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Baroness Carnegy of Lour: My Lords, I think the noble Baroness has misunderstood the amendment. No doubt my noble friend will confirm that when he replies. Sub-paragraph (4) of Amendment No. 8 refers to,

It therefore includes income from savings. One has to remember that quite often a mother who is the parent with care may have inherited money from her family or married somebody with just an earned income, and the family is set up in a way which reflects the mother's circumstances as a result of inheritance. Not an enormous amount of money is required to produce such an income; it could well happen.

I believe that the Bill as it stands will result in a perception of unfairness. The concept of fairness is, of course, very important. That is because the events surrounding the break-up of a family will inevitably attract discussion. Other people will talk about them; the circumstances will be known. In my opinion, therefore, it would be a great mistake to allow the Bill to remain in its present form because, if it is seen to be very unfair, it will bring the whole measure into disrepute.

Baroness Hollis of Heigham: My Lords, Amendment No. 8 seeks to change the way the maintenance liability of a non-resident parent is calculated in cases where a parent with care has a gross annual income, from all sources, in excess of £25,000. I am not even sure whether, for example, "all sources" includes a new partner's income or whether it refers only to that parent's earnings.

None the less, the amendment provides for the net weekly income of the non-resident parent (upon which child support liability is based) to be reduced by a

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penny for each pound by which the gross annual income of a parent with care exceeds £25,000, subject to there being a limit which would prevent the non-resident parent's net income being reduced by more than 50 per cent. That would lead to a consequential reduction in the amount of maintenance payable in affected cases. The amendment also provides for the calculation of a non-resident parent's net income to include income from both earned and unearned sources. I hope that the House will not support this move.

The amendment replaces the current complex child support scheme with a radically simpler system of rates which will be easier for parents to understand. One of the main reasons for the failure of the existing scheme, and why this legislation is necessary today, is that the current scheme depends on a vast amount of information being needed to work out liability. As a result, assessments take 26 weeks to make. As a result, before he starts to pay a penny, his payments are already in arrears. As a result, an adversarial relationship develops from the start with the CSA when it seeks to collect his maintenance because he is already substantially in arrears.

We are seeking to keep it simple. One of the key simplifications is that no account will be taken of the income of the parent with care. Our position is based on two grounds. The first is the question of principle. In that connection, I dispute the contention of the noble Baroness, Lady Carnegy, that her argument is fair and that the Government's position is unfair. Our first argument is one of principle and fairness. Our second argument is one of practicability. I shall deal with both of those points.

I deal first with the argument of principle. We say that the parent with care already contributes in kind. Who else pays the bills for the child's food, housing, clothing, schooling and, if that is what they have chosen, holidays, toys and equipment? The parent with care pays the bills. If she is earning a gross income of £25,000 a year and is asked to pay cash as well, your Lordships would be saying that she should pay twice, first by providing care and, secondly, by an additional cash levy. Yet everyone in this House knows that a child living with a parent with care on an income of £7,000 a year will inevitably have at least a financially very different and lower standard of living--I am not referring to emotional support--than a child living with a parent with care on an income of £25,000 or £30,000 a year. As the income of the parent with care increases, so does the child's standard of living, irrespective of the contribution from the non-resident father. Therefore, to ask her not only to allow the child--

Earl Russell: My Lords, is the Minister really saying that if the parent with care earns £25,000 and the non-resident parent is £1 or so above benefit level, the care on its own is sufficient to balance that inequality?

Baroness Hollis of Heigham: My Lords, yes. I shall return to that argument. I was about to say that I believe that the father's contribution of 15 per cent,

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irrespective of whether he is £1 above £100--which is the correct figure, not £1 above benefit income, because up to then he pays £5, as I am sure the noble Earl knows--should be independent of what the mother brings to it. That is his responsibility as a father.

The position of the noble Earl, Lord Russell, and perhaps of the noble Lord, Lord Higgins, is that the father's contribution, whether it be 15 per cent, 10 per cent, 14 per cent, 22 per cent, or whatever, according to the number of children, should fluctuate up or down, not according to his income but according to whether the mother's income goes up or down, according to whether or not she is in work, or indeed according to whether, though she is not in work, she happens to have snared a rich partner.

