HL Deb 06 April 1995 vol 563 cc368-78

2.39 p.m.

The Minister of State, Department of Social Security (Lord Mackay of Ardbrecknish) rose to move, That the draft regulations laid before the House on 16th March be approved [14th Report from the Joint Committee].

The noble Lord said: My Lords, in January the Government published the White Paper Improving Child Support, which set out our plans for reforming the arrangements for child support to ensure that the scheme delivers a fair, efficient and effective means of establishing maintenance for children whose parents live apart. The regulations will bring into effect those of the proposals which can be enacted through subordinate legislation.

The main principle of the scheme—that parents are responsible for their children, even where they live apart —still commands wide support. The Government recognised from the start that the Child Support Act 1991 constituted a major reform to social policy, and that it would take time for it to become widely accepted. As promised, we have kept the scheme under review and have concluded that changes to the scheme are necessary. The changes proposed in the White Paper are designed to balance the needs of all the interested parties: the children, parents with care, absent parents and the taxpayer. Many of the changes require primary legislation which I hope to be bringing from another place shortly. Other changes can be brought in by the regulations before us today which will enable many parents to benefit quickly in advance of wider ranging changes proposed in the Bill.

In addition to the White Paper proposals, the regulations contain a number of corrective amendments which I am sure will be welcomed by your Lordships.

Turning to the detail, the regulations introduce a provision to ensure that no absent parent will normally be assessed to pay more than 30 per cent, of his net income. This will guarantee that maximum maintenance payments are brought into line with original expectations.

The regulations also introduce an allowance to reflect past transfers of property or capital, made before April 1993—often referred to, incorrectly, as "clean break" settlements. The Government have always made it clear that there can never be a clean break from children. However, we accept that many parents would not have entered into the agreements had they been aware that the advent of the Child Support Act would substantially increase their maintenance liabilities. After careful consideration, we have concluded that some explicit recognition of these settlements is justified.

The Government intend that the proposed system for departures from the normal maintenance assessment will, in due course, deal with these cases. However, the passage of the necessary primary legislation and the setting up of the departure system will take time. We are therefore introducing a broad-brush allowance in the formula now, so that parents do not have to wait until 1996–97 for recognition of the settlements. There will be three rates of the allowance which will depend on the value of the property or capital transferred: £20 where the value of the transfer was between £5,000 and £10,000; £40 where the amount was between £10,000 and £25,000 and £60 where the transfer was £25,000 or more. No allowance will be payable if the transfer was less than £5,000.

The regulations also introduce an allowance towards travel to work costs, intended to provide some help where parents travel long distances. In the large majority of cases—and even more so following the other changes we are making —the formula leaves absent parents with sufficient income to meet other expenses such as travel to work costs. However, it is important that work incentives are maintained and this allowance will assist those parents who, because they have to travel long distances, tend to have particularly high costs.

Again, the allowance will be calculated on a broad-brush approach, which will enable a simple calculation to be made, avoiding the need for detailed inquiries to be carried out in each case. If either parent feels that the allowance is not representative they will, in due course, be able to apply for a departure, where there will be more scope to take account of the particular circumstances.

Many commentators have argued that greater priority should be given to step-families. We remain convinced that it would be wrong to let step-families take priority over first families in all cases; their needs should be met in the first instance by their natural parents. We do, however, agree with the recommendation of the Select Committee in another place that allowable housing costs should not be reduced where the absent parent has a new partner or step-children living with him, and the regulations remove that provision.

The regulations also contain a range of measures designed to help the operation of the scheme. The Government have already acknowledged that performance of the agency in the early days did not fully meet expectations, despite the efforts of the staff. However, the agency is now achieving significant improvements, and the measures contained in this package will help to ensure that that continues.

In particular, the regulations allow for periodic reviews to be conducted only every two years, rather than annually as at present, which will relieve the agency of the considerable burden of making a full reassessment of all cases every year. Of course, it is still open to either parent to ask for a re-assessment if there is a relevant change of circumstances.

The regulations also contain a number of measures which will simplify the current complex provisions for determining earnings and housing costs. These should reduce considerably the need for time-consuming follow-up investigations while ensuring that the figures used are representative and accurate.

Finally, we have made provision for the start date of liability to be deferred for eight weeks where the absent parent provides certain essential information within four weeks. That will act as an incentive for absent parents to co-operate quickly and help to ensure that maintenance feeds through to parents with care as soon as possible.

