HL Deb 08 May 2000 vol 612 cc1240-73

5.30 p.m.

House again in Committee.

[Amendments Nos. 4 and 5 not moved.]

Clause 1 [Maintenance calculations and terminology]:

Lord Higgins

moved Amendment No. 6: Page 2, line 11. leave out ("one month") and insert ("two months"). The noble Lord said: Before we adjourned for the Statements, we were discussing matters of enormous and wide-ranging importance with regard to social security policy. Amendment No. 6 is at the other end of the spectrum, both politically and technically. It seeks merely to increase a time limit in the Bill from one to two months.

Under the Bill, the parent with care has one month in which to respond to a letter telling her that the Secretary of State intends to cease dealing with an application. If she does not want it to stop, she may be considered a voluntary client of the agency without further application. If the parent with care misses the one-month time limit, she can apply for maintenance later and the agency will pursue the non-resident parent from the current date.

With our passionate desire to improve the Bill, I believe that this amendment would be suitable because we know that, one way or another, communications may well be prolonged. Two things may happen if the individual concerned is not aware of the situation within a month: first, there will be further delay while the process that I have just described continues and eventually is concluded; and, secondly, if she goes through those lengthier proceedings, she may lose some degree of maintenance because it is calculated from the date when the new procedure is concluded rather than when she writes rapidly saying that she wants the Secretary of State to go ahead. I hope that the Minister will consider the proposal to be an improvement rather than otherwise. I beg to move.

Baroness Hollis of Heigham

As clearly explained by the noble Lord, Lord Higgins, this amendment increases the time limit within which a parent with care must notify the CSA if she wants to continue as a voluntary client when she leaves benefit before a maintenance calculation is made.

Clause 1 provides the basis for maintenance calculations. It substitutes a new Section 11 dealing with the rules for maintenance calculations in the 1991 Act. New Section 11 (subsections (3) to (5)) requires the Secretary of State to stop acting on an application for child support treated as made under Section 6(3) if he becomes aware that the parent with care has left benefit before the maintenance calculation has been made.

The treating of an application for child support "as made" when a claim for benefit is made streamlines the way in which parents with care who claim or receive benefit apply for child support. It will ensure that parents with care who claim income support or income-based jobseeker's allowance receive a seamless maintenance service at the same time.

Under the current scheme, a parent with care who claims income support or income-based JSA can be required to authorise the Secretary of State to take action to recover child maintenance. She is not required to do so if there are reasonable grounds to believe that there would be a risk that she, or any child living with her, would suffer harm or undue distress. This is known as "good cause". However, child support arrangements can be made only after a formal application for maintenance has been made.

In the reformed child support scheme, only those parents who need to will take action to opt out of making a claim for child support. That will ensure easy access to the new system which will provide a regular and reliable flow of maintenance and a better service for parents.

However, if a parent with care, who has had an application for maintenance treated as made under Section 6(3), leaves benefit before the maintenance calculation is made, she can instead ask the agency to treat her application as voluntary under Section 4 of the 1991 Act. Action to pursue child maintenance would otherwise cease in those cases. If there is no court order or pre-1993 written maintenance agreement in place to prevent that, the Secretary of State can then continue the process of determining child support liability. That avoids a delay in liability coming into effect.

The parent with care has one month to respond to the letter telling her that the Secretary of State intends to stop acting. If she does not want action to stop, she may then be considered as a voluntary client by the agency without any further application. If the parent with care in this situation misses the one-month time limit, she can apply for maintenance later and the agency will instead pursue the non-resident parent from the current date.

The one-month period exists in the current scheme. It gives the parent with care a reasonable amount of time while not requiring the CSA to suspend action for too long. It is consistent with other time limits; for example, with regard to disputing and appealing decisions. Therefore, the one-month time limit goes across the board.

We have no evidence to suggest that the existing one-month time limit causes a problem a t the moment. I have not heard anything from the noble Lord tonight to suggest that we should extend it to two months, except on an a priori principle as opposed to problems that have been generated. I am perfectly willing to listen but, as far as I am aware, the amendment proposes a solution to a problem that does not exist. That solution, with its extended time period, could become a minor problem in itself. If the noble Lord has evidence from organisations that it is a problem and would like to send me that evidence, I shall of course reflect on it. However, at the moment I have no such evidence and have no reason to believe that this issue presents a difficulty. Therefore, I suggest to the noble Lord that we keep the legislation as it currently is on this point, and I hope that he will withdraw the amendment.

Lord Higgins

It seemed to me that evidence was unlikely to be readily available—certainly, to me. Perhaps I may ask the noble Baroness a rather simple question in the light of what she has just said. Is it not the case that, if someone misses the one-month deadline, what then ensues before the matter is resolved will take longer than if a slightly longer deadline was in place when the individual could simply go through the initial procedure rather than through the second round?

Baroness Hollis of Heigham

I believe that that might be true under the existing system. I hope that it will not be true under the future system. Given the simplicity of our arrangements under the future system, even if an application were brand new as opposed to a continuation of one where we had to obtain new information about the ex-partner's circumstances, we would expect to have that information within days and the assessment to be running within four to six weeks. Where one deals with, broadly speaking, continuous information—the same number of children and so on—I would hope to see the new or revisited application triggered even more quickly. Therefore, again, I do not see that it should be the problem that the noble Lord fears.

Lord Higgins

In the light of that assurance, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Higgins

moved Amendment No. 7: Page 2, line 28, at end insert— ("( ) The Secretary of State shall report annually to Parliament on the change to the number and qualification of maintenance variations that have been made in the preceding year."). The noble Lord said: In moving this amendment, I wish to speak also to Amendment No. 8. The amendments concern two matters. First, Amendment No. 7 proposes that the Secretary of State should report annually to Parliament on the change to the number and qualification of maintenance variations that have been made in the preceding year. Secondly, Amendment No. 8 proposes that any change in the nature and qualification of maintenance variations shall be agreed and ratified by Parliament before a change can be implemented.

I believe that we are all agreed that the simplified formula is likely to be an improvement—at any rate in terms of timing—on the existing formula under the previous legislation. I believe also that it is generally agreed that there are likely to be real problems in operating the old and new formulas side by side in the transitional period. Clearly, those who under the old formula believe that they are being treated more harshly than they would be under the new formula will feel that they have cause for complaint. Be that as it may, there was a general consensus, certainly in the Select Committee in another place, that the move towards the simplified formula is a good thing.

On the other hand, it is extremely important indeed that there should be adequate variations to deal with particular difficult situations. I believe that in the jargon a variation is described in another form. No doubt the noble Baroness will assist me.

Baroness Hollis of Heigham

It is "departures".

Lord Higgins

I am not entirely sure why we are talking about both "variations" and "departures".

Baroness Hollis of Heigham

"Departures" belong to the existing scheme, "variations" to the new one.

Lord Higgins

I imagine that the reason for the change in terminology remains shrouded in mystery. We seek to argue, as the Family Law Bar Association has argued very strongly, that if the simplified terms are to be used then there is a need for more grounds of departure. They should not be reduced, as has been suggested. They should cover such matters as higher housing costs, travel-to-work costs, disability costs and so on.

In view of that, there would seem to be a case for the House continuing to be aware of any changes which have been made in the preceding year. As I have suggested, Amendment No. 7 deals with that particular problem.

Secondly, if such departures or whatever are to be decided upon, those matters should be discussed and agreed in Parliament before they go ahead.

Overall, our concern is that despite the simplified formula, the system should be sufficiently flexible to deal reasonably with individual circumstances. Therefore, we hope that the Government will be prepared to accept our proposal. I beg to move.

Baroness Carnegy of Lour

Earlier in Committee, the noble Lord, Lord Northbourne, referred to the actual effect on children brought about by this Bill. It is extremely important that Parliament should know how it is working out for children. Therefore, the idea of an annual report seems to be excellent.

It is all very well to have a system which is justified as likely to be fair and to talk about the matter generally, but it will be important to know the real implications for the children concerned. This is a way for Parliament to discover and discuss that. I suggest that the Government should give some serious thought to this proposal.

Baroness Hollis of Heigham

Both these amendments relate to parliamentary scrutiny of variations. Amendment No. 8 will require the Secretary of State to seek the approval of both Houses of Parliament for any changes he wishes to make to the nature and qualifying criteria of the grounds on which he will consider a variation from the normal child support maintenance calculations.

I recognise the noble Lord's concerns to ensure that new variations are not introduced through the back door with the result that the variations scheme simply reintroduces the complexity of the current scheme by another route. I am sure that the noble Lord, Lord Higgins, agrees with the comment made by his honourable friend Edward Leigh in another place when he said that, if they load a new set of variations on to the simplified formula, the system will quickly revert to something approximating the present highly complex system". Members of the Committee will no doubt be aware that we have thought very carefully about which expenses will merit a variation of liability. We may wish to come to that in due course. To put it very simply, the two grounds of variation that we are proposing are, first, where the costs of supporting the child of the first family, including contact, need to be taken into account in order to ensure that the payment of maintenance does not subvert the father's capacity to make contact with the child. Legitimate expenses will be taken into account.

