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Lord Skelmersdale: My Lords, your Lordships will have noticed that I have an unfailing habit of thanking the Minister for repeating a Statement in this House. I do so again today. Often this extends to the content of the Statement itself, but I am very much afraid that now I cannot say the same. The Statement paints a gloomy picture indeed. Before I continue, however, I should like to say how sorry I am that the noble Baroness, Lady Hollis, is not in her place. I am sure that the whole House will join me in wishing her a full and speedy recovery.

Noble Lords: Hear, hear!

Lord Skelmersdale: My Lords, as the Statement acknowledges, the Child Support Agency was set up by the last Conservative government with all-party support. It remains as true today as it was in 1993 that, wherever possible, children should be supported financially by both parents and that even low-earning or benefit-recipient absent fathers—for it is usually fathers—should make a contribution to the upkeep of their children according to their means.
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Unfortunately, no one in either House of Parliament realised the scale of the problem that was to be tackled. However, by making a few quite popular changes in 1995 and 1996, the then government made it considerably more acceptable, in particular by reducing the maximum level of maintenance, which made it more affordable for absent parents. The Government inherited a system that was, I believe, beginning to work, and the noble Baroness, Lady Hollis, the then Minister for child support, was able to say in 1998 that around 80 per cent of assessments were correct to the last penny and that some 98 per cent of maintenance,

None the less, the formula used to calculate payments was hideously complicated and slow and led to long delays in assessment. The Government therefore produced a new one which was intended to go live in late 2001. It was delayed several times due to problems caused by a new computer system, but it did go live in 2003. Now, three years later, it still is not working properly and cases resolved under the old formula have still not been entered into it. I note that the Statement says that it is quite likely they never will be.

The problems with the computer programme were so dire that they caused the resignation of the chief executive last year. This was hardly surprising when a Select Committee of another place, in July 2004, described the CSA's £456 million IT system as,

The new chief executive, Stephen Geraghty, then stepped into the breach, with an initial remit to investigate what was going on in the agency and to report to Ministers with solutions, as we have heard. I emphasise this as it is quite clear that his solutions of another £300 million and hundreds of extra civil servants are unacceptable to the Government. I am glad, though, that we will be able to see exactly what he said through the departmental website. I cannot help but wonder whether he was given the wrong remit. But we shall see.

The department has already admitted that there is a backlog of cases amounting to almost 330,000 and that more than £3 billion of debt remains uncollected. Recent figures from the CSA statistical summary of last month show that the new scheme is still not delivering. Why has only 61 per cent of maintenance due under the new scheme been paid as of December 2005, compared with 72 per cent under the old scheme? Why does the agency's enforcement unit cost £12 million a year to run but only managed to recover £8 million from absent parents last year? Why did the agency receive 63,678 complaints in 2004–05, an increase of almost 30 per cent? Is it because of the fact that, of the 67,000 cases assessed as having a positive maintenance capability, only just over 40,000 parents with care are actually receiving any money? Most importantly of all, why have the Government taken so long to get down to this fundamental review?
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Better late than never. So I welcome the decision to appoint Sir David Henshaw to conduct what I hope will be a root and branch review of a government organisation which by any account is a total shambles.

I also believe that this new review should look at each operation of the CSA separately. Assessment, case management, collection and enforcement are all discrete functions of the agency and could ultimately be carried out by separate organisations, either within or without the public sector. I note that an immediate solution is to use an outside agency to collect such debts as have been identified. This must be right—but I hope the Minister will acknowledge that it is only a temporary solution. There are also suggestions around of attachment of earnings orders being used. I would have thought that these were long overdue.

In essence, this is an honest and, for once, unspun Statement. At long last the Government are grasping a nettle and my party will do all in its power to contribute to the solution. Child support is one subject on which we desperately need a consensus.

2.49 pm

Lord Oakeshott of Seagrove Bay: My Lords, I thank the Minister for repeating the Statement first delivered in another place. As I sat with the noble Lord in the Public Gallery in the Commons, I felt the Secretary of State's response to the serious concerns raised by my honourable friend David Laws fell far short of the standards of courtesy and behaviour we certainly expect in this House. Frankly, they did not measure up to the scale of the crisis at the CSA.

Let me give noble Lords a little flavour of the Secretary of State's remarks. He accused David Laws of "dancing around" and "intellectual bankruptcy", and then said that he did not want to get party political. Lone parents deserve far better than that from the Secretary of State who is meant to be responsible for protecting them and seeing that they get the money they need to bring up their children.

I pay tribute to my noble friend Lord Kirkwood of Kirkhope—as he then was not—for chairing the Select Committee in another place and its excellent report. I know that he does not exactly share our views on this particular matter, but I pay tribute to him.

Why is it intellectually bankrupt to argue, as we do, that the CSA has failed, and failed again, beyond any reasonable prospect of redemption and that most, if not all of its functions should be handed over to HM Revenue and Customs? Why is that not a serious proposition to be examined sensibly and in detail rather than shrugged off with a few snide remarks?

Independent observers with an open mind would point out that the Inland Revenue must be the government department best placed to know individuals' personal financial circumstances and to enforce collection of debts. We agree that such a transfer would not be easy, but we are not looking for an ideal solution, just a realistic way out of a very deep black hole where the Government seem unable to stop digging.
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I turn now to the review by Sir David Henshaw—sorry, it is not a review but a redesign. My dictionary says that a review is,

I would have hoped that that is what this redesign is meant to achieve.

