House of Lords - Explanatory Note
Child Support, Pensions And Social Security Bill - continued          House of Lords

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Clause 21: Recovery of child support maintenance by deduction from benefit

260. In the current scheme, where a non-resident parent has no assessable income because he is in receipt of an income-related benefit, a contribution to maintenance can be deducted in certain circumstances. However, there are many exempt categories and, in practice, only around 23,000 non-resident parents make a contribution to maintenance.

261. In the reformed scheme most non-resident parents in receipt of certain prescribed benefits, including income-related benefits and war pensions, will be liable to pay a minimum amount of maintenance (£5) a week. The vast majority of exemptions will be removed.

262. In addition, the parent with care may make an application for a variation against a non-resident parent in receipt of certain prescribed benefits where he has, for example, earnings, an occupational pension or assets. Provision is therefore made to deduct from benefit the amount of child maintenance determined in these cases. Where arrears of maintenance have accrued, an amount may also be deducted from benefit.

263. This clause substitutes section 43 of the 1991 Act (contribution to maintenance by deduction from benefit) with a new section on the recovery of maintenance by deduction from benefits. It increases the range of benefits from which deductions can be made in respect of current maintenance and arrears, and includes deductions from war pensions.

New section 43 - recovery of child support maintenance by deduction from benefit

264. New section 43(1) states that the section applies where the non-resident parent is liable to pay a flat rate of child support maintenance because he (or his partner) is receiving one of a range of prescribed benefits or a war pension. This subsection also allows regulations to prescribe additional conditions which may have to be satisfied before a deduction can be made.

265. New section 43(2) is an enabling provision which allows maintenance or arrears to be deducted from benefits, by means of regulations under subsection (1)(p) of section 5 of the Social Security Administration Act 1992*).

266. New section 43(3) provides that, for the purposes of making deductions from benefit, a war pension is to be included as a benefit.

Clause 22: Child Support jurisdiction

267. This clause amends section 44 of the 1991 Act to extend child support jurisdiction to non-resident parents who are not habitually resident in the United Kingdom but who are employed by a UK-based employer. This will mean that certain non-resident parents who are employed abroad will be required to pay child support for their children who live in the United Kingdom.

268. Subsection (2) amends section 44(1) (which limits child support jurisdiction) to refer to a new subsection (2A), inserted by subsection (3).

269. Subsection (3) adds a new subsection (2A) which lists the cases where, even though the non-resident parent is living abroad, the CSA will have jurisdiction to calculate and collect maintenance. These cases cover people employed abroad:

    (a) in the civil service;

    (b) in the armed services;

    (c) by a UK-based company, the description of which will be prescribed in regulations, or

    (d) by a body prescribed in regulations. These regulations are intended to be used to cover employment comparable to those listed in this subsection which are subsequently identified.

270. Subsection (4) removes the provision in subsection (3) of section 44 to cancel a maintenance assessment when there is no longer jurisdiction to make an assessment. Cancellations in these circumstances are to become supersession decisions in the new scheme, provisions for which are in section 17 of the 1991 Act, as amended by clause 9 of this Bill.

Clause 23: Abolition of the child maintenance bonus

271. The child maintenance bonus is a lump sum payment of up to £1,000 which can be paid to a parent with care who has been receiving Income Support (or income-based Jobseeker's Allowance) when she leaves benefit to take up work. The payment is based on the amount of maintenance paid for the parent with care's children during her time on benefit: it accrues at up to £5 for each week in which maintenance is paid. This allows families to see some gain from maintenance payments which reduce benefit entitlement pound for pound. The bonus is also intended as a work incentive.

272. In practice, relatively few lone parents gain from the child maintenance bonus. Around 1,000 payments are made each month.

273. Under the reformed scheme, the Government intends to replace the child maintenance bonus by a child maintenance premium, which will allow all families on Income Support or income-based Jobseeker's Allowance to keep up to £10 per week of any child maintenance paid. When a parent with care transfers to the new scheme and so becomes entitled to the child maintenance premium, she will no longer be able to receive a child maintenance bonus.

274. This Bill contains no provision for the child maintenance premium. Existing legislation which governs Income Support and income-based Jobseeker's Allowance already allows for regulations to provide that income can be disregarded.

275. This clause repeals the legislation governing the child maintenance bonus. Regulations will bring the child maintenance premium into effect for parents with care with an existing child support assessment when they are transferred to the new scheme.

Clause 24: Periodical reviews.

