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Grand Committee

Thursday, 7 February 2008.

The Committee met at two o'clock.

[The Deputy Chairman of Committees (Lord Geddes) in the Chair.]

Child Maintenance and Other Payments Bill

(Fourth Day)

The Deputy Chairman of Committees (Lord Geddes): I will not waste the Committee’s time by talking about Divisions, as they are singularly unlikely to happen on a Thursday.

Clause 18 [Transfer of cases to new rules]:

Lord Kirkwood of Kirkhope moved Amendment No. 102:

Clause 18, page 8, line 15, at end insert—

“( ) During the process of transition, all existing maintenance agreements in payment will be frozen at their current level, revalorized annually by the increase in the September retail price index and awarded £20 maintenance disregards by the end of 2008.”

The noble Lord said: The Grand Committee now turns to the important question of transfer. Clause 18 and Schedule 5 deal with that part of the Bill’s endeavours and attempts to change the system. The amendment in my name and that of my noble friend is linked with Amendments Nos. 104 to 107 and 220.

I hope that colleagues will not hold it against me if we spend a little time on transfer. Clause 18 and Schedule 5 relate to an important part of the operational success or otherwise of this policy; the computer platform is also crucial in that respect. I invite the Minister to tell us as much as possible about the transfer process. The last time this was seriously considered was in another place. Time has moved on. Of course, not everything will be settled, because there are still some questions to be resolved by the commission. That is right and proper and we understand it, but perhaps there have been further developments that would give us a little more information about what is to happen when this unfolds in a few short months’ time.

Some points that I made in passing earlier in Committee resolve into two questions. First, if the software releases that the Minister has been telling us about, characterised as PR1 and due to be put in place some time in this financial year, were to be delayed beyond Easter 2008, or all their specification problems were not ironed out before then, or if there were problems with stuck cases or anything like that—and there is a finance release coming behind PR1, so there are two important bits of software development on which the transfer depends—would the Minster’s default position be that he would consider delaying the whole timetable of change? My worry is simple and relates to what happens if the

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computer is not working and we start the process of transfer. We have been there before and do not want the same result.

My second question is about the continuing use of the child support computer system—the original system that runs old cases. As the National Audit Office report of 2006 reminded us, if the child support computer system is required after 1 April 2008, the agency—and/or the commission in future—will have to renegotiate the arrangement with the supplier, EDS, to establish who will meet any additional costs of extending the use of the system further. So my second question is about the platform to enable the transfer to be achieved successfully. Who is paying for CSCS and when do the Government expect the last old cases—those that are run on CSCS—to be shut down and transferred to the new statutory maintenance scheme? As far as I understand it, some of those cases may run to 2013, at least in theory. These are important technical questions that the Committee would benefit from knowing a little more about.

The amendments are probing amendments, save Amendment No. 107, which refers to the need for regulations on the introduction of the transfer proceedings to be dealt with under the affirmative procedure. That is an important issue, to which I shall return.

I want to look at the background, so that I can ensure that I understand what is going on. I stand to be corrected on this. I am not trying to demonstrate any great knowledge here; I am just struggling to understand what the proposals are. Under the Bill, the two existing schemes are to be closed down and the cases will be transferred to the new statutory maintenance service, floated off into voluntary arrangements between parents or, in effect, parked in a new cash transfer service. One of those three options has to be an outcome for all existing cases under the two schemes. This much I think I understand.

However, previous attempts at bulk migration do not give us any confidence that we will not, unless this is carefully thought through, repeat the mistakes made in years gone by. The 2006 National Audit Office report on the failure of the move from the old system to the new system in 2003 rather grandly said that the system had to be abandoned because the,

“pre-requisites in terms of system and business stability had not yet been met”.

A few short months before the new transfer, can we be sure that those prerequisites have been met for the redesign of the system that is to be deployed by the new commission? The 2006 White Paper said:

“We do not underestimate the challenge of moving to a single system, and previous attempts to move clients between schemes have highlighted the complexity and risks involved”.

Given what the NAO said about what went before and the White Paper’s assessment of what we are facing, it is important that we take time to understand what is going on.

The details that we have to date could be described as sketchy. We still have a lot to understand about how the transition will be managed between the

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present situation and 2013, when there will be a completely new, completely unified child support scheme supported by a single, free-standing IT system. We need to know that before we can be confident that that will all work.

