Considered in Grand Committee
My Lords, these regulations were laid before both Houses on 15 October and will implement powers inserted into the Child Support Act 1991 by the Child Maintenance and Other Payments Act 2008, which was introduced by the previous Administration. A correction slip was published on 5 November, but the change was purely technical to correct a simple typing error in draft Regulation 3 concerning the amendment to the Child Support Information Regulations 2008.
I shall move on to the detail of the regulations in a moment, but first I will assure the Committee that the Government are determined to get to grips with the long-standing issue of child maintenance arrears. More and more parents are paying child maintenance, but we must ensure that those who do not are compelled to meet their financial responsibilities for their children and pay what they owe. To this end, we will shortly publish an arrears strategy, setting out our approach to preventing their accumulation and to collecting and enforcing them in future.
There are, however, some cases where child maintenance arrears are very unlikely ever to be collected in full, where we have no legal power to enforce them, or where they are no longer wanted by the parent with care. It is only these cases that the regulations we are debating today look to address. The regulations provide the ability for the department to accept a part payment in satisfaction of a child maintenance debt in full. When these regulations are introduced, the department will use them only in response to part-payment offers received from clients and will not take a proactive approach. Only once we are satisfied that we have a robust process in place will we consider how and when a proactive approach could be taken.
Where the department has exhausted all appropriate enforcement measures but has been unable to enforce the full amount owed, and where both parties are in agreement to a lesser amount being paid, this power will enable the department to bring cases to an acceptable resolution for clients. It is intended that the ability to accept such lower amounts will enable money to flow to children in cases where it may otherwise not have done and incentivise non-resident parents to come to agreements in respect of their arrears. As part of maintaining this principle of providing a real incentive for non-resident parents to pay, where a part-payment offer is made and the non-resident parent pays maintenance to more than one parent with care, they will have the ability to specify which parent they want the money paid to.
In plain English, what that means is that if the non-resident parent—for these purposes, let us assume that it is a man—is paying maintenance to two different parents with care—for these purposes, let us assume that they are both women—he will be able to choose which mother and child he makes the part payment to. However, I shall come on to a very important point about any parents to whom a part payment is not made. We will be clear with the non-resident parent that the arrears will remain owed in full and will be subject to enforcement. To make that absolutely clear, if a part payment is made to one parent with care—one woman—and there is another woman to whom the non-resident parent is paying maintenance, the other woman will not be in any way affected by this decision.
Where a part-payment offer is made, the department will consider on a case by case basis whether the offer made by the non-resident parent is reasonable, taking into account the probability of collecting all the arrears due and the non-resident parent’s employment status and income. The department will also obtain written consent from the parent with care in every case and will not accept any part-payment offer to which they have not given their explicit consent. So if the parent with care does not agree, it will not be forced upon them. This will continue to be the case if, in future, a more proactive approach is taken by the department in relation to part payment.
When the part-payment powers are introduced, they will only allow part payments to be made by non-resident parents in one lump sum. However, following the views of stakeholders in response to the public consultation, the department will introduce further regulations in future that will allow part payments to be made by instalments, once the required system changes have been made to accommodate them.
Moving on, the regulations also provide the power to write off some arrears of child maintenance, but only in the explicit circumstances set out in the draft regulations. The provisions of the 2008 Act limit those regulations to circumstances where it would be “unfair or otherwise inappropriate” to pursue enforcement of the arrears. An example of where arrears can be written off under these regulations is where the parent with care has explicitly informed the department that they do not want the arrears collected. Where this is the case, the department will ask the parent with care to confirm this in writing and ensure that it provides all the information necessary to enable them to make a fully informed decision.
In other circumstances covered by the regulations, such as where the non-resident parent has died and we cannot recover from their estate, there is no way of ever collecting the arrears. In such cases, where the arrears will never be collected, it is not sensible to allow them to remain outstanding. It is better to be open and transparent and write off the arrears. Where the department is considering writing off arrears it will inform both clients of this if they are still alive and, where appropriate, will give them 30 days to make representations. As my honourable friend pointed out in the other place, this period has been extended from 14 days following responses received to the public consultation on these regulations.
