Thursday, 7 February 2008.
The Committee met at two o'clock.
[The Deputy Chairman of Committees (Lord Geddes) in the Chair.]
Child Maintenance and Other Payments Bill
102: Clause 18, page 8, line 15, at end insert—
“( ) During the process of transition, all existing maintenance agreements in payment will be frozen at their current level, revalorized annually by the increase in the September retail price index and awarded £20 maintenance disregards by the end of 2008.”
The noble Lord said: The Grand Committee now turns to the important question of transfer. Clause 18 and Schedule 5 deal with that part of the Bill’s endeavours and attempts to change the system. The amendment in my name and that of my noble friend is linked with Amendments Nos. 104 to 107 and 220.
I hope that colleagues will not hold it against me if we spend a little time on transfer. Clause 18 and Schedule 5 relate to an important part of the operational success or otherwise of this policy; the computer platform is also crucial in that respect. I invite the Minister to tell us as much as possible about the transfer process. The last time this was seriously considered was in another place. Time has moved on. Of course, not everything will be settled, because there are still some questions to be resolved by the commission. That is right and proper and we understand it, but perhaps there have been further developments that would give us a little more information about what is to happen when this unfolds in a few short months’ time.
Some points that I made in passing earlier in Committee resolve into two questions. First, if the software releases that the Minister has been telling us about, characterised as PR1 and due to be put in place some time in this financial year, were to be delayed beyond Easter 2008, or all their specification problems were not ironed out before then, or if there were problems with stuck cases or anything like that—and there is a finance release coming behind PR1, so there are two important bits of software development on which the transfer depends—would the Minster’s default position be that he would consider delaying the whole timetable of change? My worry is simple and relates to what happens if the computer is not working and we start the process of transfer. We have been there before and do not want the same result.
My second question is about the continuing use of the child support computer system—the original system that runs old cases. As the National Audit Office report of 2006 reminded us, if the child support computer system is required after 1 April 2008, the agency—and/or the commission in future—will have to renegotiate the arrangement with the supplier, EDS, to establish who will meet any additional costs of extending the use of the system further. So my second question is about the platform to enable the transfer to be achieved successfully. Who is paying for CSCS and when do the Government expect the last old cases—those that are run on CSCS—to be shut down and transferred to the new statutory maintenance scheme? As far as I understand it, some of those cases may run to 2013, at least in theory. These are important technical questions that the Committee would benefit from knowing a little more about.
The amendments are probing amendments, save Amendment No. 107, which refers to the need for regulations on the introduction of the transfer proceedings to be dealt with under the affirmative procedure. That is an important issue, to which I shall return.
I want to look at the background, so that I can ensure that I understand what is going on. I stand to be corrected on this. I am not trying to demonstrate any great knowledge here; I am just struggling to understand what the proposals are. Under the Bill, the two existing schemes are to be closed down and the cases will be transferred to the new statutory maintenance service, floated off into voluntary arrangements between parents or, in effect, parked in a new cash transfer service. One of those three options has to be an outcome for all existing cases under the two schemes. This much I think I understand.
However, previous attempts at bulk migration do not give us any confidence that we will not, unless this is carefully thought through, repeat the mistakes made in years gone by. The 2006 National Audit Office report on the failure of the move from the old system to the new system in 2003 rather grandly said that the system had to be abandoned because the,
“pre-requisites in terms of system and business stability had not yet been met”.
A few short months before the new transfer, can we be sure that those prerequisites have been met for the redesign of the system that is to be deployed by the new commission? The 2006 White Paper said:
“We do not underestimate the challenge of moving to a single system, and previous attempts to move clients between schemes have highlighted the complexity and risks involved”.
Given what the NAO said about what went before and the White Paper’s assessment of what we are facing, it is important that we take time to understand what is going on.
The details that we have to date could be described as sketchy. We still have a lot to understand about how the transition will be managed between the present situation and 2013, when there will be a completely new, completely unified child support scheme supported by a single, free-standing IT system. We need to know that before we can be confident that that will all work.
The abolition of Section 6 later this year is expected to lead to a reduction in the number of cases dealt with by the statutory scheme even before the new maintenance service begins to operate. In 2009-10, parents who are still in the existing two schemes will be offered the three options that I referred to. From 2010-11, new applications for the statutory scheme will be accepted and the process of transferring existing cases will begin.
My point is—and I seek clarification on this—that parents using the existing scheme will, wherever they go, have to opt in to the new scheme if that is what they want. There is a formal application process but, if that is not completed, they are not in the scheme; if a formal application is not made within a set time, the commission will be entitled to close the case and liability for maintenance will stop. That is a danger point, which people who are advising those who may be in this situation later this year need to understand; they need to make their clients—non-resident parents and parents with care—fully aware of that situation.
I acknowledge and agree with the protection that, if two parents disagree, the parent wishing to use the new service has the advantage and wins the day if there is a contest. That is welcome and reassuring, but the requirement to opt in and the procedure for opting in need to be made abundantly and patently clear to the people who are currently in the system if we are to be safe in the knowledge that people can best take advantage of what we propose.
The memorandum from the Delegated Powers and Regulatory Reform Committee that accompanies the Bill talks about the transfer being a complex and detailed process and about the exact requirements not really emerging until the process is well under way. It talks about the exact process of how and by what means an individual parent shall decide to opt in and about whether more precise data can be given on the type and number of cases involved. That is a good point, but it is difficult to assess the type and number of cases involved.
Mr Plaskitt, the Minister in the other place, admitted that a number of behavioural uncertainties make it difficult to make robust estimates of future flows and the future case load. He is right, but that makes the planning of the transfer process that much more difficult and more hazardous. He told Members of Parliament:
“We cannot possibly anticipate what people will choose, and they will not be in a position to indicate their likely decision until they understand more about the choices facing them”.—[Official Report, Commons, Child Maintenance and Other Payments Bill Committee, 11/10/07; col. 317.]
In that regard, the department has undertaken a dedicated telephone survey of existing CSA clients on their future choices—admittedly, as I have said, even though people may not yet be in a position to make rational and detailed choices. The survey, which incidentally was part of the DWP’s Child Maintenance Redesign Survey: Indications of Future Behaviour and Choices, Research Report No. 444, in 2007, is significant because it suggested that a quarter of parents with care and half of non-resident parents would prefer to make their own arrangements. Those figures are low enough. On further and better questioning, however, the researchers concluded that only 15 per cent of all parents with care could be considered likely to make their own arrangements under the new system. That figure concerns me and should concern other Members of the Committee. I would be grateful for any reassurance on that from the Minister.
We discussed earlier in Committee the Government’s working assumption that the number using the commission’s statutory collection and enforcement services will fall from 1.4 million cases to around 1 million. That automatically assumes that the number of those using the voluntary arrangements as opposed to anything else will rise by about 40 per cent—from 500,000 to 700,000. Forty per cent is a big and optimistic figure. Moreover, I cannot find in anything that I have been given any information on the expected numbers to opt for the proposed cash transfer payment system as opposed to either the voluntary system or the new CMEC set-up.
All that is taking the long way round to say that we need a lot more information, that a lot of planning needs to be done and that we need to be sure when we make a start to this change later this year that we have done everything that we conceivably can to anticipate problems and to make things easier for the client group. Parliament has a duty, subject to the requirement on the new commission to put the final touches to all this planning and to implement it once it is properly constituted, to pause and ask diligently exactly what planning is in hand and to satisfy itself that this has some prospect of working.
Amendment No. 107 is a substantive amendment on an issue that I feel strongly about. While I understand the imperative to move quickly because the scene is fast evolving and I know that affirmative resolution procedures always hold Ministers back—or at least, that is how they see it—a great deal is riding on this three-year period. Schedule 5 certainly provides for regulations setting out how the commission is expected to approach the process. The regulations are lengthy because they need to set out phasing and timing requirements, the principles for determining the order in which parents are asked to choose, the procedures involved, overall scheme time limits and where applications are to be made. All these things are welcome, but we must consider them under the affirmative procedure if they are to be meaningful and if Parliament is to have a chance to track the process with the leverage afforded by that procedure. Negative procedure leaves the parliamentary scrutiny process with one hand tied firmly behind its back.
I understand the need for speed, but if we begin grabbing at change it suggests that we are not in the position that we want to be in. We should introduce this in a consistent and planned way—one that does not require panic measures. For the life of me, I cannot understand why we need to or even should accept the negative resolution procedure for this set of regulations. This is where the introduction of CS2 failed: in the transfer to and implementation of the new scheme, it all fell over. Parliament is entitled to insist on this; even if the process takes a little longer, we will be more reconciled to it so long as there is a chance to monitor it in detail. Through the affirmative procedure, we are able to hold the Government to account. Parliament can also offer help and advice with the process in the way that only it can. So Amendment No. 107 is not probing in nature; it is a substantive amendment. We may want to return to it if we cannot get the Minister to think again.
On Amendment No. 220, the Minister will say that paragraph 2(2)(e) of Schedule 5 allows for regulations that would require the commission to have a strategy. This amendment would strengthen that requirement by putting a direct obligation on the Secretary of State to ensure that all parents in the system are kept well informed about the transfer arrangements. I think that that should include a personal information communication to each parent, but I anticipate that the Minister will respond by saying that that would be too bureaucratic, too costly and too slow. However, we need to think about this carefully.
Amendment No. 104 deals with the principles that will determine the order of transfer. I can see that paragraph 2(2)(c) allows for regulations to specify those principles, but this is a probing amendment, because I want to explore the Government’s thinking here. The discussion in the other place did not take us much further beyond what had been set out in the White Paper in 2006, which pointed clearly to ensuring that we are driven by child poverty considerations and putting the poorest families first. The commission will look at this issue, but it would be helpful if the Committee could understand what further thinking has been done. Amendment No. 104 gives us a chance to do that. I am particularly worried, as are members of the Select Committee in another place. The Minister will have seen the comments in the fourth report of the House of Commons Work and Pensions Committee on child support reform. Having taken evidence from the chief executive/commissioner designate, the committee was worried about the operational difficulties of taking on the priorities that he was suggesting and said:
“This means that the transition should be planned with administrative efficiency at its heart. We appreciate that the Government wants to focus on support for the poorest families first. We are, however, concerned at the CSA Chief Executive's comments that C-MEC may prioritise the old scheme nil assessment cases. This approach may be misplaced effort and result in little additional child maintenance for parents with care. We would welcome clarification on this aspect of the Government’s proposals”.
There is obviously a vein of concern in the Select Committee report that I share, and it is referred to in Amendment No. 104.
On Amendment No. 105, it is patently clear that the transfer must not disrupt maintenance payments. That is obvious, but some ministerial reassurance that that will be guaranteed would be helpful.
Penultimately, Amendment No. 106 deals with transitional protection and tries to flesh out exactly what the prescribed adjustment will mean to a maintenance calculation on transfer. It is a probing amendment. Transitional protection is obviously necessary, but it can complicate bureaucratic and administrative systems to a high and damaging degree. If we do not know exactly which cases will remain in the statutory system and which will leave, we need to know a little more about how the Government see the commission using the power of a prescribed adjustment, because it could impact quite severely with big increases or decreases in maintenance or liabilities in future. We need to understand how that power will be used properly.
Finally, and briefly, Amendment No. 102 was my desperate attempt over Christmas to think of some way to deal with the legacy of the outstanding backlog while all that happens. Whether David Henshaw is right or wrong, I fear that the Bill is asking the new commission to do an enormous amount of work in the transfer process at the same time as it continues with its ongoing work to try to keep pace with everything that has gone on in the past. The amendment was a cockshy at trying to find some way to reduce the workload. Of course, it is practically impossible, because it would be unfair and unreasonable to refuse to alter a non-resident parent’s liability if it were dramatically increased or decreased; the amendment was just an attempt to make the point again that, if we are not careful, the work that the commission is being asked to do—to deal with the day-to-day work and the legacy case load, as well as to make this important transfer—will pull down the whole pack of cards.
These are very important issues. I am sorry that I have laboured the point, but I hope that people understand that the intention is merely to try to ensure that we do not make the same mistakes as we made last time. I beg to move.
I shall speak to Amendments Nos. 103 to 107, to which I put my name. They are in the centre of the two brackets: Amendments Nos. 102 and 220. As the noble Lord, Lord Kirkwood, said, transference has proved to be a veritable nightmare for the CSA. It would be helpful first to establish from the Minister not how many cases have been transferred but how many have not. I suspect that there are an awful lot.
On Amendment 102, as I understand it, under the Bill, some non-resident parents will get an awful shock quite soon, because HMRC data will become available to CMEC and a reassessment will presumably be made. I am talking not so much about single transference as about, in a sense, double transference. The noble Lord, Lord Kirkwood, is interested in transferring the original cases and the 2003 cases to the new CMEC formula under the Bill. Before that, an element of transference will be going on anyway. The Minister might say that it is not true transference, but it is certainly an alteration. I do not think that there is any doubt about that.
The whole point of the amendments to which I have put my name is to understand exactly how the new scheme will take over from the old one. The last I heard was in a letter to someone, possibly even to me, from the Minister. It gave the impression that he did not have the slightest idea. He said that it would be a matter for CMEC when it got around to it. That, at least, was honest, and I am sure that he can confirm it today—although perhaps he would not like to use exactly the same words as I just did. With two different child maintenance payment schemes running concurrently at present, how can he assure the Committee that a third will not again cause hideous confusion for CMEC or, even worse, for the parents due for maintenance payments, whether those payments are in to the parent with care or out from the non-resident parent? That is extremely important.
My real worry, though, lies not with the ensuing confusion so much as with the effects of that confusion. There is a possibility—not to put it any more strongly—that the non-resident’s liability for payment could be lost in the transition between the former scheme and the current scheme. Does the Minister see that in the same light as I do? Does he see it as a problem? Does CMEC plan to put in place any mechanisms that will prevent that happening? Can it, or he, guarantee some sort of transitional protection to parents as the commission implements yet another scheme?
At present, regulations under Schedule 5 will be subject to negative resolution, as the noble Lord, Lord Kirkwood, said. That is on the basis that the process by which cases transfer will take around three years and that issues may emerge requiring changes to be made quickly. I agree, given the importance of transitional arrangements, that it is right that the regulations governing the process should receive the positive approval of Parliament before enactment. There should not be much difference in speed between affirmative resolution and negative resolution, except that regulations made under negative resolutions come into effect on the day that they are laid. I cannot imagine that the speed requirement will be such that four to six weeks would not be appropriate before the regulations came into effect. I agree with the noble Lord, Lord Kirkwood, that this is such an important subject and will affect so many people that it is right that Parliament should discuss the regulations before they become operative.
With regard to the prioritisation in Amendment No. 104, clearly the principles are not in any particular order. None the less, CMEC will have to have some idea of the order in which it will transfer the various cases. Does the Minister have any thoughts on that, or will he say yet again that it will be a matter for the commission? The interesting thing about Amendment No. 220 is that it is not necessary if the noble Lord and I get what he has suggested; namely, the affirmative procedure.
I turn to Amendment No. 106. Paragraph 6(2)(c) of Schedule 5 will,
“prescribe circumstances in which liability under such a maintenance calculation is to be subject to a prescribed adjustment”.
With all my reading, I have failed to understand quite what may be in the Minister’s mind. It would be extremely helpful to know. I shall have to await the Minister’s response to Amendment No. 105. I am sure that I shall be able to comment far better on it then.
Perhaps I may put two brief questions to the Minister. The first relates to transition. Will he help me to understand Schedule 5 more clearly? As I take it, there is a case load in the two statutory systems. Should an NRP have a new relationship under the new, third system, that will potentially require a recalculation for the parent with care in one of the existing statutory schemes. At that point, that case will be pulled over to the new system. Can I take it from my noble friend that it will not be assumed that that existing statutory case, irrespective of activity in it, will go automatically into the voluntary system? I would be horrified if that were to happen.
If somebody is in the statutory system and is taken by default into the new system because a new case under the new system affects them and their income has to be recalculated—for example, the person concerned may go from supporting one family to supporting two—there must be a presumption in favour of the statutory system unless the person chooses to go into the voluntary system. With a new case, one could argue that it is different: the person concerned is going into it with their eyes open. But it seems unwise to tell somebody who is in the statutory system that they are to go into the voluntary system unless they choose to opt in to the statutory system. Will the Minister clarify that? My apprehensions may be groundless.
My second question arises from some of the statistics in the briefing, which made me raise an eyebrow. Has the Minister reflected on the implication of the fact that twice as many non-resident parents as parents with care want the voluntary system? Can he think why? I can suggest several reasons: they think that they will get a better deal; they think that they will pay less money; they think that there will be less pressure on them to pay; and they think that they will be able to hug knowledge and information that she—the parent with care—will not have and which will allow them, to a degree, to control what they pay. The question obviously belongs to other debates as well, but if there is any statistic that should alarm the Minister about the potential for the voluntary system to be grabbed by NRPs, if they can, it is the one that I have just given. It can mean only that NRPs will seek to get a better deal for themselves. The perception is not necessarily shared by the parent with care. This frightens me.
The noble Baroness has been assiduous in her attendance in Committee, but I think that she had a small gap towards the end of Tuesday, when I suggested that, in a voluntary arrangement, £40 would be the limit, which is what she has just talked about.
It depends on whether the limit of £40 applies only to those who remain within the CMEC system or to those who are making voluntary arrangements. How will one know and track that? The noble Lord is probably right. The person concerned will say, “I am not going to pay any more than £40 because that’s all you’d get under the statutory system at any rate”. I would say that if I were in their position. I might be required to pay £60, but if I knew that, under the statutory system, the other party would receive only £40 and the other £20 would go to the taxman, I would say to them, “Well, I am only going to give you £40. Under the voluntary system, you’d be no better off”. That is another way of keeping the pressure on and reducing the contributions that they may pay.
