Lords amendment: No. 2, in page 10, line 33, at end insert—
(4) Until the coming into force of subsection (1) of this section and Part I of Schedule 2 to this Act, section 34 of the said Act of 1976 (which provides for the interpretation of that Act) shall have effect as if after subsection (2) of that section there were inserted the following subsection—
' (3) In determining for the purposes of this Act whether a person (in this subsection referred to as "the provider") has to provide for, or for the requirements of, another person to or in respect of whom any payments are made otherwise than by the provider, the other person shall not by reason only of the payments or the amount of them be treated as a person who is, or whose requirements are, provided for otherwise than by the provider.'.
§ Mr. Deputy Speaker (Mr. Richard Crawshaw)
With this we may take Lords amendment No. 3, in clause 21, page 25, line 33, leave out "sections 6" and insert 828section 6 (except subsection (4)) and sections 7 ".
§ Mr. Prentice
The two amendments were introduced and passed in the other place in the light of a recent High Court judgment in Supplementary Benefits Commission v Jull. That judgment, which was reported in The Times of 21 March 1980, decided against the commission's interpretation of the existing legislation in aggregating maintenance payments made to a child with the resources of the mother in determining her entitlement to supplementary benefit. A subsequent High Court judgment in Young v Supplementary Benefits Commission, reported in The Times on 18 April 1980, has gone further and decided that even maintenance payments made to the mother for the child are not the mother's resources for the purposes of the Act.
Paragraph 3(2) of schedule 1 to the Supplementary Benefits Act, as presently enacted, enables the commission to aggregate with those of the claimant the requirements and resources of a person who is a member of the same household and for whose requirement the claimant has to provide. The Bill at present provides beyond doubt in new paragraph 3(2) of schedule 1 that where a person is responsible for, and is a member of, the same household as a child, that child's requirements and resources shall be aggregated with those of the claimant. That provision will be operative from November of this year. The effect of the amendments passed in the other place is to enshrine in legislation from the date of Royal Assent the commission's interpretation of that paragraph.
It has always been the intention behind the legislation that a child's resources and requirements should be aggregated with those of the claimant, and before 1976 maintenance payments paid direct to a child were taken fully into account as a resource of the family. In late 1974 the Court of Appeal decided, in the case of K and Others v JMP Company Limited, that an award of damages to a child would not affect its mother's entitlement to supplementary benefit, because, once benefits were awarded to cover the child's requirements, the mother would not be a person who has to provide for those requirements.
In 1976, on legal advice, the commission changed its policy to follow that 829 ruling. It decided that, where a maintenance order made payable to a child exceeded the child's requirements, the child's requirements and resources would not be aggregated with those of the parent. That resulted in more benefit becoming payable to the parent. Relatively few cases were affected at first, and there was no evidence of abuse. The Supplementary Benefits Commission continued to regard maintenance and affiliation payments paid direct to the mother, as opposed to being paid to the child, as a resource of the mother.
More recently, however, there has been a growing realisation among those advising parents that the commission's policy following the case of K and Others v JMP Company Limited permitted a substantial increase in the amount of supplementary benefit payable if a court could be persuaded to load the maintenance order in favour of the children with nothing, or only a nominal amount, for the mother. An extreme example was the registrar who made an order for £15 weekly to the youngest of four children, with nominal amounts for the other three.
Eventually, the commission, on legal advice and with the full and public support of Ministers, decided to revert in June 1979 to its previous policy of taking children's resources into account, including any maintenance, and it is that current policy that has been the subject of the two recent High Court decisions. The Young case, for the first time, cast doubt on the commission's interpretation of the law that maintenance payments made to the mother for a child counted as a resource of the mother. That decision has even wider implications than that in Jull, and many millions of pounds of public money are at stake. The estimate is about £500,000 a week.
Apart from the financial aspects, we believe that a fundamental principle of the supplementary benefits scheme is involved. Payment of maintenance enables the parent having custody of the child to maintain it and discharge the duty of custody. If that payment were disregarded for supplementary benefit purposes, certain families would be maintained at a level higher than that contemplated by the supplementary benefits scheme, which is intended as a scheme of last resort.
830 Finally, I put to the House the main reason why we feel that we should make the change sooner rather than later. It is that it will make for sensible administration of the supplementary benefit scheme if the staff operating it are enabled, by the amendment, to continue to follow the commission's existing interpretation of the law by taking all maintenance payments into account.
