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The noble Baroness is quite right and she reflects the view on all sides of the House that these sharing powers need to be handled with careful compliance rules and protocols, bearing in mind that the commission is not the department. As Members of Parliament we are able to have direct access to Ministers and hold them to account. That is not necessarily going to be the case in these new circumstances where these important bits of data and information containing the most personal details about some of our families throughout the United Kingdom will be handled in future by a Crown agency. That is a different situation. I reflect on, acknowledge and agree with the concerns raised by the noble Baroness. However, the amendment would be a step too far for me were it to be voted on in a Division and agreed to.

Lord McKenzie of Luton: My Lords, I thank the noble Baroness. I understand that this is a probing amendment and I hope that I can give her and the noble Lord, Lord Kirkwood, the assurances that they seek.

Schedule 6 enables certain relevant information to be supplied to the commission by HMRC, the Department for Work and Pensions and the Northern Ireland department to enable the commission to carry out its functions relating to child support. That is a very

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important caveat. In turn, the commission is also able to supply information to those government departments to enable them to carry out certain specified functions for which they are responsible. Our plans to support information sharing between the commission, DWP and HMRC will improve administration of the child maintenance calculation regime, by providing the commission with easy access to relevant gross income data.

The problems of the current system have been well documented. By not having to ask non-resident parents for income data in the majority of cases, and by being able to rely on already available income data as provided by HMRC, we will improve the efficiency of the assessment process and provide a better service to parents.

Removing Clause 44 and Schedule 6 would mean that the commission would have to request income information from the non-resident parent. That would undermine the case for basing liabilities on gross weekly income. It would also carry the risk that current delays in calculating maintenance and getting money to children would be repeated in the future scheme. Obtaining income data from HMRC will also provide vital support to the proposed system of fixed-term awards, helping to ensure that maintenance calculations are kept accurate, up to date and easy to administer.

We cannot overstate the necessity of a simple and efficient calculation system for the smooth running of the child maintenance service. We estimate that the commission will be able to obtain data for about 90 per cent of all non-resident parents by combining information available through the gateways. This includes the self-employed, who have proved particularly difficult to assess in the past. We are currently investigating the most effective way to transfer data. Although ultimately this will be a decision for the commission, we will start work as early as possible to ensure that the IT is efficient, functional and, above all, secure. The information the commission will receive will not be substantially different from the information currently used by the Child Support Agency to make maintenance calculations. The Data Protection Act 1998 will apply to this information, which will be processed in accordance with the Act.

Section 50 of the Child Support Act 1991 will be extended. A person will be committing a criminal offence if they inappropriately disclose information obtained as a result of working for, or on behalf of, the commission. We will publicise the planned use of HMRC data so that non-resident parents, and parents with care, are fully aware that gross income data will be used to make maintenance calculations, and also provide parents with as much information as possible about their claim. We will build in safeguards to ensure that inappropriate or excessive information is not accessible by commission staff and to ensure that all persons with care, and non-resident parents, are aware of the appeals process operated by, and the legal obligations of, the commission.

I hope that I have given the noble Baroness the assurances that she seeks. It is an important area that she has probed, but it is vital that we have these gateways to make a more effective commission.



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Baroness Verma: My Lords, I thank the Minister for his response. The noble Lord, Lord Kirkwood, also raised some very important additional points to the probing amendment that I put forward.

It is important that these data follow a stringent path through the commission and that they are encrypted. Past difficulties have shown how easy it has been to access data that were not properly guarded with encryption and with policies and procedures. Having been given those assurances by the Minister, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Schedule 6 [Use of information]:

[Amendment No. 48C not moved.]

