Child Support Agency

HC Deb 20 July 1994 vol 247 cc471-91 2.45 am

Mr. John Spellar (Warley, West)

It is unfortunate that we must have this debate, not because of the hour at which we are holding it but because many of us had hoped that, before the recess, the Minister would have made a clear statement about the changes that are so necessary in the Child Support Agency.

Given the clearly identified problems which so many constituents of hon. Members on both sides of the House face, it is intolerable that nothing will be done to resolve their real and pressing problems over the next three months. We hoped that Ministers would give some hope to the thousands of families affected, especially as many of them are heading deeply into debt and face horrendous problems as those debts and related problems, such as potential repossession, pile up.

We should also recognise the varied nature of the problems and the way in which they are continuing. I understand from press reports on the Secretary of State's attendance at the Select Committee on Social Security that, in about a fifth of the cases being dealt with—an estimated 40,000 people—individuals are now in receipt of less than 70 per cent. of their income. We have been assured time after time in debates on the CSA in the Chamber that nobody was left with less than 70 per cent. of his or her income and that we were simply hearing scare stories, yet we find that a huge number of people are so affected.

We are not sure, however—I hope that the Minister can clarify the matter this evening—whether the standard assessment is bringing about that result or whether it is because of the clawing back of accumulated debt. Such debt is almost built into the system because of the delays in assessment. Even with a maximum of co-operation by the individuals concerned, that delay can run from 10 weeks to more than three or four months, so substantial debts are built up and the agency is trying to claw money back. Is that why so many people have been telling Members of Parliament over the past year that far more than 30 per cent. is being taken out of their money? Or is it because the CSA is stepping up the deduction-at-source orders and taking money directly from individuals' salaries, irrespective of the effect that it is having on their ability to pay other debts?

As a result of deduction orders, some of my constituents cannot meet their mortgage repayments and face threatening letters from their building society about the future continuity of their mortgage. I hope that the Minister will shed some light on that tonight.

It is true that we have achieved some clarification of the amount that has been collected, although, in the debate on 4 July 1994 and the Question Time before that, the figure moved around a little bit. I hope that we shall be given a clearer estimate of the amount that was collected by the CSA in the past year, although it seems as though that figure is well below target, and does not, up to now, bear especially favourable comparison with the operations of the Department of Social Security when it previously dealt with the application of recovery of maintenance. I hope that we shall obtain an idea of the figures that are involved, and also of the on-going costs—not only the set-up costs, but the running costs—of the agency.

We must welcome the fact that, in the debate on 4 July, the Secretary of State, even if belatedly, announced changes to deal with the administrative back-up. We all recognise from correspondence with our constituents and with Members of Parliament that, until then, the problems were horrendous. The sheer period of delay was extremely unsatisfactory, and made it difficult to pursue cases and to follow them up. The nature of the replies has, until recently, been fairly deplorable.

We should acknowledge that there has been an improvement in the replies in the past couple of months. One has the feeling now that one is communicating with a human being at the other end of the letter, rather than a pre-programmed computer which spent the first two pages giving one the background history and philosophy of the Child Support Act 1991, and never used to discuss the details of the case that one had raised on behalf of one's constituent. That seems to have improved slightly, and the CSA now appears to be addressing itself to the specific problems, although I know that many of our constituents continue to receive letters that are both belated and relatively incomprehensible.

Even if the administrative problems are overcome, we must recognise that the scheme is fundamentally flawed. There is also the problem that the agency and the Department seem, from time to time, to kick the ball backwards and forwards between one another, especially when issues that relate not so much to administration as to policy are mentioned. They seem, collectively and individually, reluctant to accept the real-life problems that are being created, or, if they do, it is with gradual acquiescence and after a considerable period.

Some movement has taken place, but it has taken an enormous amount of effort to obtain that movement, and many people's lives have been blighted in the meantime.

The underlying problems that confront the agency appear to stem from two factors. One factor is mentioned with monotonous regularity in debates on the subject—the influence of the Treasury, driven by the pressures resulting from the huge increase in the public sector borrowing requirement, and a desire to narrow that down.

No one would deny that the Treasury must have a legitimate interest in substantial sectors of public expenditure. The real question that arises is whether that interest has passed beyond that into obsession, and is being severely overdone to the detriment of individuals. In many cases, Ministers—not only the Parliamentary Under-Secretary of State, the hon. Member for Bury, North (Mr. Burt), but other Ministers—when speaking about the subject, have constantly asked how much all the changes would cost to the public sector borrowing requirement. Those are legitimate questions to ask, but, by emphasising that aspect as such an overriding priority, they demonstrate that, in effect, the CSA imposes a tax—a tax that falls on specific people, and has fallen with great rapidity, causing huge increases in the amounts that are being taken from those people.

It is also clear that the initial proposals for the introduction of the CSA would have allowed longer lead times, a greater degree of flexibility and the potential for phasing in. But, under pressure from the Treasury, those proposals seem to have been put on one side, which has resulted in the enormous burdens that have been inflicted on individuals. Wiser counsel has perhaps been overcome by the pressure from the Treasury.

In the past, although not so much recently, there have also been quotations about changing the culture. They have been reminiscent of the cultural revolution phrases which came from another angle in earlier days in the 1960s. People at that time found how difficult it was to institute cultural revolutions. While Governments may wish to bring about some changes in behaviour, they should be extremely careful about how they undertake them, the pace at which they try to implement such revolutions and the effect that they have on the individuals who get caught up in the resulting problems. Different parts of Government policy may be pulling in different directions in the cultural revolution and various strands in the Tory party may be trying to exert influence in different ways, but the victims are getting caught up in the battle.

Last year Members of Parliament found that huge increases in payments were being required. It was that factor that kicked off the main debates in the Chamber and in the country. People were particularly struck by the fact that, whereas changes in local authority taxation—which were fairly fresh in the mind then—had included provisions for transitional arrangements and financial provisions from the Government to ease the transition from one form of local authority taxation to another, there was no such remedy within the CSA legislation. The full force of the legislation fell directly on individuals—with catastrophic effect.

