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Baroness Hollis of Heigham: Does not my noble friend agree that one difficulty with the CSA, unlike other fields where debt is owed, is that you cannot go
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Lord McKenzie of Luton: I agree entirely with my noble friend. There was a brief interlude of naming and shaming on the website, but that quickly disappeared. It is right that it did, for the reasons that my noble friend has given.
Lord Skelmersdale: In withdrawing the amendment, I certainly agree with the noble Baroness, Lady Hollis, that there are very few effective sanctions for many of the people whom we have been talking about and therefore I say to the noble Lord, Lord Kirkwood, that it is a great mistake to do away with any of them. I may be straying into the next group of amendments by saying this, but that is a different matter from saying that the way in which the sanctions are triggered is necessarily correct in the Bill. However, the sanctions most certainly should be used.
I accept some of the points made by the Minister. I recognise that buried somewhere in the Bill is the fact that there will be no application for the removal of a driving licence if it would affect an individual’s earning capacity. But there are other sanctions that could affect earning capacity, which is why we tabled the amendment. I shall look carefully at what the Minister has said in response.
The positive point made by the Minister was that it is quite right that CMEC should engage with the parent with care. What he apparently does not accept is that the parent with care should trigger that engagement. I must ask why not. We are not moving at the pace of an E-type Jaguar today, so perhaps the noble Lord would like to consider the question and come back to me in writing.
Lord McKenzie of Luton: I had hoped that I had covered the point, but I shall look at the record on this large grouping and write to the noble Lord.
Lord Skelmersdale: In that case, I have pleasure in begging leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Schedule 5 [Maintenance calculations: transfer of cases to new rules]:
[Amendments Nos. 104 to 107 not moved.]
Clause 19 [Use of deduction from earnings orders as basic method of payment]:
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Lord Skelmersdale moved Amendment No. 108:
Clause 19, page 8, line 27, leave out “magistrates’ court (or, in Scotland, to the sheriff)” and insert “tribunal”
The noble Lord said: I shall speak also to Amendments Nos. 109, 110, 165, 168, 169 and 173. These are all probing amendments, pure and simple. As I said just now, we must be satisfied that the appropriate legal place is used for each of these sanctions, whether in the case of the original application or, in the case of these amendments, in the right of appeal. They change the place to which a person may have a right of appeal from a magistrates’ court or a sheriff court in Scotland to a tribunal. The latter is a panel of much narrower judicial scope and typically has a specific remit. It can make more informed and sensitive decisions when dealing with fragile child support negotiations and demands. The tribunal also provides an important benefit in that it creates an alternative route from that of the magistrates’ court and thus prevents everyone with a grievance clogging up that court system. I do not know whether the Minister has had complaints about that recently, but certainly complaints are made to us quite regularly that the magistrates’ courts are overstretched. We must be absolutely certain that their use is appropriate in every case when we consider the various sanctions and mechanisms for sanctions in the Bill. I beg to move.
Lord McKenzie of Luton: The amendments give us the opportunity to discuss the appeals route for deduction from earnings orders when used as a basic method of collecting child maintenance. Amendments Nos. 108 to 110 apply specifically to appeals against a decision by the commission that there is no good reason not to apply a deduction from earnings order as a basic method of collection. They would mean that the appeals would be heard by a tribunal and not by the magistrates’ court, or, in Scotland, by the sheriff, as currently proposed in the Bill.
Where regulations are made allowing deduction from earnings orders as a basic method of collection, they will include provision for such an order not to be made where there would be good reason not to do so. In deciding the most appropriate method of collection, the commission will consider any representations from the non-resident parent. Matters to be taken into account when considering what constitutes a good reason will be set out in such regulations, but it is envisaged that they will be related primarily to concerns about privacy issues. An example might be where a non-resident parent is employed in a family business and wishes to keep any details of child maintenance private. The intention is for the commission to pilot the approach of using deduction from earnings orders as a basic method of collection. The criteria for what constitutes a good reason will be further developed from lessons learnt from the pilot if this policy is to be fully rolled out.
Deduction from earnings orders, as they currently operate, are part of the Child Support Act 1991. There are appeal routes to a magistrates’ court, or, in Scotland, to the sheriff. There is no evidence that this system does not work effectively or is inappropriate.
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Amendments Nos. 165, 168, 169 and 173 deal with the route of appeal for deduction orders—in this case, lump sum deduction orders. We considered deduction orders further following debate in the other place, and as a result I plan to table government amendments that increase the scope of these orders. As part of this, we have reconsidered the appropriate routes of appeal.
