Child Support (Hansard, 23 January 1995)

§ The Secretary of State for Social Security (Mr. Peter Lilley)
With your permission, Madam Speaker, I should like to make a statement about the White Paper, "Improving Child Support", which I am publishing today. The Child Support Act 1991 established the principle that parents are responsible for their children: both parents, even if they live apart. Taxpayers should pay only to the extent that parents cannot afford to do so. The whole House endorsed that principle, when it passed the Act, without a single dissenting vote. I reaffirm it today.
The whole House, however, has also had growing concerns about the practical application of that principle and the operations of the Child Support Agency. I responded rapidly to early concerns by introducing reforms last February. I promised then to keep the system under review, and I committed the Government to respond positively to the Social Security Select Committee's second report. In the light of that report and the experience of the first year and a half, I am persuaded that further significant change is required.
The proposals in the White Paper incorporate the majority of the Select Committee's recommendations, and in some cases they go further. Altogether, I believe that our proposals will enable the system to achieve its original purpose. They will make maintenance assessments fairer, improve the service offered by the agency and ensure that maintenance assessed becomes maintenance paid. I believe that that is what Parliament wants.
The major focus of criticism of the Child Support Act relates to past settlements of property or capital. Some of those criticisms are based on misconceptions. However much property was transferred, there never could be a clean break from one's children. Parents or the state always could return to court to seek increased child maintenance. Also, the current formula does indirectly reflect property transfers. None the less, it is true that the formula does not explicitly reflect the value of property or capital transfers that were intended to contribute to child maintenance. To establish how much of any past property settlement was in lieu of child maintenance is often very difficult. It involves the exercise of judgment and discretion.
To give the agency and appeal tribunals discretion to amend assessments to reflect past property settlements will require primary legislation. I therefore intend to bring in a Bill in the current Session. But primary legislation means that the new arrangements cannot be up and running before 1996–97, and I want to give some recognition now. So I propose, from this April, to introduce into the formula a broad-brush allowance for past property transfers. It will assume that half the equity belonged to each partner. Where the absent parent transferred more than £5,000 of his share of the equity, there will be set allowances in the formula for amounts falling in three broad bands. Any parents who find that the broad-brush allowance does not sufficiently reflect their property settlement may seek a departure from the formula under the new discretionary powers.
I also propose to allow strictly limited discretion to prevent hardship by taking account of some other expenses that are not in the formula. They will include 20 high costs of visiting children, extra costs of supporting a disabled dependant, exceptional costs of caring for stepchildren and certain debts of the former relationship.
I also intend to make a number of amendments to the maintenance formula. First, I want to encourage people to continue working even where they have to travel long distances. Calculating actual travel costs would be burdensome for everyone. So instead, for parents who live more than 15 miles from their place of employment, I shall introduce a broad-brush allowance. An automatic calculation will avoid the need for detailed inquiries to be made about actual travel costs. If that works out much too high or too low, either parent will in due course be able to apply for a discretionary adjustment.
Secondly, I shall let absent parents who have a new partner or stepchildren deduct all their reasonable housing costs.
Thirdly, I shall put a ceiling on assessments of 30 per cent. of net income, or the minimum of £2.30 a week. So absent parents will be able to keep at least 70 per cent. of their net income after paying maintenance. Even those who are also paying off arrears will be allowed to keep at least two thirds of normal net income. That reassurance goes beyond anything recommended by the Select Committee on Social Security, and I am sure that it will be welcomed by the House.
Fourthly, the maximum amount payable under the formula can be very high, especially where there are several children. I intend to halve the maximum additional amount payable above basic maintenance.
In addition, to encourage absent parents to co-operate, where an absent parent provides basic information within four weeks, I shall defer the start of his maintenance liability for eight weeks.
Most of the measures that I have announced will make assessments fairer for absent parents. Indeed, no absent parent will now be able reasonably to refuse to pay his child maintenance. As a result, the measures will also help parents with care and their children by securing maintenance more speedily. Even where maintenance already being paid is reduced as a result of the changes, parents with care on income support will not lose money, as income support is adjusted immediately. However, awards of family credit and disability working allowance are set for six months. For those whose maintenance drops because of the changes, the Government will provide some compensation for the rest of the award period.
Some commentators have argued for maintenance to be disregarded in calculating income support. But that would make it much more difficult for a parent with care to improve her family's standard of living by returning to work. Instead, I propose that parents with care who are on income support or jobseeker's allowance will be able to build up a new maintenance credit of up to £5 a week. That will be paid as a lump sum when they leave benefit for work. It will give parents with care an increased interest in receiving maintenance and enhance their incentive to work.
The Child Support Agency has performed less well than I would wish, despite hard work by its staff. But the agency has already taken steps to improve its performance. In December, the agency announced two measures to help it to manage its outstanding cases. They involve deferring the take-on of parents with care on income support who have not asked or provided sufficient 21 information for the agency to pursue maintenance. All parents with care who continue on benefit will, in due course, be taken on by the agency, and there is no question of deferring action against unco-operative absent parents.
None the less, the policy changes announced today will impose further work on the agency. I do not want it to add unnecessarily to its backlog, but I want it to devote its resources to its current work load. Cases where there was a court order or maintenance agreement before April 1993, and the parent with care is not on benefit, were due to have access to the agency at the initiative of either parent from 1996. I propose to defer take-on of those cases. I shall ensure that they retain the right to use the courts and I shall also give them the right, for a fee, to use the agency's collection and enforcement service.
Some absent parents have suffered, through no fault of their own, from delays in making assessments, resulting in huge bills for arrears. In those cases, we shall not enforce more than six months' arrears, provided the absent parent agrees to pay them and to pay his on-going liability for maintenance. After a year, it will be clear whether the absent parent is meeting his obligation and if so, we shall compensate the parent with care for any financial loss. I have decided to stop charging fees and interest for two years from April 1995. After that, fees will be reintroduced and the interest charged replaced by a late payment penalty.
On Thursday, I intend to lay a set of minor technical amendments to regulations, which will further help the administration of the scheme. Many of the changes that I am announcing today will take effect from this April. The formula will change, interest payments will be abolished and fees will be suspended. The agency will be writing to all its clients about those changes, so there is no need for parents to contact the agency.
Primary legislation is needed to introduce discretion into the maintenance formula and for other changes including deferring take-on of non-benefit cases. Subject to the approval of Parliament, those changes will take effect during 1996–97. From April 1997, the new maintenance credit scheme and late payment penalties will start and fees will be reintroduced. None of those changes will apply retrospectively.
Legislation involving children, broken families and money will always arouse strong emotions. That is certainly the experience of Australia's Child Support Agency, even after six years of operation. The changes will improve our child support scheme for both parents. They will take account of property or capital settlements, give flexibility to prevent hard cases, allow for high travel-to-work costs, help absent parents with step-families, reduce the maximum level of maintenance and ensure that absent parents normally keep more than 70 per cent. of their net income after paying maintenance. Those changes should encourage and enable more absent parents to pay child maintenance regularly. As a result, they will give more parents with care and their children the chance of a better life and I commend them to the House.