276. When the 1991 Child Support Act was passed by Parliament, it included a provision for the periodical review of child support assessments. When an assessment had been in force for a prescribed period (initially a year, subsequently extended to two years) the Secretary of State was required by this provision to write to both parents to find out if their circumstances had changed. When all the information needed to make an assessment had been checked, a new assessment of child support liability would be made.

277. In practice, this process proved difficult to operate. Parents, many of whom had been unwilling to co-operate in making the first assessment, failed to reply to requests for further information. Others were unable to provide all the information which the Secretary of State required. Since it was impossible to clear the periodical review without this information, substantial backlogs of work built up. The problem became even worse as cases where a review was stalled became due for another review.

278. In June 1999, the decision-making and appeal processes in CSA were improved and streamlined. Section 16 of the 1991 Act, which provided for periodical reviews, was replaced by a provision for revision of decisions. However, transitional provisions ensured that outstanding periodical reviews could still be completed.

279. There are still some 350,000 periodical reviews outstanding. The CSA has made it clear that it will complete any review where either parent requests this. There is, however, little sign that parents want past periodical reviews completed. The effect of these reviews is difficult to predict - some will increase liability, thus creating substantial debts for the non-resident parent, while others reduce liability, creating overpayments which have to be recovered from the parent with care.

280. This clause removes the requirement on the CSA to complete outstanding periodic reviews. This provision will come into effect when the Bill receives Royal Assent. Before this happens the CSA will make sure that there is sufficient publicity to alert any parent who might wish to see an outstanding review completed.

Clause 25: Regulations

281. Section 52 of the Child Support Act 1991 provides for the Parliamentary control of regulations and orders made under this Act. Many of the delegated powers in the 1991 Act require a resolution of both Houses before any regulations made under them can come into effect (the "affirmative procedure").

282. This clause amends section 52 to provide for Parliamentary control of regulations made under new child support delegated powers in this Bill.

283. The substituted subsection (2) alters the list of regulation making powers which follow the affirmative procedure.

284. This subsection also amends the reference to Part I of Schedule 1 to refer specifically to the new paragraph 3(2) (regulations prescribing how the reduced rate of liability is worked out) and 10A(1) (regulations amending the way that liability is worked out) - see commentary on Schedule 1 above.

285. New subsection (2A) in section 52 provides that the first set of regulations under paragraph 10 of Schedule 1 to the 1991 Act (regulations defining net weekly income for the maintenance calculation) will follow the affirmative procedure. Subsequent regulations will follow the negative procedure.

Clause 26: Amendments

286. This clause introduces Schedule 3 which makes minor and consequential amendments to the 1991 and 1995 Child Support Acts and a number of other Acts.

Schedule 3

287. Paragraphs 1 to 10 and 14 provide for changes to other Acts (ie non-child support and Social Security Acts) covering England, Wales and Scotland, to reflect changes in this Bill. These Acts make reference to child maintenance, and in all of them a change is being made in terminology to refer to "maintenance calculation" in place of "maintenance assessment".

288. The Army Act 1955 and The Air Force Act 1955 allow for the deduction from pay in respect of a wife or child to such extent as is specified in the Order of Council. They set out how child maintenance will be deducted from a serviceman's pay and are amended for child support purposes.

289. The Matrimonial Causes Act 1973 provides for the duration of continuing financial provision orders in favour of children and the age limit on making such orders. Where the court has made an order, it may vary or discharge it, as well as suspend or revive any provision in the order. This provision includes references to child support.

290. The Domestic Proceedings and Magistrates Courts Act 1978 sets out the age at which responsibility for financial provisions in favour of children ceases, and the duration of such orders. This refers to child support.

291. The Family Law (Scotland) Act 1985 is amended to reflect changes in terminology provided by clause 1(2) of this Bill.

292. The Insolvency Act 1986 sets out the effects of discharging a bankruptcy on various monies owed. It is amended to reflect changes in child support terminology.

293. The Debtors (Scotland) Act 1987 is amended to provide that when a liable person is sequestrated in Scotland, it will not be possible to use a Deduction from Earnings Order under the 1991 Act to enforce a child support maintenance calculation (previously a maintenance assessment). The 1987 Act is also amended to define "maintenance order", and to reflect the changes in terminology provided by clause 1(2) of this Bill.

294. The Income and Corporation Taxes Act 1988 sets out which Social Security benefits shall and shall not be charged to income tax and what payments shall not be treated as income. The list of payments includes child support.

295. Sections 36 and 38 of The Finance Act 1988 are amended to reflect changes in terminology provided by this Bill.

296. Schedule 1 of The Children Act 1989 is amended to reflect changes in terminology provided by clause 1(2) of this Bill.

