Welfare Reform Bill

Baroness Sherlock Excerpts

Wednesday 25th January 2012 Lords Chamber

[Lord De Mauley]

My Lords, I shall speak also to government Amendments 62BM and 62CA. In doing so, I wish to put these amendments in the context of the reforms they relate to.

The Government are committed to supporting lone parents. We spend over £6.5 billion on income-related benefits for some of the poorest lone parents alone. Significant financial support is also offered through the tax credit system and child benefit. Our reforms to child maintenance build on this support that the Government already provide directly to lone parents. Our key aim when reforming child maintenance is to ensure that both parents take responsibility. That includes taking responsibility for paying maintenance and for making the right choices about maintenance. This should be seen in the context of our wider ambition to make it the norm that parents work together in the interests of their children, especially when they no longer live together.

Every family is different and the child maintenance system in Great Britain should reflect this. The truth is that the statutory scheme cannot be so detailed and individualised as to be able to deal with every possible circumstance. For too long, parents have been implicitly or explicitly told that the Child Support Agency is the default option. That approach has entrenched conflict and led to an overreliance on the Government providing enforcement action.

The CSA-based system has failed, with the statutory schemes costing around £450 million each year. That could be seen against funding for relationship support for separating parents of £30 million over four years. Furthermore, taxpayers support costs of up to £25,000 for some typical CSA cases and up to £40,000 where we need to take substantial enforcement action. That is money spent by the state chasing maintenance from one parent to give to another. This has led to a system where, overall, it costs about 40p to move £1 between parents. The system must change because it is not working properly for parents or children. It does not represent value for money for the taxpayer.

The reformed system of child maintenance will be based on the principle that collaboration between parents is best for children. We firmly believe that collaborative child maintenance agreements are longer lasting and parents are more likely to be happy with them. Furthermore, we know wider collaboration between parents is clearly associated with better outcomes for children.

I hope that noble Lords will also acknowledge that we cannot be overly simplistic as to where fault lies when it comes to problems establishing maintenance arrangements. In reality, one-third of parents in the CSA identified that they had a friendly relationship with their ex-partners and said there was frequent contact by non-resident parents with their children. Furthermore, these parents reported that their maintenance arrangements were not really a source of tension. The CSA said that it was fairly easy for these parents to discuss financial matters. Our reforms also reflect the fact that over 50 per cent of parents using the CSA told us that, with the right support, they were likely to be able to make a collaborative agreement. Groups working with parents also tell us this. Karen Woodall, director of the Centre for Separated Families, said that,

“the campaign around the proposed changes to the child maintenance system has been largely based on outdated stereotypes around parental behaviour. By offering support to both parents and to the wider family, we believe that the changes will bring about much better outcomes for children”.

However, it is surely not the state’s role to intervene and arbitrate in personal relationships between two adults. Instead we wish to support parents to make an informed decision. That was always the intention of the gateway we provide for under Clause 134. It has become apparent that Clause 134 as drafted, referring to reasonable steps, has been interpreted more stringently than we intended. We do not wish to require parents to take multiple steps determined by us before being able to make an application. That would risk establishing a new quasi-judicial function. It would require us to decide whether a parent had taken reasonable steps and is an impediment to making a collaborative agreement. This would be akin to the complex and intrusive bureaucracy that dogged the early days of the CSA. That is the antithesis of our approach and why we have brought forward Amendments 62BL and 62BM. I hope this clarifies our intentions.

The amendments make clear that our role is to inform the parent approaching us and invite them to consider whether they can make a collaborative arrangement outside the state scheme. This will normally take place when the parent telephones to discuss their options. Where parents wish to pursue it, we will direct them towards wider sources of support. To further make sure support is available for parents, we have announced today £20 million of additional funding. This will be spent working with voluntary and community groups on streamlining existing support and looking at what additional help is needed. This amounts to doubling government spending on relationship support in 2012-13. I hope that, on that basis, noble Lords will be prepared to support Amendments 62BL and 62BM.

Organisations as diverse as the Centre for Separated Families, Families Need Fathers and Relate have all welcomed this announcement. Sarah Caulkin, interim chief executive of Relate, has said that her organisation hopes that,

“this funding will not only allow parents to access support before problems become serious, but also enable as many parents as possible to make their own arrangements to become effective co-parents, which in turn will benefit the whole family”.

I can confirm to the House that this is indeed the Government’s ambition.

These reforms to support parents in collaborating are coupled with reforms to the state-run CSA system. Perhaps I should make it clear that under our reforms the system will still continue to be heavily state-subsidised. However, we want the state-run system to be smaller, enabling us to free up these resources to help separating families who really need that help.

We absolutely recognise that some parents will need to continue to use the state-run service, and we need to do better for them as well. Our starting point for reform is the review by Sir David Henshaw, which was commissioned by the last Government in 2006. The key reform is based around a new scheme recommended by Sir David to replace the Child Support Agency scheme. At the heart of the new scheme will be tough enforcement and collection measures when parents fail to pay maintenance. The Government have developed new processes for identifying those who might not pay and addressing non-payment when it first occurs. The new scheme will also ensure that non-resident parents cannot escape their true responsibilities by refusing to provide us with details on their income. Instead, we will generally access this information from HMRC, which will enable a smoother and faster flow of maintenance to parents with care.