We believe that the father's contribution should vary only according to his income and his second family, and not hers. Otherwise, it would create a gross unfairness between two fathers, both of whom may be £1 over the benefit level, in the words of the noble Earl, Lord Russell, but one of whom, whose ex-partner may have married a rich man, pays less than the other, whose ex-partner still remains on benefit. That is deeply unfair, and I hope that the noble Earl, Lord Russell, will recognise that. It is deeply unfair between fathers with the same income and the same responsibilities, but whose contribution on this formula would vary according to what the mother has done.

4.30 p.m.

Earl Russell: My Lords, the Minister says that this proposal is deeply unfair. But has she heard of the principle, "To each according to his need"?

Baroness Hollis of Heigham: Yes, my Lords. But this is a case of, "From each according to his needs"--in other words, from each person according to his ability to pay. But the needs here are those of the child. The noble Earl would construct a situation where the parent with care is contributing in kind through maintenance support and in cash, especially if it has come from a husband--she does not necessarily need to have earned it. The noble Earl seems to be espousing a situation where a non-working parent with care may be getting her money and be supported by a new partner, whose income would, therefore, allow the biological father of the child to reduce his financial responsibilities to that child. Does the noble Earl really think that that is right? I do not.

The father's obligation to his child is independent of what the parent with care may be doing--whether she is on benefit, married, in work or not in work. His should be an ongoing commitment that reflects his income and his responsibilities, not hers. She is already contributing to the well-being of the child through her support in kind.

The first argument is one of fairness. Noble Lords opposite wish to make the parent with care pay twice over, especially if she is fortunate enough to have

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married a wealthy man. The second argument is one of practicality. It is hard to imagine that there will be many parents with care with incomes of £25,000 within the CSA system. As far as we know, the number is about 200 out of a caseload of 1.2 million. In order for the CSA formula to work, all we take into account at present is the income of the fathers, because we are saying that the parent with care is contributing in kind through her support of the child. So the agency is making 1.2 million assessments of the income of the fathers--the non-resident parents.

If we were to accept the amendment, we would have to double the number of those assessments because we would need to assess the income of the parent with care. Therefore, instead of 1.2 million assessments, we would be assessing 2.4 million incomes. But what about the situation as regards the stepchildren in the second family? If there are stepchildren in the second family--who, in all decency, we are treating in exactly the same way as the biological children of the non-resident parent--we then have to look at the capacity of the non-resident parent's new partner to support the stepchildren. Well, half of them have remarried and one-quarter of them have stepchildren, so not only would we have 2.4 million examinations of income; we would also have something like 3 million examinations of income to consider.

Equally, the parent with care may have more children in her new relationship. So we would have to offset that against this whole formula in the same way as we are doing for the non-resident parent. This means that we would then have to look at her partner's new income and thus would have carry out up to 3.5 million, perhaps 4 million, assessments of income, instead of 1.2 million assessments, just to pick up 200 parents with care. Instead of making an assessment of one person--namely, the non-resident parent--based on his earnings in a simple ready-reckoner form, we would, under the amendment, have to assess not only that income but also her income, his new partner's income and, possibly, the income of the parent with care's new partner just to catch the income of 200 parents. Moreover, as a result of having done so, the abatement in his formula--the payment that he makes--is likely to be trivial.

We would have to assess 4 million people in order to catch 200 parents. As a result, judging from what we know of those parents' income, the total effect on the non-resident parent's payments would be trivial. Perhaps I may give your Lordships an example. The woman earns £28,000 a year. Very few non-resident parents with care have earnings of £28,000 a year. He earns £15,000 gross--that is, about £10,000 to £12,000 net and has one child. Under the Government's scheme, he would be paying £38 a week, but under the formula proposed that would be abated by just £5 a week. However, another father on similar income and living in similar circumstances with the parent with care on an income of £20,000, rather than £28,000, would pay £38 a week.

So we would have assessed the income of 3.5 million or perhaps 4 million people to pick up 200 incomes of parents with care. As a result, we would have to spend

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another £10 million on technology and there would probably be several weeks of delay and complexity because of possible arrears or possible errors. At the end of the process, we would get just a trivial reduction in the maintenance that the non-resident parent would pay. It is neither practicable nor fair. Therefore, if the noble Lord wishes to test the opinion of the House, I hope that noble Lords will not support these amendments.

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