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Grand Committee

Thursday, 31 January 2008.

The Committee met at two o'clock.

[The Deputy Chairman of Committees (LORD BROUGHAM AND VAUX) in the Chair.]

Child Maintenance and Other Payments Bill

(Second Day)

The Deputy Chairman of Committees (Lord Brougham and Vaux): Welcome to day two of the Bill.

Clause 2 [Objectives of the Commission]:

Lord Skelmersdale moved Amendment No. 26:

The noble Lord said: Here we are again. It is somewhat distressing to find the Minister on his own. He has an enormous set of advisers behind him, but he is looking lonely over there. I am glad to say that I am not lonely as my noble friend Lady Verma, who sometimes keeps me on the straight and narrow, is beside me.

Amendment No. 26 is investigatory. It seems to me that the legal framework for CMEC, as set out in Clause 2, imposes an express bias on the objectives of the commission towards encouraging the private ordering of maintenance as opposed to the use of the statutory scheme. I am sure that the Minister will say straightaway that that is not intended and that it does not do that at all. He will have to work quite hard to persuade me. I have tabled Amendments Nos. 26 and 32 to suggest a redress of the bias and to reinstate the statutory route as a viable option.

These two amendments are attempts to make CMEC and its statutory scheme more accessible and to convince parents that the CMEC route is the most efficient and effective route to negotiate and to realise child maintenance arrangements. I use them to ask the noble Lord whether this bias will work in the interests of parents with care and their children. Surely the statutory system should be available and accessible as a measure to protect vulnerable parents with care from being forced into unequal bargaining positions when negotiating voluntary arrangements. The statutory system, therefore, should never be tarred as being inferior or somehow substandard in comparison with private ordering.

To encourage that, CMEC needs a friendly human face—much more friendly than that which was exhibited, certainly towards the end, by the CSA. Arguably, I suppose, it never had a friendly face, or was never seen to have had one, by the parents we are talking about. Without such encouragement, there is a danger that the parent will not claim child maintenance at all or will feel obliged to settle for unsatisfactory, low amounts.

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I am pleased to say that this amendment was prompted by the lobby group, Gingerbread. As I suspect that the amendment in the name of the noble Lord, Lord Kirkwood, comes from the same source, it is hardly surprising that it chimes in with my own. His amendment is perhaps slightly different. Although much of the Bill is committed to promoting the voluntary side of CMEC which orchestrates mediation and negotiation between the two parents, his amendment seems to enforce the superiority of the statutory scheme. Parents must have faith that, in either system, there will be an adequate resolution and that children, therefore, will be protected either way. I beg to move.

Lord Kirkwood of Kirkhope: I am pleased to follow the noble Lord, Lord Skelmersdale, in the style in which he has introduced this group of amendments. Clause 2 is the core and kernel of the Bill. It enshrines the objectives of the commission and therefore, if we get that wrong, the commission will have less chance in succeeding in producing the policy outcomes to which we aspire. We have four important groups of amendments on that. There was one in our last Committee day on debt, here we are looking at voluntary agreements, and we will go on to discuss child poverty and definitions of key terms in Amendments Nos. 31 and 37. This is part of what I consider to be an important probing of what is in the Government’s mind on the setting of objectives for the commission.

I concur with everything that the noble Lord, Lord Skelmersdale, said on Amendment No. 26, but this is also an opportunity to allow us to test the claims that are in the regulatory impact assessment. In particular, I would like further information, if there is any extant, on the estimated rise of 40 per cent in the number of parents making voluntary arrangements. It is anticipated to rise from 500,000 to 700,000. That is a key part of the business plan. I guess the Minister will cleave to the view that the business plan is for the commission, but it is important and significant, and we need to get some confirmation that the figures that have been there for some time are still robust. In particular, is it the currently held view in the department that there will be a saving in administrative costs of something like £200 million? That is an important part that lies behind the amendment moved so ably by the noble Lord.

The noble Lord is right to stress that poorer parents are those who will have to struggle most to come to a satisfactory voluntary agreement, if anyone does at all. Yet, that is the group that will pose the most difficultly to the statutory administration and that is where the cost of collection of the maintenance is disproportionate to the amount that it wins back by way of the amount recovered. Therefore, there is a predisposition to think that there is other, lower-hanging fruit that the commission could access more easily, thereby meeting targets faster, and there is obviously, rightly, a temptation to strive to do that.

