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Child Support Agency

Volume 264: debated on Thursday 19 October 1995

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Motion made, and Question proposed, That this House do now adjourn.— [Dr. Liam Fox.]

10 pm

It is a wise Member who from time to time assesses the way in which the work that goes through his or her constituency office and the House is composed of individual cases. It is important that the House should examine the implications of what has happened with one of the next steps agencies, which are having a direct and, in some instances, horrifying effect on the lives of my constituents.

I speak of the Child Support Agency. We have seen a fairly classic example this week of what happens when Ministers seek to distance themselves from the implications of their policies. That gives us all the more reason to examine in a comparatively calm atmosphere the continuing saga of the CSA. It has now had long enough to undergo certain changes and to absorb the alterations that the Government felt were necessary.

I am glad to welcome the Minister to what I understand is his first Adjournment debate on the Government Front Bench. I know that he is sympathetic to the work of the CSA and does his best to deal with the myriad claims upon his time that the agency must represent.

The reality is that for the House, the CSA has become a major difficulty. If we analyse the cases with which we deal in a month, we see that those involving the CSA are becoming more numerous. I have carried out an analysis of the cases raised in my constituency since the CSA came into operation. There have been 56 cases. Of those, four women are paying maintenance while six women, one male and one grandparent cannot get any maintenance. There are 30 cases where people are already paying and eight where there are arrears.

Those cold statistics may not sound tremendously impressive with a population of 78,000. I was rather stunned, however, that the director of the agency—who I am glad to say is a civil servant—in giving evidence yesterday to the Select Committee on Social Services was congratulated by the Chairman on the facts that she presented. I found them rather concerning. She said that embittered couples were aiding the benefit fraud drive by reporting each other to the agency, which had become a lightning conductor for officials investigating benefit and VAT fraud, tax evasion and unpaid national insurance. That is certainly the experience of many of us.

Of the 7,610 cases that have been passed on to the agency, 39 per cent. had a "fraudulent element". Miss Chant did not say how large that was. She moved on to justify the cost of the agency by saying that it had taken £1.44 billion back in savings on benefit. From my point of view, the threatening thing that she then went on to say was that 66,000 people had stopped claiming income support. Fine, that may be perfectly justifiable; I am not in any position to judge. But 12,000 single parents are on reduced benefit after refusing to name the father of their children.

Now, I know that, for the present Government, single parents are indeed not only the lowest of the low but probably the pariahs of modern society, but what cost will we have to pay in future for those 12,000 children, who are not only being removed from what I regard as a very inadequate level of benefit but presumably are being thrust even further into the poverty trap?

I want to raise with the Minister tonight some of the real problems that arise from the CSA, because we just do not know what damage it is doing. That agency is stirring the detritus of relationships and is having a direct and terrible effect on the children of those marriages. Anyone who has gone through a divorce knows that, if one is unlucky, it is an exceedingly bitter and unpleasant experience. The effect that the CSA is having on individuals is really very frightening.

I have taken up a number of cases, but in two of them males have given up quite highly paid jobs because of the CSA and are now unemployed. In theory, of course, one can say that they have made themselves intentionally unemployed, so one cannot expect any kind of sympathy for them. The reality, it would seem from the cases that we have considered in detail, is that the CSA has gone largely for people in salaried jobs, where they can be easily reached: working for the police, the fire service or some large organisation, such as British Rail, where they can be got hold of quickly and where attachments of earnings can be shoved in quite soon.

On the other hand, a large number of people who have come to me, whose husbands or wives have announced that they were self-employed, have been told in effect, "There is really very little that we can do to help you. We don't have investigation facilities ourselves. We have no way of following up the particular details that you've handed over to us. Indeed, we don't even know where the people concerned can be found."