The second is where mistaken or fraudulent information has been given and we want variations on those grounds to ensure that, for example, the father is not living a life style inconsistent with the income declared. Those are the two basic grounds for variations. We are determined to keep it tight. We believe parents should put children, not other expenses, first. All the rules of the new scheme are intended to ensure this.

I am pleased to be able to provide reassurance that Section 52 of the Child Support Act, as amended by Clause 24, already provides that no regulations made under Schedule 4B can be made unless a draft of the instrument has been laid before Parliament and approved by both Houses. The new Schedule 4B—as substituted by Clause 6—details the cases and circumstances where a variation may be allowed. It also provides for regulation-making powers relating to the manner in which, and the extent to which, the normal calculation rules may be varied. That includes regulations relating to grounds which are not specified on the face of the Bill itself. I suggest to the noble Lord, Lord Higgins, that that affords ample opportunity for debate of any proposed changes, and should provide all the safeguards as regards accountability which are being sought.

Amendment No. 7 appears to require the Secretary of State to report annually to Parliament on the number of variations, although it may be the nature of them, which he has made in the preceding year. I do not believe that it is necessary that the Secretary of State should do so because the Child Support Agency, through its chief executive, will, as now, compile the relevant information as a matter of routine and publish it in an annual business report. I shall take up the point regarding information about variations and shall try to ensure that that is embedded in any future reports. That will give your Lordships and the noble Lord, Lord Higgins, the information which is sought on the basis of which, should he ever wish to, he could raise a Question or introduce a short debate. Therefore, an appropriate vehicle is already in place—namely, the annual report of the Child Support Agency—and it seems unwise to ask the Secretary of State essentially to duplicate that work. With those reassurances, I hope that the noble Lord will feel able to withdraw the amendment.

5.45 p.m.

Lord Higgins

With regard to the confusion between the number or nature of the variations, that can be covered by asking for both the number and nature of the variations.

What the noble Baroness said about the annual report of the Child Support Agency largely covers the point which I was seeking to make about that and the question of agreeing variations by statutory instrument.

I agree with the noble Baroness that we do not want to have so many variations that we go back to the former complexities. Anyone, like myself, who has suffered from arguing those complexities in the past on behalf of constituents—or sometimes against them—will realise that that is not a route which we want to follow. Indeed, it is not. Nevertheless, we believe that there needs to be a degree of flexibility. As the noble Baroness pointed out, some of those issues arise later in the Bill in specific terms. No doubt we can pursue them at that time. Meanwhile, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 8 not moved.]

Baroness Hollis of Heigham

moved Amendment No. 9: Page 2, line 34, leave out from beginning to ("and") in line 39. The noble Baroness said: In moving this amendment, I shall speak also to Amendments Nos. 10, 79, 81 to 83, 85, 87 to 91, 104, 106 to 108, 200 and 201. This group of amendments is a technical group necessary to improve the drafting of the Bill and to ensure that it achieves what is intended.

Amendments Nos. 87, 88 and 90 are minor amendments in connection with the new civil penalty of disqualification from holding a driving licence. Of course, we shall have a substantive debate on Amendment No. 84 regarding that matter. These amendments are necessary because of changes currently being made to the Powers of Criminal Courts Act. The effect is unchanged.

When magistrates' courts have made a disqualification order, the non-resident parent will be required to produce his licence. These amendments concern the powers of the police to ask the non-resident parent to produce the licence if it was not given to the courts. Failure to produce the licence in these circumstances is a criminal offence punishable by a fine.

The new simple system will, for the first time, enable the CSA to devote greater resources to collection and enforcement. We believe that this and the new measures in respect of driving licences together with the ability to deduct maintenance from a wider range of benefits will ensure that regular maintenance payments are secured from the vast majority of nonresident parents.

The other amendments, including a number that relate to Clause 17 of the Bill about civil imprisonment in Scotland, make technical corrections or additions to parts of the Bill to ensure that it achieves what is intended without unnecessary duplication. As I say, these are technical drafting issues. Later we shall come to the substantive issues. With that explanation I hope that noble Lords will accept the amendment. I beg to move.

Lord Higgins

The Committee will be grateful for that explanation. If the Committee eventually takes a different view on some of the later matters, like disqualification and confiscation of driving licences, no doubt we shall see another set of amendments like these that will put the matter right. That being so, we are grateful to the Minister for explaining it. I do not want to oppose this further at this stage.

On Question, amendment agreed to.

Baroness Hollis of Heigham

moved Amendment No. 10: Page 2, line 40, leave out ("in connection with any other assessment of maintenance"). On Question, amendment agreed to.

Clause 1, as amended, agreed to.

Schedule 1 [Substituted Part I of Schedule I to the Child Support Act 1991]:

Lord Higgins

moved Amendment No. 11: Page 89, line 7, at beginning insert— ("( ) Where the amount of child support maintenance calculated exceeds such sum as may be prescribed ("the maximum sum"), the maximum sum shall be payable by the non-resident parent."). The noble Lord said: In moving Amendment No. 11, I shall also speak to Amendments Nos. 14 and 17. This is an important amendment that seeks to impose what in current jargon would be described as "an upper limit". There is widespread feeling—again I refer to and support the Family Law Bar Association—for the view that there should be a maximum season on liability and that the basis of saying that the contribution from the absent parent should be unlimited is one that gives us considerable cause for concern.

In effect, it will give the parent with care and, through him or her—although that is not certain—it will give the child the right to share in the income of the non-resident parent without limit. That raises a number of important issues as to what extent it is appropriate to say in a Bill that is designed to protect the rights of the child and that states that the child should be supported, whether the child should have, over and above what may be a reasonable amount for that purpose, an entitlement to the income of the absent parent.

Earlier the noble Baroness sought to argue that, in sharing the responsibility for a child, the parent with care was, in effect, providing the home, and so on, and that it was up to the absent parent to provide the money. That is debatable, not least because, as we know—we shall come to this point later—the income and wealth of the parent with care may be substantially greater than that of the absent parent. At all events, even if the situation is one where the absent parent is rich, or well off compared with the parent with care, it is arguable that there should be some limit imposed on the amount that is transferred from the absent parent to the children of, let us say, a first marriage.

The matter becomes particularly complicated when someone has had several marriages or may have fathered a succession of children without having been married at all. That may be less likely in the case of someone who is extremely well off than otherwise. None the less, it would seem unreasonable that there should be no limit whatever to the amount that is transferred from the absent parent to the parent with care.

The amendments before us seek to deal with that particular problem in a variety of ways. Amendment No. 11, for example, suggests that there should be a maximum sum for which the non-resident parent is liable and that, following the calculation of the amount paid by a non-resident parent, the Secretary of State shall determine the net weekly income of the parent so that there is some degree of equity between the two.

I believe that the Select Committee sought to argue as follows: In the final analysis, the child-support formula should be seen clearly to be related to the cost of bringing up children and not as a straightforward 'tax' levied on the non-resident parent. We recommend that the Government should re-examine the possibility of inserting in the legislation an upper limit on the automatic application"— I stress the words "the automatic application"— of the revised CSA formula". The Select Committee reached that conclusion after taking evidence from a number of witnesses who argued along those lines.

Similarly, we also have in front of us Amendments Nos. 14 and 17 that suggest that the upper limit of child support maintenance may reasonably be of the order of £400 a week for each qualifying child. I do not believe that anyone would reasonably argue that that limit is too tight. Even in the most exotic circumstances, a limit of £400 a week for each qualifying child would seem relaxed. If there were three children, that would mean £1,200 a week from the absent parent to the parent with care. We put that down as a basis for debate.

Clearly, we are not concerned with the vast majority of cases in front of us. The number of people who can afford to pay £400 a week for their child, absent or not, is limited, but to have no limit at all would mean that, effectively, it would become a tax on the absent parent. We believe that in these circumstances there is a strong argument that at least some limit—we can debate the quantum—ought to be imposed. I hope that the Minister is sympathetic to that view. I beg to move.

Earl Russell

We, on these Benches, and my honourable friends have discussed at some length, and on a good many occasions, the principles involved in these amendments and in the next group of amendments. We can see a good deal of merit in the arguments on both sides. All of us were extremely reluctant to come to a conclusion until my honourable friend, Professor Webb, finally grasped the nettle and laid down a general principle. Perhaps I may save myself the labour of speaking on the next group of amendments by explaining that the general principle was that in general children ought to share in the increasing wealth of their parents. That means that we decided we would not support this group of amendments.

Suppose a child of Mr Donald Trump were subject to British law. The sum of £400 a week may seem to him or her to be rather mean considering his or her father's resources and could lead to a certain amount of resentment. On the other hand, we felt that some account should be taken, although not in quite the same way or to the same extent, of increasing wealth of the parent with care. Clearly, the Minister is correct that the care is a direct contribution to the welfare of the child and anything that did not take that into account would be entirely indefensible. On the other hand, a situation can exist in which the parent with care may be a great deal richer than the non-resident parent.

We have to try to reduce the resentment that arrangements for child support have created. I can see among those who feel resentment, even at the basic principle, that that is one that could easily be fastened on and could lead to a great deal of complaint. Although we shall not support this group of amendments, we shall support the next group, beginning with Amendment No. 12.

