Memorandum submitted by Stephen Lawson
EXECUTIVE SUMMARY
1. Historically the problem has not been
the lack of enforcement powers available to the CSA but the failure
to use them. The White Paper does not show how the change of culture
will be achieved since it is not more powers that are required
but proper and effective use of the existing measures.
2. Administrative enforcement is likely
to result in substantial injustice especially in relation to recovery
of historic arrears.
3. The White Paper should have made provision
for compensation when dealing with the issue of "write offs"
where financial loss is caused by Agency maladministration.
4. The CSA claims that it owes no legal
duty of care to anyone. It claims the unique ability to make as
many mistakes as it wants causing financial loss to individuals
without any legal redress. The White Paper is silent with regard
to legal duties owed by C-MEC and it is presumed that the Government's
wish is to leave the position unchanged. This is not acceptable.
5. Collection of historic debt will saddle
C-MEC with the impossible problems of the past and will deflect
the new Commission from its role in collecting and enforcing current
maintenance payments as they fall due.
INTRODUCTION
6. I am a Solicitor of the Supreme Court.
I qualified as such in October 1984. I am a Partner in Forshaws
Solicitors LLP based in Warrington.
7. I represent both parents with care (PWC)
and non-resident parents (NRP).
8. I am a member of Resolution. I have been
involved in many Court actions against the CSA/Secretary of State
for Work and Pensions.
9. Because my predominant area of expertise
is in relation to "use of CSA powers" I intend to submit
evidence only in relation to questions 6, 7, 8 and 9.
Q.6—Approaches to enforcement
10. The CSA White Paper complains that the
problems facing the Agency are not the fault of the CSA—this
is not accepted. Just by way of illustration the problems start
right at the outset. If an NRP fails to return maintenance enquiry
forms it seems not to be the practice of the CSA to institute
any form of prosecution. An NRP who gives false or misleading
information is most unlikely to be prosecuted—indeed most
of the requests for information from the CSA are either made verbally
or without the appropriate warning. This means that an NRP can
give whatever untruthful response to questions without any fear
of prosecution. (See Regulation 3A Child Support (Information
Evidence and Disclosure) Regulations 1992).
11. The abject failure of the CSA to use
the powers available to it to obtain bank statements or to send
an inspector to discover information under section 15 of the Child
Support Act 1991 continues this culture of apathy.
12. It is unclear if the Government intends
to repeal in full the Child Support Act 1991 and ancillary regulations.
If it does then information and inspection powers must be retained.
13. The CSA already has in place all of
the necessary powers available to it to recover debts. The problem
is the reluctance to use the powers available. There is a fear
that the problems of the past will still be repeated in the future.
14. The Government says there is a culture
of non-payment—the Government/CSA can easily send out a
clear message that they will not tolerate failure to pay. Just
as a small illustration, outside the police station in Liverpool
are two sports cars that have been plastered with police stickers
to indicate that the cars have been seized because the owners
failed to pay tax and insurance. The CSA/C-MEC could send similar
"messages" by seizing and displaying vehicles taken
to pay child support arrears.
15. At present there is a reluctance to
use the powers available to the CSA to consider recovering arrears
from sources other than income. The CSA will not, as a matter
of course, use the powers available to them to ascertain information
about the resources of the NRP to enable a decision to be made
about recovery—eg if a debtor in a civil case owes money
a creditor will usually ask for evidence of the debtor's means
and will want to see copies of bank statements, building society
passbooks, life policy details, house equity details. The CSA
is systematically incapable of obtaining or processing this information
from capital. The drive to reduce administrative costs reduces
the incentive for the CSA to conduct forensic investigation. The
fear is that in the drive to reduce costs C-MEC will not make
appropriate forensic enquiries and the PWC will not be engaged
or consulted in the process.
Q.7—Shift to administrative enforcement
16. It is entirely appropriate to use a
deduction of earnings order (DEO) in respect of "administrative
enforcement" relating to recovery of maintenance payments
as they fall due. There are great concerns about any use of administrative
enforcement in relation to historic arrears. The justification
given by the Government for the abolition of Court-based enforcement
is not accepted.
17. The Government complains that the Liability
Order process is too slow. As a matter of law the CSA only have
to give an NRP seven days notice of an intention to apply for
a Liability Order. Once a complaint is issued in a Magistrates
Court a return date is issued very quickly—usually within
a week or two. The Liability Order process should remain.
18. The Auditor General has qualified his
opinion on CSA client funds accounts for each of the last 10 years
due to errors.
19. The National Audit Office 2006 report
(paragraph 4.24) reflected that 65% of the cases where a Liability
Order was sought were inaccurate. Why should C-MEC be given administrative
enforcement powers in respect of historic arrears when there is
such little confidence in the accuracy of existing calculations?