That was only part of the problem; the other aspect that caused, and still is causing, enormous upset was the retrospective nature of the legislation. It was not as though the Government had not been warned. From time to time the reports of the Select Committee on Social Security have been quoted in debates on the CSA. In its second interim report of 30 April 1991, the Select Committee stated extremely clearly: one particular aspect of the Government's plans, the intention to make the new provisions retrospective, causes us considerable immediate concern. We have therefore agreed to this initial Report to make our views known in advance of the debates on the Bill in the House of Commons. At the conclusion of the three-page document the Select Committee stated: We recommend that provision be made in the Child Support Bill to take account of divorce settlements that have involved a capital settlement clearly made in lieu of child maintenance. Apart from the overall question of retrospective legislation, which excited Conservative Members when they were in Opposition and the Labour party was in power, the fact is that a considerable number of the difficulties could have been avoided had the Government taken the Select Committee's wise words, which it did not dream up out of the air. Those words were based on the experience of the established Australian Child Support Agency which, as has been said innumerable times in the Chamber, has been far more successful than our scheme and has caused less major national upset and debate. One reason is that the scheme was not implemented retrospectively.

Many families made what at the time seemed to be prudent arrangements. Indeed, they were often advised to do so by their lawyers. Whether or not the Minister has some objections to those arrangements because of the implications for the public purse, they were perfectly legal, legitimate and sensible at the time. Now, by a stroke of legislation, those arrangements have been turned upside down. I use that phrase advisedly because it is the phrase used by so many people who have come to my advice bureaux or been at meetings that I have addressed. They have said, "Our world has been turned upside down."

Those people have been prudent, have kept out of debt and have tried to adjust their affairs as they have moved into a new family relationship. Suddenly, they find that all that is put at risk by the operations of the CSA. In many cases, people made settlements that involved transferring the house to one of the partners. Quite often, payments were also being made. Sometimes people took on the joint debts that had been incurred during the marriage. They did all that on the assumption that they would have to make fewer regular payments, but that has all been turned over and their financial arrangements turned upside down.

I accept that even dispensing with retrospection would leave some longer-term problems. For example, we clearly envisage that there would be far less likelihood of the transfer of the house and therefore the family being able to continue living in the family home—with the consequences of that on the security and welfare of the children. We also envisage that divorce settlements will be more bitterly and fiercely fought. We anticipate considerably more arguments not just about access to the children, but about who will be the parent with care because of the financial implications of that responsibility. There may be further political activity on that front. Even so, it would be at a far lower level than that we are experiencing at the moment.

We are very concerned about why the system is so inflexible. I have previously mentioned the way in which questions asked in this House, especially on policy issues, seem to be bounced backwards and forwards between the Ministers and at the Department. There is an acceptance of the system as it is rather than an examination of the problems that have been created, some of which cry out against common sense and should be resolved at a much earlier stage.

Given the changes that have taken place and the enormous range of human experience, it is inevitable that a series of anomalies will be thrown up. There must be a system to take account of those and to deal with them before people's lives are once again thrown into turmoil.

The Daily Telegraph today again raised the case of the grandparents who adopted their granddaughter to prevent her from being taken into care. I understand that the child is living with other members of the family and that her parents are still alive. However, because the grandparents took action to help the welfare of the child, the CSA is holding them liable for her support.

I have a case in my constituency where a child is being looked after by the grandmother, who has chosen to direct the CSA to one of the parents even though both of them are working. That seems to be extremely inequitable.

There is also the constantly raised question about the income of second spouses or partners. Time and again, they are told that their income is not assessed to establish how much is owed. In that case, they query strongly why they are required to give their income. It does not matter how many times they are told that their income does not affect the sum owed, nobody out there believes it.

If, as the Minister may say, that is only done for their benefit, would it not be better to make the provision of the information voluntary and so avoid a huge amount of mistrust and ill feeling? That would be a simple, straightforward measure which would help the Child Support Agency. There is no mechanism at present within the system for such a political decision. Matters are held in abeyance between the Department and the agency.

Considerable concern is also caused by the prospect of maintaining the spouse's new partner. Most hon. Members will have come across the problem caused by the break-up of a marriage, the circumstances of which do not concern us, when the ex-wife, as it mostly is, marries or lives with someone who is or becomes unemployed, so that it then appears to the first partner that he is now having to pay not only for the children and the ex-spouse, but for the ex-spouse's new partner if he or she is on income support. That strikes people as absurd and unjust.

That leads to spousal maintenance, which causes enormous resentment. Again, we need not go into the rights and wrongs of the break-up of relationships, but if we are dealing with the Child Support Act and the Child Support Agency, we must query the inclusion of spousal maintenance. In the debate on 4 July the Secretary of State conceded that spousal maintenance was a matter for the courts and it would be better left there. The Minister shakes his head. If he wishes to take up the point, I am sure that I can quote the Secretary of State directly. It would be much better if the maintenance was strictly for the children, not for spouses. It would be considerably better if most of the money went to the children rather than disappeared in abatement against income support.

There is also considerable concern about the assessment and collection charges, particularly for those who did not request the service. The Minister must decide whether the inconvenience, cost of collect and resultant ill feeling is worth such sums of money. There is no doubt that that is causing considerable resentment.

The Minister must also be concerned at the huge amounts of arrears that many individuals are building up. Those who have never previously been in debt now find themselves in debt. As always, one of the problems is that debt becomes a multiple problem—as people fall into debt in other areas and face repossession, penalty costs and bailiffs and join the vicious cycle that we want to prevent. That requires a speeding up of the process of assessment and perhaps a re-examination of the way in which those arrears can build up.

The first key element of change is that more money should go to the children and the disregard should be reconsidered. In Australia, the disregard is far more generous and that leads to far wider public acceptability. Not only is it true that in many instances the money does not go to the children; the family is worse off as a result of money coming via the CSA because the mother often loses passported benefits.

In my constituency, a mother with three children is £15 a week worse off as a result of the money coming via the CSA and having to pay for school dinners. That is a considerable dent in the family income, resulting in real problems. We would be grateful for an indication of the amount that will go to children. The original estimate, given in the Minister's evidence to the Select Committee, was £50 million out of £480 million. A variety of estimates were given on 4 July. May we have an up-to-date figure?

I hope that the Minister will take on board the question of incurred costs, particularly in respect of travel to the individual's place of employment. They may be reflected by higher income but if there is not a similar offset, that adds substantially to the individual's CSA liability without any commensurate benefit. Also, the Australian scheme makes allowance for access. That is a much bigger country, but many people in this country are confronted by significant access costs.

