Child Support

HC Deb 06 July 1998 vol 315 cc739-54 3.30 pm

The Secretary of State for Social Security and Minister for Women (Ms Harriet Harman)

Madam Speaker, with your permission, I will make a statement on the Government's Green Paper on reform of the child support system.

We promised to reform the welfare state, so that it is modern and fair and strikes the right balance between rights and responsibilities—reform on the basis of work for those who can, and security for those who cannot. Children are first and foremost the responsibility of their parents, but we have a responsibility as a Government to ensure that parents are in a position to support them—that they are working if they can—and that children get the support they need. That is why, as a Government, we place so much emphasis on policies for families. We have increased child benefit for all families. We have embarked on a major welfare-to-work programme to ensure that mothers and fathers can work and improve their children's standard of living.

The new deal for lone mothers will ensure that mothers work, if they can. The new deal for the long-term unemployed and the young unemployed will mean that fathers, many for the first time, can support their children through work. Those new deals, with the minimum wage and the working families tax credit, are important parts of banishing child poverty. Therefore, welfare to work, the first part of our welfare reform, is under way. The second step in welfare reform, to ensure that children are properly supported by their non-resident father, is what I bring to the House today.

The child support system is like no other part of social security. In most of the benefit system, there are just two stakeholders: the benefit recipient and the taxpayer. In child support, there are four: the child who needs an adequate standard of living and is entitled to the father's support; the father who has a responsibility to support the child and needs enough left to live on and to discharge his other responsibilities; taxpayers who need both to support their own children and to contribute through their taxes to prevent other people's children from living in poverty; and the mother, who needs a dependable source of income for her family.

Getting the system right and fair for all four is not an easy task. Few people would seriously disagree with those objectives of child support. Most agree that the current system is not working to deliver them.

In identifying the need for reform, I seek to make no party political criticism of the previous Government. We are all wiser with the benefit of hindsight. Nor will I dwell for too long on the statistics that show the failings of the child support system, except to remind the House that there are 1.8 million children living in families on income support or family credit, in respect of whom fathers pay no maintenance at all. One in six of all children in this country are being brought up supported only by their mothers working, or, more usually, by the benefits system. What message does it send to boys, who may one day become fathers themselves, when the financial responsibilities of fatherhood can be wholly delegated either to the welfare state or to the mother alone?

Seventy per cent. of lone mothers claiming income support try to avoid co-operating with the Child Support Agency. Their co-operation takes their time and energy, and can cause further conflict with the child's father, but if they are not working, it brings no financial gain to their children, as all the maintenance paid by the father is deducted from their benefit.

The formula for assessing maintenance is so complicated that the CSA has to spend 90 per cent. of its time assessing maintenance or keeping assessments up to date, and it is left with only 10 per cent. of its time to chase up payments. The complexity of the formula means that fathers do not know where they stand, and often the first demand for maintenance tells them that they are already thousands of pounds in arrears. Complexity leads to errors.

Our reform of child support involves replacing the byzantine complexity of the current formula with a simple percentage. The assessment of maintenance will no longer require more than 100 separate bits of information. It will no longer require fathers to report their new partner's income. It will rely only on identifying the number of children the father has, where the children live and how much income he has after deduction of tax and national insurance.

We propose that, for one child, 15 per cent. is deducted from the father's net income and paid in maintenance; for two children, 20 per cent.; and for three or more children, 25 per cent. There will be special rules for fathers with a low income. For fathers who are on benefit or whose net income is below £100, we propose maintenance of £5 a week, with a sliding scale for those between £100 and £200.

In assessing the amount of maintenance, we propose to take into account children in a second family. Our Green Paper sets out, for consultation, two different options for reaching the right balance between the children in the first and second families, but both our options are about taking second families into account.

Moving from a complex formula to a simple percentage will have a number of advantages. Men who father a child with a woman with whom they are not living will know that they will have to pay 15 per cent. of their weekly income to that child for the next 16 years. Men who separate from their wife and children will know, before they take on other commitments, that they will have to put money on one side for their children. The CSA will be able to spend dramatically less time assessing maintenance, and more time ensuring that it is paid. Everyone will understand the system. The aim is to ensure that more fathers pay, rather than that fathers pay more.

There is also the issue of what the children receive when the fathers pay. Almost from the outset, the complaint has been made that, for every pound paid in maintenance by the father a pound is deducted from the mother's income support. When mothers who are not working co-operate with the Child Support Agency, it may mean that maintenance is paid by the father, but no maintenance is received by the child. Fathers who do not pay feel that they are merely defying the CSA, and are not disadvantaging their own children.