Clause 53 [Regulations: Part 4]:

Lord McKenzie of Luton moved Amendment No. 49:

The noble Lord said: My Lords, I shall speak also to Amendments Nos. 50, 52, 53, 54, 55 and 56. These government amendments address concerns raised in Grand Committee and implement recommendations by the Delegated Powers and Regulatory Reform Committee. They also make certain technical adjustments. Amendments Nos. 49, 50 and 53 provide for regulation-making powers to be used in the first instance, subject to affirmative resolution. These amendments will ensure that the powers undergo a proper level of parliamentary scrutiny. The powers are those in Clause 53 relating to mesothelioma lump-sum payments. In Schedule 5, they relate to the movement of existing cases to new arrangements, which we have just discussed. Clause 28 makes provision for the commission to apply to the magistrates’ court in England and Wales and the sheriff court in Scotland for a curfew order against a non-resident parent, where appropriate. Clause 41, which deals with piloting powers, will provide regulation-making powers to be used, subject to affirmative resolution. Amendments Nos. 52, 55 and 56 are technical in nature and I will not detain noble Lords with the details. I beg to move.

Lord Skelmersdale: My Lords, I say “ditto” to what I said to the previous block of government amendments.

On Question, amendment agreed to.

Clause 55 [Regulations: general]:

Lord McKenzie of Luton moved Amendment No. 50:

(a) regulations under section 6(1) or (4),(b) the first regulations under paragraphs 2(1), 3(1), 5(1) or (2), 6(1) or (3) or 7 of Schedule 5, or

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(c) an order under section 11(6),shall not be made”

On Question, amendment agreed to.

Schedule 7 [Minor and consequential amendments]:

6.15 pm

Lord Skelmersdale moved Amendment No. 51:

The noble Lord said: My Lords, it is very rare for a member of the Opposition to move an amendment to a schedule that is solely concerned with minor and consequential amendments. At first blush, it would seem that this is a technical amendment. However, it seeks to make a very important point. It replaces the phrase “one year” with “four years” in cases where a court order for maintenance and financial settlement following a divorce may be overturned by CMEC. Its purpose is to create consistency between the objectives of the commission and its likely operation in the light of the experience that we have had of the CSA.

I will summarise the background to the amendment. CMEC’s main objective will be to maximise the number of effective maintenance arrangements for children of parents who live apart. Subsidiary objectives include encouraging parents to make and keep voluntary arrangements for the support of their children. Perhaps it would be useful to point out that this subsidiary objective is a change from the original objective, which was to incorporate, stage by stage, all financial arrangements within the auspices of the Child Support Agency. This necessitates taking careful stock of the structures of the original Act. I contend that such retention from Section 4(10)(aa) of the Child Support Act 1991, in its current form, will undermine these objectives.

The amendment seeks to close a loophole that is used by those who seek to reduce maintenance payments to children. Currently, parents may agree financial arrangements for children and have them made by court order. However, that obligation will end 14 months later if either parent wishes to take advantage of the “one-year rule” by making an application to the Child Support Agency. The solicitors’ association group Resolution relayed a story that neatly summed up the disadvantage of what we might call, for convenience, “the 12-month rule”. One of Resolution’s lawyers recently acted on behalf of a wife. She was in part-time employment with a local bank. There were two young children. The husband ran a popular veterinary surgery in the local area. The parties had a good standard of living during their marriage. The husband met someone else and the marriage came to an end. The wife and husband negotiated a good settlement, largely between themselves, but also with assistance from legal representatives.

One of the stumbling blocks was maintenance. The husband reinvested a lot of the profits back into the company, but also recognised that the wife needed money for the children. It was therefore agreed that he would pay a larger amount of child maintenance.

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They did the sums, using the 20 per cent net income figure, minus deductions for overnight stays, and the result was to agree a significantly higher figure than this. The husband also agreed to contribute to childcare costs. Had Resolution gone through the CSA or used its formula, the wife would not have been able to continue living where she was. She was made aware by Resolution lawyers that the husband could change his mind after 12 months, but she was still content. However, as predicted, after 12 months the husband is no longer sticking to the agreement. The wife has now met someone else and the husband fails to see why he should contribute to the household pot. The wife does not want to go through the Child Support Agency, having heard the horror stories. She therefore accepts a reduced amount that is causing her what was put to me as “no end of financial difficulties”. This is the loophole of child maintenance arrangements that is exploited by paying parents who apply to terminate higher court awards and have them replaced with lower agency calculations. This is what I would like to put an end to through my amendment.

