Examination of Witnesses (Questions 40-59)
PROFESSOR STEPHEN
MCKAY,
MS ANNE
KAZIMIRSKI AND
MS MAVIS
MACLEAN
17 JANUARY 2007
Q40 John Penrose: I wanted to ask
about the variation and the 25% envelope and the on-going reassessments
of the assessment under the new process. I think Ms McLean, you
were saying that you viewed this relationship as closer to a taxation
relationship, an on-going need to be updated. Do you think that
the 25% variation figure before a reassessment gets triggered
is right, is too high? Should it be improved? Are you happy with
it?
Ms Maclean: I think it is on the
high side. I was quite surprised, I would have expected 20 rather
than 25, but I have no strong objections. I certainly have not
done any maths to support my view.
Q41 John Penrose: Any other thoughts
from either of the other two?
Professor McKay: I think the White
Paper makes the assertion that these incomes are quite stable.
In the experience of tax credits, where all we have is people
ducking and diving out of jobs, it is probably hard to call that
stable on a year to year basis. It would be nice to see some evidence
on how much variability there actually is. I have also got a slight
concern that we work with this complex tax system, NRPs may well
be on tax credits, and all these kinds of reassessments looking
forwards and backwards really being rather more complex than the
current sales, and tax credits have a kind of financial disregard
upwards (20,000, or up a percentage), so I can see it being a
lot more complex than it would appear to have been. I think people
do not tend to save from their income. If you have of good year,
which means you then have a higher chance for assessment probably
18 months to two years later, you will not have made any savings
from that and people will then be facing cash flow issues and,
for that reason, I think 25% is quite high.
Q42 John Penrose: That is also an
argument, not just for 25% being potentially too high, that is
also an argument about frequency of review and whether or not
it should be annual or quarterly. What you are saying there is
that with all the problems of tax credits, and, goodness knows,
I suspect every single one of us around this table has a stream
of people at our surgeries complaining about tax credits, that
is due to come and hit us as well?
Professor McKay: Yes. There is
certainly a danger that all those kinds of things that applied
to tax credits will apply exactly the same to this kind of approach
to calculating child support. You could obviously also have people
who are receiving child support and receiving child tax credits
as well, so all these kinds of complexities as to what their actual
financial situation is, and predictability, although I have not
done the maths as yet, you could still be having tax credit style
problems for 2008-09 onwards.
Ms Kazimirski: I do not have anything
to add to that.
Q43 John Penrose: A final question
here about whether or not the Chancellor should adjust liability
in the case of shared care. We sort of sidled up to that issue
with an earlier question. In the past, as I understand it, shared
care has resulted in some sort of impact on the assessments that
have happened and that, I think, has probably directly contradicted
the principle that you enunciate, Ms McLean, about whether people
should effectively pay for access to children. That was the way
it ended up being pursued. What is your view on that going forward
in the new system?
Ms Maclean: I worry about it,
for a number of reasons. Not because I do not wish to see parents
sharing the care of their children. Of course that is everybody's
aim. I worry about it because it has added to the complexity of
the scheme and I think that our attempts to simplify it are important
and worthwhile. I worry about it because evidence from Australia
shows that shared care arrangements tend to break down rather
more frequently and rather sooner than anyone had expected, and
I worry because there may be an impact on contact disputes, it
may stir up difficulties over contact, and that would be very
unfortunate.
Q44 John Penrose: Based on, I think,
most of your earlier comments, you would like to mentally separate
care, shared or not, from contact, and I think you were, all of
you, saying that you thought the CSA's role should not be to deal
with contact as part of an overall package of parenting, but that
package does not include the CSA's role, if I can put it that
way, or the CSA is only part of that. Is that a correct summary
of where you have got to?
