Select Committee on Delegated Powers and Deregulation Thirteenth Report



Clause 18 - Financial penalties

103.  Clause 18 substitutes section 41A of the 1991 Act. The new section replaces the existing provision for additional sums to be paid with provision for a late payment penalty. A new financial penalty may be provided for in regulations under section 41A(1). This will be discretionary and up to 25 per cent of the amount owing for the relevant week. The intention is that these regulations will set out in detail the way in which the penalties are to be calculated. Regulations under section 41A(4) enable provision to be made about the time of payment and the ability for the Secretary of State to waive payment. These are matters of administrative detail that may need refining once the scheme is in operation and are more appropriate to be set out in secondary legislation. For example, we will need definitions of what or what does not constitutes a late payment and the process that should be gone through before imposing a penalty or waiving a penalty. In view of the punitive nature of this provision, these regulations will follow the affirmative procedure.

Clause 19 - Reduced Benefit Direction

104.  Clause 19 replaces section 46 of the Child Support Act 1991. In the new child support scheme, a parent with care who claims benefit may be treated under section 6 as having made an application for child support. However, she has the right to opt-out. Section 46, as replaced by clause 19, provides for a benefit penalty, to be known as a "reduced benefit direction", to apply to a parent with care who, without good cause, opts out of child support, refuses to provide information or refuses a DNA test. This section contains five delegated powers, all of which require the affirmative procedure.

105.  Subsection (1) sets out who this clause applies to and when. Subsection (2) enables the Secretary of State to require the parent with care to provide reasons why she has "good cause". This must be done within a specified period. A power to specify the period exists under the current scheme and is being carried forward. In the new section 46 the power is in subsection (10). The White Paper "A new contract for welfare: Children's Rights and Parents' Responsibilities" (Cm 4349) set out the Department's intentions in relation to this period, stating that it should be four weeks. This is a reduction from the current scheme where the parent with care has six weeks. Placing the 4-week period in regulations will provide flexibility, if, once the scheme is being operated, it is found that this period is too long or too short for some or all cases.

106.  The Secretary of State must then consider "good cause" - that is, whether there are reasonable grounds for believing that there is a risk of the parent with care or her children suffering undue harm or distress as a result of recovering child maintenance. Under subsection (5), if he decides that there is no "good cause" he will make a reduced benefit decision in relation to the parent with care, except in prescribed circumstances. This carries forward a power that is presently in regulations. Currently, where the parent with care has either the disabled child, higher pensioner or severe disability premiums a reduced benefit direction will not be made. The Department intends to have the same exemptions in the new scheme, but prefers to retain the flexibility of prescribing the circumstances in regulations in case further categories need to be added.

107.  Where the Secretary of State considers that the parent with care does have "good cause" no further action is taken on the case. However, the case will be reviewed from time to time using the power in subsection (6). In such cases, the Secretary of State will write to the parent with care to see whether her circumstances have changed. She will be required to reply within a period to be set out in regulations. The intention is that this period will be linked to the prescribed period set out above and the intention is that it will also be four weeks. As the two periods are intended to be similar both should have the same flexibility should a change be needed rather than being on the face of the Bill.

Clause 20(1) - Voluntary payments

108.  Liability to pay child support usually begins on the day that the non-resident parent is contacted about the application for a maintenance calculation. However, there will be some delay between this date and the date that a maintenance calculation is completed. This means that arrears of maintenance build up before parents know how much they should be paying. Voluntary payments made during this period can reduce this debt and provide financial support for the children while child maintenance is being worked out.

109.  However, at present voluntary payments are not defined and have no statutory status. The CSA follows guidelines in determining if payments can be set-off against arrears of maintenance. The Department considers that the use of discretion is not providing sufficient reassurance to parents that all cases are being treated in the same way. This in turn provides a disincentive for non-resident parents to make payments before the maintenance calculation is completed. The Department therefore proposes to give statutory recognition to voluntary payments.

110.  Clause 20 inserts a new subsection into section 28J of the 1991 Act about voluntary payments. Subsection 28J(3) provides the Secretary of State with two regulation-making powers. These provide the Secretary of State with the power to define in regulations the circumstances in which and the extent to which voluntary payments may be off-set against any arrears of child support maintenance which have built up since the maintenance calculation application was made or treated as made. Regulations may also provide the rules for adjusting the amount of maintenance payable to take into account the voluntary payment. The intention is that when the Agency contacts the non-resident parent by telephone they will be able to discuss his net income and other details to allow them to suggest a suitable level of voluntary payments.

