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Earl Russell: I accept that the Minister is making a perfectly sensible short-term case in a particular context. However, the Secretary of State is beginning to appear a bit of a Pooh-Bah. He is the legislator who lays down very wide powers for his own use; he then collects the money; he then decides whether people are stringing him along; and he then collects the money if they do. It is not a particularly controlled power: it is the Secretary of State wearing one hat, talking to the Secretary of State wearing another hat, passing on the power to the Secretary of State having a third hat. It is not a particularly controlled system and it does not seem a particularly constitutional one. Nevertheless, I do not intend to pursue the matter any further now. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 44 not moved.]

Clause 4 agreed to.

Earl Russell moved Amendment No. 45:


(" . The Secretary of State shall by regulations provide that, in determining the entitlement of a parent with care or his partner (if any) to income support or income-based jobseekers allowance, there shall be disregarded as income the first £15 of any maintenance paid each week to the parent with care.").

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The noble Earl said: This amendment seeks to increase the £10 maintenance disregard to £15. Before I play Oliver Twist, I congratulate the Minister. The £10 disregard is one of her great achievements. We have worked together in this cause in the past. The noble Baroness is the one who has been able to deliver, and I congratulate her on it. Nevertheless, I am sure that the Minister will not blame me for playing Oliver Twist. After all, it is the duty of an opposition. Both of us have always argued that the best way to secure compliance is not by a series of threats and penalties but by giving people an incentive to co-operate so that children are better off. This measure does that, but we believe that if it is a little bigger it may do a little better. Since I am sure that the Minister can script the rest of the argument herself, at this time of night I shall say only that I beg to move.

Baroness Hollis of Heigham: It is late. Basically, one needs to give a full description of what the Government are doing for lone parents to show that this is part of a balanced set of proposals. We have gone for a £10 disregard as opposed to nil in order to get parents with care to co-operate with the agency and ensure that a direct benefit goes to the children to tackle child poverty. Obviously, it is also an encouragement to fathers who see that some of the money that is provided goes to the children.

The noble Earl proposes that we raise the sum to £15. We expect that over time our reforms will at least double the proportion of children and families on income support for whom maintenance is paid. Together with the new child maintenance premium, this means that about 600,000 children and families on income support will see the benefit of maintenance for the first time. Obviously, while lone parents would like a £15, £20 or £25 disregard, none the less £10 will make a substantial difference to the material wellbeing of such families. The average family headed by a lone parent receives an income of about £88 a week. The premium will increase family income by well over 10 per cent, which itself will have a substantial effect on child poverty. That is in addition to the increases which lone parents with children on income support have received under this Government since 1997. For example, the rate for a child under 11 has almost doubled over three years from £16.90 to over £30 in the autumn. In addition, it was announced in the Budget that there would be an increase in the earnings disregard. Consequently, parents on income support will see their incomes go up in terms of benefit levels and earnings disregard. Obviously, parents in work will see the application of WFTC and the minimum wage.

If the noble Earl views this in the context of everything else that we are doing for lone parents and the substantial cost to the child maintenance premium as is, which is an extra £65 million, I hope that he will regard this as reasonable. This is cost neutral. None the less, I believe that the £10 is a generous addition to lone parents' budgets over and beyond all the other

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changes by government. With that explanation, I hope that the noble Earl understands why the Government are not minded to raise the figure to £15 as he wishes.

Earl Russell: I thank the Minister for her reply and hear what she says. When the noble Baroness looks at the effect of this measure will she also monitor whether there is any increased compliance as a result of the introduction of the premium? That may affect the costings and, in turn, debates with the Treasury. If that could be done it would be rather interesting.

Baroness Hollis of Heigham: I do not think that there is any way in which we shall be able to determine the degree of compliance associated with the child premium as opposed to everything else we are doing--above all, making the formula so simple that CSA staff will be able to spend most of their time ensuring that there is compliance rather than trying to do a maintenance assessment which is then never delivered in terms of cash for children.

