a British company there who contracts the
disease.
Hilary
Reynolds:
They might
indeed.
Hilary
Reynolds:
The aim is to get to those sufferers and
dependents who, as a result of this exposure, get this bowel disease.
We are particularly interested in the views of the Committee and other
interested parties on how we can achieve this policy intent in
particular.
Q
101
Paul
Rowen:
What about retrospectively? If you go back in time,
when we had many more colonies, you may have many more eligible
people.
Hilary
Reynolds:
That is a point that we probably need to
come back to.
Q
102
Andrew
Selous:
I have two very brief questions. I have
some constituents who seem to be stuck for ever between their
former employer and insurance
company, and I cannot get either to move at any speed to take the issue
forward. Has there been any thinking on such issues?
I want also to raise the issue
of pleural plaques, on which there is an early-day motion signed by a
number of Members. I recognise that this is not as serious a medical
condition as mesothelioma, but it is distressing and causes anxiety.
Could the Minister or anyone present tell us what view the Department
takes on pleural plaques?
Hilary
Reynolds:
I cannot answer that
question, and I will not even pretend that I can.
Mr.
Plaskitt:
I will try. My understanding of pleural
plaques is that it can have a variety of contributing causes. It is not
a narrowly defined disease which is solely the result of exposure to
asbestos. Pleural plaques can arise for reasons other than asbestos.
That is why there is a separate approach.
Q
103
Andrew
Selous:
What about the length of time that cases can be
stuck between employers and insurance companies? In some cases,
constituents are compensated quite quickly. Perhaps they had a smarter
lawyer or the employer was feeling a bit more generous that day, but in
more serious cases, there seems to be no cut-off
period.
Lord
McKenzie:
Could you drop us a note with the specifics
on that? It is best that we look at it on that basis and
revert.
The
Chairman:
May I thank the witnesses for helping the
Committee with its deliberations? I also thank the Committee members
for their assiduous work during the morning. The room will be locked
from 1 o’clock onwards, so if people wish, they can leave their
papers here.
It
being One o’clock,
The Chairman
adjourned the Committee without Question put, pursuant to the
Standing Order.
Adjourned till this day at
Four
o’clock.
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