The department will then consider those representations and inform both clients of the decision on whether to write off the arrears. Cases will always be considered on their own merits and the views and information provided by clients will always be taken into account. All arrears written off under the write-off and part-payment powers will be carefully and fully recorded. Clients will be kept informed of what is happening in their case and why. Where appropriate, their consent will always be sought.
In summary, these powers are intended to address a minority of cases. They will be used only where the department is unlikely ever to collect the arrears in full, where all enforcement measures have either been exhausted or are not appropriate, and where clients have either been informed or, where appropriate, have given their consent. The department will continue to collect arrears whenever a parent with care wishes and it is appropriate and possible to do so.
I am satisfied that this statutory instrument is compatible with the European Convention on Human Rights, and I commend it to the Committee.
My Lords, I thank the Minister for introducing these regulations in a comprehensive way. As she said, they derive from the provisions of the Child Maintenance and Other Payments Acts 2008. It was legislation of the previous Government, so we clearly support its thrust and that of the regulations. Incidentally, the “Other Payments” bit of the Act, as the noble Lord, Lord Kirkwood, will remember, was the no-fault scheme of compensation for sufferers of mesothelioma.
We have a few questions. One was prompted in particular by the Minister’s introduction, when she referred to the arrears strategy that will be published shortly. Can she give us a rough idea of what “shortly” means?
On the write-off of arrears, the Minister in the other place was clear, as was the noble Baroness, that the intent was that the power would be used only where the arrears were no longer wanted or where there was no legal way of enforcing the arrears owed. As example of the latter circumstance, the Minister instanced the PWC or NRP having died, or there having been an interim maintenance assessment. We have no questions on interim assessments, which were a mechanism designed to get some sort of payments out of non-resident parents who were not co-operating with the system. However, the new regulations also include circumstances, at paragraph 13G(f), where,
“the non-resident parent has been informed by the Secretary of State that no further action would ever be undertaken to recover those arrears”.
I am unclear whether this a separate circumstance rather than just an administrative requirement of the others. If it is not, what are the circumstances in which that would apply?
The death of the PWC raises the question—I cannot remember the answer although I asked it in the past—of whether the debt due from the non-resident parent is technically a debt due to the parent with care or to the CSA, or CMEC as it is now, which has a corresponding liability to the PWC. If the latter, is there any reason why it should die with the PWC? Even if the former, would it not be an asset of the estate—to the extent that it is collectable, of course? Presumably, if someone else takes on responsibility for caring for the child when the PWC dies, a new child maintenance assessment is potentially in point, unless a voluntary arrangement can be agreed. A similar power—which was referred to—applies when the NRP died before 25 January 2010, or where there is no further action which can be taken with regard to the NRP’s estate.
I presume that the January 2010 date is the relevant date under Section 43A, which was introduced to enable recovery from a deceased person’s estate. Will the Minister remind us of the status of such debts when the estate has insufficient funds to meet all outstanding debts and obligations? What will be the approach to compromising, or otherwise, on that which is owed under child maintenance arrangements? Before accepting part payment it is obviously important that the full rigour of the enforcement procedures available has been deployed. Doubtless the Minister will be aware of the considerable range of powers in the 2008 legislation. These include disqualification from holding or obtaining travel authorisation, curfew orders and disqualification from driving. Can we have an update on which of Sections 20 to 30 of the 2008 Act have been brought into force and when any remaining provisions are to commence?
Where part payment of arrears is to be accepted, whether or not appropriate consent is required, as I understand it, depends on the extent, if at all, that the amounts are due to the Secretary of State or to the PWC. It reasonably follows that where the amount of any payment is due to the Secretary of State—presumably for benefit recovery—then appropriate consent is not required for accepting a smaller sum in settlement. Will the Minister explain what safeguards are to be in the system to prevent any amounts being accepted as part payment in such a way as to leave the amounts which are collected due to, or disproportionately due to, the Secretary of State? If it is accepted that there must be a written agreement involving the PWC, what guidance and support will be available for them to make a judgment in these matters? Will amounts accepted in part payment always maximise the amounts due to the PWC, with the Secretary of State picking up any residue? Is there scope for the NRP to disagree with any allocation between the Secretary of State and the parent with care?
