§ The Secretary of State for Work and Pensions (Mr. Andrew Smith)
With permission Mr Speaker, I should like to make a statement on the implementation of the child support reforms.
As the House knows, the Government are reforming the child support system to ensure that more children benefit from regular maintenance. That will get support more effectively to parents with care and their children, help non-resident parents meet their responsibilities and tackle child poverty.
The new scheme will be more transparent and easier for parents to understand. It will also be easier for the agency to calculate maintenance and enforce payment so that children have the support that they need. It will be based on a simple rate so that non-resident parents will know in advance how much maintenance they must pay. For example, non-resident parents with net incomes of £200 to £2,000 a week will be expected to make payments—based on 15 per cent. for one child, 20 per cent. for two and 25 per cent. for three or more—from their net weekly income; that is, after tax, national insurance and pension contributions, and after the same percentage allowance for any children in their new family.
For non-resident parents with net incomes of less than £100 a week and those receiving income support and jobseeker's allowance, child maintenance will be set at a flat rate of £5 a week. For those with incomes of between £100 and £200 a week, there will be a sliding scale. There will be specific provisions for cases where the care of children is shared.
The introduction of the child maintenance premium will mean that for the first time parents with care receiving income support or income-based jobseeker's allowance who are on the new scheme can keep up to £10 a week of any maintenance paid for their children. That will give them a real stake in making child support work.
The changes we have brought in since 1997 will help, too. The Child Support Agency is more customer focused. Levels of compliance have increased; the agency now collects over £200 million more each year in child maintenance than it did five years ago. The number of complaints is well down; for example, those referred to the chief executive by Members of the House have fallen 28 per cent. over the past three years.
Last March, my predecessor, now the Secretary of State for Transport, announced that the introduction of the new scheme would be delayed until the Government were confident that the new information technology worked effectively. That was the right decision and was generally welcomed on both sides of the House, as well as by voluntary groups.
Last September, I wrote to all Members updating them on progress. I said that testing of the computer system had been progressing satisfactorily over the summer so that we were in a position to pilot the new IT for some cases on existing rules. Those pilot arrangements have worked well and are operating across the country. Both senior officials and I are now satisfied, on the basis of the careful and comprehensive testing, that the system will deliver the level of service that our customers have a right to expect.
568 I am pleased to tell the House that new cases will be calculated using the new rules from 3 March this year. New cases are those where liability for maintenance begins on or after 3 March. They will come on to the system at a rate of 30,000 a month. I should remind the House that we always planned to introduce the changes in a phased way. We will start in March with new cases, and then convert the existing 1.1 million cases later, when we can see how the arrangements are working.
However, some existing cases will be brought across to the new scheme earlier than others—primarily those that become linked to a new case. For example, if an application calculated under the new scheme were made by a parent with care in respect of a non-resident parent who was already liable for maintenance in a different case, it would be neither fair nor workable for people to have liability simultaneously under two different schemes, so it is best to move those linked cases on to the new system together. We will, of course, write to existing clients to explain how they will be affected by the changes and to tell them that they need do nothing further until they are contacted by the agency.
I am satisfied that the IT system will deliver a level of service that is acceptable, but with any new system of this size, even after exhaustive testing, there will be some bugs to be sorted out. We have put in place systems and procedures to deal with that. We are also improving arrangements for responding to inquiries from the public, advice agencies and hon. Members. Tomorrow, I shall write to hon. Members with details of an MP-specific hotline that is already in place in all the agency's business units. The agency will do all that it can to ensure that the new system gives a better service to clients.
On the financial implications of this announcement, my predecessor told the House in his statement on 20 March last year that there would be additional costs. The system has proved to be more complex than had been originally thought, and we have reached a negotiated agreement with EDS to share those costs, with it meeting its share under the contract. The amount that the Government will pay has risen by about 7 per cent. over the term of the contract. Although any extra cost is unwelcome, an increase on that scale is not at all unusual for a complex project—whether in the public or private sector—and it is justified to deliver this important reform.
The implementation of the new IT system is the key to bringing in the much-needed new child support scheme, with its better, fairer and simpler system for calculating maintenance. It will help us to target resources to make sure that more maintenance is actually paid, getting more money to children more quickly. That is the right policy. I believe that the decision that we took to delay implementation last March was right, and that it is the right decision to proceed now.
