Child Support

HL Deb 06 July 1998 vol 591 cc978-95

4.24 p.m.

The Parliamentary Under-Secretary of State, Department of Social Security (Baroness Hollis of Heigham)

My Lords, with the leave of the House, I shall now repeat a Statement made in another place by my right honourable friend the Secretary of State for Social Security. The Statement is as follows:

"Madam Speaker, with your permission, I will make a Statement on the Government's Green Paper on reform of the child support system. We promised to reform the welfare state so that it is modern and fair and strikes the right balance between rights and responsibilities—reform on the basis of work for those who can and security for those who cannot. We want work for parents and security for their children.

"Children are first and foremost the responsibility of their parents. But we have a responsibility as a government to ensure that parents are in a position to support them—that they are working if they can—and that children get the support that they need. That is why as a government we place so much emphasis on policies for families. We have increased child benefit for all families. We have embarked on a major welfare-to-work programme to ensure that mothers and fathers can work and improve their children's standard of living. The new deal for lone mothers will ensure that mothers work if they can. The new deal for the long-term unemployed and the young unemployed will mean that fathers, many for the first time, can support their children through work. These new deals, together with the minimum wage and the working families tax credit, are important parts of banishing child poverty.

"So welfare-to-work, the first part of our welfare reform, is under way. The second step in welfare reform—to ensure that children are properly supported by their non-resident father—is what I bring to the House today. The child support system is like no other part of the social security system. In most of the benefit system there are just two stakeholders—the benefit recipient and the taxpayer. In child support there are four: the child, who needs an adequate standard of living and is entitled to the father's support; the father, who has a responsibility to support the child and needs enough left to live on and to discharge his other responsibilities; the taxpayers, who need both to support their own children and to contribute through their taxes to prevent other people's children living in poverty; and the mother, who needs a dependable source of income for her family.

"Getting the system right and fair for all four is not an easy task. Few would seriously disagree with those objectives of child support. Most agree that the current system is not working to deliver them. In identifying the need for reform, I seek to make no party political criticism of the previous government. We are all wiser with the benefit of hindsight. Nor will I dwell for too long on the statistics which show the failings of the child support system, except to remind the House that there are 1.8 million children living in families on income support or family credit in respect of whom fathers pay no maintenance at all. One in six of all children in this country are being brought up supported only by their mothers working or, more usually, the benefits system.

"What sort of message does it send to boys who will one day themselves become fathers when they see that the financial responsibilities of fatherhood can be wholly delegated—either to the welfare state or to the mother alone? Seventy per cent. of lone mothers claiming income support now seek to avoid co-operating with the Child Support Agency. Their co-operation takes their time and energy, can cause further conflict with the child's father and, if they are not working, brings no financial gain to their children as all of the maintenance paid by the father is deducted from their benefit.

"The formula for assessing maintenance is so complicated that the CSA has to spend 90 per cent. of its time assessing maintenance or keeping assessments up to date and is left with only 10 per cent. of its time to chase up payments. The complexity of the formula means that fathers do not know where they stand, and often the first demand for maintenance tells them that they are already thousands of pounds in arrears; and complexity leads to errors.

"So our reform of child support involves replacing the byzantine complexity of the current formula with a simple percentage. To assess maintenance will no longer require over 100 bits of information. It will no longer require fathers to report their new partner's income. It will not be necessary to assess the mother's new partner's income. It relies only on identifying the number of children the father has, where the children live and how much income he has after deduction of tax and national insurance.

"We propose that for one child 15 per cent. is deducted from the father's net income and paid in maintenance, for two children 20 per cent., and for three or more children 25 per cent. There will be special rules for fathers with a low income. For fathers who are on benefit or whose net income is below £100 we propose maintenance of £5 a week, with a sliding scale for those between £100 and £200.

"In assessing the amount of maintenance we propose taking into account children in a second family. Our Green Paper sets out for consultation two different options for reaching the right balance between the children in the first and second families. But both of these options are about taking second families into account.

"Moving from a complex formula to a simple percentage will have a number of advantages. Men who father a child with a woman with whom they are not living will know that they will have to pay 15 per cent. of their weekly income to that child for the next 16 years at least. Men who separate from their wife and children will know, before they take on other commitments, what they will have to put on one side for their children. The CSA will be able to spend dramatically less time assessing maintenance and spend more time ensuring it is paid. Everyone will understand the system. The aim is to ensure more fathers pay rather than that fathers pay more.

"But there is also the question of what the children receive when the fathers pay. Almost from the outset there has been complaint because for every pound paid in maintenance by the father a pound is deducted from the mother's income support. For mothers who are not working, this means that while co-operation with the Child Support Agency can mean maintenance is paid by the father, no maintenance is received by the child. For fathers who do not pay, they can feel that they are simply defying the CSA rather than disadvantaging their own children.