These regulations will presumably be applicable to the charging regime in due course. Again, what safeguards will be in the system to prioritise moneys for the PWC? As discussed in another place, the Explanatory Note envisages acceptance of part payment being by way of a lump sum—the noble Baroness referred to this in her introduction. However, it has been accepted that the primary legislation does not limit arrangements to lump sums. Nor, it would seem, does the order. The noble Baroness referred to bringing forward further regulations in due course. I am not clear, from these regulations, why that would be necessary and why the regulations cannot operate to cover a series of payments when the systems can cope with it.
If it is the intention to limit settlements to lump sums, this would appear to be a more limiting facility than is necessary. Would it not be the case that more NRPs are likely to be able to enter into some form of settlement if there were some prospect of spreading payments than if the compromise could only be by way of a lump sum? Indeed, it begs the question: if the NRP can make a payment in settlement of the arrears, what is defective in the enforcement powers that otherwise prevents these sums from being collected in the normal way?
We have followed the exchanges in another place concerning circumstances where the NRP may be obligated to make maintenance payments in respect of children in more than one family. Giving the NRP the right to allocate any settlement moneys is not an easy matter, but we see the thrust of the Government’s position on that, particularly as reinforced by the Minister’s comments in respect of the other parent whose arrears remain fully due and collectable.
As I said, we support the regulations. We are aware that they could be applied in a positive way to help move more money quickly for more children, but also in a negative way—the latter to avoid the grind of using to the full the extensive enforcement powers, with the temptation offered to PWCs to have the promise of some early money even if it is not their full entitlement. However, we note the assurances given by the Minister in the other place that the Government will only be reactive in the initial stages of using these powers, which again was reinforced by the Minister this afternoon. Nevertheless, when considering an offer from an NRP, what kind of assurances will be sought concerning full disclosure of the NRP’s current financial status? All in all, we are prepared to give the Government the benefit of the doubt, but we seek assurances on the monitoring of these provisions and regular reporting to Parliament.
My Lords, it is a pleasure to follow the noble Lord, Lord McKenzie, on this important set of regulations. I should say at the outset that, like him, I have no objections to the technical provisions therein contained. I recognise the genuine progress that the Child Maintenance and Enforcement Commission in the current set-up, which will eventually morph into the Child Maintenance Service, has made in some areas over recent years.
That does not deny that a huge amount of work is now going to unfold, starting from next year with the closing down of all existing CSA cases. The department has the job of getting to grips with the mountains of child maintenance debt that have accumulated over the past 19 years. It is reassuring to hear the Minister say that we will soon be able to see the child maintenance arrears strategy. It was supposed to be published by the end of this calendar year, so I hope that we will still see it within that timeframe. Although the regulations are important, they are relatively small scale compared to the longer-term problems that we may face.
Like the noble Lord, Lord McKenzie, I have a list of elucidatory questions to ask. I do not think that it will be possible for the Minister sensibly to answer them all in the time available this evening, so I am perfectly happy to take some written guidance if that is found to be convenient to the Committee and the Minister. Although the regulations are important, they merely tidy up some peripheral areas. However, the context behind the whole policy or subject area is complicated and concerning and it bears some examination before we approve the regulations.
I start with the position taken by the Comptroller and Auditor-General on the last client fund accounts published by the Child Maintenance and Enforcement Commission. I accept that they are historic; the last audited figures we have are for 2008-09 and 2009-10. These suggest that at 31 March 2010 the commission regarded that total maintenance arrears amounted to £3.7 billion, and I believe that that figure will have increased by now. At that stage the commission took the view that only 28% of it was potentially collectable. That is just about £1 billion, and of that only about £0.5 billion, 13% of the total reported arrears, was likely to be collected. That is the size of the mountain we are setting out to climb next year, and we know that it is against a background of inaccurate maintenance assessments, processing errors, overstatements and understatements in the reported accounts, the arrears being available only at financial statement level, not at the individual case level, and arrears collection targets consistently missed year after year, year in, year out. On the basis of the information presented in the last audited client fund accounts, the Auditor-General concluded that,
“the scale, age and collectability of the outstanding maintenance balances which have accumulated since the inception of the statutory child maintenance schemes, mean that the Commission continues to face a significant challenge to collect a large proportion of these arrears”.