This has been an interesting start to our proceedings today. I shall deal first with the two questions raised by my noble friend. The first was the proposition that there is an existing case under either the first or the existing scheme and that, under the new arrangements, there will be another relationship and a link with that earlier case. The specific question was whether that would automatically force that first case into the voluntary system—
Yes. The question was whether that would automatically force the first case into the voluntary system irrespective of whether the second parent with care was in the statutory system. The answer to that is clearly no. There would not be an automatic deeming that the first case was in the voluntary system. Quite how the mechanics will work during the transitional period will need to be sorted through, but the general principle—this touches on a point raised by my noble friend at Second Reading—is that in linked cases, if I may use that term, one arrangement may well be voluntary by choice and another may be in the statutory system. I could take my noble friend through how the arithmetic works, but perhaps we could do that outside the Committee.
My noble friend has been very helpful. Perhaps he could enlighten us a little more. We have family A in the statutory system. A new family, family B, comes into the system. Family B, the second family, chooses to go for the statutory system. What is then the presumption about family A? Is it that the family will be pulled over into the statutory system but can opt out into the voluntary system if they wish, or will the presumption be that they will go into the voluntary system unless they opt out and go into the statutory system? Secondly, if family B has opted for the voluntary system, what then happens to family A? In other words, where is the presumption?
The presumption is that each of the parents involved has a choice. In the first case, if there is a non-resident parent and a parent with care, if neither wants to stay in the statutory system, that arrangement does not have to stay in the statutory system. Similarly for the second case—I am not sure whether we are talking about a common NRP or a common PWC—where there is a common NRP. If, for that arrangement, both want to be out of the system, both would be in the voluntary system; if one of them chooses to be in the statutory system, they will be in the statutory system. There is nothing to preclude a common NRP having a voluntary arrangement in respect of one relationship and a statutory arrangement in respect of a second relationship. I know that that raises questions about how the arithmetic works. I can summarise it on the assumption that they are both in the statutory system, although the first case in the voluntary system would not be adjusted for a change in the arithmetic. If that became unaffordable, presumably a parent would choose to opt in to the statutory system.
Surely in the case postulated by the noble Baroness, Lady Hollis, there are two parts. First, there are more children—there is another relationship, but with a common non-resident parent. As I understand it, that automatically affects the calculation. The subsidiary question that I think the noble Baroness was asking was: in that case, assuming that they do not opt out of the system at that point, which formula will be used? Will it be the new CMEC formula or the 2003 formula? I suspect that, for the first three years, it will be the 2003 formula, not the CMEC formula, because the CMEC formula will not really be up and running, except for new cases, and that could not be described as a new case.
I think that the noble Lord is right. If I have understood my noble friend correctly, in a new case involving a second family in the voluntary system with a NRP shared with a family in the statutory system, the statutory figure would remain unaffected. All that they could get is the head space of the difference between, say, two and three children, which might be 5 per cent net, 4 per cent gross, as opposed to divvying up the full sum between them. That would be grossly unfair to the second family. That suggests that for any new family coming into the new scheme, if there is any linked case, the only way that they can get a fair apportionment of resources, especially if the first family chooses to stay in the statutory system, would be for them also to go into the statutory system. Otherwise, they could get only the head growth for the extra child, not share the apportionment between the two families.
Let me have another go at this. Let us start with a situation where the non-resident parent has two relationships, the first one of which is currently in one of the statutory systems, either CS1 or CS2, and there is another parent with care involved. I agree entirely with the noble Lord, Lord Skelmersdale, that if two children have to be dealt with under the formula where there was only one before, that will affect the percentage that applies to the non-resident parent and the sum must be divided among the children involved. However, that affects only the amount that is then due to the parent with care who is in the system; it does not of itself drive an adjustment to a voluntary arrangement.
If it were the other way around, so that there was a voluntary arrangement to start with and a new arrangement with the same non-resident parent, and the second relationship resulted in a request to be in the statutory system, the calculation on the percentages to be applied to the non-resident parent’s income would be driven on the basis of two children. Whatever sum is produced will be divided by two for each of the two children. The parent with care who is in the system would get that amount, but it could not force any adjustment to the pre-existing voluntary arrangement, regardless of whether that arrangement involved a higher or a lower sum. It may be that that would cause the parties to seek a renegotiation of the voluntary arrangement. If the renegotiation is not successful, there is an option for the non-resident parent to bring the case within the statutory system so that the formula would apply to both situations. This would not of itself disturb a voluntary arrangement. Although clearly the number of children being supported in the system would affect the calculation, it would not be applied to the voluntary system.
I am sorry to take up the time of the Committee. Let us say that the non-resident parent is supporting two children at a net level of 20 per cent of his income under one of the statutory schemes. He goes into a new relationship that produces one child. That would mean that his total contribution under the net formula would be 25 per cent. If the second family goes into the voluntary system, would that family get merely 5 per cent, the difference between the 20 per cent already going to the statutory family and the total net percentage required to support three children, which is 25 per cent? Would the statutory family remain unaffected at 20 per cent because the second family was in the voluntary system or, despite that, would there be a presumption that the 25 per cent total would be divided up pro rata, in which case the second family would get a little over 8 per cent? Which of those two would apply in the voluntary system, and what would be the case in the statutory system?
I am sorry. The non-resident parent is paying 20 per cent for two children in the statutory system and now there is a new family. Normally he would be required to pay 25 per cent in total, so the difference between the old and the new assessment would be 5 per cent. Would only the extra 5 per cent go to the second family, or would the entire 25 per cent be reapportioned?
Let me try again. The 25 per cent net figure would apply to the new calculation. That amount, whatever it is, would be divided between the three children. There would be an adjustment to the statutory arrangement for the first two children so that the parent with care would get two-thirds of 25 per cent. In relation to the one-third, there would be no effect on the voluntary arrangement. Whatever the voluntary agreement was would drive what the payment is. If that became unaffordable in the light of the adjustment, it would be open to either parent to bring it into the statutory system. In that case, the 25 per cent level would apply and would be divided into three with two-thirds going to the parent with care and one-third to the other parent.
I hope that that has dealt with the point. All sorts of combinations can affect this. It is more likely that it will hit cases the other way around, where there is a voluntary arrangement to start with and then someone comes into the statutory scheme. The same principle applies. You take account of all the children who are involved in maintenance. That drives the formula and the percentage. It is divided up among those children and is adjusted only for those in the statutory scheme. My noble friend also asked whether, if there were an arrangement under the new basis of assessment in 2010, that would drag an existing arrangement under the previous scheme across to the new formula. I believe that the answer is yes. Obviously when we get to 2013 there will be only one formula. I see reassuring nods from the back.
It may not have come through because some of the intricacies of how this will work in practice are still being worked through. I was enunciating the principles. In a sense that second point is no different from what happens at the moment. If someone starts off in the old scheme and a new scheme case is linked to it, that drags the case across on to a new basis of assessment. There will be differences and fewer complications under the new arrangements. Some of the complexities around linked cases will fall away because under the new system the CSA—or CMEC—will not police the benefits system as it does at the moment. That will be the job of Jobcentre Plus. Therefore, ordering cases around the NRP will make some of the processes easier. That is the principle involved. I hope that that has clarified matters. I will be more than happy to have another go or to write to Members of the Committee if they feel that that would be helpful. We are not intending to change voluntary arrangements although the children involved in that would clearly impact on the percentage that is used.
I do not know about the noble Baroness, but I believe that I have the point. However, if, having read Hansard, I find that I have not understood the point and I make an oral request for a letter from the Minister, would he be good enough to provide one?
Perhaps my noble friend will give me an assurance about a parent who currently is in the statutory system. If a second family comes into the new system and, therefore, the first family has to be drawn into the new system, can he assure me that there will not be a presumption that that second family will go into the voluntary system?
Absolutely. I can give a very clear assurance on that. People have a choice about whether they are in the statutory system or have a voluntary arrangement. The choice is for either parent. There does not need to be agreement to be in the statutory system; just one parent can cause that to happen.
My noble friend asks whether one technically has to make a claim to be in the new system, which I think is broadly the proposition going forward. I would like to reflect on that. In either event, the information and support service will be there to help people to arrive where they want.
I have listened to most of the debate. Even with the amount of expertise in this Room, there is some confusion. Does the Minister agree that the case for affirmative resolution has been made very strongly? The longer the proposals are out in the open, the better chance people stand of getting near them. Perhaps he would take that away for consideration.
I turn to the amendments and I shall pick up some of the broader points that were raised. I welcome the interest in the transfer of cases to the new arrangements because that is very important, as indicated by all Members of the Committee who have participated. Planning for this transfer is one of the commission’s most significant early challenges. The scheme would have to be approved by the Secretary of State.
Within Schedule 5 we have made provision for regulations to require the commission to develop a scheme for the movement of existing customers to the new statutory maintenance arrangements. The process by which cases transfer will commence in 2010 and take around three years. The provision is for negative regulations, but I hear the strength of the argument and will take this away. I believe that the Delegated Powers and Regulatory Reform Committee did not have any problem with what is proposed. It is usually focused on challenging when it believes that the affirmative procedure should be used. I might return to this, even if we change the procedure for the first set of regulations. I understand the point.
Our intention is to be completely transparent about how this transfer process will work. The commission’s plan will be published and will be available to Members of both Houses, key stakeholders and, most important, parents, so that they can raise any concerns at that time and before the transfer to new arrangements begins. It is essential not only that Parliament can scrutinise the plan, but also that parents understand the choices that will be available to them during this transfer period. A communication programme to support parents through this process of transition will start in 2009, enabling the first case transfers in 2010. The commission will consult stakeholders on our plans for transition.
Amendments Nos. 102 and 105 seem to have similar intentions, which is to keep existing maintenance liabilities running during the transfer process. The amendments differ in their effects, but I understand that they are probing by nature. By freezing ongoing case activity, we run the risk of not addressing any urgent changes of circumstances that may be required. For example, if someone paying an assessed amount of maintenance lost their job, all action on reassessing their case in line with their new circumstances would stop. I do not believe that this is a fair situation to present to anyone, nor do I believe that it is the intention of the amendment. Unfortunately, some incomes do not keep pace with prices; therefore, to base an assessment on what someone earns as opposed to what prices are is a much fairer way of doing things. Additionally, we know that there are many cases that have a current liability of nil. For these cases a percentage increase would have no effect and the nil assessment would remain in place for the length of the transition process. I am sure that this is not the noble Lord’s intention either.
During the transfer period, any current assessment will remain in place and will not cease until a new assessment has been carried out under the HMRC assessment formula. This would remove the ability of parents to choose what is best for them, whether this is in or out of the statutory system. I am sure that that is not the intention of Members of the Committee but that would be the consequence. I confirm that the liability will not end before the new scheme liability begins where parents choose to stay in the statutory scheme.
We know that a large number of voluntary arrangements are compliant and successful and have a real benefit for the child or children concerned. Therefore, to remove this facility could have a detrimental effect. This is also true of the cash transfer option, which enables those parents who are satisfied with the current arrangements to continue to have support.
Amendment No. 104 stipulates that certain cases should be given priority in the move to the new HMRC data-based assessment during the transition period. In the White Paper, which has been referred to, we laid out guiding principles for the approach to transition. These are to focus on supporting the poorest families first; meet parents’ needs by empowering them to make informed choices; minimise disruption and provide a seamless service for the move to the new regime; and ensure that the approach is practical and achievable, learning from the past.
As the Committee will be aware, we have consistently stated that it is right that the commission should consider the order in which cases are moved. This gives the commission time not only to plan but also to take account of the scale of the task and the nature of the cases involved. Only the commission will be in a position to know about its levels of other work and available staff resources. It would therefore be inappropriate for us, at this stage, to dictate to the commission how to carry out this major administrative challenge.
We know from previous attempts at reform of the child maintenance service that a large scale movement of cases is a complex and time-consuming process. I am sure that the Committee will agree that it would be prudent to let the commission, having learnt the lessons from the past, assess for itself the right order for the movement of its customers, the right plan of action and the right point at which to begin the transition. It would not, therefore, be appropriate to dictate any priorities on the face of the Bill.
Amendment No. 106 would remove the facility to allow for a set of prescribed adjustments to be applied to the new formula assessment in certain cases, where the new calculation based on HMRC data differs significantly from the existing liability. This could have the effect of either a marked increase or a marked decrease in maintenance paid or received for either parent. By removing that facility, we run the risk that either parent may not have sufficient time to adjust to a change in their maintenance payments. That could create significant hardship and is not consistent with our intention to minimise disruption during that period.
I think that the noble Lord, Lord Skelmersdale, raised the point that some adjustments could be quite significant, as some of the assessments are based on data that are quite old. That is right, so it is important to have a mechanism to potentially smooth the impact of that. Similar arrangements were introduced when the current system was changed from the first one, although they turned out to be quite complex and difficult to manage. A good deal of thought needs to be addressed to this. Without such a mechanism, some parents with care and non-resident parents could hit difficulties. I recognise that the prescribed adjustments regime currently administered is a complex and lengthy process that is difficult for staff and parents to understand. That is why the commission will need time to develop detailed plans to introduce a new and simple way of handling such instances. However, to have no facility and no flexibility would be in no one’s interests.
It is for similar reasons that I cannot agree with Amendment No. 107, which would make all regulations made under Schedule 5 subject to the affirmative procedure. Once the transfer process is under way, the commission will be able to see how it is taking shape and may need to make changes at fairly short notice. As any changes will require regulations, making them subject to debates in both Houses could introduce unacceptable delays, which could have detrimental effects for the parents involved. Notwithstanding that, we ought to think seriously about changing the initial set of regulations, but I will revert to that matter on Report.
Finally, Amendment No. 220 would require the Secretary of State to set out in regulations the strategy for informing parents of the details of the timetable and arrangements for transfer to the new arrangements. It is our intention to be completely transparent about how the transfer process will work. We will make that information available to honourable Members so that they can raise any concerns at that time and before the transfer to new arrangements begins. Honourable Members and noble Lords, I should say—I saw the Chairman bristling at that. You can see where this speaking note originated.
It is essential not only that Parliament can scrutinise the plan but also that parents understand the choices that will be available to them during the transfer period. We are committed to minimising the disruption to parents in that period by providing a seamless service for the move to the new arrangements. We are also concerned that this amendment, were it to be accepted, could build delays into beginning the process of moving cases to the new maintenance arrangements. That could prevent children from benefiting from the movement to new maintenance arrangements at the earliest opportunity.
I shall try to pick up some of the other points that have been raised. The noble Lord, Lord Kirkwood, asked about the computer system for the old scheme cases. He said that he thought that the contract ran out in 2010. He is pretty well informed, as usual, but there is a right to extend that as required, which it almost certainly will be. Cases will remain on that system until, possibly, 2013.
The noble Lord also asked about the releases under PR1 and how that will affect things. It is vital, and the CSA recognises this, that any new releases should be fully tested. To date they have been extensively tested and we believe that PR1 will be delivered in time to ensure that the indicative timescales in Section 6 that I referred to last time can be adhered to. I stress that it is not just CSA systems that need to be adjusted; Jobcentre Plus is being worked on as well because of the changes around benefits and the removal of Section 6 compulsion. Those systems have to cope as well.
I shall take a little step back. It is implicit in the discussion that we have already had that the transitional process proceeds as follows. The first issue is the removal of Section 6. By the end of 2008, on the basis of current plans and timing, there will be a choice for all parents to stay in the system or enter the system. In 2010 the transition of cases from the first and second schemes to the new scheme, for those who wish to stay in the statutory scheme, will then begin. It means that, for a period, three different schemes will run, but we will end up in 2013 with one scheme, in which everybody will be on the same basis of assessment. The transition is not brief, but it is right to build in time to make sure that it can be done effectively and that we avoid some of the difficulties that have been encountered in the past. It is currently proposed that people will have formally to opt in to the statutory system. That is being looked at by the commission but, if that is where we end up, it is important that parents who wish to stay in the system are supported in doing so.
While the Minister has been speaking, I have been looking at paragraph 6(1) of Schedule 5, which states:
“The Secretary of State may by regulation make such provision as appears to the Secretary of State to be necessary or expedient for the purposes of, or in connection with, giving effect”—
these are the important words—
“to a decision not to leave the statutory scheme”.
Could that not be read as a presumption in favour of the voluntary scheme?
That takes us back to a debate that we had a couple of days ago. Let us be clear that we want parents to have the choice. We want those who are currently in the system to have the choice whether to stay in it just as anybody else will have the choice. We had a philosophical debate about whether we were encouraging voluntary arrangements as a broad principle. I think that it is clear that that is where we are, but it is not inconsistent with making sure that those people who want and choose to go into the statutory system are fully supported in doing so. The mechanics by which they end up in the system are a secondary issue; the principle is that, on the basis of information and support, that is what people choose to do. We must do everything that we can to make sure that that is where they end up.
The noble Lord, Lord Skelmersdale, is absolutely right. The Minister is obviously right in saying that we will move to one statutory scheme, but we are creating one statutory scheme plus a voluntary scheme. Those in the voluntary scheme will have come out of two, possibly three, statutory schemes. We will substitute different complexities for those that we have now. Although the Minister has been helpful, I am still not persuaded of the appropriateness of the interface.