I believe that this package of modifications—together with those measures that we hope to bring before the House shortly in the Bill—meet the major concerns expressed and at the same time preserve the basic principles of the child support scheme. The regulations will also enable the Child Support Agency to deal with cases more effectively, and I commend them to the House.

Moved, That the draft regulations laid before the House on 16th March be approved [14th Report from the Joint Committee].—(Lord Mackay of Ardbrecknish.)

Lord Haskel

My Lords, these Benches support the principle that absent parents should still be responsible for their children and should properly contribute to their maintenance. But we have long criticised the Child Support Agency generally for its administrative complexity. In particular, we criticised it because it was retrospective, thus throwing into chaos arrangements already made by families at the point of divorce; because it failed to take into account property and capital transfers at the point of divorce; because it failed to help those parents with care who merely replaced in benefit what was lost in maintenance and then only if the maintenance was actually paid; and because it failed to offer, unlike the agency in Australia, defined grounds for appeal.

So we have not and will not oppose government efforts to reform the CSA along the lines of Opposition views. Indeed, if the Government had taken seriously and adopted Opposition amendments when the Bill went through both Houses, virtually all the problems that they are now having to address would not have arisen.

Let me say immediately that we welcome many of the amendments listed by the Minister: the abolition of interest rates on delayed payment; the suspension of fees; the proposed arrangements for arrears; the simplified verification of earnings; and, in Regulation 50, the simplification of housing costs, which will help second families. But we want to register our concern that virtually all the changes proposed by these regulations benefit the absent parent, usually the father. Very little in these changes will help the parent with care, who is usually the mother. He will have his maintenance contribution capped, which is of especial benefit to the better off; but she will still receive not a penny in disregard, even though, having lost income support, she loses the passported benefits that go with it.

However, that is an issue to which we shall return when the Bill is before us. Instead, let me ask the Minister to clarify seven points in these regulations. First, disclosure of information, Regulation 24: what assurance will the Minister give that issues of privacy and confidentiality will not be abused?

Secondly, property settlements, Regulation 44: we are glad to see that on a broad brush basis they are being taken into account, but why are only those property and capital settlements made before April 1993 brought into the calculation? Would it not be wise and proper to make all such settlements part of the maintenance agreement? If we do not, solicitors will understandably urge male clients not to accept the transfer to the spouse of the matrimonial home, and she may face eviction when her youngest child grows up.

The third point relates to travel-to-work costs, Schedule 3B. We think it is reasonable. But will the Minister remind us what arrangements there are for the costs of travelling to visit the child?

The fourth point concerns the periodic review of maintenance assessment every two years under Regulation 34. We appreciate the need to catch up on the administrative backlog. But do the Government propose to return to annual reviews, which are more desirable, when they have caught up?

The Minister admitted that some 30,000 to 50,000 parents with care will be losers because they will lose more in maintenance than they will receive back in benefit. Is that fair? What arrangements for compensation is the Minister making? Given that so much of the hostility between second and first families occurs when the income of the second wife is taken into account in assessing the liability of the husband to his maintenance of the first wife, are the Government proposing to change that?

We welcome the abolition in Regulation 46 of the non-dependent adult deduction. Are the Government considering extending that to income support and housing benefit? Finally, will the Government tell the House what the total full-year cost of the regulation changes will be, how much of that will go to the absent parent, and how much to the parent with care?

While broadly welcoming these changes we regard them still as one-sided. We hope that when we receive the Child Support Bill we shall be able to deal more even-handedly with all the parties involved in child maintenance.

Earl Russell

My Lords, when the Home Secretary is attempting to transmute the principle of parliamentary sovereignty into the principle of the infallibility of the Secretary of State, we must welcome any government climb-down, however small. However, on this occasion the Department of Social Security has forgotten the first law of climb-down: "You must reach the ground". It has also forgotten the second law of climb-down: "The longer you put off the climb-down, the further you have to climb". Political climb-downs are like having got onto the wrong escalator. If one gets on to the up escalator by mistake and does not reverse very quickly indeed, one has an extremely long way to come down.

We have given the Government plenty of warning that we could not indefinitely go on supporting the continuation of the Act. We have now reached the point where those warnings have to move from the conditional into the actual. The Government should not be surprised. I hold a press release issued by my honourable friend Mr. Kirkwood on 9th February 1994. It says, Failure to act will seriously risk the All-Party support the Act has up until now enjoyed. There must be substantial changes made to repair the impact of the Child Support Agency in the way it has operated the Act in practice. If there is nothing done we may be forced into a position where the pressure for the Act to be repealed will be impossible to resist". The Minister knows, or at least he ought to know, that I have repeated those warnings in private on many occasions to his honourable friend Mr. Burt, to his noble friend Viscount Astor and, indeed, on at least one occasion I can remember, to the Minister himself. At last, very belatedly, we have a few changes. In fact we have the shell of a number of changes I recommended on 9th February 1994. But when we look into that shell we find that it is largely empty.

