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Child Support

Volume 684: debated on Monday 24 July 2006

My Lords, with the leave of the House, I will repeat a Statement made by my right honourable friend in another place on the Government’s plans for reform of the child support system.

“Mr Speaker, parents, whether they live together or not, have a moral as well as legal responsibility to support their children. Relationships end; responsibilities do not. Government and society have a clear interest in making sure these responsibilities are honoured. That was the foundation on which the Child Support Act 1991 rested. I believe that these are the right foundations on which to build any future system of child support.

“However, as we know, and despite the best efforts of its staff, the overall performance of the CSA has fallen well short of expectations. When we came to office, the agency cost more to run than it collected in maintenance, and it has been taking longer to process claims than the court arrangements it replaced. The 2000 Act made important changes: simplifying maintenance calculations and allowing parents with care on benefit to keep up to £10 of any maintenance received. Since 1997, the agency has nearly doubled the number of cases receiving maintenance payments.

“However, problems have persisted. Only a minority of cases handled by the CSA receive any maintenance. There is a backlog of around 300,000 cases. Debts of over £3 billion have built up, with limited prospects of recovery. There is a net cost to the taxpayer of around £200 million per year. And levels of customer service, although they have improved recently, have never reached the standards of quality and consistency that the public are entitled to expect.

“The need for radical overhaul is clear. I do not, however, believe the continuing problems are a failing of the staff of the agency, but rather the policy framework and the system they are being asked to run. That is why, in February, I asked Sir David Henshaw to redesign our system of child support. He has now presented his recommendations to me. Copies are available in the Vote Office and on my department's website, together with the Government's response.

“Sir David has recommended an entirely new system for child support, which will be simpler to use and administer, tougher on parents who do not face up to their responsibilities, and make a bigger impact on reducing child poverty while delivering value for money for the taxpayer. There are four main elements to his recommendations. First, he believes that the system should focus on tackling child poverty by ensuring that parents with care keep more of the maintenance owed to them. Sir David recommends that lone parents on benefit should be allowed to keep more maintenance by significantly increasing the extent to which child maintenance is disregarded in income-related benefits.

“Secondly, Sir David believes that a new system should promote greater personal responsibility by ensuring that, wherever possible, we should help parents come to their own financial arrangements for the maintenance of their children. This means reconfiguring advice services to improve the quality and accessibility of information and guidance for parents. Sir David also believes that the Government should remove the requirement that parents with care on benefits make an application for child maintenance through the CSA, even when there is a perfectly satisfactory private arrangement already in place. As a first step to getting maintenance flowing to children, Sir David recommends that, with up to a fifth of potential child support cases not having their father's name on their birth certificate, we should consider the joint registration of births.

“Where parents cannot come to an amicable agreement, parents with care need to have confidence that the enforcement arrangements will be effective. So the third element of Sir David's recommendations is to introduce new, tougher enforcement powers, including the withdrawal of passports, and exploring the potential to make better use of existing financial penalties.

“Fourthly, Sir David has proposed that there should be a clean break with the past. He believes that the delivery of child support requires a fresh start with a new organisation. Sir David believes that there should be no automatic conversion of cases from the two existing schemes to the new redesigned system. Instead, parents wishing to use the new system will be able to reapply. He recommends that there should be a separate residuary body to manage down and enforce old debt and that we should consider how best to give the new organisation the power to charge clients for using the new system.

“Sir David has consulted widely in producing these recommendations and I am grateful to him for his work and to all those who have contributed to it. As Sir David's report shows, tougher enforcement and a substantially higher disregard could increase the number of children receiving maintenance to 1.75 million, compared with just 1.1 million today. This will also lift many more children out of poverty. A smaller, more focused agency that deals with significantly fewer cases will deliver better value for the taxpayer with administrative costs substantially lower over the long run.

“Although there is still a great deal of detail to be worked through, I think it is right that the Government should signal their view of the way ahead. We have decided to accept these principal recommendations. We will bring forward legislation at the earliest opportunity to remove the requirement that all parents with care claiming benefit are treated as applying for child maintenance.

“We agree with Sir David's recommendation that there should be a higher disregard. But this must ensure a fair deal for taxpayers and avoid sending any signal that families might be better off apart than together. So we intend to significantly increase the level of the current disregard of £10. Details will be confirmed later this year. Both of these changes will help more families to receive more maintenance and reduce the risk of child poverty. They fully reflect both the rights of children to be properly maintained by their parents and the right of society to ensure that parental responsibilities are properly discharged.

