The Parliamentary Under-Secretary of State for Work and Pensions (Will Quince)
I beg to move,
That the draft Child Support (Miscellaneous Amendments) Regulations 2019, which were laid before this House on 9 May, be approved.
These regulations amend child maintenance legislation to enable the delivery of the child maintenance compliance and arrears strategy.
We all know that, when parents work well together, their children fare better. A reformed child maintenance scheme based on that principle was launched in 2012 and administered by the Child Maintenance Service. This scheme was designed to encourage parents to work together following separation and, where possible, to make a private family-based arrangement for the child. Where parents are not able to do this, the statutory scheme is there as a fall-back option. I am pleased to say that, following staged implementation, the service is working well and largely avoiding the problems that beset the previous statutory child maintenance schemes. As the reformed scheme has been implemented, we have listened to the issues that hon. Members and external stakeholders have raised. This valuable input has informed our new child maintenance compliance and arrears strategy.
Last November, this House approved regulations tackling a number of those issues, closing down loopholes, introducing tough new sanctions for those who evade their responsibilities and dealing with the historic arrears that built up under the Child Support Agency. This second set of regulations supporting the compliance and arrears strategy builds on those made last November. It includes provisions to make deductions from benefit fairer, to address uncollectable debt and to improve information-gathering processes, alongside amendments to the calculation and fees regulations so that they better reflect the intent of the 2012 reforms.
Let me turn first to the changes to powers to make deductions from benefits. All parents have an obligation to support their children regardless of their financial circumstances. Parents on benefits are liable to pay the flat rate of maintenance of £7 per week. If they do not pay voluntarily, we can take deductions directly from their benefit payment, plus a collection fee of £1.40. There are different rules surrounding what may be taken for ongoing maintenance and what may be taken for arrears.
The Child Maintenance Service can currently make weekly deductions of £8.40—a flat rate of maintenance at £7, plus a £1.40 collection fee—towards ongoing maintenance from certain benefits, and £1.20 towards arrears from a smaller number of benefits. In some cases, a total of £9.60 a week can be deducted. I want to make this policy fairer for all parents involved.
The regulations enable deductions towards arrears to be made from the same benefits from which the Child Maintenance Service can deduct ongoing maintenance. They also ensure that the service can deduct a maximum of £8.40 a week in all cases. They will stop deductions towards arrears and ongoing maintenance being taken at the same time, with arrears deductions being taken only after ongoing liability has been satisfied. This removes all current inconsistencies and means that arrears of child maintenance can be cleared at a faster rate.
I am also proposing specific changes to deductions from universal credit. The Child Maintenance Service can already deduct £8.40 towards ongoing maintenance from universal credit, if the paying parent has no income from employment. The new regulations will allow the Child Maintenance Service to do the same where the paying parent has earnings in line with other benefits. This will only apply in cases where the paying parent is liable to pay only the flat rate—that is, based on earnings of £100 a week or less. This change means there will be a more efficient and consistent approach to clients on UC with similar financial circumstances.
Let me turn to the proposals regarding protected trust deeds. A protected trust deed is an arrangement in Scots law between a debtor and their creditors. In Scots law, child maintenance arrears that are covered by the deed cannot be collected once a parent enters into its terms. Although dividends may be received towards arrears while the deed is in operation, once it expires any arrears covered by the deed are legally uncollectable. At present, any child maintenance arrears are still held on child maintenance computer systems, even though they are no longer enforceable. The regulations will extend our write-off powers to cover arrears within the terms of a protected trust deed, once that deed has expired. This change keeps our legislation in line with that in Scotland and provides clarity to parents about the status of these arrears. It also stops the Child Maintenance Service holding information about uncollectable arrears indefinitely at a cost to the taxpayer.
There are occasions when child maintenance agents need to access premises to gather information, using powers of entry—whether to trace a parent, to recover child maintenance arrears or to ensure that the child maintenance calculation is as accurate as possible. We do this in a limited number of cases and when other measures to collect this information have failed. In line with the Protection of Freedoms Act 2012, we propose an additional safeguard to protect the public from unnecessary intrusion. The regulations require an inspector to apply for a judicial warrant where they are refused or expect to be refused access to premises, or where they cannot contact the occupier. Although the Child Maintenance Service cannot use its powers of entry to access a wholly private dwelling, this change would reassure the public that independent judicial consideration has been given to any request for inspection. I expect only about 20 judicial warrants to be sought per year, and the occupiers of these premises will have all the usual rights of appeal via magistrates courts in England and Wales, or sheriff courts in Scotland.
I am also proposing changes to the manner in which the Child Maintenance Service requests information from certain organisations. Mortgage lenders and occupational pension providers can be a valuable source of information where there is a need to trace a parent, to calculate a maintenance liability or to decide on the best enforcement power to use. To collect this information currently, the Child Maintenance Service has to arrange for one of our inspectors to visit. Repeat visits are often needed when the information is not readily available, and that can be costly and time-consuming. The regulations add mortgage lenders and occupational pension providers to the list of persons who are legally required to provide the service with information; that information is provided in writing, on request.
