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Public Bodies (Child Maintenance and Enforcement Commission: Abolition and Transfer of Functions) Order 2012

Volume 738: debated on Thursday 12 July 2012

Considered in Grand Committee

Moved By

That the Grand Committee do report to the House that it has considered the Public Bodies (Child Maintenance and Enforcement Commission: Abolition and Transfer of Functions) Order 2012

Relevant documents: 1st Report from the Secondary Legislation Scrutiny Committee, 1st Report from the Joint Committee on Statutory Instruments.

My Lords, the order was laid before Parliament on 23 April under the powers granted by the Public Bodies Act 2011. It provides for the abolition of the Child Maintenance and Enforcement Commission and the transfer of its functions to the Secretary of State for Work and Pensions. I am satisfied that this instrument is compatible with the European Convention on Human Rights.

Before addressing the order in detail, I emphasise that there is no intention to change the services currently delivered by CMEC when its functions are transferred. The promotion of financial responsibility and child maintenance, the provision of information and support and the delivery of the statutory service will all continue. However, it would be helpful to provide some background on CMEC and the proposed abolition and transfer.

CMEC was established by the Child Maintenance and Other Payments Act 2008 and took over responsibility for the child maintenance system in Great Britain. Its primary objective is to maximise the number of effective child maintenance arrangements in place for children who live apart from one or both of their parents, whether these are made collaboratively between parents through family-based arrangements, by court order or through the statutory scheme. To achieve this objective, CMEC has three core functions: promoting the financial responsibility that parents who live apart have for their children; providing information and support to help parents make effective maintenance arrangements; and providing an efficient statutory child maintenance service with effective enforcement.

CMEC currently has two delivery bodies: Child Maintenance Options, which provides a free and impartial information and support service, and the Child Support Agency, which continues to administer the two existing statutory maintenance schemes. Together they are staffed by some 8,000 committed and dedicated people but, despite their best efforts, CMEC does not properly achieve its key purpose. Noble Lords are well aware of the complexities, inefficiencies and poor IT that have been a well publicised feature of the existing schemes but, crucially, around half of children living in separated families do not benefit from effective child maintenance arrangements—that is more than 1.5 million children.

CMEC costs taxpayers £500 million a year, but at present the Government spend less than 10% of that on positively helping families to address relationship issues or helping them to work together for the benefit of their children. That is why the system needs reform, and that is what we are working towards. I know that there will be particular interest in the planned reform of the child maintenance system but I do not propose to dwell on those matters here. I will write to noble Lords soon, inviting them to a meeting to discuss our proposals in more detail.

The proposal to abolish CMEC was announced as part of the Public Bodies Bill review on 14 October 2010. The review’s overriding aim was to increase transparency and accountability as well as to cut out the duplication of activities. Three criteria were set out by the Minister for the Cabinet Office in the Public Bodies Bill review which determined whether a body or function should be delivered at arm’s length from Ministers. I am satisfied that CMEC does not meet any of these criteria because, first, it is not a technical or fact-gathering body that needs independence, nor does it require political impartiality to discharge its responsibilities, nor does it need to act independently to establish facts. CMEC performs an administrative function and the services that it provides should be managed within the Government rather than by a non-departmental public body.

Child maintenance is an important part of the Government’s central aims and objectives in supporting families, particularly the 3 million-plus children living in separated families. It is right that Ministers should be directly accountable and responsible for the operational delivery, strategic direction and policies relating to child support without an additional layer of external management, as currently exists with the CMEC board. As I have already mentioned, the current system needs reform, and the proposed integration into the Department for Work and Pensions will enable us to do that much better. In the longer term, efficiencies can be achieved and I am convinced that the change will enable a better service to be provided to parents and children.

In accordance with requirements of the Public Bodies Act, which this House requested, a consultation on the abolition of CMEC ran from 10 October 2011 to 3 January 2012. Only 11 responses were received, a rate that indicates that this really is not a contentious change. Indeed, five responses were broadly supportive of our proposals, either agreeing with or welcoming the change, albeit with some minor concerns. Three responses disagreed or asked for reconsideration. One respondent had no comments to make and another had misunderstood the consultation criteria.

