Another couple of issues have been raised about how the much-diminished statutory scheme will work in the future. These have to do with finding out about the earnings and assets of some of those who are the most difficult to deal with. Under the present regime, the CSA can have regard to evidence about people’s assets and lifestyle that suggests that their income is not what they say it is. My understanding is that the Government propose to remove the effect of two regulations that achieve that at the moment. I believe that they are regulations 18 and 20 of the child support regulations. That, too, would be a mistake, because it would enable people to construct their affairs in a particular way.

11 July 2012 : Column 114WH

Regardless of gender, it is very frustrating for the parent with care, who is struggling, to see the other parent living what appears to be a fairly affluent lifestyle, yet able to present official records suggesting that they do not have the money to pay for their child. That makes people angry, but it often has to do with the attitude of the partner. The Government should reconsider that.

Fundamentally to take away the system and say, “We want people to make their own arrangements,” especially if they will not be legally enforceable, is a mistake and underestimates the difficulty of making those arrangements. Furthermore, that is happening at a time when changes to legal aid may make it harder for people to obtain legal advice so that they can turn the arrangements into more formal ones, and to obtain advice on what their rights are. Sometimes—perhaps not always but sometimes—informal agreements are not very good ones. Let us say that one parent says to the other, “I’ll give you 20 quid a week. That’s fine. Just don’t shop me to the CSA.” I know people who have been through that. The weaker partner, the one who has perhaps traditionally been quite afraid—I am thinking not just of domestic violence as it is narrowly defined—may well accept that when actually it is grossly unfair. People need proper support. I am not convinced that the £20 million that is talked about will be sufficient to put in place for people the level of advice, support and mediation that will be required if the Government press ahead with their proposals.

It is regrettable that, because the Government have framed the question in the way that they have and made this assertion—created this straw man—about the CSA being the cause of so much family discord, that will lead them into a situation in which even fewer children will get maintenance.

Mr Gregory Campbell (East Londonderry) (DUP): The hon. Lady is touching on a very important point. Obviously, the position will differ throughout the United Kingdom, but I have found through experience that the turnover of staff at the Child Support Agency is pretty significant, given the difficult task that many of them face. Does the hon. Lady agree that additional training of staff coming into the agency would go some way towards trying to deal with what are very emotive and difficult problems and could help alleviate the issues to which she has just alluded?

Sheila Gilmore: I thank the hon. Gentleman for his intervention. I agree. Obviously, we want staff to be well trained, given that they are dealing with very difficult situations. My point was that, if the official agency is to be shrunk to the extent that appears to be the case and people are to be largely discouraged from going down that route, on the assumption that it will be relatively easy for them to reach family-based agreements, that flies in the face of the reality of the situation that many people find themselves in after separation. I am referring to the fact that it is very difficult to conduct these negotiations and that that will allow people who just want to walk away to do so even more easily than they can at the moment. If the answer is to put in support services, they have to be put in at a level that will be effective. Up and down the country, people know that there are often waiting lists to get support and advice

11 July 2012 : Column 115WH

and that mediation is not necessarily easily available—and mediation itself has a cost. Not all mediation services are offered free to users.

It is important that we do not throw the baby out with the bathwater and that a generation of children do not lose out as a result of these proposals.

2.58 pm

Sheryll Murray (South East Cornwall) (Con): It is a pleasure to speak under your chairmanship, Mr Weir. I congratulate my hon. Friend the Member for Loughborough (Nicky Morgan) on securing this exceptionally important debate. It is on an issue that spans all constituencies. I cannot imagine being able to find an hon. Member who has not had many letters and e-mails about the Child Support Agency. The issues that parents face when claiming or being claimed against are massive; this is such a complex issue on both sides of the coin. I am sure that all hon. Members will agree with me when I say that one answer does not fit all, as every incident is so case specific; and it is near impossible to attain the best solution for everyone, especially when one law applies to all. I agreed with the Under-Secretary of State for Work and Pensions, my hon. Friend the Member for Basingstoke (Maria Miller) when she said that the child maintenance system was “broken”. I am pleased that the Government are taking action to reform the system, which is unworkable in most cases.

Caroline Nokes (Romsey and Southampton North) (Con): Does my hon. Friend agree that a frustration our constituents often face, whether they are the parent with care or the non-resident parent, is that they find it very hard to make their voices heard by the CSA, or indeed anyone?

Sheryll Murray: I thank my hon. Friend for highlighting that important point. I would like a formal mechanism through which parents can share experiences and suggestions with the Government and the CSA. A kind of CSA users forum or a panel made up of non-resident parents and those with care could be initiated to feed back their experience regularly to Government. That would enable the CSA to improve its performance for parents with care and non-resident parents.

A major issue seems to be the CSA’s use of the deduction of earnings system. Non-resident parents complain that the CSA does not adequately monitor changes in their income or give them sufficient notice that a deduction of earnings is taking place. Deduction of earnings comes out of the non-resident parent’s pay before they see it, and the payroll department cannot make changes if anything is incorrect. Nothing can be done if an error has been made; the person paying the money has to claim it back and prove that errors were made, which can take years.

An absent father who lives in my constituency has never missed a payment. He was following the old rules, and then the departure was granted and he went on to the new rules. The CSA now says that he has arrears of £8,000, although he has never missed a payment. There appears to be a catalogue of errors, which are being investigated, including putting the wrong child’s name on correspondence, which causes unnecessary angst.

11 July 2012 : Column 116WH

The CSA is now taking £400 out of his wages per month for one child, which is ridiculously high. Because that money comes out of a deduction of earnings, the father has no say over the amount taken out—at one point, it increased considerably with no explanation. The situation has caused untold stress to him and his family, especially when the paperwork says that he should pay £42 a month.

Outstanding child maintenance arrears increased by almost £1 billion between December and March. If net weekly profit is over £100, £5 plus a percentage of weekly income in maintenance is payable. That may help to explain the complaint that non-resident parents often try to avoid paying child maintenance. The Government recognise that, and the Child Maintenance and Enforcement Commission has recommended a new scheme, which is at consultation stage. It would use HMRC-sourced gross annual income for the income child maintenance calculation. That method would reduce costs to business by £0.8 billion.

A major difficulty for the CSA occurs when the non-resident parent is self-employed. Self-employed status means that it is much more challenging to obtain accurate figures. Money cannot be taken at source or from a deduction of earnings. A case in my constituency has taken approximately 14 years. The parent with care is owed a considerable amount of money. The absent parent owns a number of properties, and a charge should be taken on his properties. Allegations have been made—I cannot confirm or deny them—that the absent parent has put his accounts into his partner’s name, so it appears as if he has no assets. I obviously do not know whether that is true, but it is clear that it is not a straightforward case.

Sheila Gilmore: The circumstances the hon. Lady describes are familiar to me, but would she not concede that such difficulties existed before the CSA and there would undoubtedly be difficulties whoever enforced decisions? Such cases were always hard to pursue, because people could do exactly as she describes.

Sheryll Murray: I accept what the hon. Lady says, but I am sure that we can do something with the system to ensure that there are not such anomalies and long-standing cases. It has been 14 years and there is still no conclusive result. The situation needs to be addressed.

I must express my concern that in such circumstances, the only option left open to parents with care is variation mechanisms, such as lifestyle inconsistency tribunals, and the Government have announced their intention to scrap them. If the last line of defence for parents with care is removed, what hope is there for justice to be done and for children to get the money they are owed? Some non-resident parents are engaged in practices that, if this were income tax and not child maintenance, would be seen as tax evasion. I urge the Government to think again and ensure that parents with care have adequate opportunities to appeal against obviously perverse CSA assessments.

In another constituency case, the absent parent lives in a caravan, which is not an official registered address. That completely throws the normal process off balance, because the CSA has to send out officials to identify the tenant. In that case, the non-resident parent denied their identity to the CSA and had to be photo-identified

11 July 2012 : Column 117WH

by the parent with care. That process has taken months. The CSA should be equipped to deal with unusual situations. The person concerned has asked for face-to-face meetings, but is being ignored. I have even visited the regional CSA centre with my caseworker to discuss long-standing cases—the regional manger of my centre was a classmate of mine from school.

The CSA costs the public £450 million, and a typical case costs the taxpayer £25,000. Reform is desperately needed, but we must be exceptionally careful because botched reforms by the previous Government cost almost £1 billion, left thousands of families in hardship and were deemed one of the greatest public sector disasters of recent times. I am glad that we have a Minister and a Government who understand that reform is necessary and a priority, and that we have learned the lessons from the previous Government’s time in office.

Mr Mike Weir (in the Chair): Time is marching on. There are four Members left to speak. I recommend trying to keep to seven minutes each.

3.7 pm

Mr Robert Buckland (South Swindon) (Con): It is a pleasure to serve under your chairmanship, Mr Weir. I congratulate my hon. Friend the Member for Loughborough (Nicky Morgan) on securing the debate. I will not repeat the excellent points made by the speakers so far, but will simply use a couple of examples from my casework to illustrate two recurrent problems from which the CSA suffers and which need to be addressed as part of the reform process, as we move to 2013 and that all-important change.

More than 4,000 families in Swindon use the CSA to recover maintenance payments. In my constituency, £6.9 million is owed in arrears—the highest figure in the south-west—so the number of parents, either with care or non-resident, who come to me, as a last hope in many cases, because of the problems they are experiencing, is no surprise. I will use two examples: one of a non-resident parent and one of a parent with care.

First, Mr D, the non-resident parent, was on tour with the Army in Afghanistan for six months. Prior to his tour of duty, he informed the CSA that it meant that he would be away and therefore would technically not be a shared carer, because he would see the children for fewer than the required 52 days. By way of a court order, he has the children for approx 70 days a year with split holiday time. He told the CSA, went on his tour of duty and came back to find that the CSA had finally acted and presented him with a large bill for arrears.

