Memorandum submitted by Professor Nick Wikeley (CM 1)
CHILD MAINTENANCE AND OTHER PAYMENTS BILL 2007
Written evidence for Public Bill Committee prior to oral evidence session on Tuesday 17 July 2007
· The structure of the Child Maintenance and Other Payments Bill 2007 is disappointing, in that it is both stand-alone and amending legislation (para. 3);
· The absence of detail (e.g. in draft regulations) is not helpful (para. 4);
· C-MEC's primary objective is unclear; the expression "effective maintenance arrangements" needs to be clarified (paras. 6 and 7);
· C-MEC's duty to promote child maintenance arrangements (para. 8) needs strengthening;
· There are real concerns about the viability of holistic information and guidance services (para. 9);
· The question of charging fees is problematic (para. 10);
· An independent advisory committee should be set up (para. 11);
· The child's right to maintenance has not been clarified (paras. 12-14);
· The repeal of section 6 is welcome but raises further problems (paras. 15-18)
· The definition of "income" remains unsatisfactory (paras. 19-21);
· The 25% tolerance rule may be set too high (para. 22);
· The role of the courts in private ordering has not been recognised (para. 23);
· The new sanctions will face legal challenge (para. 24) and the case for administrative rather than court-approved liability orders is unclear (para. 25);
· Appeal rights have been further fragmented (para. 26).
1 I am a law professor at the University of Southampton where my areas of research expertise include child support and social security law and policy. My relevant publications include Child Support Law and Policy (Hart Publishing, 2006, 525 pp) and (with Gwynn Davis and Richard Young) Child Support in Action (Hart Publishing, 1998, 251 pp); see also N Wikeley et al. National Survey of Child Support Agency Clients, DWP Research Report No 152, 2001). I was one of the Specialist Advisers to the House of Commons Work and Pensions Committee for its recent report on Child Support Reform (Fourth Report of Session 2006-07, HC 219-I).
2 As I hold part-time judicial appointments as an appeal tribunal chairman and a Deputy Social Security and Child Support Commissioner, I wish to make it clear that I am making these observations in my personal capacity as a researcher. These comments are also confined to Parts 1 to 3 of the Bill, although in the past I have conducted research into the legal aspects of asbestos-related disease (N J Wikeley, Compensation for Industrial Disease, Dartmouth, 1993, 221 pp).
The structure and format of the Bill
3 The structure and format of the Child Maintenance and Other Payments Bill 2007 is disappointing in two respects. The first is that this is a combination of stand-alone and amending legislation. Parts 1 and 2 comprise new stand-alone provisions which establish the Child Maintenance and Enforcement Commission (C-MEC). Part 3 then makes whole swathes of amendments into the Child Support Act 1991, inserting a total of 38 new sections (most of which concern enforcement issues) as well as other changes to existing sections. We already have two main versions of the Child Support Act 1991 in force (the original Act applying to old scheme cases and the version amended by the 2000 Act applying to new scheme cases). This style of legislating is hardly a contribution to transparency and public understanding of the law.
4 The other disappointing feature is that much of the detail is missing. The arguments for using secondary legislation are well known and well made - yet it would have been helpful if draft regulations had been made available at this stage. An example of good practice concerns the Welfare Reform Act 2007, which replaces incapacity benefit with employment and support allowance, where the debates on the Bill were undoubtedly improved by such draft regulations being made available during its passage through the House.
The Child Maintenance and Enforcement Commission
5 The creation of C-MEC (Parts 1 and 2 of the Bill) is a novel departure for child support policy; there are no other obvious comparisons in other jurisdictions around the world. The following points may be made.
6 The main objective as stated in clause 2(1) is commendable - but what is meant by "effective maintenance arrangements"? The term is left to stand undefined. Does the expression refer to the amount of child maintenance being transferred, or the regularity/reliability of payment - or some combination of both? The statutory emphasis of maximising the number of children for whom such arrangements are in place might be seen as prioritising the number of children over the quantum of such awards/agreements, as well as encouraging C-MEC to pick off the 'easy targets' - precisely the charge that was laid against the CSA, especially in its early years.