“We also agree that the delivery of child support requires a fresh start. We will therefore create a new organisation to replace the CSA and we will strengthen enforcement powers. But we will go further. We intend to seek legislation to strengthen the powers available to the agency to recover maintenance from those who repeatedly fail to pay, including through the imposition of curfews as well as the suspension of passports. We will explore publicising successful prosecutions including the feasibility of naming those so prosecuted. And we will continue the CSA's current operational improvement plan, which is already improving our capacity to trace people who owe maintenance and which should see the Child Support Agency collecting a further £250 million in unpaid maintenance.

“There is a great deal of detail in Sir David's report that should now properly be the subject of fuller consultation and debate. In particular, we want to consult on: the best way to allow existing claimants to either move to private arrangements or make a claim to the new system—we must ensure that where people currently receive maintenance through the CSA they continue to do so, if they wish to, under the new system without disrupting the payment of child maintenance; how best to deal with the legacy of debt that is left, protecting both the interests of families and the taxpayer; the appropriate role for the courts in this new approach; how we can improve parental responsibility from birth, including the possibility of compulsory registration for fathers; how we can further simplify and improve the current assessment, collection and enforcement processes; and the details of a new charging regime.

“In advance of legislation, I intend to publish a White Paper later this year that will set out in greater detail the way forward in all of these areas. In the mean time, I have asked Sir David to report to me on the policy and implementation issues that arise from his first report.

“During this process of change the staff of the agency are entitled to expect the full support of my department. They will have it. In particular, we will do all that we can to help and support staff through the transition to the new organisation and in their efforts to ensure that children and families receive the maintenance to which they are entitled.

“The original proposals for child support had a wide and broad measure of support. But this consensus over aims was never translated into a consensus over means. We must not repeat the same mistake. That is why I want the new arrangements that must now be established to command the broadest possible measure of agreement.

“There is a clear sense, both in this House and outside, that our system of child support needs radical change. It must offer better value for money for the taxpayer. It should enforce the rights of children and the responsibilities of parents more successfully. It must ensure that families and children in particular do not slide into poverty when parents split up.

“I believe that the proposals I have set out today can help us better to achieve these vitally important objectives and that is why I commend this Statement to the House”.

My Lords, that concludes the Statement.

My Lords, I am most grateful to the Minister for repeating the Statement made by his right honourable friend the Secretary of State for Work and Pensions in the other place.

I could not agree more with the sentiment that parents, regardless of whether they live together, have a moral as well as a legal responsibility to support their children. We can also agree that no one is happy with the chaotic way in which the CSA has performed the task of getting money from absent parents to the parent with care. Chaotic it is: 267,000 new cases and 66,000 old cases are still waiting to be sorted out and 25 per cent of the cases received since March 2003 are waiting for clearance. Clearance itself takes a ridiculous three weeks to achieve and, when that is over, as the recent National Audit Office report showed, half of those are wrong. It is no wonder that it costs the agency 70p for every £1 that it collects and that there is an estimated £3.5 billion of outstanding maintenance to be collected. It is this fact that is the real scandal and where every effort should be directed. Yet, for the 1.5 million families trapped in the old system, today’s announcement will be a big disappointment.

There are two main reasons why the present system does not work—and unless we understand what has happened, we run the risk of repeating mistakes. The first reason is the difficulty in finding the absent parent. I understand that the Government are looking at addressing that in their efforts to get joint registration of birth certificates, but that is a serious problem with existing families. It should not be beyond the wit of man to use all the references, such as the electoral list or state pension records, to find the father—for it is usually the father.

The second difficulty is, once found, that of assessing the income of the absent parent, who may be in irregular employment. However, the real problem here is that the agency tries to assess their current income. That relies to a large extent on the honesty of the individual. The problem does not occur with the self-employed, who are assessed on the previous year’s income. Why cannot everyone be assessed in that way? It would be easy enough to ascertain through the individual's income tax form, which, by law, every employer has to give to his employee. If, during the year, the income went up, the payments would automatically be processed the following year. If, however, the income was lower, the absentee parent would have to provide evidence in the way of wage slips for the assessment to be adjusted downwards. No doubt some hard cases would appear but they would fade into total insignificance beside the 333,000 parents with care whose children are facing hardship right now.

