Written evidence to be reported to the House


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Paul Rowen: Will the Minister give way?
The Chairman: I think that the Minister has already sat down.
Andrew Selous: I am happy to give way if the hon. Gentleman wants to intervene on me. I am grateful to the Minister for his explanation. I am not blind to the definitional issues that he has raised. I concede that they probably are fatal, as far as the new clause is concerned.
Paul Rowen: Bearing in mind the Minister’s earlier comments, does he not feel that an enabling order is needed to follow this Bill? We need a clear definition of the steps that can be taken. I am thinking of the cases that the hon. Gentleman was referring to in which there may be an issue about domestic violence and the parent is not making a claim, because of their situation. Clearly, somebody who is independent will see that if action is not taken, the child will suffer.
Andrew Selous: I agree with the hon. Gentleman. I would prefer to have that clarity included in the Bill, rather than in secondary legislation and an enabling order at a later date. I very much support what the Minister has said about information and advice. He will probably remember earlier debates, when I said that I would like the Department to go a lot further on that particular angle.
Finally, I will have a bet with the Minister.
Mr. Plaskitt: I am not a betting man.
Andrew Selous: Then I shall put this contention to the Minister: in years to come, when social services have the sad but important duty of removing children from their parents, they will list in their many and varied reasons, the failure to apply for child maintenance. That failure will be one of the factors in perhaps a long list that will contribute to children being removed from their homes, which may be the proper thing to do.
Question put and agreed to.
Clause 15 ordered to stand part of the Bill.