297. The Prisoners Earnings Act (paragraph 14) sets out the powers of the prison Governor to make deductions and impose levies on prisoners who are paid "enhanced" wages or "net weekly earnings", including for child support purposes.

298. Paragraph 11 amends the Child Support Act 1991.

Sub-paragraph (2) replaces the term "absent parent" in the 1991 Act with the term "non-resident parent".

Sub-paragraph (3) amends section 4 of the 1991 Act to make it clear that the information that must be provided when applying for child support includes information which enables the non-resident parent to be identified.

Sub-paragraph (4) amends section 7 of the 1991 Act, which currently gives a child in Scotland the right to apply for an assessment.

Sub-paragraph (4)(a) will enable a child to apply for a maintenance calculation if no parent has been treated under the new section 6(3) of the 1991 Act as having applied for a maintenance calculation with respect to the child.

Sub-paragraph (4)(b), which amends section 7(10), alters the restrictions on when an application may be made by a qualifying child. The effect of the amendment is that the child may not apply if there is a maintenance order in force in respect of him which was made before a prescribed date, and which has not been in force for less than a year.

Sub-paragraph (5) amends section 8 of the 1991 Act, which governs the role of the courts in dealing with child maintenance.

Sub-paragraph (5)(a) amends section 8(1) in consequence of the changes to section 6.

Sub-paragraph (5)(b) substitutes part of subsection 8(3A) to reflect the changes to section 6 of the 1991 Act made by clause 3 of this Bill.

Currently, a parent with care who claims or is receiving Income Support or income-based Jobseeker's Allowance can be required to apply for child support. Clause 3 provides that in the reformed scheme, a parent with care in these circumstances will be treated as applying for child support unless she opts out.

Sub-paragraph (5)(c) repeals section 8(6) to remove the power of the courts to make "top up" maintenance orders when a maximum child support assessment has been made. This is in consequence of the removal of a maximum liability under the new scheme.

Sub-paragraphs (6) to (10) amend sections 9, 14, 26, 27A and 28 respectively, in consequence of the changes to section 6.

Sub-paragraph (11) amends section 28ZA of the 1991 Act which covers decisions made under section 11, 12, 16 or 17 and which involves issues that arise on appeal in other cases. These amendments consolidate provisions that were inserted into the 1991 Act by the Social Security Act 1998.

Sub-paragraph (11)(a) reproduces part of paragraph 4 of Schedule 4C of the 1991 Act by moving a provision relating to reduced benefit decisions under section 46 to section 28ZA and generalising the reference to decisions in section 28ZA(1). Section 28ZA already allows for section 46 decisions to be held back pending resolution of a lead case.

Sub-paragraph (11)(b) consolidates Schedule 4C(4) by including a reference to appeals that are pending against reduced benefit decisions to section 28ZA. Section 28ZA already allows for a decision on a reduced benefit direction to be held back pending the outcome of an appeal in a lead case.

Sub-paragraph (12) amends section 28ZB of the 1991 Act which covers appeals made under section 20 of the 1991 Act which involve issues that arise on appeals in other cases. This consolidates provisions that were inserted into the 1991 Act by the Social Security Act 1998.

Sub-paragraphs (12)(a) and (b) amend section 28ZB to include reduced benefit direction appeals and appeals against the imposition of fees, partly by moving these provisions from paragraph 5 of Schedule 4C.

Sub-paragraph (13) amends section 28ZC of the 1991 Act. Section 28ZC limits the retrospective effects of decisions in certain cases of error. For example, where an understanding of law has been overturned by a decision on appeal it cannot affect liability or other decisions for a period before the new interpretation was determined. This consolidates provisions that were inserted into the 1991 Act by the Social Security Act 1998.

Sub-paragraphs (13)(a) to (e) reproduce the effect of existing provisions in paragraph 6 of Schedule 4C of the 1991 Act in section 28ZC

Sub-paragraph (14) provides that sections 28H and 28I will no longer have effect. This is because the departures scheme is to be replaced by new provisions for variations in child support liability - see clauses 5 to 7.

Sub-paragraph (15) amends section 30. Section 30 is about collection and enforcement of forms of maintenance other than child maintenance. It amends this so as to avoid doubts about the meaning. It clarifies that regulations can be made for both periodical payments and secured periodical payments.

Sub-paragraph (16) amends section 32. Section 32 concerns deductions from earnings orders. This provision amends section 32 to provide for regulations to say that the non-resident parent will always retain a set percentage of his earnings after a deduction has been made for maintenance.