"We are proposing to change this. The child will in future receive a child maintenance premium. The first £10 of maintenance paid will go to the mother for the child and will not be deducted from her benefit. So when a father pays he will know that he is fulfilling his responsibilities and his child is better off. When a mother on income support co-operates with the CSA, she will ensure he is paying his fair share and the child gets up to £10 more a week.

"As well as a simple percentage we need a better child support service. We propose a three-stage process. First, when the mother applies for maintenance, the father will be contacted and in most cases an assessment can be made over the phone. He can start paying right away. Secondly, if either parent has concerns about the assessment, there will be a review where the situation can be explained or sorted out. Thirdly, if either parent wants to challenge the basis of the assessment—for example, the calculation of income—their case will be assessed by an independent tribunal. We also propose that the tribunal should be able to set maintenance at a different percentage rate if the non-resident parent can show that he has special expenses incurred in supporting the child; for example, where the cost of paying the maintenance will make him unable to afford the costs of visiting the child.

"Though we propose these reforms, there will need to be time to consult, to take legislation through the House and then to change the computer systems. But people currently in the system cannot wait that long to see progress. We need to do what we can within the existing system to make it work better for them. We therefore intend to press forward with the introduction of more phone lines and service outside normal working hours. We will be taking further action to tackle the backlog. We will be spending an extra £12 million this year, in addition to the £30 million already committed over the next two years, to sharpen up our service.

"The CSA staff have borne much of the brunt of the complexity and unpopularity of the system. Much of the criticism that should have been directed at the system has been heaped on them, usually unfairly. But we are counting on them, and I know we can do so, to improve the current system and then make a first-class job of the new system. This is a Green Paper. Its proposals are for consultation until the end of November this year. We hope there will be the widest possible debate. For fathers, mothers and the taxpayer all to feel that the system is fair is not an easy task. The need for reform is obvious. The demand for reform has been voiced in hours of debate in this House, hundreds of pages of official reports and thousands of letters of public complaints. I believe that we have charted a new way forward.

"But I will conclude with a word of caution. Relations between men and women are not always easy. Relations between men and women where they are parents of the same child but do not share the same home are often intensely difficult. No reform of the child support system can ever change that. But it can work better than it does now and it can better serve those children who have a right to the support of both their parents, irrespective of where they live. It is above all for them that I present this Green Paper to the House today."

My Lords, that concludes the Statement.

4.35 p.m.

Lord Higgins

My Lords, first, I express our thanks to the Minister for repeating the Statement made in another place. I do so with particular enthusiasm because I have the impression that much of the intensive work on this subject has fallen on the shoulders of the noble Baroness. Indeed the style that is adopted perhaps reflects that. I certainly hope to engage with her in a sympathetic and constructive dialogue on the basis of the Green Paper.

Before I do so there is one point I ought to make. It would not have been unreasonable for the noble Baroness to have said this afternoon, "Have I got news for you?" The reality is that almost all of the content of the Green Paper has been leaked steadily in the press for many weeks. That is particularly unfortunate. Recently the tendency of the Government to leak information has been accelerating. It has increased from the occasional unfortunate lapse to something approaching a nasty habit. That is to the advantage of the spin doctors whom we now suffer from so much. It gives them the chance either to put a gloss on something which is good news, or, if it is bad news, to say, "That is something which was dealt with days ago. It is old news and therefore do not bother about it" when it is actually dealt with on the Floor of Parliament. I hope therefore that the noble Lord the Leader of the House will feel it appropriate to join with Madam Speaker in saying that this is something we need to take into account.

Having said that, I greet with some enthusiasm what the Minister said. Indeed I greet it with some passion. I do not think that anyone who has been a Member of Parliament since 1991 when the original legislation was passed can do so other than with passion. I spent hundreds of hours on individual cases and had endless interview nights and so on. In the light of what was mentioned at the end of the Statement, I witnessed more bitterness between people in these circumstances than in any other constituency cases.

This will not be an easy task. Indeed, it is right that it should be dealt with on an all-party basis because part of the present structure reflects the proposals made by the present Minister for Welfare Reform when he was chairman of the Social Security Committee in another place. Those ideas have been incorporated but, as has been rightly pointed out, there is still much to be done.

I do not think the answer is in any way to return the matter to the courts. Much of the original problem arose because the courts tended to reach decisions on the assumption that the costs of the children would be borne by the taxpayer in the form of one benefit or another. That is not satisfactory. We must do what we can to improve the present situation. That is particularly difficult because in many cases the parents of the child are not married and therefore their legal status is somewhat different from those who are.