§ Mr. Donald Dewar (Glasgow, Garscadden)
Does the Minister understand the relief that, at last, there is movement on his part, after years of inaction? Does he share my dismay, however, that the chaos and bitterness 22 surrounding the Child Support Agency has seriously undermined the very principles that the system was brought into being to defend?
I recognise that the White Paper offers changes to a wide range of issues. Does the Minister agree that the test is the practical impact of the proposed reforms, and that it is in that light that the Opposition and the country will judge them?
We welcome the introduction of a discretion to depart from the over-rigid financial formula, in cases where there is real hardship. Does the right hon. Gentleman accept, however, that we shall want to study with particular care the grounds and the definition of additional expenses? If the changes do not attack the causes of discontent, the damage may well be fatal.
Why did the Minister reject the machinery of the review office system that was pioneered in Australia, which at least appeared to be administratively convenient and offered an independence of judgment that many thought lacking in his present proposals?
Does the Minister recall that, time after time, we have called for just such a reform—the introduction of a discretionary element, through an independent review procedure—only to be repulsed with a lack of sympathy and sensitivity that I hope he now regrets? It is apparently intended that so-called clean-break settlements prior to April 1993 should be in the remit of the new appeal procedure. Will the Minister, however, say a little more about future cases and the perhaps unhappily christened broad-brush approach? With that, a great deal depends on the practical effect.
The formula that illustrates bands and the impact on exempt income will not make immediate sense to everyone. Is not it important—I put particular emphasis on this—in this case and, indeed, with every part of the package, that the Minister makes the impact transparent? Will he publish examples of the impact of those various provisions on typical cases and, where necessary, on a range of assumptions? Does not he agree that that is the best way in which to inform public debate?
Will the Minister note that there will be welcome on Opposition Benches for the translation of the advisory guidelines that no liable parent will pay more than 30 per cent. of net income, or 33 per cent. including arrears, into legislative form? There is plenty of evidence that in practice the financial formula has breached those guidelines in many thousands of cases. Is not it a striking comment on the failure of the system when a total of—I think—40,000 cases was quoted to the Select Committee where the guidelines had not been met? That clearly came as a shock and a surprise to Ministers.
On other changes in the financial formula, subject to further study, we are prepared to offer support. I am thinking specifically of the change to housing costs. However, may I remind the Minister again that those tardy moves reflect pressure from hon. Members of all parties, which he has long resisted? Will he also note that, at first acquaintance, the broad-brush approach to travel costs borders on the crude?
On administration, too, the Minister is giving ground and not before time. The incentive to co-operate represented by an eight-week moratorium on liability for arrears and the protected income provision where deduction from earnings applies are useful, but I suspect that, in impact, they are very modest changes. Will he 23 note that the cap on arrears at six months, as a form of remission for good behaviour, is welcome, especially as it is linked to compensation for the parent with care, which is a particularly important safeguard and feature?
Does the Minister accept that the so-called maintenance credit, no more than a poor relation of the back-to-work bonus, will simply not do? Does not he realise that parents with care living on income support need help now, not a possible windfall at some future date? Is not there a danger that the households where work will be difficult to come by will be the least likely to pick up the divvy? Would not it have been wiser and more in line with the social purpose of the 1991 Act to establish the principle of disregard, even if at a modest level? Why is the proposal on such a slow fuse and not coming into effect into April 1997, when other changes are being introduced this April?
May I ask about the deferment of take-up of cases by the agency, when no state benefit is involved and there is a court order or written maintenance agreement? Does deferment mean that those cases will become the agency's responsibility at the earliest possible point, as soon as administrative capacity allows? Does the Minister accept that it is important to establish what is intended, as otherwise some will charge that the Child Support Agency is rough justice for those on benefit, while the courts protect the better-off? Would not that become a problem, if there were a perceived continuing differential in awards between courts and the agency?
The House will note that none of those changes will apply retrospectively. I accept that there are difficulties, but does the Minister recognise that that may cause major problems? The day before the House of Commons rose for the Christmas recess, he announced that 350,000 cases were being shelved by administrative fiat. When those cases come back into the system, are the individuals concerned to benefit from the changes announced? Is not there a danger, if that is so, that they will be seen as being advantaged as a result of the agency's own inefficiency and, in some cases, perhaps more seriously, will not it be a matter of non-co-operation unfairly rewarded?
Opposition Members want reform. We want reform that gives a better service to both sides of a broken partnership and we want reform that will take some of the stress and strain off the staff of the CSA who have been put under, at times, almost unendurable pressure. May I make it clear that we shall not unnecessarily obstruct the legislation when it comes forward? There will be no call from the Opposition Front Bench for trench warfare. However, we reserve the right to weigh the merits of the proposals, to scrutinise properly and to try to strengthen the Bill in Committee in the public interest.
The tragedy is that reform which might have made an impact 18 months ago will now have to contend with the bitterness that has built up in the system. Is not it clear to everyone involved in the argument—many of whom, honourably, are on the Conservative Benches—that the delay is deeply regretted? The fact that Ministers have had to be driven to action by public pressure and parliamentary anger is a considerable downside.
24 Does the Secretary of State recall that, as recently as 4 July last year, sheltering behind the very marginal changes made the previous February, he said: We must not put the improvements in performance that we are achieving at risk by introducing unnecessarily disruptive changes".—[Official Report, 4 July 1994; Vol. 246, c. 43.] That is a prime example of complacency writ large.
The Opposition believe firmly in the duty of a parent to contribute to the maintenance of his or her child. This is perhaps our last chance in this Parliament to get matters right. I hope that the changes will undo some of the damage caused by delay and restore a measure of public confidence to the child support system.