Let us take the travel-to-work concession. We have here, as the Minister puts it, a "broad brush" formula. That brush is as broad as the way that leads to damnation. We have concessions only at 10p a mile for journeys above 150 miles a week. People who travel through fare zone 4 on the London Underground pay £932 a year. For people who are assessed to the bone under the Act, to get no concession on that is not equitable and not helpful. It seems to be a mistake that the agency can insist on doing the assessment as the crow flies. We all know that we do not go to work as the crow flies. To take an example, the journey from Tarbert to Tighnabruaich is 10 miles as the crow flies across Loch Fyne but 80 miles by road. The Minister is unwise to shake his head because the evidence for that comes from my honourable friend Ray Michie, who succeeded him in what was once his constituency, and she has as much claim to know the distance as he does.

Lord Mackay of Ardbrecknish

My Lords, perhaps the noble Earl can tell me whether there is a person making this journey by road.

Earl Russell

My Lords, that I cannot tell him. However, if a person wishes to go to work across that route he should have the right to do so. An injustice which is done to one person remains an injustice. That is a fundamental principle.

It is also one of the flaws in this travel-to-work concession that it will be useful almost entirely to those who travel to work by public transport. As I have reminded the Minister on many other occasions, we are rapidly developing a new poverty trap because there are a great many people who cannot go to work by public transport and on the wages they are offered, or indeed on benefit, they cannot possibly afford a car. The really big costs of work for those people are the road fund licence, insurance and the maintenance of their cars. I warned the Minister on 23rd January that if the concessions included nothing on this point, they would be unacceptable. They do not.

Perhaps I may quote a letter which is one of many. It is not a particularly strong one. It just happened to be the one that was lying on my desk this morning waiting for an answer: Travel to work costs. This is the one change that I stupidly thought might just save my bacon. I really thought that the Agency was going to be able to take all my costs for travelling to my place of employment into consideration, but alas no. I as a Police Officer have to work a seven day shift rota and as my station is only 9 miles away along the road and only 7 miles away as the crow flies I am not entitled to a penny even though it costs me approximately £15.00 a week in petrol alone without the cost of providing a Vehicle, Insurance, Tax etc, Also the new change only supports the idea of someone who works five days a week. When will the Government realise that we do not all conform to their cosy idea of how we all live". That is vox populi. I am not telling the Minister that it is vox Dei but I am telling him that he would be wise to listen to it and that he may well have left it too late.

I will warn the Minister also that I think he was unwise today in putting as much blame as he did for past misfortunes on the agency. The agency has run into difficulty very largely because the Government have not appreciated the back-breaking burden of work it was asked to undertake. We did warn them but they did not listen.

As regards property settlements—"dirty break" settlements because the Minister does not like the phrase "clean break" —again we have a token concession. Where we have a settlement between £5,000 and £9,999, allowance and exempt income of £20 may mean an actual maintenance reduction of £3 a week, and on the figure of £25,000 and upwards, an actual maintenance reduction of £9 a week. That is not equitable.

I do not believe that the Government understand at all quite how much resentment among those who have been subject to this Act concentrates on the feeling that the overriding of court settlements amounts to an attack on the rule of law. That is something that I have heard over and over again. The only sensible thing to have done would have been to exclude property settlements made before April 1993 altogether and to have made the Act operate only for people whose situation began after the Act came into force.

As regards second families, I believe that the Minister was offering a red herring in suggesting that any of us had for a moment suggested that second families should take priority. What I have suggested in this Chamber over and over again is that first and second families should count equally. The children are all there and, being there, they need support.

I welcome the concession on housing. That is genuinely valuable, and I am glad to see it. But it still falls short of the concession that the first and second families should count equally. I remind both the other two parties that it is very unwise to portray this as a straight confrontation between men and women. I have heard from large numbers of second wives who are becoming increasingly irritated at being treated as honorary men. They believe that they have a point of view which needs to be heard but which has not yet had a hearing.

