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
16changes
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—
(a) HMRC 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 HMRC in order to verify the financial information submitted by him
or on his behalf.”. (2)
After subsection (8) of that section
insert— “(8A) In
this section “HMRC” means the Commissioners of Her
Majesty’s Revenue and
Customs.”’. 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.
Andrew
Selous: This important set of amendments and new clauses
cuts right to the heart of so many problems that the CSA has
experienced in recent years.
It is important that we get this area of the Bill absolutely right. It
is a large and somewhat unwieldy group of amendments, so we will
probably be spending a little time on it as we go through everything.
It merits a serious debate, which I hope all members of the Committee
will contribute to fully.
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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