Perhaps I may have one last go before I shut up on this and we perhaps revisit the issue in some other way. Let us assume that somebody is in the statutory scheme and remains in it. They have two children and receive 20 per cent of income net. Under a new case in the voluntary scheme, as the Minister said, they would be entitled to approximately 8 per cent or one-third of the other’s total liability of 25 per cent. Under that new, voluntary case, they would have to know not only the other’s income but also all the details of the existing case on the statutory system to be aware that they were entitled not to 15 per cent net, which they might recently have thought if they were the only case, but to 8 per cent net because an existing case was on the statutory system, which they, being voluntary, had no way of knowing about or accessing. The second family, in the voluntary scheme, may well get short-changed because of a lack of knowledge and bargaining power in the equation.
Let us take a second case as an example. It is a brand-new case coming into the voluntary system. One child is involved and the non-resident parent agrees the equivalent of 15 per cent. That is fine and everybody is very happy. There then comes a second child in the voluntary system. The first person asks, “What is going to happen?”. Are the two women expected to get together over a cup of tea and divvy up the money? How will each of them know what they can reasonably ask from the non-resident parent without them knowing about the other and what the other is getting?
There are real problems with the alignment of a voluntary system with a statutory one and with the alignment of one voluntary system with another. I absolutely agree that in many cases there is no problem with there being a single, one-off voluntary system where there is an agreement to pay. However, the moment you move beyond that—we saw this with all the problems with the old CSA—we are simply substituting different sorts of complexity, without the parent with care necessarily being able to have formal knowledge based on what the statutory bodies have collected from her.
It is inevitable that the more links there are, the more complexity there is. However, to return to the first of my noble friend’s examples of what a parent with care in the voluntary scheme will be entitled to, the starting point is that they would have a voluntary arrangement for something to which the two parties agree. If that negotiation could be successfully concluded and sustained, it would involve some discussion about the non-resident parent’s other commitments. At the end of the day, if the new parent with care is not satisfied with where a voluntary agreement is heading, they would test the statutory scheme and see what came from it.
We acknowledge that there are challenges for parents with care to obtain information, particularly when relationships have been fairly transitory. That is why we have to do all that we can to enhance the variation arrangements and the commission’s engagement with those. I hang on to the point that people are encouraged to enter voluntary arrangements with which they are satisfied. They then negotiate between themselves, with the help of the information and support service. Where the NRP already has commitments, whether under the voluntary system or the statutory system, I imagine that they will inevitably mention them as part of the discussion and potentially dampen the outcome. However, if the parent with care is not satisfied at any point, the recourse to the statutory system will settle in. That is the protection in the scheme.
Let me see whether I can address the other points. Perhaps I concluded on what the broad transition was and how we reach 2013. My noble friend also talked about the disparity between the views of NRPs and PWCs. That is a real point. It is not fair to say that the NRPs will inevitably prefer a voluntary arrangement to the statutory system because they will get away with less. Many of them are bugged by having to be in the system at the moment, particularly when it has not really produced more cash for their kids. That drives some, but I accept not all, of the behaviour.
I hope that I have dealt with the queries about the IT systems. I stress that it is for CMEC to decide ultimately which system it ends up with. Inevitably it will start off with the system that is there at the moment and will live with that and with the enhancements that will be made through PR1 through much if not all the transition. As I said, however, that is something for CMEC to decide in the future.
The noble Lord, Lord Skelmersdale, asked how many schemes had been transferred.
If the noble Lord’s question was how many cases have not been transferred from the first scheme to the—we call it the “new scheme”, but we will have to get away from that term now that there is a third scheme—current scheme, the answer is very few. I do not have the absolute number, because we said that we would transfer cases only when the new IT systems could cope with that. We know that they have not been able to. Inevitably, cases are drawn across into the current scheme when they are linked under the sort of arrangements that we have been talking about.
I have an absolute figure. There are currently 443,680 cases maintained on CSCS—the original scheme. Subject to what happens with linkages in the interim, those cases will remain on that scheme until they come across into the new scheme.
Indeed they will.
I hope that that has dealt with each of the points raised. The noble Lord, Lord Kirkwood, talked about the numbers and how we could be confident on the behavioural responses to the new arrangements. Indeed, we cannot be absolutely confident about that. The surveys that we have undertaken, to which the noble Lord referred, have given us some information and some basis on which to plan. These things are kept under review, but we must ensure that there is capacity and flexibility in the system to deal with what comes from these arrangements. That is why the transition is relatively extended. I will leave it there, if I may. I hope that, on that basis, the noble Lord will feel able to withdraw his amendment. If not, I am going home.
We might as well all go home. The debate has demonstrated that it is obviously essential that this new commission, CMEC, should make some of its own decisions for itself. However, I make the final point that, as demonstrated by the debate, leaving the commission in charge of the transition by itself is not safe. It is perfectly reasonable to get it to oversee and deploy the plan in the legislation, but we have had much bad experience of this transitional process. This is my final plea. I am encouraged by the Minister saying that he would think about the affirmative resolution procedure being used at parliamentary level, at least in the initial stages of this transfer. If we do not get this right, the organisation has no chance of success. It is carrying a package of legacy issues, which we all understand. However, the debate has been useful, even if it just demonstrates the complexity of the transfer process that we are facing. On that basis, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 18 agreed to.
103: After Clause 18, insert the following new Clause—
“Entitlement of parent with care
(1) A parent with care may make representations (oral, written or otherwise) in enforcement proceedings commenced under this Act and attend enforcement proceedings hearings brought under this Act.
(2) A parent with care may apply to a magistrates’ court or an appeal tribunal for collection or enforcement pursuant to paragraphs 20 to 28 of this Act.”
The noble Lord said: In moving the amendment, I also speak to Amendments Nos. 179, 180, 181 and 213 in my name and the question that Clauses 24 and 26 to 28 stand part of the Bill, as well as Amendment No. 187 in the name of the noble Lord, Lord Kirkwood.
My amendments in this rather large group are all intended to protect the parent from CMEC impinging on their civil liberties. Before discussing Amendment No. 103, I should point out that there is, I am afraid, a misprint on the Marshalled List: proposed subsection (2) should refer not to paragraphs 20 to 28, but to Sections 20 to 28. I see the Minister nodding, so he obviously realised that when he was preparing his—dare I say?—defence.
Amendment No. 103 and our opposition to the Question that Clause 24 stand part of the Bill have been tabled to garner a little more clarity about enforcement proceedings and the role of the parent with care within those enforcement proceedings. Amendment No. 103 would allow the parent with care to do four things: to make representations in respect of the appropriate enforcement action; to be involved in the enforcement action taken by the commission; to be permitted to attend enforcement proceedings; and to take their own enforcement action in certain circumstances. That is currently prevented under the two existing child support systems.
It is often the parent with care who has the necessary information in respect of the non-resident parent’s financial circumstances. Especially in the early months following separation, the parent with care will know of any assets held by the non-resident parent, which may mean that the appropriate enforcement action to be taken should include an application for a third-party debt order or a charging order or whatever—the various sanctions that are available to the commission.
That information is rarely released by a non-resident parent to the Child Support Agency. Notwithstanding the effects of the interrelationship between CMEC and HMRC, that position is likely to continue in the future. It is often a lack of knowledge of the non-resident parent’s circumstances that leads to a delay of appropriate, or indeed any, enforcement action being taken. Does the Minister not think that, as the remit of the commission is to secure payment with minimum delay, the parent with care should be involved in that process and should be in a position to make representations that will achieve that aim? Would it not help the commission to have the advice of the parent with care? How does the Minister justify the rather unusual situation that the person who generally has financial interest in payment being secured is the only person prevented from making representations about how such payments should be secured? I find it odd that the existing formulation prevents the parent with care from taking any enforcement action in his or her own right, even if there is a complete failure by the child support organisation, CMEC, to take enforcement action, which, therefore, results in a financial loss to the parent with care. I cannot believe that that is really a situation that the Minister wants. I beg to move.
I have three or four amendments in my name and that of my noble friend dealing with Clauses 26 to 28 stand part and Amendment No. 187.
I can dispose of Amendment No. 187 expeditiously. The Committee may know this, but it may be worth asking a couple of questions about the difficulty of enforcement of some of these maintenance payments in arrears in the United Kingdom. In a previous incarnation as a country solicitor in Scotland, I always found it immensely difficult to get hold of people to enforce a matrimonial aliment and other orders if the absent father left the jurisdiction of the court. Under the Maintenance Orders (Reciprocal Enforcement) Act 1972 it was certainly possible to enforce a maintenance order made by the UK courts on behalf of a UK resident, and it had to be registered because of the procedure involved. That can eventually be deployed in courts in other countries. It is a complicated process. It is known as the REMO procedure and a CSA website gives helpful details of it. It is cumbersome and difficult.
There are two hopeful signs on the legal horizon. The first is that the Hague convention looked at this in November 2007 and a new global convention on international recovery of child support and other forms of family maintenance was finalised. That new Hague convention was intended to provide a much reduced bureaucracy—a swift, cost-effective more accessible and fair procedure—to allow international recovery. The convention was signed by the United States immediately. I think that it is expected that the European Union, through the Commission, will commit all EU countries to the convention shortly.
I understand that the European Union has looked at this matter separately. I know a little bit about it because I sit on your Lordships’ Sub-Committee G, which looks at social policy. In 2004, the Commission published a Green Paper on this matter. In 2005, it published an impact assessment to look at different options. The aim is to replace the diverse provisions that underpin reciprocal arrangements between EU countries with a specific regulation that deals with international maintenance cases. Will the Minister confirm that Britain intends to sign up to the new Hague convention and, if so, when will CMEC and its client group be able to take advantage of its provisions? Will he confirm that the European Union is likely to agree with a specific Council regulation? More generally, what additional steps can the Government take to allow child maintenance orders under the CMEC provisions to be directly enforced abroad? In this global day and age, it is not beyond the realms of possibility that this will become an even bigger problem than it has been in the past, as foreign travel and people’s movements around the globe become more extensive and prolific.
Perhaps I may say a few words about Clauses 26, 27 and 28, which relate to curfew orders, prison provision and driving licences. These penalties are now more or less discredited. Curfew orders are a nugatory waste of space, time and effort. They will provoke non-resident parents who set their face against the Act to look for curfew orders, which will not in any way, shape or form be a deterrent. I can understand that they give comfort to the red-top, tabloid press, which will say that the Government are being tough on deadbeat dads and other such nonsense, but they are a distraction and discredit the proper work of the commission, which is to get money out of non-resident parents if they refuse to pay or delay in doing so. Curfew orders create much administrative distraction and displacement of activity. In the court of public opinion—let us disregard human rights challenges under the European convention—they are more trouble than they are worth.
The same is true of prison provision. As with curfew orders, putting people in jail costs the taxpayer extra money, but it gets no extra money for the parent with care. It does not affect liability positively for anyone. I would be much happier if we removed the provision for imprisoning people for these offences and concentrated on some of the important improvements that the Government are making, such as attacking joint accounts. It is important to concentrate on what produces money, what avoids human rights legislation cases and the core activity of the commission.
It is my experience that, if one takes away someone’s driving licence, they just drive anyway, which has perverse consequences for those who have accidents because that person is driving uninsured. I do not have evidence or figures for that. It is always easy to say of the enforcement powers in the three clauses, “Well, the Government or the commission will have them available. They are always a prospective threat and that might make people a bit more responsive to their duties and legal responsibilities”. For my money, I would rather we had a cut-down, nuts and bolts, reduced revision of the way we attack sources of money, because the public perfectly well understand that if money is owed, you attack the money source. People find it difficult to understand why people are sent to jail at vast cost, even if it is only for a short time. Never mind the high principle of human rights; from a practical point of view, this is a distraction and it does not work. I am very sceptical about it. We should do something else with the time of the staff in order to realise money for parents with care. I hope that the Government will think carefully about this.
I dissociate myself from the remarks of the noble Lord, Lord Kirkwood. If someone is in regular employment and there are money resources, the situation is straightforward. You can put a direct debit on the account via the employer and get the money. The problem arises with the self-employed and those with no money resources. That happens with the young, the feckless, those who change jobs rapidly and so on. How do we make the sanctions bite if there are no financial resources on which to do so?
No one wants to take a passport away, no one wants to take a driving licence away and certainly no one wants to see someone go to prison. I presume that we would all much prefer to see community sentences and the like. But there have to be sanctions if even the statutory system is not to be voluntary, let alone to allow the voluntary system to remain in effect. The difficulty is that those who are reluctant to pay and fail to do so are often precisely those who do not own a house, so we cannot get a garnishee order; they do not have goods worth seizing, so bailiffs cannot be used; and they are not in regular, steady PAYE employment on which a direct debit can produce a flow of money. Where do you go except to the individual concerned?
I agree absolutely with the noble Lord that no one wants to do this. It is counterintuitive to go for a prison order which stops him working, a curfew order which makes him angry or the removal of his driving licence which runs the risk of him driving uninsured. But if we do not have access to the individual’s financial resources, and with this difficult group we very often do not, where do we go, apart from saying that there are no sanctions to apply? That is why I hope that my noble friend will persist in this. I hope that the success of the new system and CMEC will mean that there will be no need to use these sanctions, but I believe that they are necessary as a back-up in order to get some non-resident parents to take their responsibilities seriously.
This is an important group of amendments, all of which relate in some way to the operation of the commission’s enforcement regime, although each amendment produces a number of issues within itself. For that reason, I would like to address them under separate headings. I will make reference to the one government amendment in the group and then deal more generally with the clause stand part issues that have been raised.
Amendment No. 103 would give the parent with care the right to make representations to or attend any enforcement hearings. It would also allow the parent with care to apply directly to the court or the tribunal for enforcement action. I recognise that this is an issue of major concern and indeed I welcome the chance to debate it. The parent with care’s role in enforcement was discussed in the other place and was raised by the Select Committee on Work and Pensions. It is therefore something about which we have thought long and hard. I accept entirely that the commission needs to engage the parent with care when taking enforcement action against the defaulting non-resident parent. Indeed, it would be beneficial for the parent with care to disclose to the commission any information that he or she may have that is relevant to the non-resident parent’s financial situation. But we need to remind ourselves of the commission’s role. Once a case has reached the state maintenance service, the commission is responsible for taking action to enforce payments. However, it has to be mindful of the position not just of the parent with care but of any other parents with care involved with the non-resident parent. It also, of course, needs to consider the welfare of any children that may be affected.
The commission’s role is not solely to be the representative of a single parent with care. It is not the same relationship as a solicitor would have with a client. Where enforcement hearings are held in open court, the parent with care is able to watch proceedings, although they have no right to make representations to the court. I understand that, in practice, magistrates’ courts usually hear such cases in the family court where the magistrates have the power to exclude persons not directly involved in the case. The court does have discretion to permit a person who has adequate grounds for attendance to be present, but they would still have no right to make representations. It is hard to see what the parent with care could add to assist the court in reaching a decision.
In relation to the parent with care taking their own court action, there are a number of practical considerations. In order to streamline the enforcement process and to allow the commission to take swift and effective enforcement action, a number of the provisions in the Bill have been made administrative—for example, deducting money from bank accounts, issuing liability orders and removing passports—which adds to the current administrative provision of applying a deduction-from-earnings order. Were parents with care able to pursue the enforcement of maintenance through the courts, these administrative measures would not be available to them. With these additional powers, we are confident that the commission will take enforcement action within a reasonable time—that is the nub of the issue here—which will make it unlikely for the parent with care to feel the need to take independent enforcement action through the courts, particularly as there are opportunities for them to make what information they have that may assist the case available to the commission. There is also a real danger that, if the commission and the parent with care had concurrent or interchangeable abilities to enforce, there would be risk of overlap and duplication, which could cause confusion and increase costs.
Equally, enabling parents with care to enforce the commission’s maintenance assessments might provide the commission with a perverse incentive to divest itself of difficult cases, leaving parents with care or legal aid to meet the cost of enforcement. If legal aid was not provided, a two-tier system would be created where only parents with care with the financial means to do so would have this option open to them.
The obligation to pay child maintenance under the Child Support Act is not a civil debt in the normal sense. In deciding whether to take enforcement action, the commission must not only have regard to the interests of the parent with care, but consider the position of the non-resident parent and the welfare of all the children involved. It would not be appropriate to allow parents with care to take their own enforcement action. However, I accept that we must build confidence in the fact that the Government must not and will not abandon their responsibility to children.
Amendments Nos. 179 and 180 would set out in primary legislation that the non-resident parent has the opportunity to make representations to the commission before it makes an order to administratively disqualify him or her from holding or obtaining a travel authorisation. It is of course important that non-resident parents are able to make representations to the commission before such a serious form of enforcement is imposed. We intend that the non-resident parent will have the opportunity to put forward any representations on receipt of the notice that they receive from the commission of the intention to disqualify him or her from holding or obtaining a travel authorisation. A requirement to this effect will be set out in secondary legislation.
The Government acknowledge that disqualifying a person from holding a travel authorisation is a very serious measure. It will be employed only after other, more direct, forms of enforcement have been attempted and maintenance remains unpaid. Any non-resident parent who may be at risk of losing their passport will have had several opportunities at earlier stages—
We have a separate amendment on that, but we are touching on driving licences here. There is a discrete amendment, but these amendments are part of this group. However, the noble Lord is right that we have also strayed into travel authorisation. I shall skip that part of my notes and return to it later.