We are proposing to change that. The child will, in future, receive a child maintenance premium. The first £10 of maintenance paid will go to the mother for the child, and will not be deducted from her benefit. So when a father pays, he will know that he is fulfilling his responsibilities and that his child is better off. When a mother on income support co-operates with the CSA, she will ensure that he is paying his fair share, and that the child gets up to £10 more a week.

As well as a simple percentage, we need a better child support service. We propose a three-stage process. First, when the mother applies for maintenance, the father will be contacted. In most cases, an assessment can be made over the telephone, and he can start paying right away. Secondly, if either parent has concerns about the assessment, there will be a review, where the situation can be explained or sorted out. Thirdly, if either parent wants to challenge the basis of the assessment—for example, the calculation of income—their case can be assessed by an independent tribunal.

We also propose that the tribunal should be able to set maintenance at a different percentage rate if the non-resident parent can show that he incurs special expenses in supporting the child—for example, where the cost of paying the maintenance will make him unable to afford the costs of visiting the child.

Although we propose these reforms, there will need to be time to consult, to take legislation through the House and then to change the computer systems. However, people currently in the system cannot wait that long to see progress. We need to do what we can within the existing system to make it work better for them.

We therefore intend to press forward with the introduction of more telephone lines, and service outside normal working hours. We will take further action to tackle the backlog. We will spend an extra £12 million this year, in addition to £30 million already committed over the next two years to sharpen up our service.

The CSA staff have borne much of the brunt of the complexity and unpopularity of the system. Much of the criticism that should have been directed at the system has been heaped on them—usually unfairly. However, we are counting on them—and I know we can do so—to improve the current system and then make a first-class job of the new system.

This is a Green Paper. Its proposals are for consultation until the end of November this year. We hope that there will be the widest possible debate. To ensure that fathers, mothers and the taxpayer all feel that the system is fair is not an easy task. The need for reform is obvious. The demand for reform has been voiced in hours of debate in this House, hundreds of pages of official reports and thousands of letters of public complaints. I believe that we have charted a new way forward.

I will conclude with a word of caution. Relations between men and women are not always easy. Relations between men and women who are parents of the same child but do not share the same home are often intensely difficult. No reform of the child support system can ever change that, but it can work better than it does now, and it can better serve those children who have a right to the support of both their parents, irrespective of where they live. It is above all for them that I present the Green Paper to the House today.

Mr. lain Duncan Smith (Chingford and Woodford Green)

I thank the Secretary of State for her courtesy in giving us the Green Paper and her statement at 12.30 pm today. That was much appreciated, and gave us the opportunity to look at them in detail.

This is a very important statement—no one for one moment would downgrade it. The Opposition welcome the idea—stated by the Minister of State and the Secretary of State today—that, in essence, because the House of Commons was the place that put through the original legislation and agreed it, it is the House of Commons that must rectify the problems and inequities. We must all shoulder that requirement across the board, regardless of party.

I wish to concentrate on the questions arising from the statement. I hope that I can do so constructively, but some of the questions are detailed; if they cannot be answered now, I hope that answers will be placed in the Library or sent to me.

The Government claim that, as a result of the disregard, 75 per cent. of absent parents and parents with care will be better off. Will the Secretary of State give full details of the gainers and losers, as calculated by the Department? If those calculations have not been made, I hope that they will be. For example, will the disregard be for both in-work and out-of-work benefits? I am not sure of the answer, even after reading the statement and the Green Paper.

The Government also claim that the change to the system will be revenue-neutral, but have they included the cost of the £10 disregard and of the transitory arrangements in that calculation? How will the system apply? It is not clear whether the Secretary of State intends changes on that; will the new system apply to people on benefits, or to everyone regardless of whether one of the partners is on benefit?

The Secretary of State made much of simplicity, which is a great goal. However, the claim that the arrangements can be made over the telephone may be a touch optimistic, given some of the complex questions that arise. She said that there would be alterations for those with second families, and she offers alternatives. What is the basis for the two alternatives—which are very different—in the Green Paper, and what calculations will the Department make on the implications for both the taxpayer and the absent parents?

Paragraph 27 of the Green Paper deals with special expenses. It says: We therefore propose to allow a tribunal to set a different level of maintenance in certain, exceptional, circumstances. That is part of the real key; it raises a huge issue, from which I do not think anyone should shy away.

What effect will a tribunal have on the system's simplicity? We could be shifting all the decision-making problems from the first part of the system to a second stage. I understand—I am not certain of this—that a similar problem has arisen in Australia. There is simplicity in the first instance, but all the tribunal cases and exemptions jam up the system later, so nothing is solved.

How much variation from the flat rate will a tribunal be allowed? What will the special expenses include? How will the new system deal with those on low incomes with high living and travelling costs, which currently count as protected income, but would not under a simple, flat-rate system?