111.  Subsection 28J(5) provides the Secretary of State with the power to define what counts as a voluntary payment. The power provides for regulations to specify which payments are and which are not to be treated as a voluntary payment. This will relate to all payments whether they are paid to the parent with care or another person. It is intended that as well as cash payments, any payments that are made for food, shelter and warmth will normally be taken into account. For example, food or heating bills or mortgage payments. However, where the non-resident parent spends money on other items for the child such as trainers or outings, these will not be taken into account. The power also allows the Secretary of State to specify the extent and the circumstances in which these payments can be taken into account once it is accepted that the payment can be counted as a voluntary payment.

Clause 21 - Recovery by deduction from benefit

112.  Clause 21 substitutes section 43 of the 1991 Act and enables the recovery of maintenance and arrears by deduction from benefit. Currently, a contribution to maintenance and arrears is payable by non-resident parents receiving Income Support and income-based Jobseeker's Allowance unless they are exempt. The amount is deducted from benefit.

113.  Most non-resident parents in receipt of social security benefits, pensions and allowances including income-related benefits and war pensions will be liable to pay the flat rate of maintenance (normally £5).

114.  Subsection (1) provides the conditions that must be met to enable the deduction from benefit to be made. Subsection (1)(b) provides the power to prescribe additional conditions that may have to be satisfied before a deduction can be made. We intend to prescribe that non-resident parents in receipt of Income Support will only be liable to pay the flat rate if they are aged 18 or over. Regulations under this provision will follow the affirmative procedure.

115.  Subsection (2) makes it clear that regulations made under section 5(1)(p) of the Social Security Administration Act 1992 may be used to secure the recovery of child support by deductions from benefits to which that section applies. Subsection (3) extends the coverage of that provision for this purpose to cover War Pensions.

Clause 22(3) - Jurisdiction

116.  Clause 22 amends section 44 of the 1991 Act, relating to jurisdiction of the Child Support Agency (CSA). Currently, the CSA has no power to assess and collect child maintenance if a non-resident parent is not considered to be habitually resident in the UK. Section 44 is being amended so that if a person works for a UK based employer but is based abroad, child maintenance can be calculated and collected. Employers that will be covered are set out in subsection (2A) and are bodies such as the civil service, armed forces or diplomatic service. This section also provides the Secretary of State with the power to prescribe particular registered companies or bodies. For example, it is intended that the registered company would be one in relation to which the CSA could enforce maintenance liability using a deduction from earnings order. To the bodies referred to on the face of the Bill are intended to be added bodies of a similar nature, such as NHS trusts or local authorities, if it appears that they have employees abroad. A regulation-making power, which will follow the affirmative procedure will allow other bodies to be added as necessary.

Clause 26: Schedule 3 - Amendment of enactments relating to Child Support

117.  Schedule 3, introduced by clause 26 makes minor amendments to the Child Support Acts 1991 and 1995. Paragraph 11 amends the 1991 Act and a number of other Acts.

118.  Paragraph 11 sub-paragraph (4) amends section 7 of the 1991 Act that refers to the right of a child in Scotland to apply for an assessment. Subsection (b) of this sub-paragraph alters the restrictions, through regulations, that apply before a qualifying child in Scotland may make an application. This regulation-making power mirrors that in the new subsection 4(10)(a) inserted by Clause 2.

119.  Sub-paragraph (15) of paragraph 11 amends section 30 and relates to the collection and enforcement of forms of maintenance other than child support maintenance. This amendment clarifies the wording of an existing regulation-making power that provides for the collection of maintenance other than child support. The existing provision has not been commenced because the CSA has not been in a position to take on this extra work. In future, however, this may change.

120.  Sub-paragraph (16) amends section 32 and relates to cases where deductions of maintenance are to be made direct from the non-resident parent's earnings. This provision allows regulations to ensure that the non-resident parent will always retain a set percentage of his earnings after a deduction has been made. It is right that this should feature in regulations as it allows us the flexibility to amend the percentage if experience shows us that it is necessary.

121.  Sub-paragraph (18) amends section 51 of the 1991 Act to provide the Secretary of State with the power to make, by regulations, provisions for the procedure to be followed with respect to the making of a maintenance calculation and decisions to revise or supersede maintenance assessments. This clarifies the existing regulation-making power.

122.  Sub-paragraph (19) amend section 54 as regards to definitions. Subsection (d) of sub-paragraph (19) amends the definition of "maintenance assessment", allowing regulations to prescribe cases where default maintenance decisions and interim maintenance decisions are not included in this definition. This provision replicates an existing delegated power relating to interim maintenance assessments.

Clause 27 - Temporary compensation payment scheme

123.  In recognition of the significant backlogs that developed in the early years of the CSA a scheme was introduced which allowed the Agency to agree not to enforce more than six months worth of arrears, providing the non-resident parent met his responsibilities for a year. After a year, the Agency makes payments to the parent with care in lieu of those she would have received had he paid in full. This Bill provides a statutory framework for such payments, including a range of delegated powers to provide the detailed operation of the scheme, all of which will follow the affirmative procedure.