Clause 16

changes to the calculation of maintenance
Paul Rowen: I beg to move amendment No. 46, in clause 16, page 7, line 22, at end insert ‘(subject to subsection (3))’.
The Chairman: With this it will be convenient to discuss the following amendments:
No. 48, in clause 16, page 7, line 22, at end insert—
‘(2) The Secretary of State must, before Schedule 4 comes into effect, publish a report, including statistical information, on the effect of using the following levels of income variation—
(a) 20% increase;
(b) 15% increase;
(c) 10% increase;
(d) 5% increase;
(e) 20% decrease;
(f) 15% decrease;
(g) 10% decrease;
(h) 5% decrease.’.
No. 49, in clause 16, page 7, line 22, at end insert—
‘(2) The Secretary of State must publish a report on the criteria which will apply to evidence brought before the Commission by a parent with care who wishes to appeal against a maintenance calculation.
(3) A Minister of the Crown must make a motion in each House of Parliament in relation to the report mentioned in subsection (2) before the coming into effect of Schedule 4.’.
No. 47, in clause 16, page 7, line 22, at end insert—
‘(2) The Secretary of State must publish a report, including statistical information, on the likely actual impact of the move from using net income for maintenance calculations to gross income.
(3) A Minister of the Crown must make a motion in each House of Parliament in relation to the report mentioned in subsection (2) before the coming into effect of Schedule 4.’.
No. 14, in clause 57, page 43, line 22, after ‘sections’, insert
‘16, [Duty of HM Revenue and Customs to ascertain financial circumstances of non-resident parent],’.
New clause 2—Duty of HM Revenue and Customs to ascertain financial circumstances of non-resident parent
‘(1) In section 11 of the Child Support Act 1991 (maintenance calculations) after subsection (6) insert—
“(6A) Where subsection (6) applies or an application for a variation under section 28 has been made by either the non-resident parent or the parent with care and any question arises concerning the income of the non-resident parent—
New clause 3—Enhanced enforcement to coincide with changes to the calculation of maintenance
‘When applying section 57 of this Act, the Secretary of State shall only implement the provisions contained in sections 19 to 28 inclusive of this Act on such day as the provisions contained in section 16 and [Duty of HM Revenue and Customs to ascertain financial circumstances of non-resident parent] of this Act also come into force.’.
New clause 6—Financial circumstances of non-resident parent
‘(1) In section 11 of the Child Support Act 1991 (maintenance calculations) after subsection (6) insert—
“(6A) Where subsection (6) applies or an application for a variation under section 28 has been made by either the non-resident parent or the parent with care and any question arises concerning the income of the non-resident parent—
(a) the Commission shall take all reasonable steps to investigate and verify the financial circumstances of the non-resident parent in order to establish his income for the purposes of this Act or regulations made under it;
(b) the non-resident parent shall provide such information as is required by the Commission in order to verify the financial information submitted by him or on his behalf.” ’.
New clause 14—Provision of information
‘Government departments, non-departmental public bodies and the Courts shall provide all such information as the Commission may reasonably request to—
(a) enable the Commission to form a correct maintenance assessment; and
(b) locate the address, workplace, or other places, where any parent who has an undischarged maintenance liability may be found.’.
Paul Rowen: The clause deals with changes to the way in which maintenance is calculated. I want to discuss amendments Nos. 46, 48, 49 and 47 and new clause 6.
I want to consider the new clause separately, so I shall start with the four amendments. The amendments address the new assessment process, which will be based on gross income for the non-resident parent with the data coming from HMRC. Although the change to using HMRC to provide the data is welcome, there is a concern that the data will be one or two years out of date, particularly for a self-employed, non-resident parent.
The Bill allows for reassessment, but only if income has risen or fallen by more than 25 per cent. The idea behind the amendments is to reduce the administrative burden on HMRC created by reassessments, which might mean that children end up receiving less under the new system. The amendment asks for an investigation into the effects of varying this level on the caseload of the CMEC. We also need more information on the proportion of non-resident parents, both employed and unemployed, whose income differs substantially from one year to the next and who may have spells of unemployment in any one year.
I am not suggesting that that should happen annually, but given that we are discussing a new structure and a new assessment, we need to predict the effect of those changes on people in different income bands and the difference that that would make in principle to the level of maintenance that parents with care receive. I put it to the Minister that that could be carried out fairly quickly once the Bill has received Royal Assent, so that we can get some indication of the changes. The Minister may well say that it is a matter for the commission, as it is the body charged with dealing with that, but as Members of Parliament who will be dealing with individual cases, we need to know what information the parent with care will need to provide in order to initiate an appeal. I hope that the Minister can give us some idea of what the level of information will be.
New clause 6 is slightly different from new clause 2. Both new clauses would place a duty on statutory authorities to investigate non-resident parents. In the case of new clause 2, that investigative duty is with HMRC, and in the case of new clause 6 it is with the commission. I want to quote two pieces of evidence that were given at the start of our deliberations about non-resident parents who are self employed. Referring to the resident parent having to provide information to the CSA, as it currently constituted, in order for it to initiate an investigation, Stephen Geraghty said that if the CSA can provide it, it will do so.
Mr. Weir: I understand what the hon. Gentleman is saying, but is his experience not the same as mine, that parents with care complain that, although they have given the information to the CSA, nothing happens and there is no investigation? The Minister has accepted that that was because the CSA does not have investigative powers in a lot of those cases, which is a serious defect.
Paul Rowen: I agree with the hon. Gentleman. The CSA has a statutory right to investigate, but it does not have the resources to do so as it is currently set up. Given the situation, I disagree with the proposals to use HMRC. If one deals with a non-resident parent who is a self-employed director of a company, it is quite possible for them to arrange their financial affairs to be, as is said colloquially, more tax-efficient. That may well reduce the visible income and, therefore, the amount of child maintenance to be paid. I know that One Parent Families and Gingerbread have provided a briefing that includes several cases showing how it is possible for not only millionaires but ordinary, self-employed people to change their tax affairs to make it more difficult for the parent with care to pursue their claim.
I put it to the Minister that we should not be putting the onus on the parent with care to have to prove that, because the parent with care may have separated in difficult circumstances and may not be in the best position to know the ins and outs of the non-resident parent’s income—they may only know background information. There is no requirement for the non-resident parent to provide full information to the commission. Stephen Geraghty’s comment says it all by putting the onus on the parent with care.
I also want to quote Janet Allbeson, who asked us in the evidence sitting where the pressure would come from. As she said, it will be parents with care who are not getting anything at the moment who will think that at least they can get something. However, where will they get the information from? New clause 6 is important, because we are saying that we are introducing a new arrangement, trying to encourage people to make voluntary arrangements and setting up information and support services to enable such voluntary arrangements, but, where a parent is clearly determined to avoid their responsibilities at all costs, there must be statutory back-up to make them declare what they are doing.
Turning to the difference between new clauses 2 and 6, new clause 2 puts that responsibility on HMRC. I put it to the hon. Member for South-West Bedfordshire, who tabled new clause 2, that HMRC’s primary responsibility is the collection of taxes—it investigates tax fraud and is keen to ensure that such investigations take place. It is not charged with the effective and efficient calculation of child maintenance, which is still the responsibility of the commission. I put it to the hon. Gentleman that new clause 6, which would give the commission the power to order the non-resident parent to provide the information, is a more appropriate way of going forward.
12 noon
HMRC will have to be involved and it has the database that will be used to provide much of the calculation. However, where a non-resident parent has been tax-efficient and is therefore avoiding child maintenance payments, perhaps by switching from earned income to dividends, the issue, as far as HMRC is concerned, is dealt with. The issue, however, it is not dealt with as far as the resident parent is concerned because, while that is not earned income, it is still income that the non-resident parent is receiving. I hope that the Minister will look at that. As I said, the first few amendments are probing. We want an assurance that a review will take place before the Bill is operational so that we have an indication of the number of parents whose income changes within a year and what effect that is likely to have on the amount of child maintenance collected by the new procedure. Again, that information should be available from HMRC’s database.
Finally, new clause 6 is very important because unless and until we have the statutory back-up for the new system—we partly discussed this earlier—we are still going to let down those children in that particular situation. I appreciate that Ministers may say, “Well, it’s only 7 per cent. of all the cases involved.” Nevertheless, for the children involved that is 7 per cent. too much. We ought to be using this opportunity to ensure that while we are encouraging voluntary agreements, we have a statutory back-up for cases where one parent is attempting to use the tax system to avoid their parental responsibilities.
Amendment No. 14 has the effect of introducing provisions in schedule 4 from the moment that the Bill receives Royal Assent, rather than delaying it. That is important because it would give CMEC the power to use HMRC data straight away so that the tougher enforcement powers, which I hope we will discuss later, can be used on accurate assessments. I cannot stress how important it is that the tougher enforcement powers go hand in hand with the stronger enforcement powers because, as we all know from our case loads as constituency Members of Parliament, faith in the system will only be restored if the assessment process is more accurate and if those accurate assessments are enforced.
The National Audit Office estimates that 65 per cent. of assessments put forward for enforcement were incorrect. That is at the heart of many of the problems that arrive in our mailbags week in, week out, and it is deeply unfair to the non-resident parents who have incorrect assessments and highly frustrating for the parents with care and, most importantly, for the children who do not receive the correct amount of money. Amendment No. 14 and new clause 3 are important because they would allow HMRC data to be used straight away and ensure that those powers link up with the tougher enforcement powers, which are going to come in straight away, as my hon. Friend the Member for Forest of Dean will no doubt tell us later.
 
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