Amendment No. 181 would set out in primary legislation that the commission must consider the impact on the non-resident parent’s ability to pay the outstanding child maintenance should he or she be disqualified from holding or obtaining a driving licence. I agree that it is important that, before such a measure is imposed, consideration is given to whether a non-resident parent needs a driving licence to earn a living. That is precisely why new Section 40B(A4)(a) in Clause 28 as well as existing legislation on how the current process operates make it clear that the court should, in the presence of the non-resident parent, inquire whether the driving licence is needed by him to earn a living. I appreciate that noble Lords may therefore question why the commission is not duty bound to consider this as well before making an application to the court. However, including such a provision in the legislation is not necessary.
I am just about to cover that. The Child Support Agency, or the commission in the future, will make an application to the court based on a determination of the facts at hand. Where the agency or the commission are aware of the non-resident parent’s occupation, this factor will be taken into account in determining whether an application will be made for disqualification. The CSA or the commission is highly unlikely to ask the court to disqualify the non-resident parent from driving if the non-resident parent’s ability to earn a living would be seriously affected. This would not be in the best long-term interests of the children and it would be against the commission’s main objective. Ultimately, however, it will be the court’s decision. The court has the power to summon the non-resident parent, to issue a warrant should he or she fail to appear, and to inquire in that person’s presence whether he or she needs a driving licence to earn a living, before it reaches a decision. I should also point out that the existing driving licence provisions have been in operation since 2001. In the vast majority of cases, the non-resident parent receives an actual or suspended sentence. Clause 28 simply restructures existing provisions.
Amendment No. 187 would enable the Secretary of State to make regulations allowing the commission to recover maintenance payments from non-resident parents who have moved outside the United Kingdom and do not remain in the commission’s jurisdiction by virtue of Section 44 of the Child Support Act 1991—an issue raised by the noble Lord, Lord Kirkwood, in some detail. That section gives the CSA currently, and the commission in the future, jurisdiction where all parties to the maintenance calculation are resident in the United Kingdom, except in prescribed circumstances where the non-resident parent may reside abroad but is employed in the services of the Crown; in the forces, including as a reservist; by a company registered in the UK; or by a body of prescribed description. I agree that it would not be right for non-resident parents outside these limited exemptions to escape their financial obligations towards their children by moving abroad, but I am pleased to inform noble Lords that this is generally not the case.
The United Kingdom has a system for administering international child and spousal maintenance cases. There are a number of international conventions and agreements—the noble Lord, Lord Kirkwood, referred to these—which allow maintenance claims from UK-resident parents to secure payments from non-resident parents who move abroad. International agreements include the Hague conventions and EU law, and of course arrangements are established under the Maintenance Orders (Reciprocal Enforcement) Act 1972.
In essence, the system works by UK courts sending details of the maintenance liability to a foreign jurisdiction where the claimant is resident in the UK. The foreign jurisdiction then applies its domestic collection and enforcement mechanisms to recover the amount due. Those mechanisms in turn refer the maintenance received to the claimant. The process is reversed where the debtor is resident in the UK and the claimant resides outside. Where a non-resident parent is or moves outside the Child Support Agency’s jurisdiction, a maintenance calculation cannot be made or pursued. The parent with care must then either reach an agreement for maintenance provisions with the non-resident parent or apply to their local magistrates’ court or family proceedings court to secure maintenance from an ex-partner living abroad.
The UK has reciprocal agreements with over 100 states and territories to enable such claims to be made and recently established a new bilateral agreement with the USA to extend the arrangements there. There is currently an EU proposal for a new regulation—referred to by the noble Lord, Lord Kirkwood—on such claims in Europe, which the UK hopes to be able to opt into at the conclusion of negotiations. I have no precise data on when we expect those negotiations to be concluded. I am also pleased to inform the Committee that a new global Hague convention on family maintenance was successfully concluded in November 2007, which we hope will further extend the coverage of such arrangements in the future.
I realise that Members of the Committee may be concerned about what happens to any outstanding arrears that the non-resident parent may owe when he or she moves outside the commission’s jurisdiction. I do, of course, have the greatest sympathy with parents with care who find themselves in this situation, but it would not be possible for the commission to take direct action to recover the money owed, nor could the arrears be included within any subsequent international maintenance order made through the courts.
I am sure that Members of the Committee will understand that we cannot apply UK domestic legislation across international boundaries. We could not, for example, give the commission the power to apply a deduction from earnings order against any person where the employer is not registered as a company within the UK. It is simply not possible. Nor is it currently possible under the terms of the 1972 Act to include arrears of child maintenance accrued in the UK within an international maintenance order. We do not, however, rule anything out in the longer term; this may be something that we can address at a future legislative opportunity. It may also be the case that, should the non-resident parent have any property within the United Kingdom, the CSA or the commission could apply for a charging order against that property, notwithstanding the fact that the non-resident parent may reside outside the UK. We will certainly continue to investigate that possibility. I hope that Members of the Committee will appreciate that an adequate system for dealing with non-resident parents who move abroad already exists, albeit with the caveat concerning arrears that I have just mentioned
Amendment No. 213 would give the appeals tribunal the power to question the underlying maintenance calculation when considering a liability order appeal. By the time a liability order is made, the non-resident parent will already have had opportunity to appeal to the tribunal against the maintenance calculation at the point when it was made; there are also provisions for late appeals. This amendment would allow the non-compliant non-resident parent a second bite at the cherry. It could delay enforcement action and be additional work for the appeals tribunals. We are, however, putting appropriate safeguards in place by providing appeal rights based on those matters that magistrates can currently consider when making a court liability order. The appeals tribunal will have the opportunity to question whether the person is liable, whether they have failed to pay an amount of child maintenance and if the amount of the liability order exceeds the amount of maintenance owing. It is important to remember that a liability order is made because the non-resident parent has failed to pay. If we give them another opportunity to challenge the maintenance calculation, it will be another opportunity to delay payment for their children. We know, sadly, that some will use every opportunity to do that.
Finally, on the Government’s Amendment No. 219, following concerns raised over the recovery of historic debt as this Bill has progressed through the other place, we are introducing this amendment to ensure that all new and existing powers to collect child maintenance can be used on debts of any age. We have previously amended regulations so that there is no longer a six-year time limit for an application for a liability order on debt that accrued on or after 13 July 2000. However, some debt had already reached six years of age before then and so is still subject to a limitation period. We estimate that this pre-July 2000 debt accounts for more than £700 million. It can currently be collected only through a deduction-from-earnings order and not through court-based recovery methods.
The amendment ensures that, when the provision for the new administrative liability order comes into force, the same enforcement mechanisms—liability orders, deduction orders, deduction-from-earnings orders—can be available for use on all child maintenance debt regardless of the date on which it accrued. However, the new administrative liability order will not be used in relation to pre-July 2000 debt as a matter of course. Because this debt was previously time-barred as far as court action was concerned, it will be important to consider in each case whether enforcement action is justified.
I shall speak as briefly as I can to the issues raised under clause stand part and deal first with Clause 26 and curfew orders. As both my noble friend Lady Hollis and the noble Lord, Lord Kirkwood, recognised, those are at the extreme end of our enforcement process, but they are important. Clause 26 enables the Child Maintenance Enforcement Commission to make an application to the court for a curfew order where the non-resident parent wilfully refuses or culpably neglects to pay maintenance. Curfew orders are intended to serve as an effective alternative to committal. They should not interfere with the non-resident parent’s ability to earn a living and should allow him or her to continue with any pre-existing contact or custody arrangement with the children. That is an important point. At the same time, however, they will provide a powerful incentive to co-operate.
Furthermore, it is envisaged that the use of such powers will contribute to changing the culture of non-compliance and demonstrate that the commission will take strong measures to deal with it swiftly. The length of the curfew order will be at the discretion of the court. Electronic monitoring has been operating throughout England and Wales since 1999 and is run by private companies. About 15,500 persons are subject to electronic monitoring at any one time; about 58 per cent of people complete a curfew order successfully without any enforcement action being applied.
It will certainly generally be the case; we want to use the whole panoply of enforcement action available before we reach the orders. I am not sure that I could say that that will be the situation in every case. In any event, our estimate is that there may be 700 to 750 cases per year maximum to which the orders might apply, so it is a relatively small percentage of the likely total case load of the CSA. It would be pretty much a last resort, but preferable to committal proceedings, where there are the issues that I outlined, such as the ability to continue with contact arrangements. I have perhaps said enough about why we think that those are important provisions and why we want to retain them in the Bill.
The noble Lord also referred to committal to prison under Clause 27. The Child Support Agency can already apply to the court seeking to have a non-compliant non-resident parent committed to prison for a maximum of six weeks. The clause simply restructures the existing provisions to be consistent with other provisions in the Bill. The clause will aid the effective operation of the existing committal provisions and we certainly want it to stand part of the Bill.
On disqualification from driving, the CSA can currently apply to the court to seek to have the non-resident parent disqualified from holding or obtaining a driving licence for up to two years. Again, the changes to the driving disqualification panels align amendments to the existing committal orders, the new legislation on curfew orders and the administrative power to disqualify the non-resident parent from holding or obtaining travel authorisation. That is an important part of our armoury to ensure that we have effective compliance.
Having said all that, I ask noble Lords not to press the amendments, with the exception of offering support for the government amendment, for the reasons that I have outlined.
Does not my noble friend agree that one difficulty with the CSA, unlike other fields where debt is owed, is that you cannot go for a lot of conventional remedies to collect debt—for example, naming and shaming—precisely because there are named and known children involved? It is quite hard to get enforcement procedures that bear on the parent when he does not have property but that do not stigmatise the child. With a lot of debt collection, you can use an element of naming and shaming, public display and so on. It is precisely to protect the children that you cannot do that in this case, which is why we are short of penalties. That is why my noble friend is right to say that, although the provisions are there as a last resort, they need to be there.
In withdrawing the amendment, I certainly agree with the noble Baroness, Lady Hollis, that there are very few effective sanctions for many of the people whom we have been talking about and therefore I say to the noble Lord, Lord Kirkwood, that it is a great mistake to do away with any of them. I may be straying into the next group of amendments by saying this, but that is a different matter from saying that the way in which the sanctions are triggered is necessarily correct in the Bill. However, the sanctions most certainly should be used.
I accept some of the points made by the Minister. I recognise that buried somewhere in the Bill is the fact that there will be no application for the removal of a driving licence if it would affect an individual’s earning capacity. But there are other sanctions that could affect earning capacity, which is why we tabled the amendment. I shall look carefully at what the Minister has said in response.
The positive point made by the Minister was that it is quite right that CMEC should engage with the parent with care. What he apparently does not accept is that the parent with care should trigger that engagement. I must ask why not. We are not moving at the pace of an E-type Jaguar today, so perhaps the noble Lord would like to consider the question and come back to me in writing.
In that case, I have pleasure in begging leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Schedule 5 [Maintenance calculations: transfer of cases to new rules]:
[Amendments Nos. 104 to 107 not moved.]
Schedule 5 agreed to.
Clause 19 [Use of deduction from earnings orders as basic method of payment]:
108: Clause 19, page 8, line 27, leave out “magistrates’ court (or, in Scotland, to the sheriff)” and insert “tribunal”
The noble Lord said: I shall speak also to Amendments Nos. 109, 110, 165, 168, 169 and 173. These are all probing amendments, pure and simple. As I said just now, we must be satisfied that the appropriate legal place is used for each of these sanctions, whether in the case of the original application or, in the case of these amendments, in the right of appeal. They change the place to which a person may have a right of appeal from a magistrates’ court or a sheriff court in Scotland to a tribunal. The latter is a panel of much narrower judicial scope and typically has a specific remit. It can make more informed and sensitive decisions when dealing with fragile child support negotiations and demands. The tribunal also provides an important benefit in that it creates an alternative route from that of the magistrates’ court and thus prevents everyone with a grievance clogging up that court system. I do not know whether the Minister has had complaints about that recently, but certainly complaints are made to us quite regularly that the magistrates’ courts are overstretched. We must be absolutely certain that their use is appropriate in every case when we consider the various sanctions and mechanisms for sanctions in the Bill. I beg to move.
The amendments give us the opportunity to discuss the appeals route for deduction from earnings orders when used as a basic method of collecting child maintenance. Amendments Nos. 108 to 110 apply specifically to appeals against a decision by the commission that there is no good reason not to apply a deduction from earnings order as a basic method of collection. They would mean that the appeals would be heard by a tribunal and not by the magistrates’ court, or, in Scotland, by the sheriff, as currently proposed in the Bill.
Where regulations are made allowing deduction from earnings orders as a basic method of collection, they will include provision for such an order not to be made where there would be good reason not to do so. In deciding the most appropriate method of collection, the commission will consider any representations from the non-resident parent. Matters to be taken into account when considering what constitutes a good reason will be set out in such regulations, but it is envisaged that they will be related primarily to concerns about privacy issues. An example might be where a non-resident parent is employed in a family business and wishes to keep any details of child maintenance private. The intention is for the commission to pilot the approach of using deduction from earnings orders as a basic method of collection. The criteria for what constitutes a good reason will be further developed from lessons learnt from the pilot if this policy is to be fully rolled out.
Deduction from earnings orders, as they currently operate, are part of the Child Support Act 1991. There are appeal routes to a magistrates’ court, or, in Scotland, to the sheriff. There is no evidence that this system does not work effectively or is inappropriate. We have considered whether to make different arrangements for this type of appeal when deduction orders are used as a basic method of collection, but we are confident that magistrates, with their wide range of experience examining decisions and evidence, are well equipped to deal with appeals of this nature, and we see no good reason why these appeals should go elsewhere. We have therefore decided to adopt a consistent approach on appeal routes for deduction from earnings orders and to continue with the magistrates’ courts, and with the sheriff in Scotland.
Amendments Nos. 165, 168, 169 and 173 deal with the route of appeal for deduction orders—in this case, lump sum deduction orders. We considered deduction orders further following debate in the other place, and as a result I plan to table government amendments that increase the scope of these orders. As part of this, we have reconsidered the appropriate routes of appeal.
In consultation with the Ministry of Justice, we have concluded that in England and Wales, the county courts are best placed to deal with financial matters such as these. This allows us to benefit from the extensive experience of the county courts in making third-party debt orders. In addition, we recognise the potential complexity of joint account deduction orders, so we intend those appeals to be heard in the High Court. To allow for further consultation with the Scottish Executive to mirror these changes in Scotland, however, we will set out the specific route of appeals in regulations.
I hope that that explanation was sufficient, and that the noble Lord will be able to withdraw the amendment.
I am very grateful. I think that I am satisfied, because I was trying to discover whether there had been a thorough examination of this subject in the steps leading up to the Bill. Quite clearly, there has been. The Minister mentioned a future government amendment on this subject. I assume that that is not the one that we are about to discuss but one that he will table on Report. Am I correct?
Clause 21 [Current account deduction orders]:
111: Clause 21, page 9, line 34, leave out “a current” and insert “an”
The noble Lord said: I speak also to Amendments Nos. 112, 117, 118, 120 to 125, 127 to 134, 136, 138, 139, 142 to 144, 146, 148, 150, 152 to 154, 156, 157, 159 to 164, 166, 167, 170 to 172, and 214. This series of government amendments, which touch on Clauses 21 and 22 and Schedule 7, relates to deduction orders. Before dealing with the specifics I want to take a moment to reflect on the importance of deduction orders as a whole and give the Committee a taste of how I expect them to be applied.
At present, the first action the Child Support Agency can take to collect child maintenance from a non-compliant non-resident parent is to impose a deduction from earnings order. Where this is not possible or proves ineffective, the next avenue is enforcement through the courts. Orders for deductions from accounts will provide the commission with a further quick and effective method of ensuring child maintenance reaches those to whom it is due. They will come in two forms.
The regular deduction order can require financial institutions to remove money from an account on a regular—normally monthly—basis. That can be in respect of ongoing maintenance, arrears or both. Lump sum orders will operate by first requiring the freezing of an amount up to the maintenance arrears. That will allow for representations to be made as to why the specified lump sum should not be removed from the account, but at the same time it will protect the sum from being moved. Once a final order is made it will operate to remove the amount due in a single deduction. However, if there are inadequate funds in the account the order can stay in force and be used against future deposits.
I know that the Committee will already be aware that during debate in the other place, the Government accepted that there would be a benefit to revisiting the reach of deduction orders. We have consulted widely with the finance industry as well as across government, and we accept the current drafts are too cautious and leave unacceptable loopholes. So we have removed most of the exclusions from the face of the Bill.
That said, we recognise that removing money administratively is a very serious step to take. This is particularly the case when other parties may be involved, which is why we feel we must ensure that joint accounts are specifically safeguarded. Similarly we must think very hard before putting a non-resident parent’s business at risk. With this in mind, while we have removed exemptions from the face of the Bill, we will use secondary legislation to limit the use of joint, and certain business, account deductions. However, if over time it is apparent that moneys are being diverted into these accounts to avoid a deduction order being imposed—that is, if we have evidence to suggest that non-resident parents are organising their finances to avoid these provisions, and hence their responsibilities—we will come back with affirmative secondary legislation to close loopholes.
We have also considered the effect of lump sum deduction orders specifically on businesses of non-resident parents. It is not our intention to apply such orders to those accounts that are used solely for the purpose of running a business. We feel that if used on such accounts, the process of freezing funds to impose lump sum deduction orders could put too great a strain on a business. That could jeopardise the income of the non-resident parent and his or her ability to pay maintenance. So, again, these accounts will be excluded by regulation.
In recognition of the significance of these measures, we intend that appeals against deduction orders will be heard, as I have intimated, by the county courts, with the exception of appeals against joint account deductions, which will be heard by the High Court. We continue to consult the Scottish Executive to determine the appropriate route for such appeals in Scotland. In addition to these changes, we have also ensured that the making of regulations providing for rights of appeal is mandatory. This further demonstrates our commitment to safeguarding the rights of the individual while addressing the need to ensure child maintenance is collected.
