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The key question relates to existing cases and existing debt. There are a third of a million cases and £3.5 billion of arrears, each case averaging £10,000. What is going to happen? I listened carefully to the Minister but I heard no answer to that. It is not satisfactory to say that it will be a matter for consultation. It should be a matter for the Government to decide. These are good ideas but action is painfully slow. We must move very rapidly to action and not consultation.
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Lord Hunt of Kings Heath: My Lords, I am grateful to the noble Baroness, Lady Morris, and the noble Lord, Lord Oakeshott, for their comments. I think that I detected some support for some of the principles proposed but I had to work hard to do that. In general, I hope that there will be an opportunity for some constructive debate around the current consultation and the White Paper that will come later in the autumn.
I fully agree with the noble Baroness, Lady Morris, on the moral and legal responsibility of parents to their children. Sadly, the experience of the past 13 years has been that too many parents have sought to evade their responsibilities. That is part of the problem that the agency has had right from the start. There have been signs of improvement in the performance of the CSA in the past year or so, which I shall come to later, but clearly, taken as a whole, the CSA was not delivering what was required of it—hence the need for the Henshaw redesign and the Government’s decisions on the general intent of the way forward, and hence the need for further work in certain areas. Noble Lords have mentioned a number of those areas and I shall come to them.
The noble Baroness, Lady Morris, said that there are two reasons why the CSA is not currently working: the first is the problem of finding absent parents, and the second is the problem of assessing income. She then referred to the need for the agency to assess current income. She will know that there is a requirement to do that frequently if there are changes in income. There is no question but that, as part of the next phase of work in the redesign of the child support system, we will need to look carefully at how to make the system somewhat more streamlined. If she has had a chance to go through Sir David Henshaw's report, she will know that paragraphs 123 to 126 refer to some of the discussions on the role of her Majesty's Revenue and Customs. Sir David suggests that greater co-operation between the CSA and HMRC may be one way of providing further information which can be used. But that is clearly work that we need to take forward.
On the question of tracing absent parents, I agree with the noble Baroness. Under regulations that we passed in this House just a short time ago, the agency already has the power to contract private companies for tracing services. That is part of the new processes which the agency is currently undertaking to improve
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The noble Baroness asked about the level of maintenance disregard. I cannot give her that information now as we need to do further work on it. As the Statement said, however, the increase will be significant. She also asked about experience in other countries and whether such arrangements were likely to provide reverse incentives in family break-ups. I suppose that there is a theoretical possibility, though little empirical evidence to suggest, that that would happen. We are, after all, talking about relatively small sums, and many events and factors play a part in people’s decision to separate. I would also say that in many cases there are additional costs to those who separate and leave the family home. So we do not believe that this will turn out to be a particularly major problem.
I very much agreed with the noble Baroness’s comments on the contact issue. She was right to refer to the Children and Adoption Bill and to the potential for ensuring that contact orders are both made and well enforced. I am sure she is right to say that we cannot link child support payments to contact, as such a dispute is between the two parents and the person who would suffer is the child who does not receive the flow of money. However, I think that contact is very important. The noble Baroness asked what kind of advice we would want to give parents to encourage them to try to resolve some of these issues themselves. We will be establishing a group across government to consider that, because clearly a holistic, integrated approach in dealing with all matters to do with separation would be very beneficial.
The noble Baroness and the noble Lord, Lord Oakeshott, raised questions about a clean break, how that would apply, and what would happen to the current caseload. Sir David Henshaw’s view is that one of the major organisational problems in the history of the CSA—at the beginning, in 1993, and in 2003—was the transferral of cases on to a new system, which has proven extremely problematic, as noble Lords will know. In order to make the new arrangements work effectively, Sir David believes that the new organisation has to start with a clean sheet, and that it will be a major problem if it is contaminated by the existing caseload. He therefore suggests that a residuary body deal with the existing caseload, to reach a situation where parents on the existing system are given an option of discontinuing and going private, as they will be able to resolve issues and carry on satisfactorily, or of going on to the new system as new applicants. We want to consult to see whether that is the right approach. Clearly, if money is flowing satisfactorily from one non-resident parent to the parent with care, the last thing we would want is to disrupt those arrangements.
I have answered one or two points raised by the noble Lord, Lord Oakeshott. On reports to the Front Bench, I have always tried to do my best to give as much advance warning as possible, and I shall continue to do so. The noble Lord talked about the 13
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The noble Lord, Lord Oakeshott, asked about enforcement and welcomed the prospect of new powers, though he also asked whether the agency is using the powers that it has. The answer must be no—historically, the agency did not use its powers to fullest effect. But that is changing. Last year, 15 people served custodial sentences for matters to do with child support, and the number of liability orders has increased considerably. There are good indications that the agency is prepared to use enforcement more enthusiastically. We want that to continue while we are looking at other measures that could be taken.