It has been suggested that under the new arrangements something like one-third of lone parents will lose, and only two-thirds will gain. Is that statement correct? I am not sure whether it is lone parents on the one hand or parents with care. Will the Minister give us some idea as to what the balance will be between those who gain and those who lose under the new arrangements? That will be extremely relevant in considering the extent to which the changed system is to operate effectively, particularly in what may be a very difficult transitional period.

The problem with the original proposal was that it was made retrospective. In a sense the same is being done, although, as the Minister pointed out, the Government propose measures to attempt to deal with that problem. There will be significant transitional problems. Clearly the extent to which the changes are acceptable to individuals—especially those who do not wish to pay anything at all for their children—will depend very much on whether they gain or lose in the transition from one scheme to another.

What will the situation be so far as arrears are concerned? As I understand it, there are presently some £1.4 billion of arrears. Are those to be carried forward to the new system? I understand that it covers both full and temporary assessments, but, clearly, we need to know what will happen. In particular, do the Government propose to collect all the arrears that are outstanding under the old system before changing to the new one?

The Government propose to change the present complex formula to a simple percentage. It is very much a question of rough justice. Although there are proposals for appeals against assessments under the new system, one cannot but help be concerned that the burden falling on the tribunals may build up rapidly as more and more people, often determined not to pay at all, seek to dispute even the simplest formula.

The Minister rightly said that the position of second families will be taken into account. That has been much of the problem in practice. Generally speaking, the second family has always been better off, because the father concerned has been promoted and so on. Much of the bitterness has come from the second family not wishing to see money transferred back to the first. It would be helpful to learn more at this early stage about the position of the second family.

I turn to the question of the proposed extra £10, although "extra" is perhaps a misnomer. In many cases, there is a genuine problem in identifying the parent. It is suggested that under the present system a parent will not do so if, for example, she is likely to suffer violence as a result. Apart from the obvious benefit that the child will receive something from the deal, is the extra £10 intended as some kind of incentive to identification? What are the Government's proposals regarding identification?

On a broader point, what will be the overall cost, taking the entire arrangement into account: the cost of the extra £10, of running two systems side by side and so on? Will the Minister give us some idea?

Finally, again I stress that we shall be happy to co-operate with the Secretary of State in another place and the Minister here so far as this matter is concerned. However, there is a real danger that further complexity will be piled on existing complexities. In Australia, where a similar simplified system has been introduced, the burden falling on tribunals has been very great indeed.

There is now an enormous burden in changing from a system that has been complicated to the new system. Apparently there is to be movement from one to the other. Two alternative methods are suggested. I hope the Minister will recognise that the transition is likely to be extremely difficult. We must hope that, nonetheless, the changes introduced will finally result in absent parents contributing more to their children. I hope that that will be the case. Broadly speaking, the Statement is to be welcomed, but it has considerable difficulties and dangers ahead of it.

4.45 p.m.

Earl Russell

My Lords, I am human. I know one is not supposed to say, "I told you so". I hope that the House will forgive me if I say it just once and then get down to business.

That said, I congratulate the noble Baroness the Minister on producing this Statement. Admitting error is one of the most difficult things to do in all politics. She has put herself into the company of great parliamentarians such as the noble Viscount, Lord Whitelaw. She has done herself great credit.

This is the second measure that I have seen through from Second Reading to repeal. It is the first that I have seen through from White Paper to repeal while still remaining in the same brief. I remind myself a little of the character in the 18th century epitaph: Here lies Will Smith And, what's something rarish, He was born, bred and hanged All in the same parish". I wish to associate myself with some of the remarks made by the noble Lord, Lord Higgins, about the advance release of the Statement. It meant that the comment made did not relate to the whole Statement. It was made on those features of the Statement to which the Government or their advisers chose to draw attention. The independent tribunal, which is to me by far the most interesting feature in the Statement, was not even mentioned. If we look at the history of previous legislation we see that the advice of Members of this House was far more valuable where it was listened to than the advice of almost anyone else who spoke. I was slow on the uptake, but my noble friend Lord Meston and the noble Lord, Lord Stoddart of Swindon, both of whom are present, spotted what was wrong from the beginning in 1991. If the comments had been made in Parliament, put into the context of the whole Statement from the beginning, we should have got on a little faster.

There are features in the Statement with which I am delighted. I am delighted at the prospect of less inaccuracy; less delay; less chaos; less forcing people inside the agency to do what they cannot do. I am particularly delighted by the introduction of the disregard, for which the Minister and I have many times argued together. That is a great victory on her part. I should be grateful if she would explain in a little more detail exactly how it will work. Perhaps she would explain the phrase, "up to £10", and exactly how that proposal will interact with the problem of poverty traps. It is a detailed and difficult problem in which I know the Minister is interested, and in which she is expert.