In brief, the extended remit of regular and lump sum deduction orders will allow such measures to be taken against funds held in deposit, current and business accounts held in sole names. It will also allow for such deductions from joint accounts but only where regulations have been made for that. This will significantly extend the ability of the commission to collect maintenance from those who currently make it difficult to do so.
I hope the Committee will be able to support these amendments. I beg to move.
This is a gigantic group of amendments, covering releases offered from bank accounts which may be either ongoing or lump sum. Indeed, they fall rather neatly into two halves. If CMEC is to have this power, any account may be appropriate in certain circumstances. I originally thought that, by removing the word “current” in Amendments Nos. 111 and 112, the Minister was doing just that. However, as he said, further examination shows that the first half of Amendment No. 117 pushes the decision on which account is appropriate into secondary legislation in new Section 32(3A)(b). That pricked my interest, because delay is not necessarily the right thing to do. I assume that this statutory instrument—or series of statutory instruments, as appropriate—will produce the safeguards the Minister has been talking about. However, will current accounts be included or excluded? That is a fair question.
On Amendment No. 120, the credit in a joint account clearly belongs to all the account holders. Would subsection (5)(a) not be better expressed by referring to “account holder or holders”? I suggest this as a simplifying drafting amendment. Would that not cover all types of account, whether held by a single person or group of people? That is appropriate, because Amendment No. 121 says that all the account holders must be informed that money is to be withdrawn from the joint account due to the activities—in this case, the non-payment of maintenance—of one of them. The Minister clearly believes that this will put added pressure on the defaulter because the others will complain to him immediately. In general, he must be right. However, what about the non-resident parent in a new relationship, with or without children, with a joint account? Is it not likely that the other account holder—the new parent with care, although in this case it is a couple—will object strongly to the money being withdrawn? Would this not add substantially to the number of appeals?
Amendment No. 124 adds to the pressure, as the deposit holder is allowed to take fees as it would for any other standing order. I assume that the Minister envisages that these amounts from the various accounts would be taken by standing order. The other account holders would be able to get at the defaulting non-resident parent in question. Amendment No.125 compounds this. As far as Amendment No. 127 goes, why is the deposit taker himself being allowed to go to appeal? I simply do not understand that.
In Amendment No. 130, it is not appropriate to have a may/shall debate; only comment that if all these chances for the withdrawal of money from accounts are not in the Bill, they must be in the statutory instrument. Amendment No. 134 is a sensible provision defining the parameters of the statutory instrument, although new subsection (1A)(a) is perhaps a little vague and my earlier comments apply.
As far as I can see, all the new provisions in Clause 21 are duplicated in amendments to Clause 22, as I said at the beginning, which covers lump sum deduction orders, so the same questions apply. To save time, I am happy to allow the Minister’s answer to cover both clauses, unless he wants to give one that is pertinent to one clause and not to the other, although I doubt it.
Amendment No. 156 deserves comment. It would be quite wrong if the account were to be stripped by the other account holder, and I hope that these two long amendments will prevent that. However, seven days’ grace is given before the maintenance due starts to be paid. This will give time for asset stripping so what will happen then, especially if it is done by the non-resident parent? Is this to be a criminal offence?
I am afraid I do not understand the reason behind Amendment No. 164 and the removal of proposed new subsection (4), or, indeed, proposed new Section 32G(9). It may be my inattention to detail but why is it still needed? Is it because it duplicates earlier amendments? The same question applies to proposed new subsection (7) on page 16 in Amendment No. 167. I shall have to study the rationale for the other amendments but I hope it will not be necessary to return to this at a future stage of the Bill.
For the avoidance of doubt, I am wholly in agreement with the general thrust of all the amendments. However, I do not understand all of the detail and I should like to study what the Minister has said. In addition—I do not know whether he made any reference to this in his earlier remarks—in relation to both the current account and the lump sum deduction orders, the proposed regulations in Amendments Nos. 117, 134 and 156 contain caveats which state that regulations will specify that an order cannot be made in respect of an account of a prescribed description. As that applies to both current account and lump sum deduction orders it would be helpful—the Minister may have glancingly referred to this earlier—if the Minister could let me know, if not today then at some other stage, exactly what those exclusions were designed to try to catch. Otherwise they take away the rationale for my later Amendments Nos. 115 and 174. I am wholly in agreement with the general thrust of these amendments.
I shall try to respond to as many of those points as I can. The noble Lord, Lord Skelmersdale, raised many detailed points and I shall need to read the record and respond more specifically on some of them.
On the issue of removing the term “current account” from the text, this is because, when we thought about it, focusing only on current accounts was not very helpful, particularly as these days a number of people will have deposit accounts, investment accounts, current accounts and moneys swept between them. It was not potentially going to catch very much. This caused us to recast the arrangements and to differentiate not so much in terms of accounts by and large, but between regular deductions and lump sum deductions.
Regular deductions are those which are likely to be taken monthly. They could be related to arrears as well as current liabilities, but they would be taken routinely. Obviously there are different considerations in respect of lump sum deductions, which touch upon arrears. That is the basis on which this is structured.
I do not want to go into any more detail at this point, but surely with the lump sum deductions, as the system does not allow the account to go into negative equity, as it were, there may well be a case where you take several lump sums from the same account over a period, in which case they would be fairly regular deductions.
I do not think anything proposed here would preclude more than one go at a lump sum. But there is a distinction between them. If there is a lump sum which deals with arrears, and then arrears subsequently build up again, another process for another lump sum would be perfectly possible.
The noble Lord is quite right to say that there is a limit in these arrangements that states that the account cannot go overdrawn. But you can have more than one bite at the lump sum; you can take it in tranches when there is funding in the account. Also, of course, the first stage of the lump sum process is a freezing of the accounts. This at least keeps the accounts whole so that the assets cannot be dissipated very quickly. Although a process may be under way, that does not preclude alienating the assets in the interim. But the processes being administrative, they should be speedy and limit the scope for that.
I was going on to explain why some of the limitations are in regulations and why we need to reflect on them in relation to lump sum deductions, particularly on business accounts. We are not proposing to start with business accounts because if a lump sum was taken from a business account it could have quite a significant impact on that business, particularly if there was a freezing of the resources in that account. It could have all sorts of ramifications for the wages bill, for dealing with suppliers and for the survival of the business. So that is quite a difficult one.
The same considerations do not arise with the protections that you need when accessing other accounts for regular payments. We plan to continue the current kinds of constraints where—for example, for deductions from earnings orders—you cannot take more than 40 per cent of a person’s net income. So there is a limit on what can be taken in any event. Obviously, it is more likely that that kind of constraint would be aligned with what routinely goes into a business account if it is reflective of income.
There are difficult issues around joint accounts, particularly in the kind of situation to which the noble Lord referred, where you have an NRP with a new partner and they have a joint account. Sometimes the past relationships and past obligations are not necessarily known and the extent to which the new partner would want to share resources in that joint account may raise some issues. When we get to those regulations we will need to think them through in some detail.
On deductions from earnings orders, it is not only the bank accounts where money is held that can be accessed; potentially, money held by accountants and solicitors on behalf of individuals can be accessed as well.
The noble Lord, Lord Kirkwood, asked which accounts might be excluded. These may include accounts such as trust funds where the non-resident parent is not entitled to the moneys held within the account. That is an example of the kind of account that might be excluded.
I am conscious that I have dealt with only some of the quite detailed points that have been raised. I should like to read the record and revert in more detail so that noble Lords are satisfied. Obviously what we are trying to do here is to add significantly to our powers of enforcement, particularly, following on from the point raised by my noble friend earlier, in view of how difficult it is in some circumstances to reach NRPs who will not pay.
I am most grateful. As the Minister has not answered all the points and he will have to write to me, perhaps I may put a thought into his mind. As I understand the situation proposed, there is a leeway of seven days before the operation starts. In these days of electronic transfer of money and so on, there is a potential difficulty. The noble Lord is shaking his head. Have I got it wrong?
I should point out that if Amendment No. 112 is agreed to I shall not be able to call Amendment No. 113.
112: Clause 21, page 9, leave out lines 35 to 37
On Question, amendment agreed to.
[Amendment No. 113 not moved.]
114: Clause 21, page 9, line 40, leave out “the account” and insert “any account held by that person”
The noble Lord said: This is by way of a slight parliamentary trick to allow me to say what I want to say, the first amendment in this group, Amendment No. 113, having been pre-empted. In moving Amendment No. 114, I shall speak also to Amendments Nos. 115 and 116, 119, 126, 135, 137, 140, 141, 145, 147, 149, 151, 155 and 158. All the amendments in this group enforce limits on the commission and narrow its broad parameters into what I hope are specifics. The need for such amendments suggests once again how the Government these days will shy away from including any detail on the face of legislation, thus allowing themselves a free rein when making secondary instruments—not for the first time during our proceedings on this Bill. I do rather object to that. A large number of these amendments are drafting amendments intended to define the proposals made in the Bill more strictly. Thus “the account” will become,
“any account held by that person”,
and “third party” becomes “licensed deposit taker”. In every case that I have used the phrase “licensed deposit taker”, I am not absolutely sure that that is what the words “third party” actually mean in the Bill. It is confusing to use the same word or phrase in totally different contexts. Precision is important because without it, room is created for error and confusion, which could ultimately impact negatively on the child, something we all want to avoid.
Amendments Nos. 119 and 126 would ensure that the Bill denies the non-resident parent the opportunity for malpractice. Has the Minister considered that a non-resident parent may seek to avoid paying his child maintenance fees by transferring his account to another bank? I have just commented briefly on the electronic transfer of money, so perhaps he would like to consider that at the same time. At the moment the transfer happens, the money is lost to the system so far as CMEC is concerned. I have proposed the former amendment to prevent any Houdini tricks and the latter to consider that this might be a circumstance in which an application may be made to the commission for it to review an order.
I turn now to a more detailed examination of Amendment No. 181. This is a provision to safeguard against the possibility that the actions of CMEC could restrict parents from fulfilling their financial responsibilities to their child. The Bill should do everything possible to facilitate parents to provide sufficiently for their offspring; it should never hinder the ultimate objective. Noble Lords will be aware that CMEC’s power to confiscate a driving licence is one that the CSA currently holds. In relation to my earlier argument, I must first welcome the fact that a confiscation would occur only after recourse to the courts. I am not opposed to penalising errant parents who refuse to meet their responsibilities—
Perhaps I may start with Amendment No. 135, which seeks not to exclude deduction orders from being used against accounts that can be used only partly for business purposes. In light of the government amendment, of course, this amendment will no longer be appropriate, as the amended clauses will now remove such exclusions. Following on from that, Amendment No. 114 also seeks to extend the scope of deduction orders to all accounts. As we have made clear, we intend to expand the remit of deduction orders, but we do not think it appropriate from day one for deduction orders to be used on every type of account. As I outlined earlier, we would like to see accounts such as those held by more than one person for the purposes of business initially excluded by secondary legislation.
I hope noble Lords will agree that although increasing the remit of deduction orders in the Bill is a positive way to enable the commission to collect more maintenance, it is important to allow sufficient opportunity to consider carefully how far that remit should be extended. I trust that this also addresses the issue raised by Amendment No. 115, which seeks to expand the current account deduction orders to any joint trade or business account.
Amendments Nos. 137, 140, 141, 144, 147, 149 and 155 would prevent lump-sum deduction orders being used in relation to anyone other than licensed deposit takers. During consideration of this group of amendments, we have been unable to find any reference to licensed deposit takers in current legislation. I think that the term used to exist in old banking legislation, but went out in the mid or late 1980s. As a result, we are not quite sure how critical it is.
The amendment could be used to open loopholes or to encourage non-compliant parents to lodge their money with people who are not covered by the term “deposit taker”. We would like to prescribe others who are likely to hold money on behalf of the non-resident parent in secondary legislation—an issue that I also touched on earlier. We are currently further investigating those funds not held in accounts that might be prescribed for the purposes of lump sum orders. However, the amendment would mean money held on behalf of the non-resident parent by, for example, lawyers and accountants would be inaccessible to the commission. That was probably not intended, but it would be the import of the amendment.
On Amendments Nos. 119 and 151, I assure noble Lords that in both instances the clauses already achieve what the amendments strive for in that there is already a power to include in regulations a requirement on the deposit taker to provide details of when an account is closed. Indeed, the banks have an obligation to notify the commission if the NRP closes the account or opens other accounts, where that information is available to the banks.
In the case of a lump-sum deduction order, the greatest amount at which the order will be set is the amount of arrears stated when the order was first made. It cannot be increased beyond that amount and is intended to be collected in one payment rather than over a period. However, it is acknowledged that the order will continue where there is an insufficient amount available to be deducted in that one payment. Again, we touched on that earlier.
Amendment No 126 would remove the power of the Secretary of State to provide in regulations for the circumstances in which a request may be made for a review of a deduction order. It is worth noting that this particular subsection is extended as part of the Government’s amendments. It now includes a regulation-making power to provide a right for the parties affected by an order imposed, including joint account holders, to request a review. This is not an appeal.
The amendment would allow regulations providing for the order to be varied, but only on the initiative of the commission. It would not allow for an application for a review by the non-resident parent. At this stage, we envisage that the right to request a review will be available in cases of hardship or a significant change of circumstances. We are however happy to hear views on the appropriate grounds for review. All the regulations relating to this clause will be subject to the affirmative procedure.
Finally, Amendment No. 116 seeks to require the commission to impose an order that applies to maintenance arrears, to ongoing maintenance, or to both. In reality, however, these are the only three options. The current drafting is permissive in recognition that we give the commission the option to use regular deduction orders to collect both past and future maintenance. I therefore urge the noble Lord to withdraw the amendment.
Two points arise from what the Minister has said. First, not all the amendments are in my name. Amendment No. 115, for example, is not. It is in the name of the noble Lord, Lord Kirkwood, and I do not know whether he wants to speak. Secondly, the fact that there may be no definition of a licensed deposit holder in legislation is no bar on me coining a term for the purposes of an amendment. I still find the idea of the third party extremely confusing. Perhaps the Minister might look at that again. If closing one account and opening another took place in the same financial institution, that would be obvious, and CMEC would be informed if the order had that effect, which I am sure it will. However, if one transfers from, let us say, Barclays to NatWest, that is a totally different matter, and the defaulting non-resident parent would continue to be in default of their obligations until the system caught up with them. That is not a very happy arrangement.
I shall reflect on the drafting, but I have tried to do battle with parliamentary counsel in the past and invariably lost. If there was a transfer from one bank to another, the transferring bank would generally know to whom the money was going. That would not be the case if someone withdrew the readies and then deposited them in another bank—or at least the first destination on the transfer, if not the final destination.
117: Clause 21, page 10, line 11, at end insert—
“(3A) An order under this section—
(a) may not be made in respect of an account of a prescribed description; and(b) may be made in respect of a joint account which is held by the person against whom the order is made and one or more other persons, and which is not of a description prescribed under paragraph (a), if (but only if) regulations made by the Secretary of State so provide.”
118: Clause 21, page 10, line 13, leave out “current”
On Question, amendments agreed to.
[Amendment No. 119 not moved.]
120: Clause 21, page 10, line 20, leave out “account-holder in the”
121: Clause 21, page 10, line 25, at end insert “; and
( ) if the order is made in respect of a joint account, the other account-holders.”
122: Clause 21, page 10, line 38, at end insert—
“32AA Orders under section 32A: joint accounts
(1) Before making an order under section 32A in respect of a joint account the Commission shall offer each of the account-holders an opportunity to make representations about—
(a) the proposal to make the order; and(b) the amounts to be deducted under the order, if it is made.(2) The amounts to be deducted from a joint account under such an order shall not exceed the amounts that appear to the Commission to be fair in all the circumstances.
(3) In determining those amounts the Commission shall have particular regard to—
(a) any representations made in accordance with subsection (1)(b);(b) the amount contributed to the account by each of the account-holders; and(c) such other matters as may be prescribed.”
123: Clause 21, page 11, line 6, leave out “a person’s credit in a current” and insert “the credit of an”
124: Clause 21, page 11, line 11, leave out from “deposit-taker” to end of line 13 and insert “at which an order is directed to deduct from the amount standing to the credit of the account specified in the order a prescribed amount towards its administrative costs before making any deduction required by section 32A(5)(a);”
125: Clause 21, page 11, line 15, after “made” insert “(and, in the case of an order made in respect of a joint account, to the other account-holders)”
On Question, amendments agreed to.
[Amendment No. 126 not moved.]
127: Clause 21, page 11, line 32, leave out from “which” to “order” in line 33 and insert “the deposit-taker at which an order is directed, the person against whom the order is made and (in the case of an order made in respect of a joint account) the other account-holders may apply to the Commission for it to review the”
128: Clause 21, page 11, line 48, leave out “current”
129: Clause 21, page 11, line 50, leave out “current”
130: Clause 21, page 12, line 1, leave out “may” and insert “shall”
131: Clause 21, page 12, line 2, leave out “magistrates’ court (or, in Scotland, to the sheriff)” and insert “court”
132: Clause 21, page 12, line 8, leave out “or (as the case may be) the sheriff”
133: Clause 21, page 12, line 13, leave out from “of” to end of line 15 and insert “the court to which the appeal under the regulations lies”
On Question, amendments agreed to.
Clause 21, as amended, agreed to.
