§ The Secretary of State for Social Security (Mr. Alistair Darling)
With permission, Mr. Deputy Speaker, I should like to make a statement on our reforms of the Child Support Agency—a key part of our strategy for supporting families and children.
Last year, we published a Green Paper setting out our proposals, and there was overwhelming support for change. I am placing in the Library a summary of 1,500 responses to the Green Paper, along with a list of those who contributed. I am also publishing our White Paper on child support, setting out reforms that will get money to 1 million children who currently miss out. I have written to all hon. Members enclosing a summary of the White Paper, and I have placed copies in the Vote Office.
The reforms that I will set out today are driven by principle. We are putting children first, and we are making sure that the new system is fair on fathers who want to support their children, and tough on those who will not. Our reforms mark a new contract for child support, based on the right of a child to the care and support of its parents, and on the responsibility of parents to provide it.
The responsibility for bringing up children lies squarely with both parents, and that responsibility endures whether they live together or apart. All children have the right to a decent start in life. The Government are already doing a great deal to help. We are increasing child benefit by a record amount and providing more help for low-paid families through the new working families tax credit, tax changes and the national minimum wage. Taken together all that means that a family on £13,000 a year will be better off by up to £2,500 a year.
We are investing £540 million in the sure start programme for very young, disadvantaged children. We are committed to ending the scandal of child poverty in a generation. We are determined to make sure that children receive all the help that they need, which is why we are introducing a new system of child support that is simple, effective and fair.
Today, many children miss out on the support that they should receive from both parents. Under the present system, only 250,000 children receive maintenance, and only 100,000 children get all that they should. Some 30 per cent. of parents using the CSA pay nothing towards the care of their children. That cannot be right. The child support system should help parents to meet their responsibilities, and, where necessary, it should take action when parents will not do so.
The system that we inherited has failed. It does not help parents who want to pay, and it is not tough enough on those who will not pay. The previous Government set up the Child Support Agency in 1993 to replace a court system that could not cope. Going back to the courts is not the answer. In 1979, 52 per cent. of lone parents on income support received maintenance, but by 1990, the courts were getting money to only 20 per cent. On top of that, decisions were often unpredictable, unreliable and unfair. The CSA was meant to sort that situation out, but it did not. The percentage of lone parents on income support getting child maintenance is the same today as it was when the agency was set up.
The CSA became a bureaucratic nightmare for parents and staff alike. The reason for that is clear. Under the current system the CSA can require more than 432 100 different pieces of information to make a single decision, meaning that a third of all child support cases wait at least six months for a decision. The CSA spends 90 per cent. of its time chasing information, and only 10 per cent. chasing parents who will not pay. The result is that many responsible parents who genuinely want to support their children often find themselves facing a mountain of debt through no fault of their own, while irresponsible parents can play the system to their advantage and end up paying nothing for their children. We must always remember that it is children who lose out.
These failures have their roots in the complexity of the current system, and the result is an administration so burdened that only root-and-branch reform will turn things round. We are tackling that inheritance by introducing a simple, new and effective system of child support to deliver for children by reforming the policy and rebuilding the agency.
We will put the confidence back into child support by introducing radical reforms in four key areas. First, we are abolishing the current system for calculating child support, replacing unworkable policy with a workable new system that is based on a simple way of deciding how much parents should pay. Secondly, we are turning the agency round so that it provides a decent and effective service to all parents to make sure that children actually get the money from their parents, and quickly.
Thirdly, we are introducing tough new measures to deal with parents who try to run away from their responsibilities. Fourthly, we are helping the fight against child poverty by introducing new help for children in the poorest families.
I now wish to refer to the detail of our proposals. I want to set out our plans to reform the formula that is currently used to calculate how much parents pay towards the care of their children. That is the fundamental flaw at the heart of the system. It was designed to take account of any—in fact every—detail that might affect how much a father could pay. The result is a calculation so complex, it is barely workable; so complex, it is often difficult for parents to know whether a decision is right or not; so complex, it takes months to get a decision.
Today, I can announce that we are abolishing the complex formula and replacing it with a system of simple rates that is so easy to understand that parents can work out for themselves how much they should pay. We will publish these rates—indeed, they are in the White Paper—by putting leaflets in post offices, libraries and elsewhere.
The new rates are reasonable because they reflect the amount a parent would pay if he were still living with his children. Under the new system, a father will pay a flat-rate percentage of his take-home pay. The amount will be 15 per cent. if he has one child to support., 20 per cent. if he has two and a maximum of 25 per cent. where he has three or more children. For fathers on less than £100 a week, there will be a flat-rate payment of £5 a week.
Every parent knows that one cannot calculate the cost of bringing up a child down to the last penny. However, our proposals are fair and reasonable. The changes are fairer to fathers, because they are more reasonable and realistic. They are fairer to mothers, who will get money much more quickly. They are fairer to children, who will actually get the money they need. As the system is so 433 simple, it will take the agency only a few days to confirm what should be paid, rather than the six months it takes now. It is fast and simple for parents and fast and simple for the agency—but, above all, it is right for children.
To do this, we need also to reform the way in which the CSA operates and to improve significantly the service that it provides. This is not going to be easy. The CSA will never be popular—it will always be doing a difficult job at a difficult and emotional time. However, by replacing the complex formula with new, simple rates, we are laying the foundations for a far better service than would ever be possible under the current system.
These reforms mark a new contract for the CSA, too—a new system in return for a radical change in culture, service and approach. The shake-up has already started. We are strengthening the agency's management and we are importing private sector know-how to work together with public sector experience to sort things out.