That is not acceptable. The least courtesy we can offer to serving members of the armed forces is to deal promptly when they provide information to the CSA, rather than reward them with a massive bill on their return. Mr D accepts that his tour of duty means a reduction in shared care and that consequences follow, but really, more must be done to improve the quality of how we deal with cases such as his. I do not believe that he and many others should be penalised in that way for serving and representing their country. Active service should be taken into consideration when such issues are being determined.

There is a broad-brush approach that does not help anyone. I find it hard to believe that no mechanism can be found to deal more sensitively with payment changes

11 July 2012 : Column 118WH

for serving military personnel. This is an ongoing problem, not just for Mr D but for countless serving military personnel, because they never know when they might be redeployed. I urge the Minister to consider a more flexible approach in those circumstances, so that we can do better by our armed forces. I have already raised Mr D’s case with the Minister and I am grateful to her for corresponding with me about it. Today I make a heartfelt plea, not just on Mr D’s behalf, but on behalf of thousands in the same position.

My second example illustrates what I regard as a poor use of enforcement powers. Miss C is a parent with care of a young child. She first contacted the CSA in 2006, but is yet to receive any money. She has had liability orders and has had the non-resident parent taken to court on two occasions, but still she has received nothing. Her bitter experience has taught her that the powers available to the CSA are not being used strongly enough. Those powers include the removal of driving licences and, yes, imprisonment. At the moment the maximum sentence for non-payment is six weeks, but there are clearly cases where that is an insufficient deterrent and maximum term, and it seems the courts are slow to remove driving licences or impose such sentences. There must be stricter penalties for evading responsibilities. More people are being imprisoned for animal cruelty—itself a serious offence—than for non-payment of child maintenance.

Miss C’s former partner is of no fixed abode, as in the example cited by my hon. Friend the Member for South East Cornwall (Sheryll Murray), and works in what I shall describe as an irregular way, for cash payment. I understand that it is proving very difficult for the CSA to trace and track activities of that nature, but other powers are available in such circumstances and they are not being adequately used. I urge that a different approach be taken with persistent non-compliance of this nature—we are talking about six years. There should be more automatic powers available to the successor body to the CSA to freeze and remove money from bank accounts, where available, and to impose restrictions on holding passports and driving licences, without the need for costly and cumbersome court proceedings.

In the years since its creation, the CSA has become an organisation that, despite the best efforts of many of its employees, is still failing far too many parents with care and non-resident parents. I urge the Minister to do everything she can to ensure that the reforms address some of the issues raised today.

3.13 pm

Caroline Nokes (Romsey and Southampton North) (Con): It is a pleasure to serve under your chairmanship, Mr Weir. I will endeavour to keep my comments as brief as possible, so that colleagues may also contribute.

As has been pointed out, the Child Support Agency is a recurrent issue in every MP’s mailbag. I would like to raise one key aspect of the reforms with the Minister: the family-based arrangements. We know from past failures that parental responsibility is key to any workable CSA reform. Parents should be encouraged to make their own arrangements, with minimal interference either from the CSA or from the courts, which of course should be the last resort for those whose separation is so rancorous or potentially violent that private arrangements are not possible.

11 July 2012 : Column 119WH

Like the Government and Resolution, an organisation representing 5,700 family lawyers, I support the concept of family-based arrangements wholeheartedly. However, many family law solicitors are concerned that the Government’s objectives will not be achieved unless those arrangements are enforceable. That is not because lawyers are looking to feather their own nests, but because they have a duty of care towards their clients—a duty of care that the CSA sadly lacks and which unenforceable agreements simply do not fulfil. Lawyers will therefore be obliged to recommend that clients refer themselves direct to the agency or pay for a court order. Family lawyers assure me that, if the agreements were enforceable, the duty of care would be fulfilled and their uptake might be vastly increased. However, there is a risk that the number of couples making such an arrangement will be pitifully small, due to the inability to provide security or certainty.

One might be tempted to argue that a parent who wants an enforceable arrangement should simply pay the fee and use the agency or the courts, but I would argue that logic is flawed in both its economic and social consequences. In terms of social policy, while the fee could be sufficiently high to discourage or even prevent those who most need CSA assistance from getting it, in economic terms the fee makes no substantive contribution towards the real cost of agency services. That cost will not fall, as levels of case load will remain near constant, prompting one to ask what the purpose of the fee is.

The logical and pragmatic answer is to establish agreements that, if possible, bypass the CSA and the courts, yet are none the less enforceable. There are several ways to establish that. Perhaps the simplest option would be to lodge the agreement with the CSA and rely on the agency for enforcement, passing the full cost of collection on to the defaulting parent, not the parent with care. One would hope that would be a significant disincentive to default. Secondly, the arrangement could be lodged with the court, so that in the event of default, the parent with care would look to the court for enforcement. However, as with the CSA option, that has cost and, most important, significant time implications for parents in financial difficulties.

It is with some trepidation that I follow the hon. Member for Edinburgh East (Sheila Gilmore), who not only is a family lawyer but has significant experience of Scotland, because I am about to launch a suggestion that a further option could be to replicate the system north of the border. I will not repeat her comments, but will add to the information she has already provided. I contend that the system in Scotland is far superior to anything thus far proposed in England in terms of simplicity, cost and speed of recovery of moneys due. It might also hearten the Minister to know that it also avoids the need to have an argument over who should be charged.

As we heard, Scotland has long had the benefit of a registered minute of agreement, which does not need to go before either a court or the CSA, and works because it is summarily enforceable. Minutes of agreement are easy to draw up, so they are cheap; and when it comes to default on child maintenance payments, the parent with care does not need to go to the CSA, with its

11 July 2012 : Column 120WH

long-winded collection processes, or return to court to seek an order. When the money does not get paid, the parent with care merely asks the sheriff’s officers—roughly the equivalent of an English bailiff—to enforce the agreement. The defaulting parent then has his or her assets frozen in a process that a Scottish lawyer described to me as being “quick and muscular”. They then have a choice: pay the maintenance or go to court to try to have their assets unfrozen. The reality is that, due to its enforceable nature, the minute of agreement rarely has to be enforced, as parties know the harsh measures that can be deployed in the case of default.

I do not suggest that we can expect the entire legal system south of the border to be turned upside down and made to replicate Scottish law. There are certainly different understandings about the use of bailiffs, but we can surely import the key principle: that the agreement is enforceable, and is enforceable quickly and cheaply. How could we replicate the Scottish system? Changing and improving the collection powers and methods of the CSA is an option and should be looked at, but the courts will ultimately use bailiffs anyway, so replicating the quick and muscular nature of a Scottish minute of agreement within English family-based arrangements, perhaps by making them summarily enforceable, would enable solicitors to recommend them and, most important for the Government’s objectives, it might make parents actually want them.

I can see no better way to reflect the spirit of the original legislation and meet the Government’s objectives than with a family-based arrangement that is speedily enforceable. If someone is destitute and has hungry mouths to feed, an arrangement that is not enforceable is useless, and an arrangement that is enforced many weeks or months after default is next to useless. The best solution is an arrangement that is enforceable speedily and, best of all, at no cost to the parent with care.

3.20 pm

Heather Wheeler (South Derbyshire) (Con): It is a pleasure to serve under your chairmanship, Mr Weir. I, too, congratulate my hon. Friend the Member for Loughborough (Nicky Morgan) on securing the debate—so much so that I have ripped up half my speech; but here we go. Hon. Members have given excellent examples and covered key issues in the debate, so I shall go straight to the heart of the two things that I think changes to the CSA should deal with, to make the agency truly effective. There are two loopholes that need to be addressed.

The first is undoubtedly the 12-month rule, which 87% of family lawyers say causes difficulties, because it enables the CSA to overturn court orders after just 12 months. What is the point of going to court to seek an order, when after only a year—and without the need for any substantive change in circumstances to be demonstrated—the order is void? As my hon. Friend the Minister has said before, the rule is open to abuse, and has become a tool whereby non-resident parents, especially the self-employed, can hide income to avoid paying the full level of support. Furthermore, family lawyers tell me that the existence of the rule skews divorce negotiations, with solicitors increasingly relying on spousal maintenance as a backstop because of the inevitable consequences of the CSA’s ability to scupper

11 July 2012 : Column 121WH

a court order after 12 months. The rule likewise promotes hostility, as after 12 months the parent with care returns to court to seek a pound-for-pound increase in spousal maintenance to compensate for what has just been lost through child maintenance under an agency review.

Finally, the 12-month rule is used as a tool for blackmail. I have been shown a shocking but sadly typical case, evidenced by the e-mail exchanges between the parties, of a woman who, having spent considerable sums in legal costs to secure a financial settlement, was threatened with having her children’s maintenance halved unless she agreed to dispose of a joint overseas asset that remained unresolved from the divorce. Her lawyers advised her against short selling. At exactly the same time as her ex-husband, a wealthy accountant working in risk management and financial services, was funding private education for his other children, he was threatening to use the 12-month rule to reduce his maintenance payments by 50%.

The rule was not designed to be used as a tool for blackmail. Indeed, correspondence between the lady in question and the Minister, which I have seen, showed that the Minister regarded that use of the rule as abusive. Therefore, I have to agree with the findings of Henshaw on the rule. It is used as a means of securing a better outcome for the non-resident parent, not the child, and the Government should consider scrapping it, or at least extending it to four years. That would give security and certainty for both parents, and prevent the current abuse.

The second issue that reforms must address is that of spurious zero assessments. It is perfectly illustrated by the case of a lady whose ex-partner, a Porsche-driving former executive who lives in a luxury docklands apartment and who she says has an extremely luxurious lifestyle, is assessed as having to pay less than someone on benefits. Despite his extravagant lifestyle, he simply claims he lives entirely on his new wife’s earnings. The mother however, forced to provide evidence to the contrary, lives in poverty, works full time in low-paid work, and last winter, at the height of the cold snap, was forced to accept charity food parcels and to beg £300 from a friend to put heating oil into her boiler when the tank ran dry. Often the only way the parent with care can attempt to secure some maintenance is through a lifestyle inconsistency appeal, where they can demonstrate that the lifestyle of the non-resident parent is inconsistent with his declared income.