§ Mr. Lilley
Assuming that the hon. Gentleman was welcoming the changes, I am grateful for his welcome. I welcome the fact that he has consistently supported, as the whole House has, the underlying principle that the changes are designed to reinforce and uphold.
However, the hon. Gentleman was quite wrong to suggest that there has been inaction since the agency was established. He ignores the changes that were introduced last February and the fact that it would have been impossible to introduce a Bill in the previous Session. Had we done that, it would not have been able to undertake the changes that we are now proposing.
I share the hon. Gentleman's concern about the administrative problems that the agency has experienced, and we are doing all in our power to overcome them. He said that he would look closely at the system of departures from the formula and he seemed to want them to be as open-ended as possible. We believe that it would be wrong to have a wholly open-ended system of discretion, which would amount to going back to the courts and which would allow the system to be degraded, unfair and unsystematic. However, we believe that it is right that there should be limited discretion to deal with the hard cases that have caused hon. Members concern.
The hon. Gentleman complained about, or thought that he might have complaints about, the broad-brush approach to dealing with past property settlements. That broad-brush system cannot be satisfactory on its own. Had it been possible to deal satisfactorily with the problem of past property settlements simply through changes in the formula, I would have preferred to do it that way. However, it is necessary to have an element of discretion as well, and that requires primary legislation; that is why I am introducing it. I wanted to ensure that the change in the formula was in place as soon as possible from April, to deal with the situation as best we can in the interim.
The hon. Gentleman asked me to make available worked examples of how some of the changes will affect people. I have asked my officials to place some worked examples in the Library. I hope that they will be available by the time that I finish my comments.
The hon. Gentleman mentioned rightly the 30 per cent. limit on maintenance assessments as a percentage of net income. A proportion of people were retaining less than 70 per cent. of net income. That was never intended or expected from the simulations carried out before the agency began its operations. I thought that it would be much better to place that hard and fast cap on maintenance assessments so that when stories abound that people are being left with only a tiny fraction of their income, people 25 will know that those stories simply are not true—[Interruption.] They will not be true when we have this cap. [HON. MEMBERS: "Ah."] People will know that.
The only circumstances in which people may have large assessments relative to their income will be when they have refused to co-operate with the agency and to give any details of their income. People can rapidly resolve that problem by co-operating with the agency and providing the necessary details.
The hon. Gentleman complained that the travel-to-work broad-brush element in the formula was too crude. He simply cannot have it both ways and say, on the one hand, that we are in danger of creating additional administrative problems, and then object to a simpler way of dealing with a problem without imposing a huge administrative burden such as would be required if everyone had to confirm, identify and provide bills and details to show their travel costs over the past year.
The hon. Gentleman says that the maintenance credit will not do. He is conspicuously unwilling to say what he would do in terms of a maintenance disregard, which he would like. He had previously costed his own proposal at £340 million. That is not a sensible and priority use of public money. It would act as a disincentive to work and it would be unfair as between those who did and did not have maintenance.
It is sensible to defer the take-on of pre-1993 cases where there is no taxpayer interest because those people are not on benefit and they already have an agreement or a maintenance order from the courts, and to give them continued access to the courts if they wish any changes. There will be power on the statute book to bring them into the purview of the agency, but that can be done only with the approval of the House.
The 350,000 cases that the hon. Gentleman says were shelved were not shelved. There always has been a phased take-on of people, and we are rightly trying to get the backlog down before we take on new benefit cases where the mother has not requested us to do so. Parents with care who request early help from the agency will be given priority, as now.
I welcome the hon. Gentleman's understanding of the problems that staff have often faced and the hostility and often adverse treatment that they have had, which the whole House deplores. I welcome his assurance that that. will not be a matter for trench warfare. All of us have an interest in ensuring that we improve the system of child maintenance, so that more maintenance is paid more rapidly to more parents with care and their children.