7 The subsidiary objectives in clause 2(2) reflect the policy bias towards prioritising private arrangements over applications to C-MEC - thus C-MEC is "to encourage and support" the former but only "to support" the latter. The risk is that parents with care may be deterred from making applications to C-MEC if private arrangements are not made. The term "voluntary maintenance arrangements" is not ideal. If child maintenance is that important, and is a parental obligation, then the use of "voluntary" may send the wrong signal. "Private", "non-agency" or "non-C-MEC" may be better terms.
8 C-MEC's statutory duties include "raising awareness among parents of the importance" of both the principle and practice of child maintenance (clause 4). The proposed statutory language here seems to me rather weak. Note that under Australian legislation the parental duty to maintain children is a primary duty and "has priority over all commitments of the parent", other than the commitment to support oneself and others to whom one owes a duty of maintenance.
9 The effective provision of information and guidance (clause 5) is widely recognised as being crucial to the delivery of the new child support strategy. Lobby groups will doubtless express their concerns in this area. Recent experience does not make one optimistic that a high quality holistic service will be forthcoming (e.g. changes to LSC (legal aid) funding). Research also makes it clear that the most vulnerable parents do not have single issue problems which need solving - rather they come with a cluster of inter-connected problems for which resolution is often intractable (e.g. child support, contact, domestic violence, housing etc). The minister's statement that the advice service might be largely phone-based or web-based (2nd Reading, Hansard Debates, HC Vol 462 col 1037 (4 July 2007)) did not fill me with optimism. I am not convinced that this will necessarily address the question of access in rural areas; moreover research indicates that users often express a strong preference for face-to-face services (which, of course, are highly resource intensive).
10 The question of charging fees will doubtless be controversial (clause 6). The obvious point is that charging fees is unlikely to be effective if customer service remains at current levels. Even if C-MEC's performance is substantially better than that of the CSA, there remain awkward questions of policy. If fees are charged, they are likely to act as a disincentive to using C-MEC's services, which will undermine efforts to reach the child poverty target in cases where private arrangements are not viable. If parents with care are exempt from fees, so as to avoid that deterrent effect, there are obvious questions of fairness of treatment as regards non-resident parents - which will then impact on the reputation of C-MEC and indirectly effect compliance.
11 My final point on Parts 1 and 2 is to regret the absence of some form of independent Child Maintenance Advisory Committee (CMAC). In time C-MEC will undoubtedly establish users' groups in the way that other public service providers do. However, there remains a strong case for an external advisory organisation that can stand back from day to day delivery issues and advise both the Secretary of State and C-MEC on the direction of travel. In 2000 the former Social Security Select Committee proposed a Child Support Advisory Committee, modelled on the Social Security Advisory Committee, to perform this role. Arguably the case is now stronger still with the establishment of C-MEC at arm's length from the Department. CMAC might include representatives of relevant professions (lawyers and mediators), lobby groups for non-resident parents and parents with care and the judiciary.
The Bill and the basic principles of the 1991 Act
12 Part 3 comprises extensive amendments to the Child Support Act 1991, mostly in relation to enforcement issues. It is notable, however, that the first of the so-called "basic principles" set out in section 1 of the 1991 Act (the duty to maintain) is left largely untouched. Many of the changes to the rest of the Act are of the "cut and paste" variety - thus Schedule 3 comprises eight pages of amendments to the 1991 Act which may be summarised as "for 'the Secretary of State', read 'the Commission'". The only apparent change to section 1 of the 1991 Act is effected indirectly by updating the definition of 'child' to fit the new child benefit definition (clause 37).
