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Currently, the Child Support Agency makes a maintenance calculation based on information provided by the non-resident parent. That can obviously lead to delay. The commission will be able to get the non-resident parent’s income data directly from HMRC, making the process much simpler and easier for everyone. The assessment will then be updated annually to reflect the changes in the non-resident parent’s tax data. That means that generally parents will not be required to provide large amounts of information to the commission,
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I know that some noble Lords have concerns about the treatment of investment and dividend income, and more generally in relation to the self employed. We are considering placing a duty on the commission actively to investigate applications for variations, so that non-resident parents pay a fair amount of maintenance whatever their financial circumstances. As the operational realities of the future scheme and the availability of unearned income information become clearer, we will continue to examine what can be taken into account in the main calculation.
The changes will make the assessment process easier and we need to do that not least in fairness to those many non-resident parents who want to provide for their children. However, it is a sad fact that no matter how easy we make it for people, some non-resident parents will attempt to avoid their responsibilities to their own children. For those cases, we are giving the commission new collection and enforcement powers. The use of administrative liability orders will make the processes of enforcing arrears considerably quicker, while the ability to collect money directly from bank accounts and other financial resources will mean that the commission can get the money moving as quickly as possible.
If a parent still refuses to comply, the commission will be able to use a variety of powerful tools, such as disqualifying a person from holding a passport, or applying to the magistrates’ court, or in Scotland to a sheriff, for the imposition of a curfew order.
We have listened to recommendations made in another place, and have introduced a clause which will make the failure to notify the commission of a change of address if required to do so an offence. Following discussion in another place, we intend to introduce an amendment allowing the commission to use its enforcement tools to collect old debt. We are also considering further enforcement powers, including opening up the types of account against which ongoing and lump-sum deduction orders can be made, and giving the commission the ability to apply to the court for an order freezing a non-resident parent’s assets where there is evidence that they are about to dissipate them in order to defeat the payment of child maintenance.
These are strong but necessary measures. The money in such cases rightfully belongs to the children, not the non-resident parent. While I acknowledge that many non-resident parents are meeting their financial responsibilities to their children, it is both right and fair that we should use fully effective measures against those who chose to deny their children the maintenance that could make a real difference to their young lives.
Part 4 of the Bill sets out the lump sum payment scheme for sufferers from mesothelioma or their dependants. While money cannot compensate for the
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The scheme will be funded by an amendment to the Social Security (Recovery of Benefits) Act 1997 to allow the state to recover moneys in cases of double compensation. If a person receives both a lump sum from the state and, later, a civil compensation payment from their employer, the Bill will allow the state to recover the amount of the lump sum. Currently, that amount is deducted from the civil compensation payment made by the employer or the insurance industry. That means that the state effectively subsidises civil compensation payments, allowing the polluter to pay less. Such a situation is not acceptable, as all stakeholders, including the insurance industry, have recognised. The Bill ensures that negligent employers or their insurers can no longer benefit from the state’s duty towards those who suffer from industrial diseases such as mesothelioma.
This Bill sets out a framework through primary legislation, and I know that noble Lords will be interested in the regulation-making powers arising from it. Indeed, much of the detail will be in secondary legislation. On the child maintenance provisions, that is important because the commission has the opportunity to develop its own thinking to take these reforms further and make sure that they work. However, I assure noble Lords that where we have draft regulations, I will make them available and where we do not, I will provide a dossier of information relating to the secondary legislation at the earliest opportunity once your Lordships’ House returns in January and certainly before we enter Committee.
The broad consensus and cross-party support which this Bill has enjoyed in its passage through another place is a clear sign of its importance to many people. I welcome the scrutiny which I know will ensue in the remaining stages in your Lordships’ House. I commend the Bill to the House.
Moved, That the Bill be now read a second time.—(Lord McKenzie of Luton.)