6 p.m.

Lord Higgins

I am grateful to the noble Earl for giving way. In the course of weighing the pros and cons of the arguments, did he consider, if he decides not to support these amendments, whether the principle should be extended to those whose marriage has not broken down and to those who were never married? Does he believe that the law should indicate that a very wealthy parent must give a certain percentage of his income to any given child?

Earl Russell

Subject to the provisions of Amendment No. 15, which we have yet to debate, yes, I think that I would say that.

Baroness Pitkeathley

The noble Earl has reminded us that arguments can be made on both sides as regards caps on maintenance. However, we should remember that when we take into account the philosophy that lies behind the provisions relating to child support in the Bill, we cannot support these amendments. That philosophy is not about need, but rather the rights of a child to support and the responsibilities of parents to give that support, whether they are absent or present.

Where parents remain together, the child would share proportionately in the income of the household. In my view, and speaking with some experience as a lone parent, it is morally unjust if children do not share proportionately in the income because the parents live apart. We should also remember that we are trying to introduce the simplest possible system to improve what is currently in place. These amendments would add complexity and for that reason would make it less effective.

Furthermore, as the noble Lord, Lord Higgins, reminded us, this applies to only a very small number of people. The number of lone parent families where this would apply is absolutely tiny. I believe that we should reject the amendment.

Baroness Carnegy of Lour

I believe that this is an extremely important issue. One can imagine a case where the non-resident parent is extremely well-off and is forced to supply to the resident parent large sun-is of money for the children. I believe that the noble Earl mentioned that those sums would be transferred to the mother of the children. However, the children might not in fact get the money. I do not believe that such arrangements would ever be made in any other circumstances.

In any case, it is not good for children to be given large sums of money when they are young. That could happen unless an amendment of this kind is introduced. The Bill as it stands is contrary to good sense. Indeed it may well be that the children never see the money because the funds would simply be transferred from one parent to another. That will occur not even as a result of unintended consequences, but will be the result of not sufficiently thinking the matter through.

I believe that we would be making a great mistake and I hope that the Committee will support these amendments.

Lord Haskel

The noble Earl, Lord Russell, spoke of sharing in the increasing wealth of families. Unfortunately, in real life family incomes can go down as well as up. In view of the fact that in most families the household wealth will fluctuate over the period that a child is dependent on the family, the introduction of a cap would present an added complication. In order to take account of the fact that the wealth of a family can rise and fall, a cap would be a disadvantage. It would be better to keep the system as simple as possible and to stick to the arrangements that are agreed.

Baroness Byford

Perhaps I may add my support to the contributions made by my noble friends Lord Higgins and Lady Carnegy. As I understand it, we are discussing support for the child and ensuring that adequate provision is made in all cases. That was my interpretation, not that the Bill aims to give a child a lump sum of whatever size simply because that child has a parent who happens to be wealthy.

I should be grateful if the noble Baroness could clarify what we are considering here. Are we discussing a sufficient sum of money to enable the child to be brought up in a loving environment—I refer to the comments made earlier by the noble Lord, Lord Northbourne? If it is possible to demand unlimited levels of support from the parent, all that will do is introduce more controversy and bitterness to the relationship. It must be noted that a cap of £400 a week per child is a very high limit.

I believe that we are moving away from the basic intention of the Bill which, as I understand it, is to ensure that adequate support is given to a child. I did not think that we were aiming to secure investment for the future for certain children. Can the noble Baroness make clear to the Committee the intention here?

Lord Stoddart of Swindon

I believe that we may have forgotten exactly what was the intention that lay behind the introduction of the original Child Support Act. The original legislation was designed to make parents on social security pay towards the maintenance of their children in order that the Treasury could save around £400 million a year. That was what it was all about and I believe that we should bear that very much in mind. The legislation was not introduced in order to distribute largesse from one family to another and thus give some children a lifestyle that perhaps they should not enjoy at a particularly young age.

Furthermore, we should bear in mind that circumstances can change. For example, there may be a separation in a family. A man or a woman remarries and, whereas previously the partner might have been poor or perhaps living on an average wage, through the newly formed couple's diligence and desire to get on, they build up a large business. They then become relatively rich. A part of that success will have been contributed by the new spouse. Why should she contribute towards the upkeep of children who are not hers? I do not believe that circumstances of that kind have been considered. I think that it would be entirely wrong to expect a new spouse to contribute. Because the business would belong jointly to her, that is what she would be doing.

I believe that my noble friend should take heed of what has been said and, if not today then at some stage, consider the force of these amendments. She should give some consideration to what has been said and then bring forward a formula that would set a reasonable limit on contributions that might have to be made—usually, of course, by men.

Baroness Hollis of Heigham

The proposal has given rise to an interesting debate. The purpose of these amendments is to introduce an upper limit to the amount of maintenance that a non-resident parent is required to pay. This would reverse the Government's present intention that there should be no upper limit to the amount of maintenance payable.

Amendments Nos. 14 and 17 seek to restrict the amount payable in respect of any one child to £400 a week, which under our proposals equates to an annual gross income of roughly £200,000 where there is one qualifying child. Amendment No. 11 provides that the level of the limit, or "maximum sum" is to be prescribed in regulations, although the wording is not entirely clear and we would need to discuss further the details.

I suggest that having an upper limit to the amount of maintenance payable would result in an inconsistency of treatment between non-resident parents with relatively high levels of income and those on more modest sums. Our decision not to introduce a cap was not one that was reached lightly. We have considered the issues very carefully and we accept that there are strong and respectable arguments on both sides. I accept that the matter is quite finely balanced.

As noble Lords have commented, there is a concern that if maintenance is set as a proportion of net income, levels of maintenance where income is very high bear no relation to the needs of the child. Furthermore, the noble Lord, Lord Higgins, has tonight argued that in those circumstances maintenance payments effectively become spousal maintenance payments. The counter-argument, which was put persuasively by my noble friend Lady Pitkeathley, is that the children of intact families share in the standard of living of their parents without any limit. Why should the amount that a father spends on his children be less because he is not living with them? It is important to remember that child support rates are not based on a calculation of the child's need for maintenance.

Of a current case load of about 1 million nonresident parents, only 500 have incomes exceeding £50,000 a year and only 120 have net incomes exceeding £150,000. The noble Lord will recognise the point made by my noble friend Lady Pitkeathley about having to scrutinise all incomes to protect or cap 120 non-resident parents.

Under the new system, there will be no maintenance requirement but simply a straightforward percentage slice of income that all parents can understand. Maintenance for all children will be based on what a father can afford—not what he or anyone else believes the children need. All non-resident parents will keep a minimum of 75 per cent of their net income in the new liability calculation. If just one child qualifies for maintenance support in the first family, 15 per cent of the net income of a higher rate taxpayer equates to between 9 per cent and 10 per cent only of his gross income. The rest remains with the tax authorities, national insurance and himself. After divorce, the average non-resident parent is 15 per cent better off whereas the parent with care and the children are on average 15 per cent worse off.

I acknowledge that the arguments are finely balanced. Our decision takes account of the various views expressed in the consultation exercise on the Green Paper and in talking to interested groups and individuals. The Social Security Select Committee in another place, after carefully considering many of the points raised today, reached the same conclusion. Placing an upper limit on the amount paid in respect of any one child is inconsistent with the Government's plan for a simple and transparent system of rates that protects the rights of all children to support from nonresident parents, in keeping with their ability to provide. I ask the noble Lord not to pursue his amendment.

Lord Higgins

This has been a fascinating debate, not least because, in reply to my intervention, we seem to have heard new Liberal Democrat party policy that government should legislate how much should be allocated by parents to their children in any family that has not broken up. If that is the case, we may be in serious trouble.

Earl Russell

The noble Lord asked me for a moral principle, not a prescription. I will qualify my remarks. I would hesitate to apply that principle to Augustus the Strong, who had 592 known children.

Lord Higgins

I always thought that the noble Earl thought that moral principles and what ought to be in legislation were one and the same. We shall, no doubt, pursue that point on another occasion.

The noble Baroness, Lady Pitkeathley, and the Minister said that the income of every non-resident parent would have to be scrutinised to identify those who were to be capped. If we were to insert this simple provision into the Bill, anyone who thought they ought to be capped would say so in response to the agency's inquiries. It is unlikely that the vast majority would need to have their means assessed in that way or would think they were caught by the cap.

The Minister referred to spousal income rather than assistance for the child. On the kind of numbers the noble Baroness was talking about, it is doubtful that the needs would be of such a high order. The amount will be based on what the other parent can afford. We have to take into account the position of second families. In the case of someone who is extremely wealthy and has a second family, paying support without limit on the percentage basis might reduce the income he can devote to the children of the second family. One thing that is indelibly printed on my mind from dealing with such cases is the bitterness of second families, which gives rise to many problems and a determination on the part of absent parents who have remarried to avoid by any means becoming involved with the CSA. On this basis, there could be a redistribution of income from the second family to the first family. There would be a variation on the old purse-to-wallet argument, as to who ought to have the money.