If CMEC and the commission are doing what we hope they will, the Section 6 client group—the people who will be invited to contemplate voluntary arrangements for the first time—are almost certainly going to be better off if CMEC is working properly. It will act as an intermediary, and it will have a firm hand, especially

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at the start. Bear in mind that we are not just talking about families at the point of breakdown. Often relationships stabilise after a breakdown and then, after some months, if not years, the relationship turns hostile again and the two parents have to do some reconciliation of their respective financial positions. It is not just once and for all; we could be contemplating a pretty continuous process.

I have looked at the Bill’s wording carefully, upside, downside and sideways, and it demonstrates what I consider to be a deliberate bias in the duty to encourage appropriate voluntary arrangements. That is obviously part of the Government’s policy, but no such equivalent duty exists to encourage statutory arrangements. I cannot understand what it will cost the Minister to resist this kind of amendment, if he is going to do so. If he were disposed to accept the amendment, he could have the satisfaction that it would deal with the power imbalance in the relationship, which we all understand is likely to be the case in these circumstances. He will understand too that parents with care will very often settle for less than what they are due, because they will do anything for a quiet life. There may be violence at the end of any continued and sustained objection against a potentially violent non-resident parent.

The Child Support Agency is in any case a pretty unpopular organisation, so staying out of its grasp is something that people may want to do if all other things are equal—again, for a quiet life. Finally, non-resident parents need to be sent a very strong signal that the Child Maintenance Enforcement Commission understands that they have a duty, knows where they live and will come to look for them if they do not do what is expected of them. The amendments in the group that suggest some changes and some rethinking there are essential.

I will quote again from my favourite Australian of the month, Professor Patrick Parkinson, in the Times of 19 January, when he talked about the danger of our whole system becoming essentially voluntary. He said that was the gravest danger; that was the first thing that he pointed out. He said:

That is what we are facing. There has to be a duty on the commission to encourage the use of the statutory scheme. Amendments Nos. 26 and 32, if not perfect in their drafting, raise the question in a clear and stark way and I hope that the Minister will respond positively to them.

Baroness Hollis of Heigham: I sincerely apologise for missing the remarks of the noble Lord, Lord Skelmersdale. Forgive me, I was caught on the telephone and was not diligent enough to get off it quickly enough. I support the push of the noble Lords in the amendment, which I think is very wise. Many of us have what I hope are ill-founded reservations about the efficacy of a voluntary system. I understand that in Scandinavia, for example, the parents with care could not even claim good cause to allow them to remain anonymous. The reason for that, which was not the path that we followed in Britain in either 1991

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or 2000, was to remove absolutely the burden of responsibility from the mother on to the organisation, to ensure that maintenance floated to the children. If it appeared to be discretionary as to what she sought and how much she would settle for, it was more likely that she would be at the end of harassment, bullying or even violence.

I remember seeing a NACSA website which said, “Go and break the window of your ex and tell her that if she pleads good cause, that she is afraid of you, you will pay her £10 or £15”. I saw that website; it was then taken off when it was realised that I had had access to it. One should not underestimate not just the fecklessness of some payers but the reluctance of men who feel that they have no continuing relationship with the parent with care and no continuing relationship with the child. Anything that sends agreements into the voluntary sector encourages him—I say him; I accept that some parents with care will be fathers, but 90 or 95 per cent will be mothers—to seek always to press down on the payments that he would otherwise make. That is especially true, from my experience, when he moves into a second relationship in which there is another player, possibly a woman with children of her own in a fairly tight financial situation, who is seeking all the time, understandably, to maximise the second family's income.

My first point is that I have very deep worries about a voluntary system, given the inequity of bargaining power. A lot of European experience suggests that that is an unwise path to go down. My second concern is that, if we are going down that path, we must ensure that there is at least some way to give her some muscle. I know that she can come back to CMEC and the statutory system, but that will be discouraged, because the whole of the business case is based on trying to get as many individuals into the voluntary sector as possible. At the very least, I would like my noble friend to see whether it is worth exploring, alongside the amendment, reinforcing it by making it possible to have a registration system, as I understand there is in Scotland, so that voluntary agreements can be registered. They will not have statutory force, but will appear to stiffen and formalise the situation. If then by consent she seeks to depart voluntarily from the minute that she has registered—perhaps because she is trading a reduced sum for extra money for school trips or trains and so on—that is fine. At least it may balance some of the imbalance of power that may result.