Will a tribunal have the flexibility to include housing costs, high travel-to-work costs, high travelling costs to see the children, allowances for pensions, long-term illness or disability, pre-separation debt that the absent parent took on for the benefit of the family, pre-1993 financial arrangements that cannot be stopped or that it would be unreasonable to stop, and pre-1993 transfers of property or capital that were not fully reflected in the maintenance assessment? If a tribunal has to assess all those matters, the system will quickly lose its simplicity and speed. Those issues must be addressed.

The Green Paper acknowledges the problem of dealing with existing assessments, which was one of the main problems that the Child Support Agency encountered. It is unclear in the Green Paper—I may be wrong—exactly what the Government plan to do. I think that the Secretary of State is being a touch optimistic when she says in paragraph 7 on page 40: We are simply suggesting a change in liability within existing agreements, similar to the re-assessment that takes place when parents' circumstances change. That brief section of the Green Paper holds the key to whether the changes will be perceived as a success. What calculations has the Department made of the costs of option A and option B, which are outlined in the section?

Dealing with the backlog could be the biggest problem. The Green Paper does not seem to deal with the CSA's backlog and how those cases that still await assessment will be resolved under the new system. That will give rise to some of the most divisive issues; there may be iniquity between those who have co-operated and finalised their assessments and those who will now deliberately delay because they recognise that a new assessment may be made. How will the Secretary of State deal with those backlog cases? Does she recommend considering them on the basis of the new system, or is she saying that all cases are backlog? The Green Paper points to that, but I am not certain how it will work when the cases come in.

What research has the Department carried out into the setting of the percentage? Who will be the gainers and the losers in that area? The backlog will create some problems. Some people may say, "I would rather have been assessed under the new system than the old," and others may say the reverse.

When will the legislation be introduced? That is an important question for the Secretary of State. We have the Green Paper and presumably we will have a White Paper, and then the legislation. If the system is introduced around the millennium, it will have another impact, as she will be asking her Department to make major changes in the way it makes calculations through its computer system, at the same time as it is being asked to make such changes as a result of the millennium. The Government need to think about that carefully, and I wonder whether they have. What are the cost implications of those sorts of changes?

Finally, what did the Secretary of State mean when she said that the absent parent would be paying 15 per cent. of his net pay for the next 16 years at least? Might there be some other changes beyond 16 years, and what does she mean by net payments—what does she include or not include?

The main point about which many lone parents, particularly absent fathers, are concerned is the way in which the other partner in the marriage, the ex-marriage or the relationship often uses access rights as a tool against the absent father—or, in this case, the absent mother. What discussions has the right hon. Lady had with other Departments to find out what can be done about that and whether there are other ways in which those problems can be resolved, when rights might already have been laid down by the courts?

To depart for a moment from the sense of common purpose, I must point out that much of this statement was already known to the public at large as a result of a series of leaks. Perhaps the Secretary of State could also say how, on 25 January, The Sunday Times and The Sunday Telegraph came up with the points that are in the Green Paper; how The Observer and The Sunday Telegraph reported the "extra cash" that lone parents were to receive on 28 June; and how The Daily Telegraph on 29 June reported that there would be a sliding scale reducing the assessments made for absent parents. How did The Daily Telegraph and the "Today" programme come up with the 15 per cent. calculation on Monday 29 June, and why did the story about the £10 bonus appear in The Guardian and The Times on 2 July?

This is a big issue for the House. It is the last chance for the Child Support Agency to prove itself—to prove whether it will work and whether it can resolve the problems with which it was meant to deal. To use a hackneyed expression, perhaps it is dining in the last chance saloon. Perhaps the CSA never can work—we do not know, but we will see. We want changes to be made to make the system work. Therefore, the question for the Secretary of State is whether it will work. We will judge that success against the answers to those questions. I wish it, as ever, the best of luck in securing that outcome.

Ms Harman

I thank the hon. Member for Chingford and Woodford Green (Mr. Duncan Smith) for the genuinely constructive spirit in which he greeted the Green Paper. I, too, deplore the leaks. I have done no briefing of our proposals, and nor has anyone on my behalf. I regret the fact that the details were in the newspapers before they came to the House.

The hon. Gentleman asked a number of questions, which were all relevant and important, and I will try to deal with them quickly one by one to enable as many other hon. Members as possible to ask questions on this important topic.

There will be a £10 child maintenance premium for those on income support, which will be paid to the mother for the child only if the maintenance is paid. For family credit, the child maintenance premium will be £15, so there will still be that incentive to work.

The hon. Gentleman asked about the assertion that the system will be revenue-neutral. In calculating revenue neutrality, we took into account the cost of the child maintenance premium and the transitional cost that he rightly identified of moving from the existing to the new system. The system is for those on benefits as well as for what are described as private cases.