The noble Lord, Lord Stoddart of Swindon, pointed out that it was not the intention of the 1991 Act—or this Bill, I thought—to lead to massive transfers from one group to another. One could have an extremely rich mother with care combined with an extremely rich absent parent—but the absent father would still have to transfer support, without limit on a percentage basis, to his very rich previous wife. We will need to return to these complicated matters on Report, then reach a view on the balance of argument. Subject to that, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

6.15 p.m.

Lord Higgins

moved Amendment No. 12: Page 89, line 7, at beginning insert— ("(A ) Following the calculation of the amount payable by the non-resident parent, the Secretary of State shall determine the net weekly income of the parent with care in like manner to the determination of the net weekly income of the non-resident parent. (A2) Where the net weekly income of the parent with care exceeds the net weekly income of the non-resident parent the Secretary of State shall in such manner as may be prescribed reduce the amount of child support maintenance payable by the non-resident parent. (A3) Where the non-resident parent is liable to pay child support maintenance to more than one person the provisions of sub-paragraph (A l) shall apply to each parent with care and the reductions in the amount payable provided for by sub-paragraph (A2) shall apply to the amounts payable to each of those parents with care in receipt of a net weekly income greater than that of the non-resident parent."). The noble Lord said: With this, we may appropriately consider also Amendment No. 26. The argument is simply that the income of the parent with care and the absent parent should both be taken into account. The Government seem determined only to take into account the income of the absent parent. That was made clear earlier by the Minister when she said that the contribution by the with-care parent was care and that of the absent parent was money. We have grave doubts, believing it important to take both aspects into account.

Baroness Hollis of Heigham

I did not mean to imply that the father's sole responsibility is that of providing cash support. I would certainly wish to see contact and loving support. But when it comes to determining proper apportionment, all the research indicates that children of an intact family take 30 per cent of its income—not just in terms of food and trainers but housing costs and the like. Therefore, it seems equitable to allocate 15 per cent to the parent with whom the child is living and 15 per cent to the nonresident parent. I was not trying to suggest that the absent parent is only there for the money and the caring parent is there to do everything else.

Lord Higgins

In the light of the debate we had earlier on the amendment of the noble Lord, Lord Northbourne, it is clearly desirable—not least in light of the statistics the noble Baroness advanced earlier—that the absent parent, man or woman, should continue to take part in the emotional and other development of the children concerned. That is something on which we should all agree. Where there is room for dispute is whether, on the other side of that coin, the fact that the parent with care takes most of the responsibility—in many cases not all the responsibility—mean s that he or she should be in some way exempt from paying anything at all. That is a debatable proposition, particularly where, after the marriage has broken down or if there was no marriage at all, the parent with care is better off than the absent parent, whether it be male or female. That gives rise to great tensions and seems to us, in a simple-minded way, to be unfair.

The parent with care ought to contribute, if she is able, towards the cost of the child's rearing in terms of finance. The noble Baroness's position is that, however well off the parent with care is, she should not contribute anything financially. Is that right?

Baroness Hollis of Heigham

I must challenge the noble Lord. I made it clear that the parent with care contributes her share of the maintenance by providing the lifestyle which the child enjoys by living with her.

Lord Higgins

But she does not contribute anything at all in relation to finance. Am I wrong?

Baroness Hollis of Heigham

The child is fed; has its clothes bought; the housing and heating costs paid; school costs, trainers and gym kit paid for. Is that not part of the parent-with-care's contribution in kind?

Lord Higgins

We fully accept that the parent with care, male or female, contributes in that way. But it is not reasonable to say that that exempts them from making a financial contribution.

Baroness Hollis of Heigham

That is a financial contribution.

Lord Higgins

I suppose if one wished to do so, one could evaluate it in a cost sense. But if one does that, then the noble Baroness is hoist with her own petard. She has to argue that that value is the same as the value of the amount which is being contributed by the absent parent. The noble Baroness is not doing that.

Baroness Hollis of Heigham

I am sorry to get under the noble Lord's feet. I am baffled by this. A child needs support. We know from all the research and experience abroad that in most families that takes around 30 per cent of their income; not in a narrow sense but in the broadest sense of living costs. That is how much is apportioned.

The argument is simple. If the child needs that sum of money, it is reasonable to assume that that should be split 50–50 between the two parents. Clearly, because the child is living with the carer—normally the mother, but not invariably so—the mother is providing that 15 per cent not in cash, but in kind. She has to purchase that kind through cash, including housing costs, food on the table, heating, TV licence and so forth. That is her contribution. The absent parent's contribution towards those living costs, because he is not providing care in kind because it is not an intact family, is the cash. If they were together, he would be providing it in cash because he would possibly be bringing in the earnings and the mother might be producing it in kind. That is being replicated in these arrangements.

I am baffled that the noble Lord is not willing to put a financial equivalence on the contribution made by the parent with care to the cash sum produced by the non-resident parent.

Lord Higgins

I am happy to do that. But it still seems to me that one ought to take into account the resources of both parties in the broadest sense of the term. As I understand it, that is not what will happen under the Bill as drafted; the wealth of the parent with care is not to be taken into account in determining how the matter should be adjusted. There is a strong argument for saying that that is not the right approach, not least because it will tend to create tensions; it will not lead to a satisfactory arrangement.

In this context, our amendment imposes a limit in that regard. In another place the Australian experience was called in aid. A senior Australian lawyer gave evidence to the Select Committee to the effect that some sort of adjustment ought to be made on the lines that we are suggesting. Perhaps I ought to give the noble Baroness the chance to have a run at this, so to speak, rather than by way of intervention and we can then take the matter forward.

Baroness Gale

The noble Lord, Lord Higgins, said that this was a simple amendment taking the incomes of both parents into account. But we would argue that the parent with the care of the child gives much more in kind and will make a greater contribution to the rearing of the child. That contribution cannot be calculated on a balance sheet. The amendment seems to argue that it is the incomes of the parents that are important, rather than the needs of the child. But the needs and rights of the child must be paramount and that is what we should be considering.

The Government's clear policy is to lift children out of poverty. So how can anyone seriously propose that if in some instances—a small percentage—the parent taking responsibility of the day-to-day care happens to have a higher income than the non-resident parent, the child should be penalised. The non-resident parent should continue to make a financial contribution to the agreed amount, which is 15 per cent in terms of the first child, irrespective of what the resident parent's income is. In that way, the child will share in the wealth of both parents, as the child would if the parents had stayed together.

The key issue here is children's rights. The children should be allowed to share in the wealth of both parents and not have their income diminished because the resident parent's income increases. Amendment No. 12 will allow the non-resident parent to pay less than the agreed 15 per cent for the first child. That would, in effect, let the non-resident parent off the hook. For example, if the mother (in most cases it would be the mother who would have care and responsibility) worked hard to improve her position and because of that her income rose, then the nonresident parent could have his contribution diminished. That cannot be right. We believe Amendment No. 12 should be rejected and I support the Government's proposals.

Baroness Byford

I rise to make a short intervention on this amendment. I am somewhat concerned that, if we are not careful, we may be looking at the past when, in this day and age, we should be looking to the future. Many women are managing to hold good jobs—I accept not all and it is the same for men; people's incomes vary enormously. I support my noble friend's suggestion that both incomes should be taken into consideration. I cannot see why the Government feel that they should not.

I listened with care to what the Minister said about the mother—the resident carer is predominantly the mother—giving time and I accept that it is difficult to evaluate time, whether it is a man or a woman. However, that mother may be earning £40,000. Some women are now earning a lot more than that. If the father of that child earns much less money and goes on to re-marry, it would be unfair not to take the earnings of the caring wife into consideration. I should therefore like to press the Minister further on that point.

In many ways, I think the Bill has grown from past experience, when some women were not working. However, in this day and age there are great opportunities for women to earn, and many are taking up that challenge, and that point has a bearing on the amendments.

6.30 p.m.

Baroness Pitkeathley

I agree with the noble Baroness, Lady Byford, that this is not an issue of men versus women but about a child's right to support.

I should like to link financial support, emotional support and maintaining contact with children.

We all agree that emotional development is the most important matter. Research has repeatedly shown that absent parents who contribute, whether they are mothers or fathers, are much more likely to keep in touch. The money is almost a symbol of commitment to the child and of their willingness to take, and continue to take, responsibility as a parent, whether or not they are living with the other partner.

The fact that the parent with care is well off does not absolve the other parent of this responsibility. Moreover, it will certainly contribute towards maintaining emotional support, which is very important for the psychological wellbeing of the child.

Baroness Carnegy of Lour

Would the noble Baroness agree that the emotional support of the nonresident parent will be lost if the whole thing appears to be grossly unfair? I can think of nothing that would alienate the non-resident parent and his or her new family more than if the situation is manifestly unfair.

The Family Law Bar Association thought that the lack of a cap was crude social engineering. I think this is an inadvertent giving-in to feminism, thinking that it will be the woman who will perhaps be better off. It may not necessarily be the case, but it is likely to be. One must be sure that the emotional support of the child comes from both sides. That support will be lost if this is maintained.