I congratulate the Minister, too, on the recognition that there are some women who need to avoid contact. That needs constant protection. As recently as the night before last, I was listening to a close family friend describing the experience of one of her undergraduate contemporaries, who was not told that she had a right to refuse to sign the form because of good cause, which ended with the man who had committed domestic violence against her discovering where she lived. Many times I have received assurances from Ministers of all complexions—who meant it, and did everything they could to bring it about—that that would not happen again. It still does. I hope that the noble Baroness can in future make sure that it does not.

The Government have not spotted the key principle of error. They think they can make the thing work by simplifying it. That reminds me a little of Ministers in the previous government saying that the poll tax would have worked if only local authorities had not been so extravagant. That is not what is needed.

As soon as one brings in a formula, however simple, one is on a fork. Either the formula is set too high and one increases the number of men who cannot pay without having to give up work; or it is set too low and many women do not receive as much money as they should. In any attempt to use the formula, there is no way off that fork; one must be impaled on one prong or the other.

That is why I find the independent tribunal, which can deal with exceptional cases, one of the most interesting features in the Statement. It takes account of the point made by Ann Chant that the agency has been constantly asked to engage in conflict resolution, which it has no authority to do. This proposal will take account of that. However, I am a little worried by the tightness of the wording, "certain exceptional circumstances", which, if I understand it right, are in danger of being spelled out, regulation piddler fashion, one by one. We shall not even begin to get started unless those exceptions include some other reason why, a case that none of us has ever foreseen. I will not detain the House—I know the Minister knows the cases; they are on her desk—by recounting some of the matters that have come before us which none of us could have foreseen in 1991 in which the formula did injustices that none of us could have imagined to be intended.

I wish to ask why it is only circumstances associated with the support of the child that are taken into account. I quite understand that those expenses are central. However, let us take someone who is supporting his aged parents, which is something the state wishes people to do. Let us take someone who is paying a legally due debt, under a court order, say. We do not want to encourage people to disobey court orders; that would be against public policy.

Ministers may say that children must come first, but people can only put them first so far as they are legally empowered to do so. If the wording remains so tight, people will be under two conflicting legal obligations; and they cannot meet them both. I believe we shall therefore have to consider whether the tribunal is, as we used to argue about my Dalmatian when I was little, black with white spots or white with black spots. We shall have to consider whether it is rules with exceptions or exceptions guided by rules.

There are some very specific queries here. One is with regard to the treatment of arrears, especially in pre-1993 cases of clean-break orders, where the settlement involving the house was not taken into account. Gross injustice was done in some of those cases. I wish to know whether we shall retain anything resembling the welfare-of-the-child provision in Section 2 of the 1991 Act. I see some of those who got that on the statute book here today. If it is to be there, I wish to know how it is to be interpreted. Will the benefit penalty be enforced against women who do not co-operate? I have always said that we should have a carrot rather than a stick. The noble Baroness has provided us with a carrot, on which I congratulate her very warmly. Can she now afford to throw away the stick?

I am a little worried by the sentence in the statement to the effect that the arrangements made, will ensure that mothers work if they can". Maybe I have misunderstood that. If I have, I shall be delighted, and I shall listen to the explanation. It sounded a little unfortunate.

We have had a change of government, but the court and Treasury party are still in office. They still think with the mentality of Procrustes, who used to stretch or cut people to fit them into the one bed in which he gave hospitality to travellers. He no longer cuts them to fit his bed according to hip width but only according to length. That is the great game. It does not mean that it is therefore right. There is still the urge to simplify what is, in its nature, inherently complex. There is still the urge to treat people as if they were Plasticine, to mould them into a pre-ordained shape. It will not work. Matrimonial break-up is not that simple.

We have served seven years for Leah; we have to be thankful. We must still serve seven years for Rachel. When the time comes, which of us will be speaking from which place is something on which I shall not speculate; but come it will.

4.55 p.m.

Baroness Hollis of Heigham

My Lords, there have been 20 minutes of very detailed questions. I apologise to the House, but I believe that it is important to get replies on the record to as many as I can. I hope your Lordships will be tolerant.

First, I thank both noble Lords for giving a broad, though careful, welcome to the Green Paper. I also thank them for endorsing what I hope will continue to be a non-party, inclusive and consultative approach. If the Child Support Agency has a chance for radical reform, it must be one that has robustness and staying power, because it is built on consent. I believe that that includes the consent of your Lordships' House.

Both noble Lords raised the point about leaks. I think I am right in saying that my right honourable friend said in the other place that she had not leaked any information. Nor had anyone with her authority. The same is true for me.