There needs to be recognition of previous settlements and some phasing, to incorporate some of the huge changes. One suggestion is that after an individual has been given a notional assessment, his payments should increase £5 a week at yearly intervals. That would avoid huge disruption to people's lives and finances.

My hon. Friend the Member for Glasgow, Garscadden (Mr. Dewar) has argued before for a proper appeals procedure on the lines of the Australian model, which would introduce robust common sense, which has been absent so far.

Would such changes require amending the legislation or scrapping the Child Support Act 1991 and the Child Support Agency and devising a new Act? The 1991 Act and the agency in its current form are unsustainable and should certainly go.

3.12 am

Mr. Donald Dewar (Glasgow, Garscadden)

We have had many opportunities to debate the vexed question of the Child Support Agency. I welcome this bizarrely late slot, and congratulate my hon. Friend the Member for Warley, West (Mr. Spellar) on his persistence and staying power. I hope that the Minister will be able to give useful information before we give way to other hon. Members who are deeply enthusiastic about very different issues.

This is almost certainly the last time that I will address the House as a DSS spokesman for my party, until we return from the summer recess. I notice from today's events that not only the Department's budget but its ministerial team is expanding. The hon. Member for Bury, North (Mr. Burt) has been joined by three Under-Secretaries of State—one of them in the other place. I hope that it is not tasteless to observe that there is a newly minted Minister of State. Perhaps the hon. Member for Bury, North has to be married to duty in the Child Support Agency. In the hon. Gentleman's case, no doubt, virtue will have its own reward.

The CSA has given rise to enormous discontent, bitterness and difficulties, the like of which I have not seen before in my career in this place. In the debate on 4 July, there was broad canvassing of the issues, and I do not intend to spend time going over the whole canvas.

I shall raise one or two points in short compass in the hope that the Under-Secretary will be able to help me with information and with clarification. Most hon. Members will know that the suggested sum of £310 million was raised by the agency in its first year of operation. That figure appears in the agency's annual report for 1993–94, which was published on 4 July—the very morning of the Opposition Supply day.

As the Minister will know, in a letter to the Select Committee, the chief executive of the agency produced a figure of £312 million, which is a very minor adjustment, of which I would make no criticism. I wish to place on record some of the conclusions, which I hope I have justifiably drawn, from that letter, and which will be of some interest to those following the debate. I remember that, on 4 July, I asked about the contribution that had been made by the liable relatives section. I did not get a reply, but it was a detailed point, and I recognise that, in the hurly-burly of exchanges, not every point can be picked up.

If I have understood it correctly—I say that a little tentatively, because the figures still seem to be somewhat obscure in some respects—the amount of that £312 million that is directly attributable to the liable relatives section and to arrangements that predate the Child Support Agency was £199 million. If we take that out, we are left with a figure for the first year of operation which is directly linked to the activities of the CSA, and assessments levied by it fall to £112 million. I say this in no sarcastic or hostile way, but that seems to me to be a startlingly modest figure against all the claims that were made.

If one looks at that £112 million, one will see that something else of interest emerges, on which I invite the Minister's comments. Apart from the £199 million for the liable relatives section's activities—its continuing legacy —we also find that £98 million is accounted for by the parents with care who are drawing family credit. Those people are of particular interest, because they give rise to the £73 million, which, rather surprisingly, popped up as the amount that was being retained by parents with care.

I shall come to that in just a minute. Let us deal with the £98 million. It is extremely helpful of Ros Heppelwhite to have supplied the figures. She gives a breakdown of that figure, and says: Of the total of £98 million, £27.9 million offset benefit spending. The balance of £70.1 million was retained by parents with care due to the application of the disregard. She went on to explain that.

I hope that the Minister will confirm that, or point out to me where I am wrong—if I am wrong—but it seems almost inevitable that the £98 million must also be split in terms of deciding what can be linked directly to the activities of the CSA, in the same way that the £199 million must be separated out to get the correct figure.

I put this as an Aunt Sally, but it would seem reasonable to assume that the £98 million would have to be split between the liable relatives section activity carrying on from a previous year and new assessments from the CSA, in roughly the same ratio as the £199 million to the rest of the total.

Ros Hepplewhite's notes state: Information is not available on how much of the amount shown in the table for Family Credit"— that is, £98 million— was arranged by the CSA. I see no reason to think, however, that that split would be any different from the split represented by the £199 million. If I am right, another £60 million or £70 million, in addition to the £199 million, is not attributable to the CSA's activities but would have been paid and collected in any event under the liable relatives scheme. If that is correct, it is possible that as little as £40 million can be attributed directly to the CSA's first year of operation.

I recognise that I have reached a fairly dramatic conclusion, but it seems reasonably logical, give or take a few million; we are talking in very large sums. When Ros Hepplewhite appeared before the Select Committee, it was put to her that effectively only £15 million—the £15 million enumerated in the appendix to the report that has just appeared—could properly be claimed as having been gathered in by the CSA. That may be a little harsh, however; the agency may be entitled to the rather larger figure that I mentioned, for the reasons I gave.

It would be extremely helpful if the Minister would comment. He has the time: he will not be howled down by eager hecklers. I hope that I can speak even on behalf of the beleaguered Liberal Democrats who are in our midst, for we all know that they are men of peace. This is important; we all want to know the definitive figure, and I think that my exposition has been reasonably clear.

Let me put my question in brutal terms: how much new money is in that £312 million? It is self-evident that we can take out the £199 million, and that we must split the £98 million: we have that on the CSA's own figures. But am I right in thinking that that brings us to a figure of less than £40 million in the agency's first year of activity? If so, is this not an extraordinary state of affairs, given the claims, hopes, expectations and trouble that have resulted from the whole operation?

Given that we can expect a considered reply, will the Minister also give us some explanation of the benefits savings? When I spoke on 4 July, I pointed out that, at that point, £310 million had been gathered in, and £418 million had been saved in benefits. I did not apologise for expressing some scepticism as to how £310 million could be translated into benefit savings so much greater than the total sum paid in maintenance.

Let me be fair to myself. I said then that I recognised that certain factors—particularly cases in which a claim for income support or benefit had been abandoned—might, by applying a multiplier, have produced additional savings to explain the more than 100 per cent. translation of maintenance paid into benefit savings. I understand that that is what happened in this instance.