13 So if the Bill is enacted in its current form, section 1 of the 1991 Act will continue merely to assert the parental obligation to maintain - there is no statutory recognition of any right on behalf of the child. So although C-MEC's main and subsidiary objectives are to be enshrined in statute (see above), the 1991 Act itself remains silent on the broader goals of the child support system.
14 The failure of the legislation to engage with 'basic principles' disguises a reluctance to articulate the underlying purpose of child maintenance. A rights-based approach sees children as enjoying a right to participate in the standard of living enjoyed by both their parents, irrespective of which parent they are living with. A needs-based approach is concerned merely with apportioning between parents the assumed costs of raising children. Addressing this question is not just a nice theoretical point - it can assist in solving otherwise intractable policy dilemmas (e.g. as to how to accommodate overnight contact and shared care within a formula system).
The repeal of section 6
15 There are two main aspects of the "basic principles" in which the Bill does make major changes. The first is the radical and widely welcomed decision to repeal sections 6 and 46 of the 1991 Act (clause 15), the compulsion on parents with care on benefit to apply for child support. The likely impact of this change on the child support system is uncertain, not least as other anglophone systems (notably those in Australia and in the United States of America) require parents with care on welfare to apply for child support. Indeed, most other European regimes impose similar requirements.
16 Henshaw's vision of the new organisation as handling a much smaller caseload now seems in some doubt. The latest research estimates that only about 15 per cent of all parents with care are likely to take advantage of the freedom to make private arrangements (DWP Research Report No 444, 2007). Current planning seems to be based on an assumption that C-MEC's caseload 'in steady state' will be about 1 million, nearly 30 per cent down on the CSA's caseload of 1.4 million. But this is still a very substantial caseload.
17 The repeal of section 6 is not without its potential difficulties. It seems odd that section 6 may be repealed before the new increased child maintenance disregard is fully operational, as the existence of a higher disregard will be crucial to encouraging private arrangements. Many non-resident parents at present wrongly believe that parents with care on benefit have deliberately chosen to apply to the CSA for child support, which they see as a hostile act. In the future an application to C-MEC will by definition be a hostile act, with all the risks that entails to the parties' relationship. There is also the risk that repealing section 6 will undermine community acceptance of the child support obligation.
18 There is also a wider issue of principle here. Clause 40 amends the liable relative rules in the social security legislation by removing the DWP's power to recover money spent on benefits where a liable parent has not provided child maintenance. This reform is portrayed in the Explanatory Notes (paras 357-363) as merely consequential upon the repeal of section 6, as these powers have fallen into disuse since the CSA began. However, the liable relative rules go back to the Poor Law Act of 1597 - they therefore predate section 6 by nearly 400 years. So it does not follow logically that the repeal of section 6 means the repeal of the liable relative rules so far as children are concerned. It is one thing to say that recovery of public expenditure on benefits is no longer a primary objective of the child maintenance system; it is quite another to say that benefits recovery has no place in the child maintenance system.
The changes to the child support formula
19 The second main change to the "basic principles" concerns the operation of the formula (clause 16 and Schedule 4). I have no strong views on whether the formula should use net income (as at present) or gross income (as in the future). The critical issue is how one defines income in the first place. As at present, this definition will be left to regulations. The argument is that using gross income allows easy use of HMRC data, so cutting down on delays. But HMRC does not use a single definition of income - there are some differences (although fewer than there used to be) between income for income tax purposes and income for NIC purposes. Income for tax credit purposes is defined differently again. Even the Australian child support scheme, which is much more closely integrated with the tax system, adds back in to the assessment some forms of tax-free income.
20 It must also be remembered that a non-resident parent may arrange (typically) his tax affairs in a perfectly legitimate way so as to minimise his tax liabilities - but does it follow that the child support system should operate on exactly the same basis? From a Treasury perspective there may also be sound fiscal reasons for encouraging certain types of capital investment by way of generous capital allowances - but again, how far should this impact on child support liabilities? Historically HMRC has devoted relatively few resources to investigating 'small fry', those self-employed individuals with modest incomes and skeleton self-assessment returns. Yet some of these cases may be very important in terms of child support liabilities. Are we seriously to expect that HMRC will readjust its investigative priorities?