The point about tribunals is extremely important. If something has gone wrong in the assessment of income or there is a dispute about where the children are living, people must have the right to go to an independent tribunal. A large amount of people's weekly income is affected, so either side must have the opportunity to put a case before an independent tribunal, exactly as happens with tax affairs. That is essential for the credibility of the system. The hon. Gentleman rightly identified the fact that the gateway to the tribunal will be critical in striking a balance between people perceiving that the system is fair, and not going back to all the complexities and individual variations that have bedevilled the current system and have been the central reason for its failure.

I believe that the tribunals should be able to consider matters of fact and assessment about income, the number of children, and where they live. We propose that the tribunal should be able to vary the percentage of income paid in maintenance if there are special issues relating to the cost of child support: for example, when there is a choice between making the payments or seeing the child. In the narrow circumstances in which the percentage may affect the emotional and financial support of the child, it is right to allow the tribunal not only to examine all the facts, disputed as they will be, but to assess whether, in an individual case, 15, 20 or 25 per cent. would be fair.

If we do not keep the gateway narrow, we will return to a situation in which everybody appeals automatically, the appeals system will cause delays, we will be back to the same old problems, and the promptness and fairness that we want to introduce will be lost.

The hon. Gentleman talked about people moving from the current system to the new system. New cases will obviously start with the new system once it is introduced. For existing cases, we canvassed two options. People could either move into the new system when they come up for review, which happens every two years, or we could review them in advance by assessing what they would have to pay under the new system; but there would have to be phasing, because it would not be fair for either the non-resident parent or the parent with care suddenly to have a big change in income. We need to do a great deal of work to reduce the backlog. Progress is being made, and that will continue.

The hon. Gentleman asked about timing. We have to hold consultations, do the drafting, introduce legislation and set up computer systems. There is an urgent need for reform, but we simply must get it right. As he said, we cannot afford to get it wrong. There are 1 million non-resident parents, 1 million lone parents, 2 million children and a great deal of money and concern at stake. We must act as fast as we can, but not so fast that we get it wrong.

The young man who has a baby with a woman with whom he is not living would have to pay 15 per cent. for 16 years, but that could be extended to 19 years if the child stays on in further and higher education. The payment for one child will be 15 per cent., but that could last for 16 years or more.

I agree absolutely with what the hon. Gentleman said about rights of access and maintenance. My starting point has always been that children have two parents, and have the right to both the financial and the emotional support of both. The mother does not have the right to deny access to the father when it is in the child's interests and has been ruled so by the courts. Children need not only their parents' money, but their time.

These matters are extremely complex, but I hope that we have made progress, and that that progress can continue.

Mr. Malcolm Wicks (Croydon, North)

Does the Secretary of State agree that the large number of children in Britain affected by family insecurity and the resulting poverty and deprivation will burn a hole in Britain's future unless we make her reforms work? The House of Commons has been good at espousing the principle of parental responsibility, but somewhat shriller in attacking child maintenance in practice. Often, the voice of men has overcome the needs of children.

During consultation, will the Secretary of State do her best to build a true consensus in Parliament, including those parties that have previously attacked the principle? Will she also seek consensus among the public so that we can ingrain in our culture the idea that having a child—as mum or dad—brings rights and joys, but also responsibilities, including the financial responsibility to maintain the child?

Ms Harman

I absolutely agree, and I will do as my hon. Friend suggests. I pay tribute to his important work on child support, and the understanding and wisdom that he has brought to bear.

Mr. David Rendel (Newbury)

I, too, welcome the fact that someone is trying, at last, to do something about the Child Support Agency. I also welcome the Secretary of State's important judgment that there is a place for tribunals in the new system. The main question is the size of the gateway. If there is a narrow gateway, a great many people will feel that the system is unfair and that their circumstances have not been properly taken into account. If people cannot agree the amount of maintenance with their ex-partners, that disagreement will be bad for children.

Will not the Secretary of State find, as the experience of the CSA shows, that the small number of exceptions for which she has allowed is bound to grow, until most people, if not all of them, go through the tribunal system? Would it not be best to acknowledge that, and to get the system right now?

Ms Harman

I thank the hon. Gentleman for his congratulations, which I share with the Under-Secretary of State for Social Security, Baroness Hollis, who has done a huge amount of work to bring our proposals forward. The hon. Gentleman asked what would be taken into account. The principle is that the system will deal with a specific child, a specific father and the father's responsibility to pay for that child out of his net income. That is the simplification we seek.

A broad gateway, which would allow thousands of matters to be taken into account at tribunal, would take us back to the current system, which is not fair. We must remember that the current system tangled people up until they did not know where they stood. If our system sets a clear percentage, but allows the other parent to go to tribunal and to bring up hundreds of different circumstances that can change the percentage, we will return to lack of clarity. It is fair to set 15 per cent. of net income for one child. That leaves 85 per cent. of net income for the father to spend as he sees fit, or to live on.