As the Minister will know, the £418 million total includes the £199 million from the liable relatives total again; that must be taken out immediately. In addition, it includes what are labelled—rather mysteriously, to the layman—"non-maintenance cessations", which amount to the noble sum of £138.2 million. As I understand it, non-maintenance cessations refers to situations when benefit ceases, presumably because of the activities of the agency and its approach to the parties in the case.

I am interested because I know that there are many reasons why the claims might be abandoned, and I can quote parliamentary answers from the Minister which show that. It may be that there has been a reconciliation between the parties, or that the party who has authorised the claim has returned to work, and there is no locus for the agency to intervene.

There are a variety of other circumstances. I am not clear about the basis on which it was decided when a claim, having been abandoned, should be seen as collusive desertion or some other form of fraud. That is important, and it is clear that not all the claims could fit into that category. Many of them might be claims that would have fallen by the wayside anyway for some of the other reasons that I have mentioned.

I should be grateful if the Minister would comment on this, because those of us who are engaged in the minutiae of the issue are genuinely interested in how the split was made. If no deduction was made for honest cessation of claims, the £138 million could be an optimistic figure. As it is a key figure in terms of justifying the £418 million, we should be told how it was arrived at.

Even in cases of fraud, perhaps the Minister could say a word or two about how the benefit saving was calculated and which multiplier was applied. I am aware that the Department of Social Security uses standard multipliers, and I have no doubt that the Minister will have them at his fingertips. I am afraid that I am not as versed as the Department in that type of detail. We should know, because page 8 of the CSA's annual report says: Just as the nature of the work carried out by the Agency has changed in comparison with previous systems, so has the basis for calculating some of these savings, thus giving a better indication of the impact of the system on benefit expenditure. That is an extremely interesting sentence that is full of inferences and implications. However, on any reasonable interpretation, it is implying that the basis for calculating the savings in these cases has changed from that which has been used previously in similar cases. The report uses the words giving a better indication of the impact". If it is more optimistic in terms of giving a higher savings figure as against what has been used previously, the House is entitled to know about it and to hear from the Minister.

I mention in passing the maintenance cessation figure of £16.3 million. As I understand it, that occurs when someone is floated off benefit; in other words, the maintenance payment is so high that the benefit claim is excluded and automatically falls. If we can calculate the figure of £16.3 million, why is it impossible to calculate the number of people involved? If we can corral the cases and quantify them to calculate the figure of £16.3 million, on that basis, we should be able to say how many people are involved.

I have asked parliamentary questions about that and I have been told—this is an experience familiar to other hon. Members—that the figure is not available and cannot be found. Perhaps the Minister can help me. If the system cannot produce the number of people in this circumstance, it seems a little odd that it can produce a total figure of £16.3 million as the proceeds of benefit saving. I do not see how we can reconcile those two points. The Minister has some time in hand, so perhaps he will say a word or two about that issue. From that flows the final category, which involves the consequential savings in housing benefit and council tax which, at more than £28 million, are substantial.

I should like to understand the figures better in order to be able to assess the £418 million. Even if we assume that the figures are above board, we must take about £199 million—almost half of the £418 million—away from what has been produced by the CSA. I concede that the CSA's report contains a coded message when it states: We estimate that, in total in 1993/4, the payment of maintenance exceeded £310 million in cases in which the Agency was involved. Nevertheless, it is evident that not enough of this yet stems from new arrangements, and that many absent parents were not complying in full with the assessments we made. On a narrow inspection, and if one were in full possession of the facts, one could make a deduction from the phrase not enough of this yet stems from new arrangements". Nevertheless, that is an inadequate way in which to flag up the fact that at least half the alleged benefit savings did not come from the activities of the CSA but comprised money that would have almost certainly been collected in any event with the run-on of what had been set up by the liable relatives section.

I shall deal hurriedly with a couple more points, as I promised that my speech would be of narrow compass. The Labour party has an agenda for change with which the Minister is very familiar. I agree with a great deal of what my hon. Friend the Member for Warley, West said. There has been inflexibility, and I was especially interested in what he had to say about the collecting of information on the income of a spouse in the case where the so-called absent parent has either remarried or is living with a new partner. It seems to me that the only reason for having that information is to calculate the protected income.

I wonder whether there is not a case for saying that, as long as the people involved are aware of the protected income rules, are satisfied that they would not benefit from them and therefore do not want to provide that information, they should have that privilege. Of course, they should recognise that they have no right to complain if they then discover that, had they returned the information and used the protected income rules, they might have benefited from them. However, I am sure that, like me, the Minister is aware of many cases in which an interim assessment has had to be made. That is in no one's interest.

I reinforce another point made by my hon. Friend the Member for Warley, West. I, too, was fascinated by press reports to the effect that 40,000 of those who had been the subject of a mainstream CSA assessment were left with less than 70 per cent. of their net income as a result. That is a clear breach of the guidelines, which stipulate that a spouse should be left with 70 per cent. to 85 per cent. of net income—being left with even 70 per cent. puts one at the very bottom of what should be quite a generous range of possibilities.

Ros Hepplewhite told the Select Committee that 20 per cent. of cases fell below that level, although she said that virtually none fell below 60 per cent. However, the fact is that about one in five cases falls between 60 per cent. and 70 per cent.

We have not yet had the printed evidence but, according to press reports, the Secretary of State tried to minimise the number of such cases by saying that it was based on a rough sample, that—typically—it dealt with people who did not have second families, and that they had no or low housing costs. However, it is a serious matter.

I should perhaps wear sackcloth and ashes. Protesting groups often told me that many people were being taken below the 70 per cent. threshold, but I expressed scepticism about that. In a sense, I now feel that I owe those groups an apology, because it is clear that the number of people affected in that way is substantial.

Something must be done about that. We cannot simply wait and see whether anything comes out at the end of the day. When we are faced with such a situation, it is essential that we secure a commitment from the Government to deal with it, and to re-establish the guidelines that they originally presented as an important part of the system that they were introducing. I hope that the Minister will say a word or two, not to minimise the point but to show what he intends to do about it.

That takes me neatly to my final point. I do not want to run over the arguments for an independent appeal procedure, or for the possibility of a disregard for dealing with clean-break settlements. The Minister is well aware of that agenda; I hope that it will be part of his agenda too, and that he will consider it carefully.