There is no reason to suppose that the new agency will be any more successful than the old one if it is constantly struggling to establish an accurate basis of assessment. Although we had understood that Sir David was looking at this in his redesign of the system, there was no recognition in today's Statement of the importance of this fundamental issue to a robust system of child maintenance.

On the subject of parents on benefit keeping more of the maintenance owed to them, can the Minister give an indication of the level of disregard being contemplated? Can he tell us whether any research has been undertaken on whether the level of disregard could prove to be a disincentive for some struggling families to stay together?

We share the view of promoting greater personal responsibility, where parents reach their own arrangements and the state becomes the last resort. Yet we all know that that is not always so neatly delivered in the real world—hence, the birth of the CSA in the first place. Can the Minister say what advice will be given to parents who wish to sort things out as amicably as possible?

Noble Lords will know from our debates on the Children and Adoption Bill—I am looking at the noble Baroness, Lady Pitkeathley—that we on these Benches believe strongly in the presumption of co-parenting. A child has a right to reasonable contact with both parents if their relationship breaks down, and that provides emotional and financial stability. David Levy, president of the United States Children's Rights Council, says that the benefits of shared parenting were apparent not just in fewer costly disputes going to court but in increased child support payments. Consensus Bureau statistics showed that fathers with shared parenting rights paid twice the amount of fathers with no contact. I do not for one minute argue that payment should follow contact but it is clear that, in the best interests of the child, the state should do all it can to facilitate contact. Will this issue be part of the consultation?

We are told that Sir David would like a clean break with the past—a fresh start with a new organisation. I should think that that is exactly what the parents caught in the present system long for, especially as it will bring huge financial benefit. Yet they will not automatically transfer to the new system. Parents wishing to use the new system will have to reapply. If all parents in the old system reapply, will the new system be able to cope or will the service be rationed? If there is to be a service charge, will it apply to parents from the old system, even if that system let them and their children down?

We shall follow the consultations with interest, but no redesign will work unless we address the fundamental flaws, learn the lessons of the past 13 years and act on them. No rebranding will work unless there is a real change in the arrangements of the families involved. Without that change, the Government will continue to let down hundreds of thousands of lone parents and limit their children’s potential to have the best start in life.

My Lords, I, too, thank the Minister for reading the Statement made in the other place. I also thank him for the courtesy of a telephone call this morning in which he outlined the principal findings of the report. However—I think this point should be made—it is ridiculous that substantial reports of the type produced by Sir David Henshaw, and, indeed, the Statement, are not made available to Front-Bench spokesmen, at least in the morning, so that people have a few hours to study them. There is no possible question of market sensitivity or anything else in this case. I think that that would be a basic improvement to democracy in this country and I cannot see what it would cost.

“Thirteen wasted years”. Those who, like me, have relatively long political memories will recall that that was the slogan with which Harold Wilson swept the discredited 1964 Douglas-Home Tory Government out of office. It is a horrible irony that 13 wasted years is what the lone parents and their children have had to endure in this country under both Governments. The Statement says:

“I do not … believe the continuing problems are a failing of the staff of the agency, but rather the policy framework and the system they are being asked to run”.

Does the Minister accept that, in plain English, those weasel words really mean that there has been management failure at the very top by Ministers and top civil servants and that the dither and delay that we have seen over many years has contributed substantially to that?

Sir David's report is fine as far as it goes. It is strong on analysis but not very strong on prescription and on what has to be done now. I am bound to say that it reads more like a report from someone with a public-sector rather than a business background. My heart sank when I read that we are now to have a further consultation—indeed, a report—from him on the ways to implement it. How many reports, redesigns and consultations do we have to have before decisions are taken and we move on?

On Sir David’s specific proposals, I agree with the suggestion that parents should keep more of the maintenance owed to them. It is important to maintain the principle that the parent who has moved away should still contribute as far as possible. If there is a disregard, I believe that it should be at a high level with as much personal responsibility as possible.

Of course these arrangements need to be enforced properly. We are happy to consider new powers but, as always with Blairite initiatives, one must ask whether the existing powers are being properly used. The agency already has powers to remove driving licences, but just 11 were removed in the five years up to 2005. That seems to me to be quite an effective power. If the Government are to bring in any new powers, they should ensure that they are used.

There must also be concern about how morale is to be maintained in the rump CSA, if I can call it that—or residuary body or whatever—which inevitably for some time to come will have to carry on dealing with the existing cases. Morale must be bad enough already. Will Mr Geraghty remain as chief executive of whatever the agency now is, and what steps will be taken to ensure that those cases are progressed?

