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The primary purpose is to promote child maintenance but, as the Minister said, there is a clear link between the responsibility of paying child maintenance and the responsibility of parenting. I am sure that I speak for my noble friend Lord Northbourne when I say that we hope that this will go into guidance on this Bill as well as into other guidance because it has become evident to us that there is a need for a clear, straightforward message on what supportive parenting is and for a clear definition that can be picked up, used and applied in teaching at every level—to children in schools, in antenatal classes and across the board—as well as in the many initiatives that the Minister outlined.

Given his helpful remarks, I beg leave to withdraw the amendment.

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Amendment, by leave, withdrawn.

[Amendment No. 4 not moved.]

Clause 4 [Promotion of child maintenance]:

[Amendments Nos. 5 to 8 not moved.]

Clause 9 [Annual report to Secretary of State]:

Lord Tunnicliffe moved Amendment No. 9:

The noble Lord said: My Lords, Clause 9 places a requirement on the commission to prepare an annual report for the Secretary of State. The Secretary of State must then lay a copy of that report before Parliament enabling the proper scrutiny of the commission’s performance. The annual report must detail all the activities undertaken by the commission in the previous financial year and must also include the report prepared by the non-executive functions committee. The commission is specifically required through this clause to report on: its strategic direction; the statutory requirement to exercise its functions effectively and efficiently; the steps taken to meet its statutory objectives and targets; the extent to which they have been met; and the extent to which it has commissioned out work.

This amendment requires the commission to report on the extent to which it has relied on the provision for agency arrangements in Clause 7(1). Noble Lords who were present in Committee in January may recall that this amendment was tabled then by the noble Lord, Lord Kirkwood. At that time, the Government requested that the noble Lord let them consider his amendment further and allow them to come back to him on Report. I am pleased to tell the noble Lord that I agree that his amendment would set out clearly in statute what we had, in fact, intended in any case, which is that the commission should report on its use of any external body to deliver services on its behalf.

Before I finish, I briefly inform your Lordships that in Committee, the Government mentioned that there is currently no timeframe for the annual report as such to be produced. I should like to clarify that Treasury guidelines state that the annual report should be laid in Parliament with the annual accounts. There is a statutory requirement provided for in the Government Resources and Accounts Act 2000 that the annual accounts should be laid in Parliament by the Treasury by 31 January. The Treasury may direct that the Secretary of State take on responsibility.

I therefore beg to move the amendment standing in the name of my noble friend Lord Mackenzie of Luton, with thanks to the noble Lord, Lord Kirkwood.

Lord Kirkwood of Kirkhope: My Lords, I am deeply grateful to the Minister, the Government and the department for accepting the sense of the argument mounted by all sides in Committee. The amendment clarifies the situation; it is a minor amendment but improves the Bill. I am also grateful for the clarification about the timing of annual reports, because we have seen one or two annual reports from the Child Support

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Agency slip a little—we understand why that has been in the recent past, and those arguments are now past. There was a little bit of clarification; the amendment shines a little bit of extra light; and I extremely grateful to the Minister for bringing it forward at Report.

On Question, amendment agreed to.

Clause 15 [Repeal of sections 6 and 46]:

Lord Kirkwood of Kirkhope moved Amendment No. 10:

The noble Lord said: My Lords, I am very pleased to move the amendment, which stands in my name and that of my noble friend. Amendments Nos. 10, 11 and 12 bring us back to a familiar subject. I do not think that we need to spend a huge amount of time on it this evening, if for no other reason than that we have between now and 2011 or 2012 to persuade the Government that it is a good thing to do. Full maintenance disregards were part of our important discussion in Grand Committee; I looked again at the position that the Government took then.

I just want to take the opportunity to say one or two things that I hope will persuade colleagues that this argument is still worth pursuing. First, it is absolutely excellent news that last autumn, in the Pre-Budget Statement, the Chancellor increased the amount of maintenance that parents with care on benefit will be able to keep. It was an absolutely splendid achievement. The £20 that parents with care on benefit will keep from 2008 was welcome enough but, privately, I did not believe that the department would get £40 for them out of the Treasury for 2010-11. I really pleased about that; I make no qualification about that. If that was not enough, the disregard for child tax benefit being added to working tax benefit disregard makes the whole thing an excellent piece of work and extremely well worth having. It will have a very positive effect on the reforms that we are considering today.