The noble Lord, Lord Oakeshott, also asked about morale in the Child Support Agency, and he is right to do so. Child support law is in operation. Many cases are going through the CSA system, and it is important that they continue to go through. We have agreed to the operation of an improvement plan, which will continue. We will do everything we can to see that the CSA improves its current performance as we move to the new arrangements. The question of leadership of the future organisations is a matter on which we shall have to decide in due course, but I pay tribute to Mr Stephen Geraghty, chief executive of the CSA, who has now been in post for a little more than a year. He is doing an excellent job and has pulled together a very good executive team. Again, I pay tribute to the work of my noble friend Lady Hollis in enabling that to happen.
Sir David Henshaw's report refers to debt as a matter requiring close attention, and indeed it does require attention. However, I remind the noble Lord, Lord Oakeshott, that we passed an order only a few weeks ago that allows the agency to contract out some of the debt collection, and the move is already showing signs of positive results. The first lot of letters warning customers that debt collectors may soon be coming round to knock on their door has produced a positive response and resulted in money being paid up. We are keen to chase down what debt we can.
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Baroness Hollis of Heigham: My Lords, I welcome two aspects of the Statement and have two worries about it. Like other noble Lords, I welcome the additional disregard which, in so far as it will help to address child poverty, will be splendid. I could only ever get 10 quid out of the Treasury, so any more that my noble friend can get would be a real bonus for children. I hope that the earnings disregard for part-time jobs, which is currently 20 quid a week, will also go up; that will overcome some of the disincentives that the noble Baroness spoke about.
I also welcome the emphasis on co-operation in the Henshaw report and in the Government’s report. Anything that reduces conflict, gets parents to come to an agreement and therefore encourages contact must be good for the child. Agreement, co-operation and additional resources to children are all good for their well-being, and we must welcome them.
My two worries are, first, whether an essentially voluntary system will produce more money for children than a more compulsory one. After all, that is where we all came in in 1992. It can, but only if the parent with care has sufficient leverage vis-Ã -vis the NRP than at present. For example, the NRP may well say, “We’ll agree on 20 quid and you can have it. I know I should be paying 40 quid, but if you go for that, I will duck and weave and you won’t get your money”. He may bribe, lie, withhold information and behave like too many self-employed men by concealing his income. I am sure we all want to ensure that the parent with care has sufficient leverage—perhaps by getting his P60 at the end of each year—to know the basis on which she should expect to get the maintenance to which she and her child are entitled.
Secondly, transition has been only lightly touched on. It is not possible, despite Sir David Henshaw’s report, to have a clean break. If an NRP has a new relationship and a new child, there may also be a child in the old system and a child in the system introduced in 2000. If maintenance is to be arranged voluntarily in the new relationship, the arrangements in the two previous cases have to be recalculated. There is no choice. On average, every new case coming into the system has 2.5 linked cases. I have traced 29 linked cases. They all have to be recalculated. That is why the computers failed last time. I hope that my noble friend will be able to tell us how the linked cases will be dealt with. Any new case under the new system means that the old cases have to be reassessed; otherwise, the NRP is paying too much to all three families.
It is absurd that something like three-quarters of those on the child maintenance assessment system are parents with care on benefit. In turn, the NRPs are largely—60 or 70 per cent of them—on tax credits or jobseeker’s allowance. As a state, we are paying money to them, and if only we could net off the maintenance due to the parent with care and pay the NRP net, we would not need to redesign the system at all. We would get rid of that problem, which forms the bulk of the cases in the agency. It is bizarre. We
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Finally, I thank the staff. They have been mentioned today. They have done a heroic job under difficult, demanding and often abusive circumstances. As a result of their work, around 1 million children are getting maintenance that they would not otherwise get.
Lord Hunt of Kings Heath: My Lords, I welcome my noble friend’s welcome of the general principles on disregard and more co-operation. As to her two worries, Sir David said that a clean break was necessary, and I have already given his reasons for that. He recognised that more work needed to be done to explore the practicalities of that approach. He will be taking that work forward in the next stage. That is why we are having two consultations. We considered it appropriate to bring his first report to Parliament as soon as possible, to state the key things that we are in agreement with and those areas in which further work needs to be undertaken, leading to the White Paper later on. We think this is the best way to consider the kinds of issues that my noble friend has raised.
My noble friend’s second point was to question whether this will raise more money. She said that it would, but that it would depend on leverage by the parent with care. That is an important factor, particularly for vulnerable parents with care, and we must ensure that this system can operate to their benefit. Clearly, some of the work will be on the advice, guidance and focus of that work. It will be open to the parent with care to seek an assessment from the new organisation and to pursue that, but I am taken with the points raised by my noble friend and will consider them carefully.
Baroness Noakes: My Lords, the Minister said that he accepts the recommendation that there should be a clean sheet and a new organisation. That new organisation will need new staff and—God forbid—new computer systems and all that goes with that. At the same time, there is what the Minister referred to as the “residuary body”. He makes it sound as if it is a diminishing body but given the continuing problems—the backlog of payments, the unsettled cases—it will be no smaller than the current CSA, and possibly even bigger, to sort out the problems. So we have something at least as big as the existing CSA and something else. What estimates have the Government made of the cost? They must have made some estimates or they could not have accepted Sir David Henshaw’s recommendation. Will the Minister put that in the context of the 5 per cent efficiency savings to which his department has already committed as part of the current comprehensive spending review?