In consultation with the Ministry of Justice, we have concluded that in England and Wales, the county courts are best placed to deal with financial matters such as these. This allows us to benefit from the extensive experience of the county courts in making third-party debt orders. In addition, we recognise the potential complexity of joint account deduction orders, so we intend those appeals to be heard in the High Court. To allow for further consultation with the Scottish Executive to mirror these changes in Scotland, however, we will set out the specific route of appeals in regulations.
I hope that that explanation was sufficient, and that the noble Lord will be able to withdraw the amendment.
Lord Skelmersdale: I am very grateful. I think that I am satisfied, because I was trying to discover whether there had been a thorough examination of this subject in the steps leading up to the Bill. Quite clearly, there has been. The Minister mentioned a future government amendment on this subject. I assume that that is not the one that we are about to discuss but one that he will table on Report. Am I correct?
Lord McKenzie of Luton: No. We are about to discuss it; it is on deduction orders.
Lord Skelmersdale: Having ascertained what I needed to know, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 109 and 110 not moved.]
4 pm
Clause 21 [Current account deduction orders]:
Lord McKenzie of Luton moved Amendment No. 111:
The noble Lord said: I speak also to Amendments Nos. 112, 117, 118, 120 to 125, 127 to 134, 136, 138,
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At present, the first action the Child Support Agency can take to collect child maintenance from a non-compliant non-resident parent is to impose a deduction from earnings order. Where this is not possible or proves ineffective, the next avenue is enforcement through the courts. Orders for deductions from accounts will provide the commission with a further quick and effective method of ensuring child maintenance reaches those to whom it is due. They will come in two forms.
The regular deduction order can require financial institutions to remove money from an account on a regular—normally monthly—basis. That can be in respect of ongoing maintenance, arrears or both. Lump sum orders will operate by first requiring the freezing of an amount up to the maintenance arrears. That will allow for representations to be made as to why the specified lump sum should not be removed from the account, but at the same time it will protect the sum from being moved. Once a final order is made it will operate to remove the amount due in a single deduction. However, if there are inadequate funds in the account the order can stay in force and be used against future deposits.
I know that the Committee will already be aware that during debate in the other place, the Government accepted that there would be a benefit to revisiting the reach of deduction orders. We have consulted widely with the finance industry as well as across government, and we accept the current drafts are too cautious and leave unacceptable loopholes. So we have removed most of the exclusions from the face of the Bill.
That said, we recognise that removing money administratively is a very serious step to take. This is particularly the case when other parties may be involved, which is why we feel we must ensure that joint accounts are specifically safeguarded. Similarly we must think very hard before putting a non-resident parent’s business at risk. With this in mind, while we have removed exemptions from the face of the Bill, we will use secondary legislation to limit the use of joint, and certain business, account deductions. However, if over time it is apparent that moneys are being diverted into these accounts to avoid a deduction order being imposed—that is, if we have evidence to suggest that non-resident parents are organising their finances to avoid these provisions, and hence their responsibilities—we will come back with affirmative secondary legislation to close loopholes.
We have also considered the effect of lump sum deduction orders specifically on businesses of non-resident parents. It is not our intention to apply such orders to those accounts that are used solely for the purpose of running a business. We feel that if used on such accounts, the process of freezing funds to impose lump sum deduction orders could put too
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In recognition of the significance of these measures, we intend that appeals against deduction orders will be heard, as I have intimated, by the county courts, with the exception of appeals against joint account deductions, which will be heard by the High Court. We continue to consult the Scottish Executive to determine the appropriate route for such appeals in Scotland. In addition to these changes, we have also ensured that the making of regulations providing for rights of appeal is mandatory. This further demonstrates our commitment to safeguarding the rights of the individual while addressing the need to ensure child maintenance is collected.
In brief, the extended remit of regular and lump sum deduction orders will allow such measures to be taken against funds held in deposit, current and business accounts held in sole names. It will also allow for such deductions from joint accounts but only where regulations have been made for that. This will significantly extend the ability of the commission to collect maintenance from those who currently make it difficult to do so.
I hope the Committee will be able to support these amendments. I beg to move.
Lord Skelmersdale: This is a gigantic group of amendments, covering releases offered from bank accounts which may be either ongoing or lump sum. Indeed, they fall rather neatly into two halves. If CMEC is to have this power, any account may be appropriate in certain circumstances. I originally thought that, by removing the word “current” in Amendments Nos. 111 and 112, the Minister was doing just that. However, as he said, further examination shows that the first half of Amendment No. 117 pushes the decision on which account is appropriate into secondary legislation in new Section 32(3A)(b). That pricked my interest, because delay is not necessarily the right thing to do. I assume that this statutory instrument—or series of statutory instruments, as appropriate—will produce the safeguards the Minister has been talking about. However, will current accounts be included or excluded? That is a fair question.
