Andrew
Selous: I agree with the Minister’s point about not
linking access and maintenance—these can be vexed issues for
non-resident parents if they are dealing with both subjects at the same
time. He is right in that, but would he acknowledge that the current
system leads to some conflict, particularly when the parent with care
does not want to see her maintenance reduced? That is quite
understandable, and I would defend her right not to see her maintenance
reduced. As the Minister helpfully outlined by way of an example, the
costs of a school uniform, new shoes, iPods and so on are probably in
most cases being borne by her, rather than by the non-resident parent,
although he may be contributing.
Will the Minister acknowledge
that the present system leads to conflict? That is the experience of
family lawyers to whom I have spoken, and we should look at ways to
reduce that potential conflict—something that amendment No. 117
would do. My final
point, and I will be brief, is that I wonder whether there is scope to
look at the difference between fixed and variable costs. I quite
understand that the cost of rent, council tax and some major items are
fixed, but I wonder whether there is scope for designating some costs
as variable, which would be applicable to the non-resident
parent.
Mr.
Plaskitt: All I can see in front of my eyes as the hon.
Member speaks is huge complexity. It really is not a route that we want
to go down. We must do everything that we possibly can to keep this as
easy to administer as possible, and I can see us going towards an
incredibly unwieldy system if we follow the route that he suggests.
That is why, in the end, we proposed no substantive change to the
shared care rules—the consultation on the child maintenance
White Paper revealed no consensus among major stakeholders on any
fundamental change to the arrangement. In our view, that reflects the
fact that it is a difficult issue. Most of the issues that we have
teased out during this brief debate are finely
balanced.
John
Penrose: Does the Minister accept that although there
might not have been a huge consensus on what must be done to change it,
it is not necessarily true that the current system avoids the problems
that he has described? The system of day counting and continual record
keeping both is unwieldy in itself and creates the sort of
unintentional and unwanted frictional links between access and
maintenance that he rightly says we want to avoid if we can. The
current system is not perfect by any
means.
Mr.
Plaskitt: I am certainly not claiming perfection for it. I
would not dream of it, because of the complexity of the matter and the
circumstances with which we are dealing. With respect, the amendments
that we have been asked to consider would not ease that situation. They
will not achieve perfection either; I think that they would make the
situation more different. We found during the consultation that people
could point to frictions arising as a result of the arrangements, but
no one could tell us what changes would overcome or resolve them. That
is the difficulty. After distilling the consultation, we came to the
conclusion after careful consideration that it is best not to make any
substantive changes. In speaking in more detail about the specific
proposals, I shall try to reinforce that
point. 6
pm The amendment
would remove all changes to schedules designed to ease the process of
making decisions about shared care. The agency has often found the
issue difficult, because information about the shared care arrangements
is of poor quality or disputed by the parents involved. The
Bill’s proposed changes will assist the commission by allowing
parents to reach an agreement regarding the principles of shared care
without having to agree on the details during what can be a stressful
and uncertain time for both parents.
We intend to reduce the
maintenance liability of non-resident parents by a set amount for up to
six months in cases where the details of shared care have not been
agreed. We believe that that period will help parents reach amicable
shared care arrangements. The reduction in maintenance liabilities will
also allow parents to get used to the level of maintenance that they
will pay or receive when a more permanent shared care agreement has
been established. The rules will allow more flexibility in the early
days of separation, so that parents are not immediately tied into a
maintenance liability under a system of fixed-term awards. By
reconsidering shared care after six months if necessary, the commission
will be able to take account more quickly of any changes to shared care
arrangements. If
parents can agree a pattern of shared care during or at the end of the
six-month period, the new powers will allow the commission to take
account of that agreement. If they cannot agree on the level of future
shared care, the six-month period will give the commission appropriate
time to judge existing levels of shared care and make any appropriate
reductions in maintenance.
We are continuing to investigate
the specifics of the interim shared care decision, which is not an easy
matter. When final decisions have been made, we will set them out in
regulation. The amendment would remove the advantages of the more
flexible approach and tie parents into a year-long shared care
decision, when arrangements are likely to be at their most unsettled.