The order was laid on 23 April 2012. Orders under the Public Bodies Act have a minimum 40-day scrutiny period, with a Committee of either House able to extend that to 60 days by resolution if it feels it is necessary. The order has been scrutinised by several committees within Parliament: in this House by the Secondary Legislation Scrutiny Committee, as it is now called; in the other place by the Work and Pensions Committee; and collectively by the Joint Committee on Statutory Instruments. None of those committees chose to trigger the optional 60-day scrutiny period.

The Secondary Legislation Scrutiny Committee reported on the order on 15 May and concluded that it increased direct ministerial accountability by reversing the provisions of the Child Maintenance and Other Payments Act 2008. In the other place, the Work and Pensions Select Committee held an evidence session on the draft order on 25 April, which the Child Maintenance Commissioner and the Minister for Disabled People attended. The committee raised a number of issues, including how CMEC’s current objectives and functions would be pursued, how its activities would be reported following the transfer and whether the transfer could be justified on the grounds of improving value for money.

Similar concerns were voiced during the passage of the Welfare Reform Act 2012, and we were able to provide assurances that the Secretary of State would continue to have in mind all of these matters. He already has sufficient powers to ensure that the department maximises the number of effective child maintenance arrangements and has strong incentives to do so. He also has sufficient powers to provide information and does not need legislation to set out objectives on information-sharing.

The commissioner and the Minister for Disabled People also confirmed to the committee that transparency and information-sharing would be improved as a result of the change, and I am pleased to repeat that message to the Committee. Our focus will remain on ensuring effective child maintenance arrangements and on publishing data that will enable success to be measured.

On 3 July the Delegated Legislation Committee in the other place considered the draft order. The Minister for Disabled People confirmed that we will continue to publish the same data reports as we do now, so that the effectiveness of arrangements can be measured and monitored. We will also use the biennial Understanding Society survey to gain a valuable overall picture across society of effective child maintenance arrangements.

Under the order, CMEC will be abolished and will no longer exist as a separate legal organisation. Staff will transfer from CMEC to DWP under the Cabinet Office Statement of Practice rules, and the transfer will be treated as a machinery of Government change from one department to another. Staff will retain their civil servant status, and staff terms and conditions will be protected at the point of transfer.

There will no longer be a separate CMEC board and Noel Shanahan, the current CMEC commissioner and chief executive, will become head of the operational business unit, to be called the Child Maintenance Group. He will report directly to DWP’s Permanent Secretary and will become a member of the DWP executive team. There will therefore be important continuity at the most senior levels of the organisation.

When this matter was discussed during the passage of the Public Bodies Bill, the intention was to form an executive agency similar to Jobcentre Plus within the department. However, since then all DWP executive agencies have been incorporated into the department to enable greater efficiencies to be gained, particularly in back-room functions such as IT, finance and corporate services. The intention is for the department as a whole to work as “one DWP”.

As I confirmed, there is no intention to change the services currently delivered by CMEC when its functions are transferred. The focus will remain on delivering child maintenance support, with the same staff continuing in similar roles to provide an effective service to parents. It is important to underline again that Ministers will not be involved in operational matters such as the day-to-day running of cases, in the same way that they are not involved in the day-to-day running of benefits such as jobseeker’s allowance or the employment and support allowance. That will rightly remain a matter for officials and, where necessary, tribunals. Nothing in the order changes that.

The abolition and transfer of CMEC is designed to increase effectiveness and achieve economies over the longer term. Most significantly, those managing the delivery of the service will no longer be at arm’s length from Ministers, who will be accountable and answerable to Parliament for performance in this area and for the ongoing reform of the child maintenance system. This will enable Ministers to manage the major reforms to that system and to work towards the goal of helping more parents to make the right choices in the best interests of their children by taking responsibility for their financial, emotional and social needs and remaining involved in their children’s lives even when relationships have broken down. I beg to move.

My Lords, I thank the Minister for his explanation of the order, which is to abolish CMEC and transfer its functions back to the DWP, where it will operate as a business unit within the department. As we have heard, CMEC has not been around for long; it was created by the 2008 Act but was an integral part of the reform of the CSA that broadly followed the recommendations of the Henshaw report. This was essentially the third attempt to make it fit for purpose after its flawed creation in 1991.

