Andrew
Selous: That is not the case. There is merit in amendment
No. 83, and had the hon. Member for Inverness, Nairn, Badenoch and
Strathspey wanted to push it to a vote, I would have urged my hon.
Friends to support him. If he chooses to reintroduce the amendment on
Report, we may well do so.
New clause 15 would deal with
another aspect of the problem: the rearrangement of financial affairs
in such a way as to ensure the payment—legitimately—of a
much smaller amount of child maintenance than should morally, and I
should say, legally, be the case. They are separate, they go together,
and I shall push the motion to a vote at the appropriate
time.
The
Chairman: I am grateful to the hon. Gentleman for that
indication.
Danny
Alexander: I beg to ask leave to withdraw the
amendment.
Amendment, by leave,
withdrawn.
Schedule 4 agreed
to.
Clause
17Power
to regulate
supersessionAndrew
Selous: I beg to move amendment No. 118, in
clause 17, page 7, line 32, at
end insert— ‘(aa) make
provision that where there is a change in circumstances of the
non-resident parent, the Commission shall make a fresh assessment if
the gross income position of the non-resident parent increases or
decreases by 10 per cent. from the gross income figure fixed by the
calculation currently in
force.’.
The
Chairman: With this it will be convenient to discuss
amendment No. 124, in clause 17, page 7, line 32, at end
insert— ‘(aa) make provision
to include that where there is a change in circumstances of the
non-resident parent, the Commission shall review maintenance
arrangements if the gross income of the non-resident parent has
increased by greater than 25 per cent. or decreased by greater than 10
per cent. from the gross income figure fixed by the calculation
currently in force; (ab) make
provision for supersession in circumstances in which updated income
information is provided to the Commission and the maintenance
calculation currently in force has been calculated using historic tax
year information held at Her Majesty’s Revenue and
Customs.’.
Andrew
Selous: I shall be brief, as it is getting late in the
day. Amendment No.
118 would change the provision in the Bill whereby a reassessment takes
place only if the income of a non-resident parent either increases or
decreases by 25 per cent. I can almost hear the Minister’s
response about the agency’s difficulties with readjusting
assessments on small amounts of income, but the 25 per cent. figure is
much too high. It can be as unfair to the parent with care as it can be
to the non-resident parent when income both goes up and goes down. If
there is an increase in income of 24 per cent. and children do not
benefit from it, that is wrong. If someone has a gross weekly income of
£100, it goes down to £76 and the percentage is applied
on the £100 figure, that is wrong, too.
The figure is too wide in
scope. The Minister will say, “We will get it all through, it
will be simpler, it will be administratively easier,” but the
scope is just too wide. It is another example of too much rough justice
in the Bill. The figure of 10 per cent. would be more reasonable, and
variations of 9 per cent. either way could be borne more easily than
variations of 24 per cent.
Danny
Alexander: I speak in support of amendment No. 124, which
is part of this group of amendments. To some extent I share the
concerns that the hon. Gentleman has expressed, but amendment No. 124
would introduce asymmetry to the arrangements. It would make provision
that “where there is a
change in circumstances of the non-resident parent, the Commission
shall review maintenance arrangements if the gross income of the
non-resident parent has increased by greater than 25 per cent. or
decreased by greater than 10 per cent. from the gross income figure
fixed by the calculation currently in force”.
The asymmetry is proposed for
two reasons. Although it is important to ensure that children benefit
from increases in income, it is also important to provide for
non-resident persons whose income falls by, for example, 24 per cent.,
because if there is no variation, the proportion of their income that
is taken up by maintenance could, in some cases, rise to 42 per cent.
The amendment is designed to concentrate more of the
commission’s limited administrative resources for processing
variations and changes in circumstance
on those cases in which a fall in income could have a serious
effect on the non-resident parent’s circumstances. The Select Committee’s
report includes a helpful table in paragraph 133 on page 37 that shows,
using different figures, the proportions of employed non-resident
parents who would be eligible for adjustment. A 10 per cent. variation
for income falls would result in an increase of 9 to 16 per cent., but
a 10 per cent. reduction for income rises would result in the
proportion of cases being dealt with rising from 15 to 33 per cent. I
accept what the hon. Gentleman said about the importance of ensuring
that income increases are passed on, but if the interest of justice and
fairness is balanced with the administrative efficiency that CMEC will
have to pursue as one of its objectives, our amendment would enable
those cases to be addressed in which income falls could lead to serious
hardship, although when significant income increases occur they would
have to wait until the start of the following year to be
processed. That would
be the right balance, and would allow CMEC’s resources to be
devoted to cases in which hardship might occur. I agree with many of
the points made by the hon. Member for South-West Bedfordshire, but our
asymmetric system would make the balance more right and I hope that the
Committee will support our
amendment.
Mr.