If the noble Earl can tell me how one could isolate that one variable amount from the 50 or 70 other variables involved in the changes we are making, I shall be interested to hear from him.

Earl Russell: I wondered about that question while I was on my feet. The answer has occurred to me at this moment: the Minister brings in the Bill with the £10 attached and after a year increases the amount to £15 and sees whether compliance improves. In the meantime, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 5 [Departure from usual rules for calculating maintenance]:

[Amendments Nos. 46 and 47 not moved.]

Lord Higgins had given notice of his intention to move Amendment No. 48:

    Page 6, line 12, leave out ("one of the conditions") and insert ("the condition").

The noble Lord said: I do not propose to move Amendments Nos. 48 or 51 which stand in my name. However, the noble Earl may wish to move Amendments Nos. 49 and 50 with which I have considerable sympathy.

Earl Russell: I was wondering whether it was rather late at night to go into an issue as big as this. Does the noble Lord, Lord Higgins, wish me to move the amendment now?

Lord Higgins: That is a matter for the noble Earl. It seemed to me that it raised important questions. It is a matter for the noble Earl to consider whether it would be more appropriate to do so at a later stage. I do not think that it would be helpful at this stage to move my amendments, which are technical in nature.

Earl Russell: I shall go along with that. It is somewhat late for a really big issue, so I shall not move my amendment.

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[Amendment No. 48 not moved.]

[Amendments Nos. 49 to 51 not moved.]

Earl Russell had given notice of his intention to move Amendment No. 52:

    Page 7, line 38, leave out ("and") and insert ("or").

Baroness Buscombe: I hope that noble Lords will forgive me for being slow in rising to my feet. I had expected the noble Earl, Lord Russell, to move Amendment No. 52.

I should like also to speak to Amendments Nos. 53 to 70. In essence we want people's financial arrangements to be determined on the basis of their income and commitments. The Bill in its entirety will not, we fear, stand up to the need to reform and improve the workings of the CSA unless the Government accept that not all situations are the same and uniform. We need to respond to that by helping people to cope.

Many of the relationships that brought about the happy event of the children in the first place have broken down because people are unable to cope. If we make it harder, who will ultimately lose out? It will be the children.

Our amendments in relation to Clause 5 and Schedule 2 are saying that we must respond to real life situations--everyday individual commitments--and then there is a chance that the children will fully benefit from what is already, for them, a tough situation.

As my honourable friend in another place, Mr Eric Pickles, said during Committee stage,

    "what might be equal and fair justice for one person might be rough justice for someone else. That is why the variations we seek are important".

We agree with the Government that the present formula is too complex. What we want to ensure is that a simplified formula is fair, equitable and flexible.

In that case, we believe that it is right to stipulate on the face of the Bill a number of foreseeable living costs which might impact on the welfare of children in any relationship; for example, costs in respect of any handicapped child or children with other special needs, the significant costs of childcare, costs of boarding school and the often high costs of travel to work. We list further examples in what I must make clear are probing amendments, albeit important, which we have tabled in order to seek reassurance from the Minister that her Government are as concerned as we are to ensure fairness and flexibility for the sake of the children.

As the noble Earl, Lord Russell, said tonight in relation to Clause 1, if you set out to avoid complexity you avoid the real world. I entirely agree. I beg to move.

11 p.m.

Baroness Hollis of Heigham: As we have heard, all these amendments relate to the provisions under which the Secretary of State may agree to a variation from

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the normal rules of calculation. Perhaps I may spend a few moments explaining why we are making the change.

We believe that simple and consistent rules will provide a clearer and more efficient child support service for children and get money flowing regularly and reliably. Parents will be able to see at a glance how much maintenance they must pay even before they break up.