Specifically, what will happen to existing cases in the system? It would be heartbreaking for families who are well through the system to be told that they have to go back and start all over again. We must know the answer to that. It is the sort of thing that the Government and the Minister should have thought about. It is no good just to say that we are to have a few more months’ consultation. That is totally unsatisfactory—the issue needs to be faced up to.

The key question relates to existing cases and existing debt. There are a third of a million cases and £3.5 billion of arrears, each case averaging £10,000. What is going to happen? I listened carefully to the Minister but I heard no answer to that. It is not satisfactory to say that it will be a matter for consultation. It should be a matter for the Government to decide. These are good ideas but action is painfully slow. We must move very rapidly to action and not consultation.

My Lords, I am grateful to the noble Baroness, Lady Morris, and the noble Lord, Lord Oakeshott, for their comments. I think that I detected some support for some of the principles proposed but I had to work hard to do that. In general, I hope that there will be an opportunity for some constructive debate around the current consultation and the White Paper that will come later in the autumn.

I fully agree with the noble Baroness, Lady Morris, on the moral and legal responsibility of parents to their children. Sadly, the experience of the past 13 years has been that too many parents have sought to evade their responsibilities. That is part of the problem that the agency has had right from the start. There have been signs of improvement in the performance of the CSA in the past year or so, which I shall come to later, but clearly, taken as a whole, the CSA was not delivering what was required of it—hence the need for the Henshaw redesign and the Government’s decisions on the general intent of the way forward, and hence the need for further work in certain areas. Noble Lords have mentioned a number of those areas and I shall come to them.

The noble Baroness, Lady Morris, said that there are two reasons why the CSA is not currently working: the first is the problem of finding absent parents, and the second is the problem of assessing income. She then referred to the need for the agency to assess current income. She will know that there is a requirement to do that frequently if there are changes in income. There is no question but that, as part of the next phase of work in the redesign of the child support system, we will need to look carefully at how to make the system somewhat more streamlined. If she has had a chance to go through Sir David Henshaw's report, she will know that paragraphs 123 to 126 refer to some of the discussions on the role of her Majesty's Revenue and Customs. Sir David suggests that greater co-operation between the CSA and HMRC may be one way of providing further information which can be used. But that is clearly work that we need to take forward.

On the question of tracing absent parents, I agree with the noble Baroness. Under regulations that we passed in this House just a short time ago, the agency already has the power to contract private companies for tracing services. That is part of the new processes which the agency is currently undertaking to improve its ability to track down absent non-resident parents. The report refers to the question of birth registration and the desirability of registering fathers at the child’s birth. We will consider that matter in the consultation period.

The noble Baroness asked about the level of maintenance disregard. I cannot give her that information now as we need to do further work on it. As the Statement said, however, the increase will be significant. She also asked about experience in other countries and whether such arrangements were likely to provide reverse incentives in family break-ups. I suppose that there is a theoretical possibility, though little empirical evidence to suggest, that that would happen. We are, after all, talking about relatively small sums, and many events and factors play a part in people’s decision to separate. I would also say that in many cases there are additional costs to those who separate and leave the family home. So we do not believe that this will turn out to be a particularly major problem.

I very much agreed with the noble Baroness’s comments on the contact issue. She was right to refer to the Children and Adoption Bill and to the potential for ensuring that contact orders are both made and well enforced. I am sure she is right to say that we cannot link child support payments to contact, as such a dispute is between the two parents and the person who would suffer is the child who does not receive the flow of money. However, I think that contact is very important. The noble Baroness asked what kind of advice we would want to give parents to encourage them to try to resolve some of these issues themselves. We will be establishing a group across government to consider that, because clearly a holistic, integrated approach in dealing with all matters to do with separation would be very beneficial.

The noble Baroness and the noble Lord, Lord Oakeshott, raised questions about a clean break, how that would apply, and what would happen to the current caseload. Sir David Henshaw’s view is that one of the major organisational problems in the history of the CSA—at the beginning, in 1993, and in 2003—was the transferral of cases on to a new system, which has proven extremely problematic, as noble Lords will know. In order to make the new arrangements work effectively, Sir David believes that the new organisation has to start with a clean sheet, and that it will be a major problem if it is contaminated by the existing caseload. He therefore suggests that a residuary body deal with the existing caseload, to reach a situation where parents on the existing system are given an option of discontinuing and going private, as they will be able to resolve issues and carry on satisfactorily, or of going on to the new system as new applicants. We want to consult to see whether that is the right approach. Clearly, if money is flowing satisfactorily from one non-resident parent to the parent with care, the last thing we would want is to disrupt those arrangements.