Clause 22 [Lump sum deduction orders]:
134: Clause 22, page 12, leave out lines 32 to 45 and insert—
“(1) The Commission may make an order under this section if it appears to the Commission that a person (referred to in this section and sections 32E to 32G as “the liable person”) has failed to pay an amount of child support maintenance and—
(a) an amount stands to the credit of an account held by the liable person with a deposit-taker; or(b) an amount not within paragraph (a) that is of a prescribed description is due or accruing to the liable person from another person (referred to in this section and sections 32E to 32G as the “third party”).(1A) An order under this section—
(a) may not be made by virtue of subsection (1)(a) in respect of an account of a prescribed description; and(b) may be made by virtue of subsection (1)(a) in respect of a joint account which is held by the liable person and one or more other persons, and which is not of a description prescribed under paragraph (a) of this subsection, if (but only if) regulations made by the Secretary of State so provide.(1B) The Secretary of State may by regulations make provision as to conditions that are to be disregarded in determining whether an amount is due or accruing to the liable person for the purposes of subsection (1)(b).”
On Question, amendment agreed to.
[Amendment No. 135 not moved.]
136: Clause 22, page 13, line 2, after “the” insert “deposit-taker or”
On Question, amendment agreed to.
[Amendment No. 137 not moved.]
138: Clause 22, page 13, line 2, at end insert—
“( ) if made by virtue of subsection (1)(a), shall specify the account in respect of which it is made; and”
On Question, amendment agreed to.
139: Clause 22, page 13, line 5, leave out from “32E” to end of line 17
On Question, amendment agreed to.
[Amendments Nos. 140 and 141 not moved.]
142: Clause 22, page 13, line 28, after “the” insert “deposit-taker or”
143: Clause 22, page 13, line 29, at end insert “; and
( ) if the order is made in respect of a joint account, the other account-holders.”
144: Clause 22, page 13, line 31, after “the” insert “deposit-taker or”
On Question, amendments agreed to.
[Amendment No. 145 not moved.]
146: Clause 22, page 13, line 39, after “the” insert “deposit-taker or”
On Question, amendment agreed to.
[Amendment No. 147 not moved.]
148: Clause 22, page 14, line 9, after first “the” insert “deposit-taker or”
On Question, amendment agreed to.
[Amendment No. 149 not moved.]
150: Clause 22, page 14, line 10, after “directed;” insert—
“( ) if the interim order was made by virtue of section 32D(1)(a), shall specify the account specified in the interim order;”
On Question, amendment agreed to.
[Amendment No. 151 not moved.]
152: Clause 22, page 14, line 13, after “specified” insert—
“( ) ”
153: Clause 22, page 14, line 15, at end insert “; and
“( ) if the order is made in respect of a joint account, shall not exceed the amount that appears to the Commission to be fair in all the circumstances.(3A) In determining the amount to be specified in an order made in respect of a joint account the Commission shall have particular regard—
(a) to the amount contributed to the account by each of the account-holders; and(b) to such other matters as may be prescribed.”
154: Clause 22, page 14, line 26, after “the” insert “deposit-taker or”
On Question, amendments agreed to.
[Amendment No. 155 not moved.]
156: Clause 22, page 14, line 27, at end insert “; and
( ) if the order is made in respect of a joint account, the other account-holders.”
On Question, amendment agreed to.
157: Clause 22, page 14, line 28, leave out from beginning to end of line 32 on page 15 and insert—
“32EA Orders under sections 32D and 32E: freezing of accounts etc.
(1) During the relevant period, an order under section 32D or 32E which specifies an account held with a deposit-taker shall operate as an instruction to the deposit-taker not to do anything that would reduce the amount standing to the credit of the account below the amount specified in the order (or, if already below that amount, that would further reduce it).
(2) During the relevant period, any other order under section 32D or 32E shall operate as an instruction to the third party at which it is directed not to do anything that would reduce the amount due to the liable person below the amount specified in the order (or, if already below that amount, that would further reduce it).
(3) Subsections (1) and (2) have effect subject to regulations made under section 32EC(1).
(4) In this section “the relevant period”, in relation to an order under section 32D, means the period during which the order is in force.
(5) In this section and section 32EB “the relevant period”, in relation to an order under section 32E, means the period which—
(a) begins with the service of the order on the deposit-taker or third party at which it is directed; and(b) (subject to subsection (6)) ends with the end of the period during which an appeal can be brought against the order by virtue of regulations under section 32G(6).(6) If an appeal is brought by virtue of the regulations, the relevant period ends at the time at which—
(a) proceedings on the appeal (including any proceedings on a further appeal) have been concluded; and(b) any period during which a further appeal may ordinarily be brought has ended.(7) References in this section and sections 32EB and 32G to the amount due to the liable person are to be read as references to the total of any amounts within section 32D(1)(b) that are due or accruing to the liable person from the third party in question.
32EB Orders under section 32E: deductions and payments
(1) Once the relevant period has ended, an order under section 32E which specifies an account held with a deposit-taker shall operate as an instruction to the deposit-taker—
(a) if the amount standing to the credit of the account is less than the remaining amount, to pay to the Commission the amount standing to the credit of the account; and(b) otherwise, to deduct from the account and pay to the Commission the remaining amount.(2) If an amount of arrears specified in the order remains unpaid after any payment required by subsection (1) has been made, the order shall operate until the relevant time as an instruction to the deposit-taker—
(a) to pay to the Commission any amount (not exceeding the remaining amount) standing to the credit of the account specified in the order; and(b) not to do anything else that would reduce the amount standing to the credit of the account.(3) Once the relevant period has ended, any other order under section 32E shall operate as an instruction to the third party at which it is directed—
(a) if the amount due to the liable person is less than the remaining amount, to pay to the Commission the amount due to the liable person; and(b) otherwise, to deduct from the amount due to the liable person and pay to the Commission the remaining amount. (4) If an amount of arrears specified in the order remains unpaid after any payment required by subsection (3) has been made, the order shall operate until the relevant time as an instruction to the third party—
(a) to pay to the Commission any amount (not exceeding the remaining amount) due to the liable person; and(b) not to do anything else that would reduce any amount due to the liable person.(5) This section has effect subject to regulations made under sections 32EC(1) and 32G(2)(c).
(6) In this section—
“the relevant time” means the earliest of the following—
(a) the time at which the remaining amount is paid;(b) the time at which the order lapses or is discharged; and(c) the time at which a prescribed event occurs or prescribed circumstances arise;“the remaining amount”, in relation to any time, means the amount of arrears specified in the order under section 32E which remains unpaid at that time.
32EC Power to disapply sections 32EA(1) and (2) and 32EB(2)(b) and (4)(b)
(1) The Secretary of State may by regulations make provision as to circumstances in which things that would otherwise be in breach of sections 32EA(1) and (2) and 32EB(2)(b) and (4)(b) may be done.
(2) Regulations under subsection (1) may require the Commission’s consent to be obtained in prescribed circumstances.
(3) Regulations under subsection (1) which require the Commission’s consent to be obtained may provide for an application for that consent to be made—
(a) by the deposit-taker or third party at which the order under section 32D or 32E is directed;(b) by the liable person; and(c) if the order is made in respect of a joint account, by any of the other account-holders.(4) If regulations under subsection (1) require the Commission’s consent to be obtained, the Secretary of State shall by regulations provide for a person of a prescribed description to have a right of appeal to a court against the withholding of that consent.
(5) Regulations under subsection (4) may include—
(a) provision with respect to the period within which a right of appeal under the regulations may be exercised;(b) provision with respect to the powers of the court to which the appeal under the regulations lies.”
On Question, amendment agreed to.
[Amendment No. 158 not moved.]
159: Clause 22, page 15, leave out lines 37 to 39
160: Clause 22, page 15, line 39, at end insert—
“( ) as to circumstances in which amounts standing to the credit of an account are to be disregarded for the purposes of sections 32D, 32EA and 32EB;”
161: Clause 22, page 15, leave out lines 42 to 44 and insert—
“(c) allowing a deposit-taker or third party at which an order under section 32E is directed to deduct from the amount standing to the credit of the account specified in the order, or due to the liable person, a prescribed amount towards its administrative costs before making any payment to the Commission required by section 32EB;”
162: Clause 22, page 15, line 45, after “person” insert “(and, in the case of an order made in respect of a joint account, to the other account-holders)”
163: Clause 22, page 16, line 1, after “a” insert “deposit-taker or”
164: Clause 22, page 16, leave out lines 16 to 20
On Question, amendments agreed to.
[Amendment No. 165 not moved.]
166: Clause 22, page 16, line 31, leave out “magistrates’ court (or, in Scotland, to the sheriff)” and insert “court”
On Question, amendment agreed to.
167: Clause 22, page 16, leave out lines 33 to 37
On Question, amendment agreed to.
[Amendments Nos. 168 and 169 not moved.]
170: Clause 22, page 16, line 38, leave out “or (as the case may be) the sheriff”
171: Clause 22, page 16, line 42, leave out “subsections (6) and (7)” and insert “subsection (6)”
On Question, amendments agreed to.
172: Clause 22, page 16, line 45, leave out from “of” to end of line 47 and insert “the court to which the appeal under the regulations lies”
On Question, amendment agreed to.
[Amendment No. 173 not moved.]
174: Clause 22, page 17, line 12, at end insert—
“32I Power to freeze assets
The Commission shall have express power to freeze any and all capital and heritable assets owned wholly or jointly by any non-resident parent against full and final satisfaction of all or any outstanding areas of maintenance.””
The noble Lord said: I shall speak briefly to this amendment as its subject matter may be dealt with in government amendments to come. For the convenience of the Committee, I beg to move.
In speaking to Amendment No. 174, I shall speak also to government Amendments Nos. 175 to 177, 215 and 217. I thank the noble Lord for moving Amendment No. 174, which seeks to give the commission the power to make an administrative freezing order in relation to any real property and capital as soon as a non-resident parent has missed a payment of child support maintenance. As part of this group I propose government amendments which enable the freezing of non-resident parents’ assets. I hope that my explanation of these amendments will cover the point raised.
In Committee in another place, the Government agreed to consider an amendment that would provide the commission with a power to apply, in appropriate circumstances, to the court for a freezing order. Following that consideration, the Government agree that this would be a useful addition to the commission’s enforcement tools. The government amendment would apply where there is evidence that a non-resident parent is about to dispose of assets or remove them from the commission’s jurisdiction with the intention of avoiding payment of child maintenance. It would enable the commission to apply to the court for an order freezing those assets. Indeed, we propose to go one stage further. The government amendment would also enable the commission to ask the court to satisfy the disposition which had already been made. The court will also be given the power to make consequential directions and orders as it sees fit to give effect to the order.
The number of cases in which the commission will have firm evidence of the non-resident parent’s intention to dispose of his assets is likely to be very small; nevertheless, the provisions will enable the commission to act quickly to secure maintenance where such evidence comes to light. It will act as a deterrent to non-resident parents who would otherwise be prepared to enter into transactions to prevent enforcement of their parental responsibilities.
I recognise the sentiment behind Amendment No. 174, but, as I said, it is the same as what I have just outlined. As drafted, the power to freeze assets as described would be a step too far. Not only would there be practical and operational difficulties for the commission, the commission would be given administrative powers comparable to those operated by the High Court but without appeal rights. The noble Lord’s amendment would give the commission the power to make an administrative order which would freeze all assets and it would apply equally to those assets owned wholly or jointly by a non-resident parent and could be applied as soon as a payment for child maintenance had been missed. The freezing order would remain in force until the outstanding arrears had been settled. That provision does not contain any safeguards in relation to the exercise of this power, nor is there a right of appeal, as I said.
In considering whether the proposal is proportionate, we need to bear in mind that the commission will have several additional enforcement options that are not currently available to the Child Support Agency. They include, as we have discussed, lump sum deduction orders, which will allow the commission to freeze and then seize assets from a number of different types of accounts. I believe that the collection and enforcement provisions will go a long way towards meeting the aims behind the noble Lord’s amendment. I invite him to withdraw his amendment and to support the government amendments.
The words “sledgehammer” and “nut” come to mind. I think that our concern was justified and that we were right to raise it, and I thank the Government for including something which seems to have a slightly weightier blow behind it. Having said that, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 22, as amended, agreed to.
175: After Clause 22, insert the following new Clause—
“Orders preventing avoidance
After section 32H of the Child Support Act 1991 (inserted by section 22 of this Act) insert—“32HA Orders preventing avoidance
(1) The Commission may apply to the court, on the grounds that a person—
(a) has failed to pay an amount of child support maintenance, and(b) with the intention of avoiding payment of child support maintenance, is about to make a disposition or to transfer out of the jurisdiction or otherwise deal with any property,for an order restraining or, in Scotland, interdicting the person from doing so.(2) The Commission may apply to the court, on the grounds that a person—
(a) has failed to pay an amount of child support maintenance, and(b) with the intention of avoiding payment of child support maintenance, has at any time made a reviewable disposition,for an order setting aside or, in Scotland, reducing the disposition.(3) If the court is satisfied of the grounds mentioned in subsection (1) or (2) it may make an order under that subsection.
(4) Where the court makes an order under subsection (1) or (2) it may make such consequential provision by order or directions as it thinks fit for giving effect to the order (including provision requiring the making of any payments or the disposal of any property).
(5) Any disposition is a reviewable disposition for the purposes of subsection (2), unless it was made for valuable or, in Scotland, adequate consideration (other than marriage) to a person who, at the time of the disposition, acted in relation to it in good faith and without notice of an intention to avoid payment of child support maintenance.
(6) Subsection (7) applies where an application is made under this section with respect to—
(a) a disposition or other dealing with property which is about to take place, or(b) a disposition which took place after the making of the application on which the maintenance calculation concerned was made.(7) If the court is satisfied—
(a) in a case falling within subsection (1), that the disposition or other dealing would (apart from this section) have the consequence of making ineffective a step that has been or may be taken to recover the amount outstanding, or (b) in a case falling within subsection (2), that the disposition has had that consequence,it is to be presumed, unless the contrary is shown, that the person who disposed of or is about to dispose of or deal with the property did so or, as the case may be, is about to do so, with the intention of avoiding payment of child support maintenance.(8) In this section “disposition” does not include any provision contained in a will or codicil but, with that exception, includes any conveyance, assurance or gift of property of any description, whether made by an instrument or otherwise.
(9) This section does not apply to a disposition made before the coming into force of section (Orders preventing avoidance) of the Child Maintenance and Other Payments Act 2008.
(10) In this section “the court” means—
(a) in relation to England and Wales, the High Court;(b) in relation to Scotland, the Court of Session or the sheriff.(11) An order under this section interdicting a person—
(a) is effective for such period (including an indefinite period) as the order may specify;(b) may, on application to the court, be varied or recalled.”
On Question, amendment agreed to.
Clause 23 [Administrative liability orders]:
176: Clause 23, page 17, line 14, leave out “32H” and insert “32HA”
177: Clause 23, page 17, line 14, leave out “22” and insert “(Orders preventing avoidance)”
On Question, amendments agreed to.
Clause 23, as amended, agreed to.
Clause 24 agreed to.
Clause 25 [Disqualification for holding or obtaining travel authorisation]:
178: Clause 25, page 18, line 16, leave out “make” and insert “apply to the court for”
The noble Lord said: Amendment No. 178 stands in my name and those of my noble friends Lord Skelmersdale and Lady Verma and the noble and learned Lord, Lord Morris of Aberavon.
Clause 25 enables the Child Maintenance and Enforcement Commission to make, without reference to the courts, an order under which a person who fails to fulfil their child maintenance commitments is disqualified from holding a travel authorisation—in other words, a passport or identity card. It is also possible that under Clause 8, which allows CMEC to contract out functions, decisions about passports and identity cards may in due course be made by any employee of a business or organisation. In contrast to these provisions, CMEC must apply to a magistrates’ court to obtain a curfew order or one disqualifying a person from holding or obtaining a driving licence.
The freedom to leave and return to one’s country is recognised as a fundamental right in international law. In its report of 13 December last year, your Lordships’ Select Committee on the Constitution expressed the view that a civil servant or private sector employee should not be given the power to remove a person’s travel documents without reference to a court.
The Minister said in correspondence that most people require travel documents such as a passport on relatively few occasions during the year, such as when taking foreign holidays. Clause 25 states that CMEC, and presumably any employee of one of its sub-contractors in the private sector, must consider before imposing an order whether the non-resident parent needs a travel authorisation in order to earn a living. But there is no mention in the Bill of family illness overseas or, indeed, any other consideration. It was the unanimous view of your Lordships’ Select Committee that confiscating someone’s travel documents is a sufficiently serious step that it should be overseen by the courts.
Under the Bill, an order would not take effect until the end of the 28-day period in which it can be appealed, so the argument that these provisions would enable swifter and more effective enforcement does not run. Indeed, the Select Committee said that it is not obvious that the scheme of the Bill—an administrative decision followed by a right of appeal with suspended effect—will meet the Government’s policy goal of avoiding an inevitably drawn-out court process any better than a straightforward power for CMEC to seek an order from a magistrates’ court.
The amendment will be succeeded at future stages of the Bill by further technical amendments, but its purpose today is to require CMEC to apply for an order from a magistrates’ court which is consistent with the judicial oversight envisaged by other sanctions in the Bill. I respectfully submit it for the consideration of the Committee and I beg to move.
I am grateful to my noble friend Lord Goodlad for tabling this amendment, to which I and my noble friend Lady Verma were only too happy to add our names. Although the withdrawal of a passport can be an effective measure to force non-resident parents to stop neglecting their obligations, it should not be within the competence of the commission to decide on that matter as the Bill proposes. It had not occurred to me that this administrative arrangement might extend to what my noble friend referred to as a “sub-contractor”, and I wonder if he is correct in that. I am sure the Minister will be able to tell us.