In at least two cases that I know of, the offended spouse handed over details of addresses, of a considerable number of assets, including extra houses—all sorts of large elements that seemed at least to suggest that there was a large income—but they were unable to receive any support for their children. Naturally, that not only leads to a lack of faith in the workings of the CSA but makes it very clear that, so far, it neither has the machinery, the efficiency nor the method of doing anything practical unless people fall into easily defined categories. When they do, good—the agency is happy and is able to take the money back.

It goes further than that. I have cases in which people were receiving maintenance payments through the courts. They had come to an agreement. The agency accepted the monetary terms of the agreement; yet people discovered that, whereas the local court was able to pay the maintenance quite quickly, the agency, because the money went from the court in Crewe to the west midlands, trundled all through the government machinery and then came back to them, frequently making them wait three weeks for payment—a payment that they would normally be able to obtain within three or four days from the court. That cannot be right. It cannot be defensible. Frankly, one wonders whether the Government are using that as a method of making some interest on the goods that are going through their system, because when one raises it with the CSA, one is told, "We're sorry about it. That's the way the machinery goes. That is what is going to happen." If that leaves the family with no money, they are told, "We are sorry about it, but there is nothing we can do."

In one case, in order to feed her family, a woman was forced to ask for a crisis loan. She had what can laughingly be called a bank account, she was given a crisis loan of £60 and the bank charged her £60 for being overdrawn because the agency had not given her the money. It was not that the money was not available; the agency hung on to it for three weeks. The answer that I received was, "Sorry about that. That's the way the thing is working. We can't do anything about it."

If it is true, as it says in the press—I do not always believe the press—that Miss Chant said yesterday that there were 382,000 outstanding cases and 350,000 mothers on income support from last April who still had not had determinants, the number of cases in my constituency is quite small. But the investigations are extraordinarily leisurely.

People who are already bitterly on edge find the situation impossible. When they ring the agency, they seldom speak to the same person twice. They speak to a nice person who gives his or her name and they start off on the whole story. They feel humiliated because each time they have to give all their details again to someone new, a member of the so-called business team—how this can be described as a business, I do not know—who has to call up the details on the computer and may or may not give the same advice as was given previously. That has happened time and again.

I see that the agency is to offer DNA testing in paternity cases. The savagery that disputation of paternity unleashes is something from which the children involved will probably never recover. It is born out of desperation. It is the worst kind of dispute between divorcing parents, and the agency now seems to be prepared to provide DNA testing—but on a paying basis—if anything goes wrong. That is not the answer and it will not help in any way.

I come now to the effect of the agency's business classes. Someone must sit down and think seriously about arrears. It is nonsensical when people are earning, say, £125 a week to say to them that, because of the time that it has taken to assess the case, they owe the agency thousands of pounds. That happens time and again. Sums of money in the order of £5,000 or £6,000 produce much trauma. Anyone who has had to deal with CSA cases knows that a lot of time is spent calming people down enough for them to be able to give the details of the case. At some point, someone must assess the likelihood of obtaining thousands of pounds in arrears and whether it would not be better, and encourage people to stay at work, to seek to come to a proper agreement with a recognisable sum.

At the moment, we have the worst of all worlds. Many women do not receive proper maintenance payments. They do not understand why this great agency, which is supposed to be so effective at finding the cash, so brilliant at getting the money from the Treasury, is not finding them money, saying, "We are terribly sorry, but your spouse has somehow or other managed to escape the net." They understand that there are still far too many loopholes and far too many difficulties.

Looking through all the cases, I am saddened at the effect that the CSA is having in addition to the effects of divorce. In a sense, the CSA is in danger of becoming an additional hazard, not for the parents, who may or may not be worthy of support and sympathy, but for the children. I begin my complaints about the CSA with the children. They are the people who concern me; they are the people who will always concern me. If we have a system whereby people are not receiving rapid support in the form of a suitable amount of money, it must be re-examined effectively.

For example, I know one man who is paying half his existing wage to the CSA. In another case, a woman's husband is obviously working full time as a builder but has declared that he is self-employed. He paid £70 only when the bailiffs went in, yet the CSA took £70 for expenses.