Professor McKay: It is, but every
English-speaking country with a child support system makes some
allowance for sharing of care. They do it very differently, some
have low thresholds, some have high thresholds, but New Zealand,
Australia, Canada, most US states make some kind of child support
adjustment where care is shared, where the child is with typically
the father for a period of nights, on average. What is proposed
in the White Paper would seek no adjustment made for any kind
of sharing of care, and I think that that has potentially large
implications, potentially big effects, on the kind of maintenance
assessments that people have at the moment, and I think, although
we try and keep these things legally separate, these are kind
of equated. In the debate John Hutton did talk about the importance
that child support things are both enforced, and he talks about
in some senses it being a problem that they should be enforced,
so I do worry that it is a step into an area where every other
jurisdiction in the world has some kind of allowance made and
that we will not.
Q45 John Penrose: So how would you
ensure that it does not knock on into contact arrangements?
Professor McKay: It is a difficult
one.
Q46 John Penrose: That is the crucial
question, is it not?
Professor McKay: I think when
the Government talks about this, it tends to down-play the amount
of shared care that there is, because it bases it upon current
clients of the CSA, and the number of current clients of the CSA
who have to put up significant overnight stays is quite small,
whereas if you were to generalise this to the wider population,
then there is more sharing of care among the rest of the population
than there is for the CSA group. I think there is good evidence
that, where people do have some kind of shared care, they are
more likely to pay child support, they are more likely to take
an interest, so there is a kind of incentive argument for having
some kind of production. No doubt people end up having extra costs
for looking after the kids. Are we really saying we do not care
about the fact he has got extra costs looking after the kids,
we are only going to look at one person's costs? That is one thing
that actually is a big change. I have mixed views about it, good
and bad, but I certainly think it will arouse controversy and
dispute.
Ms Kazimirski: Either way, you
will still get problems. For example, the way that it has worked
in the past where an overnight stay reduces the payment, some
parents with care will say, "It should not because I actually
still feed the child before they go to the non-resident parent."
You will get this. As we said earlier, trying to be completely
fair and accurate and really reflect people's circumstances is
very difficult to achieve.
Q47 Natascha Engel: I want to ask
a bit about benefits, disregard and the balancing of the child
poverty aspect with the disincentive to work. We have had a bit
of expert evidence on what the consequences would be on each of
those aspects. I was just wondering what your opinion was with
regard to a full disregard on the parent with care claiming income
support and Jobseeker's Allowance?
Ms Maclean: I would love to see
full disregard, as you might guess. I think the arguments for
disregard are, again, making the scheme clearer and simpler. I
think research is planned to look at this more closely, but I
do think in the past the job-seeking behaviour of lone parents
has not been well enough understood, and I think the impact of
a small amount of money is not as powerful as people might think.
The main difficulty, again, drawing on the one-parent families
helpline information (and I am a trustee, so I am quite familiar
with their client group), there is very much a desire to work,
not full-time necessarily but in a suitable, part-time, flexible
way. The disincentives to work are to do with child care, they
are not to do with £10 or 20 a week, and I think that it
is very important and is not given enough consideration.
Q48 Natascha Engel: What about the
others?
Professor McKay: It looks as if
there is a full disregard within the tax credit system, but in
a sense there is a big unfairness between those who are out of
work and those who are in work, because for those who are in work
it does not affect their tax credits, which is one of the reasons
to go for a big disregard for income support. I suspect, once
the disregard got to about £40 a week, the number actually
getting more money would be relatively small. So I think, as long
as it goes up substantially, whether it goes up to £40 or
is a complete pass through is not going to make a huge amount
of difference. Hence, you do not want someone with £200 a
week maintenance being able to qualify for income support, which
seems to be his view, and I think that might well command attention,
but, again, the number of people that affects is relatively small.
So, I think a much larger disregard is operationally very similar
to a complete disregard.
Ms Kazimirski: There might be
some other associated benefits as well in terms of communication
between parents. I can think of quite a few situations where the
parents are on benefit, therefore the CSA get involved. From the
NRP's point of view, quite often he does not realise that is what
happens and he thinks the parent with care has taken him to the
CSA and that he is paying all this money and "She must be
rich with everything I am giving her", and does not actually
realise that the money is not being passed on. So there could
be some benefits to the relationships between parents, which then
affects the relationship with the children too.