Generally, agency decision-making proceeds slowly, particularly in complex cases, and there is likely to be a delay of many months, during which there is no obligation to pay at all, resulting in a hiatus of payments for the child. As such, the current system permits the unscrupulous to settle their court case on one level of obligation, knowing that after one year they can endeavour to surprise the other parent by a reduction in payment. That is patently contrary to the interests of the child and is at odds with government aspirations to reduce child poverty.

The new system should seek to stop such behaviour and create safer, longer-term arrangements for the support of children. The current rules prevent parents making reliable settlements of other claims between themselves. When parents divorce, they may divide pensions, assets, contents of the home, maybe even the home itself, and they may make decisions about the occupation of the home or spousal, rather than child, maintenance. They do so usually by balancing ability to pay and need. To be able to do that, they must predict what award will be made by the CSA or, in due course, CMEC. Unfair settlements can result where one side opts to have a second bite of the cherry by relitigating support for the child through exploiting the one-year rule. Parents may reach agreement as to the level of payments that should be made. However, most parents will still want a binding obligation to pay. That can be offered by obtaining a confirmatory court order by agreement.

Retention of the one-year rule undermines Parliament’s objective for the new commission by making that arrangement vulnerable to termination after 12 months. Merely sanctioning compliance with the threat of an award by CMEC of an uncertain amount is inadequate. Further, it will increase the demands made upon CMEC, thus undermining the meeting of its objective of encouraging parents to reach their own agreements without recourse to the commission.

My amendment recognises that circumstances change. Many families find that after four years it is time to reconsider whether the level of maintenance is appropriate.

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Families may then want to take advantage of the CMEC scheme if they are not otherwise able to reach agreement. My amendment has other significant benefits that I doubt the Minister can refute. By abolishing the 12-month rule, families are enabled to retain greater control of how they address their financial issues. That will reduce conflict on financial questions; conflict is the feature that is most likely to bring damage to children experiencing the separation of their parents.

Another consequence is that the amendment will protect mediation agreements that otherwise risk being undermined by the CMEC jurisdiction. Lastly, the amendment will avoid the potential ping-pong of cases between the CSA and the court. Where the CSA assessment is followed by a court order, there is a risk that the CSA will return to request a review, following manipulation or a change in the formula’s variables. Such a change will either undermine the intention of the court order or lead to a variation of the spousal maintenance order. I beg to move.

Lord Kirkwood of Kirkhope: My Lords, I acknowledge the service that the noble Lord, Lord Skelmersdale, has done by moving the amendment. It is a very serious and significant issue. I wish to make two points about it. I, too, have seen some of the cases produced by resolution and they are compelling. They make pretty dire reading in terms of their outcomes for the families that they affect. Therefore, I absolutely agree that we need to think this through carefully.

However, a long time ago I was a consistorial solicitor in a family practice in Roxburghshire. In my experience, there is a world of difference between the law that applies to families with assets and incomes on both sides and the arrangements that need to be made sensibly for people on income-support-based JSA. My worry is that if we agreed to the amendment as drafted, you would lock out for four years some of the parents on benefit who entered agreements. That is difficult to contemplate, because the new CMEC—fingers crossed—will, I hope, sort itself out and become an efficient child maintenance collection system, which people will have recourse to with confidence.