If the amendment is not made, staff throughout the commission's offices, at a time when they are more than fully occupied preparing for the new scheme, will have to learn a completely new set of rules and apply it for an interim period of a few months, only to revert to current practice when the new scheme comes into effect in November. That cannot make for prudent administration, and it is bound to lead to errors.
§ Mr. Orme
There are considerations that flow from what the right hon. Gentleman said that will lead to a major change in procedure. As he is taking powers to implement the change immediately, I think that the House will want to be kept informed of developments and any problems that arise. The amendment will enable all payments made on behalf of a child to be aggregated as part of the family's resources. That is especially relevant to the payment of maintenance allowances.
We are talking about the level of resources allocated to children. The right hon. Gentleman gave an example of one child being the subject of an allocation considerably in excess of other children's allocations. Difficulties might arise if maintenance allowance is assumed to have been paid to the family but has not been received. It is possible that direct payment to the child will profit a family.
As I have said—the Minister's attention was distracted at the time—the right hon. Gentleman gave the example of an allocation being made to one child considerably in excess of allocations to other children within the family unit. We are not in a position fully to debate these issues, and we want more time to examine the implications.
Is the Minister able to confirm that the purpose of the change is to protect the benefit to the child and that the allocation will not be widened? Will he give 831 an undertaking that he will keep the House informed of future developments? Obviously, the Department will monitor developments.
§ Mr. Andrew F. Bennett
The courts have to decide maintenance payments. They often decide that no maintenance payments will be made to the mother and that payments will be made to the child. The courts are supposed to make those decisions after taking into account the particular circumstances. It appears that the amendment is proposing that the Supplementary Benefits Commission should be able to say "Let us forget about the particular circumstances and let us treat the money as if it were being paid to both the mother and the child."
It will be unfortunate if a statutory body is able to go against the decision that a court has arrived at. This seems to be a rather worrying principle. Although the courts sometimes make odd decisions on the allocation of maintenance, they usually do so for special reasons. The commission should be able to say that it intends to disregard what the courts have done and treat the issue as if the money were being paid to the family in total. It seems a worrying principle, although I can understand that the Government want, administratively, to have a situation that is clear. They do not want one set of rules to apply from now until the November changes and then have to revert back to a different set of rules. They should consider whether, as a matter of principle, they want to say that no notice should be taken of the judge's decision and that "We know better than the judge." That seems an unfortunate principle for the Government to put forward.
§ 9 pm
§ Mr. Prentice
With permission, Mr. Deputy Speaker, I wish to inform hon. Members that we shall keep a close watch on how policy operates in this sensitive area. There is no question of the Supplementary Benefits Commission being able to set itself above the law or seeking to do so. I referred to two recent decisions in the High Court, one in March and the other in April. The Supplementary Benefits Commission applied to the House of Lords for leave to appeal. Leave to appeal has been granted. It is hoped 832 that both appeals will be heard on 16 and 17 June. There is no question of the commission setting itself above the law. It is going through the due processes of law in order to put to the test a principle that had, after all, stood for many years.
§ Mr. Bennett
I did not suggest that the commission was setting itself against the law or the rules about supplementary benefit. I suggested that the commission was going against the judge's opinion in setting out, if one likes, a completely different set of court rules. It is the commission claiming that it knows best how the money should be treated rather than the court that was involved in the settlement of the money about which I was making the point.
§ Mr. Prentice
The Supplementary Benefits Commission has confidence in the merits of its position. That position has had the backing of the Government and, I understood, the general support of the House. All that we are aiming to do—we are legislating for the future—is to legislate in such a way that these cases will be determined as traditionally they were determined, the basic principle being that a family being assessed for supplementary benefit should be assessed as a family unit. The income of children within that family is taken into account, if they have a separate income, and their needs are taken into account. This has been the principle supported by successive Governments. It is a principle that has been eroded in the last few years because of the legal history that I have outlined.
We are now seeking to legislate for the future, so that the original principles of the supplementary benefit scheme should be reimposed. I gave reasons why I considered it was important that this should be done immediately. Otherwise, there would have to be a considerable change of rules now and a change back in November.
The Bill, as drafted, already provides for our purposes to be fulfilled from November, but, because of these recent court decisions, it was decided in another place, and we are asking this House to confirm, that the amendment should take effect from Royal Assent.
§ Question put and agreed to.
§ Lords amendment No. 3 agreed to.