Draft Child Support Fees Regulations 2014
Draft Child Support (Ending Liability in Existing Cases and Transition to New Calculation Rules) Regulations 2014
The Committee consisted of the following Members:
Anderson, Mr David (Blaydon) (Lab)
† Birtwistle, Gordon (Burnley) (LD)
† Djanogly, Mr Jonathan (Huntingdon) (Con)
† Drax, Richard (South Dorset) (Con)
† Garnier, Mark (Wyre Forest) (Con)
† Green, Kate (Stretford and Urmston) (Lab)
† Harrington, Richard (Watford) (Con)
† Hilling, Julie (Bolton West) (Lab)
Lazarowicz, Mark (Edinburgh North and Leith) (Lab/Co-op)
† McDonnell, John (Hayes and Harlington) (Lab)
Paisley, Ian (North Antrim) (DUP)
† Perry, Claire (Devizes) (Con)
† Roy, Lindsay (Glenrothes) (Lab)
† Ruffley, Mr David (Bury St Edmunds) (Con)
† Selous, Andrew (South West Bedfordshire) (Con)
† Syms, Mr Robert (Poole) (Con)
† Webb, Steve (Minister of State, Department for Work and Pensions)
Mark Oxborough, Committee Clerk
† attended the Committee
The following also attended, pursuant to Standing Order No. 118(2):
Reid, Mr Alan (Argyll and Bute) (LD)
Second Delegated Legislation Committee
Monday 3 February 2014
[Mr Graham Brady in the Chair]
Draft Child Support Fees Regulations 2014
4.30 pm
The Minister of State, Department for Work and Pensions (Steve Webb): I beg to move,
That the Committee has considered the draft Child Support Fees Regulations 2014.
The Chair: With this it will be convenient to consider the draft Child Support (Ending Liability in Existing Cases and Transition to New Calculation Rules) Regulations 2014.
Steve Webb: The regulations were laid before both Houses on 2 December 2013 and enable the Department for Work and Pensions to charge application, collection and enforcement fees for the statutory child maintenance scheme introduced in 2012 and delivered by the Child Maintenance Service. The regulations also make provision for the Department to close cases on the 1993 and 2003 schemes delivered by the Child Support Agency and they specify the means by which existing clients must exercise their choice to make an application to the 2012 statutory maintenance scheme. I am satisfied that both instruments are compatible with the European convention on human rights.
It is important that I set out a little of the background and explain why we are closing cases and introducing charging because the measures are more than technical. The background to the regulations is in Sir David Henshaw’s 2006 report on child maintenance, which was initiated by the previous Government and which called for a clean break from the past. Rather than tinkering yet again with existing schemes, we are entirely reforming the child maintenance landscape. The regulations contain not just a different set of definitions or rules, but a different philosophy. We want to enable and encourage families to sort things out for themselves wherever possible. We recognise, however, that that will not always be possible and emphasise that a statutory scheme will still exist, but we want the norm—the presumption, the first place people go—to be to try to sort things out, with help and support, for themselves, because that is clearly in the long-term best interests of the children, and of the family in most cases.
We are reforming the child maintenance landscape to put collaboration and family-based arrangements at the centre. All too often, the statutory child maintenance scheme has been seen as the default option. Indeed, previous Governments forced people to use the Child Support Agency, but we do not do that anymore. If parents work together and share the responsibility of sorting out the care of their children, their children do better. That is why we are building on the excellent work already delivered by the voluntary and third sectors by investing £14 million in the help and support for separated
families initiative, directing parents to the support they need during and after separation. There has been some misunderstanding, so I want to stress that we are not simply saying, “Go away and sort it out for yourselves,” or “We have a few pilots and we will have some ideas in a few years’ time.” Networks of help and support exist; steps, which I will discuss in a moment, have already been taken; and we intend to develop further support as time goes by.The three things in the help and support for separated families initiative that I want to flag are the Sorting out separation web application, the innovation fund and the help and support for separated families mark—like a kitemark. The web app—I encourage hon. Members to try it for themselves—is designed to help parents who may be thinking about or going through separation to identify their needs and priorities. It is hosted on websites that parents already access and enables people to look at not only child maintenance, but also shared responsibilities, housing, money and a raft of other things, through a diagnostic tool. It provides information for parents on both emotional and practical issues, such as managing conflict, parenting apart, housing, money and employment. The web app is there now. We do not have to wait for our pilot projects to finish. We have taken that initiative. The web app also directs parents to expert organisations that can provide specialist support. More than 50 organisations have embedded the web app on their websites and more than 400 links to the app have been created since launch from some100 websites.
Why is this important? The presumption is that we help and support people to sort things out for themselves, so they have to have somewhere to go and somewhere to turn to. An internet-based solution is obviously part of the mix, as might be expected, but it cannot be the whole mix. There are therefore also channels available to those who do not have access to or are unable to use the internet, and principal among them is Child Maintenance Options, a freephone service—which we pay for—that provides free and impartial information on the various ways to set up maintenance arrangements.
I recently visited Child Maintenance Options and was impressed. I listened in on phone calls to the knowledgeable and trained staff. Gingerbread, for example, recently visited Child Maintenance Options, too, and saw for itself the service that we are providing free of charge to parents going through a difficult time. For the record, I was impressed by the skill, professionalism and commitment to delivering for separated families that those staff demonstrated.
The point of Child Maintenance Options is to provide free and impartial information and support. In addition, for clients who are particularly vulnerable, such as those with learning difficulties, there is the facility for face-to-face interactions. We work with a range of other organisations, with which we share information, to ensure that they are able to provide support on child maintenance and the reform programme to separated parents.
The Child Maintenance Options service is in place now and will be expanded as our case closure programme gets under way. To give a sense of scale, I understand that since Child Maintenance Options was set up, more than 1 million calls have been made to the service. Some people say, “Oh, why don’t you hold off while your pilots are sorted out?”, but we already have substantial infrastructure in place to help separated families today.
In addition, earlier in 2013, we launched the help and support for separated families mark. The idea is to provide confidence to parents that the support services that they are accessing will uphold the principle of parental collaboration between separated parents. Organisations applying for the mark are assessed against a set of standards developed by external experts in the field. By early February, we expect 35 organisations to have the mark; the majority are national organisations which already have telephone or face-to-face support services in place. I therefore stress the point that help is available now to provide information and support following separation, and we have plans to scale this up as case closure leads to rising demand.
We also want to innovate. That is why we are doing more to test new and innovative ideas to help parents resolve conflict and work together on a range of issues in the best interests of their children. That is why we have spent almost £10 million on 17 voluntary and private sector organisations through two rounds of the innovation fund. All seven of the round 1 projects are up and running, with some real success stories. The second procurement round of this fund came to a close in early December and the 10 new projects are expected to launch in March of this year. All projects will be completed by 31 March next year.
