The Minister of State, Department for Work and Pensions (Steve Webb)
I congratulate the hon. Member for Airdrie and Shotts (Pamela Nash) on securing this debate and on the assiduity with which she has represented her constituent. I have looked into the individual case and corresponded with her a number of times about it. I will frame my remarks in a more general way, however, so as not to disclose any further personal information about her constituent, save to say that if the Child Support Agency has sent a recent letter containing factual errors, I hope she will send me a copy as I would be happy to look further into that specific issue.
The hon. Lady raised an important point about the fact that there are still 261,000 cases of people being assessed under the 1993 rules. Perfectly reasonably, she said that she did not want to approach the debate in a partisan manner, and neither do I. I will simply observe, chronologically as it were, that the 2003 system came in. I shall say more about the reasons for that, but it was not because the 1993 system was felt to be fundamentally unfair or that the figures the system produced were somehow wrong. Rather, it was about the massive bureaucracy and complexity of assessing anybody, which meant vast amounts of time were required and vast amounts of evidence had to be gathered. That is why the decision was taken by the previous Government to streamline all that—not because the answers of the 1993 system were inherently wrong or worse than under the 2003 system, but because of the awful amount of time and effort involved. It was fundamentally a streamlining process.
The original intention was, as the hon. Lady said, to migrate people across, and for several years the previous Government sought to do that in good faith. That is why letters of the sort she mentioned from Doug Smith were sent. Those letters were subject to the caveat that when the Government were convinced things were in order, those people would be moved across—but they never were. In fact, it was the independent Henshaw report that finally put the nail in coffin of this idea back in 2006. So well into the period of the last Government, it was decided that it was simply not feasible to bulk transfer people across. As the hon. Lady will have gathered—now there are more than a quarter of a million of cases; back then, there were far more—the IT issues, the compatibility of the data and the whole difficulty involved in moving things across meant that bulk transfer and bulk case closure were simply not an option.
The hon. Lady asked why, if a single constituent had calculated that he would pay less under the 2003 system, we could not just transfer that one person. Within the total of 261,000, there will be an awful lot of people who are potentially in that position. I do not know how many precisely, because we have not made 261,000 calculations; if we had, we could probably transfer all the people concerned. However, it is clear that there will be a proportion of people of whom that is true, and a proportion of whom the opposite is true.
I was pleased when the hon. Lady rightly said that what matters is the well-being of the children. A unilateral case-by-case closure is currently against the law, but if we changed the law to enable all the people who did not fancy their ’93 assessment because they thought it was bigger than the 2003 assessment simply to transfer to the latter, tens of thousands of children—perhaps hundreds of thousands—would receive less child maintenance.
The position would be asymmetrical, because parents with care who calculated that they were receiving more under the old system would presumably not have a right of veto. All the non-resident parents who were paying more under the old system than they would under the new one would be transferred, although there would be a massive take-up problem: people would be asking us to do calculations and all the rest of it. If people opted to be transferred in tens of thousands of cases, tens of thousands of children would receive less money and no one would receive more, because no one would move in the other direction.
I hope the hon. Lady recognises that that would create a different kind of unfairness. How is it fair for someone who would pay less under the new system to be able to move to that system, while someone else—a mother, for example—who would receive a larger amount under the new system because the maintenance would be higher, as it will be in some cases, cannot do the same? That person will then persuade her Member of Parliament to hold an Adjournment debate and say, “It’s not fair. My ex-husband could transfer because he wanted to pay less, and I should like to be in the system in which I receive more. Why can he do what he wants and I cannot?”
Pamela Nash
I would argue that if non-resident parents are to be allowed to ask to be transferred, resident parents should have the same right.
Will the Minister clarify his position on cases in which there is such a large discrepancy between the amounts being paid under the two schemes? How can both schemes be seen to be fair when according to one assessment my constituent should be paying £350 a month and according to the other he should be paying nearly £600 a month?
Steve Webb
The aim of the ’93 system was to produce a tailored figure, and it took account of factors such as housing and travel costs. I believe that in some cases nearly 100 items of data were required to calculate the assessment. The incomes of the new partner and the parent with care had to be assessed, for instance. There are different answers to different questions. If those doing the calculations take the view that all the complexities of people’s circumstances should be taken into account, they will come up with one number; if they take the view that what is wanted is a rough and ready, quick calculation—15%, 20%, 25%; now let us get on with our lives—they will come up with a different number. Is one right? Is the other one right? Who is to say?
It could be argued that a comprehensive system is fairer because it is tailored to individual cases, but the calculation takes for ever. The last Government took the view that we were spending all our time doing complicated sums instead of getting child maintenance to people. The change was not based on the view that the 1993 figures were wrong—that they were inherently unfair to one party or another.
The hon. Lady asked about the process of migration. That is obviously important to her constituent, and I should probably put something on record now, because we have not said a great deal about it so far. The new system is intended to turn things around. That may be more difficult in the case of those who have been in the system for a decade or more, but, in general, we are trying to make sorting things out the default.