It therefore causes me considerable dismay that the Government have now made clear their intention to scrap the only two effective measures—including the lifestyle inconsistency appeal—by which parents with care can secure support for their children from non-resident parents who seek to hide their real income and capital. Curiously, in the case I have just mentioned, despite claiming to have no income or assets, the child’s father is still able to fund expensive legal proceedings against the mother on a separate issue. It is bizarre.

The CSA needs to be reformed. That is self-evident just from the three examples I have given. I therefore ask the Minister to consider extending the 12-month rule to four years; to examine the issue of zero assessments; and, in particular, to maintain the right of parents with care to mount a lifestyle inconsistency appeal. Lastly, we need to ensure that the CSA has a duty of care. In this era of increased accountability, we need to ensure that Government agencies are held to account.

11 July 2012 : Column 122WH

3.25 pm

Caroline Dinenage (Gosport) (Con): It is a pleasure to serve under your chairmanship, Mr Weir. I add my praise to that of other hon. Members for my hon. Friend the Member for Loughborough (Nicky Morgan), for obtaining this valuable and important debate. My hon. Friends and other colleagues have also made useful and admirable contributions. Many of the comments I wanted to make have already been made, so I will briefly voice the concerns of parents in my constituency.

Like many hon. Members who are present, I am contacted all too often by single parents who have struggled with the system and do not receive the support they need for their children. It is a tragic fact that up to half of UK children of separated families live in poverty, but it is one that is borne out by many of the cases I have assisted with in Gosport. The failures in the Child Support Agency, whether they arise from poor administration or bad decisions, have had a direct impact on the well-being and security of children throughout the country.

The hugely valuable Gosport citizens advice bureau has dealt with almost 100 CSA problems in the past year alone, and that highlights the instability caused by the CSA’s failure to secure payments. Most frequently, parents fall into arrears with their rent or mortgage, and then face the threat of losing their home, which of course gives rise to many other issues. One disabled lady in my constituency was advised by the CSA not to bother applying for child support at all, as her two children were 15 years old. That meant that she could not afford to stay in her home, in spite of her significant care needs.

As my hon. Friend the Member for South East Cornwall (Sheryll Murray) mentioned, the often irregular and unpredictable actions of the CSA also cause problems for non-resident parents. In one case, the CSA took payments ranging from £400 to £600 over a number of months from one of my constituents, without any notice. While it is without doubt the duty of both parents to support their children, such actions mean people suddenly find themselves unable to pay their own household bills.

I am also frequently left baffled by the catalogue of errors in the administrative handling of CSA cases. By the time many constituents approach me, they have endured months or even years of inaction, as other hon. Members have said. When contacted by my office, the CSA often, to its credit, gets things sorted relatively quickly, but that raises the question why it should be necessary for things to get to a stage when someone needs to contact their Member of Parliament.

That is why I welcome the Government’s reforms to the CSA. So much time and money is lost in its complex, creaking bureaucracy and the Government are right to do all they can to empower parents to come to family-based arrangements. However, in the light of my experiences in Gosport, I seek reassurance from the Minister that the Government will not neglect those for whom family-based arrangements, negotiation and collaboration are sadly not an option. Many people in my constituency have ex-partners in the armed forces, for instance, which presents greater challenges as their long periods of absence from the UK mean that they are not around to take part in the negotiations, which take time.

11 July 2012 : Column 123WH

My hon. Friend the Member for Loughborough mentioned—as, indeed, did virtually every hon. Member who spoke—the problem of those whose ex-partners earn very little on paper, although the new car on the drive and frequent sunshine holidays belie that, and suggest more cash in hand. It may take significant joined-up thinking between Departments to address that, but we must do so in the interests of fairness, and for children’s long-term well-being. I wonder if the Minister has any thoughts on how to address the issue. It is vital that the Government’s far-sighted reforms should put vulnerable children, and, indeed, common sense, at the heart of all we do.

3.28 pm

Mrs Anne McGuire (Stirling) (Lab): I echo the comments made by other hon. Members: it is a pleasure to be here under your chairmanship today, Mr Weir, for this short debate on the Child Support Agency. I congratulate the hon. Member for Loughborough (Nicky Morgan) on securing the debate, and hope she will agree that she was well supported in the contributions made by my hon. Friend the Member for Edinburgh East (Sheila Gilmore) and the hon. Members for South Derbyshire (Heather Wheeler), for South East Cornwall (Sheryll Murray), for South Swindon (Mr Buckland), for Romsey and Southampton North (Caroline Nokes) and, last but not least, the hon. Member for Gosport (Caroline Dinenage).

What we have heard today shows how complex child maintenance is. I listened carefully to the various cases with which MPs illustrated what they were saying. Frankly, no two of those cases were the same. If we multiply that by 650 MPs and multiply that again by the number of families who find themselves in a period of stress, perhaps we will appreciate the challenge that all of us face in trying to design a system that reflects all those individual situations. They range from the example that the hon. Member for South Swindon gave of the soldier in Afghanistan to the example that the hon. Member for Gosport gave of the disabled parent trying to keep her children. How do we come up with a system that deals with all those situations?

We should encourage more people to make voluntary arrangements. However, as my hon. Friend the Member for Edinburgh East—who is an expert on these issues—indicated, the people who make the voluntary arrangements are not the ones who need the state to intervene or facilitate. They are the people who come to what we could call an amicable separation and who understand that parenting, and the responsibility for parenting, is a joint effort, in terms of providing both emotional support and financial support. Sadly—and it is sad—not every couple can separate in that way. I think that it was the hon. Member for Romsey and Southampton North, who I understand may also have some experience in—

Caroline Nokes indicated dissent.

Mrs McGuire: If the hon. Lady is not a lawyer, she should get a Bachelor of Laws degree, because she certainly sounded as if she had that sort of hinterland; studying an LL.B, perhaps part-time, might be an

11 July 2012 : Column 124WH

opportunity for her to take. Anyway, she highlighted some of the issues about how people try to manage these things.

Having said that, I must say to hon. Members that some of the situations that have been described today are hopefully not quite indicative of the changes that have happened in the CSA. I will just refer to a comment from a former Chairman of the Public Accounts Committee, which I think some hon. Members will probably agree with. The BBC reported:

“The public accounts committee said the CSA had a catalogue of complaints, a backlog of cases, and poor enforcement of uncollected payments”

and that the PAC said the CSA was one of the

“greatest public administration disasters of recent times”.

That was the view of the PAC in 2007, when it was under the chairmanship of the hon. Member for Gainsborough (Mr Leigh).

In May of this year, the PAC said:

“The Commission has made real progress in recent years but the challenges it faces”—

and hon. Members have illustrated some of those challenges today—

“in supporting separated families and securing maintenance payments for children are serious.”

So there have been significant changes, and the hon. Member for South Swindon remarked on the range of enforcement actions that exist and that were supported across the board; the Minister was in the House at the time. We had to realise that sometimes the carrot might not work and that sometimes it is about the stick. We can argue about whether six weeks is an adequate sentence, but the difficulties that people would face if they had their driving licence withdrawn, as well as all the other issues relating to enforcement, would really focus the minds of many people.

As a constituency MP, I have had nothing like the volume of CSA cases recently that I previously had. Ten years ago, I would have had a little queue of parents—both with care and non-resident—complaining about all the issues that have been highlighted today. I can now count on one hand how many live cases about the CSA that I have. I do not know if there is a particular problem in Loughborough, but I am just being frank with hon. Members in saying that I have seen a significant change. That is not to say that I do not occasionally have cases where somebody has had a wage deduction charge that has been wrongly applied—

Heather Wheeler: I am sure that my constituency of South Derbyshire is as fragrant as it always is, but I get three CSA cases a week—three a week.

Mrs McGuire: Mr Weir, I hope that you will agree with me that there must be a change in the atmosphere in Scotland, although I have to say that it is nothing to do with your political party. My experience is not the same as that of the hon. Lady. I can only put my experience on the table, in the same way that other colleagues have done.

Since the range of enforcement actions have been introduced, I have seen a significant downturn in the number of CSA cases. That is not to say that there have not been occasions when people have come to me and complained about the administrative errors at the CSA,

11 July 2012 : Column 125WH

which are unforgivable, or about the fact that the wrong assessment has been made. Those are the types of problems that have been highlighted in the debate today.

The comments that I quoted from the two distinguished Chairs of the Public Accounts Committee are intended to show that there have been changes in the CSA. The reality is that all of us have to wrestle with the legacy of a flawed initial approach; that includes the Minister, who is doing so quite admirably. The introduction of the CSA had joint-party support at the time, but it was rushed. The technology was not up to it and the scale of the problem in those initial years was grossly underestimated. Perhaps because we always want to believe the best of humankind, the idea was that if we suddenly introduced the CSA, everybody would conform. That was not the reality, as we know from individual experiences.

I am sure the Minister could tell us how many connections have to be made just to reach a conclusion in a single CSA case. Reaching a conclusion is quite a complex business; everything has to be tested. As MPs, we all know that someone can have a perspective on a particular case that might not fit with what another person thinks, whether that case is about the CSA, a housing complaint or any other complaint. So, all those checks have to be made in each case. I am trying to illustrate that this problem is not easy to solve, and there are some questions that I hope the Minister will address, which have been raised by colleagues in her own party as well as by my hon. Friend the Member for Edinburgh East.

I echo the advert that the hon. Member for Romsey and Southampton North gave for the Scottish legal system. Minutes of agreement are a good vehicle for getting parents to come to an understanding and to recognise that such an agreement is not something they can sign off and then just park; it is legally enforceable. That makes a significant difference to how those agreements are seen in Scotland.

