Mr.
Boswell: Does my hon. Friend agree that it is important to
get it on the record that this is not a passive, investigatory exercise
between parties who just happen to have levels of income or expenditure
requirements as givens. Obviously, if somebody is in the
“won’t pay” category rather than the
“can’t pay” category, they will resort to various
devices, with which we are all familiar—such as
self-employment—to disguise the nature of their income, and a
vigorous, proactive investigation will be needed to get to the bottom
of where they really
stand.
Andrew
Selous: My hon. Friend is right. He has, as he often does,
put his finger on it by talking about a sector of non-resident parents
who perhaps have their own businesses, are self-employed, are slightly
more financially literate than most of the population and are able to
arrange their affairs in such a way that they
can—wrongly—minimise their child maintenance payments. It
is important that we deal with those
issues. In discussing
this group of amendments, I want to explain further some of the
measures dealing with the matter raised by my hon. Friend. New clause 2
would give stronger investigatory powers and put a greater onus on Her
Majesty’s Revenue and Customs to investigate and get to grips
with the current ability of non-resident parents to pay the maintenance
that they should be paying.
I hear what the hon. Member for
Rochdale says about new clause 6 and how the tough, investigatory
powers should primarily lie with CMEC, whereas my new clause 2 says
that the primary focus should be with HMRC. The truth is that we will
need the fullest possible co-operation between HMRC and CMEC if the
Bill is to be a success. All sorts of practical issues, in
terms of data sharing, IT systems and basic communications, will have
to be got right if we are to make a success of this. There are
different approaches in my amendment and the one tabled by the hon.
Gentleman. I will justify why I tabled new clause 2, rather than new
clause 6, as I proceed. However, I hope that he will agree that there
is, in essence, a fine divide because we will need full and good
co-operation between HMRC and CMEC if we are going to crack some of
these difficult
problems.
Paul
Rowen: I understand the hon. Gentleman’s points. We
will deal with IT systems under the next group of amendments. Does he
not accept, however, that CMEC’s prime responsibility is child
maintenance and HMRC’s prime responsibility is collecting taxes?
Therefore, the body dealing with child maintenance should be the
principal body, albeit working closely with the
other?
Andrew
Selous: I understand that, but let me take the hon.
Gentleman back to his party’s previous position, which he is
arguing against, if I remember it correctly. He wanted to transfer
virtually the whole of the Child Support Agency to HMRC. A little trip
down memory lane tells me that he has moved some way from a position
about which many of us had to listen to for some time and with which we
did not fully
agree.
Mr.
Boswell: Is it not also a consideration that, although it
is accurate to say that HMRC’s job is to collect taxes, along
the way it has become the expert in the assessment of income and the
avoidance of Spanish practices to disguise income? It is important that
it should be in the lead in smoking out people who seek to conceal
their real
situation.
Andrew
Selous: My hon. Friend is right. Let us put ourselves in
the shoes of a non-resident parent who is playing fast and loose,
frankly, and is morally wrong in not providing the amount of
maintenance that should be going to his children. If the telephone
rings or a letter arrives on his desk—in the days when we get a
postal service back—and one is headed “CMEC” and
other is headed “HMRC”, I wonder which would make us
quake most in our boots. Whether rightly or wrongly—and for many
of the right reasons—HMRC has something of a Rottweiler
reputation. For hundreds of years it has pursued us to get money from
us, and most of us would say that they probably do that pretty
successfully. It has strong, tough powers to do so, and rightly so
because the Government need
revenue. People would
be more likely to jump if Her Majesty’s Revenue and Customs took
the lead in assessing the right amount of income as it is HMRC data
that will be used. The hon. Gentleman cited
support for his approach to new clause 6 from One Parent Families, but I
draw his attention to page 5 of its brief, which
states: “At
present, despite extensive powers to seek information and require its
production, the CSA simply lacks the confidence and financial expertise
to scrutinise the financial affairs of suspected non-resident
parents”. One Parent
Families seems to be arguing slightly against its own case.
Under new clause 2, HMRC would
have to refashion some of its priorities in pursuing non-resident
parents. No doubt, there are those high up in the Revenue who say that
the objective should be to go for those cases in which it can extract
the most revenue and to ignore some of the smaller ones. I hope the
Minister is having conversations with Treasury Ministers about the
Child Maintenance and Enforcement Commission to ensure that when its
prior year data is being used, HMRC is committed to the objective of
preventing the past financial chicanery and of ensuring that there is
full and accurate disclosure. If the Minister has not had such
conversations with Treasury Ministers, perhaps he will assure the
Committee that he will do so, so that the proposal can work properly
and effectively. New
clause 14 is about the importance of all Departments, non-departmental
public bodies and the courts sharing and providing all the information
necessary for CMEC to do its job. I forgot who said it, but in a
previous sitting—in an evidence session or perhaps on Second
Reading—we heard about a case in which a non-resident parent
pleaded poverty to the Child Support Agency, saying that he could not
possibly make the unreasonable maintenance payments demanded of him, at
the same time as he was presenting himself to the Home Office as a man
of substantial means who could well afford to support the new foreign
bride he was hoping to be allowed to bring to this country.
