REGULATIONS (Hansard, 24 July 2000)

§ Angela Eagle
I beg to move, That this House agrees with the Lords in the said amendment.

§ Mr. Deputy Speaker
With this we may discuss Lords amendments Nos. 62, 63, 67 and 77.

§ Angela Eagle
This group of amendments sets a maximum level of income to be used in the child support 793 maintenance calculation. The effect is to cap child support liability at a high level, which will vary with the number of children for whom a non-resident parent is responsible.
Amendment No. 62 sets the maximum net income for child support purposes at £2, 000 per week, which represents a gross income of around £170, 000 per annum. The normal child support rates and the adjustment for children living with the non-resident parent will apply to that maximum to produce a cap on liability for one child of £300 per week. The maximum liability for two children will be £400 and, for three or more, £500. Those figures will be reduced proportionately if there are children in the non-resident parent's second family and adjusted to reflect shared care.
Amendment No. 63 provides that the maximum level of income for that purpose can be changed by affirmative regulations should that prove necessary. Amendments Nos. 67 and 77 provide for the courts to award top—up child maintenance should child support liability be capped.
As I made clear during the debate on the issue in Committee, we believe that children should come first, whatever the non-resident parent's income. Children should be able to benefit from a non-resident parent's wealth in the same way as they should if they lived with the parent.
The argument advanced by Opposition Members that maintenance should in some way be related to the subsistence needs of the child only—the need to be clothed, fed and housed—is not only impracticable, but wrong. However, as my right hon. and noble Friend Baroness Hollis said in another place, we accept that the arguments on a maximum level of liability are finely balanced. There is a respectable case to be made in favour of a cap on maintenance, based in particular on the argument that, because the financial affairs of the very wealthy are often much more complicated than those of the average earner, a simple formula-based approach to setting child support liability may not always produce a just outcome.
We remain convinced that court-based agreements should, in the main, be settled in line with Child Support Agency rates. That will avoid fluctuations in the level of maintenance where the parent with care moves on or off benefit. That is why, under the reformed child support scheme, we propose to open access to the CSA for "private" non-benefit cases where parents are unhappy and the new court order has been in place for at least a year.

§ Mr. Steve Webb (Northavon)
For information, can the hon. Lady give the House an idea of the number of cases that will be affected by the cap?

§ Angela Eagle
The hon. Gentleman has asked that question before. We had debates about that in Committee. I made it clear that the number of people likely to be affected by a change was very small—in this case, about 120 people, and we think that that might be an over-estimate.
We have been persuaded, however, that, in the case of very high earners, the courts are better placed to unravel their financial affairs and to come to a sensible conclusion about 794 the proper allocation of property, spousal maintenance and child maintenance. Without a cap on child support liability, the courts might find it impossible to settle the family's financial affairs properly. With a cap, the courts will be able to work from a fixed maximum child support liability while settling other financial arrangements.
That is why we have agreed to set the cap at a high level, so long as the child or the parent with care can go back to the court for "top-up" maintenance. That means that, where child support liability is capped, parents with care or the children concerned will be able to seek additional maintenance from the courts.

§ Mr. Eric Pickles (Brentwood and Ongar)
On the affirmative resolution, will the hon. Lady give some guidance on whether the figure of £170, 000 may be moved in either direction—either up or down?

§ Angela Eagle
I assume that it would be up to the Government of the day to put anything in regulations and for the House to debate and to consider them. However, I have emphasised that we think that it is important that the cap be set at a very high level; thus, we have set it at such a level. I assume that, in the more general use of that power, the level would be moved up to take account of prices and general movements in prices and earnings. [Interruption.] Is the hon. Member for Brentwood and Ongar (Mr. Pickles) seeking to intervene?

§ Mr. Pickles
indicated dissent.

§ Angela Eagle
I thought that the hon. Gentleman was hovering.
We have agreed to set the cap at a high level, and agreed that it is appropriate that it should be at that level, so long as the child or the parent with care can go back to the courts for "top-up" maintenance. That means that, where child support liability is capped, parents with care or the children will be able to seek additional maintenance from the court. In that way, children will still be able to share in the wealth of very wealthy parents, but the way in which that takes effect will be for the courts to determine in the light of broader considerations than the CSA could countenance.
In practice, a cap set at the levels that we propose will have little effect in child support terms; this comes on to the point raised by the hon. Member for Northavon (Mr. Webb). Currently, there are very few non-resident parents on the CSA's books with income at levels which could mean that their maintenance liability under the new scheme would be capped. The effect will rather be on the way in which the courts divide up capital, property and income in cases in which substantial sums are at stake, and in which the CSA is unlikely to be involved.
The amendments will allow the courts, in establishing financial arrangements for very wealthy parents, to work from a fixed maximum child support liability—the most that could be required if either parent came to the CSA. That should make it easier to establish the other aspects of the financial package.