On Amendment No. 120, the credit in a joint account clearly belongs to all the account holders. Would subsection (5)(a) not be better expressed by referring to “account holder or holders”? I suggest this as a simplifying drafting amendment. Would that not cover all types of account, whether held by a single person or group of people? That is appropriate, because Amendment No. 121 says that all the account holders must be informed that money is to be withdrawn from the joint account due to the activities—in this case, the non-payment of maintenance—of one of them. The Minister clearly believes that this will put added pressure on the defaulter because the others will complain to him immediately. In general, he must be right. However,
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Amendment No. 124 adds to the pressure, as the deposit holder is allowed to take fees as it would for any other standing order. I assume that the Minister envisages that these amounts from the various accounts would be taken by standing order. The other account holders would be able to get at the defaulting non-resident parent in question. Amendment No.125 compounds this. As far as Amendment No. 127 goes, why is the deposit taker himself being allowed to go to appeal? I simply do not understand that.
In Amendment No. 130, it is not appropriate to have a may/shall debate; only comment that if all these chances for the withdrawal of money from accounts are not in the Bill, they must be in the statutory instrument. Amendment No. 134 is a sensible provision defining the parameters of the statutory instrument, although new subsection (1A)(a) is perhaps a little vague and my earlier comments apply.
As far as I can see, all the new provisions in Clause 21 are duplicated in amendments to Clause 22, as I said at the beginning, which covers lump sum deduction orders, so the same questions apply. To save time, I am happy to allow the Minister’s answer to cover both clauses, unless he wants to give one that is pertinent to one clause and not to the other, although I doubt it.
Amendment No. 156 deserves comment. It would be quite wrong if the account were to be stripped by the other account holder, and I hope that these two long amendments will prevent that. However, seven days’ grace is given before the maintenance due starts to be paid. This will give time for asset stripping so what will happen then, especially if it is done by the non-resident parent? Is this to be a criminal offence?
I am afraid I do not understand the reason behind Amendment No. 164 and the removal of proposed new subsection (4), or, indeed, proposed new Section 32G(9). It may be my inattention to detail but why is it still needed? Is it because it duplicates earlier amendments? The same question applies to proposed new subsection (7) on page 16 in Amendment No. 167. I shall have to study the rationale for the other amendments but I hope it will not be necessary to return to this at a future stage of the Bill.
Lord Kirkwood of Kirkhope: For the avoidance of doubt, I am wholly in agreement with the general thrust of all the amendments. However, I do not understand all of the detail and I should like to study what the Minister has said. In addition—I do not know whether he made any reference to this in his earlier remarks—in relation to both the current account and the lump sum deduction orders, the proposed regulations in Amendments Nos. 117, 134 and 156 contain caveats which state that regulations will specify that an order cannot be made in respect of
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Lord McKenzie of Luton: I shall try to respond to as many of those points as I can. The noble Lord, Lord Skelmersdale, raised many detailed points and I shall need to read the record and respond more specifically on some of them.
On the issue of removing the term “current account” from the text, this is because, when we thought about it, focusing only on current accounts was not very helpful, particularly as these days a number of people will have deposit accounts, investment accounts, current accounts and moneys swept between them. It was not potentially going to catch very much. This caused us to recast the arrangements and to differentiate not so much in terms of accounts by and large, but between regular deductions and lump sum deductions.
Regular deductions are those which are likely to be taken monthly. They could be related to arrears as well as current liabilities, but they would be taken routinely. Obviously there are different considerations in respect of lump sum deductions, which touch upon arrears. That is the basis on which this is structured.
Lord Skelmersdale: I do not want to go into any more detail at this point, but surely with the lump sum deductions, as the system does not allow the account to go into negative equity, as it were, there may well be a case where you take several lump sums from the same account over a period, in which case they would be fairly regular deductions.
Lord McKenzie of Luton: I do not think anything proposed here would preclude more than one go at a lump sum. But there is a distinction between them. If there is a lump sum which deals with arrears, and then arrears subsequently build up again, another process for another lump sum would be perfectly possible.
The noble Lord is quite right to say that there is a limit in these arrangements that states that the account cannot go overdrawn. But you can have more than one bite at the lump sum; you can take it in tranches when there is funding in the account. Also, of course, the first stage of the lump sum process is a freezing of the accounts. This at least keeps the accounts whole so that the assets cannot be dissipated very quickly. Although a process may be under way, that does not preclude alienating the assets in the interim. But the processes being administrative, they should be speedy and limit the scope for that.
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