The trouble is that you cannot pick and choose. You cannot amend the law to depend on the current net value and worth of the members of the household to whom it applies. Therefore, you have to be careful about how you do this. I just wanted to enter that caveat. I absolutely understand the case that the noble Lord, Lord Skelmersdale, made, and I understand that according to evidence there have been dire results for the people affected. But over the piece I am more confident perhaps than I have been that the new commission will set a new benchmark and that the courts will operate a new system in the shadow of CMEC. That will become much more a default situation to which people will be able to respond. I hope that that will help some of the families to which the noble Lord rightly pointed.

My real reason for getting to my feet on this amendment—and I acknowledge the fact that the noble Lord has ingeniously found a way of raising this important question on the schedule—is that there is still a feeling that there is a problem in Scotland, where

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there are peculiar court procedures, with Books of Council and Session and registered maintenance agreements that are enforceable at first instance, because they are registered in the Books of Council and Session. I know that the Minister and his advisers looked at this—some time ago, I suspect. I had hoped and assumed that the problem had been sorted, but I am told that civil practitioners in Scotland still face difficulties. They would certainly endorse the proposal by the noble Lord, Lord Skelmersdale, to move to a four-year period, because it would give them more scope and room for manoeuvre. I would feel a lot happier if the Minister or some of his advisers would talk to the appropriate committee members from the Law Society of Scotland, who are serious people. They are the professionals who, day after day, deal with the problems to which the noble Lord alluded.

Arrangements that have bad effects on families last for a long time. My special plea to the Minister is that some last-minute conversations could perhaps be had with members of the Law Society of Scotland’s expert committee on these matters to see whether there can be some ring-fencing of the arrangements made in the civil courts in Scotland. The last thing that we want is to have some mad nationalists running around saying that this mad Parliament in Westminster is interfering with our age-old, tried and tested systems of civil litigation in divorce and consistorial cases. That would serve none of our interests.

My main point on this important amendment is to ask the Minister to look carefully again at this and perhaps agree to see representatives—or get some of his advisers to see representatives—who could argue the case regarding the peculiar circumstances of Scotland more adequately than me.

6.30 pm

Lord McKenzie of Luton: My Lords, I thank the noble Lord, Lord Skelmersdale, for the amendment, which, as he said, seeks to extend the current period of 12 months during which parents with a court consent order for child maintenance may not apply to the commission for a maintenance calculation. The amendment would prevent those parents from applying for a period of four years. The existing 12-month rule applies when parents have a maintenance order or registered minute of agreement made on or after 3 March 2003. That rule has two main purposes.

First, when agreement between parents breaks down it provides a swift and readily available route into the commission so that children are not left for considerable periods with either no maintenance or inadequate arrangements. Secondly, it encourages agreements that contain levels of child maintenance broadly consistent with the amount calculated under the statutory scheme and discourages agreements that divide property and assets between adults, leaving children without regular ongoing payments of child maintenance.

I want to make it clear that the commission does not wish to intervene or disturb court orders that are working well. It is parents themselves who must decide whether or not their children’s interests are best served by the provision of a consent order, or by a maintenance calculation made by the commission,

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or by some other route. We do not wish to restrict any effective and agreed maintenance arrangements, in whatever form, to a year, four years or to any other period of time.

The 12-month rule cannot of itself act to set aside a court order and substitute a statutory maintenance calculation. Only the action of one or both parents can do that. Our hope is that parents with effective court orders will not need to turn to the commission for a calculation under the statutory scheme. The agreements will continue and benefit the children for so long as both parents want them to.

During the progress of this Bill, Ministers have listened to a number of differing, detailed arguments on the 12-month rule, both here and in another place. Some amendments have been tabled which propose to remove the 12-month rule altogether; others to extend it to a longer period. The debate throughout has been constructive, but on the issue of extending the 12-month rule I remain unconvinced. Primarily, I am not persuaded because this issue has not been raised—as far as I am aware—by clients of the CSA themselves. Generally, when parents who use the CSA—or want to use the CSA—are unhappy about its delivery, Ministers, and indeed MPs, are quick to hear about it.

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