May I remind the Minister of our exchanges of 4 July? I asked him whether he could give us any indication of any area in which he believes reform is necessary". The Minister courteously replied: I shall come to that too in my closing remarks … because it is a serious point."—[Official Report. 4 July 1994; Vol. 246, c. 113.] We all know how time can overtake one when one is making a speech in this place. Sadly, the Minister did not get round to dealing with the question or explaining what those areas might be. I do not criticise him for the omission, but he now has the chance to put it right.

I hope that he will be able to tell us the areas on which he is concentrating, and whether he accepts, as I hope he does, that there are genuine matters of concern that must be tackled.

3.36 am

The Parliamentary Under-Secretary of State for Social Security (Mr. Alistair Burt)

I congratulate the hon. Member for Warley, West (Mr. Spellar) on securing the debate. As always, he made several constructive criticisms, as well as others that I consider less supportable. And, as always, I appreciate the manner in which he has put his arguments. I am sure that the hon. Gentleman will agree that developing a sustainable system for the delivery of child support is important, and that we are all genuinely trying to find our way through some difficult issues to develop a satisfactory system.

I have often explained in detail the principles that underpin the new system of assessing child maintenance, and it would stretch the patience of the House if, at this late hour, I embarked on another reassertion of those principles. I shall therefore not set them out again, but it is important not to forget that once a measure has been passed we spend much time in the House dealing with extremely detailed criticism, and may forget some of the underlying reasons for the legislation—such as the position of lone parents on income support, the vast majority of whom do not receive maintenance.

The House has touched on that subject before, but it was not raised one whit in the debate. Perhaps it is easily forgotten, and I am somewhat frustrated by the fact that in our concentration on the detailed effects of the Child Support Act 1991 and of the Child Support Agency we may forget about the other side of the coin. Other people —such as representatives of the National Council for One Parent Families—have been before the Select Committee to make that point, and there is an occasional interview on television or in the newspapers about the other side of the story.

Again, nothing has been said about that tonight. Shortage of time may be to blame; this is a late-night Adjournment debate, and it is easy to forget the people whom the system was set up to support. However, it is worth putting on the record that it remains a principal concern of mine to try to ensure that the system works for the benefit of those people and that we do not forget the injustices of the previous system, which were among the reasons for introducing the current system. I do not forget that, even if other people apparently do.

I do not forget, either, the fact that the Child Support Act was passed with the universal support of the House, as something that we all wanted to do. The need for it was recognised at the time, and I am grateful for that, but when principles are put into practice they can sometimes be rather harder to swallow. However, that said, I do not stand here tonight to suggest in any way that the system works perfectly, that there are no problems in the system and that there is nothing about which the Government are concerned.

When the Act came into operation, we said that the Government thought it right to keep any new legislation under review. That is especially true in the case of a change that has been described on more than one occasion by the Select Committee as the most major change in social policy since 1945. The Government showed faith in those remarks by ensuring that last February, after a period of reflection on the first six months or so of the working of the Act, they made changes based on their own observations and on some of the work of the Select Committee.

The changes that we introduced included, first, a substantial increase in the minimum amount of income an absent parent would keep after meeting his maintenance liability. Secondly, there was a reduction in the additional element where there was a liability for only one or two children. Thirdly, there was a reduction in the amount included for the care needs of the children as they grew older. Fourthly, there was an extension of the arrangements for phasing in the new amounts.

Information is now starting to feed through on the impact of the changes. I once again appreciated the contribution of the hon. Member for Glasgow, Garscadden, (Mr. Dewar) but I may not be able to go into quite as much detail as he would like. As he understood, we have said a number of times that it is important to look at the impact of the February changes and to trace them over a period before considering whether and what further reforms might be necessary.

Our early signs are that as many as 44,000 absent parents have already benefited from the changes to the formula. On average, liability appears to have been reduced by about £9 a week. When one bears in mind the fact that the formula was designed to increase average assessments by around £20 to £30 a week, it can be seen that the changes are not just minor tinkering but a real arid substantial adjustment to absent parents' liabilities. The House will recall that, on average, figures for maintenance under previous systems were estimated to be between £25 and £30 and that the new figures were supposed to be between £45 and £50. Average liability should, therefore, be reduced by some £9 a week, which is a reasonable sign that the changes made in February had quite a considerable direct impact. It would also be helpful for the House to note that the reforms have been of particular benefit to absent parents on low incomes or with second families.

The changes have not, of course, met all the criticisms of the scheme and some absent parents continue to be dissatisfied. It is, however, important to remember that in almost every case that the Child Support Agency has handled so far, the parent with care and her children are in receipt of income-related benefit. In contrast, the vast majority of absent parents enjoy a much higher standard of living. Two points arise from that.

The hon. Member for Warley, West again made his comment about feeling how unfair it was that so much of the maintenance collected went back to the taxpayer by way of the Treasury. I have never felt that that was wrong. The House, in passing the Act, recognised that, for too long, the taxpayer had been the unwitting supporter of separations between parties in the United Kingdom. I do not believe that the House can hold to that opinion and then criticise the work of the agency in ensuring that the taxpayer sees some benefit from increased maintenance payments designed not only to secure higher levels of maintenance for the families involved but to ensure that the taxpayer is not bearing so much of the burden. Bearing in mind the difference in income between the parties, there is some equity in changing the balance, which was previously so heavily weighted towards second families.

Mr. Spellar

Does the Minister accept the point that, even if the House and the Government wanted to make that change, to make it in such a drastic way has had a devastating effect on those families? Transitional arrangements would have been a far more sensible and equitable way in which to restore the balance that the Government wanted.

Mr. Burt

The Government take the hon. Gentleman's point. That is why phasing arrangements were in place in the Act and that is why the phasing arrangements were changed in February to take account of just the situation that the hon. Gentleman describes. They were changed to ensure that where there were second families and there had been a written agreement or a previous court order, the increases in maintenance were carefully phased. That has been done and that is one of the things that has resulted in a change in the circumstances of absent parents, which the hon. Gentleman would support. Phasing arrangements have not been forgotten; they are there.