We believe that the new approach will result in a fair calculation of maintenance in the vast majority of cases. In other words, it is a straightforward rate. However, we recognise that there will always be exceptional cases where the child support rates do not properly reflect a non-resident parent's ability to support his children. For example, he may need to spend an exceptionally large amount of money keeping in touch with the children, or the net income used in working out his liability may not properly reflect the resources available to him. We therefore intend to provide for a variation from the normal rules in such truly exceptional cases and circumstances.

Members of the Committee will be aware that the current scheme also attempts to allow for expenses not covered by the formula assessment. The existing departures scheme was introduced in December 1996. Departures were heralded as introducing added flexibility into a rigid formula and they were widely welcomed. But departures produced more complexity, confusion and delay into a cumbersome system.

We have therefore looked very closely at the expenses which merit a variation of liability. We have two grounds. We believe that parents should put children, not other expenses, first. That is why we have sought to distinguish between, on the one hand, expenses which a non-resident parent should meet from income after meeting his responsibility to his children--for instance, housing costs and travel to work--and, on the other hand, primarily child-related expenses which could affect his ability to pay child support. We intend to allow variations only in respect of the latter. For the first time, they will include the costs of the overnight stay after travelling a long distance, not just the petrol costs and costs of travel for contact.

We also intend to allow variations to increase liability where the income on which the maintenance calculation has been based does not reflect the non-resident parent's true ability to pay. For example, the case of the student who may be exempt but calculated as a mature student with a high income, or where someone is self-employed and declaring an income of, say, £100 a week but none the less is managing to live in a rather large house, with a rather large car, taking rather long holidays and is clearly living a lifestyle that deviates from the declared income. Again, the parent with care may be able to seek a variation.

Equally, as capital and interest from capital will no longer feature in the normal calculations, we have already indicated in the Bill that we will be looking at cases where the non-resident parent has assets exceeding a value to be prescribed. That will prevent

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people shifting their living costs from income to capital in order to protect their money. The new Schedule 4B, as introduced by Schedule 2, provides details of the cases and circumstances where a variation may be allowed.

I turn to Amendments Nos. 55 to 70. The noble Baroness appeared to say that she was in favour of simplicity in general but that complexity may exist in a particular circumstance. I hope that she will accept the warning not only of her honourable friend Mr Pickles but of her honourable friend Edward Leigh, who said that we should avoid seeking to transfer to the appeals system the complexity which we are getting rid of in the assessment process. We are worried about what we believe she may assume is exceptional.

Amendments Nos. 64 and 66, for example, would enable every non-resident parent to claim a variation in respect of housing costs or high housing costs. Amendments Nos. 56 and 57 would allow the non-resident parent who maintained contact with his child to claim a variation in respect of any and all his expenses, regardless of whether or not the expenses are in any way related to the period of contact. Therefore, the allowable costs in those cases would include not only the costs of travelling to see the child, but also the parent's housing costs, travel-to-work costs and, indeed, any other costs. The noble Baroness's amendments almost precisely reinvent the complexity of the current formula.

Perhaps I may give an example of the complexity of costs on housing, which I believe was cited by the noble Baroness. As a starting point, if we were to include housing costs and were to continue to do so, staff would have to pick their way through the minefield of different mortgage and loan arrangements which currently exist in order to establish which applies in any particular case. They would have to establish how much of the repayment is in respect of interest, how much is in respect of capital, whether an endowment policy or investment plan has been obtained for the purpose of discharging the loan and whether it is intended to accrue profits. They would then go on to consider the extent to which any or all of the costs in question should be allowed by establishing who is responsible for the costs, whether the responsibility is shared, whether repayments of loans taken out for repairs and improvements to the property should be allowed, whether the property is used for both business and residential purposes, and, where the parent has more than one home, a decision must be made on which property is to be regarded as the principal home.

I could go on to talk about housing benefit, and so on, but I have tried to give an illustration with regard to only one cost--housing benefit--of the amount of complexity that would be introduced if we allowed it as a variation. I cannot conceive that any non-resident parent would not seek a variation on grounds of housing costs, even if that were to be rejected as not being exceptional.

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