From next week, we are bringing in the private sector to help the agency to collect more money from more parents and get it to children. I can announce today that we will invest an extra £28 million over the next three years, but, in return, the CSA must deliver clear and tangible improvements—a better service, quicker decisions and more money getting to children than ever before.
The CSA will get new information technology, and will make more use of the phone to sort out queries quickly. It will be there at times that suit parents, so that they can call in the evenings or at weekends from the privacy of their own homes, and not in the daytime while they are at work.
The CSA will introduce also a more effective complaints system to ensure swift and effective action if things go wrong. Parents will get a clear statement setting out what they have paid and what is due. They will receive a clear picture of where they stand, just as one would get from a bank statement. In short, the CSA will move from an organisation that is bogged down in paper to an organisation that will focus on the needs of parents, and, above all, on the need to get money to children, fast. Our new contract for child support is good news for responsible parents, who will get a better service that helps them to do what they want to do. However, it is bad news for the minority—the hard core who persistently let their children down. We will make sure they are brought to book.
I can announce that, for the first time ever, we are making it a criminal offence to fail to provide, or to misrepresent, information to the agency. If parents lie to the agency, if they try to dodge their duty or persistently pay late, they will face a fine or even time in jail. Although most self-employed parents are highly responsible, there are some who are not, so we are introducing new measures allowing us to access tax records to get a true picture of their income. That will ensure that fathers who run around in the company Porsche, but plead poverty to their children, cannot get away with it.
We are also closing a loophole that allows fathers to string out a decision by denying that they are the father of their child. In future, if a child was born while the father was married to the mother, the burden will be on him to prove that he is not the father. We shall also make sure that teenage boys who become fathers face their 434 responsibilities. They must realise that bringing a child into the world is a lifelong responsibility; it is not something that they can ever walk away from. We shall make sure that once they can pay towards the care of their child, they do pay.
Furthermore, because we are determined to make sure that all parents meet their responsibilities, we are looking at further measures to achieve that—including taking away driving licences from fathers who persistently shirk their responsibilities. The message is simple: there is no hiding place, no excuse and no easy way out. They must realise that their child is their responsibility. Every parent has to face up to that; they owe it to their children to do so. This is our new contract for child support. We will deliver a new, fair and simple system that will help responsible parents to support their children, but, in turn, we will take tough action to ensure that the rest deliver for their children.
We are also reforming the system to make sure that it does more for children in the poorest families. Under the current system, mothers lose their income support, pound for pound, whenever any maintenance is paid; because mothers lose out, their children lose out too. So, today, I can announce significant new help for children in the poorest families, worth up to £10 a week. More than 250,000 children will gain from that change alone. That is real help from the Government for children in the poorest families. For the first time ever, we are making sure that money goes to the poorest children, not to the Treasury.
I can announce today that, to make work pay, from October, low-paid families in work and receiving the working families tax credit will keep every pound and every penny of child maintenance paid. All those measures are delivering on our commitment to do more for those who need it most, to end child poverty and to make sure that the Government, parents and the Child Support Agency together deliver for children.
Of course, we need to make sure that those changes are introduced smoothly and successfully. We want to introduce the new scheme as soon as possible, but it is vital to get it right. The present system collapsed under its own weight because the previous Government tried to introduce reforms too quickly, and with too little thought. It is a massive task. Within a year of the millennium, the Child Support Agency will be dealing with more than 1 million cases—that is more than 2 million parents. Radical change on that scale will take time. The new system needs legislation and new computer systems, as well as a radical change of culture and working practices in the CSA itself.
We plan to introduce the new system for new cases towards the end of 2001, with existing cases coming on to the new system later, once it is up and running. However, we want to introduce some measures earlier, such as making it a criminal offence to lie to the agency, closing the loophole that allows fathers falsely to deny their paternity, and improving the administration of the CSA itself.
The future of child support lies in our new contract, which puts the rights of children first, and puts the unshakeable duty of parents at centre stage. The new system will be simpler and fairer for those fathers who want to support their children, but it will be tougher on those who will not. The agency will be turned around, so that it provides the standard of service that we all expect. 435 We are putting the confidence back into child support, replacing complexity with simplicity, replacing delay with quick and accurate decisions, and replacing bureaucracy with a high-quality customer service. Together, our reforms will help I million children who, today, are let down by the current system. We are delivering for children and putting their needs first.
I commend these proposals to the House.
§ Mr. David Willetts (Havant)
I thank the Secretary of State for his courtesy in giving me advance sight of his statement and the White Paper. Both sides of the House agree that the CSA needs reform, just as both sides of the House supported the creation of the CSA in 1993, and the reforms that we introduced in 1995. The system that Ministers inherited is one that we all supported—including those who are sitting on the Treasury Bench. The trouble is that the problems in the CSA have continued—if anything, they have become worse.
Will the right hon. Gentleman confirm that the latest annual report from the chief child support officer shows a further decline in the number of correct maintenance assessments? Will he now give a cast-iron promise to the House that that trend of deteriorating performance will be reversed, and tell the House when that will happen? It has taken Ministers more than two years to reach this statement, and it is eight months since the deadline for consultation on their previous Green Paper. It has taken Ministers longer to reach a decision than it takes the Child Support Agency they criticise.
The Opposition accept the need for a simpler system, with better enforcement and less fancy arithmetic to calculate liability. We accept that that approach is the right one. However, we have three areas of concern about today's proposals. First, rough justice is the new buzz phrase, but how rough is the rough justice to be? How many liable parents will have their obligations reduced, and by how much? How many of the parents with care will have their entitlement to maintenance reduced, and by how much?