11.53 am
Lord Skelmersdale: My Lords, while I am grateful to the Minister for introducing this Bill so clearly, as he always does, and for describing the changes that it is already planned to make to it, my immediate reaction is that it is mechanistic. The reason is simple.
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The Bill—at least the first three parts of it—is solely concerned with achieving a flow of money between separated parents to ensure that part of the earnings of the absent parent is donated for the support of his or, occasionally, her children who are living with his or her former partner. The Bill, like its predecessors, calls that person “the parent with care”. The first three parts of the Bill might be better described as the Child Support Agency revamp Bill and in normal circumstances would warrant a Bill of their own. However, I fully understand why the Government have used this opportunity to tack on the somewhat disparate “other payments”. So much legislation is emanating from other departments of state that, having got a legislative slot, the DWP must use the opportunity to the full—more of that anon.
I return to the subject of the CSA’s reformation, which is the Bill’s primary objective; as the Minister said, isn’t it needed? The CSA has had an ignominious history. The House will remember that it was set up by the previous Conservative Government with all-party support. As I have said, and it remains as true today as it was in 1993, children should be supported by both parents. Even low-earning or benefit-recipient parents when absent should make a contribution to the upkeep of their children according to their means. This was assessed by a formula—changed to fairly popular acclaim in 1995 and 1996—which made it considerably more acceptable, particularly by reducing the maximum level of maintenance and so making it more affordable for absent parents.
The Government inherited a system which was beginning to work well enough. The noble Baroness, Lady Hollis, to whom I pay tribute as one of the three Ministers in this Government who have struggled—I think that “struggled” is the appropriate word— with the CSA, said in May 1998 that:
“Around 80% of assessments for child maintenance are now correct to the last penny, and some 98% of maintenance is passed on to the parent with care within 10 working days”.
However, the complicated formula that was used was leading to quite large debts. The Government, therefore, came up with a new one in 2001, which was amended several times due to a new computer system which finally went live in 2003.
In passing, why is it that every time this Government commission a new computer system, it turns out to be disastrously late and over budget? The Minister will remember that I asked him the same thing the other day when we were discussing the annulment of the Social Security (National Insurance Credits) Amendment Regulations. I am grateful for the letter I received from the Minister last week which essentially validated my solution. Be that as it may, a Select Committee of another place described the CSA's £456 million IT system as defective, over-spec
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I mentioned the claim by the noble Baroness, Lady Hollis, in 1998. By February last year, however, the situation was very different. There was a backlog of almost 330,000 cases and more than £3 billion of debt was stated to be uncollected. Unsurprisingly, the agency received 63,678 complaints in 2004-05. Regretfully, I have been unable to discover any more recent figures. That was an increase of almost 30 per cent on the previous year. “Something”, in the words of King George VI on his visit to south Wales, “must be done”. So the Government appointed Sir David Henshaw to conduct a root and branch review. The Bill is the result of his findings. It is notable to start with that he did not recommend departure from a formulaic approach, although we have a different formula to be found in Schedule 4. He did though suggest a different approach in other areas.
First, as we have heard, the CSA is to be disbanded and a new body, CMEC, is to be created. That is all well and good, and, if it works, we will lose the stigma that has been attached for far too long to this children’s welfare support system. I welcome that. I also welcome the fact that the money going to the parent with care will be a percentage of the absent parent’s income, which can be varied if that income changes. This income, as we have heard, will be verified by HMRC through the PAYE returns. This variation is accompanied by rough justice. The Bill currently intends that once an award has been made, it should only be altered if the absent parent’s income rises or falls by 25 per cent. That percentage is far too high, especially if the income is falling. I further believe that both the absent parent and the parent with care should be treated fairly. Incidentally, I failed to find “fair” until I reached Clause 21. Is it fair that if an absent parent’s income falls by 24 per cent he should still be paying the same amount? Surely that would put him in some financial difficulty.