Baroness Pitkeathley

I clearly emphasised that the situation applies to either parent and that this is not a women's issue. Emotional support and continued contact are the important factors.

Baroness Crawley

I should like to reiterate some of the points made by the Baroness, Lady Pitkeathley. The contribution of both parents is taken into account in the Bill. None of us is saying that the parent with care—and it is nearly always her—does not make a financial contribution as well as a contribution in kind. The Bill is fair: the contribution of the absent parent is the maintenance contribution. The parent with care makes a contribution in kind by giving time and presence, and by fulfilling organisational responsibilities. They may also make a financial contribution. We are talking about a fairness of approach.

However, I challenge the optimism of the noble Baroness. Lady Byford. I deal daily with figures on women's and men's income, and, although I would like to think that in the future the situation will greatly improve, most of the women about whom we are talking, who are the parents with care, will on average be 20 per cent poorer than the parent who does not have the care. Therefore, even though in the future we hope that men and women's pay will become much more equal, we are talking about a lot of poorer women today whose incomes, in their lifetimes, will never go into double figures.

Earl Russell

The noble Baroness, Lady Crawley, is clearly right about the present balance of income. However, in this and the last group of amendments we appear to be following the principle of Parkinson's law on the bicycle shed: spending an hour and a half debating the bicycle shed and 10 minutes on the nuclear reactor. Both amendments deal with a small number of people. Nevertheless, for the sake of public acceptance, we might as well try and get it right. Legislation since 1991 has conspicuously lacked public acceptance.

I normally agree with the noble Baroness, Lady Pitkeathley, and on this occasion I agree with her about the importance of the implied emotional commitment in the principle of financial support; but she was attacking what the amendment does not say. The amendment does not say that in these cases the non-resident parent shall give no support; it says that that support shall be reduced in such manner as may be prescribed. It does not state that the principle of support should disappear, and that is quite right because it satisfies the point. It merely states that it should be taken into account.

Nobody, as far as I can hear, in any quarter of the Chamber, is disputing the principle that care, with its financial, emotional and work implications, must be taken into account. However, as I understand it, the amendment concedes this principle already and it is not an issue. The extent to which it should be taken into account and in what way is a difficult question. I understand very well why the noble Lord, Lord Higgins, has chosen to leave that matter to regulation.

The point remains that if no account is taken of the principle of the amendment, we will have a great deal of trouble with public acceptance of the Act.

Let us imagine two cases that are by no means unimaginable. One is of a highly successful woman barrister, a parent with care, who has kept the children. The husband is unemployed or temporarily employed in a series of part-time jobs, with very little money indeed; and she is earning £200,000 a year, as successful barristers occasionally do. In this situation there will be a certain amount of public feeling. Imagine the heiress of a millionaire who has had an impromptu affair with a bricklayer—such things have happened and will continue to happen. She keeps the child and then the CSA duns the bricklayer for 15 per cent of his income.

That is only one case, but stop and think for a moment about what the Sun will be capable of doing with that case. The Minister knows that I am perfectly capable of snapping my fingers at the Sun—I do it daily. However, I do not think it is particularly wise to make the Sun or the Mail, or their ilk, a gratuitous present of a free issue on which they can go to town as much as they like.

I ask the Minister, for the sake of acceptance of the legislation: please come in out of the rain.

Lord Stoddart of Swindon

I add my voice to that appeal. I do so because, together with the noble Earl and other noble Lords, including the late Lord Houghton, we spent day after day, night after night, into the early hours of the morning, trying to convince the noble and learned Lord, Lord Mackay of Clash fern, that the Child Support Act, of which he was the prime mover, would cause enormous difficulties and would alienate people not only from the Act but from the Government. I described it as "another poll tax bit of legislation", and so it has proved. It has not been accepted by either men or women. It has hurt both. Indeed, it has provided little good for both. It was supposed to help women, but it has not helped them at all: it has helped the Treasury. In fact, it has not helped the Treasury because its expenses were at least six-times as much as estimated during the course of the Bill.

We have been through all this before. I do not want my noble friend to do what was done previously and not listen to the words of wisdom that are coming From the Front Benches and, indeed, from some on the Back Benches. I generally support the Bill. It will make a good deal of improvement on what we had previously.

Nevertheless, I do not want the Bill to fail on the basis of public perception and because of a failure of public acceptance, as mentioned by the noble Earl.

There are many parts of the Bill about which we should be worried. For example, we all accept that those who have care of children—mainly women—have a most important job to do and one that is worth a lot of money. But as has already been pointed out, if at the same time the woman is able not only to employ people to carry out those duties but also has a lot of money, surely she should contribute monetarily towards the upkeep of the child, as in the case with wives who go out to work.

We are talking about the rights of children. Of course children have the right to maintenance, to a good life and to a good standard of living. But that is where the rights stop. I hope that we are not presuming to tell people who remain in a marriage or in a partnership relationship that they should be contributing a given percentage of their money to their children. That is something that I would not accept. Up to the age of about 60, I happen to believe that I am far better at looking after the money that they will inherit than they are.

6.45 p.m.

Baroness Hollis of Heigham

I had not expected my noble friend to finish his contribution by talking about inheritance. However, these amendments seek to change the way that maintenance liability of a nonresident parent is calculated to take account of the income of the parent with care in certain prescribed circumstances.

Amendment No. 12 provides for a reduction in the amount of maintenance payable where the parent with care's net income exceeds that of the non-resident parent. The manner of the reduction is not prescribed but is to be provided in regulations. It is not entirely clear whether the reduction is a pound-for-pound calculation or whether the maintenance would be reduced by a lesser amount. However, Amendment No. 26leads me to think that the latter may be the case.

Amendment No. 26 provides for the net weekly income of the non-resident parent (upon which child support liability is based) to be reduced by a penny for each pound by which the gross annual income from all sources of a parent with care exceeds £25,000, subject to there being a limit that would prevent the nonresident parent's net income being reduced by more than 50 per cent. This would lead to a consequential reduction in the amount of maintenance payable in affected cases. Additionally, this amendment also provides for the calculation of a non-resident parent's net income to include income from both earned and unearned sources.

Perhaps I may leave that last point aside for a moment and return to first principles. I find myself unable to understand why the noble Lord, Lord Higgins, cannot, apparently, understand the Government's position. At the end of the day, the essential issue is not whether the man or the women can better afford to pay maintenance—in other words, setting one off against the other—it is, as my noble friend Lady Pitkeathley, and others, so rightly said, that the child has the right to maintenance from his or her father, irrespective of the income of the mother, exactly as if they were part of an intact family. I believe that that 15 per cent or 20 per cent contribution from him, according to the number of children, is a right that the child has independent of the income of the parent with care.

Members of the Committee may ask why that is so. In response, I should like to suggest four basic reasons—

Lord Higgins

Perhaps the noble Baroness could clarify something before she leaves that specific point. She argued that the balance would still be this way if the marriage had not broken up and if we were talking about an "intact family". But if it were an intact family and the wife earned much more than the husband, surely she would contribute more.

Baroness Hollis of Heigham

Yes. She would contribute more because the whole family would enjoy a higher standard of living in which the child would participate. Perhaps I may have another go at trying to see whether I can get the noble Lord to understand our position.

I should like to suggest four reasons why this is a matter concerning the child's rights. The first is grounds of equity. I have already said that research has estimated that around 30 per cent of a family's income is spent on the children and on extra costs; for example, housing, clothes, and so on. The woman contributes her 15 per cent because she maintains the child, while the man contributes his 15 per cent by paying cash maintenance because, after all, the child is not living with him.

Where the woman has a higher income the child enjoys a higher standard of living. That care may be in the form of cash, it may be her time or it may be in the form of opportunity costs. Perhaps I may give the Committee some examples. Let us say that the woman is on £7,500 a year (£150 a week) and the man is on £10,000. He will contribute £30 a week to the child's support, while she and the child will be on £7,500. They will probably be living in modest, rented accommodation and will have to watch carefully what is spent on food. They will probably have to economise on things like fresh fruit, and so on, and will have to search for the least expensive clothes that can be found. Indeed, they will probably have to think twice as to whether they can afford a holiday, other than one which means staying with friends.

I hope that that is not too much of a caricature of how a lone parent on £150 a week might be living, together with, say, the £30 coming in from the nonresident parent. However, let us assume instead that the man earns £10,000 and the woman earns £20,000 a year. What then would the child enjoy? It is possible that the child would be living in an owner-occupied house with more space and a garden, situated in an area that is more attractive to the child in terms of parks, and so on. The extra money would also be spent on heating, lighting, repairs and probably a higher standard of food with more fresh fruit, vegetables and probably—I do not know—organic food. The child would be able to enjoy school trips that the parent on £150 a week would find very difficult to afford. The child would also have the benefit of more expensive clothes; for example, more expensive trainers. He or she would almost certainly enjoy a holiday, possibly abroad. There would also be better transport and a computer.