The average assessment per father under the new set of formulae will be lower than that under the current system. I know that you, Madam Speaker, take a great interest in assessments, because of Child Support Agency cases in your own constituency. The average assessment per father is £38 under the current system, but the average payment is only £25. Under our system, the average assessment will be about £29, but we expect the average payment to be proportionately higher, because more fathers will pay.

Mr. Terry Rooney (Bradford, North)

I should confess that I am the only Member who sat on the Committees that dealt with all three pieces of existing legislation. Will the Secretary of State promise us that, at the end of consultation, there will be a draft Bill, but also draft regulations? With social security, the devil is always in the detail, and no one who dealt with the first Bill foresaw how the regulations would turn out in practice.

Ms Harman

I am sure that my hon. Friend will play an important role in bringing forward this reform. He has had a long-standing interest in this matter on behalf of his constituents and on a wider basis. The number of reports that we have received—to which my hon. Friend has contributed—about the problems with the CSA bear testimony to the need for reform. It is now down to the Government and the House to take that reform forward.

Mr. Dafydd Wigley (Caernarfon)

In welcoming today's statement, may I ask whether the Secretary of State accepts that there could be a danger in moving from a system that is too complex to one that is too simplistic? Will she give an assurance that account will be taken of particular circumstances, such as high travel-to-work costs in certain parts of these islands? Will she ensure also that the net income of self-employed people is assessed? That can be an extremely difficult exercise. Will that sensitivity be built into the system, in order to ensure that it works fairly?

Ms Harman

When it comes to assessing the net income of the self-employed, we shall bring the situation into line with the Revenue, and calculate our assessment on the same basis as that used by the Revenue. There is a big problem with non-compliance with maintenance assessments on the part of the self-employed, and we must sort it out.

The right hon. Gentleman heralds the start of calls to make the system complicated again. We must resist those calls—we have a choice, and we are proposing that we must resist them. We cannot have fairness and complexity side by side. If a system is too complicated, it will be unfair because of its complexity. We think that we shall achieve clarity through simplicity and getting the system right by using the correct percentages. People will know where they stand, and they will be able to start paying right away. That amounts to fairness and justice.

If we are united in our criticism of the current system—and we are—we must recognise that there is only one way forward. Only one substantial change can make the difference: turning our back on the complexity and all the individual circumstances—we tried that approach, and it failed—and moving to a simpler system that is more like the tax system. People pay their taxes on a fixed percentage of their income, and they should be able to pay for their children in the same way.

Mrs. Gwyneth Dunwoody (Crewe and Nantwich)

The CSA has proved to be very adept at getting large sums of money from people who are salaried, but getting absolutely nothing from the self-employed. What is there in this newly proposed scheme that will carry the power of enforcement so that lone parents do not go through the empty and deeply depressing exercise of asking for moneys that are never forthcoming, and that are constantly taken into account by other agencies?

Ms Harman

My hon. Friend makes a very important point. She, too, has been a well-informed and balanced critic of the Child Support Agency. Simplifying the formula will allow the Child Support Agency to spend more time on enforcement. Great frustration is experienced by parents with care, who report their circumstances and who believe that they are never looked into because the Child Support Agency is too busy assessing maintenance and has no time to chase up the payments.

If our basis for assessment is the same as that of the Revenue, the self-employed will simply need to show us the assessment that they have given the Revenue, which has been approved, and we can proceed. That is another benefit of simplification. [HON. MEMBERS: "Answer the question."] I have answered the question about enforcement: there will be more time and more co-ordination with the Revenue under the new system, so the situation will be clear.

Mr. Douglas Hogg (Sleaford and North Hykeham)

Does the right hon. Lady accept that many people believe that the Child Support Agency, as a decision-making body as opposed to an enforcement body, should be abolished? Does she understand that many people believe also that maintenance orders should reflect the individual facts and circumstances of every case? That cannot be addressed through a formula: it involves the exercise of inquiry and discretion.

If that is so, I think that the Secretary of State will accept that that cannot be done by officials. In all circumstances, is it not right to contemplate returning the whole process either to the courts or to quasi-judicial tribunals, and leaving to the agency only the enforcement function?

Ms Harman

One criticism of the court system that preceded the Child Support Agency was that, without a formula and with decisions left to judicial discretion, there was huge variation and a sense of unfairness. One set of parents might be awarded £15-a-week maintenance while another set with an identical income might be awarded £40 a week by a different court. Such unfairness led the previous Administration, with our support, to introduce a formula instead of judicial discretion.