The hon. Lady also suggested that such an approach could be exported, or perhaps transferred—I do not think we are quite into exports yet, Mr Weir, from Scotland to England—into the English legal system. I echo that suggestion, which the Minister might like to consider, although I appreciate this issue is not totally within her domain. Such an approach is an excellent example of how the legal system can formally—but almost informally—make something happen. Things are done between lawyers, and as a lawyer yourself, Mr Weir, you will know that in Scotland one always trusts the word of a Scottish lawyer. The Minister should look at that issue, which I know the Law Society of England and Wales and the Law Society of Scotland have highlighted in their response to the consultation. Interestingly, the Law Society of England and Wales has said that family-based agreements are unable to command support because they are not enforceable, and that they add to the existing uncertainty.

We have all seen examples of how difficult it is to pin somebody down about their lifestyle and what they tell the CSA is their income. Before there was investigation and enforcement within the CSA, I had a long-standing case involving a woman who was married to a high-profile person who was returning an income of almost zero. Frankly, everybody and their dog knew that that was not the case, but the woman had difficulty in dealing

11 July 2012 : Column 126WH

with the situation. I think that is why there is some surprise that, given the Minister’s views on trying to get a consensual approach to arrangements, regulations 18 and 20 will, I understand, be withdrawn, and I hope that the Minister can throw some light on that.

I thank the Law Society of Scotland for its excellent comments in highlighting this problem. It is concerned that a change in the regulations, whereby the parent with care, and the CSA, could challenge the lifestyle of the parent without care,

“could allow non-resident parents with well-informed advisers to be navigated out of the child support system to the detriment of the children concerned.”

I suppose that that is the flipside of the lawyer. The lawyer will act in what he or she sees as the best interests of their client and, in those circumstances, that might be to try to navigate their way around—that is the sort of neutral term I would use.

Finally, I have one or two points to put to the Minister, which have arisen out of the recent Public Accounts Committee report. One is on the charging of parents, and a Member has already asked: if it is only £20, what is the point, because it will not even cover the costs, and there could be an element of tokenism? I certainly agree that that aspect would perhaps have been better left as it was. There is a view that the introduction of fees might well make child poverty worse, and that it might act as a deterrent. Given that some people will be on extremely low incomes, £20 might just be the deterrent that will put them off.

The Public Accounts Committee also identified that the IT system that has been introduced to save money is already running late, and every month’s delay will cost £3 million. [Interruption.] The Minister smiles in that enigmatic way that most Ministers before her have smiled about IT and Departments. Given that IT systems have been the bane of the CSA’s life, we need some—any—reassurance that she has this under control. The other related issue is whether a new IT system can be installed and tested while an existing programme is still being delivered. Those of us with accounts in the Royal Bank of Scotland and NatWest have perhaps seen an example of things going wrong when an incident happens during the running of a new system. I seek the Minister’s reassurance on that matter.

My hon. Friend the Member for Edinburgh East asked what would happen to the case load. Is it a zero-sum game? Will the current case load just be wiped, and will people have to say, “I want the CSA to be involved again”?

I hope that this has been a good discussion for everyone here. We have constantly to monitor the CSA. This is not an easy problem, and none of us should ever think that we can invent an IT system or an organisation that will solve the complexity of the emotional problems resulting from the break up of a relationship where children are involved. We only need think of our own families’ and friends’ experiences to see exactly what the pressures are, even in the most amicable of circumstances. In some ways, we are asking the CSA staff to work miracles in very difficult circumstances, and although they have come in for some criticism today, I think the majority of them work efficiently, to a high standard, and as compassionately as they can, within the parameters set by politicians.

11 July 2012 : Column 127WH

3.44 pm

The Parliamentary Under-Secretary of State for Work and Pensions (Maria Miller): It is a pleasure to serve under your chairmanship, Mr Weir. You have a tendency to chair a lot of our debates on welfare.

I congratulate my hon. Friend the Member for Loughborough (Nicky Morgan) on securing the debate. It is difficult to do justice to the wide range of issues raised by Members on both sides, but the debate has left me with the overwhelming feeling that the system is broken much more fundamentally than just a broken IT system. I may have smiled wryly before because, when the right hon. Member for Stirling (Mrs McGuire) referenced IT systems, I had a vague recollection, which officials have just confirmed, that the new future scheme was supposed to have been introduced under a Labour Government but has been delayed considerably since its inception—hence the wryness of my smile.

Mrs McGuire: Does the hon. Lady accept that the first system was rubbish anyway?

Maria Miller: I think the right hon. Lady misunderstands me. I mean the introduction of the future scheme, which was considerably delayed under the previous Administration.

I am also somewhat surprised that Stirling seems to be atypical. Although the right hon. Lady might have only a handful of cases or fewer troubling her postbag, the statistics say something considerably different, which is that the Child Support Agency receives more than 20,000 complaints every year. I know that the agency’s chief executive is absolutely unhappy about that and is doing a great deal, working with staff, to do something about it, but it is indicative of the situation facing us.

Heather Wheeler: I hope that my hon. Friend will get around to talking about the duty of care, because if the CSA mucks up, there is nowhere else for the parent to go.

Maria Miller: My hon. Friend is right that as a Government we have a duty to ensure that we have a system that operates correctly for families. I would like to take her back a step, though, to look at the fundamentals.

The reality is that every child in this country has two parents who have a commitment to that child for life. For too long, the evidence has been conveniently ignored that children who live in a stable family do better than those who do not, and the most stable families that we have are married ones. This Government do not ignore the evidence. My hon. Friend the Member for Sherwood (Mr Spencer), who is no longer in his place, was right to say that both parents have a right to stay involved in their children’s lives. I applaud the work being done by my colleagues in the Department for Education to make sure that that will happen more readily in the future.

Children thrive when both parents take an active role in their lives, and evidence from elsewhere in Europe underpins that. If adult relationships break down and parents do not work together to ensure that they both continue to play an active role in their children’s lives, it is the children who suffer. For me, that is the starting point for today’s debate. Having the opportunity to reframe the subject is important for all of us here.

11 July 2012 : Column 128WH

The hon. Member for Edinburgh East (Sheila Gilmore) got it wrong, I think, when she said that we are trying to say that the CSA causes animosity. The Government are not saying that; we are saying that the CSA is making the situation worse not better, and at a cost of almost £500 million a year that is completely unacceptable. For too long, the child maintenance system has played a one-dimensional role—pretty badly—focusing almost exclusively on money transfer. IT breakdowns apart, perhaps that is why it has fallen so short of the mark and why so many Members have taken part in today’s debate. In the past, the Government have spent almost 10 times more on the CSA, its IT systems and administrative processes for money transfer and enforcement, than on supporting families to work together to fix their relationship problems, which the evidence indicates is a more successful approach. We have to change that.

As right hon. and hon. Members have said, more than half the parents who use the current system say that they would like to make their own arrangements if they had the right support to do so. That is not to say—

Mr Mike Weir (in the Chair): Order. There is a Division in the House, and I understand that there may be several. The sitting is suspended until the series of votes ends.

3.49 pm

Sitting suspended for Divisions in the House.

4.44 pm

On resuming

Mr Mike Weir (in the Chair): The main players are all here, so we will resume the debate. Minister, you have 10 minutes.

Maria Miller: What I have said so far is the basis for the reform that this Government are putting in place. I pay tribute to the 8,000 staff at the Child Support Agency and all that they do, with the difficult system they work with, but I share the view hon. Members have expressed today that the current system is not working well enough for the people who need it the most. We inherited two sets of rules, three IT systems and more than 20,000 complaints every year, and reform that has failed to date. It is time to change the role of the child maintenance system and set it in context of the Government’s broader family and social justice policy, which is founded on the evidence that children have a better life with their parents providing support and protection throughout their childhood.

My hon. Friend the Member for South East Cornwall (Sheryll Murray) was right to say that parents need support from each other. Indeed, we have recently set up a customer panel to do just that and we are considering how to develop it further.

The hon. Member for Edinburgh East was right to say that we have to take into account the views of those who work in the field. They are indeed vital, but I caution her against focusing simply on the views of the legal profession, because as MPs who deal with such issues day in, day out, we all know that many people have more grass-roots experience, and we need to draw on that. Indeed, we as a Government have drawn on such voluntary and community sector experience in

11 July 2012 : Column 129WH

making our plans for the future scheme. A group of experts in the sector have worked with us to set out how we can ensure that parents have the right information and support, particularly early on, to work together post-separation and to make sure that both parents remain actively involved in their children’s lives. We have already announced £20 million to make that happen—that is in the current spending review. That £20 million, previously spent on IT systems and the rest, will now be used to support charitable organisations, which we all know do so much effective work with families. That funding adds to some £45 million that the Government are already spending in 2012-13 alone on supporting families and relationships.

The money will provide the sort of tangible help that makes a real difference to families’ lives when separation is involved, and it will do so in a way that supports children. It will cover the provision of an online distributable web application; training for voluntary and community organisations to provide telephone support and improved face-to-face support; and up to £14 million for the recently launched innovation fund, which will help innovative ideas to get off the ground and measure their success in supporting parents during family separation.

I reassure my hon. Friend the Member for Gosport (Caroline Dinenage) that we know that not everybody will be able to work together. She is absolutely right about that. The hard work that she does in her constituency proves that not everybody can come to their own arrangements. That is why we will also introduce a new statutory child maintenance service for parents.

My hon. Friend the Member for South Swindon (Mr Buckland) has immeasurable experience, and on a number of occasions I have had the benefit of his wisdom regarding reform in this part of my ministerial portfolio. He is right that tough enforcement action is needed. The Child Maintenance and Other Payments Act 2008 contains tough enforcement powers and we are committed to ensuring the implementation of the new statutory scheme, which will be introduced this year, along with powers to manage arrears of maintenance payments that have been accumulated under the existing scheme and are not collectible. We want to make sure, first and foremost, that we have the right statutory scheme before we take on those forcible powers that my hon. Friend thinks—and I agree—could work so well.