2.15 pm

The third thing that worries me about a voluntary arrangement relates to an amendment to be moved by the noble Lord, Lord Kirkwood, later, with which I have some sympathy, although, again, I am not sure that it should be in the Bill. I am confident that my noble friend says in his speeches to staff and to public organisations all the time that getting child maintenance flow, along with getting lone parents back into work, is one of the most effective ways of tackling child poverty. That is undeniable.

However, if we have voluntary arrangements, how do we know what money is going to children? How do we know, as a result, how many lone parents with

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children are above the 60 per cent median line? We would know the benefit income, but we would not know what additional income she is getting from the father if there is no way even to register it. I accept that a registration system is somewhat flaky and that it may be more observed in its absence than in its presence. But at least it gives us a benchmark which allows us to track what is happening to children who may or may not be just on the poverty line. If that money is flowing, at least we could see whether we are beginning to meet our targets, including the extremely challenging target of trying to reduce by half the number of children in poverty by 2010.

For those reasons, I am worried about any voluntary system. First, it increases the father’s potential all the time to negotiate the money down because he has the power and the knowledge. He knows what he is earning, whereas the mother almost certainly does not. Secondly, we should at the very least stiffen it with a registration system, as in Scotland. Thirdly, I also want to see that registration system or a version of it, if at all possible, in order to track what is happening to child poverty. If we do not concern ourselves with this, we will not achieve one of the main outcomes that we are striving for in this Bill. We want to ensure that child maintenance flows to children, not just so that biological fathers rather than taxpayer fathers bear a proper responsibility for their child’s well-being, but so that we can tackle what is really a scar on the face of the nation—too many children bumping along at the very bottom level of income support.

The Parliamentary Under-Secretary of State, Department for Work and Pensions (Lord McKenzie of Luton): Amendment No. 26 and the first part of Amendment No. 32 would require the commission to encourage applications to the statutory maintenance service in addition to and to the same extent as the commission is required to encourage appropriate voluntary arrangements. I want to be very clear on this. However, all other things being equal, we want to encourage people into voluntary arrangements as opposed to statutory ones where that is appropriate. It is not a question of a voluntary arrangement being superior to the statutory system and the statutory system being somehow second-class. That is not how we approach it. A key part of our reforms is based on the evidence that many parents would prefer to have a voluntary arrangement and that where this can be agreed between themselves, it is the best way forward. Voluntary arrangements can be tailored to the unique circumstances of the parents in question and are associated with higher compliance rates. But that is not to say that we do not recognise that for many parents arriving at voluntary arrangements will not be desirable or even possible. Certainly, in the specific circumstances that my noble friend Lady Hollis described, no one would wish to encourage voluntary arrangements in those situations.

Amendment No. 32 would,

unless there is a conflict, in which case the parent who wishes to use the statutory scheme shall have priority. I assure Members of the Committee that nothing in

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the objectives or the rest of the Bill prevents the parent with care or the non-resident parent from making an application to the statutory maintenance service at any time, including where there is an existing voluntary arrangement.

Furthermore, I also confirm that the objectives, as drafted, do not require the commission to encourage voluntary arrangements when they are against either parent’s wishes or their best interests. We have built in two safeguards against this. First, as I have said, the commission can only encourage appropriate voluntary arrangements which are suitable to the circumstances of both parents, particularly in terms of the level of any arrangements.

Secondly, everything the commission does must contribute to the achievement of its main objective to maximise the number of effective maintenance arrangements. Were the commission to encourage an arrangement that either party was unhappy with, it would be unlikely to work. In other words, it would not result in an effective arrangement. To encourage such an arrangement would put the commission in breach of its objectives.

More specifically on some of the points raised by the noble Lord, Lord Kirkwood, and my noble friend Lady Hollis, none of us wants to push parents into arrangements that do not meet their needs. We want to encourage as many people as possible to have maintenance arrangements in place. It will be for parents to decide what sort of maintenance arrangement is most effective in meeting their responsibility for the maintenance of their children, and for the commission to provide information and guidance to help parents to do so.

We recognise that pressure on one parent by the other is a potential risk in some cases. That is why we are establishing a service to provide both parents with impartial high-quality information to ensure that both parents can make informed choices about their child’s maintenance. If a separating parent feels that an enforceable arrangement is appropriate to their needs, they could go straight to the statutory scheme where they would be guided and supported to make a formal maintenance arrangement.