Some of the projects target newly separated parents, but some target parents who have been separated for longer. That is important, because if we consider the roughly 1 million families in the current child support system, they cover the entire waterfront. Some will be very long-term separated and have had no contact at all, and we want to know what works for them and what enables them to set up a family-based arrangement. We want to deal with teenagers; what are the issues for a teenaged single parent and a teenaged non-resident parent? What about particular minority ethnic groups? What about people coming out of prison? There are many different groups who might need different approaches, and that is where our innovation fund projects teach us new things.
To give the Committee a flavour of the success stories, one of the things that we found was that where parents are basically at war with each other, the children often suffer. That is not rocket science, is it? Where our projects have been able to get the parents talking to each other and working together, one of the by-products is not only that child maintenance starts flowing, but schools report children doing better. I came across one case study the other day. A child had been struggling at school; we had intervened and helped the parents to have a cordial relationship with each other; and, suddenly, for the first time ever, the child had got full marks in a spelling test. That shows that this is not only about money and child maintenance, but about a much bigger agenda.
For example, a project we are funding is through a charity called Malachi, in Birmingham. In one family, both parents had issues of substance misuse. In this case, the mother was the non-resident parent and she had not had any contact with the son for 12 months. The child had been asking to see the mother since the contact had stopped, but the father was negative about it; the child’s school were in touch, the child had started to be excluded at lunchtimes and the situation was quite a mess. The project worked with local social services
and got together with the parents, involving a child advocate in all the conversations. The result is that the child is now spending time with mum as well as dad. The school reports a happier child, because the child has more routine in life, and there is now much more prospect of dealing with matters such as child maintenance.People often say to us that we have a rose-tinted view of what happens when people separate: “You think people can sort it out for themselves, but when people have separated, sometimes they hate each other.” We know that. We get that, which is why such projects are dealing with some of the most difficult, entrenched situations and doing innovative new things to overcome those barriers. The fact that we are funding projects of this sort demonstrates that we recognise that everything in the garden is not rosy. Every separation is different. Some will be acrimonious, some will involve domestic violence and some will be sorted out with little support. There is a spectrum, which is why tailored support must be available. All those initiatives—the web app, Child Maintenance Options, the help and support for separated families mark and the innovation fund—are attempts to support parents to work together in the best interests of the children.
Obviously, we cannot stop there, because we know that even with all that support in place, it will not always happen. That is why there will be what we call the 2012 scheme. It is worth reminding ourselves that this is Government’s third go at this issue. The 1993 scheme, undoubtedly introduced with the best of intentions, was a shambles. The 2003 scheme, also introduced with the best intentions, has more or less collapsed. We have more than 100,000 cases that the computer system just cannot cope with, and that are now done manually somewhere in Bolton. We cannot just have another go at this and get it wrong again. It is vital that we do it differently this time around.
The 2012 system was introduced via what is called in the jargon a pathfinder approach, meaning that we started with a small number of families—those with four or more children—late in 2012, to see how our processes worked and ensure that things were working. Then, in July last year, we expanded it to include new cases involving families with two children. In November 2013, we opened the scheme to all new applicants. It has assured us that the processes, procedures and client interfaces are working well. We have learned our lessons from the previous systems.
The House often wants statistics from me on the issue. We want to be as helpful as we can, but we are also wary about putting out figures that we are not sufficiently confident are of sufficient quality. To tell the House what we know so far, we published figures in November 2013 on a one-off experimental basis saying that in August 2013, we had had just over 3,000 applications and in September, nearly 4,000. As I said in evidence to the Select Committee in November, we now estimate that we are receiving about 10,000 new cases a month. I hope that that gives the Committee some sense of scale. I stress that all those figures are subject to audit.
The service that we are bringing in under the 2012 system is designed to increase the number of payments reaching children, offer the taxpayer better value for money and allow speedier processing of applications, simpler calculations and faster enforcement. To listen to some of the criticisms of what we are doing, one would
think that it is about less maintenance for fewer families. It is about more maintenance for more families and better value for the taxpayer. I believe that when we look back on the measure, it will be seen as one of the more enlightened changes that we implemented, because it considers the whole person and the whole family, not just the finances.Moving on to the issue of fees—which is the central aspect of the draft regulations, as I said at the beginning—the design of the new system has its origins in the independent review conducted by Sir David Henshaw and set up by the last Labour Government, which recommended a fee for applying to the new service and for continuing to use it. Our reforms put responsibility into parents’ hands, so we have introduced charges for parents who submit an application to the 2012 system as well as charges if the collection service is used, but we have ensured that they are proportionate and should not deter people who need the service from using it.
Charging parents, particularly parents with care, is not a decision that we have taken lightly. We undertook a consultation on the draft regulations to seek feedback, and we published the Government response in November 2013. The record shows that we have substantially amended our proposals in the light of feedback that we have received. Specifically, in our consultation, we proposed a charge of £100 to access the scheme. That was felt to be too high. We did not want to put off people who needed the scheme, so we have reduced the fee by four fifths to £20, a substantial response to the consultation. The £20 fee strikes a balance. It is meant to get people to pause and think—“Hang on, I’ve got to pay for this. What am I getting for it? Could I do it for myself?”—rather than simply defaulting to the statutory scheme. If it were free, the danger is that all 1 million cases, or the best part of them, would simply go straight from one system to another, and we would be exactly where we started. The £20 fee is a stop and think fee, and is not intended as an insurmountable barrier for those who cannot make a family-based arrangement.
Even with a £20 fee, there are substantial exemptions. When individuals—vulnerable applicants—declare that they have experienced an incident of domestic violence or abuse and have reported it to one of a large range of organisations, which are named in the guidance referred to in the regulations, they will be exempt from paying the application fee. I have met charities representing those who have suffered domestic violence. The charities will speak for themselves, but my impression of the feedback they gave me is that they warmly welcome the broad definition of domestic violence we have used and the very long list of organisations to which violence can be reported. The definition is broad and intended to be as comprehensive as it can be. Those under 19 years of age will also be exempt. Not only have we substantially reduced the application fee, but we have also made sure that vulnerable groups are protected.