That continues to be the case. The regulations we are discussing are a constructive step forward, but only a small step.
The Public Accounts Committee, responding to the opinion of the Comptroller and Auditor-General, took the view that the department had to do more to communicate positively and constructively with the parents involved, particularly the parents with care. In the Government’s response to the PAC’s conclusions, they said they would make a determined attempt to collect the £2.7 billion deemed, according to the C&AG’s report, not to be collectable. They would do that by undertaking a trial with a small number of clients to try and improve communication with parents with care to keep them au fait with what is happening in their individual cases. I understand that this trial has started. It would be of great benefit to us all to learn more about it. I think it started in June. I would like to know how many cases it has covered and whether there has been any evaluation of its success in terms of improving communication.
The work has significance for the future prospects of collection in the longer term and I would certainly like an assurance that when it is completed it will be published in full so we can see exactly what difference it can make by notifying parents of what action is planned to recover the sums owing to them. It should also tell customers of any debt it believes is too costly to pursue rather than leaving parents in limbo, which has been the case in the past. The DWP and new Child Maintenance Service understand that we need to work harder to make sure that the unvarnished truth is made available at every opportunity to the parents with care. If we had some assurances about that and the pilot scheme works well, then I hope we will seize the opportunity to make improvements in that direction.
I have a couple of other questions and, again, a written response is perfectly acceptable because some of these things get quite complicated. I want to ask about the validation of cases. When the CSA closes down a case, the DWP always separately undertakes a validation of the debt before it is transferred. I understand that only validated CSA arrears will be transferred into the new IT system; that is, those amounts that have been properly validated. In passing, I hear that the computer system being used at the moment is incapable of fully dealing with part payments. That may be a temporary situation, but if it is true, there is a long history, which I remember as well as anybody, of glitches in IT systems costing the system dear and contributing to accumulating arrears. If the new IT system is fully capable of taking part payments, particularly if they are used extensively in the future, that would be good.
However, we have a validation system which will almost inevitably mean that the number of individual cases will be reduced. I would like a reassurance that if and when that happens, there will be a full exchange with the parents with care as to what has happened, what the write-off has been, and a full explanation of the validation process and how it will affect their casework. These draft regulations provide for an arrears write-off, as the Minister has said, where a parent with care no longer wants the arrears. As part of the case closure process, will parents with care be asked whether they still want the arrears and, if so, at what stage? I would like to understand better the validation process as applied to these regulations, how it will be handled and how this work will unfold during the case closure process.
I turn briefly to the deprioritisation of older cases. It is stated Government policy, and the new Child Maintenance Service has made it explicitly clear in a way that has caused a great deal of concern, that the existing arrears in older cases—cases that are out of payment because the children are beyond the age of minority or have gone on to university—will not get the same priority to be chased down as those of parents with care for children who are of the age group which is currently eligible to accrue payments from non-resident parents. I have real concerns about this. This issue obviously goes wider than these regulations. I shall lay down a marker that when the Child Maintenance Service arrears strategy is published in full later in the year or whenever it comes, I hope that serious consideration will be given to what steps will taken. If older cases are not prioritised, what will happen to them? They cannot just be left because that is an abrogation of responsibility by the department and the Child Maintenance Service. It is effectively giving a green light to non-resident parents who have successfully evaded their responsibilities so far. That needs further and better consideration.
Penultimately, I raise the question of compensation. There will be some cases in these regulations where there will be a prima facie case where maladministration within the CSA or CMEC in the past has demonstrably led to arrears being greater than they normally would have been. I do not know exactly what the policy is at the moment but in the intimation of any such set of circumstances where the arrears are judged to be no longer collectable and there is a bona fide case to be made that the Child Support Agency contributed to that, compensation should be offered. We should be clear about what those compensation details are for the cases that they affect. They will not only affect these regulations, but the whole childcare arrears strategy in the longer term.
Finally, under the new statutory child maintenance schemes, cases will be admitted to the new child maintenance collection service only once a direct payment arrangement has actually broken down. That means that all the new cases that are assumed will come with arrears. The future strategy that is yet to be published needs to take a clear hold of that and deal with it, otherwise, we will end up in five or 10 years’ time dealing with new cases with uncollected arrears. If that was allowed to happen, we would not have learnt the lessons of the past. That would be very disappointing and regrettable. What I am really asking for—as did, I think, the noble Lord, Lord McKenzie—is an early clarification of some of the wider policy intentions of the Child Maintenance Service in relation to outstanding arrears.