§ Sir David Madel (Bedfordshire, South-West)
May I welcome what my right hon. Friend has said, particularly in respect of the change in the travel-to-work arrangements, which will be welcomed by my constituency and others in commuting areas? Will he say a little more about the Child Support Agency automatically writing to people? Does it mean that., when people are in dispute with the Child Support Agency, it will write to them and tell them that a new appeals system is coming in? If people trigger the appeals system, will they be entitled to legal aid?

§ Mr. Lilley
I am grateful to my hon. Friend for his welcome for the changes to take account of people who travel reasonably long distances to work. They will be welcomed by those who commute a long way. The agency 26 will write and tell people about the changes and about how they influence them. It will, however, point out that the appeals process—the discretionary system—will not come in until 1996–97. The formula changes will be applied, wherever possible, automatically from April this year, but people may be asked to give some information to trigger off the travel-to-work changes in the formula to their benefit. There should be no question of or need for legal aid.

§ Ms Liz Lynne (Rochdale)
I welcome the Secretary of State's statement, but I wish that it had come sooner, before many parents had suffered so many problems. However, he has not properly answered the question about why he did not bring in a proper maintenance disregard of, say, £15, so that parents with care would not have their benefit withdrawn pound for pound. That would have benefited the children. I welcome his taking into account the cost of visiting the child by the parent without care, but the Secretary of State does not state the distance beyond which that measure would be brought in. I would be grateful for information on that point.

§ Mr. Lilley
I am grateful to the hon. Lady for her welcome for the changes. The change in child contact is that it will be a ground for appeal to seek a departure from the formula when people have exceptional costs. We shall spell out that point in secondary legislation, but obviously it will not be just any costs if someone lives just around the corner. As far as a disregard is concerned, we have not proposed a disregard—let alone one of the order that the hon. Lady suggests—because it would cost about £340 million. We take seriously the remarks of her hon. Friend the Member for Gordon (Mr. Bruce), who was criticising the Labour party at the weekend for its reckless spending of public money by making promises that it could not possibly fulfil.

§ Mr. Michael Shersby (Uxbridge)
I am most grateful for what my right hon. Friend has said this afternoon. During his statement, he said that he wanted people to keep working. Does he accept that it is necessary for many second wives to work? Has he therefore given consideration to allowing the inescapable costs of child-minding to be taken into account when making the calculations?

§ Mr. Lilley
It is important to give parents with care the opportunity to work, and to remove disincentives. A great many parents have said that they wish to work, and the maintenance credit will be welcomed as simultaneously enhancing and reinforcing that incentive and enabling parents to make the move back into work.
It would not be justifiable to give the desire of a second partner to go to work— rather than staying at home to look after her children—priority over one's obligation to maintaining a first family. I cannot see how that can be done at the expense of the first family.

§ Mr. Frank Field (Birkenhead)
May I thank the Secretary of State for implementing many of the proposals that the Select Committee considered, including some—such as the independent appeals tribunal—which his hon. Friends voted down in Committee? As non-payment of maintenance already puts between 2p and 3p on the standard rate of tax, does the right hon. Gentleman accept that the House and many millions of mothers and children have a vested interest in making sure that the agency 27 works? Will he therefore tell us how much new money the agency is raising, and whether it is performing more effectively in raising funds than the system that it replaced?

