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Earl Russell: My Lords, when the Minister says that it was the will of Parliament to impose a benefit penalty, is he aware that he means that it was the will of another place?

Lord Mackay of Ardbrecknish: My Lords, I thought that the other place was included in the term "Parliament". I presume that the noble Earl is pointing out to me, although I do not believe that I was here at the time, that this House did not perhaps agree with the Government's proposals but that the other place did. However, I do not wish to rehearse the arguments we had earlier today in that respect. Clearly the end part of the Bill--now the Act--was as I have stated.

In deciding whether to impose a requirement to co-operate the person acting on behalf of the Secretary of State must consider if there is any evidence of risk of harm or undue distress to the child. Welfare of the child is, therefore, already considered.

The reduced benefit direction is intended to ensure that parents with care consider carefully their decision not to co-operate without good cause. To be effective, a sanction must be applied in cases where co-operation is refused for no good reason. In deciding whether to impose such a direction regard must be had to the welfare of the child. But the welfare of the child cannot be considered in isolation and it is not the paramount consideration. Regard must also be had to the purpose and principles of the child support Acts; the obligation of both parents to support their children; and the advantages of receipt of maintenance. The

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child support scheme would be seriously undermined if the imposition of a reduced benefit direction was considered, in every case, to so adversely affect the welfare of the child that it should not be made. I hope, therefore, that the noble Earl will feel able to withdraw his Motion.

I turn now to the regulations which also formed part of the noble Earl's speech and that made by the noble Baroness, Lady Hollis. The regulations make important changes to underpin the Government's commitment to the principles of child support, as well as making a number of minor changes to improve child support operations.

The noble Baroness, Lady Hollis, said that it would be a great deal better if the CSA was doing better; indeed, the agency has had difficulties and we have never made any secret of that fact. However, it is improving year by year. In March 1996 an accuracy rate of 79 per cent. was achieved. Therefore, progress is being made but, of course, that is being made against the background that there are many men out there who do not want to pay and who are pretty unwilling payers. In such circumstances there will always be difficulties for the agency.

The most substantial changes in the amending regulations which have been mentioned both by the noble Earl and the noble Baroness are those to the reduced benefit direction provisions. Many noble Lords will recall that Section 46 of the 1991 Act provides that a reduced benefit direction may be imposed on a parent with care in receipt of an income related benefit who fails to co-operate with the Child Support Agency without good cause. The regulations make important and, in our view, necessary changes to those provisions. First, they increase the amount and duration of the benefit reduction; secondly, they remove, in certain cases, the six-week cooling-off period given to parents with care before a reduced benefit direction is considered.

The regulations also include a provision to amend the confidentiality rules to ease the appeals process; provisions to enable the agency to gather information to decide whether a case should be taken on, and to decide the best way of enforcing a maintenance assessment; and a number of minor and technical amendments to ease administration and underpin existing policy.

Perhaps I may turn first to the reduced benefit directions, which are really the key to the whole debate. We have been increasingly concerned about the large numbers of parents with care refusing to co-operate for no good reason. In the year 1995-96, the Child Support Agency investigated over 112,000 cases where the parent with care had responded to the agency's initial inquiries indicating an unwillingness to co-operate. In the same year, administrators accepted the parent's reasons for not co-operating in just under 39,000 cases, and no further action was taken. In just over 27,000 cases the parent with care refused to authorise maintenance action despite being required to do so and a reduced benefit direction was imposed.

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Of even greater concern is the number of parents with care who do not make any contact with the agency to say why they do not feel able to co-operate. Following the recommendation of the Select Committee, the Child Support Agency recently undertook a detailed investigation of the operation of the requirement to co-operate. In the sample survey used for the report, the parent with care had failed to make contact with the agency in no fewer than 45 per cent. of cases where a reduced benefit direction was issued.

7.45 p.m.

Baroness Hollis of Heigham: My Lords, does the Minister agree that that represents 34 people out of the 27,000 cases?

Lord Mackay of Ardbrecknish: My Lords, I shall come to that matter later. I referred to 45 per cent. of the sample. One can hardly move from the sample to the total number involved.

Baroness Hollis of Heigham: My Lords, I believe that the sample was 72, therefore the Minister has evidence on 34 cases and from that he is speculating as to the situation of the other 27,000.