21 It is well known that the CSA faces major problems dealing with some self-employed non-resident parents. The changes in the definition of income from the old scheme to the new scheme - especially the failure to accommodate dividend income and the absence of any anti-avoidance rules (e.g. on deprivation of income) within the formula - have already made that task more difficult. The risk is that the move to gross income data will merely exacerbate those problems. It is no answer to say that in such cases the parent with care may apply for a variation (or under the old scheme a departure). The variation/ departures process is a fundamentally unsatisfactory way of handling such cases, as the Judicial Committee of the House of Lords recognised in Smith v Secretary of State for Work and Pensions (2006).
22 The plan to move away from the 'hamster-wheel' effect of constant changes to assessments is very welcome. The proposal is to limit reassessments in-year to fundamental changes in circumstances (e.g. the child moves to live with the other parent) or changes in incomes of more than 25%. This figure will presumably be set in regulations under clause 17, but seems on the high side. The Australian child support scheme (which already works on gross incomes) allows in-year adjustments where the payer's income falls by at least 15%. An alternative to a universal lower threshold might be to have a lower threshold for those on lower incomes.
23 In passing I also note that so far as the "basic principles" are concerned there is no alteration to the position on the courts' powers to make awards of child maintenance and on the lack of permanence attached to consent orders (section 8 of the 1991 Act). As the Select Committee noted, it would be consistent with the shift to promote private ordering to give the courts the power to make awards of child maintenance in contested cases (in line with the formula). As both the Henshaw Report and the Select Committee argued, repealing the 12 month rule would also be in keeping with this philosophy.
The Bill and enforcement
24 As noted, Part 3 is mostly concerned with enforcement. Some of the amendments are not particularly contentious (e.g. separating out the driving disqualification and committal routes in clauses 27 and 28). But there are controversial changes to both the substantive and procedural law. C-MEC will be able to make an administrative order disqualifying a non-payer from holding or obtaining a travel authorisation (a UK passport and/or an ID card), subject to a right of appeal to the magistrates' or sheriff's court (clause 25). The exercise of such powers will almost certainly be challenged under both ECHR and EU law. The new sanction of curfew orders (clause 26) was not proposed by Henshaw and there is little evidence that they are deployed in other child support systems. One risk is that a curfew order might make it impossible for the non-resident parent to exercise contact (and I note that plans to impose curfew orders on residential parents who unreasonably deny contact were abandoned prior to the Children and Adoption Act 2006).
25 Procedurally the Bill represents a marked shift away from court-based enforcement to administrative recovery action. So for example C-MEC will be able to issue a liability order by administrative action (clause 23). The justification for this change is that applying to court is "a slow process that takes on average more than 100 days to complete" (White Paper para. 5.15). Yet it is unclear how far existing delays are due to the courts and how far they reflect e.g. adjournments caused by the CSA's inability to justify the accuracy of its figures. The CSA's existing record on accuracy hardly inspires confidence, which raises real issues of fairness for non-resident parents. One approach might be to stipulate that these powers do not come into force until CSA/C-MEC's overall accuracy rates on maintenance calculations attain a specified level.
26 There will be a right of appeal against the administrative decision to impose a liability order, but to an appeal tribunal and not a court. Puzzlingly, the appeal tribunal 'shall not question the maintenance calculation by reference to which the liability order is made' (new section 32K(3)). This prohibition appears to have been borrowed from the existing provisions relating to magistrates' and sheriffs' courts, where it makes obvious good sense (see the House of Lords' judgment in Farley v CSA (2006)). However, the same considerations do not apply in a forum which hears appeals against child support calculations. Moreover the right to challenge a liability order before an appeal tribunal adds to the confusing fragmentation of appeal rights under the 1991 Act.