However, helpful as that is, if Parliament is looking for ways between now and 2011 to bear down on child poverty even more directly, the amendment is one very effective way to do that. In parenthesis, before people start writing down the fact that I am making financial commitments on behalf of the Liberal Democrats—I understand from work done that it would cost an extra £40 million—the totality of the scheme introduced by the Chancellor comes in at about £140 million. If you allowed parents with care to keep all the benefit, my calculation is that it would cost an extra £40 million. I am not saying that that extra £40 million should be conjured out of fresh air; I am saying very clearly—I want this to be understood because I am sure the noble Lord, Lord Skelmersdale, has colleagues in the other place who are watching very carefully everything that we say—that I believe that the Government are committed to making further progress with child poverty between 2010 and 2020, by which time it will be abolished, if we are lucky.

If the Government are looking for ways to deliver that extra support to achieve that end, this very effective mechanism is readily available to them to enable them to do that. The Chancellor’s changes in the Pre-Budget Statement in the autumn will take

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50,000 children out of poverty. This mechanism would take an extra 30,000 or 40,000 more children out of the official definition of poverty. I take those figures from the report by Sir David Henshaw, who did some modelling, and I think they are pretty sound. Some difficulties will result from the £40 disregard when we get to 2010-11, because it risks becoming an established going rate. We have had these discussions before. Why should non-resident parents ask for more than £40 if their balance will go to the Government? Indeed, Professor Patrick Parkinson, who was the architect of the Australian system and to whom the noble Lord, Lord Skelmersdale, has already referred, made the point when he was across recently that a ceiling of that kind would advantage relatively well heeled non-residents because that would be the perverse impact of having an unofficial maximum at the £40 level.

Perhaps more than any of that, what drove me to table this amendment yet again—I make no apologies for doing that—is that the administrative arrangements for Jobcentre Plus to dock benefit from the people who get more than the disregards are almost impossible to guarantee. That is not so much because only small numbers of people in the client group get more than £40 a week but because a lot of parents with care get intermittent payments, which are characterised as lump payments. That is, they do not get streams of weekly or monthly payments or other sensible systems of payment all the time. Very many parents with care get different amounts of money over different periods, and sometimes from different fathers into the same family.

We are trying to put the onus on the parent with care to keep track of that and to report the fact that they might have had overpayments which they are entitled to keep under the new disregard levels. If they do not do that, they will end up in benefit arrears and Jobcentre Plus, as I understand the system, will have to dock the regular payment of benefit. That is the kiss of death. That is the thing that strikes fear into the hearts of parents with care, benefit recipients and other customers of the department who have a bad enough time trying to make ends meet on a week-to-week, cash budget basis. If benefits are withheld out of the blue, they may be driven into the category of “can’t be bothered, too risky, won’t do that”, and the policy will not deliver the benefits that it might.

There is also the Treasury fear that if you take the ceiling away altogether, you will get disincentives to work. I am still working my way through the Professor Alan Marsh paper. I am three-quarters of the way through it and I understand only 20 per cent of it now, not 10 per cent. There is a case somewhere to be made that the Treasury fear that parents with care and full maintenance disregard will be inclined not to take work is not well founded.

I repeat that this is less a spending commitment and more a pointing in the direction of a mechanism that is efficient and that would be of enormous help to the child poverty agenda that the Government are bringing forward between now and 2010-11 when these £40 disregards come in. It is well worth keeping the pressure not just on the department, because I guess that its policymakers would be happy to live with this amendment. But there are problems of trying

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to justify that with the Treasury. If the department is looking for people to support its case, I am at the front of the queue. It is well worth doing and we should keep using every opportunity to make the case because it is sound. I beg to move.