I welcome the fact that no longer will the parent with care be obliged to go to the new agency. Indeed, the Bill goes further and encourages people to make their own arrangements, or, in the case of divorce, accept the settlement of the court. I am worried by the fact that once these settlements have been reached, the parent with care can apply to CMEC for a new approach after only one year under this formula. This is certainly something we will want to explore in Committee, not least because there is anecdotal evidence—which I shall try to pin down before then—that divorce lawyers are advising their clients to delay settlement for as long as possible for this very reason.
I spoke about fairness just now. In its administration, CMEC should be as fair to both parents as possible. This fairness extends to the recovery of debt from the absent parent. Just because a child has turned 18, is it fair that the absent parent should get away without paying anything at all? Is it fair that CMEC should charge one parent for its services and not the other?
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I have other concerns with the Bill. The stigma attached to the CSA is due in large part to the phrases “absent parents” and “parents with care”. Both sets of parents hate being referred to thus, however appropriate the phrases might be in legislation. If any of your Lordships come up with alternatives, I am sure that the Minister will consider them seriously. As the gracious Speech says:
However, there is one technical matter that the Minister tried to address in his opening speech. I hope that he will be able to deal with it more fully when he winds up. As he said, the Government announced something at Third Reading in another place that may or may not be a major change to the Bill, or at least to the staff of CMEC; I of course pay tribute, as did he, to the staff of the existing CSA, who presumably will be transferred on the whole to the new body. It is no longer to be a non-departmental public body, but a Crown agency. While I understand that the staff welcome this, what precisely, if anything, does it mean for the parents? What effects will it have on individual Members of Parliament, occasionally including your Lordships, who have raised parents’ problems with Ministers from time to time, as the Minister knows?
Over many years, I have had the privilege—often with long intervals—of either promoting or responding to asbestos, pneumoconiosis and other similar orders in your Lordships' House; in other words, the “other payments” part of the Bill. This concerns the horrible illness of mesothelioma, a medical complaint associated with the inhalation of asbestos which kills within months of diagnosis. The current position is that the Government make payments to the sufferers which are repaid by the employer’s insurance company at minimum cost to the taxpayer. However, up to now, there has been no payment for what one might call secondary infection. That would include a home owner who contracted the disease because a builder, for example, was careless in removing asbestos from a ceiling. That home owner will be covered, insurance-wise, for the first time, and the builder’s insurance company will ultimately pay. There was quite a debate about plural plaques in another place which, although a feature of this disease, can, I am told, arise from other causes. I am not in favour of including them per se in the Bill.
I welcome the opportunity to discuss the Bill in Grand Committee. I hope and trust that when we have finished with it we can be proud of it and say, as I can now with the mesothelioma provisions, that it is a far, far better thing to do than has been ever done.
12.03 pm
Lord Kirkwood of Kirkhope: My Lords, the House will be grateful to the noble Lord, Lord Skelmersdale, and the Minister for their comprehensive and measured speeches which started this important debate. The noble Lord, Lord Skelmersdale, is absolutely right that the Bill does not have an awful lot of party politics in it and deals with situations arising from the past. It has had, generally speaking,
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I start with a contingent declaration of interest. I was reading my Sunday Times the other day and was so moved by an advert I saw soliciting applications of interest to join the CMEC board as a non-executive member that I could not resist the temptation. My colleagues think that I have lost my reason and common sense to want to spend my spare time trying to run the successor to the Child Support Agency rather than attending to my garden. This has been received with some scepticism on the part of my colleagues, but for my sins I have applied. I hope that Sir Alan Sugar is not the chairman of the appointments panel. I will report progress as the Committee stage unfolds. I have been involved in the policy of the Child Support Agency legislation, and a bit like the noble Baroness, Lady Hollis, I know more about the Child Support Agency than is good for either of us. She has had a chance to try to make it operational on the executive side of the table. If I buy her a cup of coffee later, maybe she will talk me out of it. I have made the application, and time will tell what will flow from that.