Specifically, will the Secretary of State confirm that he will no longer take account of the income of the parent with care? Does he not recognise that one of the most important grievances arising from the current arrangements is felt by those absent parents who have a lower income than the family with care? Is not one of the effects of his proposals to redistribute dramatically toward the more affluent families with care?
Instead of addressing that point about liabilities, I fear that the Secretary of State will change the subject and talk about enforcement. His spinners have been making a lot of the new criminal penalties for absent parents who do not pay maintenance. That is a snappy soundbite, but a stupid policy. Putting absent parents in prison makes it less likely that they will be able to earn any income, less likely that they will ever pay any maintenance, and less likely that they will have any access to their children.
The Government should make existing civil remedies work. After all, the Minister's colleagues in the legal Departments are boasting about their reforms of civil justice and new fast-track procedures, so why does he not practise some joined-up government, trust his Government's reforms of civil justice and use those 436 remedies effectively and energetically? Even if he does not trust his own colleagues, why does he not agree with the response to the consultation exercise of the National Association of Citizens Advice Bureaux? It said:We are not convinced that it is the powers themselves that are deficient, but rather the way in which they are being exercised".The Minister thrashes about with any old wheeze to give the impression of action. We are told that absent parents might lose their driving licence—presumably as part of the Deputy Prime Minister's attack on the motorist. Today, we read that they will lose their passport—presumably that is a desperate attempt to get them out of those queues at the passport offices. Such gimmicks are not the answer.
Our third area of concern is Inland Revenue access to information. Let me quote to the right hon. Gentleman an assurance from his colleague the Under-Secretary of State for Social Security, the hon. Member for City of York (Mr. Bayley), given when a clause of the Welfare Reform and Pensions Bill that is designed to give the Revenue access to information was debated in Standing Committee. The Under-Secretary said to my hon. Friend the Member for Brentwood and Ongar (Mr. Pickles):the clause will be used as a last resort, after all attempts to get information from other sources have failed, to enable the CSA to check tax records in the interests of the children."—[Official Report, Standing Committee D, 27 April 1999; c. 1000.]When did a last resort become a first resort? How is the Secretary of State's announcement today compatible with the assurance given by his colleague to the Standing Committee only a few months ago?
Yes, the CSA needs reform. Yes, more money needs to go to children. Yes, we accept that the current arrangements are not working. However, we need to know more about who gains and who loses. We need to know why Ministers will not use civil remedies more effectively. We need assurances about Inland Revenue access to information. The principle of the CSA is absolutely right; what has gone wrong is the practice, and that is where further reform is needed. It is pity that it will take Ministers four years to do anything about it.
§ Mr. Darling
I congratulate the hon. Gentleman on his appointment as shadow Secretary of State. I believe that this is his first time out. I am grateful for his acknowledgement that I let him read the White Paper, although that is perfectly normal practice.
The hon. Gentleman expressed three concerns, but what struck me was that only towards the end of his remarks did he mention children. If there is rough justice in the present system, it is that 66 per cent. of children do not get everything that is due to them. The reforms that we are introducing today are designed to ensure that an assessment is not theoretical but realistic, and that the child sees the money to which he or she is entitled.
The hon. Gentleman mentioned that we are not taking into account the income of the parent with care. I point out that 96 per cent. of parents with care have an income of less than £100 a week, so that will not be a widespread problem. We are ensuring that the formula, which takes into account the children in first and second families, is simple and fair. The more complex the system becomes—as more and more disregards and other considerations are brought in—the further we shall slip back into the mire that bogs down the CSA at present. If the hon. Gentleman 437 is saying that we ought to have more exceptions to the general simple formula, he must accept that every added complexity will mean that it will take more time and be more difficult to get money to the children.
The hon. Gentleman also complained about penalties. There is nothing wrong in saying that there ought to be a criminal sanction for people who lie to the CSA, misrepresent their circumstances and give the agency the run-around. Those people are not cheating the Government or the agency—they are cheating their children. In any decent, civilised society, people recognise that there ought to be a deterrent and, if necessary, punishment for those who have obligations to society or to their children but who, at the end of the day, after every stone has been turned and every difficulty has been addressed, still insist on trying to avoid their responsibilities.
Most of those who have to deal with CSA cases know that there are mothers who are trying to bring up their children and, in the same town, the father is driving around in his Porsche, living the high life while his children are not being properly looked after. I make no apology whatsoever for taking the necessary action against the minority—I stress that they are a minority—of parents who insist on ducking their responsibilities.
I find it difficult to understand the hon. Gentleman's complaint about us allowing access to the Inland Revenue in cases where people will not tell us how much they earn, or where we have good reason to believe that they are not telling us the truth. If we do not take action, the state will have to support the children of people who are perfectly capable of doing that themselves. The Conservatives used to believe that that was wrong, but they are more concerned about protecting the interests of people who want to hide their affairs from their own children than they are about the children themselves. I simply do not accept the hon. Gentleman's complaint. Using the access to the Inland Revenue is, of course, an action that we shall take when every other option has been exhausted, but I disagree with the Conservatives' proposition that we should not allow access to the Inland Revenue so that we can find out the truth about those matters.
Finally, the hon. Gentleman complained about the time that the reforms will take. The Conservatives had six years to sort out the CSA, and they did not do so. We have tackled the problems and we are making improvements. The hon. Gentleman asked whether the CSA's performance is improving. If he reads the departmental report, which will be published later this month, he will find that the CSA has improved in a number of respects, although it has a long way to go before it provides an acceptable service. As I said in my statement, I do not believe it will be fully acceptable until we get rid of the complex formula that it must operate at present. However, the agency is making improvements and things are getting better.