Q49 Natascha Engel: If you all agree
to a full disregard, do you have any evidence that there would
be a positive impact on child poverty rates?
Ms Kazimirski: Not from my perspective,
but from other research that is definitely the case, yes.
Ms Maclean: There is clear evidence
that small amounts of money in that context do have a powerful
impact.
Professor McKay: There are two
issues there. One is will it incentivise work or not. If you can
get people into work, it obviously has a big impact on poverty.
Whether it will take someone on income support from below the
poverty line to above it, I do not think it would because it would
bring them a lot closer to it than they would be at the moment.
On the disregard question, I think there is no reason why this
should not happen pretty soon. I do not see the reason why it
needs to be delayed. It needs to be increased; it needs to happen
soon. You can argue about the amount of it, but I think there
is no reason why it should not be doubled, tripled and done very
quickly, and I think most people would support that.
Q50 Natascha Engel: Do you think
that a high level of full disregard would be an incentive for
the parent with care to apply to the Child Maintenance and Enforcement
Commission rather than going through to do private arrangements?
Professor McKay: Obviously there
is an issue here. When it is done by the CSA the Department knows
about the amount that is being paid, and the suspicion has always
been that there are these private arrangements out there that
are happening at the moment, so I suspect there is really an incentive
to bring those private arrangements out of the shadows into the
light. The anecdotal evidence is that people are saying good cause,
but they are actually receiving some maintenance. It would be
a good way of, hopefully, taking those out of the darkness into
the light really. I think that would be quite valuable news. Whether
there is a £10 disregard or no disregard, for most people
at the moment the incentive is to make a private arrangement and
not declare it, and that is not very good for the integrity of
the system.
Ms Kazimirski: It is hard to say
what the break-down will be, but I think there will probably be
some parents with care who have the CSA involved and the £10
did make a difference to them. If the CSA is no longer involved
automatically they may actually end up making a financial sacrifice
in order to maintain good relations, because then it would definitely
be clear to the non-resident parent that she is taking him to
the CSA and, therefore, he can blame her for it. I think there
will be parents in that situation as well.
Q51 Natascha Engel: We have had some
interesting ideas around guaranteed child maintenance and about
a time-limited guarantee scheme to ease parents with care through
the transition arrangements and into the new arrangements. Do
you think such a scheme would be a good idea, a bad idea, or are
you indifferent?
Ms Maclean: Any kind of guaranteed
maintenance would be fine by me, as much of it as you can have.
Professor McKay: I do not have
any strong views. As you say, it is about complexity. Guaranteed
maintenance has been recommended many times and never seems to
get very far; so I do not have any strong views.
Q52 Natascha Engel: Do you think
it is an area that the Government should look at again, or do
you think it has been done?
Professor McKay: The kinds of
countries where it works are different kinds of places, very different
kinds of governments, and often very different ways of assessing
and enforcing and all the rest of it. I do not really see much
mileage as a temporary measure. I think people want the system
to be worked out—sort out the paying and make sure people
do pay. Some of the parents we spoke to said that if maintenance
was guaranteed, it would take away the incentive to pay because
they know they are going to get the money anyway. I am the kind
of person who would rather see higher child benefit for everybody
rather than this wedge of guaranteed money for a particular group.
Ms Maclean: But it is something
that we have not tried, and there are all kinds of myths and uncertainties
about what in fact we have, so to try it in a temporary way would
at least be a good pilot exercise to see if it did all the terrible
things or all the wonderful things it was meant to do.
Ms Kazimirski: It might add complications
to the transition, certainly. It would be hard to understand what
is happening for parents anyway, so to add that as another factor,
I think, would complicate things.
Q53 Greg Mulholland: I was going
to ask a couple of questions about collection and compliance.
As you know, the White Paper states that it aims to collect maintenance
more efficiently, building on existing successful methods. I think
that is part of the White Paper that quite a few of us would question
as to whether the methods are particularly successful or not.
In terms of collection, do you think that C-MEC should provide
a maintenance collection service, and, if so, what kind of service
should that be to enable it to actually deliver the collection
that needs to happen for the system to work?