I agree with the right hon. and learned Gentleman that there is a problem if we seem to give discretion to officials or a bureaucracy. It is much simpler and clearer if officials are responsible for ensuring that the calculation is made correctly, while we decide what is a fair percentage for maintenance. If something goes wrong with the calculations, the tribunals are a quasi-judicial element in the system.

Unfortunately, the courts did not work—I wish they had. The CSA, with its complicated formula, has not worked—I wish it had. We are trying to take it forward. I think that a simple formula with fair rights of appeal offers some hope.

Mr. Robin Corbett (Birmingham, Erdington)

Does my right hon. Friend think that someone should say a big "sorry" to the thousands of people who have suffered anguish and misery from the monumental incompetence of the Child Support Agency? Will she reconsider the backlog? It is estimated that it will take three years to get through it. Is she really going to turn civil servants loose on the impossible task of going back over the ground to do the assessments on the basis that she now proposes? Would it not be sensible to a take some short-term measures to achieve brutal fairness, as it were, until the new formula is in place, in order to avoid expensive duplication?

Ms Harman

We should all say, "Sorry," to the children in respect of whom no maintenance has been paid, to the mothers, to the fathers who have been tangled up in a system that has presented them with thousands of pounds of arrears that they feel that they can never hope to pay, and to the staff who have been given an impossible job. We should all be determined to reform the CSA.

Mr. Archy Kirkwood (Roxburgh and Berwickshire)

The Secretary of State deserves the support of the whole House in her attempt to reform the CSA. This is the last chance, because much work needs to be done to rebuild public confidence in the CSA after its past actions. I exhort her to hasten slowly. It is right that this be done with due dispatch, but, once this important consultation process is over and a draft Bill is available, will she consider allowing the Select Committee on Social Security to produce a pre-legislative, interim report, so that some of the points on consensus and the complexity of regulations can be properly considered?

Ms Harman

The hon. Gentleman, who is the Chair of the Social Security Select Committee, makes an important proposal by offering that his Committee will consider the legislation in draft and hold pre-legislative hearings. We all feel that, last time, the House agreed the principle but the implementation was not got right. There were some things that we could not have foreseen, but others that we could. I hope that proper consultation—certainly I take up his offer and will make the draft Bill available so that he can conduct pre-legislative hearings—will make the reform proceed on a stronger footing.

Mr. Dennis Skinner (Bolsover)

Is my right hon. Friend aware that one of the problems with the original scheme in 1992 was that it was pushed through just before a general election? In my view and that of many who were around at the time, it was not properly scrutinised. One of the redeeming features of this scheme is that it will be dealt with in a proper manner. It will get a lot of time, and people will be able to scrutinise it to make sure that we try to get a decent result, notwithstanding the fact that we are talking about trying to find a formula against the changing social fabric of society, and that ain't easy.

Tribunals are important, because that falls into line with other social security tribunals, with many of which we have been involved over many years. May I enter a plea that there should be equal representation of men and women on those panels? May I also argue that there should be no more closures, such as those that took place under the previous Government, of industrial tribunal centres, because they will be used much more than they have been in the past? If my right hon. Friend the Secretary of State manages to crack this hard nut, she could get the finest accolade of all—she could end up among Draper's 17 useful people.

Ms Harman

I am sure that my hon. Friend, who, above all, takes seriously his duties in the House, will be a key scrutineer of the Government's proposals. He makes a good point about equal representation: with a three or two-person tribunal, it is right that we should have equal numbers of men and women. He also makes the point about locally accessible tribunals, and that, too, is important. In every town, there are people who have concerns about child support, and we do not need to make it impossible for them to appeal by making them travel miles.

I shall discuss the issue with my right hon. Friend the Lord Chancellor to ensure that, when we introduce the tribunals, we have equal representation, and that the tribunals are locally accessible. I thank my hon. Friend for making those important points.

Mr. Edward Leigh (Gainsborough)

No doubt the Secretary of State will win plaudits for trying to simplify the system, until, that is, we hear in our postbag from the losers—we shall not hear from the gainers, I fear.

Is the right hon. Lady aware that she has created an essentially valueless system? Many people already feel that they can lose their spouse, their home and their children, without any account being taken in existing family law of their behaviour or that of their spouse. Now, it will make no difference whether one wants to go and see one's absent children, or whether one has high travelling costs—nothing will make any difference.

Is the right hon. Lady aware that that will cause much grief and despair, and that, while we might raise children out of physical poverty, we might well reduce them to psychological poverty? Is that the right way of going about things, or should we not have a proper, flexible system that takes account of people's desire, if at all possible, to look after their children, not only financially but physically? Looking after children is about care and compassion, not just money.