The message needs to go around
Whitehall loud and clear that there should be basic data sharing among
Departments, which should link up and speak to each other. I hope that
the Minister and his colleagues are taking the lead in that respect,
and that they have been round, knocked on doors and had conversations
to ensure that the data flows. We know from the intractable problems in
the past that unless there is the greatest possible sharing of
information between Departments to build up a full and accurate picture
of the non-resident parent’s state of affairs, we will not crack
the problems presented by these serious
issues. The Bill
touches on some important matters about the nuts and bolts of getting
enforcement to work: using HMRC data straight away; being fair in
respect of the tougher enforcement powers; using only accurate
data—the data is inaccurate in 65 per cent. of cases; and
ensuring that information is shared. This is a large, unwieldy group of
amendments, but these are important issues and I look forward to
hearing what the Minister and other members of the Committee have to
say about
them. 12.15
pm
Mr.
Plaskitt: I shall give a full response to this large group
of amendments and I hope that the Committee will bear with me, as there
are many very important issues to be considered. I will divide my
response into three broad areas.
First, there are those
amendments that require the Government to publish statistical reports
before the new arrangements for calculating maintenance come into
effect. Secondly, there are amendments that have an impact on the
timing of the commencement of different parts of the Act, including an
amendment which means that collection and enforcement powers could only
come into force from the time the changes to the calculation of
maintenance come into force. There is also an amendment that would mean
that the new calculation arrangements would come into force on the day
that the Bill receives Royal Assent. Thirdly, a set of amendments would
provide ongoing obligations once the new arrangements are up and
running. In particular, they would require routine investigations into
all non-resident parents’
incomes. Amendments
Nos. 46 and 47 would require the Government to publish a report
outlining the impact on cases of the move to use gross rather than net
weekly income when making statutory maintenance calculations, and to
make a motion in each House about this report. Using gross income data
already held by Her Majesty’s Revenue and Customs rather than
asking the non-resident parent to supply net weekly income details,
will remove one of the significant causes of delay in making
maintenance
calculations. Our
intention is that the effect of the move from net to gross weekly
income should be broadly the same across the income range. That is the
reason for the new percentages for basic rate cases. I would add that
that intention resulted in changes to the rates originally announced
last December in the child maintenance White Paper. In particular, it
resulted in the introduction of a second set of percentages to be
applied to higher income
levels. We already
published in May this year information showing the impact of moving
from net to gross weekly income in our response to the Select Committee
on Work and Pensions’ fourth report. The amendments would
require publication of analysis showing the actual impact of the change
on individual cases at the point at which it is implemented. In
reality, such analysis is unlikely to be available. The first reason
for that is because the composition of the case load is likely to
change as we start to allow parents to make their own arrangements for
child maintenance. At this time there is no way of knowing precisely
which cases will remain in the statutory maintenance service and which
will leave. Secondly, we would need to make estimates of what
non-resident parents’ incomes would be in 2010, and, again we
have no way of knowing how accurate such estimates might turn out to
be. Amendment No. 48
would require the Government, before bringing into effect the new rules
for calculating statutory maintenance, to publish a report on the
effect on maintenance assessments of different levels of income
variation. The new calculation rules will include provision for an
annual review, so that more recent HMRC data can be used, enabling
calculations to be updated. Parents will be able to ask for an
alternative calculation based on the current income of the non-resident
parent where this differs from the HMRC income data used by at least 25
per cent. That threshold will provide more stability for parents in the
amounts to be paid and allow the commission to concentrate on getting
money flowing. The amendment
calls for a report showing the effect of different levels of income
variation. For the same reasons as those that I gave for rejecting
amendments Nos. 46 and 47, it is not possible to produce robust
analysis at this time. I should add that the regulations to be made
under the Bill, which would provide among other things a definition of
gross weekly income and the 25 per cent. income tolerance rate, will be
affirmative. We will, therefore, produce relevant analysis to assist
Parliament in its scrutiny of those
regulations. Amendment
No. 49 would require the Government to publish a report outlining the
information that a parent with care would be required to provide when
appealing against a maintenance calculation, and to make a motion in
each House about the report. We are not planning to change the current
process, and parents will have the same rights to query and challenge a
decision by the commission as they currently do. That means that there
will still be no requirement for an appellant to provide supporting
information for their appeal. The only information required will
continue to be that necessary for the administration of the appeal to
proceed. With that in mind, it is difficult to identify the practical
benefits to be gained in publishing a report of the type proposed in
the amendment. New
clause 3 would unnecessarily delay the implementation of the new
collection and enforcement powers until the changes in the method of
calculation of child maintenance are introduced, which is not expected
to be until 2010. The purpose of the Bill is to help the commission to
collect more maintenance for children. In order to provide the
commission with the tools to take firm enforcement action at the
earliest possible opportunity, we want to introduce the new collection
and enforcement powers as soon as they can be operationally effective.