I have answered one or two points raised by the noble Lord, Lord Oakeshott. On reports to the Front Bench, I have always tried to do my best to give as much advance warning as possible, and I shall continue to do so. The noble Lord talked about the 13 wasted years. There is no question but that the problems of the CSA, which have continued over 13 years, have been very difficult indeed for many parents caught up in the system. The fair answer to the noble Lord’s question is that we have tried our level best to get the current system to work properly. I pay tribute to my noble friend Lady Hollis, who did a sterling job in her stewardship of those matters. However, as Sir David Henshaw said, it is not simply a matter of an administrative or operational problem. There have been many systematic failures, such as the fact that the parent with care on benefits is forced into the system; that incentives to comply are very low; and that too many non-resident parents do everything they can to evade their responsibility. Unless one considers those matters in the round, one will never get a satisfactory child support system. That is the whole purpose and point of having a higher benefit disregard, ending compulsion and doing everything we can to encourage parents to act as responsibly as possible, while ensuring that if it does not work, there is an organisation to which parents can turn that will be efficient and tough on enforcement.

The noble Lord, Lord Oakeshott, asked about enforcement and welcomed the prospect of new powers, though he also asked whether the agency is using the powers that it has. The answer must be no—historically, the agency did not use its powers to fullest effect. But that is changing. Last year, 15 people served custodial sentences for matters to do with child support, and the number of liability orders has increased considerably. There are good indications that the agency is prepared to use enforcement more enthusiastically. We want that to continue while we are looking at other measures that could be taken.

The noble Lord, Lord Oakeshott, also asked about morale in the Child Support Agency, and he is right to do so. Child support law is in operation. Many cases are going through the CSA system, and it is important that they continue to go through. We have agreed to the operation of an improvement plan, which will continue. We will do everything we can to see that the CSA improves its current performance as we move to the new arrangements. The question of leadership of the future organisations is a matter on which we shall have to decide in due course, but I pay tribute to Mr Stephen Geraghty, chief executive of the CSA, who has now been in post for a little more than a year. He is doing an excellent job and has pulled together a very good executive team. Again, I pay tribute to the work of my noble friend Lady Hollis in enabling that to happen.

Sir David Henshaw's report refers to debt as a matter requiring close attention, and indeed it does require attention. However, I remind the noble Lord, Lord Oakeshott, that we passed an order only a few weeks ago that allows the agency to contract out some of the debt collection, and the move is already showing signs of positive results. The first lot of letters warning customers that debt collectors may soon be coming round to knock on their door has produced a positive response and resulted in money being paid up. We are keen to chase down what debt we can.

My Lords, I welcome two aspects of the Statement and have two worries about it. Like other noble Lords, I welcome the additional disregard which, in so far as it will help to address child poverty, will be splendid. I could only ever get 10 quid out of the Treasury, so any more that my noble friend can get would be a real bonus for children. I hope that the earnings disregard for part-time jobs, which is currently 20 quid a week, will also go up; that will overcome some of the disincentives that the noble Baroness spoke about.

I also welcome the emphasis on co-operation in the Henshaw report and in the Government’s report. Anything that reduces conflict, gets parents to come to an agreement and therefore encourages contact must be good for the child. Agreement, co-operation and additional resources to children are all good for their well-being, and we must welcome them.

My two worries are, first, whether an essentially voluntary system will produce more money for children than a more compulsory one. After all, that is where we all came in in 1992. It can, but only if the parent with care has sufficient leverage vis-à-vis the NRP than at present. For example, the NRP may well say, “We’ll agree on 20 quid and you can have it. I know I should be paying 40 quid, but if you go for that, I will duck and weave and you won’t get your money”. He may bribe, lie, withhold information and behave like too many self-employed men by concealing his income. I am sure we all want to ensure that the parent with care has sufficient leverage—perhaps by getting his P60 at the end of each year—to know the basis on which she should expect to get the maintenance to which she and her child are entitled.