The context of the Second Reading is very important. The noble Lord, Lord Skelmersdale, is right; this is an attempt at a clean break, and I am sure that the Minister is genuinely trying to achieve that. There is a legacy that cannot be ignored: the backlog of cases and, in the view of the Public Accounts Committee last July, a culture of non-compliance which has built up over the years and is no one’s fault. That is where we are. We are in a position where people think that they can thumb their noses at this type of government organisation. That cannot be ignored. We are also inviting this new organisation to run three systems; not one system, CSCS, not two systems, CS2, but three systems for a period of years until cases can be transferred across and properly catered for.
We as policy-makers have always underestimated the determination of non-resident parents—mainly absent fathers—to pay nothing; the square root of nothing at all towards the maintenance of their children. Any idea that this organisation is failing because it has an easy client group and that all it has to do is knock on a door to get a cheque is cloud-cuckoo-land. We must recognise the difficulties that members of staff face in trying to deal with a very non-compliant client group.
Two important things have changed recently, and we should not ignore them. First, there is the extent of household debt in the United Kingdom. In 1993 when this all started, there was not anything like the residual, chronic, built-up levels of debt which make it more and more difficult for a lot of the households that we are dealing with in the 1.4 million caseload that the organisation has to get through the week, never mind
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More than anything else, we cannot ignore that the problems with the computer systems and telephony systems have still not been resolved. The Child Support Agency annual report, incidentally, was delayed for six or seven months. It was due in July and it was produced only a few weeks ago. Everyone should take 10 minutes to look at what the Auditor-General and the chief executive of the CSA, Mr Stephen Geraghty, a man for whom I have a great deal of time, are saying in the report. He is the first chief executive I have come across who is able to get on top of this, if anyone can. He talks about 600 work-arounds still being necessary to get management information. It is not just that they cannot get the assessments right; they do not have the management information to know whether they are making progress. It should surprise no one that the Comptroller and Auditor-General is qualifying the accounts of the CSA.
I am disappointed and fearful that the latest computer release, the so-called PR1 release, which was due to be in place by now, is scheduled to go into place at Easter. The undertaking was that it would be done in this financial year, and the Government may squeak that by a matter of days, but it was supposed to be in place months ago. That is another symptom of the fact that we still have not cracked the technology and telephony that provides a platform for this policy. I am worried about that.
Despite all our endeavours and people doing the best they can in good faith, there is still a high risk that this policy will fail. One of the reasons for that is that I do not know whether anyone can get to grips with the behavioural changes that will flow as a consequence of the abolition of Section 6. The regulatory framework statement suggests that we will lose 400,000 cases so that the caseload will fall from 1.4 million to 1 million. There will be a little more capacity in the system, and the theory is that that will free up the organisation. I have no idea how that can be judged when we have not seen a business plan; all of that is being left to the organisation once it has been set up. I am sure it will do its best, but this a shaky basis on which on make plans.
Further, I am sure we will discuss in Grand Committee the consequence of leaving people to their own devices: that we may end up back in the same position as in 1991. If there is no way of checking on what is going on, the Government’s child poverty targets could be challenged as people fall out of the system altogether. We will have no way of knowing what has happened to them, and so we will be back to where we started. Voluntary agreements and so on need to be looked at carefully in Grand Committee, because I am not convinced that we will not end up cutting off our noses to spite our own policy faces.
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Sir David Henshaw did a very good job and we have missed an opportunity here. We have had Statements in this House about his work, which were precursors to this legislation. Taking the 1991 legislative template and using it in 2007 is a mistake. Circumstances have changed and I would have much preferred to have taken this opportunity to make changes. However, I accept that it is too late to do anything about it in the Bill. The current mood is to move towards trying to enshrine child entitlements rather than simply providing a template to ensure that the number of agreements drawn up and payments made are increased. That is all this Bill does. It is a mechanism that tries to sustain the number of payments being made. Increasing the transmission of money is all it seeks to do.
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