I welcome the cap on maintenance. I welcome the concession on fees, but I do not understand why that has to operate for only two years and not permanently. Of course we agree, as all Benches do, with the principle that fathers, and indeed the parents in these changing times should support their children and that that liability should continue. In coming round to supporting the repeal of the Act we do it because we support that principle. We believe that the attempt to pursue that principle in an unreasonable and impossible manner risks discrediting for a generation the principle that parents should pay. If that is the price of the Act, it would be a very heavy price indeed.

3 p.m.

Lord Mackay of Ardbrecknish

My Lords, we have had a short and interesting debate. I hope to respond to the points made by the noble Lord, Lord Haskel, who again emphasised the support of the Labour Party for the principle that parents cannot walk away from their children when they walk away from their marriage and they have a continuing responsibility to those children which, I guess, goes on throughout their lives. As far as we are concerned in this Bill, it goes on financially while the children have to be maintained and looked after.

In the speech of the noble Earl, Lord Russell, which I understand comes from the other place, I detected a kind of disengagement by the Liberal Democrat Party from that general principle and a moving away from support for the principle that absent parents and parents who have been divorced—

Earl Russell

My Lords, I ask the Minister to withdraw that remark. He must have heard me say very plainly that we are dedicated to the principle that parents should pay. We have taken that position because we believe that the Government are discrediting the principle.

Lord Mackay of Ardbrecknish

My Lords, I am pleased that I have managed to gel an assertion from the noble Earl that the Liberal Democrat Party is not disengaging. There has been just a little suggestion that it has been disengaging, presumably because on the doorstep Liberal Democrats have met a few irate absent parents.

Earl Russell

My Lords, once again I ask the Minister to withdraw those words. He must know that they are not true.

Lord Mackay of Ardbrecknish

My Lords, I was just about to say that I am more than happy to hear that the noble Earl continues to be in the same company as the noble Lord, Lord Haskel, and myself in supporting the principle that absent parents should pay. I am glad to have on the record that clear commitment from the Liberal Democrat Party—

Lord Beaumont of Whitley

My Lords, why did the Minister raise that point given that my noble friend Lord Russell said in specific terms within the last two minutes what I heard him say in his speech before the Minister rose to his feet? My noble friend said that then, so why did not the Minister take it in then?

Lord Mackay of Ardbrecknish

My Lords, I seem to have stunned the Liberal Democrat Party into a great deal of righteous indignation. I am simply making a point and I am sorry that noble Lords opposite seem to be so thin-skinned that they cannot take it. Perhaps they are having it both ways as usual, but they appear on the one hand to want to stick to the principle, while on the other hand they are extremely critical of the agency and the Act. I am delighted that members of the Liberal Democrat Party in this House have now clearly stated that they are in favour of the continuation of the system whereby an absent parent continues to meet his financial responsibilities and, as I am sure that we all hope, his other responsibilities to the children of the marriage which he has left.

I turn now to the various points that have been raised. The noble Lord, Lord Haskel, asked me about the Australian system and the grounds for appeal there at the outset. I think it is fair to say that the Australian system is much more broad-brush than our own. It is based on taking a percentage of gross income and varying it depending on the number of children. The only allowances in that system for exempt income are income support equivalents for the basic living costs, with nothing for housing costs. There is no equivalent of protected income in Australia. Assessments there can cause real hardship. That is why it was recognised there that an appeals system was essential from the outset. As the noble Lord, Lord Haskel, knows, we shall shortly be introducing a Bill to establish a system whereby people will he able to find a way to depart from the formula if their individual circumstances justify that.

I was asked whether we shall be compensating persons with care who are on family credit or disability working allowance where the maintenance assessment is reduced by the regulations. We recognise that recipients of family credit or disability working allowance whose maintenance decreases as a result of the changes contained in the regulations cannot have their benefit adjusted immediately in the way that those on other income-related benefits can. We shall therefore he making special compensation payments to those families, based on half the amount of the reduction for the outstanding period of the family credit or DWA award.

The noble Lord, Lord Haskel, asked me about the costs of visiting the children as opposed to the costs of travelling to work. It is proposed that the costs of visiting the children shall be one of the specified special expenses for which a parent will be able to apply for a departure from the formula assessment under the scheme which it is proposed to bring in once the new Bill becomes an Act.

We are changing to two-yearly reviews from annual reviews, and I was asked whether it is our intention to reinstate annual reviews at some point in the future. We have no intention at present of returning to annual reviews because experience suggests that biennial reviews are more practical and still provide for much more frequent and regular reviews than did the old system. However, we shall continue to monitor and evaluate the procedures.

