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Finally, Amendment No. 100 seeks to limit the tolerance level to 20 per cent. As I mentioned earlier, the agency spends far too much time adjusting maintenance assessments, and we need to reduce the amount of similar work that the commission will be required to carry out. The analysis that I referred to earlier looking at income changes between 2004-05 and 2005-06, shows that around 44 per cent of non-resident parents had an income change in excess of 20 per cent. This is only 5 per cent different to the figure of 25 per cent but, given the likely scale of the commission’s caseload, even a 5 per cent difference could have a significant impact on the volume of cases needing reassessment. As I said earlier, in due course the tolerance level will be set out in regulations, and there will be an opportunity to debate it then.

The noble Lord, Lord Skelmersdale, cited an example where someone might be tempted to go from work on to benefit and back into work to try to defeat or get around the rules of assessment. If someone goes from unemployment to work, there is an immediate reassessment of the amount that is due. The range of circumstances is fairly limited where there is an immediate reassessment.

The question was also specifically posed why we are not requiring non-resident parents to report increases in income of 25 per cent or more, when they could be earning far more than the figures used in the maintenance calculations. For reasons of simplicity, we want to remain with the historic HMRC figure and avoid changes in liability wherever possible. If the non-resident parent has a large increase in income in any tax year, that will catch up with him when the maintenance is based on his income for that particular year. If a parent with care reports that the non-resident parent had an increase in income of more than 25 per cent and she has some evidence to support the claim, it would be investigated.

In conclusion, I suggest that a key difference of the new system proposed is that it will be possible for annual updating of assessments, which has not been possible under the current arrangements. Some assessments have been languishing unchanged for many years. This is a better system. Certainly at the margins it may be perceived as broad-brush, but that is the price that we pay for efficiency and being able to make those annual adjustments.



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Lord Skelmersdale: I was just about to dream up a précis of what the Minister has been saying for the past seven or eight minutes, but he did it himself so I do not really have to think about it too much. The system is by no means perfect, but it is as perfect as we can get it at the moment. Is that a fair summary?

Lord McKenzie of Luton: That is not an unreasonable summary. If we did not have to have regard to realities, the constraints of systems and people’s behaviour, one could have a much more intellectually perfect system of what was included and excluded. Experience shows us that that is not the right way to go. At the heart of all this, we must have effective arrangements to ensure that the money goes to support children.

Lord Skelmersdale: I am glad that the Minister said that. Of course, in a perfect world there would be no people, so there would be no need for climate change Bills or anything like that, and certainly no need for this Bill. However, we do not live in a perfect world.

The latest available tax year information is all well and good, but by definition—as the Minister said under a previous amendment—it is always going to be at least slightly and possibly very out of date by the time that it is needed to be applied for the CMEC calculation. That is imperfect, but I admit that I cannot see any better way of doing it. It is rough justice, if you like. In some of my meetings with my honourable friends down the corridor, I have discussed this at some length and persuaded them that there is no better way. They have much better sources of advice on these matters than I do up here, but even with that they have not come up with a better suggestion.

I should have been able to pick it up through my reading, but I was alarmed to hear that there were 160,000 applications for variations a month. I find that an absolutely staggering figure when the total number of cases is, from memory, about 1.5 million a month. So it is a very large percentage indeed.

I was glad to hear that when someone moves from unemployment to work there is an immediate reassessment. What I did not hear was what happens the other way round—when someone moves from work to unemployment. How speedy is the assessment then?

Lord McKenzie of Luton: I think it operates symmetrically so that if somebody goes from work to benefits there is an immediate reassessment, and if he goes from benefits to work there is an immediate reassessment. We are not locked in to the preceding 12-month calculation. How speedily that can be done depends upon the circumstances. I am not sure that I can give a clear answer to that, but one would want it to be done expeditiously.

Lord Skelmersdale: Of course. At this late hour, I am not going to take the Minister to task for saying, “I think such and such happens”, but perhaps we can find out whether it does happen. I am pleased to hear that as far as he knows the speed and the action are

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reciprocal, whether from unemployment to work or work to unemployment—I see nods behind him, so I shall excuse him for the words “I think”.

I shall look at this again, but in the mean time it is quite clear that we are not going to get any further tonight, so I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 97 to 100 not moved.]

Clause 17 agreed to.

Lord McKenzie of Luton moved Amendment No. 101:

(a) the application for a variation is made by the person with care or (in the case of an application for a maintenance calculation under section 7) the person with care or the child concerned, and(b) it appears to the Commission that consideration of further information or evidence may affect its decision under subsection (1)(a) whether or not to agree to a variation.(a) consider any such further information or evidence that is available to it, and(b) where necessary, take such steps as the Commission considers appropriate to obtain any such further information or evidence.”

The noble Lord said: I was looking to see whether noble Lords had an appetite to close proceedings, but I am very happy to move Amendment No. 101 and to speak to Amendments Nos. 203 and 205.

Amendment No. 101 places a duty on the commission to make investigations into any application for a variation from the parent with care where it is clear that further evidence would help the commission to decide whether a variation should be given. In Committee in the other place, a number of amendments were tabled concerning cases where non-resident parents manipulate their income and avoid a maintenance liability which properly reflects it.