These reforms will be introduced in a way that is manageable. The hon. Gentleman was trying to urge us to repeat the same mistakes that his Government made in 1993. We shall not do that. I want the agency to work because, above all, I want children to get the money and support to which they are entitled.
§ Mr. Frank Field (Birkenhead)
I want to give the warmest welcome to my right hon. Friend's statement and 438 I hazard a guess that 1 million or so children may well, in time, also thank him. More immediately, taxpayers, who have to foot a bill of 5p on the standard rate of tax to pay for the shambles that the Government inherited from the Conservatives, will also thank my right hon. Friend for his statement.
Will my right hon. Friend consider two modest reforms? Because the Government are rightly taking their time and not rushing, and thereby risking getting things wrong, and because the Welfare Reform and Pensions Bill is due to return to the House, will he consider taking powers to intervene and stop the clock in exceptional cases when the rules are operating in a weird and mad fashion that will lead to the destruction of the second family? Secondly, given that it is so crucial that the reforms succeed, as if they do not we shall have to give up thinking about child support, will he consider asking the Revenue to collect the money? It is after all its culture to do so, and not that of the Department of Social Security, which is good at paying out money.
§ Mr. Darling
I am grateful to my right hon. Friend for his general welcome for our proposals. He raised two specific points. Although this is the first time that he has raised the point, I can see some difficulty in giving the Secretary of State power to intervene when something is wrong. Unless that is a general power to allow me or my successors to intervene in every case—which would mean that I would have to look at every case, which I will not volunteer to do—it might be difficult to operate the system satisfactorily. However, I will reflect on what he says.
Although the Inland Revenue has its problems like any other organisation, it works well. It certainly would not welcome—we should not consider it lightly—the requirement to collect information on 1 million quite difficult cases. At the moment, we have one organisation that works well and one that does not. There is a risk that we would end up with one organisation that does not work at all. I would be reluctant to go down such a route, which is why we excluded using the Inland Revenue. It is working well; we should let it get on with what it does. The key to success is to ensure that we reform the CSA so that it does a far better job collecting money on the one hand and paying it out to parents with care on the other.
§ Mr. David Rendel (Newbury)
The Secretary of State will not be surprised to learn that we on the Liberal Democrat Benches are disappointed that he has not introduced a system that can deal with each case individually. Only such a system can be seen to be entirely fair. Only when one has an entirely fair system will judgments be accepted and people be free to pay up quite generously.
We welcome several things in the White Paper, including giving access to tax records, which was a sensible move to make. I am surprised that the Conservatives object to it. The better shared care arrangements are also welcome, as is the fact that people will be allowed to keep maintenance if they receive the working families tax credit. That and the £10 disregard on income support must be good for children—and we welcome anything that is good for children. We also welcome the fact that he has not changed or narrowed the definition of good cause, which we were slightly concerned he might.
439 However, several things are not welcome, about which I should like to ask the Secretary of State. He surely must agree that imprisoning or confiscating the driving licences of non-resident parents can only hinder their opportunities to provide an income for their children, or share in their care, which is also very important. Will he reconsider that move?
Secondly, does he agree that the fines for late payment, which I understand go purely to the Treasury, should at least partly be offered to the family with care, who will have also suffered from the non-resident parent's late payments? Thirdly, will he tell us a little more about the powers and the tasks that he will ask the private sector to introduce? What accountability will there be? He did not say very much about that in his statement.
Fourthly, what assurance will he give that the information technology that he will introduce will work any better than that surrounding the fiascos of the new passport system, the new national insurance system and the system in post offices? Fifthly, what will the ombudsman be able to do about cases that are dealt with over the phone? It is my understanding that, at present, the ombudsman cannot consider phone calls as part of the evidence that he is prepared to take into account. If so much more is to be done by the CSA over the phone, the Secretary of State will have to address such a problem.
It is rumoured in the press that travel-to-work costs will now be properly taken into account. It is important that we should know a bit more about that.
Finally, why has the Secretary of State decided to shorten the time before the benefit penalties kick in? There are some very good cases where time is needed for the women concerned to come up with the relevant evidence. I should like to know a little bit more about that.
§ Mr. Darling
I shall deal with all the points that the hon. Gentleman mentioned, although when he refers to "we on the Liberal Benches" I think that he uses the word "we" rather loosely. The others, presumably, are away on the leadership campaign. He has been left a somewhat lonely figure on the Benches. [Interruption.] Well, his seconder is there, so he is all right; his deposit is safe if nothing else.
Let me deal with the points that the hon. Gentleman raised. I know that it is his view, if not necessarily that of the entire Liberal Democrat party, that the CSA should be wound up and that we should return to the court system—because that is the only way, I suppose, that every case can be considered individually. Under the new system, the people who are required to use the Child Support Agency are those on income support and those on income-related jobseeker's allowance. Others will be able to use the courts; they will be able to opt into the CSA if they want to, but in many cases the courts will reach settlements that determine how much maintenance is paid.
However, it would not be possible to burden the courts with about 1 million cases without severe consequences to the entire justice system. Many of the children would be pensioners by the time that their maintenance was calculated. The court system could not cope 20 years ago and it would not be able to cope now. I believe that the hon. Gentleman is the only one who is actively advocating that course; I do not accept that argument.