I now turn to some of the detailed points raised by the noble Lord, Lord Higgins. He agrees that we should not go back to the court system. I am not sure where the noble Earl stands on that point. The failure of the court system was the reason why the Child Support Agency was introduced. Under the previous court system, for example, where couples had identical incomes and three children, in a quarter of such cases the man paid less than £15 a week and in another quarter he paid more than £40 a week. In other words, no one knew until they had been through an elaborate and costly court case what maintenance they would have to pay. For too many people it was too much of a lottery. It depended very largely on the skill of the solicitor, and the like. Costs in terms of legal aid and administration were very high. That is why the system that we now have was introduced.

The second point raised by the noble Lord, Lord Higgins, related to lone parents, 75 per cent. of them being winners and the rest losers. I am sorry if the Statement did not make the point clear. Currently 75 per cent. of lone parents are on income support. Where the former partner pays, they will gain by having 10 per cent. maintenance disregard. A further 15 per cent. are on family credit, which, by the time this piece of legislation comes into force, will probably have been transformed into working families tax credit. They will be no worse off, and, dependent on the terms of the working families tax credit, they may be better off. Ten per cent of parents only are sprung from the benefit trap or in work and choose to use the agency to collect their maintenance, but for too many the maintenance falters.

Perhaps I may share with the House some statistics. At the moment the average maintenance assessment is £38 a week. The average maintenance paid is £25 a week. Very many lone parents who are in work do not receive the maintenance assessed. Under our formula the level of maintenance to be assessed comes down from £38 to £29 per week, but we are expecting, by virtue of the simplicity of the formula, to increase compliance from 66 per cent., which it is at the moment, to 80 per cent. or 85 per cent. As a result, therefore, there will be 75 per cent. who will be winners and 10 per cent. whose position will improve or stand still when the working families tax credit comes into effect; and, of the 10 per cent. of parents who are not on benefit, very many will for the first time gain reliable maintenance. We are seeking to make more fathers pay, not to make fathers pay more. For those fathers who see the situation change dramatically between the current and future formulae, we are proposing a cash phasing-in of no more than £5 per week each year. If somebody is £10 worse off under the new formula, it will take two years for them to get on to the new system. They can therefore bring their lifestyle into line with the new formula.

The noble Lord raised a point in relation to arrears. There will be no amnesty. Those arrears are owed either to the parent with care or to the Government and should be paid. However, we expect the backlog of existing cases to be cleared by next April.

The noble Lord, Lord Higgins, mentioned "rough justice". We are saying that the only formula that will work is a simple one about which people can obtain booklets from the Post Office, the CAB, the library, their MP and so forth. On one side will be their income—their take-home pay after tax and national insurance—on the other the number of children involved and they can read across. It will only work if it is simple and people know what they are expected to pay at the point when they conceive a child and the point when the relationship breaks up.

In order to be fair (we are anxious that the formula is seen to be fair, decent and balanced), we suggest to the men that they pay less—on average from £38 to £29—and also that there is greater fairness between first and second families. To the woman and her child we say that the fairness lies in the fact that for the first time she will receive a £10 maintenance disregard. The system is fair because it is simple and therefore we believe that it will work. It is fair to men and, we hope, to women and their children. But because it is simple, it will also be enforceable and therefore firm. That is our structure.

The noble Lord pressed me about maintenance disregard. As it stands, maintenance disregard costs £80 million net or around £100 million gross. However, as we are rolling up the child maintenance bonus, which brings it to £80 million net, overall the total package cost is neutral. We only go on to the maintenance disregard when the father is paying the money. Every new father coming in will pay an average maintenance of £29; a third of that will go to the mother, two-thirds to the Treasury. The maintenance cost is paid for by the extra compliance and the total package is therefore cost neutral. As a result, we expect at the moment one-fifth of women or parents on income support to receive maintenance. We expect two-fifths of that to be cost neutral. Any improvement on that—we hope to reach three-fifths or more—will be a bonus for all concerned.

In relation to tribunals—a wider point shared also by the noble Earl, Lord Russell—we are seeking to avoid pushing the complexity of the existing formula away from the original assessment in to an appeals assessment. All that does is reinvent the complexity of the CSA. If we take into account pensions, debts, the care of an elderly relative, housing costs and travel to work, we may as well stay with the existing system and simply muddle through. We will have reinvented the complexity. For instance, there are 58 different kinds of mortgage. At the moment around 100 pieces of information are required to calculate an assessment. Every time any one of those changes, there is a right of review and appeal. The system never catches up and that is why it does not work. That is why it takes six months to obtain an assessment and that is why fathers never end up paying and mothers and children never receive the money. By simplicity, we expect to make the money flow and turn a case round in between four to six weeks. Fathers will know where they stand and mothers and children will gain.

We are anxious not to reinvent the complexity of the original assessment and have it displaced into the appeals system. We are saying that the grounds for appeal to the tribunal, apart from error, are for exceptional costs in supporting the child. It is about child support. We do not want to see paying for the child through maintenance stopping the father having contact with the child through access; for instance, where a child is disabled or where the father has taken on the full cost of the mortgage of the first home.