When we consulted on the fee for the parent with care, we proposed that it would be between 7% and 12% of the maintenance assessment. We listened to the view that that was too high and reduced it to 4%, a figure outside the range on which we consulted. The higher non-resident parent collection fee of 20% fairly reflects the far greater control they have over being in the
collection service and provides them with a greater incentive to meet their responsibilities. The collection fee is five times greater on the non-resident parent than on the parent with care. We believe that both parents should contribute.Let me give a sense of why we think the proposed charging level is reasonable. We estimate, very roughly, that the total amount of child maintenance gathered, which is a bit over £1 billion a year, divided by the cost of running the agency, which is about £400 million, shows that it costs 35p for every pound of maintenance we collect. One way of looking at it is that the cost of running the scheme is 35p per £1 of maintenance collected. The charge we will make on the parent with care is 4p, so we could say that 4p out of the 35p comes from the parent with care, 20p comes from the non-resident parent and the rest comes from general taxation. We are charging a tiny fraction of the true cost of running the schemes.
What about the £20? We know that with the two old schemes—the 1993 scheme and the 2003 scheme—the average non-zero maintenance award is about £35 per week and cases typically run for several years. Twenty pounds to get an average of £35 a week for many years is a tiny fraction—just a few days of maintenance in order to get a flow of maintenance that can last for years. In terms of proportionality, £20 is reasonable. The focus of the 4% is principally on a small contribution towards the significant costs of running the scheme. We have also said that we will not introduce the charges until we are confident that the system is working well. What people get for the money will be a better system than the one we have now.
I shall give one example of why the 2012 system connects directly to the HMRC computer. We have probably all had constituents’ cases where the non-resident parent was asked for pay information, but they mysteriously never got the letter. It was sent again, but they mysteriously never replied. They were then chased, so they sent in one payslip. They were told that that was not enough, so they sent in some more. We can see how weeks turn into months. The 2012 system links straight to HMRC, gets the data from the computer and those data come straight back in a matter of days. We can get an assessment done without needing to ask non-resident parents for the information. That means that arrears do not start to build up and there is a streamlined service. For a modest application fee and a 4% charge, people get access to a much higher quality service.
To give a sense of what would happen if we did not go ahead with the scheme, I can tell the Committee that we estimate that the revenue from charges, once the system has gone through transition and is in a steady state, will be about £170 million a year, principally from non-resident parents who have to be forced to comply, but not including the impact on the number of people who will now make family-based arrangements. Anyone who today chooses to reject the regulations needs to explain where £170 million a year will come from, if not from these measures.
However, we do not want to charge anybody a collection fee. We would much prefer that people pay directly, if they come through the statutory scheme. Therefore we have made provision that neither parent needs to pay fees if there is an agreement to use direct pay. Direct pay is where the Child Maintenance Service does the maths
and calculates the amount payable, and then the non-resident parent gets on with it, making the payments directly to the parent with care. Direct pay will provide a way for parents to access the statutory service in a way that can help rebuild trust. For example, if there are worries about revealing identity or geographical location, we have set up mechanisms whereby the non-resident parent can pay into a non-geographic bank account, so that the privacy of the parent with care can be protected.In a sense, we have a continuum. The ideal situation is the family-based arrangement. Failing that, we have the statutory scheme but direct pay, where no collection charges apply. Then, we have the collect and pay scheme, where there are collection charges; on top of that, there are enforcement charges if necessary. However, what we are trying to do all the time, and recognising that relationships are dynamic things, is to nudge people down that spectrum of conflict towards better outcomes for children. Currently, there is little or no incentive for non-resident parents to pay in full and on time, whereas under the new system the 20% penalty will mean that they really want to get out of the collection system.
The introduction of charges is a significant change and I can reaffirm the Government’s commitment, under section 141 of the Welfare Reform Act 2012, to review the effect of the fees regulations and to lay that report before Parliament within 30 months of their beginning. Not only are we doing something new but we will come back, within 30 months, to see what impact it has had and whether or not we need to tweak the system. That is our commitment.
The second set of regulations deals with case closure. One option would be to take the 1 million cases in the old system and plonk them in the new one. There are some very good reasons why we are not doing that. The first is that this is a new philosophy and a new way of doing things; we are trying to get people to sort things out for themselves. When we have surveyed people in our case load, many of them have told us that, with the right help and support, they could have sorted things out for themselves. If we just transfer them all en bloc to the new system, we would still end up with 1 million-plus families in the child support system. It is better to close the cases, to prompt people to think about whether they can sort things out for themselves, and then those who cannot do so can come back through. That is the first reason.
The second reason is the 20% charge on the non-resident parent. We cannot simply go from a situation where people are paying under the current system, move them to a new system and add 20%, when their behaviour is exactly the same in both systems.
The third compelling reason is that the data on the old systems are in a complete mess. We have the 1993 computer, the 2003 computer, the clerical data—all of that has, frankly, built up over the years into a complete shambles. The new scheme will be a clean start where people have reliable data. For example, the income information all has to come from HMRC, so the old income information would not be any use to us, and so on.
I should add that one consequence of moving to this new system is that there will be a set of people who will receive more child maintenance. To listen to some of the commentary, people would think that this change is all about providing less child maintenance, but, for example,
the average award under the new formula for 73% of cases will be higher under the new rules than under the old rules. Our critics did not mention, when they made out today and earlier that somehow this change is about providing less child maintenance, that there will be higher average awards. Also, we are taking people who have a zero award and reassessing them, and we think that in tens of thousands of cases that will result in a positive award. Those are people who are receiving no child maintenance currently, but we think they will start to get some. I do not recall that being mentioned by our critics either.Let me just run through the case closure process. Under the power in the regulations, we plan to end the ongoing maintenance liability in all 1993 and 2003 scheme cases by the end of 2017. Many parents in the Child Support Agency were forced to be there by the Government of the day because they were claiming benefit, while other couples, who have been separated for some time, may now have come to a better relationship with each other. Bringing CSA liabilities on previous schemes to an end, and then giving parents the chance to reconsider their choices, will help many more of them to move to collaborative arrangements and avoid charging.
The majority of clients will be given at least six months’ notice that their ongoing maintenance liability is going to end. This is intended to allow sufficient time for them to consider their options and to make the best arrangements for themselves. One group—a small proportion—of clients will receive notice that their case is going to close 30 days before their liability ends. That is because when an application is received to the 2012 scheme, which is linked to a case on the ’93 or 2003 scheme, the Department has to ensure the non-resident parent has an ongoing liability on only one scheme at any time.
In all cases clients will be directed to contact the Child Maintenance Options service. That was launched in 2008 and, as I have said, it has handled more than 1 million telephone calls, and its website has had more than 1.8 million unique visitors.
Child Maintenance Options will be the gateway to the statutory service, ensuring that parents who want to use the 2012 scheme to make a fully informed decision about their child maintenance arrangement will have considered making their own arrangement first. A flexible, personalised conversation will take place with each individual; it will be designed to make sure that parents consider the full range of options before they apply to the Child Maintenance Service. The statutory collection service is no longer the default option.