We will monitor these regulations carefully. The questions the noble Lord, Lord McKenzie, and I have raised deserve some response, but I am content to rest on what has been suggested and watch the future policy roll out. The Government can be sure that we will be watching very carefully to see whether these regulations are implemented properly and effectively so that child maintenance flows to the children that it seeks to serve.
My Lords, I am very grateful for the support I have received from the noble Lords, Lord McKenzie and Lord Kirkwood. I will endeavour to respond to the various detailed questions that have been put. I note the generous offer made by the noble Lord, Lord Kirkwood, that he will accept responses in writing to any questions that I am not able to address today. Of course, if that is necessary, I will ensure that I follow up in that way, although I hope that I can get through most of the points raised.
To try to make this manageable—for myself if no one else—I will take this in three chunks. I will start with what I would categorise as general queries, then move on to the small number of points made on the write-off part of the regulations, and finally I will deal with part-payment, on which I think most of the points were raised.
On the general questions, both noble Lords asked about the new arrears strategy. I can confirm that that will be published shortly and certainly in line with the deadline that the noble Lord, Lord Kirkwood, mentioned, which was this side of Christmas. The noble Lord, Lord McKenzie, asked about the commencement of the full range of enforcement provided for in previous Acts. As I think I have made clear, our primary focus is the delivery of the new scheme. We will consider what additional enforcement powers should be brought into effect after the new scheme is introduced. We have introduced deduction orders and are using them widely, so they are already in operation.
The noble Lord, Lord Kirkwood, asked how the exploration of a new means of reporting arrears was going—apparently a previous Minister referred to this. Following the recommendation of the independent arrears panel, we have begun a trial of the reclassification of arrears, based on an approach undertaken in Australia. This trial is still under way but once it is complete and we have undertaken a full evaluation of its results, the department will take a view as to whether the approach should be rolled out across the case load. That is something that is still ongoing.
I am new to the DWP but I am getting the impression that IT is a general theme, so I have put it under “general issues”. The noble Lord, Lord Kirkwood, asked whether the computer system can cope with part-payment. The answer is: yes, but not part-payment by instalments yet, hence the system changes that we are making. That is something that we acknowledge but are dealing with.
I will move on to write-off, although there are some things that I want to come back to. The noble Lord, Lord McKenzie, asked about the date under Section 43A and the deceased’s estate where a non-resident parent has died before January 2010. This is the coming into force date of the powers relating to recovery from a deceased’s estate. I apologise but I cannot quite remember the question the noble Lord put to me.
I think that the noble Baroness has answered the question. Could she just confirm that that is the date from which recovery could be made against a deceased person’s estate? Prior to the 2008 Act, there was no facility for that. I seek confirmation only because it is the first time I have seen the date.
Yes, it is the coming into force date of the recovery from the deceased estate powers.
The noble Lord, Lord McKenzie, asked whether debt is due to the parent with care or to CMEC or the CSA, or should a debt die with the parent with care. The debt is due to the parent with care. Where the parent with care has died, we will try to find the executor of the estate, who may have an entitlement to the money. If we cannot find the executor, the debt cannot be collected. The reason I am hesitating here is that I am wondering if we have “parent with care” and “non-resident parent” in the right place in this answer.
The debt is due to the parent with care. Where the parent with care has died, we will try to find the executor of the estate, who may have an entitlement to the money. If we cannot find the executor, the debt cannot be collected. We have got to identify the person who would be legally entitled to that debt. We cannot collect on behalf of someone we have not been able to identify.
I shall move on to part payment and the various questions that were raised. Perhaps I may start with the points put by the noble Lord, Lord McKenzie—
I am sorry to interrupt, but just so that we can tick the points off as we go along: in terms of write-offs, there is the issue around paragraph 13G(f) and whether that is an additional provision relating to write-offs and the circumstances in which that would apply.
This may be something I would prefer to write to the noble Lord about.