124.  Many features of the temporary compensation scheme are placed on the face of the Bill. It relates to delays under the current, not the new, scheme. However, much of the operational detail is considered more appropriate for regulations. Subsection (1)(a) allows the Secretary of State to prescribe the date before which a maintenance assessment must be made to qualify for the compensation scheme. It is intended that the assessment will have to have been made before the last date for making an agreement set out in subsection (5). However, since the delegated power in subsection (9) allows for this date to be changed, regulations may be required to change the final date for assessments as well. These regulations will be made by affirmative procedure.

125.  Subsection (2) provides the Secretary of State with the power to apply the provisions of this clause to different types of arrears to those outlined in subsection (1) of this clause, and also, to not apply the provisions of this clause in those cases outlined in subsection (1). This will allow the Secretary of State to extend the compensation scheme to other categories of debt, should this prove necessary and to remove categories should deferred debt arrangements no longer be appropriate.

126.  Subsection (3) provides for regulations which specify the conditions under which the Secretary of State will agree to allow the non-resident parent to pay less than the whole arrears and situations where he will choose not to pursue any arrears. This is intended to apply to cases where there has been a period of delay before the notification of the initial or revised assessment as well as cases where reviews have set the subsequent assessment higher than the previous assessment.

127.  Subsection (4) provides the Secretary of State with the power to set the terms of agreements under which the compensation scheme will apply.

Clause 28 - Pilot Schemes

128.  This clause provides the power for pilot schemes to be set up. It will provide, by regulations, for the Secretary of State to set up schemes to pilot elements of the child support provisions. This will enable the Agency to test discrete elements of the new scheme on a smaller scale before introducing them nation-wide or test operational provisions for limited periods of time and in limited geographical areas to establish the best way of delivering detailed aspects of the reform.

129.  While this clause does not contain any delegated powers, it modifies the operation of the regulation-making powers elsewhere in Part I of this Bill to allow such regulations to have effect for a specified period of up to 12 months. Regulations so made will be known as a pilot scheme and may have limited effect by reference to locality, classes of person or specified criteria (subsection (3)). Because pilot schemes will be a novel use of regulation-making powers, regulations which give effect to such a scheme will follow the affirmative procedure.

130.  The Department has taken this power so that as the details of the new scheme develop changes can, if desirable, be piloted - although there are no specific plans to do so.

Clause 29 - Interpretation, transitional provisions, savings, etc.

131.  Clause 29 introduces the ability to make regulations to allow the smooth introduction of the new scheme. Subsection (2) provides the Secretary of State with the power to provide in regulations for transitional provisions.

132.  As spelt out in the White Paper, the Department intends that the new scheme will deal with new applications first. Existing cases will be transferred at a later date when the scheme is seen to be working properly. For existing cases, the new rates will be phased in over time. Transitional provisions will be needed to govern the conversion of cases and the phasing of amounts payable. These provisions need to be in regulations to allow the process to adapt to different circumstances.

133.  As outlined in subsection (3) of this clause, regulations may in particular allow for transitional provisions to be introduced to facilitate the conversion of existing cases and the phasing of new amounts. The application of the rules for phasing in the new liability will vary from case to case depending upon the change of liability and the non-resident parents net income; however, the period is expected to be no more than five years. Where a non-resident parent has a net income of £100 or less, the change in his child support maintenance liability will be phased at £2.50 per week each year. Where a non-resident parent has net income of more than £100 but less than £400 per week, his child support liability will be phased from the old to the new liability figure at £5.00 per week, and where a non-resident parent has a net income is £400 or more per week his child support maintenance liability will be phased to the new rate at £10.00 per week.

134.  The phasing rules will have to be detailed and the Department believes that they are more suitable for secondary legislation.

135.  The regulations will preserve the way in which certain aspects of current liability, such as departures to reflect property or capital settlements, have been calculated to ensure that amounts can be carried forward into the new scheme without the need for full re-examination of the case.

136.  The phasing arrangements will create transitional rates of liability to make the move to the new scheme is as smooth as possible for both parties. However, to remove the possibility of parents attempting to avoid these arrangements, for example by terminating a benefit claim and immediately re-starting it (which would otherwise allow the parents with care as a "new applicant" to move straight to the new scheme) this provision will also be used to make linking rules.

137.  Subsection (4) of this clause allows for regulations made under the provisions of this clause to deal with specific cases rather than all cases, for instance this provision will allow us to convert the liability for specific groups early to the new scheme, such as parents with care with maintenance already assessed who make a new application for child support from a different non-resident parent.

138.  Subsection (5) of this clause states that the power to make regulations under this clause is exercisable by statutory instrument. Subsection (6) states that such statutory instruments will be subject to annulment by a resolution of either House of Parliament (the negative procedure).

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