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Earl Russell moved Amendment No. 35:

Before Clause 18, insert the following new clause:

("Exempt income of absent parent: amendment of Schedule 1 to 1991 Act

. In Schedule 1 to the 1991 Act, after paragraph 5 there shall be inserted—
"5A.—(1) Regulations implementing paragraph 5 of this Schedule shall ensure that the exempt income of an absent parent or a parent with care includes—
(a) an allowance in respect of the full amount of any council tax or water charges in respect of the parent's home;
(b) an adequate allowance in respect of the liabilities referred to in sub-paragraph (2) below.
(2) The liabilities in question are any debts, obligations or other liabilities of the relevant parent which—
(a) are legally binding on him (whether under civil or criminal sanction); and
(b) arise from transactions effected, or events occurring, before the date specified in sub-paragraph (3) below.
(3) The date in question is—
(a) in the case of an absent parent, that on which he first received a maintenance enquiry form under this Act;
(b) in the case of a parent with care, the date on which she first submitted to the Secretary of State a completed maintenance application form under this Act.
(4) An allowance in respect of a liability referred to in sub-paragraph (1) (b) above shall not be regarded as adequate within the meaning of that provision, unless (on the basis of weekly equivalence) it is at least equal to—
(a) the amount payable periodically by the parent in question in respect of the liability in question under arrangements which were in existence at the date referred to in sub-paragraph (3), where such arrangements then existed; or
(b) in any other case, the minimum amount which would be necessary to enable the liability to be discharged by periodical payments within 12 months of the effective date of the maintenance assessment in question." ").

The noble Earl said: My Lords, Amendment No. 35 is, in effect, a rule of law amendment. It deals with certain other expenses which should be taken into account. It proposes an allowance in respect of the full amount of any council tax or water charges and an adequate allowance in respect of a number of others. It applies to both the absent parent and the parent with care, so the Minister cannot answer it by continuing to preach the gospel according to St. Mellons.

The liabilities for which an adequate allowance is to be made are debts, obligations or liabilities which are legally binding under civil or criminal sanction and arise from transactions before, in the case of the absent parent, he first received a maintenance inquiry form or,

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in the case of the parent with care, when she submitted a completed maintenance application form. In other words, it deals with liabilities honestly entered into before any liability under this Act arose—in short, with prior liabilities.

The Minister will be in considerable difficulty if he starts trying to argue that this is downgrading the priority for child maintenance. Child maintenance is necessary but I cannot see that it should be argued against the law. The Minister argued when we were on this matter last time—I am trying not just to repeat what I said before but also to respond to what he said—that this would create an improper difference between families subject to the CSA and other families outside. That is not a valid argument. It is really quite the other way. All the rest of us, if we have binding legal liabilities which we cannot get out of, have to meet those liabilities and we have to attempt as best we can to maintain our children out of what is left.

If I were to owe a large debt to my bank I would not be able to get away with telling my bank that I could not pay it because I had to maintain my children. I do not think that it would be particularly impressed. If I were so unwise on my way home tonight as to drive in a way which incurred a court fine I could not tell the court that I could not pay the fine because I had to maintain my children. I would get very short shrift indeed for that answer.

I do not see why people who are subject to the CSA should be in precisely the same position. They, too, have certain legal liabilities which they must meet—under civil or criminal sanction, in the words of the amendment—and if they do not, they suffer penalties. If the formula is having the effect of putting them in a position where they cannot meet those liabilities—which I know from my postbag is often the case—account must be taken of it.

We have a government who purport to uphold the rule of law but tend to see the rule of law in ways almost exclusively to their own advantage. But that is not what the rule of law is about. The rule of law is supposed to be an impartial rule between subject and ruler. We need some recognition of the need for people to keep the law. If the Minister argues otherwise, he must insert into the Bill, which he presumably still could do at Third Reading, a proviso allowing people, in order to enable them to pay their child maintenance, to default on their court fines, to default on their legal debts, to default, indeed, on their income tax. If he did that he would be going against a very long history of the Crown's attitude to its own debts. It would be a profoundly mistaken approach. If he has any respect for the rule of law he ought to accept this amendment. I should like to hear what he is going to do about it. I beg to move.

10.30 p.m.

Lord Mackay of Ardbrecknish: My Lords, this amendment would extend the range of expenses which can be included in exempt income, which is the part of a parent's net income which is not available for payment of maintenance. It represents sums allowed for a parent's basic expenses.

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Exempt income includes standard amounts for the normal living needs of the parent and any of his children who live with him; an allowance for housing costs and, where appropriate, an allowance towards the cost of travel to work. In addition, an absent parent keeps at least 50 per cent. of any income over and above his exempt income. The broad principle is to ensure that all absent parents should retain a substantial proportion of their net income after paying maintenance, so that they have flexibility in planning other expenditure. The Government recently underpinned this principle with a provision to cap maintenance payments at 30 per cent. of an absent parent's net income.

The amendment proposes making provision for council tax. There is no allowance for council tax in the basic maintenance calculation. It is an expense to be met from the margin of income left over after maintenance has been paid. An allowance for council tax is, however, included in protected income. So there is a safeguard for less well-off absent parents. Water charges should similarly be met from the absent parent's remaining income after maintenance. I would remind your Lordships that people on income support have to meet these charges from their benefit. After all, an absent parent would be left at least with benefit levels in excess of these levels. So absent parents would not only have the equivalent of income support rates allowed before maintenance is calculated, but they would actually keep a large proportion of their income above these levels. Therefore, they are not in a different position from someone on income support who has to meet these charges from that income support.

The proposal would also make allowance for any other legally binding liabilities which were incurred before the Child Support Agency's involvement in the case. Allowance would be made irrespective of the amounts involved, of whether or not the parent could afford to meet the liability when it was first acquired; or of the nature of the debt or obligation, even if it was for luxuries or for some other purpose which might reasonably be considered less important than the support of the parent's own child.

Your Lordships will be aware that the departure system proposed under the Bill will make provision for certain debts and other financial commitments where these are causing difficulty. We believe that the departure system, with its provision for discretion and for balancing the interests of all parties, is a more equitable way of dealing with these issues than that proposed by the noble Earl, which would allow any and all such liabilities automatically to take precedence over the child's needs.

The noble Earl's proposal also includes provision for liabilities under criminal sanction. Fines are a sanction against people who break the law, not against their children. To suggest that an offender should be able to offset a fine against his child support liability strikes me as totally unacceptable. I am not going to fall into the rather clever, but totally false, trap that the noble Earl tried to lay for me, that if I am not prepared to allow it to be offset, then I should excuse them from paying a fine. That really is a false trap. The position is that anyone who incurs fines has to try to pay for them out

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of income. They are allowed to pay them in weekly instalments to the court, so there is a way in which they can spread their fines. I shall resist saying that they should avoid getting themselves into a position of having to pay fines in the first instance. The fact is that I do not believe that it would be in any way proper to say that payment of a fine incurred by an absent parent should be given precedence over the maintenance due to his child.

The exempt income calculation already makes allowance for a parent's basic living costs, and he keeps at least 50 per cent. of his income over and above that. The new provisions for departures from formula assessments, which we have already included in the Bill, will deal with exceptional expenses. I believe that this amendment goes much further than is acceptable. With my explanation of where I stand on this, I hope that the noble Earl will feel able to withdraw it.

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