The abolition of Section 6 later this year is expected to lead to a reduction in the number of cases dealt with by the statutory scheme even before the new maintenance service begins to operate. In 2009-10, parents who are still in the existing two schemes will be offered the three options that I referred to. From 2010-11, new applications for the statutory scheme will be accepted and the process of transferring existing cases will begin.

My point is—and I seek clarification on this—that parents using the existing scheme will, wherever they go, have to opt in to the new scheme if that is what they want. There is a formal application process but, if that is not completed, they are not in the scheme; if a formal application is not made within a set time, the commission will be entitled to close the case and liability for maintenance will stop. That is a danger point, which people who are advising those who may be in this situation later this year need to understand; they need to make their clients—non-resident parents and parents with care—fully aware of that situation.

I acknowledge and agree with the protection that, if two parents disagree, the parent wishing to use the new service has the advantage and wins the day if there is a contest. That is welcome and reassuring, but the requirement to opt in and the procedure for opting in need to be made abundantly and patently clear to the people who are currently in the system if we are to be safe in the knowledge that people can best take advantage of what we propose.

The memorandum from the Delegated Powers and Regulatory Reform Committee that accompanies the Bill talks about the transfer being a complex and detailed process and about the exact requirements not really emerging until the process is well under way. It talks about the exact process of how and by what means an individual parent shall decide to opt in and about whether more precise data can be given on the type and number of cases involved. That is a good point, but it is difficult to assess the type and number of cases involved.

Mr Plaskitt, the Minister in the other place, admitted that a number of behavioural uncertainties make it difficult to make robust estimates of future flows and the future case load. He is right, but that makes the planning of the transfer process that much more difficult and more hazardous. He told Members of Parliament:

“We cannot possibly anticipate what people will choose, and they will not be in a position to indicate their likely decision until they understand more about the choices facing them”.—[Official Report, Commons, Child Maintenance and Other Payments Bill Committee, 11/10/07; col. 317.]

In that regard, the department has undertaken a dedicated telephone survey of existing CSA clients on their future choices—admittedly, as I have said, even though people may not yet be in a position to make rational and detailed choices. The survey, which

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incidentally was part of the DWP’s Child Maintenance Redesign Survey: Indications of Future Behaviour and Choices, Research Report No. 444, in 2007, is significant because it suggested that a quarter of parents with care and half of non-resident parents would prefer to make their own arrangements. Those figures are low enough. On further and better questioning, however, the researchers concluded that only 15 per cent of all parents with care could be considered likely to make their own arrangements under the new system. That figure concerns me and should concern other Members of the Committee. I would be grateful for any reassurance on that from the Minister.

We discussed earlier in Committee the Government’s working assumption that the number using the commission’s statutory collection and enforcement services will fall from 1.4 million cases to around 1 million. That automatically assumes that the number of those using the voluntary arrangements as opposed to anything else will rise by about 40 per cent—from 500,000 to 700,000. Forty per cent is a big and optimistic figure. Moreover, I cannot find in anything that I have been given any information on the expected numbers to opt for the proposed cash transfer payment system as opposed to either the voluntary system or the new CMEC set-up.

All that is taking the long way round to say that we need a lot more information, that a lot of planning needs to be done and that we need to be sure when we make a start to this change later this year that we have done everything that we conceivably can to anticipate problems and to make things easier for the client group. Parliament has a duty, subject to the requirement on the new commission to put the final touches to all this planning and to implement it once it is properly constituted, to pause and ask diligently exactly what planning is in hand and to satisfy itself that this has some prospect of working.

2.15 pm

Amendment No. 107 is a substantive amendment on an issue that I feel strongly about. While I understand the imperative to move quickly because the scene is fast evolving and I know that affirmative resolution procedures always hold Ministers back—or at least, that is how they see it—a great deal is riding on this three-year period. Schedule 5 certainly provides for regulations setting out how the commission is expected to approach the process. The regulations are lengthy because they need to set out phasing and timing requirements, the principles for determining the order in which parents are asked to choose, the procedures involved, overall scheme time limits and where applications are to be made. All these things are welcome, but we must consider them under the affirmative procedure if they are to be meaningful and if Parliament is to have a chance to track the process with the leverage afforded by that procedure. Negative procedure leaves the parliamentary scrutiny process with one hand tied firmly behind its back.