That third attempt—we have heard some of this from the Minister—included a simplified assessment system, based on gross income, to be provided directly by HMRC; an overriding objective to maximise the number of effective maintenance arrangements; the removal of the compulsion on benefit claimants to use the statutory system; the obligation to promote awareness of the importance of maintenance arrangements; the obligation to provide information and guidance to parents by the Child Maintenance Options service; new IT systems eventually facilitating the provision of just one statutory calculation system; and a range of strengthened enforcement powers. All this was placed under the control of CMEC, an NDPB and, unusually, a Crown one at that—there are only a couple in existence.

We acknowledge that the transfer of the CSA was not a popular decision among staff who were concerned about losing their Civil Service status, although terms and conditions were protected. Truth be told, it was not the only possible structure within which the CSA revamp could have taken place. At the time, though, it was seen as having the merit of being part of giving the CSA a fresh start and of having not only a dedicated operational management but dedicated board oversight to see that the range of objectives were progressed. This was seen as important for the efficiency of the fundamental assessment, collection and payment arrangements but also for the wider obligations of the promotion of child maintenance and the provision of information.

It is understood that the Government contend that each of the objectives of the revamp endure and that reverting to be a part of DWP will not change this; the Minister has pretty much confirmed that. It is contended that the abolition of CMEC will allow for greater ministerial accountability for child maintenance. Frankly, that is at best a marginal argument. It suggests that there are not clear lines of accountability between NDPBs and Ministers. These are generally through regular reporting but technically through the department’s framework agreement and, of course, through budget-setting. These provided a natural separation between operational matters and policy, and the oversight of the board was important in ensuring a balance of effort and resource going to the collection process and the support service.

The Minister will be aware that, as in the other place, we seek assurance that the removal of the explicit objective to maximise the number of effective maintenance arrangements does not mean that it will not remain the key objective. Can we understand what data will be routinely available to monitor whether this is so? There is a risk that this will get subsumed into broader issues around family policy with which we might entirely agree but where there is a loss of focus on this aspect.

Incidentally, I note that the order is to take effect soon. Would it not have been better to have any transfer at the end of a financial year? Will the Minister confirm that there are no adverse tax consequences of the transfer of property, rights and liabilities from CMEC to the DWP? Can we please have an update on the move towards a single statutory system of child maintenance? What is the latest timetable?

Specifically on the enforcement powers, can it be confirmed that the powers set out in the 2008 Act can be implemented equally as effectively by DWP as by CMEC? What is the timetable for bringing them all into effect?

We are not sure this move is necessary or the right one at this time but will not oppose it, although we will seek to keep up to date with progress under the new arrangements.

My Lords, I come to this discussion with some background knowledge of bodies being taken “in house” under the previous and present Labour Administrations in Wales. Accountability is crucial. The question we should ask is whether a body has the right purpose. In this case, the purpose is correct, in that CMEC provides a determined service and does not require the same flexibility of operation or fleetness of foot as, for example, an economic development body might need in attracting new investment into one’s country. However, the question of accountability remains. Any change of this sort works only if it provides a better outcome for customers at the other end and in terms of the services being provided. Does my noble friend the Minister agree that having a phone number for complaints, when last year there were 23,000 complaints, would not be a helpful way for the Government to proceed? Asking in a year or two whether there had been a certain level of complaint about the service and whether it had improved as a result would be the way to judge whether this is the correct move.

Additional funding for voluntary agencies and third-sector organisations to support this work was announced during the passage of the Welfare Reform Act. How does my noble friend see that dovetailing with the in-house operation? Will it deal with the level of change being anticipated? What relationship is there to be between those third-sector organisations and the department?

One of the criteria that always worry customers is, “Is there somebody who I can call or who I can contact who is dealing with my case?”. Will there be someone in the in-house regime who holds the file for a particular customer so that the customer can know who they will be talking to if they wish to make contact?