Lord Hunt of Kings Heath: My Lords, I am grateful to the noble Baroness for referring once again to the challenge my department faces in meeting efficiency targets. I am ever mindful of that. Clearly, more work needs to be done on costings, which will take place
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Lord Kirkwood of Kirkhope: My Lords, the House will want to acknowledge the service that Sir David Henshaw has done in producing his report, but the Minister is right to detect caution in the welcome for it because it is short of detail and of a timetable. The Minister will know that this is the third White Paper about this agency, and I hope that it is third time lucky.
In the White Paper will the Minister make it clear that in the clean break, to which he referred, that Sir David Henshaw recommends—which, as I understand it, entails a move to a commissioner of services rather than a government agency as we have come to know it—the contractualisation and the role played by private contractors will be an improvement on that which the EDS played in providing computer services to the CSA. If there is a White Paper, surely that means there is little, if any, prospect of a legislative slot in the Queen’s Speech to get these changes enacted. When, for example, will the 46,000 resident parents with care who were on income support under the old scheme, and getting paid maintenance but getting no financial advantage, be able to take advantage of this system?
Lord Hunt of Kings Heath: My Lords, I thank the noble Lord for his cautious welcome, and, indeed, for the discussions we have had, in view of his enormously valuable experience in this area. He says that Sir David Henshaw’s first report is short of detail. We are damned if we do and we are damned if we don’t. We deliberately chose, first, to ask Sir David to produce his redesign very quickly; and, secondly, to bring it to Parliament to allow for a short but, I hope, helpful debate on the general principles leading to a comprehensive White Paper later in the year. We could of course have not published his report and done all the work internally and then produced a comprehensive White Paper. I think ours was a better approach.
As the noble Lord says, there have been many attempts to improve the CSA. All have run against enormous challenges. The more of a consensus we can get on the way forward the better, and we think that this approach is the best way for that.
On contractualisation, certainly Sir David Henshaw suggests that he would commend the development of
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Lord Forsyth of Drumlean: My Lords, I hope I am not alone in my concern about the point on disregard. How can it be right that a father who stays and supports his family will pay a higher effective marginal rate of tax than one who does not? That cannot be right and that cannot encourage families to stick together.
Lord Hunt of Kings Heath: My Lords, neither was it right to insist that parents on benefit go down the route of the CSA. That simply stopped parents from acting alongside the issue of, first, no disregard, and then the £10 disregard. It removed the incentives for compliance and for parents trying to resolve these issues together. Surely, it is right to start at first base and to ask: what can we do to encourage parents to try and resolve child support issues? Removing the compulsion from parents with care on benefits and ensuring that they keep more of the money paid by the non-resident parent are the incentives required to make that happen. Over 13 years we have seen the problems of trying to operate the system according to the principles enunciated by the noble Lord. Most of us have reached the conclusion that it simply is not working
Lord Stoddart of Swindon: My Lords, perhaps I may remind the noble Lord, who was not around at the time, that when this system was first mooted in, I think, 1989, there was great publicity, and the electorate and mothers were promised that it would be very much better than the system that applied at that time, and that the Treasury would save £400 million a year. Now we find that, instead of the Treasury saving £400 million a year, it has cost the Treasury—that is the taxpayers—£200 million a year. So we are £600 million worse off every year so far as I can see. That has been an absolute disaster.
I am concerned about what assurances can be given, especially bearing in mind that there will be a larger disregard, that the costs will not go up further than £200 million per year. What about the penalties which non-absent parents will apparently receive, for example, curfews, tagging and loss of passports? Those penalties seem worse than those that muggers and old-people bashers often get from our courts. I hope that has been considered.
My final question is on the compulsory registration of fathers. That will be extremely difficult, particularly in the case of unmarried single young mothers who perhaps have several relationships, who may not know who the father is, and who will not disclose the names of all the possible fathers. I hope that the Minister will think about that before he puts this into operation.
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Lord Hunt of Kings Heath: My Lords, the words on compulsory registration of fathers have been chosen very carefully. We will seek views on this matter. I understand the points the noble Lord raised. Going back to the original point of the noble Baroness, Lady Morris, anything we can do to get more information in tracing non-resident parents is to be desired in getting a more effective system. We must balance out those two considerations.
I was not here during the debate referred to, but I have read with great interest the Second Reading debate in your Lordships’ House led by the noble and learned Lord, Lord Mackay of Clashfern, when the then Government's proposals were put forward and the amount of resource they thought would be gained by the taxpayer. Alas, it has not turned out to be so. The £200 million savings are initial estimates made by Sir David Henshaw, based on the assumption that, with the removal of compulsion, the caseload of the new organisation will be considerably less than the existing caseloads, and there will be a much more efficient administration system.
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