Child Maintenance And Other Payments Bill - continued          House of Commons

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Clause 20: Deduction from earnings orders: the liable person's earnings

121.     This clause replaces subsection (8) of section 31 of the Child Support Act 1991, and inserts a new subsection (9). The intent of the change is to define what will be considered as 'earnings' for the purpose of deduction from earnings orders.

122.     Section 31 of the Child Support Act 1991 concerns deduction from earnings orders, and the existing subsection (8) provides that 'earnings' has such meaning as may be prescribed.

123.     The definition in the new subsection (8) will include the following as earnings:

  • wages or salary;

  • payments by way of pensions including any annuity payable for the purpose of providing a pension;

  • periodical payments which are compensation for loss of employment or reduced remuneration; and

  • statutory sick pay.

124.     The impact of this change is that all pension payments, whether as a result of a private or occupational pension scheme, will be included as earnings for the purposes of deduction from earnings orders.

125.     The new subsection (9) sets out that for the purposes of sections 31 and 32 of the Child Support Act 1991, any person paying a sum covered by new subsection (8) to a liable person should be treated as their 'employer'.

Clause 21: Current account deduction orders

126.     This clause inserts new sections 32A, 32B, and 32C, which relate to current account deduction orders, into the Child Support Act 1991.

127.     Section 32A enables the Commission to make a current account deduction order against a non-resident parent who has failed to pay child support maintenance. The order allows the Commission to collect regular deductions of maintenance from an account held by a non-resident parent with a deposit taker, which is not a joint account or a business account.

128.     Subsection (2) of section 32A sets out that both arrears and maintenance payments which will become due under the calculation in place can be collected through deduction orders.

129.     Subsection (3) allows a current account deduction order to be made even where there is an ongoing appeal against the maintenance calculation. This can only happen however in cases where the Commission concludes that the outcome of the outstanding appeal will not affect the amount of the liability covered by the order or, if the outcome of the appeal would have such an effect, the Commission still considers making the order to be fair in all of the circumstances.

130.     Subsections (4), (5) and (6) set out that the order will specify which current account it is made against and the date it has effect. The order will operate as an instruction to the deposit-taker to make deductions from the specified account and pay them to the Commission, and copies of the order shall be served on both the deposit-taker and the non-resident parent against whom it is made.

131.     Subsection (7) provides that the deposit-taker is under a duty to comply with the current account deduction order. However, it also protects the deposit-taker from any liability if they do not comply with the order during the seven day period beginning with the day the order is served on them.

132.     Subsection (8) provides, for the avoidance of doubt, that where regulations have been made under section 29(3)(a) of the Child Support Act 1991, the person liable to pay child support maintenance (the non-resident parent) is taken to have failed to pay if they have not paid it to, or through, the person specified in, or by virtue of, the regulations.

133.     Section 32B provides regulation-making powers to the Secretary of State with regard to the practicalities and procedure relating to current account deduction orders. The following paragraphs give examples of provision that may be made by the regulations.

134.     Subsections (2)(a) to (2)(c) of section 32B - the regulations may require that the order specifies the amount in respect of which it is made, the amounts to be deducted in order to meet liabilities, and the dates deductions are to be made.

135.     Subsection (2)(d) - the regulations may limit the rate of deduction under a deduction order. It is envisaged that an order will be limited to an amount which is a percentage of the non-resident parent's income. If the circumstances of a non-resident parent change it will be their responsibility to inform the Commission so that the amount in the order might be changed and the deposit-taker notified. Only amounts in credit will be deducted from an account.

136.     Subsection (2)(e) - the regulations may allow for certain circumstances when amounts of money held in a current account should be disregarded in respect of the deduction order. This could be if the money is being held on behalf of another person, for instance.

137.     Subsection (2)(f) - the regulations may include provision concerning the payment of money deducted by a deposit-taker to the Commission.

138.     Subsection (2)(g) - the regulations may allow the deposit-taker to deduct an amount from the non-resident parent's account towards its administrative costs.

139.     Subsection (2)(h) - the regulations may provide for notifications to be given to a non-resident parent who is subject to a deduction order regarding amounts deducted and paid under the order.

140.     Subsection (2)(i) - the regulations may require the deposit-taker to notify the Commission, within a specified period of time, if the account specified in the order does not exist, or if the non-resident parent who is the subject of the order has any other accounts.

141.     Subsection (2)(j) - the regulations may require the deposit-taker to notify the Commission, within a specified period of time, if a non-resident parent subject to a deduction order closes their current account or opens a new account.