§ Mr. David Willetts (Havant)
I thank the Secretary of State for his statement. In fact, more than that, I welcome it with some relief after years of delay.
Will the Secretary of State confirm that the new IT system was originally promised for October 2001; then April 2002; and then, in March last year, it was delayed with no new date fixed at all? Although millions of families have been kept waiting, the latest CSA annual 569 report—in typical new Labour style—claims that it has already delivered the change agenda. It says, "target achieved", with one of those ticks in the box as well.
Will the Secretary of State tell the House about the reasons for that delay? We need to know, not least because it is very relevant to the bill for the delay. EDS says that the problem is that Ministers kept interfering in the details of the system. Ministers may, understandably, have a different version of events, but we know from the Secretary of State's statement that the Government will now pay more as a result of that delay. That implies that they accept some responsibility for what has happened. The Secretary of State did not tell the House how much more they will have to pay. We are talking about a project valued at hundreds of millions of pounds, with very significant cost over-runs. How much of that cost will be borne by the taxpayer? The House is entitled to know.
There are 1.5 million children in families covered by the CSA. We all know the problems of the CSA, which have been brought to the surgeries of all Members of the House. Can the Secretary of State give the House any more information about the handling of existing cases? More than 1 million families are still in the dark after today's announcement. When will they be moved on to the new IT system and the new formula? One Minister said in a Committee that it would take a year; another said that it would take five years. What is the Secretary of State's estimate, which will enable existing cases to know where they stand?
The Department has several major projects on its hands. The Secretary of State is introducing a new system for paying benefits in the spring, the national rollout of Jobcentre Plus, the new pensions service, the new pension credit in the autumn, and all the Chancellor's pet tax credits, which are also being changed. [HON. MEMBERS: "Hear, hear."] I am pleased that Labour Members welcome all those changes, and I hope—especially if they have welcomed them—that they, like me, will seek an assurance from the Secretary of State that they are all on time, on budget and deliverable. Surely the lesson from the disaster with the IT project for the CSA is that the Government have significant problems delivering all these changes. Will the Secretary of State learn lessons from that sorry episode and apply them to the other big projects piling up in his Department? Millions of families will face uncertainty and delay unless he can guarantee to the House that the projects will be delivered on time and on budget.
§ Mr. Smith
I thank the hon. Member for Havant (Mr. Willetts) for his welcome—lukewarm though it was. I confirm the timetable. As my predecessor said on 20 March last year, it was right to delay, rather than rushing in an incomplete and unready system. I thought that that was generally understood on both sides of the House. Let us remember why we must modernise and improve the child support system: the Conservatives rushed it in 10 years ago. They had the benefit of good will on both sides of the House. I think that they now accept that the system collapsed under its own weight, as it was overly complex, and the IT was not ready. That is why we have had to put in place these reforms.
570 The hon. Gentleman asked whether additional cost had come about because policy had changed. The policy has not changed. As he knows, the basic features of the system are as set out in the 1999 White Paper. The reason that additional costs were incurred was that the project, including the interfaces with the legacy systems that we inherited—IT systems that were designed, for the most part, in the 1970s and built in the 1980s—was much more complex and required a lot more work than was originally envisaged.
The hon. Gentleman asked about the extent of the extra expenditure. I said that it was 7 per cent. more across the life of the project. The total cost of the project, across its life, goes from some £427 million to £456 million. He asked, too, about the handling of existing cases. The staff who have been employed have been striving to make the unsatisfactory existing system work as well as they can. As I said, the level of complaints has gone down. In terms of compliance, case compliance has been running at 71 per cent. and cash compliance at 68 per cent., which contrasts with the figures when the Conservative party was in charge and struggled to get compliance running at above 50 per cent. Everybody accepts that there are limits to what one can do with the old system that the Conservatives introduced. It needs replacing, and it is right to proceed as we are doing.
The hon. Gentleman asked about the changeover of existing cases. As I said in my statement, we will reach a decision on that, sensibly, once we can see how the new system is working out in practice.