Again, moving on to part-payment, the noble Lord, Lord McKenzie, asked about safeguards and what guidance and support would be provided to the parent with care. The department will make an assessment of whether an offer is reasonable before passing it on to the parent with care. We will certainly not pass on an offer if we do not think that it is reasonable. In response to a later point raised by the noble Lord, Lord Kirkwood, in making that assessment, the agency will want to be clear about the status of the non-resident parent in terms of their current employment and so on.
The noble Lord, Lord McKenzie, asked how we will measure the success of these powers. The department will record all instances where a debt is extinguished as the result of a part payment agreement or under the explicit circumstances in the regulations which allow write-off. We will monitor the results carefully to ensure that the powers are being used correctly, effectively and only in appropriate circumstances. This information will be made publicly available as and when it is requested, for example in the usual way via a Parliamentary Question, and the department will be happy to answer any questions and to respond as we progress.
I was also asked in what circumstances the CSA has advised a non-resident parent that their arrears will never be collected. Advising non-resident parents that their arrears will never be collected is not standard practice in the CSA. We are, however, aware that this has happened on occasion. Where the non-resident parent can provide evidence to support their claim, it would be very unlikely that the department would be successful in enforcing a liability through the court in the future. The non-resident parent has been given a legitimate expectation that this would not happen and therefore the arrears should be considered for write-off.
I think that deals with the point I raised earlier that the Minister was going to write to us about. There is a specific provision that says,
“the non-resident parent has been informed by the Secretary of State that no further action would ever be taken to recover those arrears”.
If that refers to what has happened in the past occasionally, that deals precisely with my query.
I am grateful to the noble Lord—he is demonstrating his experience in this area. That is one fewer letter for us to have to commission and I am sure that my friends behind me will be grateful for that. The noble Lord asked if there is scope for the non-resident parent to disagree between allocations to the Secretary of State and the parent with care. We will give the parent with care’s debt the priority and both clients will be informed of this. The non-resident parent can specify which parent with care, as I explained in my opening remarks, but the department will decide the priority hierarchy after that. Obviously, we will give the parent with care priority over the Secretary of State.
The noble Lord asked what was defective about the enforcement powers that might lead us to this arrangement for part-payment. The enforcement powers are not defective, but there are circumstances in which there is no suitable action to take; for example, where a non-resident parent is self-employed and has no assets. In this example, there is often no way of collecting the debt in full—I think that might address one of the points of the noble Lord, Lord Kirkwood, as well.
The noble Lord, Lord McKenzie, asked about the lump sum of part-payments and clarified why instalments have to be regulated for at a later date. This is one of those technical answers. If we regulated to allow for that now but could not facilitate it in practice I am advised that we could face legal challenge. We can therefore only introduce the legal power once we know that we can deliver it in practice. So we would if we could, but we cannot.
I shall ignore the remarks of the noble Lord from a sedentary position and keep moving on.
The noble Lord, Lord McKenzie, also asked how the department will stop non-resident parents using the part-payment powers to play the system—“Where are the risks?”. The noble Lord may not have used that phrase, but I think he was asking where the risks were in this. If a non-resident parent enters into a part-payment agreement and subsequently defaults, the legislation provides that the commission may cancel the agreement and pursue the non-resident parent for the total amount of the arrears that they owe. Both parents would be notified of this before entering into a part-payment agreement with the commission. A non-resident parent will therefore have an incentive to remain compliant with their part-payment agreement.
The noble Lord, Lord Kirkwood, talked about older cases and asked whether arrears in these cases will get the same priority as more recent ones. The strategy to which we have already referred, and which is due for publication soon, will set out what we plan to do to stem the growth of arrears and manage arrears in all types of cases. It is an issue that we recognise and it will be addressed. He also asked about any arrears that have built up on the existing schemes once a case has been closed. This subject will be brought before the House for debate next year—I look forward to debating it at that time and I will ensure that I am fully equipped to answer the noble Lord then. Arrears of maintenance accrued under existing schemes will continue to be owed to the parent with care unless that parent requests that it not be collected.
I have covered the points raised by the noble Lord, Lord Kirkwood, and I believe that I have done the same for the noble Lord, Lord McKenzie. I will conclude by restating my thanks to the noble Lords for their support for these regulations.
Committee adjourned at 7.15 pm.