Where appropriate, options will promote the benefits of making a family-based arrangement with parents, help them to overcome the barriers they face to working together, and provide them with the tools to make effective arrangements. Those who say that they are victims of domestic violence and abuse will be fast-tracked through to the 2012 scheme. When parents make an application to the 2012 scheme, provided they do so before the date when their liability ends, the Department will ensure that there is no break in the underlying maintenance liability.
During consultation on the regulations we made a change to the order in which cases will be closed, to avoid disruption to continuing maintenance; it may be
of interest to hon. Members, because it is to do with the sequence in which people who might well approach their MPs about the matter will be contacted to have their cases closed.The details are included in the scheme that accompanies the regulations, but I will outline the order in which we have decided to close cases. First we shall close cases where the non-resident parent is assessed to pay a nil amount. Out of more than 1 million cases on the child support system, there are more than 160,000 such cases, with an assessment to pay nothing. Sometimes that is because the data are out of date. For example, a non-resident parent who was a student when the child was born would have had a nil assessment. A few years on, they could be a graduate with a good job, with whom the system had never caught up, who was not paying anything towards the welfare of their child. We would close the case. If the parent with care wanted to come back through the system, we would contact the non-resident parent and use their current income information from pay-as-you-earn or Her Majesty’s Revenue and Customs. We might well find a significant maintenance liability.
The critics who say that we will get less child maintenance out of the system are missing an awful lot of what will happen. We are starting with the cases where the only thing that can happen is the reassertion of a zero, or a positive maintenance result. That must be a better outcome for the families in question than the current system, where the income data are often years out of date.
When we have dealt with those 160,000, we will take the next 140,000 cases where the non-resident parent is non-compliant. It might seem a bit odd to close those, but they are the ones in which we are getting no maintenance. Often enforcement will have been attempted and failed, and the case will be sitting dormant on the system. Those will be closed, and the families will have the chance to sort something out for themselves or to come back through the new system where we can get access to HMRC and other data, and try to carry out enforcement.
Again, one of the strengths of the new system is that the agency will not be spending all its time shuffling paper, and recalculating because someone’s income has changed slightly from one week to the next. The basis of the work will be annual income, with regular updating once a year but not much change within the year. The agency will be able to spend more time chasing the people who will not pay, and less on bureaucracy. That must be in the interest of children, and that is the change in the balance.
People may be unaware of another of the scheme’s beneficial features. How often do constituents ask hon. Members to obtain a breakdown of their child maintenance account—payments and assessments? We envisage that this year we will begin to enable people to log on to their own child maintenance account, to see their assessments and what they have paid. People will be much more in control. The new system, for which we are asking a modest charge, will be much more customer-friendly.
After closing the cases of the people who are non-compliant, we will close the clerical cases—the ones that hon. Members hear about most in their constituency surgeries, because, as we know, they are often the ones
where customer service is not as good as it should be; the data are not on the computer, and there is a big file of papers. There are 40,000 of those cases. Then we will close the other non-clerical compliant cases—another 420,000.The final group is an important one: the ones on which there is an enforced method of payment or legal enforcement action under way, such as deduction from earnings orders—there are 130,000 such cases. Non-resident parents in that category will be invited to undergo a positive test for compliance. They will have a six-month period to demonstrate that they are now able to pay voluntarily. That will inform our decision as to whether they should be allowed to pay the parent with care directly, and avoid collection fees, if an application is made to the 2012 scheme. Arrears on an existing case will continue to be payable even after liability has ended, and we published an arrears strategy a year ago demonstrating our commitment.
We are carefully managing the introduction of the 2012 scheme. We will not introduce collection fees until six weeks after the regulations have come into force, or begin the process of closing cases until we are confident that the scheme is working well, which we expect to be in the summer of this year.
The context of this is all. It is not just a technocratic change, with changes to percentages, formulae, orders and cases and all the rest of it. It is about a new approach to child support. First and foremost, it is about help and support for separated families, the vast majority of whom, if they can, want to sort things out for themselves. If they cannot, there is a statutory scheme, but even within the statutory scheme there is a fee-free approach, whereby direct payment will result in no fee beyond the initial application fee. Only if the non-resident parent will not pay do we have the collection charges, and then a contribution towards enforcement costs, if necessary. This is a new approach with the interests of children at heart and, therefore, I commend the regulations to the Committee.
5.1 pm
Kate Green (Stretford and Urmston) (Lab): I thank the Minister for introducing the debate this afternoon, in which he set out some of the detail behind the Government’s plans for the closure of existing child support schemes and the transfer of cases to the new 2012 scheme, and the introduction for the first time of fees to be levied on parents with care and non-resident parents in the 2012 scheme.
Although the regulations were accompanied by a lengthy impact assessment, I think all would acknowledge that the new scheme, particularly the introduction of fees on parents with care and non-resident parents, takes us into relatively uncharted territory. Other jurisdictions do levy fees on separated parents but the context may be very different. The schemes may, for example, be compulsory or accompanied by collection processes, where the default position is for automatic deduction of sums owing from earnings or other income.
It is quite hard to predict the effect of the 2012 scheme, although the Government have been pretty clear about what they want to achieve from it. As the impact assessment reminds us, the twin policy objectives that were set out in the Green Paper “Strengthening
families, promoting parental responsibility” were to achieve cost savings for the taxpayer, as outlined by the Minister, and to create an incentive for parents to work collaboratively to make family-based arrangements, rather than enter a statutory scheme.We cannot be certain of the likely effect of the changes on parents’ behaviour and on the case load. The review of the scheme within 30 months of implementation, required by an amendment to the Welfare Reform Act 2012, will therefore be very important indeed. The Government are, of course, optimistic. Their impact assessment assumes fewer cases entering the statutory scheme as a result of the changes and suggests that the proportion of effective arrangements will rise from 60% in 2012-13 to 70% by 2031-32.
However, those figures come with some question marks, given that they assume that all direct pay and family arrangement cases will be effective. That is a brave assumption, as the present pattern of compliance and family cases may not be a guide to what will happen in future, when family arrangements become merely the lesser of two evils, rather than a positive choice by parents already disposed to co-operate.
The Minister alluded to the fact that the Government expect to score substantial financial gains from the introduction of the new scheme, especially as a result of charging fees: £30 million from application fees on transition and £1.4 million annually; £2.142 million from collection fees on transition and £164 million annually; and £66 million on transition and £4 million annually from the enforcement fees. Fees both bring in income and reduce running costs, as more parents are deterred from using the system.
What remains striking and worrying, however, is that Ministers have in no place expressly articulated an increase in the amount of maintenance in payment as a specific objective of the new scheme. Indeed, at one point I think the Minister referred to that as a by-product, which took me by surprise.