§ Mr. Pickles
I must confess to having been concerned about the Minister's health a few moments ago. Something seemed to be sticking in her craw when she made those magnificent statements about looking after very wealthy parents.
795 We debated the matter at length in Committee. I shall spare the House quotations from what the Minister said then—unless she insists—but in fact she said the opposite of what she has said today, and said it quite forcefully. Instead, let me quote something else. As I began my Second Reading speech with a quotation from P.G. Wodehouse, I think it only right now to give another, which strikes me as entirely apposite.
I think it was in "The Code of the Woosters" that Bertie, trying to get a point across to Jeeves, spoke of a man walking in the fog one night with his dog. The dog kept pulling at his trousers, trying to stop him. At every tug, the man got angrier—until the fog cleared, and he found that they were standing on the edge of a precipice, looking down. I feel that the Government have at last seen the fog clear, and have realised that they were standing on the edge of a precipice. Without this upper limit, the CSA would be swamped with cases.
The hon. Member for Northavon (Mr. Webb) made a good point. It matters not a jot that we are talking about 120 people now; my point in the amendments that I tabled in Committee and on Report was that the CSA would be swamped. It is, however, a little disappointing that the measure relates only to the very rich, and thus has the potential to bring about what would be nothing short of spousal dispersal.
I think it wrong of the Minister to reject the idea that the Child Support Act 1995 was about supporting children, because that is exactly what it was about. Even with the concessions that were wrung out of the Minister in the other place, there is no mechanism in the Bill allowing the child to benefit directly. I am surprised that the Minister looks surprised at what I have said, because it has been made clear in all our debates. Under the Bill, the resident parent with care could use the sums for any purpose.
Nevertheless, the Government have made a concession—owing mostly, we understand, to the tenacity of Lady Hollis, who argued strongly against the Minister and in favour of the amendment. We are glad that Lady Hollis won, and grateful to the Government for putting a reasonable face on their defeat in the Commons. However, I shall make a prediction. I think that, as the number of cases for the CSA start to increase because of the £170, 000 upper limit, the Minister will be very grateful for an affirmative resolution procedure that might change that limit. I suggest that she bring a large bottle of water to the appropriate Committee, because more things will stick in her craw.

§ Mr. Webb
There is rejoicing on the Liberal Democrat Benches as well, but for a rather different reason. The amendments show that the Government have finally accepted our arguments about the essence of their CSA reforms. This group of amendments recognises the principle that the formula will not fit certain cases. People involved in those cases will be able to go to the courts, and the courts will be able to examine the individual circumstances of those cases and get the answer right. It is the first breach in the armour, and the first concession to the argument that we have maintained all along—that the formula is too rigid, that individual circumstances vary greatly, and that cases have to be considered by the courts on a case by case basis.
We very much welcome the chink in the armour—the concession that the very rich are a special case. However, I hope that—as new Labour is for the many, not the few— 796 not only the rich are made an exception and get the benefit of a court examining their individual circumstances, but that, one day, that special treatment is given also to the poor.
We very much welcome Lords amendment No. 15, and we commend the Government on accepting the principle of our argument.

§ Angela Eagle
I welcome the widespread acclamation for the Government on making the concession. We listened to the arguments, and we recognised that they were finely balanced. Opposition Members should, however, realise that the change will affect very few people. I wonder whether the prediction made by the hon. Member for Brentwood and Ongar that the CSA will be swamped with such cases is part of an economic prediction that the United Kingdom will continue to do extremely well under a Labour Government and that vast numbers of people will be earning well over the maximum of £170, 000 annually, so that they will be affected by the cap. If that is his prediction, I agree with him.

§ Mr. Pickles
The hon. Lady is living in a parallel universe if she thinks that I was suggesting that. I am simply suggesting that, now that she has looked after the rich, lots of middle class people who would not have been affected by the measure will be drawn into the CSA and that the CSA is not capable of treating them. The Government will find that they have to reduce the £170, 000 cap simply because of the sheer injustice being inflicted on those who have much more modest incomes.

§ Angela Eagle
We all have to remember—this partly addresses the issues raised in his brief speech by the hon. Member for Northavon—how the CSA developed. It was created initially because the court system completely failed parents with care and their children. The Bill, from start to finish, has been about creating a CSA that works, so that we can ensure that maintenance goes to parents with care and their children. Many of those children are living in poverty because they do not receive the support that is due to them from their non-resident parent. Achieving that objective is at the centre of the Bill.
In the past, the courts have been an expensive failure. As the Bill nears the completion of its passage, we all have to work together to ensure that the CSA is properly equipped to do its job—to get maintenance flowing to the many children who are currently without it.