The hon. Gentleman asked about the lessons to be learned. There are lessons to be learned from this and indeed other major IT projects across the years. Principal among them is the need to give even closer thought to the specification and management arrangements when the contract is originally concluded. Thanks to the work that the Office of Government Commerce is doing, and the gate procedure that is now in place on all major projects, those lessons are being learned and applied. Perhaps the most important lesson is not to inherit a system that does not work from a Government who did not work for families or for children.
§ Paul Holmes (Chesterfield)
I thank the Secretary of State for giving advance sight of his statement.
The Liberal Democrats would have preferred to hear today that the Government were adopting our proposals to pass all the administration of child support over to the Inland Revenue, which already administers child benefit, will administer child tax credit and already has the names, addresses and tax records of everyone with children.
However, given that the Minister is now going ahead with the long-delayed attempt to streamline the existing system, if the Government and EDS are sharing the extra costs of the 18-month delay, does that mean that both were at fault in the delay?
Is it true that the appeals service is budgeting for up to a million new complaints as a result of the new system, as one internal newsletter suggests? When existing cases are eventually switched to the new system, is it still the Government's intention to switch them all at once, on the same day? If so, will the new computer 571 system cope? Constituents who see friends on the new system will be asking us when they will be switched to it. What should we tell them?
Finally, can the Minister clarify why the new scheme starts on 3 March rather than 5 April, the start of the new financial year? The rhetoric so far has been of streamlining and simplicity, but the fear is that the chaos has only just begun.
§ Mr. Smith
I thank the hon. Gentleman for his remarks and his welcome, such as it was, for the introduction of the new system.
The hon. Gentleman asked about levels of compliance and general performance under the new system. I referred to levels of compliance under the existing system: cash compliance at 68 per cent. and case compliance at 71 per cent. With both of those, we expect to achieve 75 per cent. under the new system, so there will be a clear improvement.
Bringing on to the system all 300,000 recipients of income support who will attract the child support premium is an enormous gain. Taking that with the efficiency improvements in existing cases, we anticipate that some 80 per cent. of parents with care will be better off as a result of the new system.
The hon. Gentleman also asked about the changeover of existing cases and whether that would be a big bang. We shall have to phase in the changeover of the existing 1.1 million cases. As to the date, I said in response to the hon. Member for Havant that we need to review the progress and working of the new system before setting it. Of course, I understand the attraction, when people see the benefits of the new system, of wanting to do that as soon as possible, but it makes sense with any big IT rollout to do it only when one knows that the system is working properly. That is what we shall do.
The hon. Gentleman asked why the date was 3 March rather than some time in April. This represents a big step forward, a big improvement for parents with care and a fairer system for non-resident parents as well. Other things being equal, the sooner it is introduced, the better. I am sure that if I were announcing it for April, the hon. Gentleman would be asking why it was not for March.
§ Mr. Terry Rooney (Bradford, North)
I remind my right hon. Friend that the original child support legislation required three further pieces of primary legislation. The computer system that was put in to operate it has now suffered more than 1,000 days when it has been either partially or totally shut down. The Opposition should bear that in mind.
I return to the child maintenance premium. Had we been on the original timetable, many single parents would have been receiving it from this April. The delay is riot their fault. Is there any possibility of bringing that in before transferring existing cases to the new system, so that those children are lifted somewhat out of the poverty that they are in?
§ Mr. Smith
I thank my hon. Friend, who takes a close interest in these matters, for his pertinent reminders of the sheer chaos in the original child support system. We have had to tackle that and introduce reforms steadily to improve it before changing to the new system.
572 I understand the case that my hon. Friend makes on the child maintenance premium. I assure him that we considered the matter very carefully, but had we sought, before existing cases switched to the new IT system, to link those receiving maintenance with the child maintenance premium, that would have added another layer of complexity to a very demanding IT delivery programme. As I said, we are trying to manage and reduce the risks associated with that, so that we can deliver to an acceptable standard, and therefore decided, perhaps unfortunately, that it was not possible to make that link.
§ Mr. Andrew Mitchell (Sutton Coldfield)
While the Secretary of State's announcement is good news, in that the technology has at last caught up with the will of Parliament, may I remind him that these changes, with a simpler formula, are not in themselves a panacea because there will be a significant increase in the element of rough justice that results? I urge him and his colleagues to understand the need to be robust in facing down those who will seek an excuse not to pay their maintenance when society rightly expects them to do so.