The effectiveness in getting maintenance flowing to children is surely the test of success that should apply. Children growing up in one-parent families face a significantly higher risk of poverty than those in couple families and even modest amounts of maintenance can make a difference to them. It is therefore vital that a careful watch is kept on the new scheme’s impact and the levels of maintenance paid. In that regard, the conclusion of the Lords Secondary Legislation Scrutiny Committee on 19 December last year was that while the scheme
“may make savings it may imperfectly achieve the overarching objective of providing financial support for children”.
I turn to some of the new scheme’s details. The Minister described the situation whereby once phase one is working well, there will be a move to introduce fees and migrate cases from the existing schemes. He hopes that that will happen quickly and spoke of the success already being claimed for the scheme to date. I must say, however, that, as I listened to him, I could not help but feel that it is quite early days to be drawing strong conclusions on how well the scheme is working, as it has been open to all new applicants only since September. Will he provide more detail on how the
scheme is performing so far? How speedily are payment arrangements being put in place and, as a result, how speedily is money starting to flow?Will the Minister tell us a little more about how the interface with HMRC is working, for self-employed non-resident parents in particular? As he knows, there is a long history of such parents being able often to conceal their income; for example, through the way in which their business accounts are prepared.
To what extent are liabilities building up within the collection service? Are those being fully met? What arrears, if any, have built up so far? I noted what the Minister said about wanting to be cautious about publishing statistics too early, but, when those are available, will they show how many cases transfer from direct pay to the collection service and vice versa? By what criteria will the Government decide when it will be appropriate to commence the migration? In a written answer on 23 January, he told me that they will determine when the new scheme is operationally ready for the transfer of cases in accordance with
“the Department for Work and Pensions Project Change Lifecycle Framework”.—[Official Report, 23 January 2014; Vol. 574, c. 263W.]
Will he tell us what the means in practice and exactly what criteria will be applied?
The Minister will know that in many cases it will not be easy for parents to make their own arrangements, especially those transferring from the existing statutory schemes. Gingerbread and Families Need Fathers, in a joint letter to him, highlight that 13% of non-resident parents and 14 % of parents with care describe their relationship with the other parent as “not at all friendly” and 42% of non-resident parents and 41% of parents with care in the current scheme had no contact with one another at all.
The impact assessment states that 51% of parents with care and 74% of non-resident parents said that they would be likely to make family arrangements with the help of trained, impartial advisers. Much was made in the Green Paper, and by the Minister today, of the support that will be available for parents. The Minister at the time that the Green Paper was published, now the Secretary of State for Culture, Media and Sport, the right hon. Member for Basingstoke (Maria Miller), said that the Government’s approach was to offer an integrated model of family support services to help parents reach agreement. The Minister described to us how far some of those services have got to date. In particular, he alluded to the help and support for separated families pilots. It is concerning that the second tranche of pilots has not yet got going and that, as I think I heard the Minister say, the entire pilot programme will be completed within one year, but the learning from the pilots will not have been able to inform the design of the complete range of support services. By that stage it is likely that we will be well into the transfer of cases and will have accepted new cases into the scheme. Will the Minister clarify whether the availability of adequate support services is one of the project change lifecycle framework criteria, as it ought to be?
Will the Minister tell us more about the plans for evaluating the family support pilots? The issue relates not only to the transition; we must assume that there will be a continuing need for family support services when the scheme is running at a steady state, and the
pilots need to point to what long-term support is needed. What objectives have been set for the pilots, and what criteria will be used to assess their effectiveness? The most important success measure, in the context of the regulations, is whether they contribute to the flow of maintenance. Will that be addressed, and has it been explicitly presented as an objective in the pilots that have been funded in the recent innovation funding round? What plans are there to publish the evaluation findings, and when can we expect to see the first results—in particular, those from the first phase of pilots, which are already under way?Finally, on transfer cases, it is worrying that previous payment history will not be considered when enforcement cases are transferred to direct pay. The Minister said that there will be a six-month period during which a non-resident parent, subject to enforcement action, will have the opportunity to demonstrate that they are willing to pay on a voluntary basis. However, it seems perverse to ignore past failure to pay—particularly repeated failure—which, on the face of it, would seem to offer good evidence that direct pay is not appropriate and that the parent with care is likely to need to access the collection scheme. Will the Minister assure the Committee that he will keep that under careful consideration? Will there be flexibility so that the most extreme and recalcitrant non-resident parents with care who have significant patterns of non-payment can be admitted to the collection service on transfer? That would considerably reassure those families.
I turn to the issue of fees. The Ministers have been explicit that their purpose is to create a disincentive to discourage parents from using the statutory scheme. I was interested that the Minister today acknowledged a fact that was borne out by a written answer to Lord Kirkwood of Kirkhope on 23 January, which set out some of the financial imperatives, and explains the Government’s enthusiasm for the fees. In the written answer, the Department says that it expects to achieve operational cost savings of £413 million from the closure of CSA cases and the roll-out of the new 2012 scheme. In the same period, however, it admits that it will spend an additional £416 million in closing about 900,000 cases, in additional IT development, in cleansing arrears balances on all existing cases, and in giving information and telephone support via the options service to all parents on case closure.
The DWP, as the Minister acknowledged, is relying on expected fee income to achieve departmental savings targets. It is difficult to avoid the feeling that financial considerations are driving the introduction of the fees. As for their deterrent effect, the Government’s statistics show that a third of new CSA applicants have already experienced a broken private arrangement, more than half have experienced violence or abuse from the non-resident parent and almost six in 10 have poor or non-existent relations with the other parent. The reasons why parents with care enter statutory schemes are not trivial, and we should be cautious about deterring them from doing so.
The level being set, especially for the non-resident parent, is not insubstantial. A non-resident parent with three qualifying children and an income of £21,000 a year will face collection fees of around £60 a month, according to the impact assessment, in addition to the
maintenance payments that will have to be paid. For about half of non-resident parents, the liabilities under the new statutory scheme will be at least £5 a week higher, with around 9% of non-resident parents—approximately 80,000—experiencing a rise of £40 a week or more.All that creates a danger that, far from improving incentives to pay voluntarily, non-resident parents will be unwilling or unable to pay the amount owing, with downward pressure on the level of maintenance that is paid. What is more, it seems perverse to charge a parent with care a collection charge when she or he will be able to access the scheme as a result of the Child Maintenance Service finding that the non-resident parent was unlikely to pay. In such circumstances, the notion of incentivising the parent with care to stay out of the collection scheme seems to be decidedly misplaced.