It would be to the advantage of the in-house service if other parts of the DWP were to provide supportive services. We know that people call CMEC at present with a variety of problems. They are not purely financial but relate to other sorts of service and support. Some of them are to do with local authorities; some are to do with caring responsibilities; and some are to do with work and so on. Can my noble friend indicate what range of on-call services the department will be able to provide to the new in-house operation? For example, data held under the universal credit system might be made available to people working in the new part of the department, thereby making things quicker.

At family breakup, a complex web of issues faces parents. What will be the scope of advice and signposting in the new regime? Will a sympathetic ear be available? Will there be someone who can provide a range of signposts to different services or make the connections if some of them are within the department?

I return to the issue on which I started: accountability. There will now be accountability to Ministers, but that accountability will be tested by Parliament. Does my noble friend intend to produce an annual report or regular update on performance in this area of work, so that noble Lords might be able to test whether the regime has worked effectively? Clearly, this service has not worked effectively over the years since its creation. It has caused a great deal of heartache for a large number of people. The ambition is to improve but we need to be able to test that improvement, and I wonder in what ways that will happen, apart from the normal scrutiny of the Minister through questioning. Perhaps the Minister could lay before Parliament some of the issues that have been successfully achieved or otherwise in data form so that we can make that judgment.

My Lords, first, I apologise to the Minister for having missed the beginning of his opening remarks. I am afraid that I misjudged the timings somewhat. In speaking to these regulations, I remind the Committee of my registered interests. In particular, although the Child Maintenance Enforcement Commission had a brief life, I managed for two of its years to be a member of its board, serving as a non-executive director until 2010, shortly after I entered the House. I also declare that I am a former chief executive of One Parent Families, now Gingerbread, to which I am grateful for the briefing.

These are small regulations to effect a major reorganisation. I want to ask the Minister a couple of questions, picking up some points made by my noble friend Lord McKenzie. When CMEC was set up by the Child Maintenance and Other Payments Act 2008, its primary objective was,

“to maximise the number of those children who live apart from one or both of their parents for whom effective maintenance arrangements are in place”.

The wording is significant. As the Minister knows, this does not refer simply to maximising the number of maintenance arrangements made through the statutory system but to maximising the number of arrangements in total. In other words, CMEC had a duty, which it took very seriously, to maximise the number of private maintenance arrangements alongside those undertaken using the statutory system. Given that, what assurance can the Minister give us that this objective will be taken on by the Secretary of State, to whom CMEC’s functions are being transferred? How will that be discharged? The noble Lord, Lord German, suggested that perhaps a report to Parliament might work.

Before CMEC was created, when the Secretary of State had responsibility for child maintenance, the Secretary of State actually issued targets and then reported publicly to Parliament on the extent to which those targets had been met—or not. That might be something that the Minister might like to take on board. Can he tell us if the Secretary of State would be willing to do that, and if not, what other mechanism is there for reporting to Parliament and for ensuring that Parliament can have some criteria for judging the report that is thus made?

The Minister, I am sure, will have read the report on CMEC by the National Audit Office of 29 February 2012, as well as the report of the Public Accounts Committee from April. In relation to the decision to charge parents for using the statutory maintenance service, the PAC report noted:

“A successful fee regime will depend on the Commission being able to deliver reasonable standards of service”.

However, it also said that because of problems with the service, there was a danger that parents would not want to use it. The committee noted:

“The risk is that parents who cannot agree private arrangements and do not trust the statutory system are left without effective child maintenance arrangements and that could impact on child poverty. The Commission should work with stakeholders to monitor whether more separated families agree their own arrangements and understand any service-related reasons for lower than expected applications”.

It also suggests that:

“The first monitoring report should be carried out six months after the introduction of fees”.

What is the Government’s response to that recommendation from the PAC? I apologise if the Minister mentioned that in the first five minutes of his opening remarks. Will the Government accept that recommendation and the timetable, and if not, by what other means are they going to address the concerns raised by the PAC?

Can the Minister give the Committee some assurances about the readiness of all involved for this transfer? The PAC report also noted that the commission’s plans to deliver the £117 million of cost reductions imposed on it by 2014-15 were “high risk”. It said:

“There is a £16 million funding gap for 2014-15 which could widen by some £3 million for every month the new IT system is delayed. A further shortfall of up to £30 million could arise in 2014-15 if projected fee income does not materialise”.