10 pm

Baroness Hollis of Heigham: My Lords, I have a lot of sympathy with this amendment for three very obvious reasons. First, this is an even speedier way to help on the problem of child poverty, although, admittedly, that would be in families where the father, or the non-resident parent, is rather better off than on average. Secondly, the Treasury argument about work incentives is completely psychologically the wrong way around. The research from Alan Marsh has shown that reliable maintenance at whatever level acts as a form of privatised family credit. It is the reliability and security of that which allows the lone parent to take the risk of going into work with all the uncertainties that come with it. Therefore, the higher the level of child support payments, provided that they are regular, the more likely a lone parent is to go into work, not less likely. Not for the first time, and I am sure not for the last time, the Treasury has got it completely, perversely, back to front.

I hope that my noble friend can help me on my third point. I am not sure how this will work exactly. As far as I can see, the whole of the maintenance is to be paid over, whether voluntary or statutory. Then there is an expectation that if it exceeds £40, the lone parent will voluntarily declare this in some way so that it is then recovered back from the benefit bill. Frankly, that beggars belief and I do not think that it will happen. Under a voluntary system, no way will the mother say and no way will the department know or be informed unless someone perhaps is malevolent about this—possibly the non-resident parent who is seeking to cap his payments. That will not happen.

If it is under the statutory system, that is all very well, but it will put an additional responsibility on Jobcentre Plus staff. It is worth bearing in mind that at the moment NRPs who receive JSA are supposed to pay £5 a week or thereabouts to the parent with care from their benefit. It should be fairly straightforward: when the NRP gets his benefit, it should be docked and should go across. Does it happen? No, it does not; almost never. Why? Very simply, it is because, perfectly understandably, jobcentre staff do not, when they are interviewing someone coming in for JSA, ask a person whether he is obliged to pay child maintenance. Why? Again, perfectly understandably, their priority is to get him into work in the labour market and they do not deal with the secondary objectives of ticking boxes and asking whether he should be paying maintenance or whether £5 should be deducted? Jobcentre staff do not focus on that at all.

One of the biggest reasons for the number of lower paid or poorer parents with care not receiving benefit is because their ex is also on benefit and the money is not coming across, because Jobcentre Plus staff do not, cannot and will not handle the issue. Why, if they do not handle it now, do we think that they will under the new and more complicated system? Again, that

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defies belief. I hope that my noble friend can explain precisely the administrative steps, because I think that this is pie in the sky.

Lord Skelmersdale: My Lords, following on from that, the Bill makes provision for increasing the current £5 to £7, which in a sense makes the situation even worse. The noble Lord, Lord Kirkwood, rather anticipated my scepticism about this amendment, which originates with Gingerbread. I am sure that the Minister had this costed out and will proclaim the results of his investigations. I am told that the full cost of the amendment would be some £180 million. The noble Lord may say, “But it is only £40 million more”. The £40 million has to come from somewhere and I did not hear him tell me where he would get it from.

I would like to express my party’s congratulations to the Chancellor of the Exchequer on his latest Budget because as the noble Lord himself remarked, the Government have already announced a new full disregard in the case of housing benefit and council tax benefit. It is not coming in straightaway, we have to wait for two years for the full effect, but it will be £20 a week from next April. Over and above that, he has proposed to increase the child element of the child tax credit by £50 a year above indexation. He has done a lot in this area. I am all for opposition parties, whether it is I and my colleagues or the noble Lord, Lord Kirkwood, and his colleagues, pushing a little further, but quite honestly, in the straitened circumstances of the public finances at the moment, I think that he is asking for a bit too much.

Lord McKenzie of Luton: I thank all noble Lords who have made some very interesting contributions to this short debate. The noble Lord, Lord Kirkwood, explained that the purpose of these amendments is to link the repeal of Sections 6 and 46 of the Child Support Act 1991 with a full disregard for maintenance payments in the main income-related benefits. In the Child Maintenance White Paper we said that we would extend the existing £10 per week disregard to cases on the old child support scheme, and we also made the commitment that from 2010-11, parents with care on benefit would be able to keep significantly more of the maintenance paid before their benefit was affected. Subsequently, as has been acknowledged—I thank both noble Lords for their support and congratulations on this—we have announced that the disregard will be increased to £20 a week by the end of 2008, together with a full disregard in housing benefit and council tax benefit from this point. The disregard will then double to £40 a week from April 2010. These changes will benefit some 350,000 children and will lift around 50,000 children out of poverty.