We are not saying that we will take all the other costs cited by the noble Earl into account. Instead, we will leave the father with a much higher percentage of his income—maintenance down from £38 to £29—with which to pay all his other costs. We will not try to second-guess his priorities. We will say to him "You are an adult. We will leave you with more money.". Everybody has different responsibilities and priorities. If we try to second-guess them all and put them into a formula, we will reinvent the present CSA. We are saying, "We will leave you, oh father, with a higher percentage of your income, with due allowance for your second family, and you, as an adult, will make your own decisions as to where your priorities lie. We will not try to second-guess you and build it into the formula". That is why the tribunal, as the Green Paper suggests, is for child support only. Clearly, it is a Green Paper and is open to discussion.

The noble Earl, Lord Russell, asked what the phrase "up to £10" means. Any parent who has an income of less than £100 per week—for example, is on benefit—currently pays £5 to the Treasury. We are proposing that the entire £5 goes straight across to the lone parent. The Treasury will not take one penny of it. That includes up to £100 a week. From £100 to £200 there will be a sliding scale to reach the moneys. That is why we say "up to £10." The £5 goes straight across from his benefit or from his low pay to the parent with care to help the child and thereafter it will climb on a sliding scale up to the £200 figure, at which point the basic assessment will be the 15 per cent. for the first child.

I was asked about the different approaches to the second family. I could spend five minutes explaining this, but it is explained in the Green Paper. Either way, it says that there is greater fairness between first and second families. We do not believe it to be right to impoverish the children of the second family in order to finance the well being of the first family. Equally, the first family is the primary responsibility of any non-resident father and he must take that into consideration before making his financial arrangements for the rest of his life.

Finally, there may or may not—I hope not—be anomalies in the Green Paper. They will arise. We have plenty of time for consultation—the consultation period does not end until 30th November. There will almost certainly be a pre-legislative Bill discussed by the Social Security Select Committee and again there will be plenty of time to analyse it there.

We are not suggesting to adults that they must be Plasticine to fit into our mould. On the contrary, we are saying that we will take from the non-resident parent—because society believes it appropriate and that parent signs up to these principles—a slice of his income for child support. Thereafter, far from being treated as Plasticine moulded to us, we are saying, "You are an adult. You make your choices. You get on with the rest of your life and prioritise your responsibilities. We will not seek to turn you into a child by second-guessing you. That is for you to decide". However, we say throughout that being a non-resident parent is difficult and demanding and we want to be on his or her side. At the end of it, what matters is that the children gain; that they are supported and supported by both parents equally. That is the basis for the Green Paper.

5.7 p.m.

Lord Kilbracken

My Lords, I know only too well from personal experience how extremely difficult it is to calculate what a person should be paying under the ludicrously complicated formulae set out in the Child Support Act. For that reason, I support the new proposals.

However, the formulae are so complicated because there are so many different things that should be taken into account if a fair figure is to be reached. Among those is the salary of the mother, which has so far not been referred to by my noble friend. It often happens nowadays that the mother earns more than the father or nearly as much. Surely, when that happens, the amount payable by the father should in some way be modified. Perhaps my noble friend can comment on that point.

Baroness Hollis of Heigham

My Lords, we are not taking into account either the income of the parent with care nor the income of the non-resident father's new partner. Forgive me if I use these gendered words; 95 per cent. of lone parents are women, but the whole scheme is gender neutral.

The reason we do not take that income into account is that the child living with the parent with care enjoys the living standards of that parent with care. For example, if the parent with care can afford a larger house, the child enjoys it; if the parent with care can afford generous holidays, the child enjoys them; if the parent with care drives a larger car, the child enjoys it. Second children in the second family enjoy the living standard of the non-resident father; equally, the children of the first family enjoy the living standard of the parent with care. Whatever the mother's income and whatever the father's, he maintains a responsibility for his children. The marriage may end but his family responsibilities continue.

Lord Goodhart

My Lords, I wish to take up one technical but rather important point. I refer to the question of how far the Government have taken into account the interface between the assessment of fathers and the poverty trap. Page 26 of the Green Paper states: we would like to use a simple definition of what counts as income. For example, the new scheme will not include an allowance for housing costs, so it would be unsuitable to class Housing Benefit as assessable income". That started the alarm bells ringing with me because as a father's income goes up he will lose housing benefit, which is not assessable, and it will be replaced with earned income, which is assessable. In that situation it seems to me that there is a serious risk that there will be a poverty trap and that the father will be worse off as his income rises. I have not checked whether that is equally true in other situations, but it worries me greatly. This should be looked at carefully because it seems to be a case where, as is all too common, simplicity and fairness may well be in conflict with each other.