I understand the need for speed, but if we begin grabbing at change it suggests that we are not in the position that we want to be in. We should introduce

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this in a consistent and planned way—one that does not require panic measures. For the life of me, I cannot understand why we need to or even should accept the negative resolution procedure for this set of regulations. This is where the introduction of CS2 failed: in the transfer to and implementation of the new scheme, it all fell over. Parliament is entitled to insist on this; even if the process takes a little longer, we will be more reconciled to it so long as there is a chance to monitor it in detail. Through the affirmative procedure, we are able to hold the Government to account. Parliament can also offer help and advice with the process in the way that only it can. So Amendment No. 107 is not probing in nature; it is a substantive amendment. We may want to return to it if we cannot get the Minister to think again.

On Amendment No. 220, the Minister will say that paragraph 2(2)(e) of Schedule 5 allows for regulations that would require the commission to have a strategy. This amendment would strengthen that requirement by putting a direct obligation on the Secretary of State to ensure that all parents in the system are kept well informed about the transfer arrangements. I think that that should include a personal information communication to each parent, but I anticipate that the Minister will respond by saying that that would be too bureaucratic, too costly and too slow. However, we need to think about this carefully.

Amendment No. 104 deals with the principles that will determine the order of transfer. I can see that paragraph 2(2)(c) allows for regulations to specify those principles, but this is a probing amendment, because I want to explore the Government’s thinking here. The discussion in the other place did not take us much further beyond what had been set out in the White Paper in 2006, which pointed clearly to ensuring that we are driven by child poverty considerations and putting the poorest families first. The commission will look at this issue, but it would be helpful if the Committee could understand what further thinking has been done. Amendment No. 104 gives us a chance to do that. I am particularly worried, as are members of the Select Committee in another place. The Minister will have seen the comments in the fourth report of the House of Commons Work and Pensions Committee on child support reform. Having taken evidence from the chief executive/commissioner designate, the committee was worried about the operational difficulties of taking on the priorities that he was suggesting and said:

“This means that the transition should be planned with administrative efficiency at its heart. We appreciate that the Government wants to focus on support for the poorest families first. We are, however, concerned at the CSA Chief Executive's comments that C-MEC may prioritise the old scheme nil assessment cases. This approach may be misplaced effort and result in little additional child maintenance for parents with care. We would welcome clarification on this aspect of the Government’s proposals”.

There is obviously a vein of concern in the Select Committee report that I share, and it is referred to in Amendment No. 104.

On Amendment No. 105, it is patently clear that the transfer must not disrupt maintenance payments.

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That is obvious, but some ministerial reassurance that that will be guaranteed would be helpful.

Penultimately, Amendment No. 106 deals with transitional protection and tries to flesh out exactly what the prescribed adjustment will mean to a maintenance calculation on transfer. It is a probing amendment. Transitional protection is obviously necessary, but it can complicate bureaucratic and administrative systems to a high and damaging degree. If we do not know exactly which cases will remain in the statutory system and which will leave, we need to know a little more about how the Government see the commission using the power of a prescribed adjustment, because it could impact quite severely with big increases or decreases in maintenance or liabilities in future. We need to understand how that power will be used properly.

Finally, and briefly, Amendment No. 102 was my desperate attempt over Christmas to think of some way to deal with the legacy of the outstanding backlog while all that happens. Whether David Henshaw is right or wrong, I fear that the Bill is asking the new commission to do an enormous amount of work in the transfer process at the same time as it continues with its ongoing work to try to keep pace with everything that has gone on in the past. The amendment was a cockshy at trying to find some way to reduce the workload. Of course, it is practically impossible, because it would be unfair and unreasonable to refuse to alter a non-resident parent’s liability if it were dramatically increased or decreased; the amendment was just an attempt to make the point again that, if we are not careful, the work that the commission is being asked to do—to deal with the day-to-day work and the legacy case load, as well as to make this important transfer—will pull down the whole pack of cards.

These are very important issues. I am sorry that I have laboured the point, but I hope that people understand that the intention is merely to try to ensure that we do not make the same mistakes as we made last time. I beg to move.

Lord Skelmersdale: I shall speak to Amendments Nos. 103 to 107, to which I put my name. They are in the centre of the two brackets: Amendments Nos. 102 and 220. As the noble Lord, Lord Kirkwood, said, transference has proved to be a veritable nightmare for the CSA. It would be helpful first to establish from the Minister not how many cases have been transferred but how many have not. I suspect that there are an awful lot.