I will try to deal with the main issues raised in the debate. One that troubles many Members is that of non-resident parents whose lifestyles are inconsistent with their declared earnings. That is often coupled with being self-employed and other ways of playing the system that hon. Members have said some parents may be exploiting. The problem is not new and we think that our reforms will start to address it. We will use information from Her Majesty’s Revenue and Customs about taxable income alongside other data to calculate the amount of maintenance that a non-resident parent is required to pay, and that information will be updated every year.

That is an important innovation, because we will no longer have to rely on declared income and will move instead to a system that relies on data provided to HMRC. Of course, some individuals may not declare all their income to HMRC, but that is a different matter. We are working closely with HMRC to do as much as we can to ensure that such income estimates are accurate and kept up to date, which, under the current system,

11 July 2012 : Column 130WH

they are not. The right hon. Member for Stirling is probably aware of all those issues from her time in government, and I hope she agrees that this is an important step forward.

Mrs McGuire: Given that we are dealing with people who put in a self-employed schedule D return, as opposed to the pay-as-you-earn, can the Minister give us any indication about where she will be taking the declared income figure from? Will it be from declared income, or will it be from income after all the other legitimate deductions come off—car use, boots for work and so on; all of the things that can be taken down—so that the taxable income at the end is far lower than what the person actually draws in?

Maria Miller: The right hon. Lady will know that we are looking at those sorts of details right now. I take from her comments that she wants to ensure that we are dealing with an income that is representative of the income that an individual has, rather than an income that may be depressed for the purposes of the calculation that is being made. I assure her that those are exactly the sorts of conversations that we are having.

The change to using HMRC data will also give us a much more efficient system, getting money to children quicker and more effectively tracking down parents who fail to pay. On that note, my hon. Friend the Member for South Swindon raised an important issue regarding armed forces personnel. We are reviewing how to provide a service to assist service personnel in this respect. I hope he finds that reassuring.

My hon. Friend the Member for South Derbyshire (Heather Wheeler) raised an important issue relating to the 12-month rule. Since I became a Minister, I have looked at that in some detail. We are looking for the evidence needed to quantify the scale of the problem and to ensure that we understand it fully, but I understand her point. I have received other representations on the matter and officials are working with the legal community and with the Ministry of Justice to consider how we can resolve the problem. It cannot be right to have a system in which people can play the rules to their advantage. We must have a system that works equitably across the piece. I undertake to write to my hon. Friend in more detail about the actions we are taking and to keep her fully informed of how we move forward.

My hon. Friend the Member for Romsey and Southampton North (Caroline Nokes) and various Scottish Members brought up the minute of agreement, which I have looked at in some detail. We do not feel that we can take that forward as part of the child maintenance system for which the Department for Work and Pensions has responsibility, but I know that my colleagues are well aware of it. If time were to permit—it does not today—I could talk a lot about the important innovations being made in the Ministry of Justice on mediation, which may well deal with some of the issues that the minute of agreement deals with.

In the few minutes that I have available, I wanted to address some of the other detailed points raised by my hon. Friend the Member for Loughborough, who is an assiduous constituency MP—

Mr Mike Weir (in the Chair): Order. We have run out of time for this debate.

11 July 2012 : Column 131WH

Local Authorities (Cumbria)

4.54 pm

John Stevenson (Carlisle) (Con): It is a pleasure to serve under your chairmanship, Mr Weir. I appreciate this opportunity to debate local government in Cumbria in the Chamber. Before specifically discussing Cumbria, I would like to make a few comments on local government generally. I believe that there is a growing acknowledgement that local government is more important to the success of this country than many previously thought or accepted. I commend the Government for their interest in local governance and for their pursuit of the localism agenda, which is greatly welcome.

However, there is more work to be done. I am delighted that there is a growing cross-party view promoted by many different MPs, councillors and think-tanks that local government matters. However, it is in need of reform. I fully accept that the Government have other priorities—primarily the economy—and it is right that that should be the case. Nevertheless, reform should not be put off or delayed. Indeed, local government reform could be a vital weapon in the Government’s battle to improve the economy and they could carry out those reforms relatively simply.

The Government could call for a commission to review local government. I am aware that Select Committees are already looking at a possible settlement between local and central Government. That commission could look at two key reform issues, namely restructuring local government—in my view, moving towards unitary local governance up and down the country—and furthering the localism agenda that has already been initiated by the Government in respect of passing further powers, particularly tax raising, to local authorities.

Sir Tony Cunningham (Workington) (Lab): May I first put on the record the apologies of the hon. Member for Penrith and The Border (Rory Stewart), who would have been here but is giving evidence to a Select Committee? Does the hon. Gentleman agree that whatever decision comes out of this, it must have the ownership of the people of Cumbria? Whatever way we divide up Cumbria—whether we have one, two or three unitaries—there has to be the fullest and broadest consultation with the people of Cumbria, so that they feel a definite ownership of the final decision.

John Stevenson: I will come specifically to that point later in my speech, but, as a general observation, yes I have sympathy with what the hon. Gentleman is saying.

The commission could report in due course and the Government and Parliament could consider its views. The advantage of that is that it would not distract the Government from their current business of policy implementation and it would avoid distracting Ministers from their priorities. I have digressed somewhat, but it is important to state that, although the debate is about Cumbria, I and many others believe it is important to address wider issues.

I have had the good fortune to live in Cumbria for 20 years and I was a councillor on Carlisle district council for 11 years before my election to this place in 2010. Over that time, I have become all too familiar with the structure of Cumbrian authorities, as well as

11 July 2012 : Column 132WH

with their politics. Back in 1974, when local government was last comprehensively reorganised, Cumbria county council was created along with six district councils within the county council boundaries.

Arguably, that was the most sensible approach at that time: it suited the nature of local government and the needs of the different parts of Cumbria in the 1970s. However, life has moved on. We live in a different world, and government at all levels has increased and become far more complex. It is also true that the role of councillors has changed dramatically. Since 1974, there have been attempts to modernise and improve the arrangements, structures and roles within local government. Yet, I question whether the role of local government has truly modernised and kept up with the times. That is especially true of Cumbria.

A report on governance in Cumbria that was published a few years ago said:

“Cumbria is a county which is over-governed and under-led”.

It was true then and it still applies today. In Cumbria, we have seven councils—eight if the Lake District national park, which has considerable authority, is included—and there are nearly 400 councillors, with seven chief executives and seven senior management teams. In the county, six authorities are responsible for collecting council tax, at a total cost of more than £4.2 million. There are six different departments for planning, environmental and property issues. All that administration serves a total population of around 500,000 people.

The structure of Cumbrian local government needs to be reformed for two reasons. First, any substantial restructure, if done properly, would lead to considerable savings for the county. When the possibility of a unitary in Cumbria was discussed a few years ago, the county council believed that it would make substantial savings running into millions. That point is even more important and relevant given the economic backdrop against which we are having this debate. Any savings, particularly from amalgamating senior management teams, unifying departments and reducing the number of councillors, could ensure that front-line services that are vital to the everyday lives of the people of Cumbria are safeguarded and, in some cases, even enhanced.

Mr Jamie Reed (Copeland) (Lab): The hon. Gentleman is making a very concise and overdue case for looking again at the structure of local government in Cumbria. I am grateful to him for securing the debate. He talks about the cost savings, which is an important point to recognise, but do we not also need to look at and be very mindful of the effectiveness of local government? A current problem—whether with education, health care or roads—in my constituency and I am sure in many others, including that of the hon. Gentleman, is not only saving money from the front line but the effectiveness of local government doing what it is supposed to do.

John Stevenson: I 100% agree with the hon. Gentleman and, funnily enough, that is what I am about to come on to. I take his point—he is absolutely right—and that is the second most important part of a reformed structure in Cumbria.

However, the second issue, better governance, is the most important in many respects. The reform of local government in Cumbria would in itself lead to better

11 July 2012 : Column 133WH

government, and the benefit for our county is potentially enormous. Currently, people often have no idea which council is responsible for the services that they need; they do not know the difference between the roles of the district and county councils; and the political parties on one council are often fighting the parties on another. Indeed, too often, we have the absurd situation of councillors of the same party but different councils battling each other. That can extend to the officer corps of the councils, with the officials of each feeling the need to defend their council’s position rather than pursuing policies that are in the interests of the local population. However, the ultimate absurdity is with individuals who are councillors on both councils. They might vote a particular way on policy in one council, but then go the other council and vote a different way in exactly the same policy debate—that takes place across the political divide, occurring among Conservative, Labour and Liberal councillors.

All that does nothing for the reputation of politicians in Cumbria, of councils or of political parties and, most importantly, it does nothing for the people of Cumbria. Over time in Cumbria, there has been a growing consensus in the political and business worlds, in local communities and among council employees and other organisations that a change is needed. Many organisations are utterly frustrated by the lack of decision making and consensus within the various councils. My right hon. Friend the Chancellor said that if are to pursue successful growth in the British economy, we need to remove the obstacles to growth. Worryingly, in Cumbria the business community sees the current structure of local government as an obstacle to growth. It is imperative, therefore, to remove the obstacle so that we can see a better performing economy in Cumbria.

One problem I acknowledge is that while everyone—I like to think—agrees that change is needed and that something must be done to streamline and improve the current arrangements, many say that a consensus on how reform should go ahead is impossible. The solution, in my view, is relatively simple: Cumbria should move towards a unitary system of government. My personal preference is for two unitary authorities in the county. The simplest way to achieve that is to ask central Government to request the Boundary Commission to come in, review the arrangements and produce a proposal. Such a proposal could go out to consultation before a final decision.