When calculating child maintenance, the Child Maintenance Service aims to produce a fair reflection of what the paying parent can afford. This is usually based on the taxable income figure provided by Her Majesty’s Revenue and Customs. The income figure given to the Child Maintenance Service by HMRC is currently provided after any deductions for pension contributions, but before non-taxable allowable expenses are disregarded. Parents need to notify the service to get those non-taxable expenses disregarded from their income figure. I propose a change in the legislation to make it clear in law that the income figure used to calculate maintenance must be used after allowable expenses have been disregarded.
The regulations also include a small technical change to collection fees, which were introduced in 2014 and were aimed at encouraging collaboration. They accrue alongside ongoing maintenance and, as with maintenance liability, accumulate when left unpaid. Collection of these outstanding fees can be enforced as though they were unpaid child maintenance. The regulatory changes that I am proposing clarify this policy intent and will provide the courts with a clear direction on fees when a liability order is sought.
Mr Jim Cunningham (Coventry South) (Lab)
Who decides on the level of fee—the court or the Department?
Will Quince
The fees and charges—20% for the paying parent and 4% for the receiving parent—are set by the Child Maintenance Service.
The regulations build on the success of the child maintenance reforms, further developing collection measures and information-gathering powers, helping to make child maintenance fairer for all parents and ensuring that we fully deliver on the commitments in the compliance and arrears strategy. I commend the regulations to the House.
Will Quince
First, let me thank all hon. Members for their comments and the good-natured and constructive approach they have taken. With your permission, Madam Deputy Speaker, I would like to take this opportunity to briefly respond to a number of the points raised.
The hon. Members for Weaver Vale (Mike Amesbury) and for Lanark and Hamilton East (Angela Crawley) asked about universal credit. In October, the maximum deduction for universal credit will go down from 40% to 30%. I will, of course, continue to monitor this policy in the way that I monitor all policies in my role.
The hon. Member for Lanark and Hamilton East asked about the family test. We conducted a family test, which concluded that there would be no adverse impact on family formation, family life or couple separation as a result of the proposals. As the Minister with responsibility for the family test, I think Members would expect no less. The family test was presented to the Social Security Advisory Committee as part of its scrutiny of the deductions from benefits provisions.
The hon. Lady talked about charges and the fairness thereof. It is important to say that charges account for about 10.5% of the costs of running the service. It is important that we operate a service that is fair to both the paying parent and the receiving parent. Most importantly, it must be fair to the children, who are the ultimate beneficiaries.
My hon. Friend the Member for Hazel Grove (Mr Wragg) raised a couple of points. Knowing what a determined campaigner and champion for the good folk of Hazel Grove he is, it would be churlish of me not to say that I would be happy to meet him to discuss this issue further. To set his expectations, there are no plans to change the 25% threshold. Nevertheless, I would be interested to hear his thoughts and any particular case that he would like to raise. I will come on to talk about enforcement, which he also raised.
My hon. Friend asked about deductions on earnings from people outside the PAYE system. If a parent is employed, we can make deductions of up to a maximum of 40% of their net income. For the self-employed, it is a bit more complicated, but we have a wide range of enforcement powers we can use, such as making deductions direct from a parent’s bank account—including, since December 2018, from joint and business accounts, which was a significant step.
The Opposition spokesman raised a point about when UC deductions will change and when that change will be implemented. We are aiming to start UC deductions from earnings when this package of changes is introduced and UC has been rolled out. He also asked whether a deduction from a parent’s benefit will affect their relationship with the child. That is a very important point. We will —I will, certainly—very carefully monitor the implementation of this policy, and also deductions of benefits. Any deduction from a parent’s benefit requires consideration of the welfare of any child—he would expect nothing less—and if we concluded that a deduction from benefit would negatively affect the child or children, it would not be taken. I hope that reassures the hon. Gentleman.
The hon. Gentleman asked about parents who are put on direct pay, and questioned whether the CMS does anything when payments are not made. The CMS still provides support for direct pay clients, so it is just not true to suggest that that support is not available. Those who do not receive their maintenance in full and on time should contact the CMS straight away, so that the case can be moved to the collect and pay service to enforce payments and any arrears.
It is important to say that, at the start of any case and at each annual review, parents are notified of what to do if their arrangements break down. The CMS sends text messages—SMS messages—to all direct pay parents three months after they have set up their arrangements to remind them to contact the CMS if their arrangement is not working for any reason. Information is available online, and is also provided by the CMS and Child Maintenance Options. It is important to say that, since March 2017, there have been sustained increases in the number of direct pay arrangements moving to collect and pay, although it is also important to note that this has levelled off in the past two quarters.
The Opposition spokesman also asked how many parents have made representations for their debt to be collected. At present, only a small proportion of cases have got to this stage in the process, so we are yet to publish data on that. That is a question he may want to ask me a little bit further down the line.
Last November, the House passed regulations to close loopholes, update the child maintenance calculation, deal with historical debt and bring in tough new sanctions for those who persistently evade their responsibilities. This second package of regulations builds on the first. The changes will make deductions from benefit fairer, tackle unenforceable debt, improve our information-gathering processes, and update calculation and fees regulations. I commend this statutory instrument to the House.
Question put and agreed to.