The commission is to be set up to enforce parents’ financial obligations to maintain their children. Therefore the administrative liability orders being introduced by the Bill are, on the whole, fully understandable. However, withdrawal of a travel order authorisation goes beyond affecting a person’s financial status and interferes with one of his civil rights: the freedom to travel abroad. That remains the main argument for leaving the decision about a passport withdrawal, along with a driving licence ban and a curfew, to the courts. The reason to do so is that all administrative decisions should have strict, limited and accurate legal bases, while any interference in civil freedoms—of which the liberty to travel is one—should be undertaken under the rules of law which are more complex than a simple administrative scheme would allow. For example, orders are to be made with regard to the rule of proportionality when the court examines whether the damage caused by the civil rights limitation is proportionate to the offence committed. Not only does that mean much more advanced data to be accumulated, but also judiciary skills which are not normally to be found in the possession of civil servants.
I am grateful for the receipt of a copy of the Minister’s letter to the Clerk of your Lordships’ Select Committee on the Constitution. It was extremely helpful, although I sent an email to my noble and learned friend Lord Lyell, who the Minister knows is very interested in this matter, to say, “Methinks the Minister protesteth too much”, and this is why. I am surprised, to start with, that in paragraph four the Minister stated that the commission is well placed to make both that judgment and that of the appropriateness of passport surrender. Why? Since the Child Support Agency performed badly and on many occasions was unable to collect information about the absent parent’s financial status, there is a serious threat that the new body will have neither the adequate capacity to collect the details of the person’s life nor the competence to assess in what ways a passport ban would affect his or her life.
Elsewhere, the letter comments that CMEC staff will have additional training before handling cases. Gosh, will they not need it? They need it just to prepare a case for the courts, but in a case that will almost inevitably be appealed from the word go, they will need it even more. I would assume—again, the Minister will correct me if I am wrong—that that training would be of a lesser sort, as the Bill envisages administrative action.
A point that has concerned all the committees that have examined the matter has been the assumption that a passport authorisation withdrawal has fewer consequences than a driving license withdrawal and can therefore remain an administrative decision, as the letter states in paragraph nine. That is simply an unjustified generalisation. It must be thoroughly recognized in what way a travel ban is going to affect the passport surrenderer’s everyday life, in exactly the same way as the court does before ordering driving licence withdrawal. That is the main reason why the decision on a passport ban, as well as the driving licence, should belong to the courts.
Moreover, the argument presented to defend the position that the passport and driving licence bans have different results is what I believe is called argumento dicto simpliciter, a misleading deduction when the examples given—such as that the passport ban is allegedly not affecting third parties—are used to lead to one general conclusion, when in fact they are too trivial so to do. Opposite examples proving that third parties can be affected by the travel ban exist and can be given, such as going abroad not only for holidays but for serious medical treatment, or sustaining other family links because one of the non-resident parents may well have family abroad—but will not be countenanced.
Paragraph seven of the report of the Select Committee on the Constitution states that the free movement of persons is strongly protected by international law, including the European Human Rights Convention—which of course, thanks to this Government, has been patriated by means of the Human Rights Act. Therefore, the examples of the two non-European countries given in the letter, which operate in a totally different legal system, cannot be applicable.
Paragraph 11 of the letter explains that the main reason for introducing an administrative passport ban is to “take quicker and firmer” action against the non-resident parents for not fulfilling their obligations, whereas paragraph four, to which I have already referred, states that the withdrawal decision will not take effect until the person to be affected has time to appeal. Obviously, in those circumstances, it will defeat its very objective. Does the Minister really believe that anyone placed in the position of an administrative order for the withdrawal of a passport will not appeal? I cannot.
Paragraph 12 does not do the Minister's defence of this disgraceful proposal any good at all. Of course, tackling child poverty is one of the Government's priorities. Although that is clearly right—we have referred to it several times during the course of our debates—there is no link between the smoother flow of maintenance and introducing a passport ban, whether or not achieved administratively. Also, it is claimed in the paragraph that non-payers should understand how serious the consequences of evading their responsibilities may be, but it does not show why exactly an administrative passport ban should result in such greater awareness. The passport ban ordered by the court would just have the same effect. I am not objecting to the introduction of a passport withdrawal per se, but to the inappropriate way of achieving it.
To sum up, administrative travel authorisation withdrawal would be an exceptional way of interfering in civil rights, but I am afraid that the Government's explanations are not yet convincing enough to allow them to put this administrative modus operandi in the Bill. Unfortunately, we are in Grand Committee and neither my noble friend nor I can do anything about it at this stage. However, I observe the threat with which my noble friend concluded his speech, and am in total agreement with him.
There was no reference, in either of the interesting and valid points made, to proposed Section 39B(4) of the Child Support Act in the amendment:
“Before making an order under this section against a person, the Commission shall consider whether the person needs a travel authorisation in order to earn a living”.
The instances quoted by the noble Lords, Lord Goodlad and Lord Skelmersdale, might include, for example, a visit to family overseas on medical grounds or a need for urgent medical treatment and so on. Would the noble Lords be satisfied if my noble friend felt that a possible compromise might be to extend the grounds in new subsection (4) to, for example, take medical grounds into account, rather than to seek to make all such applications go through the courts?
I am grateful to the noble Lord, Lord Goodlad, for tabling the amendment; it was anticipated. It would prevent the commission from administratively disqualifying the non-resident parent from holding or obtaining a travel authorisation, and would require the commission to apply to the court for such an order.
While I acknowledge the concerns of Members of the Committee on this particular provision, I hope that I can convince them that the proposal in the Bill is the right way forward. First, however, I stress that the Government believe that we owe it to children who are not being financially supported to take swift and effective measures which may not always be appropriate to other forms of debt. I am sure that the whole Committee will agree that, when dealing with the hard core of non-compliant non-resident parents, the commission should be allowed to take robust action. We are firmly of the view that the threat of imminent action will be much more potent than the threat of a drawn-out court process. We believe this holds good, despite the fact that the order would not take effect until the time for appealing had expired.
In putting forward this legislation, the Government have investigated what enforcement measures international child support jurisdictions employ. As has been referred to, both the US and Australia make use of a form of administrative passport surrender or travel ban in order to encourage compliance with child maintenance payments. This was highlighted by the Work and Pensions Select Committee in their January 2005 report on the performance of the CSA, which recommended that the department further examine passport removal as a potential child support tool for use in this country. Indeed, that committee had a distinguished chair—whose name escapes me just for the moment.
Based on the experience of those other countries, we are of the view that the administrative disqualification of non-resident parents from holding or obtaining a travel authorisation will deliver fast and effective enforcement against those who have the financial means to pay child maintenance but refuse to do so. We have balanced the risks of doing this administratively with safeguards for the non-resident parent. In addition to the appeal provisions, a number of safeguards exist and have been included in the Bill. They will ensure that this measure is targeted against those who will not, as opposed to cannot, meet their financial obligations to their children.
I also emphasise that, where an appeal has been filed, the order would be stayed—as has been acknowledged—pending the hearing, determination or withdrawal of that appeal. Thus, the person affected would have the opportunity to access an independent and impartial tribunal before any civil right was directly affected by the surrender of the passport. The noble Lord, Lord Skelmersdale, asked me whether I believe that someone would appeal in every instance. I do not think that is necessarily the case; if someone acknowledges that they have the cash and the commission is intent on pursuing collection, that may just be the point at which they do what they should have done previously and cough up.
We have heard a lot about individuals’ civil rights, but what about the rights of children to be properly maintained? What about the obligations and responsibilities of parents? We should bear in mind that if people deliberately delay paying the maintenance that is due, that could have a significant impact on the well-being of their children. The fact that it may take years—many years, in some instances—to collect the cash does not mean that there is ultimately no impact on the children. Many children may be in poverty now because that maintenance is not flowing when it should, and while collecting later may be some comfort, it does not alleviate the problem that arises in the interim.
That might very well be so. We are not talking about this being the only sanction available to CMEC and therefore to the advantage of the parent with care. This is one of a range, two components of which automatically have to go through the courts first. I hope the Minister will come on to that point shortly.
Indeed, I will come on to that. It will also be emphasised that when an appeal has been filed the order will be stayed, so the person affected will have the opportunity to access an independent and impartial tribunal. Additional safeguards include the requirement for the commission to assess the impact on the non-resident parent’s ability to earn a living prior to imposing the order.
The question of health issues was raised, such as when a family member needs to get medical support and treatment outside the country. There is no reason why that could not be taken into account in the determination of the application of this measure. It is not a requirement that the commission does this; it is a discretionary power. It does not need to be written into new Clause 39B(4) of the Child Support Act, but there is no reason why we could not think about emphasising the point. It runs right through the Bill that there is always an overriding requirement to consider the welfare of all children involved.
I stress that the commission must also assess whether the non-resident parent has wilfully refused or culpably neglected to support his or her children. That is the same test as is currently applied by the court when the CSA makes an application for the non-resident parent to be committed to prison or disqualified from driving. We are dealing with situations where the non-resident parent cannot pay. If the individual is so intent on going on holiday or travelling abroad and doing what they want to do, the remedy is in their own hands: they must pay what they should. It rests with them. It is not as though this is a restriction on anyone for life. It is very much in the hands of the non-resident parent, who should fall within the ambit of this provision only where it is clear that they can pay. All they need to do is pay and this is abrogated straight away.
Furthermore, the commission must consider the welfare of any child likely to be affected by the decision, which includes the children of the non-resident parent and members of his or her new family. In order that the commission meets its objective, we need to have a range of provisions that the commission can apply, and it will make clear to non-resident parents early on in the enforcement process that stronger provisions exist and may be used. This measure will be used only after other, lesser measures to recover the outstanding maintenance have been tried but maintenance remains outstanding. Those who seek to deliberately evade their responsibilities to their children must understand the seriousness of their failure to provide their children with financial support.
I realise that the Select Committee on the Constitution raised a number of concerns, and the Government have already issued their formal response. The noble Lord, Lord Skelmersdale, referred to it. In summary, we believe that administrative passport surrender will be an effective form of enforcement and deterrent for the reasons I have set out. I appreciate that the committee has posed legitimate questions about the relative importance of the individual in terms of holding a passport and the fact that such decisions are normally made by judicial determination, but I reiterate that we do not underestimate the important role a passport can play in an individual’s ability to earn a living, and the Bill makes it clear that the commission must consider that before imposing the order. We also argue that the commission is best placed, through its prior dealings with the individual, to make the decision on whether the non-resident parent has shown wilful refusal or culpable neglect to pay maintenance.
I shall expand on that. It is the commission in its dealings or lack of them with the non-resident parent that knows the history of the case, the basis of the assessment, the number of occasions when deduction from earnings orders have been defeated by someone changing their job, and the whole process by which a non-resident parent may have sought to avoid other enforcement mechanisms by prolonging his or her appeal. Under the wider range of enforcement powers, that information will be available to the commission, which will be able to make a judgment on whether the individual is intent on seeking to pay what is due or simply seeking to avoid it. It knows well, from a long track record of dealing with people who are intent on avoiding their obligations, when people are seeking to do that rather than when they cannot fulfil them.
I distinguish that because there are issues around the withdrawal of travel rights from, for example, people involved in soccer hooliganism. The court does that because the court would have been involved in the process of dealing with those people for what they have been up to prior to that. We are dealing here with a situation where the commission has been trying to deal with this individual; it knows their track record and what they have done or not done, so it is best placed to make these judgments—which, at the end of the day, are subject to a right of appeal and a process before the court. There is a balance in all of this, and that balance should rest with the right of children to be maintained by non-resident parents or parents with care. I hope noble Lords will be assured of the merits of this proposed action and feel able to withdraw the amendment.
I thank the Minister for the thoroughness with which he has addressed this issue both in his communications with the Committee and today. I think I can speak for other Members of the Committee in saying that, although it is outwith the terms of the amendment, we yield to no one in our desire to serve the interests of children. I hope he will accept that beyond peradventure.
We will scrutinise with great care what the Minister has said and whether or not it serves the interests of children in terms of the policy of the Bill to have an administrative decision followed by a right of appeal with suspensory effect, which meets the policy goal of avoiding an inevitably drawn-out court process, rather than a straightforward power for CMEC to seek an order from a magistrates’ court. That is an extremely important point and we will look at it carefully. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 179 and 180 not moved.]
Clause 25 agreed to.
Clauses 26 and 27 agreed to.
Clause 28 [Disqualification for driving]:
[Amendment No. 181 not moved.]
Clause 28 agreed to.
Clause 29 [Power to treat liability as satisfied]:
182: Clause 29, page 32, line 26, at end insert—
“(c) make provision for an appeal by a parent with care against any decision taken under this section which in the opinion of the parent with care is inimical to the interests of the qualifying child.”
The noble Lord said: In speaking to the amendment I shall speak also to Amendments Nos. 183 and 212. Under the debt management powers available to the commission, we are trying to ensure that the parent with care has the protection that we would want under the set of circumstances where a power to treat liability as satisfied is being considered. These are probing amendments. Perhaps the Minister would explain the Government’s view of the amendments and say whether they would consider the issues raised.
Amendment No. 183 and the consequential Amendment No. 212 give either parent the right of appeal against a decision of the commission regarding the offset against child maintenance liabilities of another sum paid by the non-resident parent. However, there is some superficial comfort available in the DWP notes on secondary legislation arising from the Bill, which state that the regulations will specify that the parent with care will need to agree to the payment being offset against liability. In the debate in the other place, in the Public Bill Committee, the Minister, Ms McGuire, expressly did not say that. As I understood it, she said that the regulations will specify that the parent with care must have agreed to the other sum being made. She went on to say that it would not be appropriate to seek the parent with care’s agreement for the payment of the offset when they have already agreed to the payment being made in the first place. There may have been some ad libbing that confused the issue, but I picked that up. It seems to contradict what was said and the intention carried in the secondary legislation notes.
This is a potential area of dispute, as I know to my cost from a previous incarnation as a Member of Parliament. The non-resident parent often argues that a particular sum that has been offset has been received by the parent with care, but it was for an item of expense that had nothing to do with child maintenance. That happens quite often.
My contention is that the right of appeal, if at all valuable, should be available to both parents; for the non-resident parent if the commission decides not to offset and to the parent with care who does not accept a determination to offset. That seems to have been rejected in the Public Bill Committee on the basis that it would not be appropriate to allow appeal rights in respect of any discretionary decisions. Providing an appeal right is likely to create a delay and a layer of complication and bureaucracy. That was maintained on 11 October in col. 365 in the Public Bill Committee. My contention is that appeals tribunals exist precisely to allow fresh scrutiny of discretionary administrative decisions. To deny the right of appeal to the parent with care, who stands to lose child maintenance which she is owed and who disputes the said payment by the non-resident parent or the reasons for it, risks, in my view, a potential prima facie breach of Article 6 of the Human Rights Act. It is important to get this ironed out now. There is confusion in my mind about the policy intention and I am still seized of the need to try to secure as much protection as we can for the parent with care in circumstances where power to treat liability as satisfied is being considered by the commission. I beg to move.
These amendments consider in the broadest terms the power of the commission to write off arrears payments and the impact that that power might have on the parent with care. My Amendment No. 186 was tabled to ensure that before making a decision under the proposed new Section 41E(1) of the Child Support Act to,
“extinguish liability in respect of arrears of child support maintenance … the Commission shall consider the welfare of the child or children in respect of whom the arrears are due”.
This is a probing amendment, intended to explore the scope of the commission’s power to write off arrears and to seek confirmation that the welfare of the child or children will be taken into consideration in respect of any regulations made by the Secretary of State when exercising his power under the proposed Clause 41E(2) of the Act. In truth, I am nervous that—
I thank the noble Lord, Lord Kirkwood, for these amendments, which relate to appeal rights in respect of the offsetting provisions in Clause 29. I hope it will be helpful if I first set out briefly how we are intending to operate this provision, which is specifically designed to allow the commission to respond to the concerns and individual circumstances of parents.
The clause has two parts. In the first part we are seeking a power to enable the commission to offset maintenance liabilities between parents of the same children. We envisage that this will occur mainly where a child is living with one parent but later goes on to live with the other. We generally refer to these as “role reversal” cases. If maintenance arrears are due to the first parent with care, the provision will allow the commission to offset them against his or her maintenance liability on becoming the non-resident parent. That will prevent situations that currently occur, where parents complain that they are being chased for maintenance even though the other parent owes them maintenance.
In the second part of the provision, we are providing a power to enable the commission to offset payments made from time to time by the non-resident parent to third parties, against their maintenance liability. That is intended to cover situations where a non-resident parent makes a payment that will be beneficial to the child—for example, an urgent electricity bill—on behalf of the parent with care, perhaps before he is due to pay his maintenance. Without such a provision, where such a payment is made the non-resident parent is still legally required to pay the full amount of maintenance, which means meeting his liability twice. We want to allow the commission to be able to adopt a sensible approach that reflects arrangements agreed between the parents and to offset the payment against the maintenance liability where it is appropriate to do so.
For both parts of the provision, regulations will set out parameters within which the commission can use the power. In respect of payments made to third parties, that will include the types of payment that will be appropriate for offsetting, such as the one-off payment of a utility bill. Most importantly, it will be made clear that the parent with care must have agreed to the payment being made in the first place. It will then be up to the commission to decide whether to offset the payment against the non-resident parent’s maintenance liability. In all offsetting scenarios, the welfare of any children affected by the decision should always be considered.