§ Mr. Lilley
I am grateful to the hon. Gentleman for his welcome, and for the helpful and influential report that his Committee produced. We have endeavoured to take on board the bulk of the recommendations that the Committee put forward, or at least the substance of them.
With regard to the appeals tribunal, my reading of the report was that there was a proposal for a simple formula that would not take into account many factors that were already taken into account by our system. In turn, that formula would have required a practically open-ended discretionary system to deal with all those circumstances, which would then not have been taken into account. The last thing that we wanted to do was to go back to an open-ended discretionary system, like the courts. My hon. Friends will tell me whether that is a correct analysis of the decisions that were taken in the Committee, but a limited discretionary system— such as we propose— with fairly closely circumscribed opportunities is right and sensible.
In the first eight months of this year, savings—including benefit savings, maintenance arising from people who were coming off benefit and maintenance being paid and replacing benefit—amounted to about £280 million, as against £180 million in the same eight months of the previous year.

§ Mr. David Faber (Westbury)
May I thank my right hon. Friend for responding positively to the Select Committee's report? Does he agree that a great deal of the problems that the CSA has faced have come about as a result of the percentage of income that non-custodial parents have been asked to pay? Those figures are hard to prove and have often been exaggerated. Will not the very welcome 30 per cent. cap that my right hon. Friend announced today put an end to that confusion once and for all?

§ Mr. Lilley
I believe that my hon. Friend is right. The 30 per cent. cap—it is a 33 per cent. cap when the combination of an assessment and any arrears that people may have to pay off is taken into account—will be beneficial in ensuring that there is no hardship. It will be beneficial also as it will gain acceptance for the agency, as it will be seen clearly that people have at least two thirds, and normally more than 70 per cent., of their net income with which to meet other expenses not taken into account in the formula. Therefore, there will be no reason for absent parents to refuse to pay maintenance for the support of their children.

§ Mr. Dennis Skinner (Bolsover)
Is the Secretary of State aware that probably only one other piece of legislation in recent years has had to be amended so often, for which Ministers have come to the Dispatch Box to apologise—the poll tax? We know that, after all the efforts to amend the poll tax, the Government finally had to withdraw it. Has he considered doing the same with the Child Support Act?

§ Mr. Lilley
No, certainly not. I believe that the principle—it was endorsed by the whole House, and 28 explicitly so by the Opposition when the Bill went through Parliament and became an Act—still has the support of the House and the country: that both parents are responsible for their children; that both should contribute according to their means; and that the taxpayer should pay only when the parents do not have the means to support the children. The hon. Gentleman gave his support and acquiescence to the Bill when it was going through the House, although he is normally willing to object to most things. He may now be withdrawing his support retrospectively, but he certainly did not vote against its Third Reading.

§ Mr. Roger Gale (Thanet, North)
I thank my right hon. Friend for agreeing to take a twin-track approach, to regulate as swiftly as possible where possible and to legislate where necessary. I thank my hon. Friend the Minister of State— [HON. MEMBERS: "Oh."]— for the unfailing courtesy with which he listened to submissions and complaints. The fact that my right hon. Friend is now willing to allow travel costs to be taken into account will be particularly welcomed by my constituents in east Kent. I express my continuing concern, however, at the level of arrears that some of my constituents must still pay and ask my right hon. Friend to look again, even at this late stage, at whether there is any way in which those arrears can be mitigated.

§ Mr. Lilley
I am grateful to my hon. Friend for his welcome for our attempt to make rapid changes where we can through the regulatory route and more substantive changes through primary legislation. I agree entirely with his plaudits for my hon. Friend the Under-Secretary of State and his promotion of him, which was well deserved.
My hon. Friend made a specific point about arrears. It will be widely welcomed that the agency recognises that, where it has contributed to the build-up of arrears, there should not be an attempt to go back more than six months. Therefore, that means writing off some of the money that should have been due to the parent with care. Once the system is established, compensation will be provided by the taxpayer. It will not be right to go beyond that, as my hon. Friend suggested. It will be widely welcomed that we are making the change.

§ Mr. Malcolm Wicks (Croydon, North-West)
With regard to the impact of the changes in child support on children, who are sometimes forgotten in the debate, will the Secretary of State confirm that the vast majority of children in one-parent families will continue to see the extra child support deducted pound for pound, penny for penny, from income support and that for the very poor children in Britain, it remains a Child Support Act in name only?

§ Mr. Lilley
I pay tribute to the hon. Gentleman for his consistent recognition that two parents are involved in the production of children. Whereas many hon. Members have talked as if it was solely a matter of concern for the absent parent, the hon. Gentleman has always recognised the interests of the parent with care. Income support is payable to help parents who do not have maintenance or other means to support their own children. It is not meant to be in addition to maintenance and it would be wrong to do so.
What we have done in introducing a maintenance credit squares the circle, in giving parents a greater interest in the system. They already have an interest inasmuch as 29 maintenance is a portable benefit that they can carry back into work and that will help them back into work. But now, in addition, the maintenance credit would build up while they remained on benefit and were in receipt of maintenance, and that will be welcomed, I hope, by those who, like the hon. Gentleman, recognise that parents with care have often had the raw deal in the whole arrangement.

