HL Deb 14 October 2003 vol 653 cc847-58

8.40 p.m.

Baroness Hollis of Heigham

rose to move, That the regulations laid before the House on 10th September be approved [27th Report from the Joint Committee].

The noble Baroness said: My Lords, I beg to move that the draft Child Support (Miscellaneous Amendments) (No. 2) Regulations 2003 laid before the House on 10th September 2003 be approved. The word "miscellaneous" used here is appropriate.

The regulations before us today make a number of diverse amendments to seven of the many sets of regulations which govern both the old and new child support schemes. This package is largely made up of amendments to regulations governing the new child support scheme and to "transitional" regulations which relate to the transfer of cases from the old scheme to the new arrangements. A small number of cases, linked to new cases—that is, where someone has multiple partners—have already moved from the old to the new scheme. But the bulk transfer of cases will take place in due course once we are satisfied that the new arrangements are working well.

In addition, this package includes a number of amendments to the old scheme. Most of the amendments reflect that the world has moved on in the time since we made regulations for the new scheme. The introduction of the new state pension credit is one example of this. Finally, some of the amendments in this package make minor technical corrections to reflect what was intended in the new child support scheme.

I shall not go into great detail, but given that the other place has not yet looked at these regulations, perhaps it may be helpful if I set out some of the more important changes.

One of the changes to the old scheme to which I referred a moment ago is consequential on the introduction of the state pension credit which replaces the minimum income guarantee, the title given to income support for people aged 60 or over. In the old child support scheme it is possible, in prescribed circumstances, to seek a "departure" from the standard formula for making a maintenance assessment. The amendment made by Regulation 2 to the Departure Direction and Consequential Amendments Regulations provides that recipients of state pension credit shall not have, or be the subject of, a departure in the circumstances which previously excluded recipients of the minimum income guarantee; that is, a straight word substitution. This is for the sound reason that a person who receives a state pension credit will, like those on minimum income guarantee, be treated as having no "assessable income" for the purposes of making a maintenance assessment. Therefore a '"departure" would be futile as it would have no effect on the amount of maintenance payable. This amendment mirrors not only the minimum income guarantee position, but also the treatment of persons in receipt of income support and income-based jobseeker's allowance.

Regulation 3 makes a number of amendments to the old scheme's Maintenance Assessment Procedure Regulations. One of the amendments I would like to bring to the attention of noble Lords takes account of the changes made to remove residential allowances in income support or income-based jobseeker's allowance, and of changes in terminology in relation to "care homes". This has arisen as a result of both Department of Health and Scottish legislation. As noble Lords may be aware, a parent with care is required to apply for a maintenance assessment if income support or income-based jobseeker's allowance is claimed by, or is payable to or in respect of, her. If, without good cause, she does not co-operate with the CSA, the agency may make a "reduced benefit direction" that lowers the amount of her benefit.

The amendment ensures that the reduced benefit directions are suspended if the parent with care is in a residential care home or independent hospital or, in Scotland, is provided with a care home service or independent care service. This suspension is necessary because parents with care are normally left with what used to be known as the "pocket money" rate of income support, and what we now call the "personal allowance" rate of some £17 of income support when they move into such accommodation or receive such services. This rate of benefit would clearly not sustain a reduced benefit direction.

The amendments made by Regulation 4 are to the Child Support Maintenance Assessments and Special Cases Regulations which relate to the old scheme. They are mostly technical and relate to changes made by other legislation. To give just one example, to correspond with the treatment of minimum income guarantee, as I mentioned earlier, recipients of state pension credit will be treated as having no assessable income for child maintenance purposes.

The amendments to the new scheme Maintenance Calculation Procedure Regulations made by Regulation 5 are consequential to changes made to income support or income-based jobseeker's allowance and upon changes in terminology relating to "care homes", the changes to which I have already outlined. However, in the same way that we have made adjustments in Regulation 3 to the old scheme, here we are making adjustments to the new child support scheme.

Similarly, Regulation 6 makes several amendments to the Maintenance Calculations and Special Cases Regulations which relate to the new child support scheme. The most noteworthy change is in cases where a non-resident parent has to pay maintenance under child support rules to one child or children, and maintenance under a court order for another child, both at the same time. The amendment ensures that the payment made in respect of the qualifying children that fall within child support rules is never less than the flat rate of maintenance of £5 a week. This provides consistency with other new scheme provisions that prevent liabilities from falling below the flat rate amount.