What assurances can the Minister give the Committee that the statutory service has adequate funding to deliver the service promised when the Welfare Reform Act was passing through this House?

Finally, I know that the Welfare Reform Act has made the decision to transfer this but can the Minister tell us what lessons the Government have learnt from history? The department has had the opportunity to see the CSA operating both inside and outside government. In bringing it back in, what lessons has the department learnt and how does it hope to avoid some of the very considerable problems the CSA had in the early 1990s?

My Lords, I am delighted to follow the noble Baroness, Lady Sherlock, because she said just about everything I had in mind to say. I concur with the important points that she made.

I am very pleased that the noble Lord, Lord Freud, offered us a meeting later in the year. That is part of his unique way of doing business and it is very helpful to the rest of us as we try to understand what is going on. I understand that he and his colleague in the other place are putting a great deal of work in to this important area.

I will stress—because it is easily forgotten—that the client group with whom we are dealing may be disproportionately affected by the impact of the austerity measures that the country faces. I am sure that the Minister and his advisers are already aware of this. As a board member of the Institute for Fiscal Studies, perhaps I could draw his attention to the analysis by James Browne that was published by the IFS for the Family and Parenting Institute in January 2012. It predicted an 8% net loss of income for working single parents and a 12% loss for non-working single parents. We are dealing with a particularly vulnerable client group here, and we all know that. The IFS analysis is useful as a reminder of the importance of getting it right. I know how concerned the noble Lord, Lord Freud, is about these vulnerable groups because he is doing a lot of work on universal credit to try to make sure that these issues are addressed.

In addition to the points addressed to the Committee by the noble Baroness, I will say that other NAO and PAC reports that came out earlier this year—particularly on client fund accounts and on CMEC’s plans to reduce its own spending, which was in an NAO report on 12 February this year—raised matters about which we should all be concerned, including the ability of CMEC to achieve its estimated £117 million savings between now and the fiscal year 2014-15. That is something I would like to put on the agenda for the meeting later in the year, which I would be very pleased to attend—if I get an invitation after this speech.

The NAO was also concerned about the plans to levy charges. I do not need to repeat the point that there is some disjunction between the early planning and the work that the NAO did in highlighting some of the gaps. This will have been worked on and I hope that there will be further and better particulars available. At any future meeting I would like to try to understand how much risk there is in the levying charges policy that is currently being publicly promoted, at least by CMEC.

I agree with the NAO analysis about planning for a 71% take-up of the new statutory system. I have no way of knowing the metrics, systems or processes that CMEC has for measuring that 71%. It is relying very heavily on that as an income stream from which it hopes to move forward. The Comptroller and Auditor-General, the NAO and the PAC were interested to learn more about that, and again expressed concerns. I will also reinforce the point about maximising payments. That is an important duty that will be lost. Any system, whether or not it involves annual reports, should underpin efforts to win back as much of that as we can in the circumstances. That would be useful.

Finally, we still expect a consultation on charging mechanisms. That is a very important piece of outstanding work in which the community, pressure groups and others to whom this area of public policy applies are particularly interested. Perhaps we could add that to the agenda of what now looks like quite a busy meeting some time in the autumn.

This is an important area. I am very ambivalent about this change but I can understand that the costs have to be reduced in a sensible way. I just hope that we are able to do that in a way that does not disproportionately affect the client group we are seeking to serve here. But I have trust that my noble friend Lord Freud is aware and alive to all these things. I hope that the Committee can look to him to give us reassurance, whether privately or publicly, going forward.

My Lords, as ever, there have been some very thoughtful and knowledgeable speeches. Why am I not surprised? I will set the context of the process we are going into in terms of consultation. I deliberately kept my speech very focused on this order. As we are all aware, there are a lot of issues around CMEC charging generally, which we will have a lot of time to address. As I said in my opening remarks, I plan to write to noble Lords reasonably soon. I made a commitment to involve noble Lords particularly in the charging process and the plans that we have. I said that I would do that at two points: first, at the outset in order to allow noble Lords to see plans at the beginning as we develop and discuss them and, secondly, before regulations are laid towards the end of the process as the debate has gone through. There is time outside the formal calendar in which to go through this.