142.     Subsection (2)(k) - the regulations may allow non-resident parents to apply to the Commission for a deduction order to be reviewed, in certain circumstances, and may provide for how the Commission is to carry out such a review.

143.     Subsection (2)(l) - the regulations may allow the Commission to vary an order. Regulations will prescribe the circumstances when this might occur, for example, as a result of a review, or if some of the arrears have been settled.

144.     Subsection (2)(m) - the regulations may provide powers similar to those in section 32A(7) in relation to the variation of an order, whereby although the deposit-taker has a duty to comply with the order as varied, they will not be liable for non-compliance during the first seven days from being given notice of the variation.

145.     Subsection (2)(n) - the regulations may provide that an order will lapse in prescribed circumstances. This might include, for example, provisions that an order will lapse if the non-resident parent no longer holds a current account with the deposit-taker to whom the order was directed.

146.     Subsection (2)(o) - the regulations may provide for an order to be revived in certain circumstances. This could be where it has lapsed because the non-resident parent has agreed to make payments but then defaults on those payments.

147.     Subsection (2)(p) - the regulations may make provision allowing or requiring an order to be discharged.

148.     Subsection (2)(q) - the regulations may require the Commission to give notice to the deposit-taker in the case of an order lapsing or ceasing to have effect.

149.     Subsection (3) provides regulation-making powers to the Secretary of State, with regard to the priority of a current account deduction order and:

  • any other current account deduction orders in place;

  • any other type of order which makes deductions from the same current account; and

  • any diligence (done in Scotland) against the same current account.

150.     Subsections (4), (5) and (6) allow the Secretary of State to provide by regulations that any person affected should have a right of appeal to a magistrates' court (or, in Scotland, the sheriff) against a current account deduction order, or against any decision made by the Commission following an application for a review of the order. On such an appeal, the magistrates' court (or, in Scotland, the sheriff) is prevented from questioning the maintenance calculation by reference to which the deduction order was made. Regulations may include provision with respect to the period within which an appeal must be made and the powers of the magistrates' court (or, in Scotland, the sheriff) in relation to any such appeal.

151.     Section 32C sets out that it will be an offence for a person not to comply with the requirements of a current account deduction order or any designated regulation under section 32B. A person found guilty of such an offence may be liable for a fine. However there is a defence if the person can show that all reasonable steps were taken to comply with the order or regulation.

Clause 22: Lump sum deduction orders

152.     This clause inserts five new sections 32D, 32E, 32F, 32G, and 32H into the Child Support Act 1991. These sections relate to lump sum deduction orders, which enable the Commission to collect payments from the accounts of non-resident parents. Lump sum deduction orders, however, may be used only to collect arrears and not regular maintenance. They will not be used in relation to current accounts, joint accounts or business accounts.

153.     Section 32D enables the Commission to make an interim lump sum deduction order if it appears to it that a non-resident parent has failed to pay an amount of child support maintenance and an amount of money to which subsection (2) applies, is due or accruing to the non-resident parent from a third party.

154.     Subsection (2) applies to any amount that:

  • is held in credit in an account with a deposit taker, that is not a current account, a joint account or a business account; or

  • is of a prescribed description. Regulations will set out the amounts which are of a prescribed description. They may, for example, prescribe an amount due to a non-resident parent which is held by a solicitor or licensed conveyancer following the sale of a property.

155.     Subsection (3) sets out that an interim lump sum order will be directed at the third party in question and will specify the amount of arrears in respect of which the Commission intends to make a final lump sum order. While in force, the order will operate as an instruction to the third party not to do anything that would reduce the amount to which subsection (2) applies, so that it becomes less than the amount of arrears stated in the order. If it is already less, it instructs the third party to do nothing which would reduce it further.

156.      Subsection (4) provides that where a non-resident parent has more than one amount due or accruing to them from a third party, the instruction not to do anything to reduce the amount will apply to the total amount held.

157.     Subsection (5) allows the instruction not to do anything to reduce the amount to be subject to prescribed exceptions. Provision may be made to make an exception in circumstances where, for example, the non-resident parent requires a payment to be made to prevent unnecessary hardship.

158.     Subsection (6) allows an interim lump sum deduction order to be made even where there is an ongoing appeal against the maintenance calculation. This can only happen however in cases where the Commission concludes that the outcome of the outstanding appeal will not affect liability for the amount covered by the order, or if it will have such an effect, it still considers making the order to be fair in all the circumstances.

159.     Subsection (7) requires the Commission to serve a copy of the order on the non-resident parent responsible for the arrears and the third party at which it is directed.

160.     Subsection (8) provides that the order will come into force at the time it is served on the third party at which it is directed.