§ Mr. Smith
The answer is yes. I welcome the hon. Gentleman's remarks, which are all the more striking because of his previous responsibilities in this area. Although there is an element of rough justice in the greater simplicity, people can at least see where they stand and understand the basis on which the assessment is made. Sadly, that is not true of the vast majority of cases under the old system.
As the hon. Gentleman said, we need to be robust, and we certainly shall be. One of the advantages of the change is that it will release staff resources to focus on enforcement rather than on assessment and reassessment. I shall be pleased to pray the hon. Gentleman in aid when we need to be robust.
§ Angela Eagle (Wallasey)
Does my right hon. Friend agree that we do not need to take lessons from the Conservative party, which bought from America an off-the-shelf computer that does not even recognise British national insurance numbers? I welcome the fact that we can now replace that and run a much simpler system. Will my right hon. Friend say a little more about how the simplified system will enable staff to spend more time chasing the approximately 30 per cent. of non-resident parents who currently pay nothing?
§ Mr. Smith
Yes, indeed. My hon. Friend is right; I believe that the current system came from Florida, where they produce such good voting machines. My hon. Friend is right to point to the improved capacity that we will have to chase those who pay nothing. That is in addition to the advantages to the child maintenance premium, which, in benefit and payment terms, will provide an incentive where there is none—apart from the child bonus—for families on income support and jobseeker's allowance.
We now have an opportunity to increase the level of payment and, more generally, to reinforce, where appropriate, the importance of non-resident parents meeting their responsibilities and having contact with their children. I hope that because the new system makes 573 it easier to address financial issues, it will do rather less to sour relations between parents with care and non-resident parents.
§ Mr. Gary Streeter (South-West Devon)
For some years now, the CSA has been adept at collecting straightforward amounts of maintenance from people on PAYE—fathers, generally speaking—so that their children are properly maintained. What in the new system will help the CSA to collect money from people in small businesses and those whose financial circumstances are complex or opaque? Let us face it: the CSA has not been good at collecting money from such people, and children all over the country are being short-changed. Will the Secretary of State assure us that the new system will help the CSA to perform that task?
§ Mr. Smith
Yes, it will. It is simpler and more straightforward, and there is not the same scope for the endless special pleading that is almost designed into the existing system, with the 100-plus pieces of information that may be relevant to an assessment. In addition, as I have said, it will release staff resources for a more dedicated enforcement effort. We collaborate closely with the Inland Revenue and we will have access to its records, which should help with the problem of the self-employed that the hon. Gentleman identified.
§ Mr. Frank Field (Birkenhead)
May I commiserate with the Secretary of Secretary, because once the Government decided not to base the reform on a simple tax rate he was presented with a reform that would be difficult to deliver? So may I congratulate him on extending way into the distance the date on which we bring existing claimants on to the new active register? Does he accept, however, that given that the reform was announced in 2000, many of our constituents feel a sense of grievance about the level at which they pay maintenance? Will he help them to sue EDS for compensation for the further delay of what is a necessary reform?
§ Mr. Smith
I thank my right hon. Friend for his congratulations and commiserations. I am sorry to say, however, that I cannot support his plea for money to sue EDS. As I said, we have a long-term partnership for delivery with EDS. I am satisfied that the system will work. We have reached an agreement with it on how the costs are to be shared. That has both incentivised levels of performance and secured the best deal for the taxpayer achievable in the circumstances.
§ Mrs. Angela Browning (Tiverton and Honiton)
While the Secretary of State makes the changes, will he take another look at the procedures for attachment of earnings orders? I am worried that the CSA is not rigorous enough in ensuring that employers pay regularly when it has made an order, because the liability remains with the parent whose wages are being deducted. If a company goes broke after making no payments to the CSA for weeks the parent with responsibility is still required to pick up the tab.
§ Mr. Smith
I should be pleased to look into any cases that the hon. Lady draws to my attention and will raise 574 with officials the issue that she poses. It is important in operating the new system that attachment of earnings and so on are enforced in a way that is business friendly. However, we must also respect client privacy. For example, arrangements will be made for clients to be rung at home rather than at work; we are learning from past mistakes.
