Conclusions and recommendations
1. In
light of the recommendations of our previous report, we are pleased
to note that the Government's proposals to reform the CSA include
its eventual wind-up (Paragraph 9)
2. The Government
needs to recognise, in planning the provision of advice services
and ensuring that these meet the needs of both parents, that parents
making private arrangements may well not enjoy equal bargaining
power, with the potential for such power imbalances to be reflected
in the terms of financial arrangements. We also ask the Department
to explain how the problems associated with the child maintenance
system before the Child Support Act 1991 will not simply recur
with the increased emphasis on private arrangements. (Paragraph
23)
3. The Committee agrees
that Jobcentre Plus has an important role in signposting lone
parents to child maintenance advice services. However, by definition
Jobcentre Plus will predominantly be dealing with lone parents
claiming benefits. There will be other separating parents on
low incomes with a need to have a child maintenance arrangement
in place who will not necessarily have contact with Jobcentre
Plus. The Government needs to find ways of reaching these other
groups, such as low income separating parents in paid employment,
to ensure that they are not at risk of being left without adequate
child maintenance arrangements (Paragraph 31)
4. The Committee accepts
that C-MEC should not be involved in questions of contact and
support for parenting by separated couples, but believes that
these issues are an inevitable and unavoidable part of many CSA
clients' lives. Ensuring that there is sufficient high-quality,
holistic, trusted and independent advice for both men and women
in all areas of the country is therefore an essential precondition
of success for the Government's proposals. It will be crucial
for parents who have separated, for example, to receive timely
advice on what is a reasonable settlement and how payments should
be set up. (Paragraph 57)
5. The Committee recommends
that whether the advice is provided by a single source or separate
organisations signposted from a central body, the availability
should be well known, and that the advice itself should be delivered
sympathetically. We are not convinced that C-MEC will be the right
organisation to deliver this advice (Paragraph 57)
6. The Committee recommends
that the Government ensures advice for separating parents is adequately
funded to provide both a telephone service and face-to-face meetings.
We recommend that the Government sets out its detailed plans
in this area at the very latest before the Second Reading debate
on the proposed Bill bringing in the child maintenance reforms
(Paragraph 61)
7. In our opinion,
it seems that if the Government is intent on moving clients towards
private agreements and away from using C-MEC then its decision
not to explore the use of the courts is inconsistent. The Committee
recommends that the Government reconsider the decision not to
allow courts to make a maintenance order unless both parties consent
(Paragraph 67)
8. The Committee is
concerned that the 12 month rule may not be working as intended
and recommends that if the Government keeps the rule then it needs
to find a way of addressing the weaknesses identified by Sir David
Henshaw and highlighted in the evidence we received, in particular
the confusion over the powers of the CSA to make maintenance assessments
even after a "clean break" settlement and the potential
manipulation of the 12 month rule by some self-employed non-resident
parents to lower their child maintenance payments (Paragraph 76)
9. The Committee believes
that without any powers to set standards, monitor or enforce it
is unclear what would motivate people to register private agreements
and particularly how the Government would encourage separating
parents, and especially those on low incomes, to do so. Parents
must have confidence that C-MEC will enforce any child maintenance
agreement which has been registered with it, if asked by either
parent. Past experience indicates that the only way these arrangements
can work is if both the parent with care and the non-resident
parent believe that C-MEC will take on their case and process
it speedily and efficiently if the arrangement breaks down. (Paragraph
86)
10. The Committee
is concerned that, whatever the merits of joint birth registration,
this highly sensitive matter is being tagged onto child maintenance
legislation when it potentially has wider ramifications through
the family law system. (Paragraph 95)
11. The Committee
is not convinced by the Government's argument that it is inappropriate
for C-MEC to collect maintenance calculated through voluntary
arrangements. The Committee believes that Government should be
doing all it can to facilitate private arrangements. In appropriate
cases this will mean enabling parents to come to private agreements
but providing an official collection service which provides both
payer and payee with an authoritative account of payments of child
maintenance made and received. (Paragraph 102)
12. The Committee
recognise that Deduction from Earnings Orders are a useful tool
to receive payments from non compliant non-resident parents.