That would benefit neither parents nor children and would further limit
the ability of shared care rules to work in everyone’s
interests. Under
amendment No. 117, maintenance would not be reduced, unless the
non-resident parent cared for the child for at least 156 nights a year,
or three nights a week on average. In the 2003 scheme, about one fifth
of non-resident parents received a reduction for shared care. Where
shared care occurs, it lasts in most cases for fewer than two nights a
week. Only one in 10, or 2 per cent. of the entire caseload, cared for
their children for 156 nights a year or more. The Government’s
view is that we ought to encourage shared care because children almost
always gain from the continued involvement of both their parents in
their lives, whether or not their parents live together.
The reduction in maintenance
recognises that shared care invariably involves non-resident parents
incurring extra expense, which can be substantial. The rule offers a
simple and transparent incentive for non-resident parents to share
care. A higher shared-care threshold might deter many non-resident
parents from active involvement with their children, which would
clearly be to the detriment of everyone involved. A sizeable proportion
of non-resident parents have relatively modest incomes and could be
forced to choose between paying child maintenance and having their
child with them, whereas they may currently do both. Others may
question why they ought to pay full maintenance, when they already
incur significant costs in looking after their child.
The Government therefore
consider that the current threshold of 52 nights is correct. It
requires a level of care that many non-resident parents ought
reasonably be able to consider and prevents reductions in maintenance
for lesser amounts of care. It also means that the reduction would
apply in what is believed to be a fairly common pattern of care, namely
when a non-resident parent has their child every other
weekend. New clause
18 would give the Secretary of State the discretion to make regulations
for the calculation of statutory child maintenance in instances of
equal shared care and enable the commission to determine what such
instances might be. However, the new clause is unnecessary, because the
scope to make regulations for such cases is given by provisions of the
Child Support Act 1991 that are not affected by the
Bill. We recognise
that a case of equal shared care will not feature a situation in which
a parent clearly attempts to avoid their responsibility to maintain
their child. Some have queried whether there should be a liability at
all in a case of equal shared care, a point of view reflected in Sir
David Henshaw’s recommendation last year that such cases should
not be within the scope of the commission. However, there is an
opposite way in which to look at such instances. The income of the
parent with care tends to be lower than that of the non-resident parent
and, in some cases, the differences
could be substantial. In those situations, there might still be a case
for the non-resident parent to provide additional financial support
above what they give when the child stays with them.
The matter is not straightforward, and in such situations the
Government need first to give careful consideration to what is best for
the child and, secondly, to the most effective means by which any
outstanding needs can be met. The current incidence of equal
shared care in the agency’s case load is small, and we expect it
to reduce further when all parents are free to come their own
arrangements. Many parents who have agreed how their children are to be
cared for ought to be able to agree whether there is a need for
maintenance to be paid. Accordingly, we wish to involve the commission
in arriving at the right way forward in cases of equal shared care.
Although we have made no decisions on the matter, any new provisions
will be presented in secondary legislation, which will be subject to
the affirmative procedure to give Parliament the opportunity for
scrutiny and debate. In summary, we want the shared care rules largely
to remain as they are, but we will continue to examine the details of
rules regarding cases of equal shared care.
New clause 10 would require the
Government to publish a report, before the commission comes into being,
on whether a lower maintenance liability, either because of shared care
or another reason, results in fewer cases of actual shared care. We
have a range of evidence from research that shows that non-resident
parents strongly support the principle that time spent with children
ought to be recognised when setting maintenance rates, but there is
less support from parents with care. In addition, we are conducting a
large-scale survey that will provide much better information on current
levels of shared care, on which we expect to report in spring next
year. Our view is that it would not be possible to commission research
that provides a robust assessment of the impact of the shared care
rules on behaviour. We would be reliant on parents accurately reporting
that they had denied contact solely because of shared care rules and
would be extremely wary about the quality of information collected in
such a way. However, we will continue to review all the evidence and
work with our stakeholders to assess whether the detail of the shared
care rules can be further improved. With those reassurances, I hope
that the hon. Member for South-West Bedfordshire will withdraw the
amendment.