440 The hon. Gentleman raised several detailed points. I believe that he opposes the stiffer penalties—including, possibly, imprisonment or fines—for people who persistently refuse to co-operate. That is not a new prospect. Such penalties are imposed in many cases in the criminal law. Of course, in such criminal cases one does not imprison or fine people at once, but when someone persistently refuses to co-operate, or lies to the Child Support Agency with a view to preventing money going to their children, there comes a point when we must say, "Enough is enough. The sanction will be visited upon you." Whether it is a fine or imprisonment is a matter for the courts. There is nothing new in that. Most people find it extraordinary that those powers do not already exist.
The hon. Gentleman asked about the private sector. As far as accountability is concerned, the chief executive of the CSA is responsible to me for everything that happens in the CSA, including anything that may be done on our behalf by private sector partners. We want to improve the way in which the CSA operates. Let me take an example. At the moment, the agency's record of collecting maintenance that is due is not very good. Instead of going to someone who owes tens of pounds, we wait until they owe us thousands of pounds, when it is much more difficult to get the money from them. Banks in this country and elsewhere have experience of far more effective collection of sums due. We should use that expertise.
The hon. Gentleman asked about IT. I readily agree that the Government's record on IT—I do not wish to make a political point, as we have as many problems as the previous Government had—has led us to believe that one should be very cautious before saying that a new computer system will work from day one. I am determined to ensure that before we start the new system, we know that the IT systems work, because much depends on that. I will ensure that that happens, but we now have funding to replace the IT system in the CSA and elsewhere in the DSS, and we intend to ensure that we get the maximum benefit from it.
I shall look at the powers that the hon. Gentleman mentions in relation to the ombudsman.
More and more work throughout the DSS, not just the CSA, will be done by phone in future. It is far more effective, far more accurate and far better for customers.
The costs of travel to work will not be taken into account. Under the new system, the absent father will pay 15 per cent., 20 per cent. or 25 per cent. of his take-home pay, depending on the number of children. We are moving away from all the exceptions and disregards in the previous system, because they were what bogged it down.
The hon. Gentleman asked about the cooling off period in relation to a good cause. We are not changing the definition of good cause. Parents will still be able to show that there are reasons why a father should not be pursued. The cooling off period has been shortened to four weeks, but it can be extended if there is good reason for doing so.
§ Mr. Deputy Speaker (Sir Alan Haselhurst)
Order. I hope that we can now step up the pace, otherwise many right hon. and hon. Members will be disappointed. Let us have brief questions, please.
§ Mr. Malcolm Wicks (Croydon, North)
In terms of responsibility for this mess, the figure of the absent parent 441 has now been joined by the absent-minded shadow Minister, given his version of history. However, this is a serious matter. Hundreds of thousands of children in Britain will spend all or some of their childhood away from one parent. It is my guess that family insecurity is now—[HON. MEMBERS: "Get to the question."] I will get to the question. Family insecurity is probably as much a cause of poverty as economic insecurity.
Does my right hon. Friend agree that however we reform the process—I warmly welcome what he is saying today, not least about maintenance disregard for lone mothers—we need to win the public debate? We need to convince our people, including children at school, that if someone has a child, the child is for life, and that the financial maintenance of that child is the parent's responsibility. Will my right hon. Friend put some effort into winning the public debate as well as reforming the system?
§ Mr. Darling
I wholeheartedly agree with my hon. Friend. It is important that the culture is changed throughout the country. People, especially young people, must realise that if they help bring a child into this world, they are responsible for that child's well-being for the rest of that child's life. People must realise that that is a very important principle, and that is why we are introducing reforms. It would not be right to take the place of absent parents, but we can make sure that they fulfil their entire responsibilities.
§ Miss Julie Kirkbride (Bromsgrove)
The Secretary of State has set out many interesting changes but has put very little flesh on the bones in terms of who will be affected by these changes. Will he tell us how many parents with care responsibilities—they are mainly women—will receive less money every week as a result of the absent parent's having a reduced maintenance liability? Will he tell us also how many in the present case list he thinks might qualify to be the errant fathers whom he has described, who may find themselves criminals as a result of the proposed changes?
§ Mr. Darling
As I understood it, the shadow spokesman said that he welcomed the principle of what we are doing. Clearly he does not carry the whole of the Opposition with him on that.
The point of the reforms is to ensure that children benefit. The difficulty now is that many assessments are made but the money is not paid. About 40 per cent. of assessments are not paid in full. We are making changes to ensure that although in some instances the notional assessment is reduced, the amount of money that a mother receives is increased.
§ Mr. Chris Pond (Gravesham)
I very much welcome my right hon. Friend's statement. Many of my constituents, whose lives have been destroyed by the inadequacies and inefficiencies of the current system, will also welcome what he has to say. They will certainly welcome the disregard on the working families tax credit. It is important that we ensure that those parents on low incomes receive help.
Will my right hon. Friend ensure that in promoting his proposals he will propose others to encourage parenthood and family life? I have in mind particularly the 442 Government's policy on parental leave, which many of us would like to see paid. What plans does my right hon. Friend have to deal with shared care between the parents? I know that this is something that the Government wish to promote.
§ Mr. Darling
I am grateful to my hon. Friend for his welcome for my statement. He is right to say that the changes that I have announced today are not the only matters that we should consider. The directive on parental leave is also an important part of ensuring that parents can spend more time with their children.
My hon. Friend asked about shared care, which we want to encourage. We are making arrangements to ensure that if a child stays with another parent for one night a week, the amount of maintenance payable will be abated by one seventh—by two sevenths for two nights, and so on. That will avoid getting into ridiculous arguments with the agency about who was where on a Saturday night. We are banding days. Maintenance will be reduced by one seventh if a child stayed with the non-resident parent for between 52 and 103 nights, and so on further up the scale.