20. The CSA can already take up to 40% of
the net wages of an NRP by way of a DEO despite the incredible
hardship that may arise to an NRP and any new family. There is
great concern about the lack of policy and lack of right of appeal
in cases of hardship.
"Just as an example there is a case of an
NRP refuse collector who the CSA say should pay arrears of £3,000
at the rate of £74.63 a week by way of DEO. In another case
a barrister NRP, who owes £14,000 arrears, has been ordered
to pay at the rate of £12.75 a week. The refuse collector
is assessed under the "old" CSA scheme and the CSA assessment
is NIL—his income is so low that he is deemed too poor to
be required to pay maintenance yet the CSA administratively take
£74.63 a week in respect of arrears. There is no right of
appeal."
Administrative enforcement is arbitrary, made
without reference to ability to pay and is subject to no judicial
scrutiny.
21. It is recognised that the new Commission
will be a new organisation—but many of the staff will remain
the same. The additional pressure to recover money alleged to
be due may have the effect of making the new Commission staff
even less willing to listen to the concerns of NRPs than the CSA.
22. The attached Schedule (Schedule 1) provides
examples of some recent cases concerning the CSA, which illustrates
the inability of administrative officers to deal with cases sensitively
or professionally. Until C-MEC has a track record of trust and
accuracy administrative enforcement powers should not be given.
Q.8—Collectable debt
23. There are grave concerns that the issue
of debt has not been seriously addressed. The accumulated debt
is simply too big for most individuals to repay. NRPs with CSA
arrears of £30,000, £40,000, £50,000 or even more
are not uncommon. It is beyond the ability of most NRPs ever to
be able to pay—even by instalments. In any event most of
this debt is legally and practically unrecoverable. Prior to the
Summer of 2006 the CSA had no powers to obtain a Liability Order
in respect of debts that were more than six years old—see
Regulation 28 of the Child Support (Collection and Enforcement)
Regulations 1992. There are no proposals in the White Paper for
a change to this Regulation in respect of debt that arose before
the Summer of 2006.
Q.9—Write off powers
24. Paragraph 4.17 of the 2006 National
Audit Office report reflected that debt greater than six years
old was currently estimated at around £760 million and could
not be subject to a Liability Court Order. In many cases it seems
there has been Agency maladministration, which has caused financial
loss. The CSA should be taking proactive steps to make compensation
payments to PWCs who have lost money as a result of CSA maladministration.
Incidentally the Committee is probably aware of the fact that
the legal stance taken by the CSA is that it owes no "duty
of care" to anyone. The CSA claims to have the unique ability
to make as many mistakes as it wants, causing individuals financial
loss without having to pay any legal redress.
25. What is of more concern for the future
is how C-MEC intends to deal with this issue of historic debt.
The proposals to make some alterations to the figures (5.41 and
5.42 White Paper) are seen but no information is given about how
C-MEC intends to recover debt that it has no legal power to collect
(other than by DEO). Someone somewhere needs to make a brave and
realistic decision to resolve the historic debt issue otherwise
this debt will continue to overshadow the creation of the new
Commission. This decision needs to reflect:
— The impossible position in which
some NRPs find themselves. The maintenance arrears figure is realistically
too high to pay—in one case the CSA agreed a repayment schedule
over 200 years. Many agreements entered into now by the CSA will
take over 40 or 50 years to repay.
— The fact that the CSA has no
power to recover much of the historic debt more than six years
old.
— PWCs have been deprived of maintenance
that could and should have been collected. The issue of Compensation
for Maladministration should be addressed.
26. In principle there is no problem with
the CSA seeking to revalue historic debts—eg by converting
interim maintenance assessments (IMA) to full maintenance assessments
(FMA). But the logic that has been given is flawed. The Government
says (paragraph 5.41 White Paper) that IMAs acted as a penalty
for any NRP who failed to provide information about their circumstances.
There is no "penalty" for non-compliance if historic
punitive debts are simply converted to FMAs. The CSA has gone
through an enormous bureaucratic exercise for no benefit to anyone,
at an enormous cost to the taxpayer. Whatever was the point of
imposing an IMA if it is simply going to be converted to an FMA
retrospectively?
27. It is important to consider the practical
realities of "revaluing" historic debts. Firstly, is
it fair and just to a PWC to reduce the debt that is owed? For
many years the CSA will have regularly sent statements to the
PWC confirming the amount of arrears—as they grow year-by-year.
The PWC may have relied on this information without any indication
ever having been given that this debt was subject to a revaluation/reduction.