The collection fee for parents with care seems to be particularly harsh when there is a pattern of non-payment by the non-resident parent. I understand that Ministers are pretty determined to get parents with care out of the collection service and back into direct pay as quickly as possible. Somewhat oddly, given that the fees are intended to incentivise behaviour, it is doubtful that the 4% collection fee will act as a sufficient deterrent for parents with care to do that. There are real concerns about the parent with care getting into the collection service and then being quickly managed back out by the Child Maintenance Service because payments from the non-resident parent begin to flow, as they should, only to find herself or himself again seeking to get back into the collection scheme because non-payment by the non-resident parent resumes. Can the Minister tell us exactly how the parent with care will be managed through, and perhaps out of, the collection service? Will she or he have the choice to remain in the collection service, or will that be up to the Child Maintenance Service? If the latter, Gingerbread has suggested there should be a minimum period before a parent with care can be removed from the collection service. That is a helpful suggestion on which I would welcome the Minister’s comments.
May I press the Minister on what will happen if the parent with care is not happy with a decision to remove her from the collection service or to refuse her access to it? In a written answer to me, the Minister effectively said that there would be no right of appeal for a parent with care who was not permitted to use the collection service. Instead, she or he would have to complain initially to the independent case examiner, then to the ombudsman, and ultimately, if necessary, could seek judicial review. That seems a highly unreasonable and potentially highly protracted process for the parent with care to have to follow to get the money owing for the maintenance of children, particularly if there has been a pattern of non-payment by the non-resident parent. It is unacceptable that Ministers should deny a proper right of appeal against a decision by Child Maintenance Service officials. I hope that the Minster will consider that and put it right.
It is, of course, welcome that in cases of domestic violence, no application fee will apply, but even when such violence has been alleged or admitted, the non-resident parent can still use the direct pay scheme. That seems to create a risk of payment being used as an instrument of abuse or control. In such cases, it is crucial that the privacy and security of the parent with care are protected, and I welcome the recognition in the impact assessment,
which was repeated by the Minister this afternoon, that a money transfer option will be needed to enable the parent with care to prevent any contact information from being divulged.The Government suggested in their response to the consultation, which was published on 5 November 2013—the Minister referred to it this afternoon—that non-resident parents might be required to use appropriate banking services to pay. The Government suggested in their response:
“We are considering introducing regulations to compel, where appropriate, non-resident parents using Direct Pay to make payments through such banking services. These services will be free of charge to both parents.”
I do not think that has appeared in regulations, but I know that there are some ideas for bank accounts with non-geographic sort codes, for example, to be available to parents with care. Will the Minister say whether there have been discussions with the banking sector about whether it would be willing to offer such accounts to parents with care, particular those who may have poor credit histories? I would welcome the Minister updating us more generally on the progress of the establishment of such banking arrangements.
There are many unanswered questions about the impact of the 2012 scheme. Although new processes and fees are likely to reduce volumes, and family arrangements will work for some, the characteristics of those who enter into them in future will be very different from those who have made them hitherto. Support to enable parents to make their own arrangements is still at an early stage in many cases. We have not yet seen the outcome and learning of any respectable pilots, let alone been able to put those learnings into practice, despite the Minister’s assurances that such support would be at the heart of the new scheme. If parents do enter the statutory service, the impact of fees on maintenance paid is at best uncertain and might even exacerbate failure to pay. The incentive argument lacks logic. For example, no account is taken of the possibility that a non-resident parent might be a serial non-payer. Even in such circumstances, the parent with care is expected to be incentivised to persuade him or her to pay by way of a collection fee.
Against that backdrop, with considerable uncertainty about future patterns of maintenance payment, it is deeply worrying that the Government have not set themselves an overriding objective of increasing the flow of maintenance to children as their principal policy aim. That is the test that really matters and on which the success of the 2012 scheme must be judged. I press the Minister to bring forward the review of the working of the scheme to the earliest date possible, because concessions may be urgently needed if maintenance to children is disrupted or reduced as a result of the new scheme. No one would wish to see that, but as matters stand, despite the Minister’s confidence this afternoon, there is real risk that we will see less maintenance flowing, in particular to some of the children who have experienced the most difficult family circumstances.
5.22 pm
John McDonnell (Hayes and Harlington) (Lab): I hope the new scheme works, but I am fearful for it. I deal with CSA cases regularly, and at one point I was having regular meetings in the House with a CSA special investigation team.
My fear involves the typical case of the parent with care of the children coming to see me because they cannot obtain the income from the ex-partner. Usually it is a woman, who will have tried to reach amicable agreement—I have not yet dealt with a parent who has not at some point tried to reach an amicable agreement—and then used the CSA service as best they can. My worry is that the parent who innocently cannot obtain agreement from the ex-partner, has used every possible mechanism to chase the ex-partner and still cannot get the money will receive the penalty, the 4% charge. I do not understand how that can be equitable. It is not the fault of such parents that their former partner is not paying. They do not need an incentive to resolve the matter amicably, because the vast proportion of them have tried that.
In a number of cases, payments might start, stop and start again, as my hon. Friend the Member for Stretford and Urmston mentioned, and some people try to avoid payments in that way; some simply cannot afford to pay, and struggle to pay, because of the burden that that has placed on them. If the parent with care is put under more financial pressure, it undermines their ability to achieve some form of amicable settlement.
I read through our briefings from Resolution, a group I know and that represents lawyers and family professionals acting on behalf a large number of parents, which expresses its concerns. I also read the Gingerbread briefing, according to which, based on the current average weekly CSA assessment of £34, children stand to lose more than £70 a year on average if maintenance is collected on their behalf by the Child Maintenance Service. That is its assessment. To most of us, £70 does not sound a lot, but it is an awful lot in my constituency. Save the Children’s survey from 18 months ago demonstrated that families in many parts of the country could not afford a warm coat for their child, and my constituency is one such area. The winter before last, we were handing out warm clothes. That £70 is the equivalent of a child’s warm coat. I cannot support a system that increases the burden on the innocent parent. I cannot understand why that person has to pay for a system when the parent who is meant to be paying is not. It is inequitable.
I understand what the Minister said about setting up support services, which I welcome, and one key such service is a forum to help separated parents overcome conflicts, which is vital. I am worried that, as my hon. Friend said, it looks as though the pilots are not starting until March or May of this year, and that the service will not be fully available for some time. That undermines some of the arguments for parents seeking to resolve things amicably when agreeing support for their children. Not only are we not providing the service across the piece, we are not even allowing the pilots to start before we rush to judgment.
I have read all the briefings, but I do not want to go into all the technicalities; I just think the proposal is inequitable. When a parent comes into my surgery and I have to explain to them that, through no fault of their own and despite them doing everything that is appropriate and everything that they possibly can to resolve the matter amicably and to chase the other parent for payments, they are going to have to pay what is effectively a 4% fine because their former partner is refusing to pay, I just do not think that it is fair. That is why I cannot support the regulations today and why I would like to record a vote against them.