Those advantages would not come from the man's £30 contribution per week; it would come about because the woman was earning £20,000 a year. As a result, the child would be able to enjoy all of those benefits by virtue of the woman's increased income. She would be paying their joint bills and he would be making a constant contribution related to his ability to pay. The difference in the standard of income between the child whose parent is on £150 a week (£7,500 a year) and the child whose parent receives £400 is huge. It arises because the woman is able to offer a higher standard of living than the child would otherwise enjoy. That is her cash contribution towards paying the bills—the mortgage, the school trips, the holiday and the clothes—and it goes over and beyond her time as carer and her opportunity costs. Indeed, without the child, she might be able to earn even more.

I do not understand why noble Lords opposite do not accept the fact that the difference between the standard of living that the child will enjoy where the woman earns £7,500 and the father earns £10,000 and where the mother earns £20,000 and the father earns £10,000 is expended in part and proportionately on the child. This means that the child is supported in a more attractive and certainly more comfortable lifestyle than would otherwise be the case. That is the first point: the child enjoys the standard of living provided by the parent with care. Therefore, because the mother is paying in kind, so to speak, as well as in cash, the child has a right to expect that the father's contribution should not be reduced accordingly.

Secondly, I turn to the grounds of simplicity. At present, if the man has a second family—whether he has one, two or three children in that second family, and whether or not they are his biological children with the new partner or the step-children whom the new partner brought into the relationship—the children in that family are treated in the same way. They are offset against his income before we apportion the 15 per cent for the first family.

If her income—that is, the parent with care—is to be taken into account, I suggest that the income of his new partner should be taken into account in assessing what she can contribute to the stepchildren, as well as to the biological children, in the second family. If her income as well as the man's is to be taken into account for the first family, one must do that for the second family. However, some of those children will not be their joint children; they will be stepchildren. In that case we should consider the income of his partner's ex-partner in contributing to the stepchildren. While we are considering four people's incomes, we might just as well throw in that of the fifth, which is, of course, the parent with care's new partner's capacity to pay for the new standard of living that may be required, for example, the extra house and so on.

What have we done? We have moved from considering one assessment—the man's—to two assessments—the parents with care—to three assessments—the man's new partner's—to four assessments—the man's new partner's ex-partner—and possibly a fifth assessment—that of the new partner of the parent with care. That comprises five income calculations instead of one. By withholding one piece of information five people could delay the maintenance assessment. Does the Committee in all honesty believe that assessing five people's incomes on a worst case scenario would result in the children receiving more maintenance?

My third point is that on the ground of common sense, that is not worth it. Parents with care generally are poor. Some 96 per cent of parents with care have incomes of under £100 a week. Only 7,000 have incomes of over £10,000 a year. Only 200 in the entire caseload of 1.2 million have incomes of over £25,000 a year. Therefore potentially we could assess five people's incomes in each of the 600,000 or so private cases to calculate the woman's contribution in 200 cases, even though the child already enjoys the higher standard of living that she is providing. The amount that would result from that elaborate la ramie arrangement of maintenance would be small.

For example, a non-resident parent with net earnings of £250 a week and one child pays £38 a week. If the parent with care was one of the 200 I have mentioned—that figure is probably by now 100—with earnings of £28,000 a year, under the penny in the pound formula his maintenance would be reduced from £38 to £33 a week. We would have to consider 600,000 cases and five people's incomes to pick up 200 cases to save him paying a fiver a week. Is that sensible?

Fourthly, apart from the delays in making the assessment, it is also costly. The cost of the IT system—about £10 million a year—would be several times more than the total sum collected. Given that the man's share is net, we would have to do elaborate calculations about whether the woman's was net or gross. I hope that in the light of arguments about equity, simplicity, the standard of living of parents with care who are poor, and the costs and delays, the noble Lord opposite will recognise that this is simply not an amendment that is worth pursuing. I hope that he will concede that point not just on grounds of principle—although there is a principle here about which I feel strongly—but on the ground that such an amendment would produce expensive and complicated outcomes which, because of the delays I have mentioned, would thwart the payment of maintenance to children.

Baroness Carnegy of Lour

The noble Baroness has produced a wonderful argument and she has all the details worked out. However, she completely neglects the fact that unearned income is not taken into account. That could alter the argument. She clearly has not listened to the noble Earl, Lord Russell, who pointed out—I thought this important and I imagine that the noble Baronesses seated behind the noble Baroness saw the point—that one case could completely wreck the whole system in the public's view because of the sheer unfairness of it. I hope that the noble Earl will elaborate on that point.

Earl Russell

I understand where the Minister is coming from. She is coming from a formula-based sense of justice. But to my mind she has illustrated more clearly than I could ever have done myself why a formula-based attempt at justice must always be unjust because it cannot take account of circumstances. The Minister has repeated again her arguments about complexity. If you set out to avoid complexity, you set out to avoid the real world. Many people have tried to do that, no one as far as I know has yet succeeded. All the arguments about complexity that the Minister developed are arguments that bite only on those who believe in doing justice according to a formula. We on these Benches are not among that number. We therefore find the basis of those arguments has no purchase on us.

Baroness Hollis of Heigham

Before the noble Lord sits down I hope that I may respond. The noble Baroness, Lady Carnegy, is right to say that we are not taking the woman's unearned income into account; we are not taking the man's into account either. There is entire equity there. The unearned income is taken into account only if it is so substantial that it represents some kind of diversion; in other words, he declares an income of, say, £100 a week but has a lifestyle that requires an income of £500 or £1,000 a week. That would create the basis for a variation. However, as I said, there is equity between both parties.

I am surprised that the noble Earl, Lord Russell, asked us to tailor our policies to the prejudices or knee-jerk reactions of the tabloid press. He would be the first to ask us not to do this in the case of asylum seekers.

Earl Russell

I made clear that I asked the noble Baroness to do this only in the rare circumstance in which their case happens to be just.

Baroness Hollis of Heigham

I cannot conceive of any circumstances where the parent with care has income where it is just to take that into account given the arguments I have set out. If one does that, one is effectively asking the parent with care to pay twice over, not only in terms of the cash payment of bills incurred as part of the care of the child but also in terms of a maintenance contribution because the other party's maintenance that is received is reduced accordingly. The noble Earl asks the parent with care to pay twice over. I am slightly shocked at the suggestion that we should tailor the provision in case one or two cases are picked up by the Sun. Perhaps the noble Earl did not hear me say that. I am slightly shocked that the Liberal Party of all parties should say that we should be wary of cases coming to the notice of the Sun which might be inconvenient to us and therefore we should treat parents with care unfairly on that ground.

Earl Russell

I must ask the Minister to withdraw the word "unfairly". We did not think that what we proposed was unfair and would not have proposed it if we had.

Baroness Hollis of Heigham

I think that it is unfair and that is why I said it.

Earl Russell

We do not.

Baroness Hollis of Heigham

Of course I would not expect the noble Earl to propose something that he believed to be unfair. However, the fact that he has a belief does not mean to say that the belief is correct. On this occasion I suggest to him that it is not. The provision we propose is fair and decent. The parent with care is providing in kind. That also means paying out cash. The absent parent is providing in cash because he is not providing in kind, in exactly the same way as if they were an intact family.

The noble Earl, Lord Russell, said that the formula was unjust. The alternative is to return to an essentially court-based system which I believe many Members on all sides of the Chamber consider to have failed children in the past and, if it were to be reinvented at huge cost and with huge complexity, would fail children again. It would be discretionary and a lottery. It might suit the instincts of angry fathers who want their day in court. However, I am concerned—as, I hope, is the Committee—with the well-being of the child which is not best met by an adversarial situation in which the father seeks to reduce his maintenance. What message does the child get from that except that his or her father does not want to support him to the extent that the agency thinks he should be supported?

We believe that the proposals are simple. Booklets and tables will be available at post offices, surgeries, libraries and other such places explaining net income and the number of children. The man will know what he has to pay. He will pay his taxes, his national insurance and his child support. The woman, in turn, will know what she can expect to receive from the man, whether she is on benefit or in work, from rough and ready assumptions about his income. The woman will offer the child the standard of living that she is capable of, both in cash and in kind. We think that that is fair and reasonable. Any proposal that the parent with care should pay cash in addition seems to me a double whammy and deeply unfair to lone parents.

7 p.m.

Lord Higgins

Let me first pick up the point made by the noble Baroness a moment ago. As she well knows, we are entirely of the view she expressed; namely, that it would be a mistake to go back to the courts and to get rid of the Child Support Agency. We believe that the right approach is to do our best—it is not easy—to improve the Child Support Agency.

While this debate is unlikely to hit the headlines tomorrow, I presume to say that it shows very clearly the ability of your Lordships' House to debate this kind of very complicated issue in a remarkably sophisticated way. It has been enhanced by the virtuoso performance of the Minister. Having said that, she has totally failed to convince me.

Perhaps I may make one or two simple points to start with. First, in the light of the debate that we had on the earlier amendment moved by the noble Lord, Lord Northbourne, we are all agreed—it is absolutely common ground—that so far as concerns emotional support and contact with the children, the support of both parents is a matter of great importance. There is no dispute whatever in regard to that.

Let me make another point which has not been raised so far but which is rather implicit in what has been said; namely, that somehow the absent parent wants to be the absent parent. In many cases that is not so. As I well know from my constituency experience, it may be that the marriage broke up in a way which deeply distressed the absent parent. Again, I think that is common ground.