§ Rob Marris (Wolverhampton, South-West)
Since the Minister first mooted changes to the 10, 15, 25 per cent. and so on, he has published a Green Paper on pension reform. I notice that the percentages refer to net income, including pension contributions. The Green Paper sets out a lifetime savings in pensions of £1.4 million. Will he assure me that, to use his word, "robust" action will be taken to stop recalcitrant non-resident parents boosting their pension contributions, thereby depressing the amount that they should pay for their children?
§ Mr. Smith
The system is simple and straightforward. My hon. Friend invites me to add complexities and bureaucratic regulation to it. I am sure that similar invitations will be made along the way. I understand his point, but we will best get money to parents with care and the children who need it by keeping the system simple.
§ Alistair Burt (North-East Bedfordshire)
As one who bears as many ministerial scars as many others do in relation to the Child Support Agency, I simply say that although we are all equally vociferous and critical of our relative roles in making the agency work, we should never forget that collectively as a House it was our failure to keep our eye on the ball as the legislation was passed that caused many of the difficulties that both Governments have sought to repair.
Will the right hon. Gentleman do his best to look at two issues that remain at the core of concerns? The first is the repeated messages issued by the Child Support Agency bearing erroneous figures that people are asked to accept and the frequent changes that it makes to those figures. If the new system does something about that, it will be greatly welcomed. Secondly, on the phase-in, I urge the Secretary of State to remember that people feel a sense of injustice if they know that they will pay less in future, yet are forced to pay more for a lengthy period of time. Will he do his best to make sure that the phase-in period is as tight as possible?
§ Mr. Smith
Yes, the new system, as I said, is much simpler, so it should dramatically cut the errors that, we recall, were made when the CSA started nearly 10 years ago. We all remember people coming to our advice surgeries clutching half a dozen envelopes that they had received in a fortnight all giving different assessments based on different criteria. That has been getting better, as I said, but to operate effectively the system must be kept simple, which is why we have cut dramatically the 100-plus variables that were previously part of the calculation.
As for the feelings of resentment or frustration that people may experience because the new system will operate on a more favourable basis, that is why, along with the merits of everybody knowing where they stand and being treated consistently, and all recipients of income support and jobseeker's allowance getting the 575 child premium, it makes sense to move to C-day—conversion day—as quickly as possible. Just as it would have been wrong to rush the initial move to the new system until the IT was right, I shall not speculate about a date until I know when we can deliver.
§ Mr. Bill O'Brien (Normanton)
The new transparent and fair system is welcome, but we must have regard for the fact that, under the old system, a third of children did not receive the maintenance to which they were entitled and that both parents are responsible for paying maintenance. Will my right hon. Friend act to ensure that children who are being denied maintenance receive urgent consideration by the Child Support Agency to ensure that they receive their entitlement? The CSA was guilty of maladministration under the old system, so will he agree to an appeals procedure to determine the level of compensation to be paid by the CSA when maladministration has occurred?
§ Mr. Smith
I thank my hon. Friend for his welcome, and am pleased to confirm that, of course, we will step up action so that payment is made to parents with care who are not currently receiving it. I shall look at his point about compensation, but I think that there are established procedures on the levels of compensation arising from ombudsman cases. As for reminding people of the importance of meeting their child support obligations, despite the banter between parties about the history of the CSA, there is a unity of purpose in the House. It would be good if a united message could go out from the Chamber that we all believe that both parents need fully to meet their responsibilities for their children, whether financial or otherwise.
§ Miss Julie Kirkbride (Bromsgrove)
The Minister will be all too aware of many absent parents' sensitivity about child support payments. Members have said that among our constituents who will pay less under the new scheme than they do at present there will be a tremendous urge to be transferred to the new system of payment. Will the right hon. Gentleman help the House a little by giving a possible time scale and say what is the earliest date for the transfer of existing payments? With reference to a previous question, can he explain how he will begin to transfer those people to the new system? Will the phasing-in be based on an alphabetical, regional or other system?
§ Mr. Smith
I am afraid that I cannot offer the hon. Lady much comfort. For reasons that I have given, I shall not be tempted to speculate about dates without knowing how the new arrangements are working. She says that those who look forward to paying less will welcome an early move, but there is another side to the equation: those who receive more now than they will in future might not look forward to the move quite as much.
