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Baroness Carnegy of Lour: My Lords, I apologise if I misunderstood the comments of the noble Earl. The noble Earl is absolutely delighted with the Liberal Democrats and I can see the Government backing them in this respect. However, for my part--

Baroness Hollis of Heigham: My Lords, I thank the noble Baroness for giving way. I was not backing the statements of the noble Earl, Lord Russell. I was merely confirming his account of what he had already said.

Baroness Carnegy of Lour: My Lords, that is great! I believe that what the Government are doing is not at all sensible. It is extraordinary to say that if a family which has broken up is, on both sides, increasing in wealth, the child is, therefore, entitled to a transfer of wealth far beyond the maintenance of that child.

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In this regard I remember the comments of the noble Lord, Lord Stoddart, from the Labour Benches. I am sorry that he is not in his place to endorse this. The noble Lord stated that he could not contemplate that a child should necessarily be entitled to the increased wealth of its parents. I believe he also said that he felt that until he was 60 he was better able to look after his own wealth than were his children who might be his heirs. He was the voice of common sense in this matter.

The Government have got this very wrong. I believe that once the public realise what can happen to an absent parent who has done very well and who loses much of his wealth to the spouse he has left at the expense of his new family, they will not think that this provision is sensible. However, I shall not go on because I think I have lost the attention of the Minister.

4 p.m.

Lord Renton: My Lords, I, too, support these two amendments. Amendment No. 6 is really of great importance. Indeed, I understand that those members of the legal profession, both barristers and solicitors, who have a great deal of experience in the practice of family law have made representations to the Government about this matter without any effect.

Quite frankly, I think that Amendment No. 6 is vital. Without it there would be a chaotic situation and it may cause serious injustice. The trouble is that the matter is presented in an over-simplified way in the Bill. It overlooks various factors; for example, a man may have two families or a man may be very prosperous but in declining health. One could enumerate the various factors.

Under the Bill as its stands in Schedule 1, paragraph 2, where there are three or more qualifying children, 25 per cent of the net weekly income of the non-resident parent will have to be paid for the support of the children. In the case of men who are less prosperous a similar position will arise with smaller figures, but the hardship could be greater. But in the case of a man who has an income of £100,000, he will be obliged, if he has three children to maintain, to pay £25,000; that is to say, 25 per cent of his net weekly income. In some circumstances that may not be too bad, but I should have thought that it is more than is needed for the maintenance of the children in ordinary circumstances, even in a prosperous family. Therefore, it could create a very high burden.

The amendment goes a good way in that direction but is not quite so burdensome. The amendment's suggestion of £200 a week would produce not £25,000 but a maximum of £10,400 a year per child. That is reasonable for the maintenance of the three children. If the question arises of their going to fee-paying schools that is a matter which should be dealt with separately, and I hope will be. So it seems to me that this is really one of the most important situations that arises under the Bill and I strongly support the amendment moved by my noble friend.

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Baroness Hollis of Heigham: My Lords, I listened carefully to the points made by the noble Lord, Lord Higgins, and others. The noble Lord, Lord Higgins, explained the argument for a maximum level of maintenance liability with characteristic clarity and precision. I accept that the arguments on this point are finely balanced; that there are good arguments for and against setting a cap on the level of child support to be paid by wealthy parents.

The noble Lord argued, with support from others in your Lordships' House, that child support liability should be limited to a level which meets the needs of children, and that where maintenance exceeds a certain level it inevitably becomes spousal maintenance. Our child support rates are based on the view that non-resident parents have a duty to put their children's best interests first. This means that they, like resident parents, should pay what they can reasonably afford. Our judgment is that 15 per cent of net income for one child, 20 per cent for two children and 25 per cent for three children or more is reasonable, and reflects the level of support provided by parents in intact families for their children.

Of course, this means that children of wealthy parents will receive a higher level of child support than children of poorer parents. But that reflects the position of children living with both their parents. There is no intention that child support should provide maintenance for the parent with care, only to put children living apart from a parent in broadly the same position as they would be were they living with that parent.

However, I accept that there are difficulties with this approach where non-resident parents have very substantial assets or, indeed, as the noble Lord, Lord Renton, said, where there may be a second family and other dependants. In such cases, the parent may derive substantial income from a wide range of sources, and, equally, a regular salary may be less likely to reflect the true income available to support the child than is the case for other parents.

In addition, as your Lordships made clear, it is the case that financial arrangements for very wealthy families on divorce or separation can be substantially more complex than for other families--a point that has been put to us, as the noble Lord, Lord Renton, said, particularly by the family solicitors. I should emphasise here that we have no intention of forcing wealthy families to come to the CSA. Where maintenance arrangements for the children are such as to obviate the need for income support payments, parents will be free, as now, to make maintenance agreements and the courts will be able to make orders for child maintenance based on those agreements. In general, we expect these agreements to shadow the child support rates.

However, as your Lordships will be aware, we are providing, in Clause 2 of the Bill, for either parent to have the option of coming to the CSA if court-based arrangements are unsatisfactory. But, while the courts are able to make sophisticated judgments on the level of available income, the CSA will operate a relatively

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simple set of rules for determining net income. This can mean that the courts could have difficulty in shadowing the CSA rates where the parents are wealthy and have complicated financial arrangements. The noble Lord, Lord Higgins, is nodding. This is a point that he also made. If either parent can unpick complex financial arrangements where there are high levels of income by coming to the CSA, it may be that in these extremely unusual and rare cases the job of the courts becomes very difficult if not impossible.

Given that these concerns apply only to wealthy non-resident parents, I am prepared, without commitment at this stage, to consider whether setting a maximum liability at a relatively high level would assist. It may be that with a fixed limit and the ability of the parent with care to apply to the courts for a top-up--as he or she now can--the courts would find it easier to settle the other parts of the financial package. This, in turn, would mean that we were able to address many of the apparent difficulties associated with giving parents the option of using the CSA even though they have gone through the courts for their broader financial package.

If that is helpful to your Lordships, I am willing--as I say, without commitment--to take this away. Bearing in mind the arguments that have been raised today I should obviously come back to the matter at Third Reading. That being so, it may be that the noble Lord, Lord Higgins, will withdraw his amendment.

Lord Higgins: My Lords, one knows that the Minister has herself been heavily engaged in the preparation of this particularly difficult Bill, certainly so far as concerns the Child Support Agency side, and has obviously given it considerable thought. Therefore, we welcome her response. It was perhaps a little uncertain. She began by saying "without commitment" and then later said that she would return to the matter at Third Reading.

Baroness Hollis of Heigham: My Lords, I said I hoped to come back. Perhaps I may make my position clear. I am clear in my mind--and this has been reinforced by the points made by the noble Lord, Lord Renton, today--that this matter is embedded in wider complex issues involving the courts. What I am saying to the noble Lord, Lord Higgins, is that if there is a way in which we can make the broad arrangement satisfactory, I am happy to reflect on the matter and seek to be helpful.

Lord Higgins: My Lords, over the years one has had to assess whether or not the reply by a Minister on a specific amendment is sufficiently watertight to be accepted. On this occasion the Minister has been very helpful. There is obviously a question as to the numbers involved and that is something we shall need to consider. We shall table an appropriate amendment at Third Reading but hope it is pre-empted by a satisfactory amendment from the Minister. I thank her for giving great thought to the issue. On that basis, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

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