Secondly, transition has been only lightly touched on. It is not possible, despite Sir David Henshaw’s report, to have a clean break. If an NRP has a new relationship and a new child, there may also be a child in the old system and a child in the system introduced in 2000. If maintenance is to be arranged voluntarily in the new relationship, the arrangements in the two previous cases have to be recalculated. There is no choice. On average, every new case coming into the system has 2.5 linked cases. I have traced 29 linked cases. They all have to be recalculated. That is why the computers failed last time. I hope that my noble friend will be able to tell us how the linked cases will be dealt with. Any new case under the new system means that the old cases have to be reassessed; otherwise, the NRP is paying too much to all three families.

It is absurd that something like three-quarters of those on the child maintenance assessment system are parents with care on benefit. In turn, the NRPs are largely—60 or 70 per cent of them—on tax credits or jobseeker’s allowance. As a state, we are paying money to them, and if only we could net off the maintenance due to the parent with care and pay the NRP net, we would not need to redesign the system at all. We would get rid of that problem, which forms the bulk of the cases in the agency. It is bizarre. We will need to think about the tax credit system, the JSA system, transition and linked cases and whether voluntarism will work.

Finally, I thank the staff. They have been mentioned today. They have done a heroic job under difficult, demanding and often abusive circumstances. As a result of their work, around 1 million children are getting maintenance that they would not otherwise get.

My Lords, I welcome my noble friend’s welcome of the general principles on disregard and more co-operation. As to her two worries, Sir David said that a clean break was necessary, and I have already given his reasons for that. He recognised that more work needed to be done to explore the practicalities of that approach. He will be taking that work forward in the next stage. That is why we are having two consultations. We considered it appropriate to bring his first report to Parliament as soon as possible, to state the key things that we are in agreement with and those areas in which further work needs to be undertaken, leading to the White Paper later on. We think this is the best way to consider the kinds of issues that my noble friend has raised.

My noble friend’s second point was to question whether this will raise more money. She said that it would, but that it would depend on leverage by the parent with care. That is an important factor, particularly for vulnerable parents with care, and we must ensure that this system can operate to their benefit. Clearly, some of the work will be on the advice, guidance and focus of that work. It will be open to the parent with care to seek an assessment from the new organisation and to pursue that, but I am taken with the points raised by my noble friend and will consider them carefully.

My Lords, the Minister said that he accepts the recommendation that there should be a clean sheet and a new organisation. That new organisation will need new staff and—God forbid—new computer systems and all that goes with that. At the same time, there is what the Minister referred to as the “residuary body”. He makes it sound as if it is a diminishing body but given the continuing problems—the backlog of payments, the unsettled cases—it will be no smaller than the current CSA, and possibly even bigger, to sort out the problems. So we have something at least as big as the existing CSA and something else. What estimates have the Government made of the cost? They must have made some estimates or they could not have accepted Sir David Henshaw’s recommendation. Will the Minister put that in the context of the 5 per cent efficiency savings to which his department has already committed as part of the current comprehensive spending review?

My Lords, I am grateful to the noble Baroness for referring once again to the challenge my department faces in meeting efficiency targets. I am ever mindful of that. Clearly, more work needs to be done on costings, which will take place over the summer. To give some ballpark figures, the current agency costs more than £460 million a year to administer. To put that in perspective, around £200 million was recovered for the Secretary of State by the agency’s impact on income support expenditure and £80 million through other routes. The current system therefore has a net cost to the taxpayer of around £200 million a year. The model put forward by Sir David will see a smaller, more streamlined and more effective agency which he thinks will see administrative savings of around £200 million a year in the long run. It will be more efficient and will deal with a smaller caseload than the current CSA. Of course, there will be costs associated with the transition and the increase in the benefits disregard. At this stage, I cannot say what those costs are, but we are looking long term at a considerable reduction in the administrative cost of running the child support system.

My Lords, the House will want to acknowledge the service that Sir David Henshaw has done in producing his report, but the Minister is right to detect caution in the welcome for it because it is short of detail and of a timetable. The Minister will know that this is the third White Paper about this agency, and I hope that it is third time lucky.

In the White Paper will the Minister make it clear that in the clean break, to which he referred, that Sir David Henshaw recommends—which, as I understand it, entails a move to a commissioner of services rather than a government agency as we have come to know it—the contractualisation and the role played by private contractors will be an improvement on that which the EDS played in providing computer services to the CSA. If there is a White Paper, surely that means there is little, if any, prospect of a legislative slot in the Queen’s Speech to get these changes enacted. When, for example, will the 46,000 resident parents with care who were on income support under the old scheme, and getting paid maintenance but getting no financial advantage, be able to take advantage of this system?