I do not think it is true that a small number of people are affected. There may be a considerable number of situations in which the wife has a higher income and greater wealth—if indeed it is the wife rather than the husband—than the absent parent. There may be a considerable number of such cases.

As to the point made by the noble Baroness, Lady Crawley, that we are seeing greater equality of incomes between men and women, that is certainly the trend. I welcome it. However, it is wholly irrelevant to the amendment we are discussing where we will be looking at what is the income in an individual case. That is what the amendment is about. So I still think it is an important issue.

It is not a case of whether the tabloid press pick up a particular point or not, but a case of whether or not taking into account the income of the parent in care increases the amount of bitterness in the relationship, perhaps with regard to the degree of personal contact and so on between the two parents.

Baroness Hollis of Heigham

The noble Lord may be going on to deal with this matter in which case I apologise. What is the noble Lord's response to the point I put to him that under the present scheme—for both simplicity and reasons of basic decency—we are not making any distinction between the biological children and the stepchildren in a second family? Does he accept my argument that if there are stepchildren in the second family—and very often if he joins a new partner he may be joining somebody with a child already, who may herself have been a lone parent in the past—then, as a result of the noble Lord's proposals, in all equity we would have to assess her income in regard to her ability to contribute both to their joint children, to her existing stepchildren and, by definition, possibly also to those of her ex-partner? Does he accept that basic argument? Or is it the cascading domino effect; that, once one goes beyond the system we have got, we cannot stop short until all incomes have been taken into account for all responsibilities, for all children, in all relationships?

Lord Higgins

I was coming to precisely that point. It relates again to the point I was making about bitterness. From my own experience—after all, if I may presume to say so, I have seen this at the front end—it will be difficult to take into account the extent to which there is bitterness between the stepchildren of a second marriage and all the ramifications that the noble Baroness spelt out. None the less, on the narrower issue, one still needs to take into account the income of both parties in this particular dispute.

Baroness Hollis of Heigham

So, under the noble Lord's formula, where the parent with care had an income of under £25,000, we would treat stepchildren and biological children in the second family in the same way; but if the income was £26,000. we would treat them differently?

Lord Higgins

I should like notice of that question. No doubt we can return to it on Report. The noble Baroness has rightly raised the ramifications of the whole issue. But one should not suppose that because one does not deal with all the ramifications in the Bill, they are not real issues on the ground. The views of the stepchildren and so on are extremely vivid, if I may put it that way.

Baroness Hollis of Heigham

It is a precise question. Does the noble Lord accept that the implication of the amendment is that the income of the new partner of the former husband—if I may genderise the issue—would now have to be taken into account if there were children in the second family?

Lord Higgins

As I said, I should like to consider that point. I am saying that, from my personal experience, it is certainly a relevant consideration. Of course, the argument the other way concerns the complications that the noble Baroness is constantly arguing against. I do not think that because of the second and third order effects, one should not take into account the first order effect. That is what this amendment is about.

I turn now to what is perhaps the most difficult point to put in politically correct terms. It concerns the point referred to by the noble Baroness who raised the question of the contribution made by the parent with care. I certainly think that one can take that into account. We are not saying that the contributions she makes—whether in kind or in money—should not be taken into account. On the contrary, we think that is so. Amendment No. 26 seeks to deal with that particular point. It states, in particular, that however great her income may be, the contribution of the absent parent should not fall below 50 per cent of what is the formula. We are seeking to adjust that. I gather that a similar system is operated in Australia.

My final point before I sit down—I have spoken far too long—concerns the issue of earned and unearned income. I take the Minister's point that we are not proposing at the moment to take into account the unearned income of either the parent with care or the absent parent. Of course, there has always been a long-running debate about whether one should call it "unearned" income. I prefer to use the expression "investment" income. I presume that in the context of this amendment we are talking about investment income.

The noble Baroness raised the possibility that perhaps what is not being taken into account is not investment income but income that is unearned and not announced by one of the partners to the agreement. However, there is a strong argument for either accepting the amendment and taking into account both kinds of investment income; or, even if one did not accept the amendment, taking into account the investment income of the absent parent. I do not understand why that is not happening at the moment.

Baroness Hollis of Heigham

Statistics show that it is not worth it. The only situation in which people are required to come to the CSA is where she is on benefit and, for the most part, he may be on benefit or he may be in work. Other cases are private cases, and those involved in them can make whatever arrangements they wish. Essentially, they would only come to the CSA as a fall-back if there was a dispute. Therefore, if she is on benefit, by definition she cannot have income of more than £3,000, otherwise it would bite into her benefit.

Equally, if she is on benefit and one looks at her income, it would be a very rare situation indeed where she would be partnered by someone who had such a vast income that—given the variation thresholds—his investment income would make a significant difference to the amount to be assessed. If he did have such investment income, one would expect in any such break-up that some of it would have gone over to her as part of the settlement, at which point of course she would no longer be getting benefit anyway and would not be a CSA client.

Lord Higgins

I was rather making the point that one should take into account the investment income of the absent parent, if indeed he has some. I do not understand why that is not so. But that is a relatively narrow point.

We have had a fascinating debate. I am interested in all the views expressed—not least those from the Liberal Democrat Benches. No doubt we shall return to the matter when we come to consider it on Report. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

The Deputy Chairman of Committees (Lord Strabolgi)

Before calling Amendment No. 13, I should inform the Committee that, if it is agreed to, I cannot call Amendment No. 14.

[Amendment No. 13 not moved.]

[Amendment No. 14 not moved.]

The Deputy Chairman of Committees

I should inform the Committee that, if Amendment No. 15 is agreed to, I cannot call Amendment No. 16.

Lord Higgins

moved Amendment No. 15: Page 89, line 20, leave out sub-paragraph (2) and insert— ("(2) Where the non-resident parent also has one or more relevant other children—

  1. (a) the total number of children cared for shall be calculated in accordance with paragraph (b);
  2. (b) the number referred to in paragraph (a) shall be calculated by adding together the number of qualifying children and the number of relevant other children;
  3. (c) there shall be calculated in accordance with paragraph (d) a sum for deemed child care liabilities;
  4. (d) the amount referred to in paragraph (c) shall be calculated by application of the rates in sub-paragraph (1) to the total number of children cared for;
  5. (e) the basic rate shall be deemed child care liability divided by the number of qualifying children.").
The noble Lord said: Amendment No. 15 is concerned with the total number of children involved in any case. In the foreword to the Green Paper the Prime Minister stated that the system must support families and children. He went on to say that it should be fair to children who will get maintenance they had the right to expect, providing not just financial benefit but tangible proof that they are cared for. We can certainly go along with that proposal. However, in their White Paper the Government said that they would go ahead without discriminating against various categories. That is not what the Government are proposing.

In the Green Paper and in the White Paper two alternatives were offered. Page 10 of the White Paper states that either one would deduct a proportion of the non-resident parent's net income for each of their children in a second family and apply the second rates to the balance or, alternatively, would calculate child support for all the non-resident parent's children in both families and share out the resulting amount according to the total number of children in each family. The amendment seeks to implement the second of those alternatives, avoiding the situation, which the Select Committee was anxious to avoid, of first and second-class children in the second family—those who could count for child maintenance and those who could not. I believe that this issue is worth debating. I beg to move.

Earl Russell

We on these Benches view this amendment with a good deal of sympathy. Under the old legislation the treatment of stepchildren was one of its great failures. I shall not in a hurry forget correspondence from several families in second marriages who were, with some agony, contemplating the prospect that they might have to break up if the legislation was not changed. I shall not forget either the noble Lord, Lord Mackay of Ardbrecknish, playing "the boy stood on the burning deck" when I raised a case where the stepfather was dead and therefore the absent parent was being made to maintain the household including him. All the noble Lord could say was that the responsibility for maintaining stepchildren is that of their natural fathers. He was not able to change it for circumstances because the legislation did not allow him to. I have rarely been more sorry for a Minister trying to reply to me.

The basic principle that we must bring to this issue is that all children in a household should count equally. The amendment is a serious attempt to achieve that principle. I like what I have seen about it. I shall listen to the Minister's reply to it but with a presumption that the amendment is heading in the right direction. I am grateful to the noble Lord, Lord Higgins, for tabling it and for moving it.

Lord Northbourne

I have enormous respect for the noble Earl, Lord Russell, but I feel that I have to raise a contrary issue in the context of this amendment. It troubles me that what the amendment says is that it is okay for the father to walk away from his responsibilities to his first children and to take on another family even if he cannot afford it. That surely flies in the face of any attempt we might be making as a society to say that fathers are responsible for the children they bring into the world.

Earl Russell

The point made by the noble Lord, Lord Northbourne, is one that I have discussed many times over, especially with the noble Viscount, Lord Astor, when he was Minister. The point he makes has merit on a moral plane, but people have been doing this since the beginning of recorded history. I could give the noble Lord cases from the seventh century, but I do not think that we need bother now. The point is that the children of such unions do exist. The children of such unions have stomachs. They need to be maintained. I do not believe that visiting the sins of the fathers on the children should be a principle which guides action of the state in its legislative capacity. Once one accepts that, however correct is the noble Lord's point on a moral plane, I do not think it should have priority in guiding legislation. Nevertheless, I understand the basis of the noble Lord's concern.