The transitional regulations make provision for how and when old cases will convert to the new scheme. They allow changes in liability to be phased in over a period of five years in specified cases. Phasing is intended to allow both parents with care and non-resident parents time to adjust their household budgets. It is crucial to the success of the new scheme that phasing is allowed to work properly, and the CSA fully intends to enforce these phased liabilities. Otherwise, obviously, someone's liability could go up by far more than their wage increase that year; on the other hand, a parent with care could equally find a very substantial drop in the child support around which they had budgeted, for example, their return to work. So the phasing works for both parties, preventing both substantial increases and decreases.

The several amendments made to the transitional regulations made by Regulation 7 ensure that the provisions in this complex area work as we intend them to. For example, in the old child support scheme, a non-resident parent can apply for an allowance in their "exempt income" in recognition of a property or capital settlement made before April 1993. The transitional regulations provide that when a case with such an allowance is converted to the new scheme, that allowance becomes a "relevant property transfer". In other words, if the non-resident parent is supporting the parent with care through support for the property, this should be appropriately taken into account.

However, in the new scheme, a maintenance calculation can be "varied" to take account of a pre-1993 transfer. I say "varied" because the language under the old scheme is "departures" and the language under the new scheme is "variations". One amendment made by Regulation 7 makes it clear that a non-resident parent cannot have both a relevant property transfer and a variation in respect of the same pre-1993 property or capital transfer at the same time. Without this amendment, the non-resident parent would have two separate adjustments to his weekly liability—in effect, a double benefit; he would get the benefit twice over—in respect of the same pre-1993 transfer. This was never intended and we need to clarify the wording.

The amendment made by Regulation 8 is consequential to the relevant property transfer amendment to the transitional provisions made by Regulation 7, to which I have just referred. It amends the variations regulations to ensure consistency with the position in the transitional regulations.

Those are the most significant changes in the package. As I have tried to describe, several of them relate to terminology in terms of replacing minimum income guarantee with pension credit; others reflect the new arrangements for financing people in care homes; and others relate to retirement pensions, to going beyond the £5 income and to rectifying any possibility of a double consideration for property transfer. I shall be happy to cover other of the amendments—which are, for the most part, technical it noble Lords so wish.

I draw to your Lordships' notice that we are a little late, with some of the regulations before us today amending the regulations concerning child support arrangements as a consequence of earlier changes made to other legislation State pension credit, for example, was introduced. just over a week ago. I apologise to your Lordships but I hope that you will agree that it is important that we get the amendments right.

The regulations before us today underpin our continuing commitment to making sure that child support works for both parents and their children. As I said, they are miscellaneous regulations. I accept that they are quite hard to decipher as they stand because they regulate changes in regulations to regulations. I have produced a "health warning" version—a kind of keeling schedule—which I hope will make the situation alitle clearer. I only regret that I did not have that bright idea a few days ago and send it to your Lordships earlier.

I am satisfied that the regulations are compatible with the European Convention on Human Rights and I commend them to the House.

Moved, That the regulations laid before the House on 10th September be approved [27th Report from the Joint Committee].—(Baroness Hollis of Heigham.)

8.49 p.m.

Lord Higgins

My Lords, the history of the Child Support Agency is a long-running saga. One of the advantages of transferring from another place to this House is that one no longer has to deal with Child Support Agency constituency cases.

This subject does not often create headlines but I was rather struck by an article in the financial supplement of the Mail on Sunday which described the present situation as the mother and father of all mix-ups. Underneath that rather exotic headline was a remarkably good, well researched article by a Mr Stephen Womack on the present state of play in child support matters.

The situation is enormously complicated, as was apparent from the noble Baroness's as always very helpful remarks, by the fact that we are running two systems side by side. Some of the provisions in the regulations relate to the transitional arrangements— some to one system and some to the other. This complication is bound to give more scope for those who are playing the system, one way or another, in trying to avoid paying the amount they are due to pay in child maintenance.

The noble Baroness spelt out a number of changes, some of which are purely terminological. Every time the Government change this or that aspect of the social security system, there will be more and more changes in the Child Support Agency system. I do not think this is helpful for those trying to administer it, nor is it helpful for the agency with regard to its computer programmes and so on.

I still do not fully understand some of the complications. For example, I would have thought that for a war widow, the question of child support does not necessarily arise. Perhaps the noble Baroness could clarify how that will operate. Similarly, there is a change in the occupational pension definition to cover a new type of pension. I am not at all clear about the relevance of that.

The noble Baroness has, in her usual helpful way, provided me and, I imagine, the Liberal Benches, with a new set of documents which show how the various changes in these regulations will affect earlier ones. We do not have a provision for delegated legislation in the same way that we do for consolidation of primary legislation. However, it is now getting so complicated here that if the kind of document which the noble Baroness has produced for us, which shows the changes in italics, could be made available to those who, one way or another, are involved with the Child Support Agency, that would be of great benefit.