Sub-paragraph (17) amends section 47 which relates to fees. Although section 47 is in force, the ability to charge fees has not been used since April 1995, pending improvements in the CSA's performance. The Government intends to consider charging fees again when the new system is running smoothly. Sub-paragraph (17) inserts a new sub-paragraph 4 in section 47 that enables payments of fees to be recovered in the same way as maintenance. For example, by a deduction from earnings order*.

Sub-paragraph (18) amends section 51 to reflect the more streamlined decision-making process in the new scheme. This provision allows for regulations to set out the procedure to be followed in making a maintenance calculation (under section 11) or, when superseding an existing calculation, (under section 17). It also covers decisions relating to the revision and supersession of maintenance calculations, default rates and interim maintenance decisions.

Sub-paragraph (19) amends section 54 as regards definitions. For example, "assessable income" and "departure direction" are omitted, and "voluntary payments" are added.

Sub-paragraph (20) amends paragraphs 13 and 16 of Schedule 1 of the 1991 Act which covers general provisions about maintenance assessments.

Sub-paragraph (20)(a) repeals paragraph 13 of Schedule 1. Paragraph 13 enables the Secretary of State to make nil assessments of child support liability. For example, where the non-resident parent has net income of £5 or less or is a student. Schedule 1, paragraph 5, now provides for such nil rates of liability in the new scheme.

Sub-paragraph (20)(b) removes provisions that enable the Secretary of State to cancel assessments in certain circumstances. For example where there is no longer a person with care or where the parents are back together again. In the new scheme, such changes will be supersession decisions using section 17 of the 1991 Act. Schedule 1 paragraph 16(3) enables the Secretary of State to cancel an assessment where the parent with care is no longer on benefit and requests that he does so. This provision is being replaced by the new section 6(9) which is inserted by clause 3.

299. Paragraph 12 amends the Social Security Administration Act 1992.

300. Paragraph 13 amends the Child Support Act 1995.

Sub-paragraph (2) amends section 18 to remove the delegated power which enabled the Secretary of State to bring parents with court orders into the CSA's jurisdiction. This repeal is consequential on the changes to section 4(10) of the 1991 Act introduced by clause 2.

Sub-paragraph (3) repeals section 24 of the 1995 Act, which provides for compensation payments in respect of people receiving Family Credit or Disability Working Allowance. This section is being repealed because these benefits no longer exist.

301. Paragraph 15 amends the Social Security Act 1998.

Sub-paragraph (2) amends Schedule 2 to the Social Security Act 1998 to reflect the terminology of the new child support scheme. "Reduced benefit directions" will become "reduced benefit decisions". Appeals against reduced benefit decisions will, as now, be against the decision to make a reduced benefit decision under section 46 of the 1991 Act (see clauses 10 and 19).

Clause 27: Temporary compensation payment scheme

302. Some arrears of maintenance will normally accrue after the start-date for liability but before a maintenance assessment has been made. However, in recognition of the significant backlogs that developed in the early years of the CSA, the 1995 Child Support White Paper Improving Child Support (Cm 2745) paved the way for the CSA to introduce a scheme which allowed the Agency to agree not to enforce more than six months' worth of arrears, providing the non-resident parent met his responsibilities for a year. After a year, the Agency makes payments to the parent with care in lieu of those she would have received had the non-resident parent paid in full.

303. The scheme was never intended to become a catch-all for individual cases of delay or maladministration. It was part of a strategy to tackle the backlogs, improve compliance and get the Agency on its feet. The scheme was not therefore translated into primary legislation and authority for compensation payments was accordingly granted by HM Treasury on a non-statutory basis, with payments approved annually in the Appropriation Act.

304. However, the CSA did not start to clear backlogs to the expected timescales. The scheme was expanded, to include arrears arising from delayed periodic reviews (section 16 of the 1991 Act) and change of circumstance reviews (section 17 of the 1991 Act), because it was accepted that, on balance, the lack of transparency and the complexity of the current system often produced changes in maintenance assessments which were difficult for non-resident parents to predict. Because the scheme was still non-statutory, a condition of the extension was that the Government should seek legislative powers if the arrangements needed to continue further.

305. This clause provides a statutory basis for continuing a scheme under which, in certain circumstances, a non-resident parent will not be required to pay the whole of the arrears of maintenance. It is intended that the circumstances should be where significant delay by the CSA has arisen under the current scheme, but only where the non-resident parent gives a commitment to meet his ongoing liabilities and pay the arrears specified in the agreement and meets this commitment.

306. Subsection (1) provides the circumstances where this clause applies. These are where the effective date of an assessment following an application or a review under the current scheme, before the introduction of the new decision-making provisions in June 1999 following the Social Security Act 1998, means that arrears have built up.