As a result of the sometimes significant shifts that can be involved, we shall phase in changed assessments, which could take more than five years, so that people do not face too sharp an increase or fall in the sum they are paying. I will set out the basis on which the conversion of cases will take place when we are ready to do so. I am not in a position to do so at the moment.
§ Mrs. Ann Cryer (Keighley)
May I seek further assurances on whether the changes will have any bearing 576 on the many self-employed, non-resident parents who seem to get away with paying very little towards their children's upkeep despite a fairly affluent lifestyle?
§ Mr. Smith
Yes, indeed. As I have said, as a consequence of the simplicity and greater efficiency of the new system, we shall be able to devote more resources precisely to that. Moreover, it will be possible for a parent with care who believes that the lifestyle enjoyed by the non-resident parent is inconsistent with the income declared to draw that to the CSA's attention. If parents with care are still dissatisfied, they are ultimately able to take the matter to appeal at a tribunal.
§ Chris Grayling (Epsom and Ewell)
May I amplify the points about not only companies but all aspects of self-employment? I have examples in my constituency of people managing to hide the true extent of their earnings by clever accounting through partnerships or companies. The fixed formulas described by the Minister may not necessarily help such cases. How will the CSA deal with those who hide their true earnings through self-employment, and how will it manage to extract the information when it appears to have no clear responsibility for taking draconian action to find out what people really earn today?
§ Mr. Smith
We will collaborate closely with the Inland Revenue on these matters. It has had the task on occasions of identifying the true level of income or profit that people earn. We will pursue that closer collaboration and will act on the information available. We shall also pursue liabilities and accrued debts that much more vigorously because our staff will not have to spend so much more time perpetually assessing and reassessing cases as a result of circumstances never catching up with the string of appeals and procedural devices exploited by those who want to put off payments. I am sure that some will try to hide their true income and so on, but it will be progressively harder for them to get away with that.
§ Dr. Nick Palmer (Broxtowe)
I very much welcome the Secretary of State's announcement. As someone who has introduced quite a few IT systems, I am aware that the prediction of completion dates is more an art than a science. We should simply accept that as a fact. Will he advise the House, however, on the precise implications of his assertion that about 30,000 cases a month will be brought into the system? How does that compare with the number of new cases that arise? Does the figure represent the capacity of the system—in other words, when we start to deal with new cases, it will take about 30 months to transfer 900.000 cases? Will he elaborate a little on that?
§ Mr. Smith
The 30,000 figure is the flow of new cases into the CSA. It is not constrained by the ability of the system to cope with them; it is the number that the system has to be able to cope with. It will be added to, as I explained, as more and more linked cases come on stream.
§ Mr. Simon Thomas (Ceredigion)
Will the Minister give some reassurance on enforcement, especially of current cases? My constituent, Mrs. Gowman, is owed 577 £50,000 by her ex-husband, Mr. Bruce, because the agency sat on her enforcement and took no action for 15 months. Will the Minister assure my constituents and others that agency staff will not use the introduction of the new system to take their eyes off the ball on current enforcement cases, and that enforcement will be considerably improved?
§ Mr. Smith
Current enforcement cases will also benefit from the ability of staff to concentrate more on collecting existing liabilities and debts. For reasons that the hon. Gentleman will understand, I cannot discuss an individual case on the Floor of the House, although I shall be happy to look into it if he sends me details.
§ Mr. Paul Tyler (North Cornwall)
The Secretary of State laid great stress, rightly, on levels of compliance. Will he give a precise figure for the level of compliance among self-employed non-resident parents? He has already answered a number of questions from Members who are clearly worried about the level of it. If we are to measure the extent of the existing problem with this category of parents, and to measure any improvements under the new system, which he is confident will be achieved, we need that figure.
§ Mr. Smith
I think I can remember the figure, but I am not certain, so I shall let the hon. Gentleman know what it is. His question is perfectly reasonable. The figure will be well short of the 68 per cent. for cash compliance and 71 per cent. for case compliance, on average. I will let him and the House have the figure, so that we can assess progress against it.