We have examined the cases very carefully. They all have one thing in common: being enmeshed in the CSA is not a happy experience. That complaint is not made only by the male of the species who has to pay up; it is frequently made by the female who is left having to cope with a second family.

I believe that the agency was set up in haste and created in chaos. It is now being run by people who are desperately trying to make it work. I do not criticise the civil servants involved, although I feel that the system—split working and the employment of low-paid civil servants and many part-time workers—contributes to the way in which the CSA is regarded. I must point out to the Government, however, that the actions of the CSA have led to a number of suicides.

It is no use saying that the sort of people who commit suicide probably have other problems. I understand that, but I am dealing with an increasing number of people who show clear signs of what is described in lay terms as mental breakdown because of the impact of what is happening in their lives. I do know a bit about this. I think that the House had better sit back and consider whether we are actually doing a good job.

I believe that the only way in which to right the position is to destroy the agency and start again. That is not a fashionable view. Opposition Members think, as they always do in all contexts, that if the odd sticking plaster is put on the Toy system it will work, but that is not my experience, and it is certainly not my understanding in this instance.

The Minister is both compassionate and sensible. He may find when he looks closely at his responsibilities for the agency that he is asking too much of the people who are trying to make a wholly inadequate system work. He is certainly asking too much of the individuals who are caught in it; they are under such pressure that the damage is too great to be justified by the amount of money that it is bringing in. The Minister will also find that the system is rather like the Tar Baby: anyone who comes near it gets stuck. I hope that he will move quite fast.

10.17 pm

The Parliamentary Under-Secretary of State for Social Security
(Mr. Andrew Mitchell)

I thank the hon. Member for Crewe and Nantwich (Mrs. Dunwoody) for raising this important matter, and for giving the House the opportunity to reflect on the performance of the Child Support Agency. The debate takes place in the aftermath of major legislative changes enshrined in the Child Support Act 1995 and the April 1995 child support regulations.

The changes were designed to remedy serious defects in the child support system, and to build on the early but unsatisfactory experience of the workings of the Child Support Agency. They sought to ensure that the agency fulfilled much more effectively the important objectives that Parliament laid down for it. It did so against some clear and unchallenged principles, which I believe continue to command widespread support across the House and among our constituents.

The first of those principles is that the CSA must hold the ring between father, mother and taxpayer. Parents should meet the cost of their own children wherever they can; it is wrong to rely on the taxpayer as the first resort when a child's own parents can afford to pay in whole or in part. Taxpayers are often themselves bringing up their own children on relatively low incomes. Secondly, the child support system should produce fair and consistent results, and allow for regular reviews to reflect changing circumstances. Thirdly, incentives for both parents to work should be maintained and dependence on benefit reduced by the establishment of realistic and fair levels of maintenance and regular payments. That is the theory of the system set up by Parliament in 1993, but the practice, as we now know, has not always honoured those objectives.

However, significant reforms have now been introduced. Either they are already in operation, or they will be as soon as we can practically bring them into force. They are largely the work of my right hon. Friend the Secretary of State for Social Security and my predecessor as Minister responsible for child support, my hon. Friend the Member for Bury, North (Mr. Burt). They resulted from an extensive and thorough exercise in consultation and the results were widely welcomed during the passage of the Bill, which I viewed at first hand as the-Government Whip responsible for its safe transit through Committee. The Government drew particularly on the helpful comments and reports of the Select Committee on Social Security.

I want to reassure the hon. Lady on both her central points—the efficacy of the current system and its sustainability. I do so against the background of four key changes that have been introduced. First, we have a new 30 per cent. rule. That will mean that no absent parent will face paying more than 30 per cent. of their net income in current maintenance payments. In other words, after paying tax and national insurance and 50 per cent. of any pension contribution, they will keep 70 per cent. of their remaining income.