Ms Harman

I think that one need not exclude the other. It is important for children to know that their father is financially supporting them, as well as has time for them. I said that in response to an earlier question. There is a morality that runs through the proposal: it is that parents have a responsibility for their children and that children are, first and foremost, the responsibility of their parents. The role of Government is to make sure that children get the financial support to which they are entitled when they do not live with both parents.

I would not say that the system is valueless. It seeks to enforce the value that children are entitled to the financial support of their parents. However, what it does not do is make moral judgments about how families end up as they are. If a Government try to make it a public policy to make men and women stay happy in their marriages, they will not succeed. What we can do, as a Government, is make sure that men and women can work, that they can support their children and that there is a simple system of ensuring that, when the parents separate, the children do not lose financially.

Caroline Flint (Don Valley)

I welcome the statement today, and the fact that children are put to the forefront of the proposals. I am sure that all of us, when dealing with our case work and leaving our surgeries, wonder about the children who are caught up in the middle of a battle between so-called adults, who are at that time acting more like young children.

Will my right hon. Friend assure us that, in reducing the amount of time that has to be spent on assessment, the development of a more personalised service—one that helps to create better communication between both parents and a better understanding of what is necessary for parents to comply-is prioritised? People's dissatisfaction at not being able to have face-to-face meetings adds to the stress, and often to the hostility between the two parents.

Ms Harman

I can give my hon. Friend that assurance. CSA staff will need to spend less time sweating over a hot computer making endless calculations. Even if they can understand those calculations, they can never hope to explain them to those who will have to pay under the assessments. They will therefore be able to spend more time on enforcement and chasing up payment, and on explaining the payments and the basis of the assessments, so there will be a more personalised face-to-face service.

Miss Julie Kirkbride (Bromsgrove)

The Secretary of State has been as clear as she possibly can be about the existing flexibility in the system, such as travel-to-work costs, housing costs and debt costs, which are all to be removed under the right hon. Lady's new plans. Bearing in mind the question of my hon. Friend the Member for Gainsborough (Mr. Leigh), when he said that there will be losers in the system, who will be banging on our surgery doors, will the right hon. Lady give us an estimate of how many losers her Department thinks there will be?

Ms Harman

The hon. Lady talks about losers. How would she describe the 200,000 or more fathers who we think, with a simplified system, will end up paying maintenance for the first time? Presumably, on the hon. Lady's balance sheet, she would describe them as losers. Surely we could not possibly describe those fathers just as losers without explaining that their children will be gainers from their paying maintenance to the tune of up to £10 a week.

That is the difficulty that I tried to set out at the outset. There is a square formed by the taxpayer, the child, the father and the mother. Although it is important under the new system to consider what people's relative but different situations will be, the simple assertion of gainers and losers, which we are able to use in other parts of the benefits system, tells only part of the story in this instance.

Mr. Jimmy Hood (Clydesdale)

May I welcome my right hon. Friend's statement? I am sure that the House will appreciate its importance and the need for it. I am pleased to see my hon. Friend the Minister for the Armed Forces in his place, because last week I received a letter from a regimental sergeant after 22 years of service in the Army, serving his country. He has been charged more than £600 a month out of his salary by the CSA. Not one penny of that is going to his children or the wife. He has been forced out of employment. The position is the same throughout the gamut of employment. The CSA, which has been a disaster, has forced people out of employment into dependency, costing the taxpayer more, not less. I make a special plea for the single parent, usually a mother, who is in employment, where the CSA has walked away from her because she was not in benefit and did not chase the other parent to pay a fair contribution to the children.

Ms Harman

My hon. Friend makes an important point about the CSA supporting the mother in work to ensure that the father pays a fair share, and that she has a reliable income stream to go towards the children.

Perhaps I can offer to look into the specific case to which my hon. Friend has referred just to check that everything is in order in the circumstances that he has outlined. Finally, may I say how good it is to see my hon. Friend back, and in what great shape he looks?

Sir David Madel (South-West Bedfordshire)

A frequent mistake made by the CSA is to add overtime and bonus payments to basic pay and assume that it is all basic pay. The result is that people receive demands for increased contributions during the financial year. Will the reforms stop the CSA demanding increases until the end of the financial year, when it and the Revenue will know how much has been earned?

As Members, will we have the power to call in tribunals to examine particular cases? Here is one such case. When an ex-wife stops earning because she has remarried to somebody who is not short of a bob, why should the ex-husband receive a demand for an increased payment to the CSA? There must be something wrong there.

As for CSA staff, my constituents are always polite and courteous, as I am sure are those of all other Members. All our constituents are polite and courteous. Therefore, we expect CSA staff to be equally polite and courteous to our constituents, with the result that everybody will be happier.

Ms Harman

The income of the first wife's new husband or partner will not be taken into account in the new system. We shall look only at the father's income, and his financial responsibility to the child. With the complexity in the investigation of countless different personal circumstances in which the CSA has been engaged, there has come a sense of invasion of privacy and of things being taken into account that really should not be. The simplicity of the new formula should remove that, and the CSA will not have to ask whether a man is a new boyfriend or whether he is just passing by.