§ Mr. Jim Lester (Broxtowe)
I thank my right hon. Friend for listening so carefully to all the representations that were made, and join my colleagues in commenting on the help given by the Under-Secretary of State.
May I be clear on the way in which this will work? My right hon. Friend said that the changes are not retrospective. Does that mean that all the consistent, continuous cases, which are already with the CSA, will be reassessed from April onwards under the new formula and that that is why nobody needs to take up a case, because the CSA will write to all its current clients and make that clear?

§ Mr. Lilley
I am grateful to my hon. Friend for giving me an opportunity to clarify that point. Although not retrospective, the changes will apply to those who already have maintenance assessments from the date that the new changes come in: April for the new changes introduced by regulatory means in the formula; and 1996–97 for the changes made through the exercise of discretion. Thus everybody, including those who have been paying and those in the process of being assessed, will get help.

§ Ms Mildred Gordon (Bow and Poplar)
The Secretary of State has made a considerable climbdown in the face of mounting public anger about the Child Support Act. Obviously, many of his measures will help non-resident parents, and those are to be welcomed. But as the changes are non-retrospective, the way in which people are treated will be patchy. What about non-resident parents who got into debt to pay the huge arrears assessed? Will that money be paid back to them with interest, or is it just tough for them? Although it will be better for some non-resident parents in the future, it seems to me—

§ Madam Speaker
Order. We have had a reasonably brisk exchange, although not as brisk as I should have liked. The Secretary of State wishes to answer a number of questions from Back Benchers, so will Back Benchers put their questions directly to him? I am sure that he will do his best to answer them equally briefly.

§ Ms Gordon
Will treatment be uneven? Will the Secretary of State also say a little more about the discretionary regulations, because they appear to be nowhere near an appeals system? As all cases are individual and as the voluntary agencies have listed about 40 differences that needed to be made, if it is not a proper appeals system, it will not help many people. I have said before—

§ Madam Speaker
Order. I ask the hon. Lady now to put her final question to the Minister. Let us be a little tolerant with each other. Many other hon. Members want to put questions, so I am sure that the hon. Lady will now come to her final point.

§ Ms Gordon
I apologise, Madam Speaker.
Finally, parents with care will get help only if they go to work, possibly in low-paid jobs, and if they can find work. What about parents with care who rightly want to 30 stay at home with their children? Do not they perform a service to the state, and should not they have a disregard that would help their children?
One further—[interruption.]

§ Madam Speaker
Order. I think that I have let the hon. Lady have a fair crack at the whip this afternoon.

§ Mr. Lilley
The hon. Lady appeared to want me to make the changes retrospective. That would be paradoxical when some of the resentment aroused by the changes was caused because they were thought to have retrospective implications. We would not want to pile Pelion upon Ossa. On the hon. Lady's point about arrears, there will be a limit on the combined amount of assessment and arrears that people can pay together. That will be welcomed and partly meets the point that she made.

§ Mr. Peter Thurnham (Bolton, North-East)
I welcome my right hon. Friend's continued pursuit of feckless fathers. Will he continue to pursue fecklessness within the CSA and contract out to the private sector wherever possible?

§ Mr. Lilley
My hon. Friend is right. I hope that the agency will continue with increasing success to trace and track down fathers who have attempted to get out of their obligation to contribute. The agency has so far succeeded in tracking down 58,000 absent fathers, who previously would have remained unknown and undetected, because of the arrangements that we have in force to trace them through national insurance numbers and other means. On improving efficiency through use of the private sector, I gave my hon. Friend an opportunity to put the points that he makes so eloquently to the agency and I know that they will have been listened to with care.

§ Mrs. Jane Kennedy (Liverpool, Broadgreen)
Given that the Parliamentary Commissioner for Administration has expressed his extreme disappointment at the fact that the CSA should repeat the systemic failures of the disability living allowance, can the Secretary of State tell us exactly what he will do to assist the CSA staff to improve the service that they give to their clients and the taxpayer, so that we might see less of the chaos that has marked the past two years' operation of the agency?

§ Mr. Lilley
I share the hon. Lady's desire to see continuing improvement in the administration and efficiency of the agency, which goes hand in hand with any changes that we have made to the assessment system to make it fairer.
On the ombudsman's remark about the disability living allowance, the report on the DLA was not produced until the Child Support Act 1991 had already been passed. The introduction of the CSA and the DLA was largely simultaneous, but take-on by the CSA was phased in, unlike that of the DLA—that failure was perceived as a major problem. We have phased in the take-on of cases by the CSA, but we have already received criticisms and complaints about that. It should not be assumed that those two issues are identical and that a formula could be derived from one and applied to the other.
31 I welcome the fact that the ombudsman accepted that action had been taken to deal with the complaints that he examined in his report.

§ Lady Olga Maitland (Sutton and Cheam)
May I warmly welcome the explicit reference to those who have remarried and taken on extra stepchildren? Does my right hon. Friend accept that that will alleviate the great concerns felt by those with new responsibilities?