In the context of these changes, I am not at all clear how the system will operate. As I understand it, around 1 million cases operate under the old scheme. At the same time, there is a constant inflow of cases being dealt with under the new scheme. One of the problems that we pointed out when the primary legislation was being debated was that the absent parent was likely to find himself in a better position under the new scheme than the old one. Therefore, there will be constant pressure to accelerate the move—my goodness, it has not been accelerated much so far—from one system to the other, but that will be to the detriment of the parent with care.

I am sure the noble Baroness is right in saying in her opening remarks that we want a smooth transition, but the changes will take place, as I understand it, over a period of five years. We have had a delay in making the change anyway because of the repeated delay— although foul-up might be a better expression— regarding the introduction of the computer. This means that the overall timescale is now stretching out further and further. Meanwhile, a good many people are still under the old system. I was fascinated to read an extremely helpful evidence-taking session by the House of Commons Work and Pensions Committee on 2nd July. At that stage, the chairman of the committee seemed somewhat to despair, especially in relation to the evidence that had come from the trade union concerned. He said: My heart sank because we were back to cases being stockpiled, management systems failing, delays occurring and staff wastage figures still unacceptably high… I cannot understand how we got here. This is the second time around".

In particular he drew attention, as the evidence session generally did, to the problems arising from the computer system, and the continued problem of non-payment. The latest figures provided were for November last year. They tell us that 384,000 parents with care are entitled to receive child maintenance; 70,000—more than 20 per cent—receive no payment; and 193,000 receive less than they are entitled to. All that suggests that the system is seriously failing to operate as it should.

There is one point in relation to the evidence on which it would be helpful to have a view. I refer to the issue of the computer system. Apparently, it costs 20 per cent more to process each claim than it did before the introduction of the new system, which was supposed to simplify it. The report said that there was, a mix of IT difficulties … and cultural problems associated with the shift to the new arrangements".

I am not clear what those cultural problems are, but perhaps the Minister could give us some indication.

It is important for us to understand, in the mass of figures that are being introduced, whether the main stockpile is going up or down. Is the number of cases coming in greater or less than the cases being dealt with? From the figures that I have studied, I am not clear what the situation is with regard to the very substantial backlog.

Finally, will the Minister clarify the situation on sanctions? Given the figures that I quoted earlier, I am not clear how many cases are now being dealt with by an earnings deduction order. It seems unlikely that we should have failure to pay on the scale to which I referred, if that mechanism were being used effectively.

With regard to the evidence to the Commons committee, how satisfied should we be and how satisfied are the Government about the sanctions imposed on those who are not paying? In the course of the passage of the primary legislation, we spent some time debating whether driving licences should be withdrawn. At the time, I believed that to be rather a sledgehammer to crack a nut. However, so far only two driving licences have been removed and only 11 cases have been brought. It seems extraordinary that we legislated for that and debated a clause at length in this House, if that kind of sanction, whatever one's views on the merits of it, is to be introduced. Will the Minister bring us up to date on that?

Apparently, the sanctions have operated so poorly that £2 billion has been written off so far. That is obviously a considerable failure of the system, which one would have thought would have begun to operate a little more effectively than it has, after 14 years. I have always conceded that the original legislation was seriously deficient in dealing with both new and old cases. However, 14 years on, one would have thought that the situation would have been rather better than it is.

The complexity being introduced by the order, on top of all the other complexities, means that the chance of the system operating effectively and of the agency managing to cope effectively is bound to be greatly diminished. I am grateful to the Minister for her help; we are all on the same side on the issue and we all want the system to work effectively, but it is in a pretty sorry state at present.

9 p.m.

Earl Russell

My Lords, first I should like to thank the noble Baroness—and, through her, her officials— for the issue of what I may best describe as the Keeling guidance. This is an extremely helpful document.

Regulation is a form of legislation by crossword puzzle. What we normally get is the insertions in the crossword without the blank squares and without the clues. That is slightly confusing. I agree with the noble Lord, Lord Higgins, that the measure will be very, very helpful not only to us here—the stately progress of the Criminal Justice Bill has given me occasion to examine it with rather more care than I might otherwise have been able to do—but also to many people outside this House. I support his suggestion that it be made more widely available. I hope that that precedent will be followed.

