COMMONS AMENDMENT (Hansard, 22 July 1991)

§ Lord Henley
My Lords, I beg to move that the House do agree with the Commons in their Amendment No. 113.
I do not think there is any disagreement that parents should continue paying maintenance even when the maintenance requirement is met. Children should be able to benefit from the prosperity of their absent parent in the same way as children in families that are not broken do. But we believe that there comes a point where an automatic formula is not appropriate.
We made it clear in the White Paper that it was our intention to set a cut-off point at which an absent parent who was well off would not automatically continue to pay extra maintenance under the formula. Provision for that is made in paragraph 4 of Schedule 1.
This amendment deals with the way in which the cut-off point is to be worked out. It proposes that it should be worked out by setting a maximum amount of extra maintenance to be paid per child. We believe 589 that the amendment, by changing the approach for the setting of the cut-off point, so that it looks more at what is due to the children rather than looking to the parents' income in isolation, is a better approach.
We believe that it is consistent with the aim of better providing for the interests of children.

§ Lord Mishcon
My Lords, if anybody looking at the amendment understands its purpose (which was so clearly explained by the Minister), he is certainly a better mathematician than I ever was. Although I cannot do any more in regard to this Bill, certainly in the future when legislation is to affect simple people -especially when it affects simple people - I can only plead that complicated formulae are used which none but experts could ever hope to understand. One of those experts happens to be the noble and learned Lord the Lord Chancellor and another, I am sure, is the Minister. But they must be in a minority in this land.

§ Lord Renton
My Lords, it may console the noble Lord, Lord Mishcon, to learn that, as it contains one formula, the proposed amendment is in fact much simpler than the combined effect of the two formulae that were in the Bill originally and which are now to he replaced. Although this may not be the best Bill to include something like eight or nine formulae, formulae have their place. Perhaps at this late hour I may use colloquial English. There is a thing called the Renton Report, in which it is suggested that in suitable circumstances formulae such as this one could be used. They do sometimes help.
Having said that, will my noble friend clarify a point. which puzzles me? It arises from what he said and which is in his note. My puzzlement perhaps arises from my lack of understanding in the time available.
The noble Lord said that this formula determines the maximum amount to be paid by the absent parent. Does that mean that, by order, a lesser amount than that maximum amount could be ordered by him to be paid? If so, and if he means what he says in the note, the matter is of some importance.

§ Lord Simon of Glaisdale
My Lords, the formula is the bureaucratic heart of this bureaucratic Bill. The Renton Committee gave its blessing to the use of formulae, particularly in revenue statutes, but even there it gave warning that they must not be incomprehensible to the people to whom they were addressed. If I may say so, I entirely agree with the noble Lord, Lord Mishcon, that all these formulae are quite incomprehensible to the people to whom they are addressed.
In correspondence with my noble and learned friend about another provision of the Bill, a letter came to me stating that it was important that the Bill should be understood by ordinary people. How many ordinary people will understand Schedule 1? Let us not forget who those ordinary people are. As my noble and learned friend pointed out many months ago, the 590 two typical people are those in Example 3 in the White Paper: a young man with under average earnings with a younger wife with two children. One goes further. The provisions have to be understood by girls of 12 years and upwards and boys of 14 in Scotland.
It is against that background that one considers what the amendment provides. Curiously enough, it amends a provision to which I drew attention at Report stage and whose virtues the noble Lord, Lord Henley, offered to defend on a blackboard. As it was the early hours of the morning, your Lordships graciously dispensed with that kindness. The noble Lord, Lord Renton, pointed out that this was a shorter formula. However, it is a great mistake to think that everything is said by the way in which it is shown in the amendment.

The Earl of Halsbury
My Lords, perhaps my noble and learned friend will allow me to intervene. Has the Minister by any chance forgotten the number that he first thought of?

§ Lord Henley
My Lords, I am sorry that I was unable to bring along a blackboard. On the previous occasion when we discussed various formulae it was rather late at night. We seem to be repeating ourselves. It may have something to do with the fact that schedules come towards the end of the Bill.
I thank my noble friend Lord Renton for welcoming the use of formulae on certain occasions. This is an occasion when the use of a formula can be justified, and I shall set out what the algebraic formula means.
But first I shall deal with a point made by my noble friend. He asked whether the formula set a maximum 591 and whether less can be payable by order. The answer is no. How much maintenance anyone pays is by a fixed deduction rate until the maximum is reached. How much is paid depends therefore upon income and affordability, which are built into the formula. I am not sure whether that was the point that my noble friend was trying to make. If he was also worried that that provides a maximum beyond which one could not go and that therefore the children might not be able to benefit from an absent parent whom we might call seriously rich rather than one having more income than the average, Clause 8 enables the courts to make awards in addition to formula awards.
I shall now give an explanation of the algebra contained in the amendment. Where the total assessable income of both parents is more than sufficient to meet the maintenance requirement in full, the maintenance the absent parent will be expected to pay will be composed of two elements—the basic element and the additional element. It is the additional element (the AE) about which we are talking. The basic element is defined in paragraph 3 of Schedule 1 and represents the amount of the maintenance requirement the absent parent should pay based on his share of the total assessable income.
The definition of the additional element which will apply normally is found in paragraph 4(1) and looks at the amount of the absent parent's assessable income left after he has met his share of the maintenance requirement. A lower deduction rate will apply to that income. However, if the use of that formula were unrestricted, some people with very high incomes would pay large amounts of maintenance. As I have already said, there should be a cut-off point for the amount of maintenance generated by the maintenance formula.
In looking at what that cut-off point should he, we were guided by three considerations. First, it should reflect the number and age of children to whom the maintenance requirement applies—the more children, and the older the children, the higher the cut-off point. Secondly, the cut-off point should rise over time to match rises in income and prices, and we do not want to have to amend primary legislation to change the level of the ceiling. Finally, it is right to take account of the caring parent's ability to support her child when looking at the cut-off point for that child.
The way we had drafted paragraphs 4(3) and 4(4) did not satisfy those conditions. We believe the amendment achieves our aim. It ensures that the total maintenance paid by both parents depends upon the maintenance requirement plus some multiple (named Z in the formula) of the aggregate Q of the amounts used in calculating the maintenance requirement and which are paid for the child or children and is therefore linked to the number and age of children. The multiplier and some of the amounts will be prescribed in regulations which will he affirmative and hence open to debate. As the amounts are linked to income support rates, the cut-off point will increase when benefits are uprated. The amount payable by the absent parent will depend upon his share of the total assessable income.
592 The noble Lord, Lord Mishcon. criticised the complexity of the formulae and said that it is very difficult for the man in the street to understand them. We had some fairly light-hearted discussion on the formulae generally at earlier stages of the Bill. I appreciate that they can be difficult to understand but we shall make available guidance which can spell out those matters in a way which legislation cannot do but in a way which will make it possible to understand for the man in the street or his adviser.
With that assurance, I commend the amendment to the House.