§ Mr. Lilley
My hon. Friend is right. There was a sense of injustice as well as a cost implication where people had a new partner and stepchildren and, as a result, did not get full allowance for their housing costs. They will now do so and that will help the formula to achieve acceptability and ease the problems that some families face.

§ Mrs. Margaret Ewing (Moray)
While I obviously welcome the broad thrust of the paper that has been presented to the House, the Secretary of State will understand that many of its details will be explored further by individual hon. Members. On property settlements, how was the sum of £5,000 reached as the share that the parent without care would have to pass over from his equity? In the assessment of clean-break settlements, the right hon. Gentleman will understand that occupational pensions are often regarded as part of capital assets. Will they be excluded in this case?

§ Mr. Lilley
The hon. Lady is right: the House will obviously want to examine in detail the proposals that I have put forward. I am sure that it is right that it should do so.
On property settlements, the £5,000 threshold was set because it seemed reasonable that there should be a minimum for a broad-brush approach. The greatest concern arose where people had passed over the whole of the house rather than just slightly more than 50 per cent. of the value of it or a fairly small sum of capital. We reached that threshold after discussion with family lawyers about the array of different costs and amounts involved.

§ Mr. Anthony Steen (South Hams)
As a founder member of the all-party child support group, may I say how much I welcome the statement, which is absolutely first rate? It shows that Conservatives not only listen to what the public say, but act on what they hear. As a member of the party committed to the family, will my right hon. Friend say something about the CSA's future arrangements governing the absent parent and the child, because CSA staff have done a great deal of damage to that relationship and some reparation work is needed?

§ Mr. Lilley
I am grateful to my hon. Friend for his wholehearted welcome. He is right. We have tried to listen to the experience and the worries that have arisen in the first 18 months or so of the operation of the agency—an agency, I would remind everyone, which was supported by the whole House when it was established, and which all of us have been keen to improve to deal with the problems that have emerged.
I am not sure that I would entirely accept the argument that my hon. Friend appeared to make about staff of the agency and the relationship between absent parent and 32 child. It must be remembered that it is always an emotional matter when the law intrudes in matters involving children, family breakdown and money. None the less, a decision must be taken about where responsibility lies. The House has decided that it should be taken through the Act and the agency, and the staff do try to fulfil their duties as sensitively as possible.

§ Dr. Norman A. Godman (Greenock and Port Glasgow)
I am pleased to hear that this discredited system is to be improved, but why has the Secretary of State refused to accept the legitimate argument that the employers of recalcitrant absentee parents should be compelled to co-operate with the agency, and why has he failed to tackle the companies—not all of them small—that pay the moneys arrested from wages to the agency so slowly? That is causing a great deal of distress to mothers in my constituency.

§ Mr. Lilley
It is easy for hon. Members to speak about discredited agencies. But when they did not vote against the agency in the first place and their parties wholeheartedly supported it, they share the overall responsibility for Parliament and our overall responsibility for responding sensitively, which we are now doing through the report of the Select Committee and today's statement.
Of course, employers have an obligation to help when the agency requires them to deduct from earnings at source. The hon. Gentleman will be pleased to know that a large number of deduction from earnings orders have been made—4,000 in November alone, compared with 2,600 in the whole of last year—and they are proving a successful way of enforcing and ensuring payment.

§ Mr. James Couchman (Gillingham)
I spent Friday night with a group of my constituents, all of whom pay maintenance and all of whose lives have been turned upside down by the agency. They will be as pleased as I am to hear of the improvements and changes that my right hon. Friend announced to the House today, especially with reference to housing costs, travel-to-work costs and the element of discretion to be granted to the new appeals tribunal.
I should be grateful if my right hon. Friend told me a little more about the housing costs. Does he mean that the agency will now recognise mortgages other than repayment mortgages—the ones that perhaps depend on endowment policies, personal equity plans and other methods of repaying capital?
On administration, we recognise that it will take some time for the discretion to be allowed to the appeal tribunal. In the meantime, my constituents continue to be told that, even when they are dissatisfied with the initial assessment, it might take as much as a year for it to be reviewed; that is unacceptable.

§ Mr. Lilley
I know that my hon. Friend has been in close contact with his constituents who have been worried about the working of the agency, so I am all the more grateful for his support.
I think that the agency does take into account more than the simple basic mortgage costs, and I should be happy to confirm details of specific types of mortgages about which my hon. Friend may have worries. The agency is devoting more resources to undertaking reviews and 33 completing them more speedily, so I hope that the length of time quoted to my hon. Friend will not apply to his constituents in future.

§ Mr. Mike Hall (Warrington, South)
The Secretary of State's statement follows two critical reports from the Select Committee and an even more critical report from the parliamentary ombudsman, but he nevertheless insists in the House that the principle that absent parents must pay and the principle—which he has not mentioned much this afternoon—that more money should be directed to maintenance of children, are the aims of his announcement. His refusal to budge on the disregard on income support demonstrates that he is led more by the Treasury than he is by putting more money into looking after children. Why will he not reconsider that point?