7.15 p.m.

Baroness Hollis of Heigham

Amendment No. 15 seeks to change the way that child support liability is calculated in cases where the non-resident parent has children living with him in a second family. As the noble Lord, Lord Higgins, said, the amendment provides for the non-resident parent's liability to children in his first family to be a proportionate share of his liability for all the children in his first and second families.

That would mean, for example, that where there is liability for one child, with another child in the second family, maintenance would be assessed as 20 per cent of net income with one half—10 per cent—being paid to the parent with care. That differs from our proposals which provide for allowances for children in the second family—of 15, 20 or 25 per cent—to be deducted from the non-resident parent's net income before his liability for maintenance for his first family is calculated. Under the system that we are proposing, where there is liability for one child, with another child in the second family, the non-resident parent would have 15 per cent of his net income deducted for the child in the second family and the maintenance liability would be estimated therefore as 15 per cent of 85 per cent for the first child in the first family as opposed to 10 per cent of 100 per cent, which is the system proposed by the noble Lord. Those are the differences. The noble Lord proposes 10 per cent for each child. Our system docks 15 per cent of the income and then 15 of the 85 per cent that remains goes to the first child. Those are the two systems. Not surprisingly, the responses came back on a gender basis.

We considered the matter very seriously. Some countries go for one system and some countries go for another. We decided to prioritise the first family because 10 per cent of 100 per cent is less than 15 per cent of 85—it is about 12.5 per cent. In the second family we were taking into account all children. We concluded that there should be no first and second class children and that an allowance should be made in the new system for all children who live with the nonresident parent, including any stepchildren. We also decided that any maintenance which the non-resident parent or his partner might be receiving for their children would be totally ignored. Given, therefore, that we were doing so much more for children in the second family, which I think is right and decent, it seemed also only right that we should give a slight tilt to the first family so that it was not substantially disadvantaged.

An example may help. A father has net earnings of £250 a week. He breaks up with his partner. He is liable for maintenance for one child in the first family and the parent with care receives £37 a week as maintenance. That is the 15 per cent on his £250. He then moves in with a woman with three children whom she has brought from a previous relationship or two—none of them his. Under our system, he would now pay £28 a week compared with the original £37. He would be paying £9 a week less by virtue of the responsibilities for the stepchildren. She would have seen her income as the parent with care drop from £37 to £28 because he had moved in with someone who already had children.

Under the amendment, one would add up the three, add the one, make four, and she would receive only £16 a week. So under the terms of the amendment the parent with care would see her maintenance fall from £37 a week to support the child, on an income of £250, to £16 simply because he had moved in with someone who had several children. If he moved out two years later, still with no children of his own, her income would rise again to £37 a week.

That amount of drop-down, over which she has no control and which depends on what he is doing, what relationships he has moved into, and what children his new partner may have brought into the relationship, leaves her income too fragile to his actions. That is why we have gone for the arrangement in the Bill, with a slight tilt to the first family. It means that if he, having left that first family, as the noble Lord, Lord Northbourne, said, takes on responsibilities for a second family, he does so knowing what his overriding responsibilities for that first family are. It is still decent. We are still recognising, as is not done under the current system, a greater weight for the children in the second family, but we are not suggesting, for example, in the case I gave that the woman's income could possibly be halved because he has temporarily (or possibly permanently) moved in with a woman with several other children.

If we were to follow the terms of the amendment, in all fairness we should have to exclude any deductions in the second family for stepchildren or children that were biologically not his. Otherwise, it would not be fair: the maintenance that the parent in the first family would receive would be dependent entirely on whom he had moved in with and what children she had. I do not believe that that would be right. I believe it is better to treat all children in the second family alike, whether the biological children or the stepchildren of that family. But that means that, in order to protect the first family from too sudden a drop in income, we need to tilt the calculation to the first family, as our proposals do.

I suggest that this is a package. Either Members of the Committee accept our proposals, which tilt to the first family but allow an offset for all children, including stepchildren, in the second family, or we can do as the noble Lord suggests in his amendments and treat the first children in the first family in exactly the same way as the children in the second family; but then, in all decency, the stepchildren would have to be excluded. I believe that the implications of having "first-class" and "second-class" children in the second family taken into account for assessment purposes would be wrong.

Having made extra provision for stepchildren, we thought it only right to protect the children in the first family by giving that extra tilt. I hope that with that explanation the noble Lord will feel able to withdraw his amendment.

The Earl of Mar and Kellie

My Lords, stepchildren can exist in both first and second families. In working out the calculations, did the Minister take into account the fact that those stepchildren might be in receipt of child support payments from their own estranged parents?

Baroness Hollis of Heigham

Yes, that was indeed one of the areas of complexity that we did not want to get into—because, if we did, we should have to see whether the child support was adequate; we should have to chase the income of his new partner's ex-partner's income in order to make that calculation. Either we strip all of this out, on the grounds that the numbers are not worth the pursuit, or we include it all. I accept the point made by the noble Earl, Lord Russell: either it is all included, or it is stripped right down. There is no middle way.

That was the failure, with the best possible intentions, of the child support system that we inherited. It attempted to apply a formula or rate—which was still too complicated and did not get the money flowing—but then, when the money did not flow, it kept attempting to tinker with the system, which meant that there was even less chance of the money flowing. The result was all the bureaucracy of the formula and none of its simplicity, and all the complexity and unfairness of the courts, and none of the tailored fairness. It seems that we must take one route or the other. It is a perfectly proper question to ask. We have pulled all those calculations out, and we have said that the stepchildren in the first family will not be taken into account; the stepchildren in the second family are taken into account, but in that case we need to protect the parent with care in the first family so that her income for her children is not vulnerable to the person with whom he moves in and the children whom she has brought into the relationship. It is a decent alternative.

We spent a great deal of time on this issue. The reason we went for this alternative rather than the formula suggested by the noble Lord was that, at the end of the day, I did not believe it right to make a distinction between "first-class" children in the second family and "second-class" children in the family, if we start with the well-being of the child, and do not make a distinction between biological and stepchildren in the second family, we must then put some protection in place for the children of the first family. That is why we have tilted the provision in the way that we have.

I am sorry to have given a rather long explanation, but the matter is complicated and technical. At the heart of it is what is in the best interests of all the children. I really do believe that we have got it right. I hope that in the light of the explanation I have given, the noble Lord will feel able to withdraw the amendment.

Earl Russell

My Lords, before the noble Lord, Lord Higgins, replies, I should like to thank the Minister for a carefully considered explanation, which I must read, but shall do so with a great deal of sympathy. Perhaps I may ask her one more question. How, under these proposals, will the system treat children in the household who may be relatives but are not natural or stepchildren? Let us take, for example, nephews and nieces whom a couple are bringing up because their natural parents are dead. Will any account be taken of a case like that?

Baroness Hollis of Heigham

Yes, it will.

Lord Higgins

My Lords, like the noble Earl, I should like to read the Minister's response. These are rather complicated issues. One needs to sit down and look at them in black and white before one can take a clear view. In considering what the Minister said, I shall be considerably influenced by what has seemed to me a very clear feature of second marriages; namely, that the second family typically has a higher income than the first family originally had. Frequently the husband's or wife's income has gone up in the meantime, and they are determined—we are back to the point about bitterness—that the first family should have as little as possible. The Minister's statement that the Bill tilts the income away from the second family and towards the first is perhaps to be taken into account.

On the previous amendment the Minister was anxious not to become involved in the matter of stepchildren, the fathers of stepchildren and other such matters. The reality is that in the circumstances she has described the Child Support Agency may well insist that the father of the stepchildren in the second marriage ought to contribute something towards them, and that that ought to be taken into account in assessing how much should be transferred to the first family.

Baroness Hollis of Heigham

A gallant try! But in that situation the new partner, because she is with the ex-partner of the first parent, is not on benefit and it is therefore not a matter for the CSA.

Lord Higgins

But she may be.

Baroness Hollis of Heigham

How can she be on benefit if she is in a new relationship with him?

Lord Higgins

He is earning.

Baroness Hollis of Heigham

He may be earning or he may be on benefit. Let me attempt to explain without using shorthand. The father of the first family, the non-resident parent, is in a relationship with a woman who has children whom she has brought into the relationship. I am asked whether the CSA would have an interest in whether her ex-partner is contributing through child support maintenance to the support of her children whom she has brought into the second family. The point is that the CSA would be required to have an interest only if she, the parent of those children, was seeking benefit. But because she is in a new relationship—with the ex-partner of the first family—she would not be seeking benefit; therefore, the CSA would have no remit, unless, of course, she chose as a private case to come to the CSA.

Lord Higgins

That makes an overwhelming case for reading what the Minister said--subject to any corrections that may be made! On that basis I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Baroness Amos

I beg to move that the House do now resume. In moving this Motion, I suggest that the Committee stage begin again not before 8.30 p.m.

Moved accordingly, and, on Question, Motion agreed to.

House resumed.

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