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Baroness Pitkeathley: The noble Earl has reminded us that arguments can be made on both sides as regards caps on maintenance. However, we should remember that when we take into account the philosophy that lies behind the provisions relating to child support in the Bill, we cannot support these amendments. That philosophy is not about need, but rather the rights of a child to support and the responsibilities of parents to give that support, whether they are absent or present.
Where parents remain together, the child would share proportionately in the income of the household. In my view, and speaking with some experience as a lone parent, it is morally unjust if children do not share proportionately in the income because the parents live apart. We should also remember that we are trying to introduce the simplest possible system to improve what is currently in place. These amendments would add complexity and for that reason would make it less effective.
Furthermore, as the noble Lord, Lord Higgins, reminded us, this applies to only a very small number of people. The number of lone parent families where this would apply is absolutely tiny. I believe that we should reject the amendment.
Baroness Carnegy of Lour: I believe that this is an extremely important issue. One can imagine a case where the non-resident parent is extremely well-off and is forced to supply to the resident parent large sums of money for the children. I believe that the noble Earl mentioned that those sums would be transferred to the mother of the children. However, the children might not in fact get the money. I do not believe that such arrangements would ever be made in any other circumstances.
In any case, it is not good for children to be given large sums of money when they are young. That could happen unless an amendment of this kind is introduced. The Bill as it stands is contrary to good sense. Indeed it may well be that the children never see the money because the funds would simply be transferred from one parent to another. That will occur not even as a result of unintended consequences, but will be the result of not sufficiently thinking the matter through.
Lord Haskel: The noble Earl, Lord Russell, spoke of sharing in the increasing wealth of families. Unfortunately, in real life family incomes can go down as well as up. In view of the fact that in most families the household wealth will fluctuate over the period
Baroness Byford: Perhaps I may add my support to the contributions made by my noble friends Lord Higgins and Lady Carnegy. As I understand it, we are discussing support for the child and ensuring that adequate provision is made in all cases. That was my interpretation, not that the Bill aims to give a child a lump sum of whatever size simply because that child has a parent who happens to be wealthy.
I should be grateful if the noble Baroness could clarify what we are considering here. Are we discussing a sufficient sum of money to enable the child to be brought up in a loving environment--I refer to the comments made earlier by the noble Lord, Lord Northbourne? If it is possible to demand unlimited levels of support from the parent, all that will do is introduce more controversy and bitterness to the relationship. It must be noted that a cap of £400 a week per child is a very high limit.
I believe that we are moving away from the basic intention of the Bill which, as I understand it, is to ensure that adequate support is given to a child. I did not think that we were aiming to secure investment for the future for certain children. Can the noble Baroness make clear to the Committee the intention here?
Lord Stoddart of Swindon: I believe that we may have forgotten exactly what was the intention that lay behind the introduction of the original Child Support Act. The original legislation was designed to make parents on social security pay towards the maintenance of their children in order that the Treasury could save around £400 million a year. That was what it was all about and I believe that we should bear that very much in mind. The legislation was not introduced in order to distribute largesse from one family to another and thus give some children a lifestyle that perhaps they should not enjoy at a particularly young age.
Furthermore, we should bear in mind that circumstances can change. For example, there may be a separation in a family. A man or a woman remarries and, whereas previously the partner might have been poor or perhaps living on an average wage, through the newly formed couple's diligence and desire to get on, they build up a large business. They then become relatively rich. A part of that success will have been contributed by the new spouse. Why should she contribute towards the upkeep of children who are not hers? I do not believe that circumstances of that kind have been considered. I think that it would be entirely wrong to expect a new spouse to contribute. Because the business would belong jointly to her, that is what she would be doing.
Baroness Hollis of Heigham: The proposal has given rise to an interesting debate. The purpose of these amendments is to introduce an upper limit to the amount of maintenance that a non-resident parent is required to pay. This would reverse the Government's present intention that there should be no upper limit to the amount of maintenance payable.
Amendments Nos. 14 and 17 seek to restrict the amount payable in respect of any one child to £400 a week, which under our proposals equates to an annual gross income of roughly £200,000 where there is one qualifying child. Amendment No. 11 provides that the level of the limit, or "maximum sum" is to be prescribed in regulations, although the wording is not entirely clear and we would need to discuss further the details.
I suggest that having an upper limit to the amount of maintenance payable would result in an inconsistency of treatment between non-resident parents with relatively high levels of income and those on more modest sums. Our decision not to introduce a cap was not one that was reached lightly. We have considered the issues very carefully and we accept that there are strong and respectable arguments on both sides. I accept that the matter is quite finely balanced.
As noble Lords have commented, there is a concern that if maintenance is set as a proportion of net income, levels of maintenance where income is very high bear no relation to the needs of the child. Furthermore, the noble Lord, Lord Higgins, has tonight argued that in those circumstances maintenance payments effectively become spousal maintenance payments. The counter-argument, which was put persuasively by my noble friend Lady Pitkeathley, is that the children of intact families share in the standard of living of their parents without any limit. Why should the amount that a father spends on his children be less because he is not living with them? It is important to remember that child support rates are not based on a calculation of the child's need for maintenance.
Of a current case load of about 1 million non-resident parents, only 500 have incomes exceeding £50,000 a year and only 120 have net incomes exceeding £150,000. The noble Lord will recognise the point made by my noble friend Lady Pitkeathley about having to scrutinise all incomes to protect or cap 120 non-resident parents.
Under the new system, there will be no maintenance requirement but simply a straightforward percentage slice of income that all parents can understand. Maintenance for all children will be based on what a father can afford--not what he or anyone else believes the children need. All non-resident parents will keep a minimum of 75 per cent of their net income in the new liability calculation. If just one child qualifies for maintenance support in the first family, 15 per cent of the net income of a higher rate taxpayer equates to
I acknowledge that the arguments are finely balanced. Our decision takes account of the various views expressed in the consultation exercise on the Green Paper and in talking to interested groups and individuals. The Social Security Select Committee in another place, after carefully considering many of the points raised today, reached the same conclusion. Placing an upper limit on the amount paid in respect of any one child is inconsistent with the Government's plan for a simple and transparent system of rates that protects the rights of all children to support from non-resident parents, in keeping with their ability to provide. I ask the noble Lord not to pursue his amendment.
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