§ Mr. Lilley
For the 'very simple reason that I spelled out to the hon. Members for Glasgow, Garscadclen (Mr. Dewar) and for Rochdale (Ms Lynne)—that it would be a system that discouraged people, a system that made it more difficult for people to return to work and improve their standard of living, and a system that would be hugely costly to the taxpayer. We do not hand out public money like confetti without thinking where it will come from.

§ Mr. Iain Mills (Meriden)
Does my right hon. Friend recall the anguish expressed by a number of my constituents, especially one from Chelmsley Wood, whom he kindly met? Does he accept that the measures will help greatly? Will he, however, clarify how discretion would work for such a person who was seriously affected and who was well over the 70 per cent. level? Would CSA officials make judgments? Would my right hon. Friend make judgments? Who makes judgments?

§ Mr. Lilley
I hope that my hon. Friend will forgive me for not remembering the precise details of his constituent; I have seen a number of constituents during the relevant period. If, as he says, people are being assessed to pay more than 30 per cent. of their net income, they will benefit immediately from the cap on assessments when it comes into force in April. If, in addition, people have particular, exceptional expenses that are not taken account of in the formula and, because they are not taken account of, mean that they would suffer hardship, they will be able to apply to the agency once discretion is operational—once the Bill has received Royal Assent and the new procedures are in force. They will be able to apply to the agency and ask for such expenses to be taken into account. If the agency refuses or responds insufficiently, people will be able to appeal to the appeals tribunal and ask for the assessment to be reconsidered. In that way, proper consideration will be given to those with genuinely difficult circumstances.

§ Mr. Robert Hughes (Aberdeen, North)
Is the Secretary of State aware that there will be a great deal of dismay and anger at his statement that none of the changes announced today will apply to those whose settlements have already been concluded with the CSA, or at least not until two years—[Interruption.] That is what it says in the White Paper, as hon. Members will see if they care to read it. Is the Secretary of State aware— [Interruption.] Oh yes. It says at paragraph 5 on page 9: None of these changes will apply retrospectively. 34 That means, for people whose settlements have already been resolved. In addition, the right hon. Gentleman's failure to deal with income support disregards means that the CSA is best known, justly, as the "Chancellor's Support Agency".

§ Mr. Lilley
I am grateful to the hon. Gentleman for giving me another opportunity to clarify the point that I made in reply to my hon. Friend the Member for Broxtowe (Mr. Lester). Although the changes will not apply retrospectively, they will apply to all cases, whether or not they have received an assessment, from the moment that they become legally applicable. A change in the formula from April this year will apply to people who have already had a maintenance assessment in terms of their future maintenance liability. Any changes will not, of course, alter the amounts that they were required to pay last year or the year before. That would be retrospection, which is something that the House has always turned its face against.

§ Mr. Michael Lord (Suffolk, Central)
Although I warmly welcome the changes that my right hon. Friend has announced today, I remind him that many of us thought that the principal reason for setting up the CSA was to chase fathers who contributed nothing to their children. May I remind him that many of us still believe that that should be our top priority? Will my right hon. Friend continue to carry out that task with renewed vigour?

§ Mr. Lilley
The agency's intention was always to chase those who were paying nothing and to ensure that everyone paid a reasonable amount. Some 77 per cent. of those taken on this year have paid not a penny of regular maintenance. As I said, we have been more successful than expected in tracking down those who had not merely paid nothing, but who had disappeared without trace. Even if there was some payment, in 96 per cent. of all cases taken on so far, the mother and children were dependent on benefit. It is only reasonable that the taxpayer should require parents to contribute first, according to their means, before the taxpayer has to contribute towards the maintenance of other people's children.

§ Dr. Lynne Jones (Birmingham, Selly Oak)
Like other hon. Members, I am disappointed that the Secretary of State has not taken the opportunity presented by today's statement to help families on benefit who are worse off as a result of the operations of the Child Support Agency. For example, a pair of children's shoes can cost about £20 or £30 and were often purchased by the absent parent who is no longer able to make such a purchase. I do not advocate a return to ad hoc measures, but they should be reflected in some kind of disregard for the parent with care.
I also take up the point made by my hon. Friend the Member for Hornsey and Wood Green (Mrs. Roche). Can the Secretary of State tell the House how he intends to ensure that the measures that he has announced today will not plunge the Child Support Agency into further administrative chaos? For example, does he intend to ensure that extra staff are taken on? Surely experience has 35 taught him that his penny-pinching attitude in the short term has resulted in a loss of money from the public purse in the long term.

§ Mr. Lilley
On the disregard, I have made the position abundantly clear as to cost and disincentive effects. With regard to the administrative burden that the changes may impose on the agency, as I said in my statement and elaborated on at greater length in the White Paper, I am introducing a number of regulatory changes that will enable administrative simplification and greatly ease the working of the agency to the benefit of those to whom it endeavours to provide a service. I think that the hon. Lady should welcome those changes.

§ Madam Speaker
We will now move on.