Delaying that can lead only to worse outcomes for
children. In contrast
to the previous amendment, the effect of amendment No. 14 would be to
bring forward changes to the new calculation rules under the Bill so
that they would take effect from Royal Assent, not in 2010 as currently
planned. It would also require HMRC to investigate the reported
earnings of non-resident parents from the earlier time. In looking to
introduce new maintenance calculations from 2010, we are being careful
to avoid the mistakes of the past. We know from previous experience
that a maintenance calculation scheme cannot be delivered successfully
without an efficient and well-tested IT infrastructure. That is
particularly true in terms of the need for robust IT to support the
commission in its use of HMRC income
data.
Andrew
Selous: I am grateful to the Minister for his further
elaboration on matters. HMRC data are so important. It is one of the
parts of the Bill that we are most enthusiastic about because, as I
shall say for the third time, the National Audit Office says that 65
per cent. of assessments are wrong. Is he saying that the reason for
not using HMRC data is down purely to IT? I want to probe him further
on that. It does not strike me that we necessarily need complex
computer systems to achieve a basic level of communication between HMRC
and CMEC to start using the data sooner.
Mr.
Plaskitt: No, it is not down to that. The matter concerns
part of the deliberations that we must go through at this stage. As the
hon. Gentleman has referred to it more than once, I return to his
allegation that 65 per cent. of assessments are wrong. We touched on
that before the recess. He knows that we dispute that figure on the
basis of how it has been defined “incorrect”. We are
certain that, in reality, the number is much
smaller. I wish also
to respond to the hon. Gentleman’s point about the importance of
data sharing. I agree with his view. He wants to know whether we are
having conversations with HMRC about data sharing. Yes, of course we
are. They have been under way for some time. It is important that the
data-sharing process is robust precisely for the reasons that he
outlined. My general point concerns getting the sequence of the changes
right, which is why I am responding to his
argument. If the
proposed scheme were to commence before the link conveying HMRC data
has been fully established, the efficiency gains from direct access to
the data would be lost. Further inefficiencies would be bound to occur
if the commission was not given sufficient time to train its staff
fully or to develop all the processes needed to administer the new
service. The second effect of the amendment would place an ongoing
obligation on HMRC to ascertain the financial circumstances of every
non-resident parent. In that respect, it is virtually identical in its
effect to new clause 2, which would require HMRC to take reasonable
steps to investigate and verify such income. The new clause would also
add a requirement on non-resident parents to provide HMRC with any
information necessary for it to complete that
task. It is important
to remember that the information that the commission will use to work
out the statutory maintenance liability will already have been
looked at by HMRC for historic income data and the Department
for Work and Pensions for those in receipt of benefits. To recheck that
information for every application to the commission, which we estimate
would occur more than 100,000 times a year, let alone at other times
when the question about income arises, would be a prohibitively
expensive and largely superfluous process. It would remove any
efficiency gains from the commission’s direct access to HMRC
data and would result in delays to the flow of maintenance, as the
commission would have to wait for the income figure to be validated
again before a calculation could be made.
The
commission will be able to undertake appropriate investigations into
any income information, where it believes it to be appropriate, and
will still be able to pass on such information to HMRC.
Non-resident parents will still be required to submit to the commission
such information, if needed, to make a calculation. Failure to provide
such information, or providing false information, would leave
people open to prosecution. Furthermore, parents will continue to have
access to the variations regime, which helps to ensure that maintenance
liabilities accurately reflect non-resident parents’ ability to
pay. New clause 6
would provide an identical obligation as that set out in new clause 2
to investigate and verify non-residents parents’ income, except
that it places that
obligation on the commission instead of HMRC. My points about the
inefficiencies arising from the duplication of effort and the
possibility of adding significant delay to the calculation process
apply equally, therefore, to this
amendment. | 