The noble Lords, Lord Kirkwood and Lord Skelmersdale, both expressed the view in Grand Committee that the disregards will set an artificial cap on the level of maintenance, but as I pointed out, almost 90 per cent of the current caseload on benefit has a liability of less than £40, although I acknowledge what might happen in respect of the other 10 per cent. But removing compulsion by repealing Sections 6 and 46 is the first step in moving towards a new system of child maintenance that will go a long way towards

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delivering our aim to encourage parents to make their own arrangements for maintenance while maintaining a statutory maintenance service for those who cannot or do not wish to do that. Moreover, it will give parents with care on benefit the same options as those who are not, and we should not make the timing of this conditional upon having a full disregard. However, the noble Lord, Lord Kirkwood, acknowledged the Government’s focus on child poverty, as I acknowledged the important contribution that child maintenance can make towards achieving our objectives.

On costs, the figures show that if we moved to a full disregard in 2008, the additional cost from the current proposed position would be around £55 million in 2008-09, £110 million in 2009-10 and £45 million a year thereafter. As the noble Lord, Lord Skelmersdale, said, that is a not insignificant cost.

My noble friend Lady Hollis and the noble Lord, Lord Kirkwood, both spoke of disincentives to work and asked where we are on it. The initial research undertaken was pretty inconclusive, but I do not think that it looked at the effect of higher disregards in benefit without taking account of the impact of full disregards on housing benefit and council tax benefit, which can operate in the opposite direction because they are in-work benefits. But I can say that we are expecting to publish further research in this area quite shortly. My noble friend asked how it would work for Jobcentre Plus, and a point stressed by the noble Lord, Lord Kirkwood, was whether it would impose an administrative burden. Incidentally, my noble friend made a point about circumstances where both the non-resident parent and the parent with care were on benefit and the fact that the system does not deliver payments across that. With respect, I am not sure that that is absolutely right. There have certainly been challenges in delivery, I am aware of that, and when I looked at this a while ago, there was a backlog, but it was a backlog that was moving, so payments were being made across. However, it is an important issue.

On the engagement of Jobcentre Plus in the process, declaring income is a standard part of a benefit claimant’s responsibility and child maintenance will be no different regardless of the amount received. The obligation will be to report the full child maintenance amount and not only the excess in respect of the disregard. Jobcentre Plus already has processes in place to deal with cases where a source of income is erratic—for example, where a client receives part-time earnings—and the same processes will apply to maintenance payments.

We recognise that there will be an increase in reported changes of circumstances but this is offset by a reduction in the work as Jobcentre Plus will no longer be required to gather information for the CSA or carry out good cause interviews, decision making and the imposition and maintenance of produced benefit decisions. We believe the changes will be cost neutral overall and Jobcentre Plus is confident that it will have the capacity to manage the increase in reported changes of circumstances.

Baroness Hollis of Heigham: My Lords, I am grateful to my noble friend for giving way. I realise that this is the Report stage but it seems such a long time ago since we were in Committee.

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My concern still is on the declaration by the lone parent. My noble friend rightly said that when a lone parent applies for income support or JSA they are required to declare other income. Actually, they do not. What we have done, because of the limited disregards allowed on income support, is send many lone parents, wittingly or unwittingly, into the grey economy of undeclared income, also known as fraud. Certainly all the research on fraud shows that after men who do not declare income while claiming JSA and housing benefit fraud, where several people are claiming from the same household with the connivance of the landlord, the third largest group is lone parents failing to declare.

If we are not careful we will build into the maintenance system the same kind of grey fraud area that we have in undeclared earnings of lone parents. We should do everything we can to build fraud out of benefit systems and not into them. My noble friend risks building more potential for fraud into the system.

Lord McKenzie of Luton: My Lords, I acknowledge that we need to do everything we can to make sure that fraud in the benefit system is challenged, tackled and designed out wherever possible. A great deal of work has been done on this. Indeed, the data in recent years show that benefit fraud has reduced quite significantly. I reiterate that 90 per cent of settlements in child maintenance arrangements are already below the £40 disregard level. With the move towards encouraging voluntary arrangements where appropriate, it is quite possible that some people currently on benefit, particularly at the higher end of the payment arrangements, will go into the voluntary system, which is something we want to see happen.

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