I take on board the comments of the hon. Member for Workington (Sir Tony Cunningham) that we must ensure a consensus in Cumbria. Whatever structure that the Boundary Commission came up with should have support in our different communities. I take that on board fully.

Sir Tony Cunningham: Does the hon. Gentleman accept, given that the Boundary Commission came up with whatever it came up with on the parliamentary seats proposals, that there ought to be a way to input into the process and to change the proposals, if necessary? The way in which the commission dealt with the parliamentary boundaries has been ludicrous.

John Stevenson: If the Boundary Commission were to agree new boundaries in Cumbria, I like to think that it would come to Cumbria, go around the place physically

11 July 2012 : Column 134WH

to see what it is all about, meet the communities, MPs and councillors, and then come up with proposals, rather than what happened with the parliamentary boundaries.

The advantage is that the politics would be taken out of the issue—at least, primarily, at the beginning—and the unnecessary squabbles that would inevitably arise if a decision had to be made by the various parties in Cumbria would be avoided. I therefore ask the Government to accept that there is a need for change in Cumbria, to acknowledge that the current arrangements are an obstacle to growth and to ask the Boundary Commission to come up with proposals for restructuring Cumbrian local government with a view to introducing unitary councils.

I am fully aware that there is general reluctance in Government to get involved in local government changes, and I understand the reasons for that. I fully support Government policy to give greater control to local authorities. I ask this: if there is sufficient support for reform in Cumbria, from local politicians of all colours, local organisations and the local population, will the Government consider exercising their powers under the Local Government and Public Involvement in Health Act 2007 to initiate a review into the local government of Cumbria? If the Government agree, it will simply be up to Cumbrians to request such a review, and I hope that MPs across the county would support it.

The legacy of a reformed structure in Cumbria would be huge. It would lead to better local government, better management, better services, and, I like to think, a more vibrant economy. Instead of being over-governed and under-led, we would be a county properly governed and effectively led. The businesses, communities and even councillors of Cumbria are asking for the removal of unnecessary layers of bureaucracy and the streamlining of a currently cumbersome system. I hope that the Government are willing to give them, and us, the tools we need to see proper government in Cumbria.

5.6 pm

The Parliamentary Under-Secretary of State for Communities and Local Government (Robert Neill): It is a pleasure to serve under your chairmanship, Mr Weir. I congratulate my hon. Friend the Member for Carlisle (John Stevenson) on securing the debate and on giving us the opportunity to debate local government structure in Cumbria. I am grateful to the hon. Members for Copeland (Mr Reed) and for Workington (Sir Tony Cunningham), who intervened during his speech.

I very much sympathise with many of the sentiments and views expressed by my hon. Friend the Member for Carlisle. Like him, my background is in local government. I spent some 16 years as a councillor in a London borough and another eight or more on what we would regard as a top-tier authority, so I understand the point that he makes. The Government recognise the importance of effective local government and how it can significantly contribute to economic growth in the local economy. I recognise the importance not only of delivering local services in the most effective and efficient way, but of effective local leadership—both officer and member leadership. Sweeping away the unnecessary bureaucratic controls, regulations and processes that could lead to over-government and stifle initiative and growth is also important.

11 July 2012 : Column 135WH

I part company with my hon. Friend on the belief that changing the structure is the answer. Having looked at, and on one occasion lived with, local government reform and restructuring in London, I do not believe that the cost, disruption and delay, which attended past attempts at enforced unitary reorganisation, are justified. It is not the right means to deal with the problem that he identifies.

Mr Reed: Although I have sympathy with the case made by the hon. Member for Carlisle (John Stevenson), I agree that now is not the time for local government reorganisation in Cumbria, given the huge costs necessarily involved at a time of financial distress for local government, not only in Cumbria, but across the country.

I would like the Minister to take on board the fact that, when the previous Government tried to address local government reorganisation in Cumbria last time, the proposal failed due to the national strategic interests in Cumbria, principally those surrounding the nuclear industry in west Cumbria and my constituency. That needs to be addressed. There were doubts about what might happen to the nuclear industry under a unitary Cumbrian authority. I ask him to bear those considerations in mind.

Robert Neill: I am happy to do so. It is a perfectly fair point; we cannot look purely at narrow structural issues in isolation from the impact that a local authority has on the wider community and economy or the national and sub-national considerations that flow from it. I therefore agree with that proposition.

The Government do not intend to instigate centrally imposed local government reorganisation, but reform and change are necessary. We should concentrate on how local government works and delivers the services that residents need. That is where we could fruitfully apply our minds and our time, and it can best be delivered in today’s circumstances of dealing with economic growth, with the financial constraints facing us and with the pressure on public finances. That points clearly to councils working closely together when that makes sense, as it often does. I accept that the boundaries may often be somewhat artificial when looked at in the economic context or in terms of the practical geography of delivery for some types of service. It is not necessary to change the boundaries and the names on the map to achieve such aims.

We should encourage local authorities to work more and more together, to pool and share their staff and their buildings and to discharge their functions jointly with other councils and other public service providers. Much work has already been done on community budget pilots and how a multi-agency approach can deliver better public services for us.

John Stevenson: I understand the Minister’s argument, and I sympathise with it. If councils work together, savings can undoubtedly be made and local government can be more efficient, but what happens when councils do not agree and are unwilling to co-operate?

11 July 2012 : Column 136WH

Robert Neill: First, increasingly that culture is changing. Secondly, the Government have made it clear that, when we look at how we finance local government in future, innovative councils will benefit because those that seek to attract economic growth to their areas and to make homes provision and so on will benefit through business rates retention and the new homes bonus. Often, it makes good sense to work jointly together. There is an obligation on councils to work together to prepare their planning policies under the duty to co-operate, so there are specific levers to give a firm nudge to local authorities to co-operate.

In most parts of the country, electors will be able to see authorities not far away and sometimes of different political persuasions working jointly together. My Conservative-controlled London borough had some joint working with the Labour-controlled council in Lewisham. Party politics need not get in the way. It is the mindset that is important, and we must all work to change that. That is the way forward, and separate chief executives, separate legal payrolls and so on are not necessary.

An example close to here is Westminster council, Kensington and Chelsea council and Hammersmith and Fulham council, which have pioneered a radical approach whereby they share all their services. They still have individual councillors with democratic accountability, but all their services are effectively now being shared and are delivering efficiencies of about £100 million every year. It is called the tri-borough approach, and it can be, and is being, adapted in rural areas. I suggest that that model is the way forward.

Since March 2010, East Devon district council has been sharing a chief executive with South Somerset district council, and they are looking to expand that sharing process. Significantly, that collaboration is across a county boundary. An enforced unitary arrangement in the county would not have helped their situation and would have been needlessly constraining. It indicates that where there is a will for authorities to collaborate, they can achieve real savings. We are seeing that in many places. Sharing senior staff, as well as back-office staff, shows that more can be done for less, and such an approach can work with the business community, which is important. That is why it is important to ensure that local economic partnerships work effectively and efficiently. We must continue to ensure that that is delivered.

Such innovation does not need permission from central Government. It does not have to wait for us to say so. Given the new general power of competence under the Localism Act 2011, councils have the ability to do that without reference to central Government. I agree with the point made by the hon. Members for Workington and for Copeland that, whatever the form of the arrangements, they should be locally developed and locally owned to meet the specific needs of local areas. The right way forward is for councils to consider what is best for their residents, rather than preserving the current means of doing things and the institutional interest in any area.

Mr Reed: The Minister is being very patient and accommodating with his time. On the point that he raised earlier, will he undertake to write to me about the prospects of business rates from the nuclear industry going to my local authority?

11 July 2012 : Column 137WH

The hon. Member for Carlisle mentioned the effectiveness of local government. The system that we have in Cumbria severely impinges on the effectiveness of our local government structure, and whatever our political persuasion, we would all like to make that work better now, in advance of any future reorganisation. How can the Government help us to ensure that local government is more effective, particularly, as I said, in education?

Robert Neill: We will consult on further technical details about the operation of the business rates retention scheme in the summer, and I will, of course, write to the hon. Gentleman. Improving ways of working together does not always require a central Government intervention. The Local Government Association has done a lot of pioneering peer-improvement work within the sector, and there are many examples, including in other parts of the north-west, of experienced members and chief officers going in to mentor and encourage joint working.

I hope that the authorities in Cumbria will look at the opportunities that are open to them and that people are benefiting from elsewhere. That will require a cultural change in the way of thinking, and that is sometimes the biggest challenge to get over. I think that there is a way to achieve that objective without the up-front costs and potential disruption of enforced reorganisation. There are also opportunities where councils come together and form a joint authority that is responsible for certain services. The obvious example, although in a more urban context, is Greater Manchester, which deals with transport and related issues. It is a combined authority that has voluntarily pooled a measure of sovereignty. It is driven from the bottom up and locally owned, and that is its advantage.

11 July 2012 : Column 138WH

I accept that there can be arguments for the merger of districts within a two-tier system, but again we would regard anything in that direction as having to be locally driven. If local authorities—this has been mooted in some parts of the country—want to come together voluntarily, that would be a different consideration from our imposing it from above, provided that there was clear evidence of public support and that it could demonstrate that it represents value for money and would result in better services for local people.

There are ways in which we can deal with the situation as it is. Reference was made to the number of councillors, and I will touch on that issue by saying that local government electoral arrangements, which include the number of councillors on a council, are the responsibility of the Local Government Boundary Commission and are not something that the House has decided should be in the Government’s hands. The commission is responsible directly to Parliament for its work. There are circumstances in which local authorities can request a review of their arrangements, and the Local Government Boundary Commission, which is well staffed and expert in these matters, is always willing to talk to local authorities in such situations.

Having looked at everything in the round, I hope that our arrangements will enable the legitimate objectives, which my hon. Friend the Member for Carlisle rightly seeks to achieve, to be met without the consequences that flow from an imposed top-down approach that is not consistent with the spirit of localism. I submit that he and I were both elected on that issue in our manifestos, and I hope that localism is generally accepted as the right approach across the House.