Baroness Hollis of Heigham

My Lords, there is a real issue of the poverty trap in all benefits that are tapered. I think we all accept that. It is clear that from earnings of about £200 a week the father is increasingly likely to be off housing benefit. However, on benefit fully, or up to £100 a week where he is paying only the £5 per week, that figure is low enough not to affect his entitlement to housing benefit, and so the poverty trap does not exist.

There is an issue of the income scale between £100 and £200 a week. However, the reason we do not go into this in detail in the Green Paper—we have obviously discussed this at some length—is that housing benefit is currently being reviewed. Secondly, we are reviewing the whole of the New Deal. Thirdly, we are reviewing the working families tax credit, which will overtake family credit. Fourthly, the minimum wage will be coming through. The working families tax credit will have a different taper—not 70 per cent. but 40 per cent. The result is that over the next two years there will be a good many changes in three or four of the different interlocking benefits which affect that income group. By the time it comes to drafting the Bill and the regulations we will have a much clearer idea of where, if anywhere, this bites unreasonably. But that is why, at the moment, it remains relatively open. We are not yet sure how possible changes in housing benefit—no such decisions have been made—the impact of the working families tax credit, the minimum wage and some of the New Deal proposals will interlock to affect that group.

Lord Milverton

My Lords, it was pleasing to hear what the Minister said and I liked the emphasis on children. That is important. The previous system was far too obscure and complicated. If this brings, as I am sure it could with all parties working together, fairness, decency and comprehensiveness, I am sure it will benefit families and children. The fathers should have time to see their children and have a say about them. But they should realise that they have a moral and ethical responsibility in the way of finance. The father's access is another matter because there are sometimes occasions when, even with his responsibilities, it is perhaps not wise for him to have contact. However, what is proposed is good and I hope that it will be done thoroughly and well, as I am sure it will be, the Minister being who she is.

Lord Stoddart of Swindon

My Lords, I was waiting for the Minister to answer.

Baroness Hollis of Heigham

My Lords, as it was a compliment, I thought it was more decorous to say nothing.

Lord Stoddart of Swindon

My Lords, I see. I congratulate my noble friend on repeating the Statement made in another place. It is certainly a good Statement. The Government have done their best to deal with a situation which was none of their making. Like the noble Earl, Lord Russell, I shall say only once, "We told you so". Nevertheless, I would add that we predicted at that time that the Child Support Agency would be another poll tax. We were wrong. It was far worse than the poll tax, as so many people have found out to their cost; indeed, in some cases, the cost of their lives. If I sound bitter about that, it is because I am bitter. I am bitter that we introduced such a system which drove some men to take their own lives because of the impositions on them by the Child Support Agency.

I should like to ask my noble friend one or two questions. I return to the question of access because it is an important question. Often one of the reasons why men do not pay their maintenance is that, despite court orders, they are refused access to their children, with whom they want to continue to associate and towards whom they would be very happy to pay maintenance. They often use refusal of access by the mother as a reason not to pay maintenance. I thought that something was going to be done about that.

Secondly, the workload of the agency will presumably fall considerably and therefore the system will be less costly. Will the Government give serious consideration to returning the whole question to the magistrates' courts? I know that my noble friend criticised the magistrates' courts and their previous lack of ability to collect the maintenance. But that was because of lack of resources which the then government poured into the agency without any good results. I hope my noble friend will reconsider the position.

Finally, with regard to the £10 net benefit—at least I understand that it will be a net benefit and that there will be some benefit from the maintenance that will not all go back to the Government—has she considered whether £10 might be a little low? Can she also say whether there are plans to increase the £10 year-by-year, in accordance with the cost of living or the wages index, or a mixture of both?

Baroness Hollis of Heigham

My Lords, I am grateful to my noble friend for his welcome to and support of the Statement. He began by saying that the CSA had been another poll tax. This will be a different body, working a different system in a different way. I believe that we are giving the staff who will be delivering the system the best possible opportunity to deliver something that is seen as fair, balanced, decent and workable.

My noble friend referred to access and to women refusing access despite court orders. I am sad to say that my noble friend is correct. Some research shows that 40 per cent. of parents with care admitted to thwarting an access order, often, although not invariably, because they are in a new relationship and wish to have a clean break from the father. What we are trying to say throughout all of this is that they can divorce each other but not their children. As a result, the father's right to have contact with that child unless the court has said otherwise is something that we should all seek to uphold. Obviously, the courts will be scrupulous where there is any risk of violence or damage to the children and none of us would wish for anything different. The fact that so far 70 per cent. of parents with care have been refusing to co-operate with the agency, nominally alleging "good cause", suggests that things other than a fear of violence are going on.