5.27 pm
Steve Webb: I am grateful to Opposition Members for their comments. There were some common themes that I will try to address before answering some of the more detailed questions.
On the 4% fee, I will draw an analogy with prescription charges. When we charge for a prescription, we are not saying that someone is at fault for being are ill. We are simply saying asking those who are in a position to do so to contribute towards the cost of an expensive public service. That is how I view the 4% fee. If the collection service is involved because the non-resident parent is not complying, there may be some cases where there is an issue about what the parent with care does and how they respond. In some cases there will be an incentive issue, for example. In all cases, however, they will be getting an expensive public service cheaply, relative to both what it costs to provide and what the parent receives.
The hon. Member for Hayes and Harlington spoke of the 4% fee as being a fine and said that £70 is a lot of money. It is a lot of money, but 25 times £70, which is the amount of maintenance that we collect, is even more money. In other words, we are ensuring that the parent would get 96p in the pound of maintenance that we collect. We are setting up a streamlined system, which means that the maintenance should in principle be collected more quickly. We are linking to HMRC, so that things are updated every year. A whole set of families that currently receive zero will get something under the new system. The proposal is actually about getting more maintenance through, and 4p in the pound will be a small contribution towards the costs. At least £170 million would be forgone if we did not make the changes, and that would be paid by taxpayers, including hard-pressed families in Hayes and Harlington, in Stretford and Urmston and in Thornbury and Yate, including lone-parent families and parents on low income.
There is a balance to be struck, because if the parent with care does not pay 4p in the pound and if the non-resident parent does not pay 20p and all the rest of it, somebody somewhere is paying that money. The families involved are getting a substantial subsidised service from the taxpayer, and to ask the non-resident parent to pay five times as much as the parent with care strikes us as the right balance. It is not about finger-wagging at the parent with care and saying, “You should not be in the collection service.” We are saying that it is a valuable public service, and it is striking the right balance to ask someone to make a contribution that represents a small part of the actual cost and the benefit that they derive from it.
The hon. Lady asked several questions about the new system and how it was working, and I may not necessarily answer them in the order in which they were asked. What do we mean by the system working well? I was shocked that she did not know what the project change lifecycle framework was. She tabled a follow-up that effectively said, “So what’s that then, pal?”, and I have seen a draft reply, so she will have a long answer to that question. When she reads my further response, she will see that it is all common-sense stuff. When we say that the system is working well, we mean that it is stable. That means, for example, that there have been no major periods of unplanned outage or slow response times, and that we are confident that we can deal with the
volumes that we are talking about. It is not rocket science; it is the kind of stuff that anyone would expect. It means that when people phone us, chances are we will answer the phone, or when we talk to the HMRC computer, we will get some sensible stuff back. It means that we are confident that we are providing a service that we would be willing to stand up and defend. In my response to the hon. Lady, I gave a more precise indication than we have done in the past, which I have smuggled into my speech. We are aiming to be in a position to move to the next phase by the summer.I understand that the Committee is hungry for information. On my birthday, 18 July 2013—I think that was a coincidence—we published our strategy for publishing information about the child maintenance system, which contains a lot of detail about what we will publish and when. We must publish correct data, and in the early days we are concentrating on getting the maintenance in and out rather than on vast streams of statistical data management information. That is being developed in tandem, and once we are confident about the quality of the data, we expect to publish official statistics after April 2014. The hon. Lady asked about the transfers between direct payment and the collection service, and vice versa. We will have that sort of management information, although it will not be official statistic quality, so we will know what is going on.
In terms of people being better off on the 2012 scheme, I mentioned up to 50,000 cases that could move from being nil assessed to being positively assessed. In addition, we are all aware from our constituency postbag of cases that were assessed some years ago and have got stuck. They have never been reassessed; they are just sitting there. On average, wages are going up year after year, so an assessment that is five or 10 years out of date may be far too low. The use of annual PAYE data from HMRC will mean that those assessments are refreshed once a year, so maintenance assessments will rise as wages and the cost of living increase. That is good news for children. The hon. Lady asked why the aim was not to get more child maintenance, and I have to tell her that children are at the heart of our reforms. We seek good outcomes for children, which involve a whole set of things, including more maintenance and the relationship between their parents.
The hon. Lady quoted from the Lords Secondary Legislation Scrutiny Committee’s reflections on our proposals. That Committee asked us a set of questions, to which we have responded explaining our reasoning, and I believe that that post-dated the report from which she quoted. We have sought to address the concerns that that Committee raised.
Both hon. Members suggested that we should wait until the pilots had finished before we changed the rules. I tried to stress in my remarks—to be fair, the hon. Lady had crafted hers before she heard what I said—that a substantial infrastructure of help and support for separated families already exists. We have taken more than 1 million phone calls through Child Maintenance Options and there have been well over 1 million visits to the website. We have given the Help and Support for Separated Families mark to lots of organisations that provide national telephone services.
Yes, there are pilots, and that is great. They are innovative and they are often deal with niche groups in the population, which in a sense is the point, because
they are about testing new things. We will not know everything about child maintenance—what works and what does not—by the time they have finished in March 2015. There will be a constant process of learning and innovation, but we will not sit here and twiddle our thumbs until we have done some pilots. The infrastructure is in place now and we are developing it as case closure starts, so there is no need to wait.The hon. Lady asked about the 30-month review, and I confirm that that will be presented to Parliament; it will not simply be an internal report that no one ever sees. She raised the position of non-resident parents. On the one hand, she seemed to be saying that parents with care would not get enough money, but on the other, that non-resident parents will be asked for too much money and that 20% is a lot of money for people who have to pay. That payment is voluntary. They do not have to pay 20% on top; all they have to do is pay directly. Saying that the 20% will put non-resident parents off is missing the point, which is to get them to pay directly. If they do so, they never pay a fee. It is entirely voluntary for non-resident parents. We will be able to concentrate on better enforcement, so that we can focus much more on the cases left in the collection service that we need to enforce.
The hon. Lady and the hon. Member for Hayes and Harlington referred to the £70 cost per annum. That is the figure of 4p in the pound. Typically a case lasts nine years in the child maintenance system. Take the £34 average liability: it works out at £1,700 a year. Over nine years, we will bring in nearly £16,000 in maintenance, and a parent with care will have paid us £636. Now, £636 is a lot of money, but £15,900 is a heck of a lot of money. There is an issue of proportion here: yes, we are asking for 4p in the pound towards the cost of running an expensive service but the parent with care is getting 96p in the pound and does not pay us a penny in collection charges unless we actually get the money through. We do not get any of our money unless we actually do the job. That is a far better way forward.