5.19 pm

Sitting suspended.

11 July 2012 : Column 139WH

Co-operative Housing

5.20 pm

Jonathan Reynolds (Stalybridge and Hyde) (Lab/Co-op): It is a pleasure to serve under your chairmanship, Mr Weir, and to debate the potential effects of the Berrisford v. Mexfield Housing Co-operative Ltd Supreme Court judgment on the future of co-operative housing in the UK. Many of us who believe that the co-operative model has a significant part to play in the UK’s current shortfall in affordable housing think that this case has raised some important issues. I am grateful to have the opportunity to discuss them today.

The court case, which I will refer to as Mexfield, or Berrisford and Mexfield, has had a profound effect on the tenancies issued by many housing co-operatives. Among other things, it has reinforced the need for a new legal framework to define the relationship between a housing co-operative and its members. Instead of applying feudal landlord and tenant law to co-operative housing projects, we would have a law that recognises the right of occupancy as a result of membership of that co-operative, as defined in the members’ agreement.

I made that argument last year when I introduced a ten-minute rule Bill that would have recognised co-operative housing tenure in UK law for the first time. Before I continue, I should say that I am grateful to the Minister for Housing and Local Government, who cannot be here today. He took time after that ten-minute rule Bill to meet me to discuss the matter further. I appreciate his interest in these matters.

The ruling of the Supreme Court in the Berrisford and Mexfield case highlighted the problems caused by the absence of this specific provision for housing co-operatives in law. I hope we can explore the implications of the court case and the actions that need to be taken in the short and long term to deal with them.

Before examining the specifics of the court ruling, I will turn to housing co-operatives more generally. I see here several colleagues from the Co-operative party, who will be well aware of the merits of housing co-operative schemes. For others less familiar with them, let me explain how they work. Like any co-operative organisation or business, fully co-operative housing projects are owned and controlled by the people who use their services, in this case, the residents.

The co-operative model gives residents democratic control of the property in which they live, giving them a greater say over the management and maintenance than they would otherwise have as tenants. Residents also decide codes of conduct and rules of membership. In brief, the co-operative model is based on a combination of rights with responsibilities and a respect for mutualism. I believe it is a model that builds strong communities, with the potential to increase the supply of affordable housing, and I would like to see it flourish.

Tom Greatrex (Rutherglen and Hamilton West) (Lab/Co-op): I congratulate my hon. Friend on securing the debate and on his ten-minute rule Bill on housing co-operatives, which I was proud to support. Does he agree that, in addition to the points he just outlined, co-operative housing can be an important way to help some people obtain their first home?

11 July 2012 : Column 140WH

Jonathan Reynolds: I am grateful for my hon. Friend’s intervention; I see that as a major benefit and will say more on that later. There are already a number of housing schemes across the country that are run to varying degrees in accordance with the co-operative model. Because UK property law acknowledges only the legal states of freehold, ownership and tenancy, co-operative housing schemes do not have full legal recognition. A definition of fully mutual housing co-operatives does exist and slightly different legal rules apply. For instance, under the Housing Act 1988, fully mutual housing co-operatives are not permitted to grant either secure or assured tenancies. Instead, co-operatives grant non-statutory contractual tenancies. The case involving Ms Berrisford and the Mexfield Housing Co-operative shows that the currently available tenancy agreements are not wholly appropriate for co-operative housing organisations. In fact, although I appreciate that this sounds like a very technical point, the issue of contractual tenancies is crucial to understanding why this case has caused concern.

Currently, the majority of the members of a co-operative housing scheme are issued with what is known as a periodic tenancy. A periodic tenancy is regularly renewed at a specific point; it is usually granted from week to week, or from month to month. It can be brought to an end unilaterally, by the tenant or landlord.

As co-operatives are not legally capable of granting secure or assured tenancies, the rights of the landlord and the tenant are defined by the tenancy agreement. So, instead of statutory security, co-operatives ensure that tenants have security through the decision-making practices and policies, of which the tenants are a part. In addition, they usually give tenants an additional degree of security by inserting a clause in the tenancy agreement specifying the circumstances in which they would end the tenancy, such as non-payment of rent. The tenancy can still be ended if either the tenant serves notice or the co-operative issues a notice to quit, but the clause in the agreement specifies that the co-operative can serve notice to quit only in certain specific circumstances, such as non-payment of rent, which I have already mentioned, or antisocial behaviour or some other pre-defined breach of the tenancy. By and large, that system has operated effectively for co-operative housing projects in the UK for some time.

However, the Supreme Court’s Berrisford and Mexford ruling has thrown that practice into doubt. Ironically, the ruling has stemmed from the clauses in the agreements that are designed to offer greater security to tenants. The Supreme Court ruled that the clauses in the co-operatives’ tenancy agreements that specified particular circumstances in which the tenancy could be brought to an end actually created an uncertain term, and as no tenancy can be for an uncertain term, the Supreme Court ruled that it should instead be considered as a tenancy for life. That means that, instead of a periodic tenancy that was routinely renewed at regular intervals, the Supreme Court said that the tenancy should be considered as a form of tenure that is more commonly associated with home owners, because under the Law of Property Act 1925 a tenancy for life lasts 90 years or for the lifetime of the resident.

Again, that decision might sound technical, but it potentially has very wide-ranging implications for housing co-operatives, bringing in a wide range of legal provisions

11 July 2012 : Column 141WH

that are primarily aimed at home owners and that are therefore inappropriate for co-operatives. First, that is because, unlike periodic tenancies, fixed-term tenancies such as the ones I have mentioned cannot be ended with a notice to quit. Instead, they must be ended through mutual agreement or, where there has been a breach of tenancy, a legal process that is again usually associated with home owners. I understand there has already been a case in which a co-operative member has successfully argued a “Mexfield defence” against possession proceedings, arguing that in effect, he had a 90-year fixed-term tenancy that could not be ended with a notice to quit.

There are concerns that this ruling could open the door to potentially complex and costly legal processes. Determining whether co-operative tenancy agreements are periodic or fixed-term tenancies is not easy, and co-operatives across the UK are waiting to see how the county courts interpret the Supreme Court’s ruling on possession orders. They are scrutinising their tenancy agreements to consider what they can do to eradicate any uncertainty, while avoiding costly legal disputes. They know that currently, the only real way to determine the status of these tenancy agreements may be through the courts.

I have already outlined the impact this ruling might have on housing co-operatives in the unfortunate circumstances where possession proceedings are needed, but its implications could also impact on the day-to-day running of housing co-operatives for residents. For example, I understand that residents will no longer be able to rely on the so-called “right to repair” outlined in section 11 of the Landlord and Tenant Act 1985, because that only applies to tenants with a short tenancy.

Gavin Shuker (Luton South) (Lab/Co-op): I congratulate my hon. Friend on raising this very important issue. I was very pleased to be one of the people helping him out on his ten-minute rule Bill. When I speak to housing co-operatives, it strikes me that one of the issues they are concerned about is the implications of this ruling for housing benefit. Can he say a few words about that?

Jonathan Reynolds: Absolutely, and I too am aware that this issue is causing significant concern. The concern stems from the understanding that co-operative tenants would be entitled to claim housing benefit only if clarification was sought. As I understand it, housing benefit is not usually payable to people with leases over 21 years, so this ruling would cause a significant problem to those people. Can the Government confirm as a matter of urgency whether co-operative tenants, like other tenants, would still be eligible to claim housing benefit?

When making the judgment, Supreme Court Justice Baroness Hale highlighted the fact that the rule about certainty was invented long before periodic tenancies. Others, including the retired Law Lord, Lord Browne-Wilkinson—back in the early 1990s, I believe—have acknowledged that this area of the law is not in a satisfactory state. I understand that CDS Co-operatives, the largest co-operative housing service agency in England, is already seeking to bring a test case before the Supreme Court. That case will ask the Court to consider whether the principle that a tenancy cannot be for an uncertain term can be overturned. However, that process will be long and costly, and even if CDS Co-operatives succeeds,

11 July 2012 : Column 142WH

the Supreme Court may rule that it is the role of this House and Parliament, not the Court, to change precedent derived from an interpretation of centuries of feudal law.

The Supreme Court ruling has raised serious questions for the co-operative housing sector. It would be wrong to leave the sector to deal with that fallout alone, so today I ask the Minister whether he can offer urgent assistance to housing co-operatives as they try to navigate their way through the implications of the judgment. However, I still firmly believe that Parliament needs to change the law in this area.

As my hon. Friends the Members for Luton South (Gavin Shuker) and for Rutherglen and Hamilton West (Tom Greatrex) said, last year I introduced a private Member’s Bill that would have acknowledged co-operative housing in law for the first time. I argued that existing landlord and tenant law assumes a fundamental conflict of interest between landlord and tenant and that that was inappropriate for the co-operative model. I suggested that the new form of tenure would open the way for the expansion of co-operative housing schemes at a time when the UK faces a significant housing crisis. The change in the law would formally have acknowledged the nature of housing co-operatives for the first time, but it would also have had the potential to increase access to affordable housing and would have enabled members of housing co-operatives to build up financial equity at a time when people are finding it harder than ever to take their first step on the housing ladder. That point is in response to what my hon. Friend the Member for Luton South said, because if that Bill had become law, it would for the first time give people a real option between ownership and renting. By virtue of being a member of the co-operative, they could pay an amount of money appropriate to their income, giving them an equity stake that would grow. They would not face the financial hurdles of buying for the first time, but they would have a greater stake than if they were simply renting.