The regulations are what I might best describe as sandpaper regulations. They smooth the rough corners of the joints not only between the old regulations and the new but also between the new and other legislative developments, such as the pension credit and the new-found doctrine of equality between widows and widowers. Where one is dealing with sandpaper regulations I do not think that it is an occasion for examining all the original pieces of wood whose corners are being smoothed. I do not think that it is an occasion for discussing policy. The Minister and I have done that at great length. I think that it was—on both sides, I hope—an extremely high level of discussion and there is no point in doing it again now.

We have discussed how far the Act is capable of working. Again, I do not think that we have anything to add to that now. We have discussed the delay in the Act and the computers. Again, I do not think that there is any need to add anything to that now. If one looks only at the sandpapering of the joints—which is what these regulations are about—I see no reason for criticism. In fact, so far as I can see, it has been extremely well and competently done. There is a spit and polish about this which I find on the whole reassuring.

There are one or two matters that I should like to raise as questions. I should like to know how the provisions for residential care under Regulation 5, and in other cases, affect women's refuges. There is a possibility of legislation being introduced on women's refuges so there may be another occasion on which to raise the matter. However, this is something that one tends not to think about because it does not come in the categories that anyone is thinking about when they prepare regulations. Therefore, I hope that the question is not redundant.

I should like to welcome the provision for equality between war widows and war widowers. In answer to the question of the noble Lord, Lord Higgins, about how that could apply, I say that people are capable of having children by more than one partner. That has been known. I am indeed the product of such a thing myself. I should like to congratulate the Government on the provisions for the training allowance.

I should also like to raise a general question regarding how far we should go ahead with the making of affirmative regulations because it is possible that at some stage something controversial might be done under the power. I can see that something controversial could have been done under these powers, but I see nothing in the contents of these particular regulations which would call for them to be affirmative. I think that we should perhaps consider the suggestion that the noble Lord, Lord Skelmersdale, made at the very beginning of the Delegated Powers Scrutiny Committee, as it then was. Where something under the affirmative procedure gave rise to no controversy, he suggested that it might be possible to let it go through on the nod. With that thought, I hope that the Minister will forgive me for leaving the matter.

Baroness Hollis of Heigham

My Lords, I am very grateful that noble Lords found the Keeling guidance helpful. I will take the matter away and see whether, under regulations in not only this field but others, it can be generalised. I accept that, when we start amending regulations in terms of amended regulations, it is a jigsaw without a picture on the box. That is part of the difficulty.

The noble Lord, Lord Higgins, talked about the complexity involved in making changes described aptly by the noble Earl, Lord Russell, as sandpaper changes. The situation is not possible to resolve. By definition, one has to adjust and adapt the language of any piece of legislation and subsequent regulations that refer to income in any form whenever one changes the format of the income, particularly benefits or tax credits. Our staff are well aware of what pension credit is—minimum income guarantee with a savings credit—and will not find themselves baffled by it. Obviously, we have to protect the legal basis of our assessments in such a way.

The noble Lord asked a couple of specific questions about the regulations. The first was on war widows under Regulation 6 and so on. That says that a non-resident parent receiving a war widower's pension should be treated like a war widow and as a result have a flat-rate liability. The numbers are very small, but the question is one of equity. Since introducing the provision, the rights of men to a war widower's pension have been established. That is why the change is necessary.

The noble Lord's second point was on pensions under Regulation 6(2)(e). My understanding is that we are adding schemes that, because of their statutory basis, do not need to go through IR approval. In other words, they are additional schemes that have a statutory basis and are not covered by the existing IR approval basis. Some additional police and local authority schemes come into that category. I am happy to write to him further on that if he would like.

The general points that the noble Lord raised were about the computer being a mess. I think that people believe that we have a simpler computer because we are simplifying the system. That is not the case. Given the pathway into child support through Jobcentre Plus and the £10 payment to the parent with care back on to their income support or income-based JSA, we need an interface that we have never needed to establish before between the old income-support computer—it dates from the 1980s—and the new system. The system is extremely complex. As I understand it, the DWP systems are larger than the tax self-assessment computer and several times larger than the biggest banking system, which belongs to Lloyds-TSB. That may give some idea of the complexity.

That is not to seek to diminish the very real teething problems that we have experienced as we have gone along. However, to get those in proportion, the Standish Group said in 2001 that only about 16 per cent of public and private major computer schemes were on time, that the average cost-run in all schemes was about 75 per cent, and that the average over time applied to more than 50 per cent. Although I would not wish to say that, by those standards, the CSA computer was a success, none the less its performance is not out of line with what we know to be the case with very large and complex computer schemes.

Lord Higgins

My Lords, as I understand it, the Government propose the so-called migration from one scheme to another to take place in one big bang. That seems to be the case from the evidence given to the Select Committee. Is the computer system capable of suddenly taking on a million extra cases all in one go? It seems rather hazardous, given the amount of data involved in those cases.