Andrew
Selous: The amendment was always a probing amendment, as I
made clear at the beginning of my remarks, so I am happy to withdraw
it. I am grateful for the Minister’s comments and recognise that
the matter is complex. The hon. Member for Wirral, West, put his finger
on it when he talked about the importance of voluntary agreements, and
if I draw one conclusion from the debate it is that parents who feel
strongly and have contentious issues arising would be well advised to
go down the voluntary route so as not to be subject to the complicated
rules. I am grateful to the Minister for his response, and I shall
study his remarks carefully and reflect on how we can go forward. I beg
to ask leave to withdraw the
amendment. Amendment,
by leave, withdrawn.
Danny
Alexander: I beg to move amendment No. 83, in
schedule 4, page 65, line 28, at
end insert— ‘(c) provide for
the calculation of income to include any interest, dividend or other
income derived from
capital.’.
The
Chairman: With this it will be convenient to discuss new
clause 15— Prevention of maintenance avoidance by non-resident
parents ‘(1) The Secretary of
State shall by regulations provide
that— (a) where the
Commission is satisfied
that— (i) a person has
deprived himself of income or capital with the effect that his gross
weekly income is reduced;
and (ii) the effect of that
deprivation is to reduce the amount of his gross income by at least 25
per cent below that which it would otherwise have been;
and (iii) in all the
circumstances of the case it would be reasonable to do
so; his gross weekly income
shall be taken to include income from that source of an amount
estimated by the
Commission. (b) in determining
what is reasonable under sub-paragraph (1)(a)(iii) above, the
Commission shall regard the person’s obligation to support his
children of paramount
importance. (2) The Secretary
of State may by regulations provide that, in such circumstances and to
such an extent as may be
prescribed— (a) a person
is to be treated as possessing income which he does not possess;
and (b) income which a person
does possess is to be
disregarded.’.
Danny
Alexander: I shall be relatively brief in moving the
amendment, although it raises a significant issue that is worth
spending a little time on. It addresses the involvement of income
from “any interest,
dividend or other income derived from
capital” in maintenance
assessments. As the Committee will know, income is currently treated
differently, depending on whether it falls under the old or new scheme.
Under the 1991 Act, dividend income was taken into account by way of
the Child Support (Maintenance Assessments and Special Cases)
Regulations 1992, with which I know the Committee will be familiar. In
the Child Support, Pensions and Social Security Act 2000, however, the
definition of “income” was severely restricted. Under it,
the scheme defines net income specifically as earnings from employment,
income from self-employment, tax credits and other income that has been
restricted to pensions or other benefits under occupational pension
schemes and so on. As
I understand it, both definitions will continue under the new regime.
There is no reference in the 2000 Act to interest, dividends or other
income derived from capital, as was provided for in the 1991 scheme. I
understand that such income can be considered only if applied for by
way of a variation by the parent with care. That arrangement will
continue under the Bill, which will potentially create significant
anomalies. The
subject of people who derive substantial income from capital but manage
to shelter it for tax purposes has been debated a great deal in
relation to private equity fund managers, for example, who, it has been
widely reported, pay considerably less tax on their
income than their cleaners. That will probably still be true today, even
after the announcement in the comprehensive spending review. If such
income is not taken into account at the first stage, someone with a
substantial income from capital could have a relatively low initial
maintenance assessment, because of how the rules about what should be
considered income and what should not are drawn
up. The Minister may
well argue that the ability of parents with care to apply for
variations should allow such egregious differences in income to be
taken into account, but the practicalities of that are complicated and
difficult. It has proved quite difficult for parents with care to be
successful in applications for variations under the Child Support
(Variations) Regulations 2000.
Of course, if one goes down the
route of variations, that still leaves the onus on the parent with care
to make an application. They may be unaware of any income, substantial
or otherwise, derived from capital, dividends and so forth. Even if
they do know that information, they might assume that it has been taken
into
account.
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