The family-based arrangement is the preference, and the charge is not set to deter—that £20 is set as the pause for thought. If something is free, why would people not use it? The £20 pause for thought is simply to say, “Before you go any further, think whether you can sort this out for yourself.” If not, £20 is, as I said, maintenance for four days in the average case.
The hon. Member for Stretford and Urmston referred to what we might call very non-compliant non-resident parents and asked why we do not simply say, for example, “He’s just a wrong ’un, so we will slap the 20% on come what may.” What we have chosen to do is to send somebody a letter when we start the new scheme, saying that in six months or so the case will be closed. The non-resident parent who has been a bad guy is on some sort of enforcement—a deduction from earnings order, for example. Over that six-month period, we will give him the chance to prove that he can pay reliably on a voluntary basis. The example we have in mind is that if he has a mix of current liability and arrears, we will make the arrears a voluntary mechanism and the current liability an enforced mechanism. The weekly liability will continue for that whole period to be enforced through a deduction from earnings order, so that money will come.
The person has to demonstrate reliably, over that window, that he can pay that money month in, month out through a voluntary method such as a standing order or something like it. The only thing that gets him off the hook of the 20% charge is systematically demonstrating that he is capable of acting differently: if he messes up or messes around he will go straight into enforcement again, including that 20% charge, and is in a worse place than before, because not only is he paying the current maintenance, not only is he paying arrears, but we have put 20% on top. The whole point is to gear the incentives so that people do not go through the collection system but demonstrate that they can pay reliably. Funnily enough, after six months of getting into the habit of paying part of the money reliably there is a chance of moving down the step of escalation and conflict. That is what we are trying to achieve.
The hon. Lady asked an important question about what happens if a parent with care disputes the decision on whether someone is unlikely to pay—a situation in which the Department thinks that it is okay to move to direct pay but the parent with care does not. There are a number of intermediate steps, so it is not the case that it would go straight off to the case examiner. First of all, there is the standard complaints process, which is the normal process in which a team leader checks the decision when it is disputed. If a parent is still not happy, the complaint can go to the complaints resolution team. There are, then, two tiers of internal process; after that, there is the case examiner and then the ombudsman, and, right at the end of the road, there is judicial review. As ever, if there is a capricious or ill-informed decision, or even just a blunder, there are plenty of internal processes to sort it out. It is not simply that the decision is imposed, with no questions asked.
Kate Green: The Minister might be about to do so, but will he address the other half of my question about the parent with care and the collection service—is it entirely for the service to decide whether an arrangement remains within the collection service, or can the parent with care state whether she or he would like to remain within it?
Steve Webb: Once the charging starts, neither parent will be able to block the use of direct pay. The parent with care will not be able to veto direct pay if we are convinced this person is likely to pay. Because of the 20%, it would be wrong for one parent to be able to impose a 20% on someone else who is actually shown as saying that they are willing to pay direct and has convinced the Department that they are willing to do so. The parent with care cannot veto that, but, if they think the decision is wrongly made, they can challenge it, ask for it to be reviewed, go through a complaints process or go to a case examiner. It would not be right for one party to be able to force an extra 20% on the other person who was willing to comply, but was not given the chance to do so.
We have talked about the issue of non-geographic bank accounts, and we are talking to the banking industry. Because the banking products we are talking about do not involve credit facilities, there should not be a problem for someone who has a poor credit history
from having a credit-only bank account, because they are not able to borrow money from it. On our discussions with the banking industry, we are in broad agreement that the policy will work, so we are pretty confident that it can happen.The hon. Lady asked for up-to-date figures on how quickly we are processing all the information. All I have at the moment is anecdotal information. As she said, this is all fairly new. On the cases we have had so far, compared with waiting for a non-resident parent to reply to a maintenance enquiry form and to supply payslips and all that kind of stuff, connecting straight to an HMRC computer and coming straight back is vastly quicker. I cannot quantify that, but that is what we have found so far.
The hon. Lady asked about the self-employed. In a sense, we are in the same position as HMRC on the self-employed. We will use its data. If self-employed people are lying to HMRC, they are lying to the Child Maintenance Service. Obviously, we and HMRC want to make sure that self-employed people are fully declaring their position. We will not run our own separate checks on the self-employment income, because, for consistency, we will use whatever HMRC has.
Kate Green: This is an old argument, as the Minister and some of his colleagues are well aware. We know that, in the past, parents with care have repeatedly gone to the agency with information about the true income of the non-resident parent, particularly when he or she is self-employed. Will it be possible for that information, which parents with care in the past have brought to the agency and which they have felt has been completely overlooked, to be taken seriously in the new scheme?
Steve Webb: There are two ways in which that might happen. First, the default is to go and get PAYE income or earnings data. If the number that comes back does not seem to be representative of the non-resident parent’s living standards, we can go back to HMRC for everything else about their income. If they are living off dividend income, property income—anything that HMRC knows about—we can assess them on that. That is one thing that will be different. To the extent that they have told HMRC—obviously, people do not, but to the extent that they do—we can use that information as the basis for an assessment.
If someone thinks that someone has under-declared their self-employment income to HMRC, that information needs to go to HMRC. If HMRC changes its assessment as a result of that, we will change our assessment. We
will not have two parallel processes of assessing the same person’s self-employment income. That would make no sense.When I was first elected in 1997, the CSA was on the agenda every week in our constituency surgeries—Members who have been in the House a long time will also recall that. The service has improved. We have gone from a situation five or six years ago, where barely three in five non-resident parents were paying something, to one in which more than four in five are paying something. We are moving towards a new norm, where paying one’s child maintenance is just what one does. When relationships break down, paying maintenance is just the social norm. That is where we are trying to get to. Sorting things out for oneself is as normal as we can make it, and that is the basis on which we are making the reforms.
I hope that, when we look back at our debates, we will see that this is a new way of doing things. Yes, elements of it are controversial, as the hon. Lady said. We are in uncharted territory, which is why we have committed to review the policy. I think that the new system will be better for families and for children, and that ultimately is the test of the regulations.
The Committee divided: Ayes 9, Noes 1.
AYES
NOES
Question accordingly agreed to.
That the Committee has considered the draft Child Support Fees Regulations 2014.
DRAFT CHILD SUPPORT (ENDING LIABILITY IN EXISTING CASES AND TRANSITION TO NEW CALCULATION RULES) REGULATIONS 2014
That the Committee has considered the draft Child Support (Ending Liability in Existing Cases and Transition to New Calculation Rules) Regulations 2014.—(Steve Webb.)