For many years the couple to whom the hon. Lady referred seem to have talked to each other and resolved matters. We know that children do better when mum and dad sort things out between themselves, and our goal is to make the child maintenance service a last resort. We are investing resources in help and support for separated families—in web applications, advice services and so on—to help people to sort things out for themselves, and if they contact us, we will signpost them and advise them on how they can do that. Clearly, however, some will still come to us, and about 1 million cases remain in the system, so we will have a migration process. Let me explain how that will work.
Pre-Christmas, in December, we started the process for new cases where there were four or more children. It is a very slow pathfinder system trying to learn from the ’93 and ’03 failures. Those cases will go straight into the new system and later this year, when we are convinced that it is working—it is going well so far—we will bring in the two-child-and-above new cases, and later still in the year all new cases. Once we are convinced all of that is working, we will begin the process of migration.
When we close cases under the existing two systems and bring them into the new system, we will encourage parents to reach family-based arrangements. Cases will be closed over a three-year period from next year, and where maintenance has been hard-won—where a non-resident parent has tried quite hard not to pay but we have got payment—we are thinking very carefully about how we can manage the case closure and migration process to make sure we do not disrupt the maintenance that is flowing. We are thinking very carefully about the sequencing of the way we do that.
We will introduce charges for the use of the statutory scheme, particularly on the non-resident parent. Again, the idea is to encourage both parties to reach a family-based arrangement, rather than to use the statutory system. Both parents can avoid collection fees entirely by paying directly using Direct Pay. Therefore, in the vast majority of cases we will give the paying parent the opportunity to pay the receiving parent directly. This Direct Pay option will give parents access to the statutory service in a way that can help rebuild trust between them.
We want to avoid the mistakes of the past. We acknowledge that some parents are better off under the ’93 scheme and some are better off under the ’03 scheme, but I stress for the record that these are statutory assessments, so people cannot say, “I don’t think the law as it stands is fair, so I will decide what I will pay.” These are legal liabilities, so the amounts are owed; it is not a matter of choice, I am afraid. I appreciate the point that some people, on both sides in many cases, will feel the sum is unfair. That is why if somebody does not pay what they are legally required to pay, arrears build up, and that will remain the case.
The previous Administration originally planned to move all 1993 scheme cases to the 2003 scheme, but it was simply not possible clerically to move 250,000 or so cases one at a time. We want to focus our energies on getting the new scheme up and running and migrating everyone to it—except where we can secure family-based arrangements—rather than put a lot of effort into moving people from the previous-but-one scheme into the previous scheme.
We are trying to ensure what happened in the past does not happen again. We are using tried-and-tested—standardised—software, as one of the problems with the ’93 system was that it was bespoke and unlike anything anyone else was using. We are also introducing the 2012 scheme gradually through a pathfinder approach, so that any issues can be picked up at an early stage, before we have a large case load.
The 2012 scheme, as I mentioned, is now open and progress so far has been good. We will gradually move people across and we have been consulting on the exact sequencing. I cannot give the hon. Lady a date for when her constituent’s case will be moved across, but our idea is to contact people six months ahead of the point at which their case would be due to be closed. We will encourage them to reach a family-based arrangement where possible and will support them in doing that. If that is not possible, six months afterwards the case can be reopened under the 2012 system, which is designed to be simpler and contains charges to encourage people to come to their own arrangements.
Another point that I think is relevant to her constituent’s case is that the 2012 scheme uses more up-to-date income information. One problem with cases on the ’93 system is that they are often stuck in the system untouched, so the maintenance assessments get very out of date, and they can be based on very old income data. I do not know whether that is the case with her constituent, but if someone asks for a reassessment and finds that their liability has gone up, that is often because the previous assessment was based on very old wage data.
The beauty of the new system is that it will use most recent tax return data from HMRC. Rather than our having to go to a non-resident parent, ask for wage slips, wait for them to come back, process them and so on without reassessing the assessment, those data will feed through automatically to us. Once a year on the anniversary we will revisit the assessment and update it with the latest income information so people will not have the rude shock of a sudden hike or drop in their liability, which will be based on the latest income information.
The hon. Lady is absolutely right that there is a set of issues for the people on the ’93 system who are paying more than those on the ’03 system. Equally, a set of parents with care would love to be on the ’03 system but are stuck on the ’93 system. It is important to realise that and perhaps we have not communicated it in correspondence as clearly as we might. We are not saying that because the computers cannot do it there is no issue of fairness, but there are multiple issues of fairness.
What we mean by “for every one, there is another” is that for every parent with care who would receive more under the new system, there is a non-resident parent who would pay less under it. Simply allowing case-by-case migration, quite aside from being unlawful, would create a different set of injustices. That is my conclusion: we want to get as quickly as we can to a new streamlined system that is fair to all and in which we do not have either of the legacy systems while learning the lessons from the past. As the hon. Lady rightly said, the process has not worked as well in the past as it should have done and we want to get to the new system as quickly as we can.
Question put and agreed to.