That was the most important reform. It injected a key fairness into the system which we had always intended and which was not previously present in a number of cases. Even absent parents whose payments are in arrears will normally pay no more than an additional 3 per cent.

Secondly, we have introduced a degree of flexibility into the formula. I will return to that later. Thirdly, although there can never be a "clean break" where children are concerned, the Government have recognised that a "clean-break" capital or property settlement may have resulted in a lower award of child maintenance by the courts before the introduction of the child support scheme. That was not always properly reflected in the child support assessment, so we have introduced regulations to make a broad-brush allowance for those property and capital settlements.

We have also recognised high travel-to-work costs. There is a case for an additional allowance for the minority who travel long distances and who therefore have genuinely high travel-to-work expenses.

The formula is clearly successful in the majority of cases, as demonstrated by the comparatively low take-up of the travel-to-work and "clean break" provision in April. It provides the best means of establishing a fair and consistent maintenance liability that takes account of individual circumstances. Experience has shown, however, that a small proportion of cases were not being fairly dealt with by the formula. That is why we shall introduce an appeal system that will allow some discretion to "depart" from the basic formula in special circumstances. We shall allow flexibility where fairness demands it.

Once parliamentary approval has been obtained, that change will be piloted for three months from next April. Subject to the results of the pilot, I anticipate the full scheme will be introduced towards the end of 1996. By doing that, we have addressed one of the biggest criticisms of the child support system and in doing so we have gone beyond the changes suggested by the Select Committee on Social Security in its last report.

I turn next to the work and administration of the agency itself, which were raised by the hon. Lady. I accept that the agency's performance remains a source of concern for many hon. Members. As a constituency Member of Parliament, I am aware of and share many of the general concerns that have been expressed.

Two factors are crucial to the future of child support. The operation of the scheme must be further improved, and we need to secure a general acceptance of the Child Support Agency's work. Those absent parent groups which campaigned so loudly against the child support scheme can no longer claim legitimate grievance. It is time for the small minority of outside groups that oppose the agency to accept that times have changed. I hope that all hon. Members will acknowledge and reinforce the message that absent parents have a responsibility to support their children where they can afford to do so.

I reassure the hon. Lady that there have been tangible improvements in the performance of the Child Support Agency, as they Select Committee on Social Security recognised last night. In 1994–95 the agency collected or arranged more than £187 million in maintenance. The £76 million collected was almost six times the total of the previous year. Maintenance arranged or collected for this year already totals more than £117 million. The agency is therefore on track for this year's target of £300 million.

The agency's increased emphasis on maintenance collection entails a strong commitment to enforcement action where maintenance is not paid—a further point raised by the hon. Lady. Improvements in payments of maintenance to parents with care are clear. Between April and August this year—the first five months alone—the agency collection service paid out £20 million. That was almost as much as in the whole of the previous year. Accuracy, which was formerly woefully inadequate, is improving significantly.

I commend the agency's memorandum to the Select Committee of the House. That details the agency's achievements in a number of areas. I hope that all hon. Members will be impressed, as I was, by the replies given by the chief executive in her evidence to the Select Committee yesterday and by her commitment to achieving further improvements.

I appreciate the concern about the apparent complexity of the system. A great deal of information is required to assess child maintenance. I acknowledge that simplification of the system is a key to improving the process. Progress has been made to resolve the difficulties experienced in the treatment of housing costs and wages. If the agency can continue to simplify and streamline its procedures, and can get it right, the way forward will be easier.

I know that the hon. Member for Crewe and Nantwich has written to my right hon. Friend the Secretary of State for Social Security about self-employed absent parents, and she raised the issue again this evening. She is quite right to express concern. As I said, where they can afford to do so, all absent parents should contribute to the upkeep of their children. It is true that the agency has experienced a number of problems in collecting maintenance from self-employed absent parents. This is not a new problem; the courts experienced similar difficulties. Mostly, it results from the difficulty some self-employed parents have in providing accounts. However, some absent parents have sought to exploit this difficulty in a bid to sidestep their legitimate responsibilities towards their children. I am pleased to be able to say that we have made important changes designed specifically to address such problems.