I am conscious that when things are difficult—and in this area of child maintenance there is a lot of sensitivity and concern—an involved process is much better than just slamming a set of regulations on the desk. That is why I have done it in that way and have made some cuts. We could easily spend all night on this and I am trying to concentrate just on the core transfer.

There were quite a few questions from noble Lords on the reporting process and the data process. The group will be included in the DWP’s annual report and accounts. It will continue to publish a quarterly summary of statistics of child maintenance and the figures will be included in the biennial Understanding Society survey. We will respond to the question asked by the noble Baroness, Lady Sherlock, and the PAC through a Treasury minute, which will be published in the near future. I do not have a translation for “near future”, so we will have to go on the commonplace interpretation of what that means.

My noble friend Lord German asked about historic debt and our strategy. It remains a priority. We have a debt of £3.8 billion outstanding. We want to collect as much of that as we can and are using all the powers available to us to do so. He also asked about effectively co-ordinating family support services. A number of principles are involved here: we need to make sure that families have the right information when they separate and that they are encouraged to have a collaborative relationship. That, as noble Lords are fully aware, is a core part of the Government’s strategy here. In the main, services will be voluntary and community sector-led. That is why we have formed a steering group of representatives from the sector to inform our thinking and propose how best to evolve those services. My colleague, the Minister for Disabled People, Maria Miller, announced in January that £20 million was available to support this work and on 25 June she confirmed that £14 million of it would be placed in a new innovation fund to finance effective and innovative interventions. I will not go into that in any greater detail.

On the question about timetabling asked by the noble Lord, Lord McKenzie, the programme is extremely complex and we are focusing on achieving the introduction in late 2012. There is a lot of work to manage the programme time and cost. Ultimately, we need to introduce a service that works for our clients, so we will introduce a system only when it has been thoroughly tested. Indeed, if I am asked about the lessons of history, as the noble Baroness, Lady Sherlock, did, that is probably the most important one. The early introduction of an unready and inadequately tested system was one of the causes of why things went so badly wrong in 2003. I am not sure that I can think of many other lessons from history off the top of my head.

Actually, I would like to turn that around on the noble Baroness; I will accept a letter from her on the lessons from history, and I will pass it on and make sure that they are applied. I look forward to receiving that.

On my noble friend Lord Kirkwood’s question about how we will achieve the savings, we are talking about securing ministerial accountability—this is not about driving savings. The amount of savings from this measure is pretty modest: direct savings are probably running at about £500,000 a year, and that is due to changes to IT systems and one-off costs. We would hope to see longer-term savings from integrating services more deeply into the department. I think, and this point was raised by my noble friend Lord German, that there are some real opportunities here to get holistic support. The longer that I have been in this job, the more I have realised that bringing support together for people and families in trouble is the way to go. There is an opportunity for us to pull the services together in this context as well as in other contexts.

I am tempted to offer to write to the noble Lord, Lord McKenzie. I always feel that it is a triumph if I can get out without offering him a letter because I can answer all his very clever questions. I think that I am down to the one on adverse tax consequences. Although it is always difficult to prove a negative, I cannot imagine how there can be adverse tax consequences because we do something in the middle of the year, when they are both effectively Crown bodies. If that is a wrong tentative statement, I will commit to write, but I hope that I will have avoided any need to put pen to paper for him on this occasion; that would be one of my personal targets. This is about making sure that Ministers are fully accountable to Parliament.

So that the Minister does not have to commit anything to paper, will he deal with the question about the enforcement powers? There is a whole raft of them in the 2008 Act. Those are all presumably going to be taken over by DWP. Where is the department on bringing those into effect?

My Lords, the noble Lord is right: we just transfer those powers over. There is no change in them. As to the detailed timetabling of all that, we are preparing to show that to noble Lords. The easiest way is if I come to that, unless I have a miraculous answer—which I do not think that I have to this specific question. I will deal with that when we assemble, quite soon, on that issue. I will not write.

I close by reassuring noble Lords that ensuring that children get the support that they require, both financial and otherwise, when their parents cannot live together and ensuring that they have the best opportunity to thrive during their childhood is what this is about.

Motion agreed.