A number of matters were raised, both by the hon. Member for Warley, West and by the hon. Member for Garscadden. I shall cover one or two of them, but I shall not be able to cover them all at this late hour. I want to say something about the performance and administration of the CSA because the hon. Member for Warley, West mentioned those important points. I want to mention them too.

It is perfectly straightforward for me to tell my colleagues that I am disappointed with the administration of the agency in its first year. The report was a fair and accurate reflection of the fact that the agency, its chief executive and those involved felt that their performance had not been as good as they wished; they were up-front about that. A number of reasons were advanced for that, and I stand by them.

A new system was being set up from scratch. A number of assumptions had to be made about the operational workings of the agency and about how long it would take people to respond to the requests for information. Assumptions were also made about the ease of verification, and the like. Again, the House will know of the importance attached to verification, checking and the ruthless pursuit of accuracy on some occasions to ensure that the system works fairly on behalf of us all.

All of that has taken more time than was anticipated, and has resulted in a backlog of cases and—as most colleagues in the House will know—a backlog of correspondence, and the like. I regard some of those difficulties as being almost unacceptable to hon. Members, and I apologise. I am deeply sorry that the administration was not able to work as smoothly as we wished.

It is one thing to stand here and say as honestly and as fairly as I can that I am disappointed that the administration has not worked well. It would be another thing to ignore that and say, "Carry on, chaps. You must make do." We do not believe that that is right, and that is why we have taken steps to make changes to the administration and ensure better responsiveness. However, I warn my colleagues that there is a time lag because we are dealing with work that requires skills and trained personnel. We cannot simply draft in people and expect an immediate change in the workings of the agency. It takes time to train people and to see an improvement. I am sure that the measures that we have taken will show that.

I shall discuss in detail some of the things that we have been doing.

Mr. Harry Barnes (Derbyshire, North-East)

Will the hon. Gentleman give way?

Mr. Burt

I shall outline the changes that we have made and then give way to the hon. Gentleman.

The Child Support Agency is currently putting in practice a range of measures to improve productivity and customer service. It is recruiting an additional 700 staff to work in areas where the agency has identified the need for the input of dedicated resources: reviews, appeals and customer inquiries. It is in the process of centralising the handling of incoming telephone calls by setting up dedicated call-handling sections in each of its six child support centres. These will handle all case-specific inquiries enabling child support officers to concentrate on processing their case loads. That is important.

The other week, I was in Birkenhead. The difference that call handling sections make is that, effectively, the calls that were being put through to business teams checking on the progress of cases, which disrupted that work necessarily, are now screened by telephone operators who have access to the information held by the business teams. The replies can be given, therefore, by the operators with the use of that access. That prevents calls from going through to the business teams, so they can get on with the job.

I have seen the work of the CSA centres. I have gone around on the floor and seen people constantly answering telephones and trying to deal with paperwork at the same time. I have seen the effect of that in Birkenhead and the quietness on the business team floors as they are able to do their work, in contrast with the business of the caller section downstairs. I know that call handling is just a simple, straightforward and practical thing that will pay a dividend for us all.

The CSA has established a centralised national inquiry line for the handling of general inquiries. The line will be connected to call-handling sections to allow for the direct transfer of calls between the two. It is planning to upgrade information technology support in local offices and to give local staff the facility to process case work on the child support computer system. That will increase the productivity of local child support officers and give agency managers greater flexibility.

The agency is also in the process of developing further the automation of its management information service, which already provides regular and accurate information on key performance indicators—although, as the House will know, not enough in crucial areas where the House has been asking for extra information. That is acknowledged by the Government and the agency, and the work that we are doing to improve the management system will help to answer some of the questions raised by the hon. Member for Garscadden tonight. It will also enable the agency to deploy its resources more effectively.

Finally, before I come to the hon. Member for Derbyshire, North-East (Mr. Barnes), let me say that the agency is in the process of introducing a standard operational model for its child support centres based on the best practices which emerged during the agency's first year. For example, the centres are streamlining the procedures by which they liaise with the Benefits Agency, which must make some adjudication decisions at some stage of the process, and they are standardising the way in which their debt management teams operate. It would be premature to attempt to quantify the success of the improvements and many of the measures must be fully implemented, but some changes are already noticeable.

Mr. Barnes

One problem that I have discovered is that my constituents who are being dealt with by the Belfast office seem to get different information at different stages. It is almost as though two or three different people are dealing with the files in Belfast. An instruction sent on one day may be countermanded by another sent the following day. Constituents are left confused. Even after I have written to Ros Hepplewhite and I seem to have resolved the problem, it is then handed over to Belfast, where it is not resolved immediately. It is difficult to believe that any co-ordination exists. Another problem is created by the letters that are generally sent to constituents. Those computer-produced letters are unsigned and it is difficult to discover whether different people are handling cases and dealing with them in different ways.

Mr. Burt

The hon. Gentleman is right to criticise the fact that different information is provided to constituents or Members of the House. That is wrong and I understand that the approach be should consistent. Different people handle cases at different stages because the work is functionalised during different parts of the process. While it may be possible that different people handle the same case, the same accurate information should be offered at all times and properly given.

Some of the problems are due to the fact that the agency has been set up from scratch. Hon. Members have discussed before some of the operational problems that I have been open enough to outline again to the House tonight. I ask colleagues to acknowledge that it is for the agency to improve its performance markedly to ensure that the problems that affect colleagues do not persist for too long.

I should like to put on record my great appreciation of the work done by the staff of the agency. Many cases are proceeding perfectly straightforwardly. The House will be aware that the CSA took on 850,000 cases in its first year, sent out that number of forms and processed those cases. The staff are working well and are well informed. Each of the agency's centres has a notice board displaying letters thanking the staff for their work. I will not discuss the pressure under which those staff work, but the House knows my feelings, and I know the feelings of all colleagues about the unfair pressure under which civil servants, carrying out Government policy have been placed. That pressure has not helped either. The staff are working hard and they are determined to improve their performance at all levels to ensure that some of the difficulties are resolved.

The agency is encouraged by the increased level of performance that has been achieved in the first quarter of 1994–95. More than half as many maintenance assessments were cleared in the three months up to the end of June —177,000—as in the whole of 1993–94. The number of cases now awaiting assessment is falling and more action is being taken to ensure compliance. In all those ways, the performance of the agency is improving considerably and will continue to do so.