307. Subsection (2) enables the Secretary of State to apply this clause to different cases of arrears from those in subsection (1), and to disapply the clause to specified cases in subsection (1).

308. Subsection (3) provides the powers for an agreement between the Secretary of State and the non-resident parent, in order for the Secretary of State not to require him to pay, and not to take action to recover, the whole of the arrears in prescribed circumstances.

309. Subsection (4) provides the Secretary of State with the power to prescribe the terms of the agreement referred to in subsection (3).

310. Subsection (5) provides that the clause will only apply to agreements made before 1stApril 2002 and expiring before April 2003.

311. Subsection (6) provides that the Secretary of State has power not to seek to recover the arrears provided the non-resident parent meets the terms of that agreement.

312. Subsection (7) provides that if the non-resident parent has complied with the agreement, then when it expires the Secretary of State may make payments to the person with care, and the non-resident parent will cease to be liable for the full amount of the arrears of maintenance.

313. Subsection (8) provides if the non-resident parent defaults under the agreement he becomes liable to pay all the outstanding arrears.

314. Subsection (9) provides the Secretary of State with the power to regulate for agreements made after 1st April 2002. This is subject to approval by resolution in each House of Parliament. Subsection (10) defines "prescribed".

315. Subsections (11) and (12) concern the procedure for regulations under this clause.

Clause 28: Pilot schemes

316. This clause provides a power for pilot schemes to be set up for specific elements of the child support provisions in the Bill. This will enable the CSA to test discrete elements of the new scheme on a smaller scale before introducing them nationwide, or test operational provisions for limited periods of time and in limited geographical areas to establish the best way of delivering detailed aspects of the reforms.

317. At present, the Government has no specific plans to pilot any of the provisions. The intention is that all cases taken on by the CSA after the reforms have been implemented will have maintenance liability worked out using the new rules. However, the Government considers it prudent to provide for the option to pilot provisions if and when it appears necessary.

318. Subsection (1) provides that regulations made under provisions inserted or substituted in the 1991 Act by this Part of this Act, or under the Schedules relating to the Child Support provision, may be made so that they have effect for a specified period up to, but not exceeding, 12 months. Subsection (2) provides that any regulations made under the provisions of subsection (1) will be referred to as "a pilot scheme". Subsection (3) allows for pilot schemes to have effect in one or more specified areas, to apply to one or more specified classes of person or to people selected by prescribed criteria or on a sampling basis.

319. Subsection (4) provides for a pilot scheme to be able to make consequential or transitional provision for the way that the pilot scheme would be wound up. Subsection (5) provides that a pilot scheme can be replaced by a further scheme making the same, or similar, provisions.

320. Subsection (6) provides that any regulations providing for a pilot scheme will need to be approved by a resolution of each House of Parliament (the affirmative procedure).

Clause 29: Interpretation, transitional provisions, savings, etc.

321. The Government has stated that the new scheme will deal with new applications first. Existing cases will be transferred at a later date when the scheme has bedded in and the new rates will be phased in over time. Transitional provisions will therefore be introduced to facilitate the conversion of cases and the phasing of amounts payable.

322. This wide-ranging general power introduces the ability to make regulations which will allow cases to be transferred from the existing scheme to the new scheme. The Bill does not provide detail on all aspects of the new scheme or state exactly how it will work. The detail will be set out in regulations.

323. It is intended that provisions will also be introduced to safeguard the way in which aspects of current liability have been calculated and to ensure that amounts can be carried forward to the new scheme. New child support legislation will have a knock-on effect on other legislation and the ability to make consequential provisions is therefore also introduced in this clause.

324. Subsection (2) provides for regulations to ensure that the new legislation can be brought into being as smoothly as possible. Such regulations may cover the transition to the new scheme, the ability to save any current provisions so that they can continue to be used in the new scheme, amending other legislation which is affected by the new scheme and making any other regulations that may be required.

325. Subsection (3) provides examples of the regulations that may be introduced. Subsection (3)(a) enables regulations to provide for a transitional rate of liability to be payable, including the phasing-in of the amount due when the provisions come into effect. Subsection (3)(b) provides that regulations may allow departure directions and any other finding in relation to a previous determination to be taken into account when determining the amount of maintenance payable.

326. Subsection (4) provides that section 175(3) and (5) of the Social Security Contributions and Benefits Act 1992* (the "Contributions and Benefits Act") applies to the regulation-making power of this section, to allow for different provisions to be made for different cases and for different purposes. It also provides powers for discretion to be exercised in dealing with various matters.

327. Subsections (5) and (6) provide that regulations will be made by Statutory Instrument, and subject to the negative procedure.

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