In many countries, co-operative housing tenure is already recognised as a distinct way for members to acquire the right to occupy their homes. For example, in Sweden, where 18% of the population live in housing co-operatives, that has been part of the law since the 1920s. I am delighted that, in Wales, the housing White Paper, “Homes for Wales”, gives due prominence to the need to support co-operative schemes through legislation, committing to create co-operative housing tenure in Welsh housing law. I congratulate the Welsh Labour Administration, the Welsh co-operative movement and the Minister for Housing, Regeneration and Heritage, Huw Lewis AM, on Wales being the first part of the UK to do so.

The importance of the issues highlighted by the Berrisford v. Mexfield ruling is inextricably linked with the seriousness of the growing housing crisis in the UK. I am sure that I need not remind hon. Members here today that in the private rented sector, rents are increasing more quickly than wages, and at a time when living standards for working families are being squeezed and people are under huge pressure. Local authorities and housing associations own 1 million fewer homes now than in the late 1970s. Families can no longer rely on social housing. With the average price of a property in the UK in excess of £165,000, it is now harder than ever for first-time buyers to step on to the housing ladder.

11 July 2012 : Column 143WH

We urgently need to find solutions to the problem. Co-operative housing schemes do provide an alternative solution. They can offer affordable, quality accommodation to residents, while empowering them to play a key role in the decisions that relate to their property. What is more, they have the potential to attract new investment into the provision of much-needed housing. We should be doing all we can to support the growth of the co-operative housing sector. We need to do more and we should start today by supporting existing co-operatives in the wake of the Berrisford v. Mexfield judgment.

5.33 pm

The Parliamentary Under-Secretary of State for Communities and Local Government (Andrew Stunell): It is a pleasure to speak under your chairmanship, Mr Weir. I congratulate the hon. Member for Stalybridge and Hyde (Jonathan Reynolds) on bringing this matter to the attention of the House today. I want to establish my own credentials in two ways—first, by geography in saying that he and I have adjacent constituencies, which have some common problems and issues. I also want to establish my credentials in relation to the co-operative movement. My first paid job was with the co-operative movement in Manchester, and it seems to have stood me in good stead as a foundation for my career, such as it is.

The hon. Gentleman has been a very assiduous supporter of the co-operative movement. This debate, coming in the international year of the co-operative and following his private Member’s Bill, is relevant and timely.

The hon. Gentleman also referred to the fact that after the demise of his Bill—at least at its first attempt—he met my right hon. Friend the Minister for Housing and Local Government to discuss in some detail his proposals and how they might move ahead. The Government have no hesitation in agreeing with the hon. Gentleman about the importance of the co-operative principle. It is certainly in tune with the Government’s thinking about decentralisation and democratic engagement and with our view that powers should be returned to local communities, local neighbourhoods and local tenants’ associations. Tenant empowerment is a notable feature of the Localism Act 2011, which came into law earlier this year.

Overall, we aim to rebalance power from central Government to local authorities and local people and to deliver the housing that communities want and need and that, as the hon. Gentleman made clear, is certainly urgently required. We are doing a lot to achieve that and to create new models to deliver additional housing. I am sure that he recognises that co-operative models of delivery and development would be welcome in that pattern; I do not think that they could ever be an exclusive, or probably even a substantial part of the sector. It is important to distinguish some of the fundamental differences between the history of the housing market in Scandinavia and in this country. We are all prisoners of our own history and models of development. Nevertheless, co-operative models can make an important contribution.

I am sure that the hon. Gentleman will also recognise that this Government, in investing £4.5 billion in developing social and affordable homes, are responding strongly

11 July 2012 : Column 144WH

and positively to the need for low-cost housing. We will deliver 170,000 new social and affordable homes by 2015. I must say for the record that that is somewhat in contrast to the outgoing Administration, which in 13 years reduced the stock of social rented homes by more than 400,000. We are turning back that figure.

Jonathan Reynolds: Just for the record, the Minister mentioned our neighbouring constituencies. I know that he knows my area well, as I know his. When the Government give statistics like that, it does not reflect schemes such as one that he will be aware of that was pursued in Hattersley in my constituency. It fundamentally turned around the housing market in that area. Yes, it reduced some of the stock, but it resurrected the market and invested a great deal. That must be reflected. It is not just about housing; it is about homes and quality of life for the people who live in those homes.

Andrew Stunell: Indeed. I can look over my constituency boundary at Hattersley. I fully understand the work being done on regeneration there. We have continued it with investment that will deliver 150,000 additional decent social homes in this spending review period. The hon. Gentleman and I have some shared objectives, but I thought that it was important to put on record what has been achieved so far and what our aims are.

I turn to some of the hon. Gentleman’s specific points. The Government believe that getting people involved is the key to making healthy, strong communities and places to live. That is encapsulated in the empowerment White Paper, which the Government recently published. We recognise that members of housing co-operatives are more likely to be active members of the community and engage in other areas of governance in the community. For instance, they are school governors, and so on. In other words, people in co-operatives and with co-operative tenancies are often the joiners and doers of a lively community.

Gavin Shuker: The Minister makes a compelling point about the involvement of many people in housing co-operatives. Will he outline what specific work has been done at the Department for Communities and Local Government with reference to the implications of the Berrisford v. Mexfield case that we are discussing?

Andrew Stunell: Indeed, I shall come to that shortly.

The Government, working with the Homes and Communities Agency, is engaged with the Confederation of Co-operative Housing as the lead member of the Mutual Housing Group, which is considering how we can develop an investment fund to support the co-operative sector. I understand that a meeting this autumn will take that forward. I hope that that shows the Government’s earnest intent to ensure that the sector is not left out of the investment and development that we have in mind.

I recognise the uncertainty that the judgment may have created for housing co-operatives and welcome the Confederation of Co-operative Housing’s issuing guidance to its members. I am sure that Opposition Members will know that that guidance makes it clear that co-operatives need to think carefully about how they word their tenancy agreements in future. However, if they get that right, co-operatives should still be able to end tenancies in a straightforward way, through service of a notice to

11 July 2012 : Column 145WH

quit. Even if a lifetime tenancy is deemed to subsist, a co-operative landlord can still rely on a breach of a term of the tenancy, for example, failure to pay rent, to obtain possession. That is broadly the same position pertaining to most other social tenants.

It is important to recognise—I am sure that co-operatives do—that there is no standard model tenancy. Therefore the Mexfield judgment has to be taken as a case relating to a particular form of tenancy. I believe that the co-operative movement has received advice about different tenancy agreements in different areas, saying either that they are subject to the Mexfield judgment or, alternatively, that a particular version is not. It is certainly a fine legal point and I would not set myself up to judge that. In short, we do not need a new form of co-operative housing tenure. We need existing tenancy agreements to be in accordance with best practice—Mexfield avoidance compliant, if I can put it that way—to avoid any of the consequences that the hon. Member for Stalybridge and Hyde mentioned.

I am sure that the hon. Gentleman will have received the message from my right hon. Friend the Minister for Housing and Local Government about his proposed Bill. We are not clear what a new co-operative housing tenure would look like or what benefit it would bring in practice. His Bill might have the perverse effect of giving occupiers of co-operative housing fewer rights than tenants in social housing, local authority or housing association properties. I am sure that he would not want that to be the outcome.

Jonathan Reynolds: I understand how the advice that the Minister received may have come to that, but will he acknowledge, for the record, that the rights and obligations of the members of a co-operative are democratically determined by its membership? The Minister’s argument could be based on the fact that some tenants in social housing have statutory rights to defend them, but the whole point of a co-op is that decisions are made democratically by a co-op’s membership, so in practice they would not have fewer rights. They would probably have many more rights than people in equivalent forms of social housing.

Andrew Stunell: I would certainly hope that that is right. One would expect a high level of mutual respect between tenants who form the co-operative. However, as the current example shows, that is not always the case. The Mexfield case went to court because that fundamental appeal to common sense and common rights broke down and the individuals saw fit to challenge the basis on which the contract had been formed.

That makes a point that is highly relevant to the work that the House does when it considers legislation. Legislation is not primarily for the use of people who have common sense; it is to regulate people who have not got a great

11 July 2012 : Column 146WH

deal of common sense. In developing a new tenure system, one has to be very aware of any perverse consequences that might be brought to light. It is also quite—in fact, very—important to make it clear that, even if the hon. Gentleman’s Bill were suitably amended and then passed, it would not apply retrospectively. The measure cannot unilaterally and retrospectively change the terms of tenancy agreements already in force. It is therefore still important for co-operative associations that believe that they may have a kind of tenancy agreement that falls foul of the Mexfield judgment to take appropriate steps at their level to amend it and to seek to get their tenants and members of that co-operative to sign up to that.

There were perhaps a couple of other points that it is worth my mentioning to try to deal with the issues raised—although I want to make it clear that both I and the Department are more than ready to enter into a continued discussion with the hon. Gentleman and his supporting colleagues if they feel that more work still needs to be done.

The outstanding point related to the applicability—or eligibility—of a tenant who had been affected by the Mexfield judgment to apply for housing benefit. First, sensible and workable solutions are certainly available locally through the tenant and the co-operative agreeing to a suitable amendment to the tenancy to ensure that there is no room for doubt. As far as I can see—if I can make an appeal to common sense—that would overcome any difficulties that might theoretically arise in that circumstance. I take it for granted—as I hope Opposition Members do—that, from more or less the day of the Mexfield judgment onwards, all future tenancies let by co-operatives will avoid this rather strange detour in contract law as established by the High Court.

Co-operatives are keen to work with the community sector to attract private sector funding, which was a point made by the hon. Gentleman. I have already mentioned that the Homes and Communities Agency, which acts as the mediator of the Government’s social and affordable housing programme, is in discussion with the co-operative housing societies and I very much hope that a fruitful outcome will be produced in the months ahead. Again, I am more than happy to share with him the progress made, although he might well have his own sources of information on the other side of that discussion.

I hope that my response was full, but I know that the hon. Gentleman will be assiduous in telling me if it was not. The Department is more than happy to engage in further discussion, if appropriate.

Question put and agreed to.

5.49 pm

Sitting adjourned.