Plaskitt: This is an important matter, and I appreciate
the points that have been made in support of the two
amendments. Amendment
No. 118 would provide for regulations to require a fresh assessment to
be made if the gross income of a non-resident parent has increased or
decreased by 10 per cent. or more. Amendment No. 124 would provide for
maintenance to be reviewed if the gross income has increased by more
than 25 per cent. or decreased by more than 10 per cent. from the gross
income figure used in the maintenance calculation. It further makes
provision for regulations to provide for an immediate change in the
maintenance calculations when updated HMRC income is provided to the
commission. Clause 17
provides powers to make regulations on supersessions, which may include
the ability to restrict the type of changes in circumstances for which
maintenance liabilities can be adjusted. At present, when a relevant
change of circumstances takes place the maintenance calculation can be
changed to reflect that, and such an adjustment is a supersession. If a
client reports repeated changes in income or shared care, the
maintenance calculation can change every week. That creates uncertainty
for the other parent and also means that agency staff are constantly
calculating maintenance rather than focusing on collection and
enforcement. I shall illustrate that with some real numbers on which
hon. Members should
reflect. Since the
introduction of the revised scheme—the 2000 change—5
million changes of circumstances have been notified to the agency, and
the current rate is 145,000 a month. That is the scale of changes of
circumstances that the agency must deal with at the moment. Taking that
into account, I hope that the Committee supports our intention to
reduce that
volume in the interest of supporting collection and enforcement rather
than constant and repeated
recalculations. For
the statutory maintenance scheme, the intention is that only
significant changes in circumstances—for example, a child
starting work or a substantial change in the non-resident
parent’s income—will lead to an immediate adjustment in
the maintenance calculation. More minor changes will be reflected when
an annual case review is carried out, and the maintenance liability
will be updated using income data for the most recently available tax
year provided by
HMRC. For changes in
income, we propose a tolerance level of 25 per cent. If the
non-resident parent’s income goes up or down by 25 per cent. or
more compared with the historic HMRC figure that was used, the
maintenance calculation will be changed so that it is based on the
non-resident parent’s current income. That tolerance will not
apply when income data are updated at the annual review. If the new
income figures result in a change in the amount of maintenance due,
then regardless of the amount by which income has changed the
calculation will be updated.
The tolerance level must be set
where it strikes a balance between allowing significant changes in
income to be taken into account, and ensuring that the commission is
not inundated with requests for recalculations. We believe that the 25
per cent. level strikes that
balance. We have
analysed income changes between 2004-05 and 2005-06 for non-resident
parents in the 2003 scheme. That analysis shows that around 40 per
cent. of them had a change in their income of 25 per cent. or more. It
also shows that just over 60 per cent. had income changes of 10 per
cent. or more. Clearly, a tolerance level of 10 per cent. suggests that
the commission would be required to make adjustments in a far greater
proportion of cases than under our preferred level of 25 per cent. It
would affect the commission’s ability to manage its case load
effectively and would provide much less certainty for parents. It
would, at a stroke, prevent us from moving to a system in which
maintenance awards are generally fixed for a year and only updated on
an annual review
basis.
Danny
Alexander: Will the Minister place the information that he
has just given, and from which he has quoted excerpts, in full in the
Library? His figures differ significantly from those that were given to
the Select Committee by the Secretary of State and published in the
report on page 37, which would suggest that reducing the threshold from
25 per cent. to 10 per cent. for downward adjustments only would lead
to 7 per cent. more cases coming through the system. The totals in the
report do not match the ones that he has given. Could he provide the
information and set the record straight on how the two sets of figures
are consistent with each other? If he could make that clear, I would be
grateful.
Mr.
Plaskitt: I am happy to do that in order to help members
of the
Committee. Amendment
No. 124 would provide a tolerance of 10 per cent. for
decreases but keep the level for increases at 25 per cent. It would
also increase the number of
cases that would need to be reviewed. We consider that the system will
be simpler for staff and parents to understand if the same figure
applies to increases and decreases in income. Under the amendment,
non-resident parents could get their payments lowered and based on
current income much more readily than a parent with care could ever get
them raised. Parents with care would perceive that as
unfair. A much lower
tolerance level for decreases in income could also
tempt some non-resident parents to manipulate their finances in order
to portray a drop in income. We will make provision to prevent the
scope for that, but if the tolerance were as low as 10 per cent.,
non-resident parents might be more tempted to try to do that than with
a higher tolerance of 25 per cent. in the knowledge that, if
successful, their maintenance would be reduced with immediate
effect. The second
part of amendment No. 124 would provide that a maintenance calculation
based on historic HMRC income information should be changed immediately
if updated income information is provided to the commission. Under the
new arrangements, all calculations will be based on HMRC income
information unless the non-resident parent’s current income is
significantly higher or lower. The calculation will then be updated at
the time of the annual
review. The amendment
appears to provide that a non-resident parent could submit income
details for a more recent period at any time and have their maintenance
calculation reviewed. That, too, would clearly inundate the commission
with requests for
changes. 6.45
pm The system of
annual reviews will mean that parents will know how much maintenance
they are to receive or pay for the year, and be able to budget
accordingly around that figure. Under the amendment, which would allow
for maintenance to be reviewed whenever updated information became
available, parents would never be able to predict when it might change.
If the commission were required to update calculations as soon as new
information became available, it could also lead to unmanageable peaks
in its work load following the end of the tax year, when most
non-resident parents’ new income information for the previous
year would become available. It is therefore vital that reviews take
place in individual cases when they are due rather than on demand, in
order to spread the commission’s work load evenly throughout the
year. Finally, I
recognise that although the principle of having the tolerance is
accepted, there is a range of views as to what it should be. We do not
want to fix it in primary legislation, as it would not be possible to
review it in the light of experience. It is therefore much more
sensible to provide in secondary legislation.
With those reassurances, I hope
that the hon. Gentleman will withdraw the amendment.
Debate
adjourned.—[Mr.
David.] Adjourned
accordingly at fourteen minutes to Seven o'clock till
Thursday 11 October at ten minutes past Nine
o'clock.
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