Ms Kazimirski: They should definitely
provide a collection service. If the suggestion is that everybody
should either be on some sort of maintenance direct type arrangements,
I think we have established that there is definitely still a role
for C-MEC to be collecting money. I think one of the suggestions
has been to perhaps move to deductions from earning and withholding
wages as being the standard way of collecting money. This goes
back to the point about what C-MEC needs to be. Does it need to
be the kind of hard-line extreme cases only: because if it is
not, if it is still supposed to respond to parents where it is
not actually to do with the non-resident parent not paying but
it is to do with the fact that they cannot agree the amount of
money, or the parent with care thinks that he can afford more,
and so on, if you go straight to deduction from earnings for them
you are going to antagonise many fathers, which I think we should
care about because it will affect their compliance. Even if reduction
from earnings makes it less likely for them to be possible to
be non-compliant, it is still an issue and, of course, it affects
their relationship with the parent with care and with the children.
If you end up going straight for a deduction from earnings, you
are not actually tailoring anything to the non-resident parent
and you are not taking into account their circumstances or their
past payment record at all. It ignores continued relationships
and circumstances.
Professor McKay: I think, when
the accounts came out in July, Tony Blair made a speech about
you cannot make an agency cost-effective, it has got to assess,
collect and enforce. At the time it did seem that people were
looking at this idea that the assessment function could be separated
from the other two, but that idea, which then had some merit and
was being discussed, seems to have vanished. If anything, C-MEC's
powers are going to be even wider than the CSA's, if we believe
the White Paper, particularly in terms of the enforcement side.
I think, because that was never really flagged up, there has not
been much discussion about the wisdom of having these things separated.
I suspect this is partly how things have vanished, basically,
whether assessment and collection takes place within the same
building or not, but it is a shame that kind of discussion was
never really had in any detail. For that reason, I do not have
any particularly strong views about whether it is better to have
them together or separate.
Ms Maclean: If you take the tax
analogy, which is my preferred way of seeing this operation, then
there is no difficulty in having the three functions together.
Q54 Greg Mulholland: In terms of
private arrangements, of course, there is a strong emphasis on
that. What incentives do you think there need to be for resident
parents to comply with those and at what stage should C-MEC get
involved and how should that process be triggered?
Ms Kazimirski: I think there probably
is a role for deduction from earnings. Again, if there is proof
of non-payment in a private arrangement, then the penalty could
be that it is straight to deduction from earning orders and there
is no sort of in-between and potentially straight to a charge,
where there would not be normally, going back to our earlier discussions.
Professor McKay: People are paying
debts typically, so it depends on their ability to pay, so you
need to look at things like how their income is changing and,
to some extent, their willingness to pay, and I think willingness
to pay would be enhanced if they have been subject to a discussion
to which they agree. There is a third aspect, which is that people
comply if they think, at the end of the day, they will be forced
to comply. Some will decide to string it out and go down that
route, but people are more likely to comply if they feel that
there is some kind of enforcement mechanism that is going to work,
because they are going to see it as essentially fruitless to continue
that. People need to believe this body has teeth and will use
those teeth and be effective. Compared to other areas of life,
a very high proportion of people buy a TV licence because they
believe that enforcement is effective, even though enforcement
probably is not very effective. Fine enforcement has been recently
pretty low. Again, that has been transformed over the last few
years. People need to believe that they will be made to pay up
eventually, which at present many of them do not think they will
be.
Ms Kazimirski: It will also encourage
parents with care to try it out as well.
Ms Maclean: I agree.
Q55 Mark Pritchard: Before Christmas
there were certain media headlines suggesting that one of the
proposals for non-payers might be to tag them and to seize their
passport. Given the recent events over the last 48 hours where
certain people who were tagged, who have perhaps done something
more serious than not paying for their child's maintenance, have
been able to abscond and have gone into the ether, I just wondered
whether, in principle, you think it would be right to have those
sorts of measures and whether you think they would work?
Ms Maclean: I do not think they
work and I do not think they are conducive to human dignity.