Let us look at the terms of reference. They are: how best to ensure that parents take financial responsibility for their children when they live apart; the best arrangements for delivering this outcome cost-effectively; and the options for moving to new structures and policies, recognising the need to protect the level of service offered to the current 1.5 million parents with care. Is that not simply a statement of what the CSA is meant to do? It is just another review of how it should work. This seems to me, yet again, to be putting off the evil day of decision.

Why has Sir David Henshaw been selected? His curriculum vitae shows that his career has been entirely in the public sector. He has, for example, acted as a former adviser to the Prime Minister's Delivery Unit; he is a non-executive director of the Home Secretary's National Offender Management Board, adviser to the Cabinet Office Strategy Unit and member of the Treasury's Public Services Productivity Panel. With an organisation experiencing the degree of failure of the CSA, would it not have been better to have brought in someone who was more of a breath of fresh air and had some private sector discipline and experience?

2.53 pm

Lord Hunt of Kings Heath: My Lords, as ever, I am grateful to the noble Lords, Lord Skelmersdale and Lord Oakeshott of Seagrove Bay, for what I am sure they meant to be constructive comments on the Statement. I also thank the noble Lord, Lord Skelmersdale, for his tribute to my noble friend Lady Hollis. We all hope that she will be back in her place as soon as possible. I pay tribute to her for her eight years' stewardship of the Child Support Agency, which at all times was pretty challenging. I very much admire the work she did. Whether I am so fortunate in inheriting her portfolio in that respect will have to be judged over the next few months.

I agree with the noble Lord, Lord Skelmersdale, that children should be supported by both parents, even where their relationship has broken down. That must be the intent of any development and redesign of child support arrangements. It was the intent behind the new system introduced in 1993. The noble Lord referred a little to the history of child support since then. He also referred to the very complicated formula which the 2001 changes were designed to change. There have been many operational problems throughout the history of the CSA and the introduction of the 2001 changes has clearly not brought about the changes that were desired, although I think the actual assessment system has stood the test of time. Rough and ready though it might be, it has been one great asset of the changes.
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On conversion, I would not wish the noble Lord to think that I said "never". It is our view that the system as it stands is not yet ready for conversion, but we will look to Sir David to advise us more on that matter in his proposals to redesign the system.

The noble Lord, Lord Skelmersdale, quoted a number of figures about performance between old and new systems. One has to be very wary about making direct comparisons because the circumstances of both systems were different. But I would not walk away from the proposition that the overall performance of the Child Support Agency has simply not been acceptable. The Statement is a clear acceptance of that fact.

The review by Stephen Geraghty was very good, but we decided that the £300 million extra public expenditure was too risky and costly for us to make such a decision. That is why we have given Mr Geraghty the green light to institute a modified review which will cost £120 million altogether. That will be focused on increasing the numbers of staff and dealing with clients at the front line and retraining the excellent staff who have had an awful lot to put up with over the past 13 years. Over the next two to three years, we expect to see significant improvements. But as the Statement made clear, it is not only the operational matters about which we are concerned. Our analysis, which I believe is confirmed by the work of Mr Stephen Geraghty, is that the whole child support system is not fit for purpose. That is why we have asked Sir David to start with a blank sheet of paper and suggest a wholesale redesign of the system.

I do not want to debate with the noble Lord, Lord Oakeshott, dictionary definitions of "redesign" and "review". Telling the House that we wish to redesign the system is an acceptance that the current system will simply not do. Therefore, we are going much further than simply having a review—we are asking Sir David to suggest to us the wholesale redesign of child support arrangements.

Anyone reading Sir David's CV would conclude that he has many qualities. He has an outstanding career in the public sector. For those who think we should look to Australia for clues about how child support should be organised in the future, Sir David is also a former Visiting Fellow of the Royal Melbourne Institute of Technology. I believe that he is an excellent choice.

The noble Lord, Lord Oakeshott, talked about having someone from the private sector. Although Mr Stephen Geraghty, the chief executive of the Child Support Agency, started life a very long time ago as an employee of the Inland Revenue, most of his highly successful career has been spent in the private sector. He has experience of banking and insurance, including running contact centres. Essentially, the CSA is a very large contact centre, albeit with very complicated matters to undertake. We have someone in post who understands the kind of operations that the CSA undertakes and has private sector experience.

On whether we should go down the route suggested by the noble Lord, Lord Oakeshott, in terms of Her Majesty's Revenue and Customs, the point my right
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honourable friend was making in the other place, in a somewhat robust way, is that you cannot take an agency that faces many problems and troubles and simply plonk it under the auspices of another agency. Equally, we understand that the work of the CSA is very complicated. It is dealing with adults whose lives in many cases have become very disrupted, as shown by the figures that I quoted in the Statement. In half the cases that the CSA is concerned with, the non-resident parents have no contact with their children and one in five have not had a relationship together. Those are stunning figures and they show the complexity of the situation. With the greatest respect to Her Majesty's Revenue and Customs, it does not have the experience of dealing with those types of matters. Of course we will listen to and await with great interest Sir David's work. As the Statement made clear, we will invite parliamentarians to contribute to that work.

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