There is a dilemma as regards the latest announcement by the Lord Chancellor concerning the proposals for parental rights to go alongside the name on the birth certificate. If one wishes to buttress marriage at the expense of all other relationships, one may regard that as undesirable. However, if one wishes to encourage fathers to take on their responsibilities and to share in the upbringing of their children, one has to treat them as though they were married parents in all but legal name. There is a dilemma here and your Lordships will accept it. If we downgrade the rights of former cohabiting fathers, the children will suffer in terms of the attention they receive from their fathers in future. That is why my noble and learned friend the Lord Chancellor is seeking to extend parental rights to fathers who are cohabiting. I hope that that will ensure, where there is no risk of violence or threat of it, that the father will go on to enjoy some of the rights that divorced fathers have. It is quite remarkable that at the moment men who are most willing to pay also pay the highest amounts of money. That is because they are divorced fathers who have access and where there has been higher engagement in their children's lives.

I was asked whether we were thinking of returning to the magistrates' court. The whole thrust of this paper is for a simple formula. We believe that lone parents were let down by a system that was random, uneven and costly. As regards the maintenance disregard at £10 being higher, I do not doubt that there will be an on-going debate with the Treasury on that subject in future years.

Lord Meston

My Lords, the Statement referred to dramatically less time being required to process applications. Can the noble Baroness say what time, effort and machinery will be devoted to assessing the true net income of the self-employed father, particularly those who are not inclined to overstate their income to the Inland Revenue, to the former wife or to anyone else? That is a problem that is not going to go away. It is easy to be deceived by the conveniently clear and round figures which always appear in the worked examples in Green Papers such as this.

Now that there is to be a simpler formula and the legal profession can throw away their expensive computer programs but still hang on to their calculators, perhaps it is time to say that the courts can once again be trusted to make orders or sanction agreements at least where they are incidental to matrimonial proceedings between husband and wife in which the finances will have been scrutinised in considerable detail. I do not say that that should be confined to the magistrates' court. Indeed, it is more likely that those cases are heard in the county court and the High Court.

I thought I heard the noble Baroness say that the matter would be considered by the Social Security Select Committee. Does that indicate that there will be full pre-legislative scrutiny of any legislation that comes before Parliament?

Baroness Hollis of Heigham

My Lords, the answer is yes to the noble Lord's third point. My noble friend gave an assurance to Mr. Archy Kirkwood in another place that, should the Select Committee wish to take it up, there would be the opportunity for pre-legislative scrutiny of the Bill. It is so important to try to get the broadest possible consent and information concerning the proposals.

The second point that the noble Lord raised concerns the self-employed. He is right. Perhaps they are between 7 and 10 per cent. of the non-resident fathers. They are certainly between 20 and 30 per cent. of the problem. In the Green Paper we are proposing that the calculation of income for self-employed parents will be on exactly the same basis as the returns prepared for the Inland Revenue. That will be a start. The degree to which there will be any sharing of information with the Inland Revenue is a question that has yet to be discussed and resolved. There will be no excuses that we are trying to work on a system different from that being prepared for the self-employed person by his accountant.

As regards the court sanctioning orders, apart from the cost and its random nature and unpredictability, the court system is essentially adversarial. In the past it has sought to have "high noon" over the levels of maintenance for children's support. It is not an approach that we wish to see continued. It is certainly true that under the new divorce proceedings mediation will be much more to the fore, and we welcome that. Therefore, we are hoping that the information about expected child maintenance liability will be part of the information that goes into the mediation process and that it will allow it to be simpler and cleaner than in the past. We do not believe that the court should seek to determine what should be paid. It can do so only if it has full discretion. We are seeking to treat alike similar people in similar circumstances. That is the basis of the formula.

Lord Rowallan

My Lords, I very much welcome the Statement. I apologise to the Minister for not being here at the start of it. I wish to ask a couple of questions. As regards a clean break, and if there is a change of circumstance for the caring parent who gets income support, is it the intention that automatically the CSA will come against the absent parent? Are we going to take account of one-off payments or the setting up of trust funds for children, remembering, as my noble friend Lord Higgins said, that in many cases absent parents do not mind at all paying for the upkeep of their children but what they cannot stand and do not want to do is to support the absent wife?

Baroness Hollis of Heigham

My Lords, as regards the clean break, in the past it has been concerned with property between the two spouses and not maintenance for the children. The legal profession currently knows what is expected through the CSA. The legal profession knows what the CSA will be doing in future with the Green Paper proposals. The disposition of property between the spouses will be made in the light of those proposals. Essentially, the clean break applies to spousal property and not to child maintenance, and it never has. As regards trust funds and one-off payments, we shall be looking at that kind of thing in the consultation period. It is possible that this could be the kind of circumstance the tribunal could take into account.