On Amendment 102, as I understand it, under the Bill, some non-resident parents will get an awful shock quite soon, because HMRC data will become available to CMEC and a reassessment will presumably be made. I am talking not so much about single transference as about, in a sense, double transference. The noble Lord, Lord Kirkwood, is interested in transferring the original cases and the 2003 cases to the new CMEC formula under the Bill. Before that, an element of transference will be going on anyway. The Minister might say that it is not true transference, but it is certainly an alteration. I do not think that there is any doubt about that.

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The whole point of the amendments to which I have put my name is to understand exactly how the new scheme will take over from the old one. The last I heard was in a letter to someone, possibly even to me, from the Minister. It gave the impression that he did not have the slightest idea. He said that it would be a matter for CMEC when it got around to it. That, at least, was honest, and I am sure that he can confirm it today—although perhaps he would not like to use exactly the same words as I just did. With two different child maintenance payment schemes running concurrently at present, how can he assure the Committee that a third will not again cause hideous confusion for CMEC or, even worse, for the parents due for maintenance payments, whether those payments are in to the parent with care or out from the non-resident parent? That is extremely important.

My real worry, though, lies not with the ensuing confusion so much as with the effects of that confusion. There is a possibility—not to put it any more strongly—that the non-resident’s liability for payment could be lost in the transition between the former scheme and the current scheme. Does the Minister see that in the same light as I do? Does he see it as a problem? Does CMEC plan to put in place any mechanisms that will prevent that happening? Can it, or he, guarantee some sort of transitional protection to parents as the commission implements yet another scheme?

At present, regulations under Schedule 5 will be subject to negative resolution, as the noble Lord, Lord Kirkwood, said. That is on the basis that the process by which cases transfer will take around three years and that issues may emerge requiring changes to be made quickly. I agree, given the importance of transitional arrangements, that it is right that the regulations governing the process should receive the positive approval of Parliament before enactment. There should not be much difference in speed between affirmative resolution and negative resolution, except that regulations made under negative resolutions come into effect on the day that they are laid. I cannot imagine that the speed requirement will be such that four to six weeks would not be appropriate before the regulations came into effect. I agree with the noble Lord, Lord Kirkwood, that this is such an important subject and will affect so many people that it is right that Parliament should discuss the regulations before they become operative.

With regard to the prioritisation in Amendment No. 104, clearly the principles are not in any particular order. None the less, CMEC will have to have some idea of the order in which it will transfer the various cases. Does the Minister have any thoughts on that, or will he say yet again that it will be a matter for the commission? The interesting thing about Amendment No. 220 is that it is not necessary if the noble Lord and I get what he has suggested; namely, the affirmative procedure.

I turn to Amendment No. 106. Paragraph 6(2)(c) of Schedule 5 will,

“prescribe circumstances in which liability under such a maintenance calculation is to be subject to a prescribed adjustment”.

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With all my reading, I have failed to understand quite what may be in the Minister’s mind. It would be extremely helpful to know. I shall have to await the Minister’s response to Amendment No. 105. I am sure that I shall be able to comment far better on it then.

2.30 pm

Baroness Hollis of Heigham: Perhaps I may put two brief questions to the Minister. The first relates to transition. Will he help me to understand Schedule 5 more clearly? As I take it, there is a case load in the two statutory systems. Should an NRP have a new relationship under the new, third system, that will potentially require a recalculation for the parent with care in one of the existing statutory schemes. At that point, that case will be pulled over to the new system. Can I take it from my noble friend that it will not be assumed that that existing statutory case, irrespective of activity in it, will go automatically into the voluntary system? I would be horrified if that were to happen.

If somebody is in the statutory system and is taken by default into the new system because a new case under the new system affects them and their income has to be recalculated—for example, the person concerned may go from supporting one family to supporting two—there must be a presumption in favour of the statutory system unless the person chooses to go into the voluntary system. With a new case, one could argue that it is different: the person concerned is going into it with their eyes open. But it seems unwise to tell somebody who is in the statutory system that they are to go into the voluntary system unless they choose to opt in to the statutory system. Will the Minister clarify that? My apprehensions may be groundless.

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