The Child Support Act 1995 introduced two new provisions. First, it bestowed a new power that will allow the agency to have liability orders entered in the county court register of debt judgements. The threat of such an entry will be an incentive to secure the absent parent's compliance, especially in the case of the self-employed as they generally rely on credit for their business.

Secondly, the agency can now issue special interim maintenance assessments. This measure is designed to facilitate the assessment and collection of maintenance. The special assessments will ensure that parents with care receive a contribution towards maintenance from the earliest possible date. In turn, this will reduce any build-up of initial arrears. Payments should come quicker and easier.

The hon. Lady implied that the old child maintenance arrangements worked better, that the old system delivered maintenance where the new system does not. The reality was somewhat different. The old system failed the parent with care and children. Child maintenance liability was put well down the list of an absent parent's commitments. Maintenance not paid would become maintenance never paid.

We have introduced a new method of enforcement: the deduction from earnings order under which maintenance can be deducted from wages by the employer at source. If the absent parent is self-employed, or a deduction from earnings order is ineffective, the agency can go to the magistrates court for a liability order. Once an order has been obtained, the agency can distrain goods up to the value of the order. The agency can seek a charging order to enable maintenance to be recovered. However, just as these measures were often ineffective under the old system, so they are not enough under the new—hence the need for the two provisions that I have outlined.

The hon. Lady suggested that the old system was better able to secure maintenance payments from absent parents. If this seemed so, it was in part due to the lower levels of expectation and inadequate levels of maintenance. This increased the burden on the general taxpayer by placing further demands on social security expenditure.

The child support scheme has rightly done two things. It has raised the legitimate expectations of the parent with care and it has highlighted the absent parent's financial responsibility towards their children. The current system is also more responsive to changes in the circumstance of either party. Maintenance assessments can now be reviewed without the need to return to court. That removes an important obstacle to securing fair and realistic maintenance assessments.

The Government have listened and have acted. We have made necessary adjustments to the system without risking a return to the old, open-ended discretionary system. Critics of the new system forget too easily the problems of the old one. The old system was fundamentally inconsistent and by no means fair to the parent with care and their children. Average maintenance payments awarded by courts were lower than those established by the Child Support Agency.

In 1993, before the Child Support Agency was established, the average amount of maintenance being received by the one in three lone parents who received any maintenance was approximately £23. This compares with an average of around £40 per week under the new arrangements. These figures also underline the inevitable extra burden that is rightly being borne by absent parents.

I once again thank the hon. Lady for the opportunity to consider the changes in hand to improve our child maintenance system. The current system has experienced significant problems. Recent changes address the functioning and the fairness of the system. Not all the changes are yet in place. In certain cases, it will take time for the improvements to feed through. However, these improvements are exactly those necessary to help the kinds of cases raised with me and my predecessor by the hon. Lady.

I speak with qualified optimism. In the short time in which I have been the responsible Minister, I have come to appreciate the real and continuing efforts of the agency's staff to improve its performance. I have now visited all six Child Support Agency centres and several local field offices and met the staff who run the system. I have been impressed by their determination and drive to succeed in the face of disruptive and sustained efforts by a small number of opponents.

There are tough times ahead for the agency while it seeks to win the trust and confidence of clients who have experienced unacceptable mistakes and delays and to implement further legislative changes, but the CSA has made real, recognisable progress. Its introduction of the April changes was particularly commendable, but further improvements in speed and accuracy are required. The CSA needs to offer its clients the standards of service that they rightly expect. Much still remains to be done to consolidate achievements to date and to continue the lengthy transition to efficient and effective operations.

Question put and agreed to.

Adjourned accordingly at half-past Ten o'clock.