161.     Subsection (9) stipulates when an interim order will cease to be in force. It will be the earliest of the following:

  • when the prescribed period ends;

  • when the order lapses or is discharged, which may be where, for example, the non-resident parent has paid their arrears, or they have made representations to the Commission which then chooses to discharge the order; or

  • when a final lump sum deduction order is served.

162.     Subsection (10) provides, for the avoidance of doubt, that where regulations have been made under section 29(3)(a) of the Child Support Act 1991, the person liable to pay child support maintenance (the non-resident parent) is taken to have failed to pay if they have not paid it to or through the person specified in, or by virtue of, the regulations.

163.     Following the making of an interim deduction order, the Commission can decide whether to impose a final deduction order. Section 32E provides powers to enable the Commission to do this.

164.     Subsection (1) of section 32E stipulates that a final deduction order can only be made if an interim one is in force, the prescribed period for the making of representations has passed, and the Commission has considered any representations made to it, for example, by the non-resident parent.

165.     Subsection (2) sets out that the order will be directed at the third party at which the interim order was directed and will specify the amount of arrears.

166.     Subsection (3) provides that the amount of arrears specified in the final deduction order must not exceed the amount specified in the interim order less any of those arrears which have subsequently been paid by the non-resident parent.

167.     Subsection (4) allows a final order to be made where there is an ongoing appeal against the maintenance calculation. This can only happen however in cases where the Commission concludes that the outcome of the outstanding appeal will not affect liability for the amount covered by the order or, if it will have such an effect, the Commission still considers making the order to be fair in all the circumstances.

168.     Subsection (5) requires the Commission to serve a copy of the order on the third party at which it is directed, and the person liable for the arrears to which it relates.

169.     Subsection (6) provides for the order to operate, during the relevant period, as an instruction to the third party not to do anything that would reduce the amount to which section 32D(2) applies so that it becomes less than the amount of arrears stated in the order, or if it is already less, it instructs the third party to do nothing which would reduce it further.

170.     Subsection (7) provides that where a non-resident parent has more than one amount due or accruing to them from a third party, the instruction not to do anything to reduce the amount will apply to the total amount held.

171.     Subsection (8) allows exceptions to subsection (6) to be prescribed.

172.     Subsection (9) sets out that once the relevant period has ended, the order will instruct the third party to make a payment to the Commission of the lesser of the amount of arrears specified in the order or the amount to which section 32D(2) applies that is due or accruing to the non-resident parent (and if there is more than one amount, the total of those amounts).

173.     Subsections (10) and (11) define the 'relevant period' as being from the date the final order is served to the end of the period of time during which an appeal can be brought by the non-resident parent. If an appeal is brought, the relevant period ends when it has been concluded and any further period to appeal has passed.

174.     Section 32F provides for a lump sum deduction order to continue to have effect, where the deduction made does not satisfy the outstanding liability, for example, if the amount deducted is less than the amount of arrears specified in the order.

175.     Subsection (2) of section 32F states that the lump sum deduction order will remain in force until the relevant time, and operate as an instruction to the third party to pay the Commission any amounts to which section 32D(2) applies (up to the amount specified in the order that is still outstanding) and not to do anything else that would reduce the amount held. For example, any further money deposited into an account held with a deposit taker will be subject to the order and should be paid to the Commission.

176.     Subsection (3) allows the instruction not to do anything to reduce the amount held to be subject to prescribed exceptions. Provisions may be made to make an exception where, for example, the non-resident parent requires a payment to be made to prevent unnecessary hardship.

177.     Subsection (4) defines 'the relevant time' for the purposes of this section as meaning until one of the following occur:

  • the remaining amount is paid;

  • the order lapses or is discharged; or

  • a prescribed event occurs or prescribed circumstances arise.

178.     Section 32G provides regulation-making powers to the Secretary of State with regard to the practicalities and process relating to lump sum deduction interim and final orders. The following paragraphs give examples of provision that may be made by the regulations.

179.     Subsection (2)(a) - the regulations may make provision for conditions that are to be disregarded when determining whether amounts to which 32D(2) applies are amounts due or accruing to the non-resident parent.

180.     Subsection (2(b) - the regulations may make provision for the payment to the Commission of sums deducted under a lump sum final order.

181.     Subsection (2)(c) - the regulations may allow the third party who deducts and pays an amount under a lump sum deduction order to deduct an amount towards administration costs.

182.     Subsection (2)(d) - the regulations may provide for notifications to be given to the non-resident parent who is subject to a lump sum deduction order regarding the amounts deducted and paid under the order.

183.     Subsection (2)(e) - the regulations may require the third party at which the order is directed to supply prescribed information to the Commission or to notify them if a prescribed circumstance occurs.