Secondly, we are ensuring that where there is equality of care, maintenance is still payable so that there is not a disincentive to enter into that arrangement. At the same time, there will be a reduction in the amount of maintenance paid by the absent parent, which is roughly equivalent to about half child benefit.
§ Mr. Peter Brooke (Cities of London and Westminster)
How many cases of access to the Inland Revenue as a last resort is the Secretary of State expecting?
§ Mr. Darling
That depends on how difficult people are. In an ideal world, there would be none. Unfortunately, some people are so determined not to pay what is due to their children—sometimes for wholly extraneous reasons and as part of another battle that they are fighting—that they will not co-operate. I find it extraordinary that Conservatives seem to be united in the belief that it is important to keep a person's affairs with the Inland Revenue away from another part of government that is simply trying to help that person's children and to avoid a situation in which the taxpayer, instead of the individual who has that responsibility, is paying to support the children.
§ Ms Joan Walley (Stoke-on-Trent, North)
I welcome my right hon. Friend's proposals. Many people have long wanted a straightforward formula. Given the time that it will take to implement the proposals, what attention will my right hon. Friend give to transitional arrangements? As part of the changes to the CSA, will he make it possible for fathers to have a named child support officer to help them sort out what they must pay, so that they can do what is right by their children?
§ Mr. Darling
My hon. Friend makes an important point. It is a matter of regret that it will take time to make the changes. Unfortunately, we could do nothing without changing the legislation, and there will have to be changes to the IT and so on. We are making changes in the meantime, and some of them will start next week.
We are bringing in more staff. Some 600 staff will be allocated to face-to-face interviews, which I think is what my hon. Friend has in mind. I have constituency cases in 443 which a parent cannot make head or tail of what has happened. Such parents will be able to sit down with a member of the agency's staff, go through the documents line by line and try to reach a resolution. We are also bringing some of the best people from the Inland Revenue and the Contributions Agency into the Child Support Agency, because the middle management of that agency needs to be tightened up. It is a relatively new agency and it lacks expertise in several areas. Those are some of the improvements that will be made. We also want people to make better use of the telephone.
I certainly agree with my hon. Friend that it should be possible to ensure that an individual deals with one member of staff. It is entirely consistent with our philosophy for the ONE service agency that we launched this week that someone has a named member of staff to whom to go, to avoid the situation that is common in various organisations, where members of the public speak to someone on the telephone who has no recollection of ever having spoken to them previously. That must stop.
§ Mr. Roy Beggs (East Antrim)
I welcome the changes. Many of us have sympathy with office staff who have been engaged hitherto, and we welcome the additional funding and support that will be given to the CSA. I welcome the fact that children are being put first; that abandoned mothers will be supported; and that fathers, especially those from Northern Ireland who skip over to Great Britain and sometimes to the continent to avoid all responsibility, will be pursued.
Will the Secretary of State give us an assurance that when fraud is identified in the father's case from false returns—or in the case of the caring mother who is exploiting the situation—no expense will be spared, and the matter will not be pushed aside and written off because a prosecution would involve court costs? It is important to give confidence and to insist that the whole truth is presented by both parties to such disputes.
§ Mr. Darling
The hon. Gentleman can rest assured that where there is fraud, the agency will take prompt action. One of our problems is that more than 90 per cent. of the agency's time and effort goes into calculating liability, and only 10 per cent. into enforcement. Because the new formula will be simpler, more staff will be available to deal with cases such as those to which the hon. Gentleman referred. We will take powers to ensure that where someone has, for example, deliberately diverted his income to avoid his liabilities, that can be looked into, and if necessary referred to a tribunal to determine the matter. We want to ensure that every single child gets what he or she is entitled to—the right amount from his or her parent who, after all, has not just a moral but a legal obligation to look after his or her children.
§ Ms Dari Taylor (Stockton, South)
I warmly welcome my right hon. Friend's statement. Does he accept that threatening criminal charges and defining a criminal offence will make it less likely that men will want to cheat the system? Only a small number want to do so, but even that can cause serious problems. So that I can be comfortable with his remarks about a simple formula for identifying commitment, will he outline that formula once again? I am concerned about wives in second families. 444 Will their income, which is often—although not always—included in assessments, be included in the new assessments and the new formula defining commitment from fathers?
§ Mr. Darling
No, that income will not be taken into account, as I told the hon. Member for Havant (Mr. Willetts); he was not paying attention, which is why he was uncertain about it. The object of the exercise is to make the formula as simple as possible. The net income—the take-home pay—of the absent parent will be taken into account. We want to keep the departures and the exceptions to the absolute minimum, otherwise we will be back in the trouble that we were in in the first place.
We will take children in a second family into account. Relationships may end, perhaps leaving a couple of children, and the father or the mother may go into a new relationship and have another child. It is right to take all those children into account, and we will do that, but I repeat that we want to keep the system as simple as possible. I agree with my hon. Friend's point about deterrence. I find it quite extraordinary that Conservative Members do not understand that, throughout the criminal system, the principle of deterrence is very important and actually works.
§ Mr. David Curry (Skipton and Ripon)
Although many parents want to evade their responsibilities, many others want only to find out where they stand within a reasonable time. My constituents have to deal with Belfast. It is difficult to get through on the phone and difficult to find the same person answering successive queries. Callers often get different stories from different people and years can elapse before matters are settled. Circumstances can change, which is not taken into account. If more reliance is to be placed on the telephone, will the Secretary of State ensure that people are able to gain rapid access to a known person who will always be at the end of the phone when necessary so that matters can be settled within a reasonable time?