We note that the DWP intends to test them as a first means of
collecting maintenance, even if the non-resident parent would
be willing to pay by another method. Although this proposal could
have merits, it would be a significant step and we ask the Department
to set out when and where it will "test" this and what
steps it will take to avoid antagonising non-resident parents
with good payment records who are asked to participate. We ask
that the lessons learned from this exercise be reported to the
Committee (Paragraph 107)
13. We request further
statistical information on the likely actual impact of the move
from net to gross income on different categories of parents (Paragraph
114)
14. The Committee
recommends that legislation should continue to provide for the
Secretary of State to have the power to make regulations, subject
to parliamentary approval, to adjust the standard percentage rates
in the new formula; and in addition that the rates should be reviewed
every five years. The Committee recognises that taking account
of the income of the parent with care would introduce unwanted
complexity into a child support system that is trying to be simpler
(Paragraph 117)
15. We agree with
the Government's intention to reverse the decision in the Smith
case and define gross income as being total income after the deduction
of capital allowances. However, we note this will leave the issue
open of how the parent with care can obtain sufficient information
to challenge low assessments, and ask the Government to set out
how it will address this problem (Paragraph 124)
16. We recommend that
more research should be carried out into the appropriate level
of income variation to balance operational efficiency and responsiveness
to individual hardship. There should be a legal duty placed upon
those non-resident parents who are involved in C-MEC cases to
report to C-MEC any change in income greater than or equal to
the set proportion. The Department should closely monitor how
effective C-MEC is in dealing with these cases promptly. (Paragraph
134)
17. The success of
the new assessment system will depend, in considerable part, on
the operational system for the transfer of information between
HMRC and C-MEC. We ask the Government to make it clear how the
process of data sharing will work in practice and to report the
evidence from any pilots that have taken place in testing the
systems to exchange information (Paragraph 139)
18. The Committee
recommends that there should be a clear, robust process of dealing
with well-founded applications for variations and appeals against
maintenance calculations where the parent with care believes that
the non-resident parent's maintenance assessment is based on incorrect
or misleading income data (Paragraph 145)
19. The Committee
recommends that the statutory child support system moves away
from the current system of overnight liabilities which causes
day counting and diary keeping by parents and constant readjustments.
In the Committee's view the ideal solution is that there should
be an initial agreement between the parents and C-MEC on the approximate
amount of time the children spend between the two households.
This should govern the assessment for the remainder of the year
and not be adjusted unless there are major contact changes. For
arrangements with close to 50:50 shared care the Government should
consider the case put by Sir David Henshaw for having no child
support liability at all between parents (Paragraph 162)
20. the Committee
recommends that informal payments should not be included in any
C-MEC maintenance calculations. However, if, as the Government
has stated, they are to be taken into account then there should
be clear advice on procedural matters and an unambiguous list,
prescribed in legislation, defining what counts as an informal
payment (Paragraph 167)
21. The Committee
recommends that the Department does not introduce a charging scheme
for applications to C-MEC. (Paragraph 174)
22. the Committee
is very concerned about the moral hazard which may be created
if section 6 is abolished, by allowing non-resident parents to
avoid their parenting responsibilities and by leaving parents
with care on benefits. We would urge the Government to research
whether similar simplification and operational savings could be
achieved, and the moral hazard avoided, through a minimum lower
limit where maintenance amounts below a very low level are not
pursued because the benefits are too small and the costs too great.
We also recommend piloting the removal of the requirement for
parents with care on benefit to use C-MEC in order to analyse
the effect it will have on them and on C-MEC's caseload and resources.
If the Government does remove compulsion nationally in 2008, appropriate
safeguards must be installed to protect vulnerable parents with
care on benefit. The Government should also be prepared for the
effect such a move will have in the short term on increasing the
burden on C-MEC's resources as parents with care look for advice
on their child support options (Paragraph 179)
23. The Committee
welcomes the Government's commitment to increase "significantly"
the maintenance disregard for parents with care on benefit. On
the basis of the evidence we have seen, we believe that a full
disregard would be a desirable, but bold, step, especially in
relation to the achievement of the Government's child poverty
targets. However, given the potential cost to the taxpayer, any
action should be preceded by a thorough assessment of the potential
positive and negative impact on work incentives of different levels
and types of benefit disregard, including percentage withdrawals
instead of fixed £ amounts and the effects of annual uprating
in line with prices or earnings. It should also include a proper
cost-benefit analysis, and we call on the Government to publish
and act on its results promptly (Paragraph 197)
24. The Committee
recommends that the Government should reassess the increase in
the size of the flat rate payment for non-resident parents on
benefit and it should instead be index-linked to inflation. The
Committee also recommend further research is carried out into
the effect this payment has on poverty among non-resident parents
and their families and indeed on the work load of CSA and C-MEC;
if there is found to be a significant negative impact, the Government