184.     Subsection (2)(f) - the regulations may allow the Commission to vary an order. They could include, for example, provision that the Commission may vary an order if some of the arrears have been settled.

185.     Subsection (2)(g) - the regulations may provide that an order will lapse in prescribed circumstances.

186.     Subsection (2)(h) - the regulations may allow an order which has lapsed to be revived in certain circumstances. The regulations may provide that an order may be revived if it has lapsed because the non-resident parent has agreed to make payments but then defaults on those payments.

187.     Subsection (2)(i) - the regulations may allow or require an order to be discharged, for example, where the arrears have been paid in full.

188.     Subsection (3) of section 32G prevents an order being varied to result in an increase in the amount of arrears stated in the order.

189.     Subsection (4) provides that regulations may provide that, in certain circumstances, where an interim or final lump sum deduction order is in force, the third party at which the order is directed must obtain the consent of the Commission before doing anything which would reduce the amount to which section 32D(2) applies.

190.      Subsection (5) provides regulation-making powers to the Secretary of State, with regard to the priority of a lump sum deduction order and:

  • any other lump sum deduction orders in place;

  • any other type of order which provides for payments to be made by the same third party from amounts due or accruing to the person liable for the arrears; and

  • any diligence (done in Scotland) against amounts to which a lump sum order relates.

191.     Subsection (6) provides regulation-making powers to the Secretary of State to provide a right of appeal against the making of a lump sum final order, to a magistrates' court (or, in Scotland, the sheriff).

192.     Where regulations include the matter mentioned in subsection (4) (requiring the Commission's consent before certain payments can be made from the amount held), regulations under subsection (7) may provide for a right of appeal against the withholding of that consent.

193.     Subsection (8) prevents the magistrates' court (or, in Scotland, the sheriff) hearing an appeal against the order being made, from questioning the maintenance calculation from which it is derived.

194.     Subsection (9) provides that regulations regarding the appeals against the order being made, or the Commission withholding consent, may include provisions regarding:

  • the length of time a non-resident parent has to make an appeal; and

  • the powers of a magistrates' court (or, in Scotland, the sheriff) with respect to an appeal.

195.     Section 32H provides that it will be an offence for a person not to comply with a lump sum deduction order or a designated regulation. A person found guilty of such an offence will be liable for a fine of up to level 2 on the standard scale (£500). However, there is a defence if the person can show that all reasonable steps were taken to comply with the order or regulation.

Clause 23: Administrative liability orders

196.     This clause inserts sections 32I and 32J into the Child Support Act 1991. This introduces a new liability order which will be made administratively by the Commission. The order will effectively certify the amount owed by the non-resident parent, and will be the first step to enforcement action (e.g. bailiff action). There will no longer be a need to apply to the courts for a liability order.

197.     Section 32I enables the Commission to make an administrative liability order against a non-resident parent if they have failed to pay an amount of child support maintenance due.

198.     Subsection (2) of Section 32I allows an administrative liability order to be made in respect of an amount of maintenance arrears where there is an ongoing appeal against the maintenance calculation. The administrative liability order can only be made in such circumstances if the Commission concludes that the appeal outcome will not affect the amount of arrears stated in the order, or if it will, it still considers that making the order is fair in all the circumstances.

199.     Subsection (3) prevents the order from coming into force until the end of the period during which an appeal can be made, and if an appeal is made, until the appeal proceedings have been concluded and any period during which a further appeal may ordinarily be brought has ended.

200.     Subsection (4) provides for the avoidance of doubt, that where regulations have been made under section 29(3)(a) of the Child Support Act 1991, the person liable to pay child support maintenance (the non-resident parent) is taken to have failed to pay if they have not paid it to, or through the person specified in, or by virtue of, the regulations for their case.

201.     Section 32J provides regulation-making powers to the Secretary of State with respect to the practical process regarding administrative liability orders.

202.     Subsection (2)(a) of section 32J - the regulations may make provision about the form and content of an administrative liability order.

203.     Subsection (2)(b) - the regulations may prevent the liability order coming into force if, before it does, the non-resident parent pays in full the arrears covered by the order.

204.     Subsection (2)(c) - the regulations may allow the order to be discharged. The regulations may provide, for example, that an order may be discharged if the non-resident parent pays off all of the arrears.

205.     Subsection (2)(d) - the regulations may enable an order to be revived. The regulations may provide, for example, that an order may be revived if a non-resident parent agrees an arrangement to pay off the arrears, but then defaults on the arrangement and does not pay.

 
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Prepared: 8 November 2007