We are not proposing that Members of Parliament should be able to take cases to the tribunals. The only parties who would be able to do so are the parents.

Mrs. Anne Campbell (Cambridge)

Does my right hon. Friend agree that many parents who are living apart share not only custody but care of their children, and that such arrangements should be encouraged and supported? If necessary, will she consider making available taxpayers' money to pay for the extra travelling and housing costs that such arrangements might entail?

Ms Harman

My hon. Friend makes an important point. In the old days, it was very simple—the man and woman were married, they had children, and if he left, she kept the children and he saw them at weekends. Under the current system, that pattern is increasingly less common. There are much more complicated arrangements of shared care, which are often in the interests of the children, who spend the maximum amount of time with both parents.

To reduce maintenance liability, the current system takes such arrangements into account only if the child spends 104 nights or more with the non-resident parent. We propose that, for the purposes of setting maintenance, the level should be 52 nights or more, and for every night that the child spends with the non-resident parent, his weekly maintenance liability should be reduced by one seventh. That is fair, and it is not a complexity that people could not understand or would not think was fair.

Mr. Nick Gibb (Bognor Regis and Littlehampton)

Given that most countries that have a fixed percentage formula apply the formula to the father's gross income, will the Secretary of State explain why she decided that her formula should apply to the net income? Secondly, will she confirm to the House that the criterion that brings the CSA into play in the first place—namely, that the spouse with care is on income support or that one of the spouses elects to involve the CSA—will not change as a result of her statement today or the Green Paper?

Ms Harman

The hon. Gentleman asks whether it is right to base the formula on an assessment of gross income or net income. The important point is that people are able to understand how much money they have left after deductions of tax and national insurance, which are then taken out of the picture, how much of their remaining income they should allocate for their child, and how much they then have left to live on. I am afraid that I did not catch the hon. Gentleman's subsequent question.

Mr. Gibb

It was about the criterion for involving the CSA.

Ms Harman

If a lone parent makes a claim for income support or family credit, that triggers an application for child support. If a lone parent who is not on benefit makes an application, that, too, triggers an application for child support. We do not envisage proposing to change either of those criteria.

Mr. Chris Pond (Gravesham)

Given that between 40 and 60 per cent. of CSA decisions are deemed to be in error, I very much welcome the statement, as other hon. Members have. I welcome also my right hon. Friend's agreement that the Social Security Select Committee may have an opportunity to consider the proposals prior to legislation being introduced. Will my right hon. Friend urge the Select Committee to include in its consideration and consultation process the inefficiencies and incompetence of the CSA's operations, without putting the blame for those on staff? Simplification will help, but it will not remove all the problems.

Ms Harman

I know that my hon. Friend takes very seriously his role on the Select Committee. He implied that he would like to examine further the administrative nitty-gritty of the system. I welcome that, and I am sure that the staff would also welcome it. He has played a key role in issues of child poverty. He is right to refer to the high error rate. We must deal with those issues, and I look forward to my hon. Friend's important and constructive involvement in the debate.

Mr. Simon Burns (West Chelmsford)

May I wish the right hon. Lady well on the inevitable tightrope that she will have to walk in the coming months, before any legislation reaches the statute book?

Will the right hon. Lady please clear up an issue that is causing concern? As I understood it, she said, in answer to my hon. Friend the Member for Chingford and Woodford Green (Mr. Duncan Smith), that the new arrangements would apply to parents on benefit as well as to those who are not on benefit but who make their own private arrangements. If that is what she said, it suggests that she is planning to extend the remit of the Child Support Agency to all families in which the relationship has broken down, and it is important that she tells us whether that is right.

If the right hon. Lady is planning to keep the criterion as it is, that is understandable; but if she is suggesting that she will extend it, in accordance with the original, 1991, plans—later abandoned—for the CSA to apply to all relationships that break down, regardless of whether any of the parents are on benefit, that would cause the Opposition great concern, because it would extend the remit and compound the problems that she is trying to mop up by making the system more effective, more efficient and more acceptable.

Ms Harman

I am grateful to the hon. Gentleman for giving me a chance to clear up a misunderstanding that, clearly, I have unintentionally caused. There is no intention that the CSA should extend its remit to cases where parents are not on benefits and where they have not called in the CSA. We have quite enough on our plate for the 1 million on income support, their 1 million former husbands, the 2 million children and all those who are not on income support or family credit who call in the Child Support Agency. I hope that I have put the hon. Gentleman's mind at rest on that.

I thank the hon. Gentleman for his best wishes; why do they give me a sense of unease, though?