At no time has it been the policy of the CSA to advise a PWC that
an IMA could be revalued and/or reduced. Secondly, there have
been cases where IMAs, going back to 1993 have, in 2006 been converted
to FMAs. In many cases it is difficult to ascertain the financial
income of the NRP as it was in, say, 1993. It is virtually impossible
to obtain information such as housing costs as they were in 1993.
The CSA ends up having to accept a "guess" since inevitably
no one retains documents relating to their financial circumstances,
as they would have been in 1993. Any assessment backdated to 1993
can be nothing more than a "guess". Is this fair and
equitable to a PWC?
28. The CSA have, in December 2006, written
to say "The White Paper proposes reducing outstanding IMA
debt to 27% of current liability where data are not available
to allow an FMA". Once again this proposal indicates the
arbitrary and capricious intention in relation to historic debt.
There is concern that this proposal has not, in fact, been mentioned
in the White Paper and seems to be a recognition that the task
of accurately converting an IMA to an FMA is, in reality, impossible.
SCHEDULE 1
Case studies
— The CSA wrote to a happily married
man and said "we have sent you an enquiry form for child
maintenance with this letter ... this is because we have an application
for child maintenance from XXX who says that you are the parent
of YYY".
The man denied that he knew the mother of the
child concerned but his wife was most sceptical. He called for
an explanation but his enquiries were unresolved. Three letters
were sent to the branch office of the CSA dealing with the application
(Stockport). Each letter was ignored. It was only when a formal
claim for compensation was intimated that the CSA (the taxpayer!!!)
agreed to pay him £1,000 compensation and his legal costs.
No explanation was ever forthcoming about why the letter was sent
but it appears that the PWC made a general allegation that someone
with a similar name was the father of the child. The CSA then
recklessly wrote to him and identified him (without any evidence
at all) as the father.
— An NRP complained that he had
not received any notice of a Liability Order in respect of outstanding
maintenance that had been made against him. The CSA said that
there was nothing that could be done so he instructed me. A formal
application to Court was sent to set aside the Liability Order.
At the Court hearing the Presenting Officer admitted that the
Liability Order Application Notice had been returned by the Post
Office marked "gone away" but she declined to give this
information to the Court and proceeded to obtain the Liability
Order in any event. The application to set aside the Order was
successful. The CSA (the taxpayer!!!) was ordered to pay the NRPs
legal costs.
— On two separate occasions NRPs
have claimed that they did not receive notice of Liability Order
applications and only found out about the hearing after the order
had been made. Both NRPs complained to the CSA who said that there
was nothing that could be done—and in one instance insisted
that the bailiffs would seize his possessions. The correspondence
from the CSA said, "Although there is an application to set
aside the Liability Order granted, the order at this present time
is valid. As such the CSA are acting in accordance with the CSA
legislation in the process of recovering the outstanding debt.
Bailiff action has been authorised and will continue".
The NRP was also threatened with arrest by the
bailiff. An application was made to Court to set aside the Liability
Orders and both were set aside (the CSA again having to pay costs—and
agreed to make a payment to reflect the distress sustained by
the NRP).
— In 2005 the CSA wrote to an
alleged NRP and said "Following an application for child
maintenance from Miss X and our phone call to you, you told us
that you are the parent of YYY".
The NRP protested that he had never in fact received
a telephone call from the CSA as alleged and denied that he had
ever admitted that he was the parent of the relevant child. A
complaint was made to the CSA who admitted that this was a standard
letter that was sent out in these circumstances. Because of the
very serious nature of the allegations that were made in extraordinary
circumstances a letter was sent to a senior official within the
CSA to complain about the use of this standard letter.
— A year later, on the 19 October
2006, the CSA wrote to an entirely different NRP and used the
same standard letter stating, "Following an application for
child maintenance from Miss K and our phone call to you on the
5 October 2006 you told us that you are the parent of CS".
This letter was opened by the man's wife who
was extremely distressed that her husband had received correspondence
from the CSA and admitted to being the father of a child without
any reference being made to her. In reliance on this alleged admission
the CSA proceeded to make an assessment of maintenance after obtaining
information about wages from his employer and then proceeded to
intimate that it would make a deduction from earnings order. My
client tells me that no such telephone conversation ever took
place.
— The CSA made an application
to the Court for a Liability Order when it should not have done
so as maintenance was being recovered by a DEO (see section 33
Child Support Act 1991). When I asked the Presenting Officer why
the application was made (wrongly) she said, "I thought that
but the CSA told me to do it".
NOTE
I have written to the CSA to ask where payment
of Solicitors' legal costs appears in the CSA annual accounts.
I have been told that this is information I am not entitled to
know.
8 January 2007
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