These amendments seek to afford appeal rights when the commission decides to apply offsetting in these scenarios, and Amendment No. 182 seeks appeal rights in respect of both parts of the provision and only for the parent with care if they believe that the decision is not in the best interests of the qualifying child. Amendments Nos. 183 and 212 seek to provide appeal rights specifically in respect of the offsetting of payments made to third parties, and that no action is taken until sufficient time has elapsed for an appeal to be brought. I must make it clear that before making any offsetting decision, the commission will discuss the implications with both parents and it will consider any representations made, including whether the welfare of their children may be put at risk. We do not believe that it would be appropriate to allow appeal rights in these limited situations which relate to the collection of child maintenance. In making a decision, the commission will be required to balance the needs of both parents and all children affected, and that will include children being cared for by both the parent with care and the non-resident parent.
As with other matters relating to the collection of maintenance payments, if either the parent with care or the non-resident parent is still not happy with the way the commission decides to apply these provisions, they may apply for judicial review of the decision. I know that that is something of a long stop, but I hope that the noble Lord will feel reassured that there is enough protection and engagement along the way to avoid the necessity of strictly technical appeal rights and that there is the opportunity for both parents and, more importantly the children involved, to be fully protected.
I am grateful to the Minister, and his response affords some reassurance. I do not think that a huge number of cases will reach this kind of territory, but there is a weakness in the system. If CMEC has an overriding duty to consult and try to reach agreement, that is fine, but, in the event of a disagreement, resorting to judicial review is slightly ludicrous. Taking a sledgehammer to a nut comes to mind, as my noble friend said earlier. For the avoidance of doubt in a small number of cases, I still believe that an ability to go to a tribunal would be the better course. This is an unfettered use of discretion unless there is an appeal, so I still have some concerns about it. However, I will look carefully at what the Minister has said. I understand that we are all on the same side in trying to find the most expeditious resolution with regard to fairness to both parents, but I shall want to reflect carefully on his response. In the mean time, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 183 not moved.]
Clause 29 agreed to.
Clause 30 [Power to accept part payment of arrears in full and final satisfaction]:
184: Clause 30, page 32, line 37, after “may,” insert “with the written consent of the parent with care,”
The noble Lord said: Since they were tabled, Amendments Nos. 184 and 185 have been addressed at least in part in the draft regulations, and I am grateful to the Minister for that. The draft regulations relating to Clauses 30 and 31 give some comfort in that the permission of the parent with care will need to be sought. The amendments have been tabled to see whether this provision should be in the Bill. On reflection, and having seen the draft regulations, they are probably enough. But if the Minister could say a word about how the consultation on the draft regulations is going and how the Government’s policy is developing in this area, that would be extremely helpful.
On the other amendments in the group, and others to be moved by the noble Lord, Lord Skelmersdale, Amendment No. 188 seeks to appoint inspectors, which harks back to the old days of the CSA when we aspired to having named officials looking after individual cases. It became clear quite early on that that aspiration could not be fulfilled because of the administrative burden that it would put on the organisation. I do not know what the policy is now, but it used to be possible to appoint inspectors, to invite them to do individual case work and to look at other things with which they were tasked. This is a probing amendment to see whether inspectors have any new role or any new dimension that could be deployed in the new set-up that is being rolled out with the new commission.
Amendment No. 200 deals with trying to protect the interests of the child and the parent with care when it comes to interests and fees. Perhaps the Minister will say a word about that. I shall spend a moment or two on the issues that are raised by Clause 32, which causes me real concern. I listened to the discourse on the Minister’s evidence to the Commons Public Bill Committee and, reading between the lines, he was less than enthusiastic. His tone was guarded when he talked about whether Clause 32 would ever be resorted to.
I have real concerns about the principle of parcelling up arrears and debts and sending them to people outside the public service to try to recover, as is envisaged in the clause as I read it. I understand the Henshaw principle behind privatisation and outsourcing, and if people can do things better than the public servants in the commission, I am certainly prepared to consider that. Clause 32, however, goes too far. The parents with care, whose debts might be parcelled up and handed out, would not be particularly comfortable with procedure either, although they might not know that much about it. Unless the privatisation of transferring arrears—bundling them up and parcelling them out—is going to become a core objective, there is a great danger that this will become an unpopular and, probably more importantly, unsuccessful part of the commission’s business compared with what can be done under existing public service arrangements.
All the evidence that I have seen to date suggests that the private collection of debts is no better—indeed, it is arguably worse—than the efforts of existing Child Support Agency professionals who do this work. It is specialist work; it takes a lot of expertise, it requires a lot of careful work, and you have to be assiduous at working out the detail of pursuing people for arrears and outstanding debts. I fear in my heart that, if we let Clause 32 go and are not careful, it will create all sorts of difficulties which would not be sensible or useful. Unless the Government are going to make this a major new plank and encourage the commission to make it a major new way of dealing with things in the future, they should think again. On that basis, I beg to move.
A few minutes ago, I was quite rightly prevented from speaking to my Amendment No. 186, which I hope that I can now do. It was tabled to ensure that, before taking a decision under new Section 41E(1) in Clause 31 to extinguish liability in respect of arrears of child support maintenance, the commission will take into consideration the welfare of the child or children in respect of whom the arrears of child support maintenance are due to.
I can envisage occasions where it would be quite appropriate to write off the arrears, but reckon that they would be well after the child—who is of course no longer a child—had left university. It should be quite a long time. They may, of course, not be going to university. None the less that gives an age range of 23 to 25 when it might be appropriate in most cases to write off the arrears. This is clearly a probing amendment intended to explore the scope of the commission's power in this respect.
I am rather nervous about Clause 31 in that it appears to go too far too quickly. It would be helpful if the Minister explained a little further how it would work. It is a considerable power that could have a considerable impact on a child. Can the Minister therefore tell me now, and not during consideration of secondary legislation, what might be the circumstances to nullify parental liability and when it would be unfair or otherwise inappropriate to enforce liability in respect of arrears? To my mind, the Bill gives the commission the power to be both judge and jury in its own case. We need some hard and fast ground rules, decided by Parliament and written into the legislation, rather than decisions left to the discretion of CMEC on this occasion.
The noble Lord, Lord Kirkwood, mentioned Clause 32. It would be useful to know how the power that has already been attracted by the CSA to outsource debt collection has been utilised until now, and what the success rate has been. One knows the money figures of course, because they are published quite regularly, but one does not know the case figures involved.
There are occasions when debt collectors leave a lot to be desired in their operations. I have a friend who is a solicitor in Leytonstone, who from time to time tells me horrible stories about fierce dogs going with the debt collector and that sort of thing. I most certainly would not condone that, and nor, I am sure, would the Minister.
Does the Minister agree that perhaps a third of the debt is uncollectible, as with local authorities and arrears of council tax or rates liability? The obvious example is where the person is dead, although that may already be covered by regulations. They may have moved abroad, and you have spent five or seven years trying to trace them without success; you have exhausted reasonable avenues of pursuit. Yet, as I understand it, Sir John Bourn and the NAO, perfectly properly under the rules, would not allow that debt to be written off. It is like an incubus on the organisation.
If I am wrong, I will be glad that the noble Lord tabled his probing amendment, but I take it that this puts uncollectible debt on to the same basis on which local authorities work. They have to use their best endeavours and act reasonably, but there comes a point at which it is not reasonable: it clutters up the books and the bodies held responsible for debt that is not collectable, and appears to cloud and muddy the financial figures. If that is the situation, as I would expect, I hope that my noble friend can give us those reassurances. If it is not, then the noble Lord, Lord Skelmersdale, has a point of real substance here.
This group of amendments enables us to discuss debt management powers. I hope that Members of the Committee will forgive a somewhat lengthy explanation, but also that they feel that it is helpful.
Amendment No. 184 concerns Clause 30, which provides a power to accept part-payment of arrears in full and final satisfaction. The provisions in Clause 30 will enable the commission to negotiate and accept settlements between parents where arrears of maintenance are due and a non-resident parent makes a reasonable offer to pay less than the total amount owed in full and final settlement of the whole debt. Amendment No. 184 would place on the commission a requirement to obtain the written consent of the parent with care before it accepts the part-payment of arrears in full and final settlement of the whole amount. This was raised in Committee in the other place, and a related issue has also been raised by the Delegated Powers and Regulatory Reform Committee concerning parent with care consent with regard to the sale of debt.
In response to those concerns, it is my intention to table a government amendment on Report that will put into the Bill that PWC consent will need to be obtained under Clause 30, and under Clause 32, which provides for the power to transfer arrears. I trust that this step will help to allay any concerns which Members of the Committee may have on this issue.
Amendments Nos. 185 and 186 relate to Clause 31, which provides the power to write off arrears. Amendment No. 185 would place on the commission a requirement to request and receive written consent from the parent with care before it extinguishes liability in respect of arrears. The CSA has a substantial amount of current debt: £3.7 billion. In his report, Sir David Henshaw recommended that we should seek powers to write off debt that may appear to be unrecoverable, but we decided against seeking such a broad power. There are, however, circumstances where it is appropriate to write off debt and where it would be unfair or otherwise inappropriate to try to enforce payment. It is therefore our intention to prescribe in regulations the precise circumstances where write-off can occur.
The prescribed circumstances will be limited to cases where there is no continuing maintenance liability and the parent with care has expressly asked the commission not to take action to recover the arrears, where the parent with care has died, or where the non-resident parent has died and the debt cannot be recovered from the estate. I think Members of the Committee will agree that, in the circumstances I have just outlined, the commission will either be acting in accordance with the express wish of the parent with care, or will have no option other than to write off the arrears.
As I have said, we will write off debt only where it would be “unfair or otherwise inappropriate” to enforce the arrears. The “unfair or inappropriate” test will usually be satisfied where the prescribed circumstances apply, but will also provide extra protection to ensure that the debt is written off only where the commission has properly considered all the circumstances of the case. For example, it might decide not to extinguish the debt if it suspects that the person with care has come under pressure from the non-resident parent. I assure Members of the Committee that the Government have absolutely no intention of writing off debt that is due to be paid to a parent with care against their wishes. However, there is already a sufficient safeguard in the Bill to provide that, where a parent with care wishes a debt to be recovered, it is not written off, and that the detail of the process of writing off debt should be set out in regulations.
Amendment No. 186 would place on the commission a specific requirement to consider the welfare of the children in respect of whom the arrears are due when it decides to extinguish child maintenance arrears. I agree that the commission must consider the welfare of children, but it is unnecessary for this to be provided for in Clause 31, as we have discussed on a number of occasions today. Section 2 of the Child Support Act already goes wider than the proposed amendment. It requires the Secretary of State, when exercising any discretionary powers given to him by that Act, to have regard to the welfare of any child likely to be affected by his decision. That duty applies equally to all children in the households of both the parent with care and the non-resident parent. It will apply equally to the commission when it takes over the Secretary of State’s functions. This means that when a decision to extinguish maintenance arrears is taken, the existing child support legislation already safeguards the welfare of children affected by that decision, and we do not believe that there is a need to repeat what is already a statutory obligation to provide.
Amendment No. 188 would provide for regulations to enable a parent with care to request the appointment of a named inspector to expedite recovery procedures when maintenance arrears have fallen behind by more than two months. As noble Lords will be aware, our intention is that the new commission should be an NDPB that has the flexibility to shape its services and adapt its policies in the light of developing experience. The new clause proposed in Amendment No. 188 would curtail that flexibility from the outset by obliging the commission to organise its work in a particular way. Not only would that place a restrictive burden on the new organisation before it starts, but it has practical implications in that it is more likely to slow down the recovery process than enhance it. We intend that the commission should be able to develop its own operating model and have the flexibility to harness the skills of private and voluntary sector partners in delivering its services. Should the commission find that it wishes to contract out part of its recovery service, the requirement in the Bill for an employer-named individual would be an unnecessary obstacle. In summary, the new clause would prove a burden to the organisation and in practice would not improve the customer’s experience or the recovery process.
The final amendment in this group is Amendment No. 200, which concerns Clause 40. This clause relates to the:
“Extinction of liability in respect of interest and fees”.
The amendment would require the commission, when writing off liability due to unpaid fees or interest, to give the parent with care written notice and a right of appeal to a tribunal on the grounds that extinguishing the debt would not be in the best interests of the child for whom the liability is due. I should explain the background to this clause. Regulations made in 1992 under the 1991 Act provide for the charging of interest on maintenance arrears and the charging of fees in respect of the assessment and collection of child support maintenance. The agency stopped charging fees and interest in the mid-1990s, and these regulations were repealed in 2001.
On the debt that had built up as a result of parents not paying remains, the total amount of debt from unpaid interest is around £1.9 million, but we expect that in individual cases, the amounts will be very small.
In the case of debt as a result of fees charged, the amount is around £12 million, which would accrue to the Secretary of State. The purpose of the power in Clause 40 is to ensure that interest or fees that accrued under the 1992 regulations will be extinguished. In effect, it is a one-off tidying-up provision. It is our intention to notify parents when debt from unpaid interest is written off, as we believe it would be unfair to raise the unrealistic expectations of parents with care that such debt could now ever be recovered. Creating a right of appeal against this decision would only introduce yet another stage and make the whole process protracted and drawn-out without any reasonable prospect of ever recovering this debt, which could be over 10 years old. It would therefore be inappropriate to give a right of appeal to a parent with care in the context of what are in essence good housekeeping provisions that will enable the commission to manage debt more effectively.
I shall pick up on some of the other points that were made. The noble Lord, Lord Kirkwood, commented on Clause 32 and the transfer of debt. A bit of market testing was done around this issue to see if the market had an appetite for taking on a tranche of the agency’s current debt and whether it was likely to provide value for money. Bearing in mind that if it were possible to get some cash to parents while the children are still young, that might be something to be welcomed. However, perhaps not surprisingly, the result of the work showed that while there may be some market interest, it was more keen on what might be called the low-hanging fruit, which would need to be parcelled up with liability orders and thus would be relatively easy to collect. With the wider range of powers that the commission will have, it should be much better placed to enforce such orders.
We discussed the benefit of retaining the clause. On balance, we believed that it was appropriate to hang on to that prospect, but who knows what will happen in future? The noble Lord is right to probe. One acknowledges that there is no great and early appetite to see this as any significant solution to collecting the money. However, given that we want to keep open as many options as possible to get more money, we thought it was worth continuing to include it.
The transfer of debt should be distinguished from the use of external agencies to recover debt on our behalf. As the noble Lord, Lord Skelmersdale, said, that has certainly happened; at December 2007, debt collection agencies had collected more than £9.3 million in child support arrears. We also know that a seven-day warning letter, which is sent by the agency to inform clients that their case is about to be transferred to debt collection agencies, can produce quite a good response. That itself triggers collection, and gets more money to more children. I do not have a ready figure on the number of cases involved, but we will certainly see whether we can provide one.
My noble friend Lady Hollis asked about the scale of recoverable debt. I agree with her analysis. As we discussed a little earlier in Committee, we do not see the solution as a broader, wholesale write-off of big chunks of debt—we think that it is important to have the engagement of parents with care—but perhaps there should be resort to the accounting mechanism that we discussed, which we will provide against the debts rather than write them off. Obviously there are particular issues to address, which is why we want there to be the opportunity to negotiate in cases where interim maintenance assessments have been in place. Such assessments were to some extent penal assessments to encourage a response, and it is important to get some sense there.
I hope that the noble Lord will be comforted by that response, and will feel able to withdraw the amendment. However, engaging with and securing the consent of parents with care is important, and we propose to table amendments to these two clauses so that that is put into the Bill.
I am not sure that “comforted” is yet the right word. I will have to consider this really quite carefully. My initial thoughts are that, although it is totally appropriate to seek to get the consent of the parent with care before writing off the debt that was due usually to her, this should not be an out-and-out veto, because otherwise the commission would continue to be landed with uncollectible debt because of a veto of the parent with care. I therefore reserve my position.
The same applies to the transfer of arrears. The Minister’s definition of the expression clearly means something rather different from mine when I came into the Grand Committee this afternoon. I shall look at this very carefully, because as I said I have some slight initial reservations about the consultation with the parent with care.
For clarity, let me help the noble Lord. On the transfer of arrears, we are looking at the potential to sell a tranche of debt. The agency or the commission would get the money for that and there would be a basis on which to distribute it to parents with care, although we do not believe that that is likely to be a significant runner, if a runner at all. If it was, however, the specific consent of the parent with care would and should be required for the debt that was transferred.
On write-offs under Clause 31, the noble Lord is right that there are some circumstances in which the parent with care should not have a veto—for example if the non-resident parent or the estate cannot pay or does not have the wherewithal to do that. I also stress that there will be circumstances in which the parent with care may have given consent, but if the commission feels that the parent with care has been unduly got at and pressured to give that consent, it would have to comply with that agreement and would not necessarily have to write off that debt.
I hope that the noble Lord will feel more satisfied once he has had a chance to read the record.
I am now about to make a 35-minute speech in reply. I am sure we are all grateful to the Minister. He has given us a lot to think about, and we have all of next week to do nothing but read the Official Report, which I promise faithfully to do. I am sure we will all be returning, collectively or individually, to some of these issues, but with regard to what he has said regarding this group of these amendments, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 30 agreed to.
Clause 31 [Power to write off arrears]:
[Amendments Nos. 185 and 186 not moved.]
Clause 31 agreed to.
Clause 32 agreed to.
[Amendments Nos. 187 to 191 not moved.]
It is a Wednesday.
The Committee stands adjourned until Wednesday 20 February at 3.45 pm.
The Committee adjourned at 5.50 pm.