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Lord Higgins: My Lords, the noble Baroness is making it black and white. There is obviously an intermediate stage. Some variations may be desirable. They would obviously increase the complexity but would not take one back to the kind of complexity which exists at present. One cannot simply say, "Either we have no variations at all or we have masses of variations". There are intermediate stages and the particular items specified need to be considered on their merits.

Baroness Hollis of Heigham: My Lords, the variations explained in this shopping list of amendments take more factors into account than is currently the case. The noble Lord said that there is an interim stage. But he has made the system more complex even than that which we currently have. That

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is no interim or half-way house. That is 120 per cent of what we currently have. That cannot be the position which the noble Lord wants to adopt.

I am not saying that there will be no variation; there are two broad grounds on which there will be variation. There has been consultation on this proposal which has received broad support. One ground is where there is misinformation, whether deliberate or otherwise, which needs to be corrected. Therefore, there can be variation. The second ground is where the cost of maintaining the child of the first family is already being incurred in some form or other by the non-resident parent and therefore should be taken into account when the amount of maintenance is determined.

We have considered carefully what should be the nature of those exceptional cases and circumstances. We do not suggest that the expenses and costs to which the noble Earl, Lord Russell, and the noble Lord, Lord Higgins, referred are not proper items of expenditure. We are saying that they are costs and expenses which the non-resident parent should meet from his income after meeting his primary responsibility to his children, and not before. Variations must be genuinely exceptional.

What are we suggesting? We want to give more help to non-resident parents who keep in touch with their children. To that end, we are extending the nature of the contact-related expenses which we are prepared to recognise. At present, it is only the travelling costs. We shall allow overnight stays as a more reasonable estimate of the costs incurred in maintaining contact. We believe that that is positive.

But Amendments Nos. 33 and 34 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 they are in any way related to the contact arrangements. That would mean that he could include his housing costs, his travel-to-work costs and, indeed, any other costs. So we should be back to complexity.

I turn to Amendments Nos. 35, 41 and 43. As I said earlier, the position here is that under the new percentage-based approach, non-resident parents will normally be left with at least 75 per cent of their disposable income out of which to meet other costs, including the costs of housing and travel to work.

If we were to introduce an allowance on the grounds of long-distance travel to work, we would also have to recognise the opposite aspect, as Amendment No. 43 suggests. Travel to work tends to be a rural problem. We would therefore have to recognise higher housing costs for those non-resident parents who live close to work but in an expensive area. As I have said, all of that reinvents the complexity of the current system.

As regards the income of the person with care, this House has already disposed of that matter in a vote tonight, so we shall not revisit it. However, the noble Lord, Lord Higgins, said that the two variations with which he was most concerned were associated, first, with debts incurred in the previous marriage and, secondly, where a parent was paying the mortgage on

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the matrimonial home but where, for example, there was no equity remaining to him. I would be grateful if the noble Lord would confirm that that is where his concerns are most focused. Although, for obvious reasons, I cannot touch on the rest of the concerns he identified, I think I can be helpful to the noble Lord here. Indeed, we intend to provide for both such variations. I am glad to have the opportunity to expand on that.

The amendments are unnecessary. We are already providing for debts of the relationship to be recognised as special expenses. This ground is included on the face of the Bill at paragraph 2(3)(c) of Schedule 4B to the Act, as amended. That appears at the top of page 103. As a mortgage is a debt, where the non-resident parent has retained a liability to pay the mortgage on the property where he used to live with the parent with care but is not retaining equity, we are already intending to recognise those payments as legitimate exceptional expenses.

I hope that the noble Lord, Lord Higgins, will think that we are already meeting the major variations on which he has focused tonight--his intermediate stage, let us say--and that he will be content with that reply.

The effects of Amendments Nos. 37, 44 and 45, however, would be to allow the non-resident parent to offset part of any costs he incurs in providing an education for his child against his ongoing maintenance liability for that child. We believe that it is reasonable that the costs of maintaining the child--the boarding part of school fees, for example, where a child attends a boarding school--should be taken into account because the boarding, that is, the food, housing, heating and so forth would otherwise have to be provided by the parent with care. To some degree, he is abating her outgoings. That is why we believe that it is reasonable. However, the same does not apply to school fees.

Paying educational school fees, whether for a day or boarding school, is a choice made by the parents. It comes within the same category as choices on expenses of elderly relatives and the like. They are free to make that choice but they pay for it out of their income. In our view, it is not an allowable expense or variation that should be included at this stage. Why should private education for a child take priority over, say, the care of an elderly parent? We do not believe that is right. We find ourselves unable to accept that.

Amendment No. 46 seeks to ensure that the Secretary of State may agree to a variation in any case where the income to which he has had regard in his maintenance calculation does not reflect the financial circumstances of the non-resident parent. In summary, the effect would be to allow a variation wherever there is a mismatch between the current and planned definitions of assessable income.

Again, I think we can help the noble Lord, Lord Higgins. The provisions already provide for a variation to be agreed where the lifestyle of the non-resident parent is inconsistent with the declarations made to the agency. We have every intention of

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allowing parents with care to apply for a variation where the rules of the new scheme, insofar as they relate to the calculation of the non-resident parent's income, have significantly short-changed them. That is covered in paragraphs 4(2)(a) to (d) of Schedule 4B to the Act, as amended, at the top of page 104.

I turn to Amendment No. 32. The position is that non-resident parents who apply on the grounds of certain of the prescribed special expenses will need to establish, as now, that the costs they are incurring exceed, either singly or in aggregate, a threshold below which a variation cannot be considered. That ensures that only unusually high costs should be considered a good enough reason for a parent to reduce his child maintenance payments. Again, I hope that your Lordships will agree that we are meeting that.

As your Lordships will recall, the threshold under the departure scheme is £15 per week. In the new scheme, however, we plan to apply a threshold on a two-tier basis: £15 per week for parents with a net income of £200 per week or more, but a lower threshold, which we think decent and fair, of only £10 per week for parents with lower net earnings; that is, below £200 per week. We think that that will positively help parents who are less well off to get more help towards their special expenses.

I turn finally to Amendment No. 47. The position is that we intend to provide in regulations that once a variation has been agreed, maintenance calculations will be varied in a consistent way. Although the exact intent behind the amendment is not fully clear, the effect will be to remove the power to provide this in regulations. That could lead to inconsistency and inequality of treatment between one case and another. We do not believe that that is right.

Earl Russell: My Lords, I thought that I had explained the purpose of Amendment No. 47; that is, to allow a variation for something which had not been foreseen when regulations were drafted.

Baroness Hollis of Heigham: My Lords, as drafted, our regulations allow for two broad grounds. The first is where there has been a mis-statement of income. I have been trying to give assurances on that. The second is where a non-resident parent is contributing to the maintenance of the child in other ways than direct maintenance payments. I refer, for example, to paying for the mortgage; continuing to pay for the debts incurred in the previous relationship, and in terms also of providing maintenance. We do not conceive of any other circumstances. Therefore, we do not envisage the need for the amendment.

I re-state that we want to move to a child support system that is simple, efficient, easy to understand, of minimum complexity and with as little scope for dispute as possible. I hope that the noble Lord, Lord Higgins, will agree that we are able to address the areas he highlighted, including variation in income, debts

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and the matrimonial home. With that, I hope that the noble Lord, Lord Higgins, will feel able to withdraw his amendment.

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