Lord Mackay of Ardbrecknish: My Lords, as I said, I had intended to deal with that point at a later stage. However, perhaps the noble Baroness would prefer me to deal with it now. I quite agree that the sample was not a big one; indeed, it was a sample of 72 cases. That sample illustrated a problem for which there is wider and statistically valid evidence. The Benefits Agency review, which was based on a sample of over 1,600 cases, showed that almost 20 per cent. of lone parents had claimed benefit fraudulently or were strongly suspected of doing so. Therefore, there is some evidence to show that this is a problem. In fact, I believe that the Select Committee was thinking along those lines when it suggested that we should look at the issue.

It is clearly unacceptable that there are people who are not telling the Child Support Agency what the position is and who are just leaving it at that. The agency has a very good record in handling good cause interviews, and complaints have been very few. Indeed, I believe that the noble Baroness mentioned that point in her speech. The good cause procedures are designed specifically to establish whether the parent with care has genuine concerns. There is no evidence that anyone has suffered harm from the absent parent as a result of being required to co-operate. Again, I believe that the noble Baroness mentioned that fact.

It is perfectly reasonable to expect a parent with care to make her case to the agency. However, this high non-compliance rate must lead to the conclusion that, in at least some of these cases, there may be fraud or collusion between the parents to avoid child support liability.

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It also appears that the problem is getting worse. In 1994-95 19 per cent. of cases investigated resulted in a reduced benefit direction, and last year the figure was 24 per cent. I do not believe that we can allow that trend to continue. Accordingly, we are forced to the conclusion that current penalties are inadequate and provide insufficient incentive to those minded to abuse the child support system.

Just as an absent parent should pay maintenance if he can afford to do so, so a parent with care should co-operate in the pursuit of maintenance unless she has a good reason not to do so. Currently, a parent with care who refuses to co-operate with the agency without good cause may have her benefit reduced by 20 per cent. for six months, followed by a reduction of 10 per cent. for a further 12 months. It is regrettable that these penalties are necessary at all; in an ideal world they would not be. It is essential that the level of the benefit reduction reflects the seriousness of the parent's decision not to comply. The regulations before the House today will encourage the parent with care to think more carefully about her decision.

We achieve that aim by means of the following changes. First, Regulation 14 provides that the reduced benefit direction will be increased to 40 per cent. of the adult income support allowance for three years. The direction will be immediately renewed if the parent with care continues to fail to comply.

Secondly, Regulation 13 provides that only parents with care who give their reasons for not co-operating in writing will have the benefit of the six-week cooling off period. In all other cases, the Secretary of State will refer the case to a child support officer to consider imposing a reduced benefit direction immediately the parent with care fails to respond to the relevant notices. Even parents with care who fail to make any contact at all will still have ample opportunity for reflection and time to contact the agency if they choose to do so. No parents with care will have their benefit reduced before they have had a minimum of nine weeks to consider their position. During that period they will have received an offer of an interview and no less than five written communications from the agency. In addition, it will still be necessary for two agency officials to consider the case.

Perhaps I may explain the new procedure to the House. As now, when a parent with care applies for a relevant benefit she will receive the CSA 12C letter which explains that she may be required to co-operate with the agency and asks her to return a declaration saying whether she intends to claim good cause. If she returns the declaration to say that she thinks she, or any child living with her, will be at risk of harm or undue distress if she co-operates, this is considered. If she returns the declaration to say that she is prepared to authorise the recovery of maintenance, or if she does not return the declaration at all, a maintenance application form is sent after 14 days. She will then be given 14 days to complete that form, after which a reminder is issued giving her another seven days if the form has still not been returned. She will then receive a letter asking her to return the form, or give reasons in writing as to why she thinks she should not have done so

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within two weeks or the case will at the end of that two-week period be referred to a child support officer to consider a reduced benefit direction.

If within two weeks she gives her reasons why she should not be required to co-operate, she will be given six weeks before the case is referred to a child support officer to consider a reduced benefit direction, even though officials may not think that the reasons that she gives are sufficient to justify good cause. Once the case has been referred to a child support officer, he will allow the parent with care a further two weeks to make representations before he makes a decision on a reduction of benefit.

So noble Lords can see where the nine weeks arises. It will take at least nine weeks before a parent with care receives a reduced benefit direction. There is therefore plenty of opportunity for the parent to get in touch with the agency or attend an interview to explain her circumstances. A reduced benefit direction is the last resort and the agency's procedures and letters make this very clear.

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