Although the Government rejected those amendments, we considered the representations that were made. We are aware that there is some dissatisfaction with how the variations process works and with how difficult it can be for a parent with care to provide the information needed to make a successful application. There are a number of obstacles either party may face when applying for a variation under the current scheme; for example, a lack of awareness caused by how the Child Support Agency currently functions. The parent with care and the non-resident parent are not initially informed of the variations scheme during the calculation process. If either feels strongly enough that the maintenance liability is unfair due to costs or income not taken into account, only then would the Child Support Agency inform the parties of the variations scheme. With that

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approach, if the parents have little or no contact with each other, the parent with care may never become aware that the non-resident parent’s liability does not accurately reflect his financial circumstances.

Once an application has been made, there is still a sift process. At that point, the agency evaluates the grounds of the variation and assesses the level of information provided by the applicant. If they do not meet the minimum requirements, the application is sifted out and no further action is taken. The other party will never be informed of the application. While non-resident parents have such an incentive to provide information on their variation applications and reduce the liability, they do not have such incentive on applications made by the parent with care. That is why we want the duty-to-investigate provision to apply for the variation applications made by parents with care.

Therefore we propose this amendment to the 1991 Act which will ensure that parents with care are able to secure variations where appropriate that will help to secure maintenance liabilities that more accurately reflect the non-resident parent’s financial circumstances. The commission will investigate applications by using information already held—for example, by HMRC—or it will seek information from other sources, such as accountants, employers or credit reference agencies.

This change is part of a package of ways in which we can strengthen the variations scheme and overcome the obstacles faced when applying for a variation. We are also considering other changes that do not require primary legislation; for example, legally requiring non-resident parents to provide information about variation applications such that the non-resident parent would be subject to criminal sanctions if he or she did not comply. We are also looking into the feasibility of the commission developing a risk-profiling system to identify those non-resident parents who may have assets or income that could be the subject of a variation and to prompt the parent with care to apply for one. We also expect the commission to work to raise the profile of the variations scheme, especially at key points such as the initial calculation and the annual review.

Amendments Nos. 203 and 205 are minor and technical. They allow the commission access to information held by HMRC for the purpose of functions relating to national insurance contributions. I beg to move.

7.30 pm

Lord Kirkwood of Kirkhope: I am sorry to raise a couple of questions at this late stage. This is obviously a welcome concession as far as it goes. There is no doubt about that, and the Minister deserves credit for introducing it. However, the noble Lord, Lord Skelmersdale, was talking about applications for variations. I would like some more consistently collected information on applications for variations. Although there are people who make applications, there are more important questions about the follow-through: the number of applications for variations that are accepted by CSA decision-makers, the numbers then taken to appeal

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and the outcome of those appeals. Although I accept that there may be a flurry of activity where there is nothing to lose, in the red rage that parents with care often get into, they will—if they know about it—make an application just on the basis that it is the only thing available to them, with no real prospect of success. We should be careful and monitor how the variation provisions pan out in practice when this legislation is in steady state.

I have already welcomed the amendment, and I may have misunderstood this but it will still put the burden on the parent with care to bring a variation application before the commission can intervene to give them access to the provisions in the new clause. We had discussions about this earlier. The amendment will not help such a parent with care unless she is alerted to the fact that an application for a variation might be appropriate. Indeed, although the noble Lord, Lord Skelmersdale, was evincing surprise that there was a big number—it is a big number in absolute terms—in proportion to everything else it is modest. We should be quite clear in this new system about what entitlements and abilities there will be for parents with care to make variation applications.

Unless I have misunderstood this, and I hope I have—if I have, someone will put me right—this does nothing to help the parent with care to know whether she has a chance of taking advantage of the new powers in Amendment No. 101. Welcome though they are, they will not do the job for that reason.

Lord Skelmersdale: It is really too late to do more than comment on what the Minister said on Thursday last:

I hope that we hear about this later.

These three amendments, particularly Amendment No. 203 which refers to national insurance contributions, allow me to ask why this is going to be helpful to CMEC in the first place. I can well understand why the tax returns and all the rest of it are useful, but not why national insurance is. Are we talking about amounts or records?

Lord McKenzie of Luton: Let me pick up first on the points of the noble Lord, Lord Kirkwood. He asked what data we have on successful applications, appeals and outcomes. We do not currently have detailed data on that, although some research is under way to look at this issue in detail. The key point is perhaps to recognise that we propose to shift it from how it currently works—or does not work—to try to make it more accessible. If we just shifted some of the issues I touched upon—about how we currently communicate with parents with care about its availability and so on—and nothing else, it would help. We are planning to do more than that.

The noble Lord is right. Standing by itself, the amendment would not provide a parent with care with any more information about whether or not they

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should be seeking a variation. We are looking at profiling to see whether the commission can use it to inform parents with care of the likely circumstances in which a variation may be appropriate. We certainly want to move on to a better system.

On the information we will be providing to the commission to which it does not currently have access, the amendment will provide the commission with access to all information held by HMRC for the purposes of functions relating to contributions. While the majority of information held for contribution purposes is also held for income tax purposes and, as such, will be accessible to the commission, specific pieces of information, and information above a certain age, will not. The agency currently makes use of historic contributions information when it needs to create a historical profile of a non-resident parent’s employment history in order to perform a maintenance calculation,

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or revalue an interim maintenance assessment. The commission will also require access to contributions information for these purposes. So there is certainly a particular opportunity there to go back into the past in trying to deal with these long-outstanding debts. That national insurance information will help the commission in building an employment profile for somebody. I hope that deals with the points raised.

On Question, amendment agreed to.

Lord McKenzie of Luton: This may be a convenient moment for the Committee to adjourn.

The Deputy Chairman of Committees (Baroness McIntosh of Hudnall): The Committee stands adjourned until Thursday 7 February at 2 pm.

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