§ Mr. Darling
I agree with almost everything the right hon. Gentleman has said, which is why we are changing the system. The problem just now is that the calculation is so complex that it is difficult for parents to understand how on earth the end result was reached. We all have constituents who have come to us with problems and we cannot work out what on earth the agency has done. That is why we are simplifying the whole process.
An advantage of the new system is that parents will be able to get a statement similar to a bank statement so that they can see what they have paid and what they are due. That is important. What is more, by being able to do those things quickly, we will avoid the build-up of huge levels of arrears, which lead to all sorts of difficulties.
We are investing £28 million more to improve the staff and staff retention. The CSA loses far too many staff and the result is that it is not common for the same person to deal with a case. The new money will help to address that problem. I agree with the right hon. Gentleman that we need to make far more use of the phone. With new technology, which banks now use, it is quite easy to ensure that calls coming in through a call centre are referred to the person dealing with a case. We are making those improvements. They will take time, but I hope that, by the time that we introduce the new system, the CSA 445 will be well on th way to becoming the sort of organisation that is taken for granted in almost every other sector.
§ Mr. Paul Goggins (Wythenshawe and Sale, East)
I welcome the emphasis placed by my right hon. Friend on tackling child poverty. What estimate has he made of the number of children and families who will be better off as a result of the introduction of the disregards on income support and the working families tax credit?
§ Mr. Darling
We estimate that, overall, about 1 million children will be better off. We think that about 250,000 will be better off as a result of the disregard. Others will be better off as a result of the working families tax credit. Overall, the effect of everything we are doing will mean that more and more children gain. About 120,000 will gain through the working families tax credit. Others will gain because the current cash compliance is some 60 per cent.; we think that we can raise it to 80 per cent., which will mean that 300,000 children will get what they are due.
§ Mr. Charles Wardle (Bexhill and Battle)
The theory of the right hon. Gentleman's statement will be welcomed, but is not one of the pitfalls for the CSA the huge backlog of cases in which arrears are in dispute? How will that backlog be cleared, and will the new formula apply retrospectively to cases in that backlog?
§ Mr. Darling
No, the new formula will apply to new cases. It would be very difficult to apply it retrospectively, because all sorts of repayments would have to be made to people and that would almost guarantee that the new system collapsed within a few days of opening. Thus the new system applies to new cases. We shall then transfer existing cases to the new system in phases, once we are satisfied that the system is fully operational.
With regard to the hon. Gentleman's general point about the backlog, we shall continue to pursue cases where maintenance is due, because it would be wrong to write off payments that people should have made to their children.
§ Mr. Peter L. Pike (Burnley)
Is it not important to recognise that there will be losers as well as gainers as a result of my right hon. Friend's proposal? The message that we must spell out is that the new system will be fairer, more workable and more acceptable. May I urge my right hon. Friend to consider the possibilities of carry-over legislation? Might not this be an appropriate Bill to introduce sooner, so that the proposals can be implemented a few months earlier than if we had to wait for the new parliamentary Session?
§ Mr. Darling
On the latter point, my hon. Friend will be aware that virtually all my colleagues have a long list of Bills that they would like introduced under the new carry-over system. I hope that we can do more through that system because we could get a lot more legislation through the House, especially where there is broad agreement.
On the other point that my hon. Friend makes, it is important to bear it in mind that when a system is introduced that has a simpler formula, there will inevitably be cases where the amount to be paid, which 446 may be a theoretical amount, is less than at present. However, because of the changes, more cash will flow through the system and into the hands of the children. That is the advantage of the new system, which is why most people welcome what we are trying to do.
§ Mrs. Jacqui Lait (Beckenham)
I certainly want the children to be the winners when it comes to maintenance, but does the right hon. Gentleman accept that given that there will be winners and losers among those who pay, under the new system cases that are currently settled would need to be backdated to the date at which the new cases are being settled? Will not there be a delay between new cases coming on board under the new system and old cases being referred? Can he assure the House that the old cases will pay from the date of introduction of the new legislation and that the amount to be paid will be recalculated?
§ Mr. Darling
If I understand the hon. Lady correctly, she is asking whether somebody who transfers two years after the new system comes in will have his assessment backdated. I do not think that that would be possible. What I am desperate to avoid—I think that there is sympathy from some Conservative Members on this—is burdening the system as the CSA was burdened in 1993, with the result that it stopped working almost before it got going. I understand that many people who are currently toiling with the CSA, who want the system to work better, cannot wait for the new system to come in. We all share that sentiment, but if we try to rush it before the CSA is operating properly and without the new IT, and if we burden the CSA unduly, the system will collapse again. That would be good for nobody. The hon. Lady and I share the same view: we must be concerned about the children. If the CSA collapses, the losers will be the children, not us. That is why I want to phase in the new system and to make sure that it works.
§ Mrs. Anne Campbell (Cambridge)
I warmly welcome my right hon. Friend's statement. Is he as astonished as I have been to hear not a hint of apology from the Opposition for the shambles that was left behind and the thousands of lives that have been ruined by the legislation as they left it?
In the case of an absent parent who has abandoned more than one family, how will the available finance be shared between those families?
§ Mr. Darling
If an absent parent had two separate children in different family units his liability would be 20 per cent., and it would divided between the two children. On my hon. Friend's first point, she may be astonished, but I am not.