The hon. Member for Garscadden asked me about what areas we might be specifically concerned. The reason that I have hesitated to pick out specific areas, and why I will hesitate again to do so tonight, is that it would be unfair for me to pick out two or three particular areas and say that we are concentrating on them. If I did that, people might say, "Oh. This is what the Government are going to do." I have already said that the Government keep the workings of the 1991 Act under review. Hon. Members have raised a number of concerns and they will know that, when the need for reform was proved, we responded in February, in good faith, with a number of changes. I ask the House to keep faith with that process again. When we say that we are keeping the entire workings of the Act under review, we mean just that—nothing more, nothing less. I know that the hon. Member for Garscadden is not being mischievous, but I will not tempted down a series of roads to suggest that we are doing one thing rather more than another.

A number of matters have emerged. As the House will know, there are answers to—

Mr. Dewar

I shall not try to chivvy the Minister out of his cautious stance. There is a difference between a Minister who says as a matter of routine that good Government Departments always keep systems under review and a Minister who has a determination to review things because there is a recognition that change is required. Can we at least have an assurance that we are watching the second type of Minister?

Mr. Burt

I have said in the past, and I have repeated tonight, that the entire system is being kept under review, and that if the need for change is proved, the Government will make changes. I hope that that satisfies the hon. Gentleman as to intent and also on our approach to these matters.

I shall move on to one or two other matters before the hon. Gentleman chivvies me for not answering enough of his questions.

Mr. Dewar

There is plenty of time.

Mr. Burt

I do not wish to take the time of the House. I know that it is anxious to move on.

First, I shall deal with the 70 per cent. issue by quoting from the basic CSA leaflet that goes out to families. It reads: Absent parents who do not have other children of their own living with them will usually be expected to pay between 15 per cent and 30 per cent of this net income figure in child support maintenance. I said in Select Committee that typically some 70 to 85 per cent. of net income would be available. I do not think that I or the Government ever suggested that in all cases everyone would be in that banding. We said that the majority would be, and that typically people would have about 70 per cent. plus of their income, but not everyone.

Hon Members are right to say that evidence taken from Ros Hepplewhite and my right hon. Friend the Secretary of State by the Select Committee dealt with instances where the figure had gone below 70 per cent. There are hardly any cases—I think six out of the sample that was taken—where the figure has gone below 60 per cent. The majority of the 20 per cent. of absent parents who are left with less than 70 per cent. of their net income after paying maintenance are left with between 65 to 70 per cent. The reasons for that are those that were given by my right hon. Friend the Secretary of State before the Select Committee.

Those who are left with less than 70 per cent. of their income after paying maintenance usually have low or no housing costs and, therefore, a low rate of expenditure to offset against net income. They may also have several children for whom maintenance is payable. Those have been typically the cases that have gone below 70 per cent. No indication was given that everyone would be above 70 per cent. In fact, what we said turned out to be accurate. Usually, most people have 70 per cent. plus of their net income left. I note, however, the concern of the House, as does the Select Committee and my right hon. Friend.

The flexibility of the formula has been raised again. It is a central issue. The formula was introduced to try to provide a degree of consistency and stability for those making decisions in maintenance matters. We cannot have it both ways. Either we provide that degree of stability by way of a formula so that everyone knows what he or she is likely to be paying or receiving, or we reintroduce elements of discretion at different levels and thereby introduce a degree of uncertainty.

My understanding was that two or three years ago the House accepted that the discretionary system had failed those who were depending on it or paying for it. We wanted to ensure, therefore, that something rather better was in place. We opted for consistency. That is why we have the formula. Obviously, changes and adjustments could be made within the formula, and the hon. Member for Warley, West made his own selection. I put to him the same argument as I put to the Select Committee last year, which was that everyone has different priorities, so a check list can be produced in which the priority of payment to the child gradually slips lower and lower. The difficulty then is that one ends up with exactly the same system as before, in which the amount of maintenance payable to the child is less because people want other essentials to be taken into account.

The formula was constructed to try to leave about 70 per cent. of net income available for those various obligations. If we take account of more and more expenses before maintenance is calculated and then simply reduce the maintenance that goes to the parent with care of the child, the benefit to the taxpayer who must support the whole system will also be reduced. I am not sure whether that is what is wanted.

That matter triggers my memory about an issue that I did not cover when I wound up the last debate. The hon. Member for Garscadden said that I had been offensive by mentioning pet food. He does not toss such an accusation in my direction lightly, and I was so thrown by it that I forgot to return to it on winding up. I took the pet food example from a real case in which a woman had written to us—it was reported in the newspapers—to say that, when her husband presented to the court his list of essential expenses to be taken into account before maintenance of the child was calculated, it included £8 a week for pet food. I grant that that does not apply to every case, but it was not offensive. What is offensive is a system in which pet food could be considered more important, to the father or the court, than child maintenance.

I was not using the example to suggest that such an expense is taken into account in every case, and it was not de minimis, simply to be dismissed. It was an example to show that, once we begin to take all sorts of essential expenses into account, according to the individual concerned, such a problem may be encountered.

Mr. Dewar

My memory is not as good as it should be. I think that I said that the Minister's comment was described as offensive in a subsequent letter commenting on his article. I may have expressed sympathy with that view, but I was essentially quoting a letter that appeared in a local newspaper.

It is, however, unwise to use an extreme example which none of us would defend as a reason to rule out any new flexibility in the system. I object to the Minister using a hard case to support his position.

Mr. Burt

I fully take the hon. Gentleman's point, and I do not use the pet food example in that sense. I was simply reminded of it as we went through lists of expenses and thought that I would sort it out while we were here.

The point that I was making did not relate to pet food, but if more and more expenses are introduced into the formula, it is an example of the risk that we run. I recognise the concerns that have been raised in the House about travel-to-work expenses and other such matters.

I shook my head at the hon. Member for Warley, West when he was discussing spousal maintenance. Spousal maintenance is not in the formula. It is a carer's allowance, which recognises that a child cannot exist on its own but needs someone to look after it. That person may be the mother, who spends her time looking after the child and cannot go out to work or goes out to work and needs to pay for child care. Many people consider the carer's allowance to be spousal maintenance. Absent parents who feel aggrieved about it describe it thus, but it is not so described in the formula or anywhere else, so I wish that the hon. Gentleman would get off that tack.