My noble friend raised the issue of a registration system for voluntary arrangements. She will be aware that the plans for the new arrangements have been discussed. Such a system might be appropriate in the future, but we leave it to the commission to look at the possibility and to advise on it, possibly on some sort of piloting basis. It is not something which under the legislation we wish to impose from day one.

Unequal bargaining power is a very real issue, and we recognise the risks involved. That is why the information and support services will be so important. As we discussed on Tuesday, if the parent with care has no idea what the income of the non-resident parent is, the automatic starting point would be an engagement with the statutory system.

My noble friend asked how we know whether our child poverty targets are being met or contributed to by voluntary arrangements. We would use the various family surveys for that information, which are the same sources that we currently use for voluntary arrangements.

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The noble Lord, Lord Skelmersdale, suggested that the strategy system was being portrayed almost as a second-rate service, to be used only if everything else fails. That is not how we approach it. We want a high-quality service and to make sure that it is available to parents if that is their end choice and they do not feel that voluntary arrangements are best for them.

The noble Lord, Lord Kirkwood, asked about figures for the increase in voluntary arrangements. The current business plan retains the increase of 200,000 to which he referred. Obviously the business plan is being refined as time progresses. We recognise that there are judgments in all this and in some of the underlying assumptions about how people will react to the new system and what their responses to it will be. On that basis, in steady state there would be an administrative saving of the order of £200 million. That figure is still in the system.

The noble Lord referred to Professor Parkinson and his article in the Times. I, too, met him. He said that he did not think the article entirely reflected the view that he had expressed. In particular, I talked to him about his view of a voluntary system. I do not think he would maintain with the force that that article seemed to suggest that we should make the system entirely voluntary. That is absolutely not what we are doing. At the centre of these reforms is a determination to get an increased number of maintenance arrangements. That is the overriding objective of the commission and the Government. I hope that that has covered the issues that have been raised, but I am happy to have another go if noble Lords think that it has not.

Lord Kirkwood of Kirkhope: The noble Lord, Lord Skelmersdale, referred to the Minister being lonely. My spies tell me that he has been moved from having responsibility for this subject and actually has nothing to do with this amendment. That is annoying. His 15 months are obviously up; he is just beginning to get hold of this important subject at a key time, and now some other Minister is doing it. That is completely bad timing and no reward for merit, competence or any damn thing. If that is true, the Committee commiserates with him. If it is anything to do with Mr James Purnell, who used to serve under me on a Select Committee in another place, if I find him in the House of Commons locker room and he is to blame, I will wait until he is in his Marks and Spencer’s best, and I will poke him in the ribs and complain because I cannot think who else to complain to. If the Minister has been moved, that is not at all helpful for the Committee, the policy or anything else, and I commiserate with him, but perhaps he has better things to do with his time. That was a diversion, and I am probably completely out of order.

How do we know when voluntary arrangements are appropriate? We are coming on to talk about definitions in a moment. The two parents will get access to the information and guidance, and we hope that will be as good as it can be, but they will go out of the door. What happens then? How do we know what goes on outside in the street, or down the pub, or back in the

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drawing room? They may never be seen again. I do not understand. The idea of a register is appealing because at least we will have some confidence that we will get some handle, even on a pilot basis. The statistics are difficult enough. I understand the case that is being made, but the noble Baroness’s point continues to obtain until the Government can find some way of giving us assurance. I fear that they will lose control and will not be able to monitor the situation in the way that enables us to take account of the policy objectives in the long term.

Baroness Hollis of Heigham: On average, a parent is a lone parent for three to three and a half years. She then usually moves into work or a new relationship, and if she moves into a new relationship, she also moves into work. That means that she will be dependent on a voluntary arrangement by virtue of being a benefit case for a relatively short time. That is an average; therefore many lone parents will be lone parents for far less. I cannot help preferring a system in which when people become lone parents they are automatically within CMEC. We know that if maintenance does not flow from the father within six weeks, it is not likely to flow at all. We also know from the Australian experience that after about 12 months to two years, his maintenance has often fallen off or fallen away, often because he has moved out of the area and no longer sees the kids or he is in a new relationship. Sustaining it is then very difficult. I would like a register at the very least, but I would be much more confident if we had a system in which for the first year or two they were in the statutory system, and then if both agree because regular payments have been made, they go into a voluntary arrangement.

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