§ Mr. Tony McWalter (Hemel Hempstead)
I congratulate my right hon. Friend on the statement today and on loosening the Gordian knot that was left to him by the Opposition. Compliance is essential. My former constituent, Mr. Barr, has been evading his responsibilities for 10 years. The Department has thrown the book at Mr. Barr and tried to seize his house and everything else, but still failed. Our noble Friend Baroness Hollis, who is sitting not a million miles away, has tried extremely hard to try to solve the case, but as long as self-employed people with large private pension schemes can get away with violating their obligations, the entire system is brought into disrepute. Will my right hon. Friend assure us that compliance will be dealt with properly at last?
§ Mr. Smith
Yes, I am determined that that should be done. For the reasons that my hon. Friend and others have pointed out, it is crucial both to confidence in the system and to people's basic sense of fairness that self-employed people, like employed people, meet their responsibilities.
I now have the figure that the hon. Member for North Cornwall (Mr. Tyler) asked for. The compliance rate for self-employed people is 34 per cent.—as I said, well short of the average.
§ Angela Watkinson (Upminster)
What can be done under the new IT system to check the accuracy of the information provided not just by the non-resident 578 parent, but by the caring parent, to avoid the sort of injustices about which we have heard—overtly successful business people who are able to produce books that show that the business is not in profit, and at the other extreme, people such as a postman in my constituency, who is paying CSA payments for one child which represent 33 per cent. of his gross income and 50 per cent. of his net income? Clearly, both cases are unjust.
§ Mr. Smith
Yes, indeed. That is why the new formula is so much fairer, as well as being so much more straightforward, and why it was widely supported in the extensive consultation. Just about the only information that parents with care have to supply is how many children they have and whether they are on benefit. The only other factors that it might be material to take into account is whether, for example, the non-resident parent is contributing towards the costs of accommodation or education. There is provision in the new system to take that into account.
§ Mr. Desmond Swayne (New Forest, West)
Members of Parliament will have an increased case load of complaints consequent upon the very simplicity to which the Secretary of State has drawn attention, as a result of the fact that the new system takes into account far fewer individual circumstances. The pay-off will be the increased number of payers who are not paying now. What targets has the Secretary of State set for that?
§ Mr. Smith
The target for compliance, both for cases and for cash, is to be 75 per cent. I agree with the hon. Gentleman. The pay-off is money getting to the parents with care and the children who need it, and what the system does more generally to reinforce people honouring their responsibilities as parents, whether as parents with care or as non-resident parents. The hon. Gentleman points to more complaints. Putting the new cases on the system will result in some complaints—we would get complaints about the introduction of any system—but by and large, given that for many people their payments will be less and the new system will be more straightforward, I should have thought that they would welcome it. What we must prepare for and explain carefully is conversion of the existing cases. However, as I said, with regard to MPs receiving more inquiries from constituents, I shall remind them tomorrow of the dedicated helpline that they and their staff can access.
§ David Cairns (Greenock and Inverclyde)
I am very grateful for the reminder about the helpline.
One of the things that will prevent the CSA from working full-time on calculating compliance will undoubtedly be its having to answer the many thousands of calls that it will receive from those in existing cases, who have, understandably, been left none the wiser following my right hon. Friend's statement. Do we not owe it to those people, who have been long suffering and patient, to contact them directly and explain what we are trying to do, be honest about what 579 has gone wrong and express our firm commitment to move them on to the new system as soon as the computer will allow us to do so?
§ Mr. Smith
My hon. Friend makes a very good point; for the reason that he gives, we shall write to those in all existing cases, explaining exactly what is going on.
§ Andrew Selous (South-West Bedfordshire)
The Secretary of State will know that all of us in the House would want payments by non-resident parents to be both fair and reasonable, but as a third of non-resident parents are not making any payments at all, the question of enforcement is on the minds of my constituents who are parents with care responsibilities. On the sanctions that it is open to him to use, where no payment is made both persistently and wilfully on the part of the non-resident parent and no attempt is made to establish contact with the children, what further steps will his Department take to remove driving licences? He already has that power. How many driving licences have been taken away, and does he plan to increase the number under the reforms?
§ Mr. Smith
The penalties have been increased. I shall certainly keep a very close eye on the matter to see whether we need to strengthen them still further. On the withdrawal of driving licences, the fact that it is being drawn to people's attention and that such a threat is hanging above them works all the more effectively when the licence is not removed; they cough up the money that they owe.