§ Sir David Madel (South-West Bedfordshire)
Will the Secretary of State confirm that, if there is a large second family, there will be flexibility in respect of what the father pays? If MPs have reason to believe that the CSA is acting carelessly or unreasonably, we should have the power to tell it to put a stop on the deduction of earnings order while the matter is carefully investigated. I am not asking for widespread cancellations: merely for a pause while the work is thoroughly and carefully carried out. 447 I have just stopped the CSA demanding £10,000 from a constituent. He had already paid £8,500, but it took God knows what to get that across to the agency.
§ Mr. Darling
That case shows why we need to improve the administration of the CSA. No one should be allowed to run up such debts before anything happens. I have also come across such cases. I am not sure that I would agree with the hon. Gentleman that MPs should be given statutory powers to stop administrative action. That would have ramifications for other parts of government. It is tempting, but I am not sure that we would want such powers, because it would lay us open to a great deal of pressure.
I am determined to ensure that such problems are less likely to arise under the new system. The CSA has been told to develop a close working relationship with Members of Parliament—as the Benefits Agency does—so that if such problems arise they can be dealt with quickly. That is what MPs are there to do: if there is an injustice because of something that the Government are doing, MPs should be able to speak to the local agency to try to resolve matters. If an MP remains dissatisfied, he has every right to take the matter up with the appropriate Minister in my Department or with me.
§ Mr. Gordon Prentice (Pendle)
We inherited a dreadful mess, and I understand why my right hon. Friend wants to proceed slowly. Will he tell us when all existing cases will transfer to the new system? I suspect that many people who read the newspapers tomorrow will think that these changes, of which I approve, will affect their lives sooner rather than later, whereas they will happen four, five or perhaps six years down the line.
§ Mr. Darling
My hon. Friend makes a good point. To be blunt about it, these changes will not happen until towards the end of 2001 at the earliest. It is not possible to get the legislation through the House: even if there were all-party agreement, it would take some time. We must install the computer equipment, and we must make a number of changes within the CSA. I do not want to raise people's expectations falsely.
I have made it clear that the first people to be transferred will be the new cases. I then want, as quickly as is prudent, to transfer the existing case load on to the new CSA. As some people will see a difference in their assessment, we will allow their payments to be phased in. If someone's assessment has changed dramatically, it would be wrong to make him pay a massively increased amount the following day. Steps set out in the White Paper will allow those payments to be phased.
I want the changeover to be as smooth as possible, and to move at whatever speed is consistent with that. Despite people's frustrations about the system, they would not forgive us if we rushed it as happened in 1993, and to a certain extent in 1995, with the inevitable result that the whole system fell apart.
§ Mr. David Lidington (Aylesbury)
Does the Secretary of State agree that one of the difficulties has been the inadequacy of civil court recovery procedures to get hold of the money that the agency has been seeking? 448 Does he have any specific proposals to strengthen or alter the recovery procedures of the civil courts, so that the agency will find it easier in the future to get hold of that money on behalf of children?
§ Mr. Darling
The agency has numerous remedies. The difficulty is that it does not always exercise them.
§ Mr. Darling
The hon. Gentleman from a sedentary position says, "Oh, absolutely". What on earth was he doing during the last six years of the Conservative Government? They had six years to sort this problem out, and it has yet again fallen to us to do so. We are sorting it out by diverting more staff to enforcing payments, so that we avoid the problem of money that we know is due not being collected.
We are not waiting for new legislation in order to do that. As I told the hon. Member for Newbury (Mr. Rendel), we are bringing in private sector expertise next week to ensure that we are as efficient as, for instance, banks in identifying customers who owe us tens of pounds rather than thousands of pounds. If we cannot persuade people to pay what is due voluntarily, we shall then be able to enforce the remedies that we have at our disposal.
§ Ms Jenny Jones (Wolverhampton, South-West)
I, too, welcome these much-needed reforms. Can my right hon. Friend confirm that, as part of his proposed reform of the culture of the CSA, staff will be trained—or retrained—in effective communication skills? There is a danger that these good reforms will be weakened if staff cannot communicate properly with the public.
§ Mr. Darling
I can give my hon. Friend that assurance. I also want to try to slow down the rather large turnover. Many of our best people, having been trained, then leave—to the benefit of, usually, the financial services industry. We want to try to keep our good-quality staff.
I believe that, if we achieve the change in culture, the CSA will be a much more attractive place in which to work. Many of our staff have to put up with quite difficult people, and, through no fault of their own, have to operate systems that do not work. I agree, however, that it is important for us to employ good-quality staff who can communicate with the public.
§ Mr. Eric Pickles (Brentwood and Ongar)
The Green Paper rightly emphasised the need to protect the children of second families. There is no point in impoverishing one set of children at the expense of another. The paper set out two methods of calculation. One method involved the netting of income according to the number of children in the second family, while the other involved the netting of income according to the combined number of the two sets of children. Did the Government finally decide which calculation was the more reasonable?
§ Mr. Darling
Yes, we did. Our conclusion is set out in the White Paper. We decided on the first option. When a person has a second family, we take the children of the second family into account. We deduct the same percentage as we would for the other set of children. For 449 example, if someone has two children in the first family and three in the second, we take 20 per cent. of that person's net income for the first family and then, off the balance, 25 per cent., which is then given in respect of the other three children.
The tables in the annexe to the White Paper make it very easy to calculate exactly how much people will have to pay, and how much the deductions are for first and second families. The White Paper is well worth a read.
§ Mr. Deputy Speaker
Order. We must move on. I suspect that hon. Members will have other opportunities to pursue this matter.