Mr. Spellar

Could not the Minister save himself a considerable amount of trouble merely by raising the amount for individuals? After all, if a child of five needs someone to look after it, the child needs that care irrespective of who gives it. Why does not he take out that item, which causes continual major resentment?

Mr. Burt

If the hon. Gentleman thinks that, if we took out the title of carer's allowance and moved £25, £40 or whatever into the child's personal allowance, his constituents would suddenly say, "That is all right; we are not paying spousal maintenance any more", I think that he has another think coming, because it is a deeper point than that.

I will finish by doing the best that I can with some of the questions about the figures. I listened carefully to what the hon. Member for Garscadden said, at 4 o'clock in the morning, about detailed figures. He will excuse me if I say that I shall have to write to him about some of them, because he mentioned some serious matters and I am anxious to be helpful, as was Ros Hepplewhite when she wrote to the Committee, and the hon. Gentleman rightly went through many of the figures given.

The £312 million represents the amount of maintenance in cases with which the CSA has been involved. It is not solely a figure of maintenance arranged or received by the agency's collection service, but includes an estimate of maintenance paid direct to parents with care by absent parents, as well as sums that continue to be paid from pre-CSA arrangements.

For many reasons, we believe that comparison between the child support unit and the Child Support Agency performance is not valid. The child support unit—the old "liable relative" staff—dealt only with clients receiving income support, and was able to direct attention to cases where it was most likely that maintenance could be arranged. The Child Support Agency is a very different organisation, offering a service to parents on income support, including those between whom no maintenance has ever been paid, to those receiving in-work benefits, such as family credit, and to parents who receive no benefit.

Once taken on, all applications to the agency must be given equal attention, irrespective of whether maintenance will eventually be assessed. I do not believe that the old liable relative system was running down; the figures of maintenance received over the years were steadily climbing, so I do not think that that argument is proved. The hon. Member for Garscadden did not weigh too much on that.

I shall now discuss the construction of figures—the breakdown of the figures, which show £312 million maintenance collected, and benefit savings arising of about £418 million. We could go through them piece by piece, but I do not especially wish to do that for the House.

We have tried to draw a distinction between the maintenance administered by the Child Support Agency arising from pre-CSA arrangements, and maintenance and other savings arising from CSA assessments and other action. The information available to the House splits the amounts between benefit savings and maintenance collected. In some cases, it is one and the same.

For instance, if we consider maintenance administered by the CSA arising from pre-CSA arrangements, the amounts paid direct by the absent parent to the parent with care receiving income support totalled £175 million, and that was all benefit savings because that directly saved income support. Similarly, the amounts paid by absent parents through the pre-agency collection service to parents with care receiving income support was £24 million, and that was also all direct benefit savings. That is how the figure of £199 million is obtained, and that is all direct benefit savings.

The family credit figures have proved to be better, and our original estimate that about £50 million would go directly to parents with care increased as a result of the success of the family credit operation. There, the maintenance collected was £98 million, but the benefit saving was only £27.9 million, the other money going directly to the parent with care in addition to benefits, so there was a net increase in income to the parent with care. That gave a total of benefit savings of £226.9 million, compared with maintenance collected of £297 million. That all stems from the maintenance administered by the CSA arising from pre-CSA arrangements.

Let us consider the maintenance and other savings arising from the CSA assessments and other actions. Some £50 million of maintenance was directly collected, but it yielded total benefit savings of £190.7 million. The figures are available to the hon. Member for Garscadden. They were set out in the letter, together with notes. The hon. Gentleman raised a number of detailed questions on the subject. I should be grateful if I could reply to them in detail by letter—I think that that would be the best way to deal with them. It may provide opportunity for debate in the next Session so that the issues can be amplified and placed on the record if the hon. Gentleman wishes.

Mr. Dewar

I am happy with that. I shall read our exchanges and I might also write to the Minister. May I raise one general policy point? With some justification, the Minister makes great play of the family credit figures. They are useful to him because they benefit children. They do so because there is a disregard. I recognise that there is a distinction between people on benefit and people who work and receive top-up benefit. It seems that there is a lesson to be learned about the large number of children living in families on income support who are not benefiting at all. Does the Minister share that view?

Mr. Burt

I do, but the hon. Gentleman will also know that I have a strongly held view that there is a danger in introducing a disregard into the income support system. First, it would create a slightly higher hurdle for those on income support wanting to return to work—they would need to earn £5, £10, £15 or whatever more. We are anxious to reduce those disincentives to return to work; the system is designed to do so. That is why the incentive is deliberately in the in-work system.

Secondly, there is the issue of cost, which is difficult to calculate. We all know that introducing such a system would incur considerable expense. Thirdly, it would be inequitable. Some people would receive extra amounts in their income support benefit through the payment of money to which they were entitled. Other people receiving benefit simply would not have access to that extra money in the benefit system. People would soon be lobbying me and knocking at my door to say how unfair that system was and to ask why income support should not be increased to ensure that everybody benefited in the same way. There would be problems, which is why we have not introduced that system.

We have had a long discussion and I have probably taken up more time than I should have done. The subject is important, and I think about it carefully, as do the Government. I appreciate colleagues' concern about the subject and I do not wish to send them away for the recess under the illusion that we do not take it seriously. We know that other parts of the House, including the Select Committee, take it seriously.

The principles are right and are strongly supported around the House. We all wish to see a workable system. We have proved in the past that, where change is needed, we have been prepared to make it. Not every change that is suggested can be introduced—it would not be right to introduce them all. It is important to ensure that the principles survive. Some of them are hard to live up to —particularly when we say to the population at large that, through their taxes, they have provided too much by way of supporting separation agreements, and we now want to give them some relief. We have all signed up to that principle, but it is hard to implement in practice when constituents who come to our surgeries are having to pay more money. We have to stand by the principles and say that they are right.

We want a sustainable and good system of child maintenance for the future. The Government are determined to ensure that improvements in administration help to deliver that, but they are not blind to the other problems. We shall continue to keep the matter carefully under review and I have the strongest suspicion that we are likely to discuss the subject again when the House returns after the recess.

The allotted time having expired, the debate was concluded in accordance with MADAM SPEAKER's statement—[Official Report, 14 July 1994; Vol. 246, c. 1197.]