Baroness Hollis of Heigham

My Lords, the noble Lord's point is very acute and well taken. The Secretary of State has not yet made and will not make a decision on when we bring the existing cases over. Clearly, they have to be migrated in terms of the system before we actually bring individuals on to the system. There may well be a case for what I would call a more incremental approach, but those and similar options are being explored. The important point—and we have the support of all the voluntary organisations to which I have spoken—is that we ensure that as we bring new cases on, they have the smoothest possible transition. It may well be that the proposal of the noble Lord is one way to do that, but no decisions have yet been made on that. We are still ironing out some of the teething problems with the new cases.

I turn to the second point raised by the noble Lord, which concerns sanctions. He asked about the deduction order. Although it is not necessarily a sanction, many people choose to pay by a deduction from earnings, in the same way as the noble Lord may pay his bills by direct debit. He was right in his point about driving licences. It is the case from the latest figures that I have that only about two licences have been taken away. The point to bear in mind is not that we wanted to take driving licences away, but that we wanted to make non-resident parents, particularly the self-employed with the white van, pay up. And they pay up, when they realise that they may lose their driving licence and therefore their livelihoods. Sometimes, there are cases where people are £40,000 in arrears. They have five children and are ducking and weaving. They clearly appear to have the resources to pay some of those sums. We have found that the threat of removal of a driving licence sometimes focuses minds wonderfully in generating a willingness to work with the agency in tackling questions of arrears and coming into the system.

The noble Lord asked about the two billion of moneys written off. Yes, that is the total money not collected nominally. I am not making excuses, but we need to disentangle it. Some of that money—maybe a third or a quarter—would have come from NRPs who are now dead or who are overseas and untraceable. Although the money is on the books, we are unlikely to be able to obtain it for fairly obvious reasons.

Another portion of the money—something of the order of a third, but I do not wish to be held to account in my statistics—is again nominal moneys. Under the old scheme that I wanted to drop, but not under the new scheme, if a non-resident partner did not reply fairly quickly, we introduced a punitive assessment, which might well have been two or three times more than his true assessment based on his income. The arrears also reflect that figure. There is then the real chunk of moneys which we should collect and which we are seeking to collect and to pursue, but one needs realistically to disentangle some of those figures.

The noble Earl, Lord Russell, asked a specific question about women's refuges. The sanctions that apply to lone parents who have failed to co-operate apply only where no good cause has been established. If a woman has moved to a refuge, it appears aprima facie case that she has done so from a well-founded fear of distress and violence. Therefore, "good cause" should apply. I have had no evidence that our "good cause" provisions have produced hardship or unfairness, let alone threats or danger to women.

I shall make two final points. We obviously have teething problems with the computer and we all agree that we should adjust that and make sure that the system is robust before we introduce the new cases.

We should also emphasise just how successful is the new policy. I was there when an NRP received a cold call informing him that he would be required to pay maintenance. He was receiving JSA and we told him that under the new scheme he would be paying five pounds per week. He then said that he was looking for a job and asked what he would have to pay when he found one. He had one child, Alicia. The young woman to whom he was talking told him that he would pay 15 per cent of his net pay. He said, "Oh, fine. That's okay". He then went off to look for a job.

It is clear that a lot of the hassle that we have suffered in the past, legitimate or otherwise, from NRPs who do not know what they should pay and distrust the figures that we had arrived at, which may have been wrong in the first place, seems to be disappearing as a result of the transparency of the new scheme. The anguish, distress and protests of clients are about the speed and reliability of the computer and not about the formula itself. As one member of staff said to me, "When we've got the computers sorted, we'll fly". I am sure that that member of staff was right.

We are now clearing thousands of cases each week. In response to the noble Lord's question about inflow and outflow, the number of new cases cleared in September was greater than the corresponding number of old-scheme cases cleared in September last year. We are clearing new cases as fast as they are coming in—apart from the difficult ones which have relations linked to the old scheme and take longer to resolve. More than one half of applications are reaching a maintenance calculation compared with only one-third under the old scheme. Cases that in the past took up to 18 months to bring to enforcement procedure are moving to enforcement within three months. The poorest families are starting to benefit in real terms from the child maintenance premium.

We are beginning to see some of the policy consequences that your Lordships supported when the Government introduced the scheme. We have a long way to go and we are not yet ready to take the mainstream old cases on to the new system. We will do so when we are confident that the system and the computer are robust. However, I am sure, and all the evidence shows, that the policy reforms were decent, proper and will ultimately ensure that more money goes to more children, which is what we all want.

On Question, Motion agreed to.