I was asked why the property and capital transfer allowances apply only to settlements made before 5th April 1993. The reason is that settlements made after April 1993 were made in the knowledge that maintenance for the children would be calculated in accordance with the formula prescribed under the Child Support Act. We believe that it is right to take account of the fact that after April 1993 people knew about the Child Support Act and that maintenance would have to be paid under its rules. It is to help those people who made a settlement prior to April 1993 that we are introducing the provisions.

I was pulled up by the noble Earl with regard to the phrase a "clean break". He suggested that perhaps I should call it a "dirty break". My real point is that although I appreciate that a man and a woman can make a clean break from each other, neither of them can make a clean break from the children of their marriage. They still have a responsibility to the children.

The noble Lord, Lord Haskel, asked about the disclosure regulations and what level of detail would be given in those circumstances. Only essential information will be given. One example may be where an absent parent denies paternity. Clearly, it is essential to be able to tell a parent with care that the absent parent has denied that he is the father. However, it would not be essential to tell her that he claimed to have had a vasectomy and this information would not be given. Another example is where an absent parent makes a maintenance application that cannot be accepted as the parent with care is claiming benefit. The CSA would reveal that the parent with care received a prescribed benefit. However, it would not be essential for the agency to tell the absent parent that the parent with care had a partner who claimed income support for the family. That information would not be given.

The noble Earl, Lord Russell, asked about absent parents, many of whom would see their maintenance reduced by much less than the property and capital transfer allowances in the exempt income. The allowances are based on the normal deduction rate of 50 per cent. Where an absent parent is paying maintenance at that rate his assessment will be reduced by £10, £20 or £30, depending on which of the three rates he is entitled to. These are fairly substantial reductions.

I accept that if an absent parent has sufficient income to pay the additional element he will have a lower reduction. The allowance is intended to be only a broad recognition of a property or capital settlement. It is not intended to reflect the value precisely. If either parent feels that it does not reflect the value precisely and is not fair, once the departure system comes in an application can be made under it.

I was asked by the noble Earl, Lord Russell, about travel to work costs and straight line costs. I thought that the example he chose was particularly inappropriate. Almost no one in his right mind would make the journey that he suggested. There is one small exception. He is clearly not up to date. There is a possibility of a ferry between Tarbert and Tighnabruaich. The proposal is there. It has started to run, albeit not all the year round. If that ferry runs regularly the journey will be much shorter as the crow flies.

Earl Russell

My Lords, one cannot eat possibilities.

Lord Mackay of Ardbrecknish

My Lords, I was going on to say that in those circumstances the noble Earl might be able to find one person who would be prepared to commute from Tarbert to Tighnabruaich or—perhaps much more likely—vice versa. However, I do not believe that we can start to devise legislation on hypothetical journeys that may be made by one absent parent in about a million. That is especially so when it is very doubtful whether anybody—be he a parent with care, absent parent or any kind of parent—will ever consider making that journey as a daily commute.

We decided that we would measure it in the way suggested simply because it was the easiest and most convenient method of attacking this in a broad brush way. We are trying to help those people who have high travel to work costs. I believe that the broad brush approach is the right one. When the departure system comes in they will be able to apply under it if that broad brush approach is unfair to them.

The noble Earl also suggested that the figure of 10 pence a mile was too low. The whole idea of the travel to work allowance is not to pay the absent parent's travel to work costs. That would be a little unfair to all the other people who travelled to work and did not get an allowance for them in their income tax or any other kind of arrangement. This is designed simply for those people whose costs are extremely high. It is intended to help them. We believe that a broad brush approach is the right one. I believe that the position is equally true in relation to car ownership and the like.

I have attempted to answer most, if not all, of the questions that have been asked. I thank the noble Lord, Lord Haskel, for his support. I take his tease. I expected nothing less. I thank the noble Earl, Lord Russell, for his support. I take his tease. I also tell him that I expected nothing less. I believe that the regulations and changes will improve the workings of the child support scheme. I hope that they will make it more acceptable to absent parents and that they will appreciate that they have a responsibility to their children. We hope that, via the Child Support Act, they will be able to carry out that responsibility. Therefore, I commend the regulations to the House.

Lord Haskel

My Lords, before the Minister sits down, perhaps I may remind him that I asked him how much the total full-year costs of the regulations will be, how much will go to the absent parent, and how much to the parent with care.

Lord Mackay of Ardbrecknish

My Lords, I shall have to ask the noble Lord to allow me to write to him with those details. The overall long-run costs of the changes are expected to be about £50 million a year, but I shall have to write to him about the breakdown of the figures.

On Question, Motion agreed to.

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