My Lords, I thank the noble Lord for his cautious welcome, and, indeed, for the discussions we have had, in view of his enormously valuable experience in this area. He says that Sir David Henshaw’s first report is short of detail. We are damned if we do and we are damned if we don’t. We deliberately chose, first, to ask Sir David to produce his redesign very quickly; and, secondly, to bring it to Parliament to allow for a short but, I hope, helpful debate on the general principles leading to a comprehensive White Paper later in the year. We could of course have not published his report and done all the work internally and then produced a comprehensive White Paper. I think ours was a better approach.

As the noble Lord says, there have been many attempts to improve the CSA. All have run against enormous challenges. The more of a consensus we can get on the way forward the better, and we think that this approach is the best way for that.

On contractualisation, certainly Sir David Henshaw suggests that he would commend the development of a new organisation as more of a commissioning body. We will certainly look at that. The noble Lord will know that the agency already contracts out elements of its work. I have mentioned two. I believe that that is perfectly proper and that we should encourage it in the future. There has been a reassignment of the contract with EDS leading to a reduction of £65 million in the amount paid to it by the department.

My Lords, I hope I am not alone in my concern about the point on disregard. How can it be right that a father who stays and supports his family will pay a higher effective marginal rate of tax than one who does not? That cannot be right and that cannot encourage families to stick together.

My Lords, neither was it right to insist that parents on benefit go down the route of the CSA. That simply stopped parents from acting alongside the issue of, first, no disregard, and then the £10 disregard. It removed the incentives for compliance and for parents trying to resolve these issues together. Surely, it is right to start at first base and to ask: what can we do to encourage parents to try and resolve child support issues? Removing the compulsion from parents with care on benefits and ensuring that they keep more of the money paid by the non-resident parent are the incentives required to make that happen. Over 13 years we have seen the problems of trying to operate the system according to the principles enunciated by the noble Lord. Most of us have reached the conclusion that it simply is not working

My Lords, perhaps I may remind the noble Lord, who was not around at the time, that when this system was first mooted in, I think, 1989, there was great publicity, and the electorate and mothers were promised that it would be very much better than the system that applied at that time, and that the Treasury would save £400 million a year. Now we find that, instead of the Treasury saving £400 million a year, it has cost the Treasury—that is the taxpayers—£200 million a year. So we are £600 million worse off every year so far as I can see. That has been an absolute disaster.

I am concerned about what assurances can be given, especially bearing in mind that there will be a larger disregard, that the costs will not go up further than £200 million per year. What about the penalties which non-absent parents will apparently receive, for example, curfews, tagging and loss of passports? Those penalties seem worse than those that muggers and old-people bashers often get from our courts. I hope that has been considered.

My final question is on the compulsory registration of fathers. That will be extremely difficult, particularly in the case of unmarried single young mothers who perhaps have several relationships, who may not know who the father is, and who will not disclose the names of all the possible fathers. I hope that the Minister will think about that before he puts this into operation.

My Lords, the words on compulsory registration of fathers have been chosen very carefully. We will seek views on this matter. I understand the points the noble Lord raised. Going back to the original point of the noble Baroness, Lady Morris, anything we can do to get more information in tracing non-resident parents is to be desired in getting a more effective system. We must balance out those two considerations.

I was not here during the debate referred to, but I have read with great interest the Second Reading debate in your Lordships’ House led by the noble and learned Lord, Lord Mackay of Clashfern, when the then Government's proposals were put forward and the amount of resource they thought would be gained by the taxpayer. Alas, it has not turned out to be so. The £200 million savings are initial estimates made by Sir David Henshaw, based on the assumption that, with the removal of compulsion, the caseload of the new organisation will be considerably less than the existing caseloads, and there will be a much more efficient administration system.

On enforcement measures, it is already possible for driving disqualifications to take place and for custodial sentences to be given. We are looking at extending that to passport withdrawal, tagging and the publication of successful prosecutions. I would say to the noble Lord that failing to provide financial support for your children is a very serious matter. We know that the effect on the life outcomes of those children in poverty can be considerable and devastating. It is very important that the message goes out that we are getting serious about the matter. For too long the CSA has been seen as a soft-touch agency that you can run rings around. We have to move away from that. The answer to those who evade and seek to evade responsibility for their children must be that there will be consequences if they do not support their children.