should consider abolishing this payment and introducing nil assessments
for non-resident parents on prescribed benefits (Paragraph 205)
25. The Committee
recommends that if C-MEC is granted powers to make administrative
orders then these should be accompanied by safeguards to ensure
against inaccuracy and to provide a swift, effective and independent
process for a right of appeal. The Government should therefore
set out what appeal methods it intends to introduce for C-MEC
customers (Paragraph 225)
26. The Committee
notes that section 2 of the Child Support Act 1991 already provides
that the Secretary of State must have regard to the welfare of
any child likely to be affected by any decision involving the
exercise of a discretionary power (e.g. such as whether to, and
how to, effect enforcement against a non-compliant, non-resident
parent). The Committee recommends that the Government reaffirm
that this requirement will still apply in the new scheme of enforcement
powers. Furthermore, the Committee has serious reservations as
to how far the proposal to publish on the web the names of non-resident
parents who have been successfully prosecuted, or non-resident
parents who have substantial arrears, is consistent with this
principle, given the potentially seriously detrimental effect
on individual children's welfare (Paragraph 229)
27. If C-MEC is to
concentrate on compliance and enforcement with severe sanctions
for non-resident parents who fail to pay their child support,
then the Committee recommends that another organisation provide
the advice services on levels of maintenance and shared care at
the point when parents separate. Such advice should be part of
a more holistic approach to relationship breakdown when children
are involved (Paragraph 234)
28. The Committee
doubts that many parents with care would wish to use the court
system to enforce child support liabilities. However, where there
are substantial arrears, and the CSA has failed to take effective
action to enforce those debts, then the Committee believes that
it would be consistent with the overall policy thrust of the Government's
reforms to allow parents with care the option to enforce such
debts through the courts in their children's name (Paragraph 240)
29. The Committee
is concerned that parents who will now have a choice to opt in
to C-MEC will not have the full information which they need to
make an informed decision as it is not clear how they would move
out of the system once they are in it. The Committee therefore
recommends that the Government states what the expected life of
a C-MEC order would be and under what conditions the case would
be closed or moved onto a private maintenance direct agreement.
(Paragraph 250)
30. We note that Sir
David Henshaw recommended that there should be a 'clean break',
with a new body to deliver the new system, and a residuary body
responsible for pursuing old debt. We are concerned that the Government's
proposals will in time mean that C-MEC is running three different
systems. This does not represent the clean break envisaged by
Sir David Henshaw. We fear that, given the experience of the
CSA, this will jeopardise the success of C-MEC. This means that
the transition should be planned with administrative efficiency
at its heart. We appreciate that the Government wants to focus
on support for the poorest families first. We are, however, concerned
at the CSA Chief Executive's comments that C-MEC may prioritise
the old scheme nil assessment cases. This approach may be misplaced
effort and result in little additional child maintenance for parents
with care. We would welcome clarification on this aspect of the
Government's proposals. (Paragraph 255)
31. We have seen no
evidence that, with CSA's record of serial IT failures, this third
attempt to create a new system of child maintenance arrangements
with the necessary IT support will be any more successful than
the first two. The Committee recognises that the proposed reforms
simplifying the child maintenance calculation does not necessarily
mean a simplified IT programme as has been demonstrated by the
current CSA computer system problems. The National Audit Office
report on IT projects, Delivering successful IT-enabled business
change, highlights the complexities of the technical issues around
joining new and old systems and we hope that the Department has
learnt from its past mistakes from its first two CSA IT systems.
Our predecessor Committee wrote in depth about these problems
and recommended that the DWP should be significantly more open
about its IT projects. In this light we recommend that the Government
publish detailed explanation of its plans for C-MEC's IT system
in an attempt to win public confidence before the work begins
(Paragraph 261)
32. We are disappointed
that having emphasised the importance of advice services in the
White Paper there is evidence that the Government has already
failed in explaining to current CSA clients what the potential
meaning of the White Paper is to them. This is a vulnerable client
group whose needs must be anticipated and met and we ask the Government
to address this urgently (Paragraph 264)
33. Given that the
level of arrears is still rising, we ask the Government to explain
in greater detail the changes in resourcing levels and processes
which it plans to introduce to turn the situation around (Paragraph
270)
34. The Committee
recommends that the DWP should develop an action plan to ensure
that the availability of compensation for maladministration (as
described in the Department's publication, Financial Redress for
Maladministration) is effectively drawn to the attention of potential
applicants. The Committee further recommends that the Secretary
of State be required to report to the Committee annually setting
out the full details of the sums paid in respect of alleged maladministration
by C-MEC, both under the scheme for Financial Redress for Maladministration
and through legal proceedings (Paragraph 281)
35. On balance, the
Committee recommends that the Department should make every effort
to collect debt owed to parents with care that can be proved to
be accurate. However, the Department should look in more detail
into the efficiency of collecting debt owed to the state, particularly
where the calculated amounts are questionable (Paragraph 285)
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