Q56 Mark Pritchard: Given the Government
resources, should we take it seriously? The Government, surely,
does not make mistakes for the sake of it and would not have made
a public statement to the media unless it was something they would
seriously consider. So, would you welcome it, or would you go
further and say you would condemn it even?
Ms Maclean: I find it very unappealing
and unhelpful.
Professor McKay: I think the reason
in the past the whole thing was slightly more attractive is because
one thing parents will say is that they are not paying maintenance
and yet they are having a foreign holiday, so that kind of stops
that, there cannot be any more foreign holidays. Other than that
kind of vengeance point, I do not see how it is supposed to make
people pay just because they are going to have to stay in and
are not going to travel. That does not have any link to actually
paying the money. It punishes them in some way but it does not
really give them the incentive to pay. I do like the passport
idea to just take away the ritual complaints about them going
off on a foreign holiday.
Ms Kazimirski: I cannot comment
on that.
Q57 Mark Pritchard: Do you think
the increased use of enforcement powers should be linked to improvements
in accuracy? I think it was the National Audit Office that suggested
that 50% of cases were inaccurate and, therefore, trust in the
whole system is undermined. Do you think there should be a progression
towards more enforcement powers based upon increased levels of
accuracy?
Ms Maclean: I think as you simplify
the system it is easier to be more accurate. You are moving in
the direction of greater competence, more effective assessments
and compliance.
Professor McKay: The two-thirds
figure that were inaccurate related to those cases taken to liability
orders in the Magistrates' Court. They took about 50 cases and
looked at those that went to the liability order stage and found
that two-thirds were either inaccurate or the procedure had gone
wrong. I think that raises questions about whether it is right
for the CSA not to have to go through that process but to take
over those kind of powers. I would like to believe that a simpler
system leads to a more accurate system, but there is nothing in
the CSA's experience so far. They have got a much simpler system
and accuracy is no better. That is partly to do with the way arrears
are calculated. If arrears occur it is difficult, under both circumstances,
to take a full decision, and the accuracy is no better now than
it was before. Certainly if C-MEC is supposed to take over the
role, not needing a liability order, we would want to at least
see that the level of accuracy was somewhat higher than it was
a few years ago.
Ms Kazimirski: I agree.
Q58 Mark Pritchard: Do you think,
in principle, the same organisation can, on the one hand, give
advice to parents and, on the other hand, enforce child maintenance
obligations?
Ms Maclean: I think the word "advice"
is the problem. I think C-MEC can give information and guidance
rather than advice.
Ms Kazimirski: On child maintenance
issues as well.
Mark Pritchard: Thank you.
Q59 Justine Greening: David Henshaw
was very clear in his report, suggesting that there needed to
be a clean break with the existing organisation administrators,
the Child Support Agency, and then a new organisation that would
administer new cases going forward. He was pretty adamant about
that and he did talk about this clean break, even to the extent
that the old organisation would pursue the old debt. However,
when the White Paper came out the new C-MEC organisation has to
do it all, so it is going to end up looking after the old system,
the sort of new system that we have at the moment, and then the
new, new approach that will be within C-MEC itself. Do you think
that the Government would have been better off following Henshaw
or can you see some merit in having it all under one roof?
Ms Maclean: I think a change of
name, clean break, not clean break—all of these issues are
relatively unimportant. I think the important issue is taking
time to look at the detail, look at how implementation will work,
to be less focused on the merit of legislation and more focused
on the actual nitty-gritty of how this is going to work; and how
it works will depend very much on resourcing, it will depend on
having good quality staff, it will depend on having proper IT
support and it will depend on having staff who are not stressed
and confused by excessive change. Your question is making me think
back to the Bristol Royal Infirmary Inquiry, which I sat on, which
was very much looking at the impact of rapid change on people
working in organisations and how very disruptive and depressing
it is and how dysfunctional it makes them. The staff have to feel
that they are trusted, properly resourced and equipped to do the
job that they are asked to do. What they call the organisation
is neither here nor there.
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