The Government are also committed to ensuring that the most vulnerable parents continue to benefit fully from child maintenance. To this end, we are ensuring that child maintenance payments remain tax-free. In addition, we will guarantee that parents keep all the maintenance, even when they are on universal credit. When money is in payment, child maintenance averages around £32 per week, tax-free, under the CSA. This is a significant financial benefit to the most vulnerable mothers.

Sir David Henshaw also recommended that,

“charging is introduced for users of the administrative system”.

He went on to say that charging would,

“contribute to the objectives of the new system by incentivising private arrangements which can be more successful”.

We agree with Sir David’s findings. The then Secretary of State—now the noble Lord, Lord Hutton—told the Work and Pensions Select Committee at the time of the report that he thought that,

“in general and in principle”,

charging should form part and parcel of the commission’s approach. Subsequently, the then Government took a wide-ranging power to charge as part of the Child Maintenance and Other Payments Act 2008. It is Amendment 62C to that Act from my noble and learned friend Lord Mackay that we will deal with in the next debate. Let me not prejudge that debate, but I shall say something on the principle of charging before flagging an amendment that we propose to make to our powers.

As I said earlier, the Government cannot fairly and should not try to apportion blame between parents. Therefore we firmly believe that, to reform the system and maximise the number of effective child maintenance arrangements, we need to have an affordable but clear financial incentive on both parents to collaborate. With such high numbers of parents who use the CSA saying that it is likely they could collaborate, an affordable financial incentive for both parents is a necessity. The application charge and collection charges proposed by the Government meet these criteria. However, noble Lords will remember that when an application is made and maintenance payments are subsequently made directly, no collection charges are applied. This is the option to pay that is often called often called maintenance direct and is dealt with under Clause 135.

The Government are convinced this approach to charging is the right one and wish to formalise a requirement for us to review based on an evaluation. This would be achieved through Amendment 62CA. We will review charging within 30 months of its introduction. Thirty months will allow a proper sample to be evaluated, including the impacts of collection charges. Within that timescale we will lay a report on the review and the Government’s conclusions on charging before Parliament. I ask noble Lords to support this amendment and the commitment to review.

Child maintenance needs major reform. Fifty per cent of children of separated families have no maintenance arrangement in place at all. We will provide improved statutory child maintenance for those who really need it, and we will of course continue to support lone parents directly through benefits and tax credits. However, we need a fundamental change so that wherever possible parents think twice, take responsibility and do not depend on the state. I beg to move.

[Baroness Sherlock]

My Lords, I will speak briefly to Amendments 62BL and 62BM, and in doing so I draw the attention of the House to my interests, which are in the register. I am a former non-executive director of the Child Maintenance and Enforcement Commission and a former chief executive of the National Council for One Parent Families.

I want to ask a specific point about these government amendments, which seem to be producing a new formulation that would require an applicant wanting to apply for child maintenance through the CSA to consider with the commission whether it is possible for them to make a private arrangement before being allowed to make such an application. Can the Minister please make it clear to the House just what the applicant would have to do? If I am making an application and I simply say, “I wish to make an application”, and the agency says, “Have you considered making a private application?”, and I say, “Yes, but there is no way that he is ever going to agree to it”, is that enough? Am I then allowed to proceed, or is it intended to be a bigger hurdle than that?

[Baroness Tyler of Enfield]

My Lords, I welcome the announcement of the additional £20 million for family support services for separating families, which is part of this package of reforms, and in doing so I must of course immediately declare a very direct interest as departing chief executive—this week—of the charity Relate. We provide help and support to separating families, to mothers, fathers and children and to wider family members. I recognise also that this is less contentious than the issues surrounding the reform of the statutory system, which we will be debating a little later, but it is worth a quick comment—not least because of the fact that each year around 350,000 children are directly affected by parental separation.

I am sure that all noble Lords across the House will agree that it is better, wherever possible, to encourage separating parents to make voluntary maintenance arrangements and to provide them with all the necessary practical help and support to do so. I am equally sure that all noble Lords recognise that this avenue will never be possible or appropriate, or even desirable, for all parents, particularly when issues of domestic violence are involved. That is what the statutory service is there to do, quite rightly, but it must be in everyone's interest that as many separating families as possible are encouraged and actively supported to make their own arrangement, not least so as not to clog up the statutory system for those who really need it most. The fact that some 50 per cent of children living in separated families have no effective child maintenance arrangements in place is surely evidence that the current system needs an overhaul. It is self-evident that any new system should be based as far as possible on reducing conflict and encouraging collaboration.

The fact that the funding announced today will allow parents to access more consistent support services as soon as possible across the country, and that it responds very directly to concerns raised by the DWP Select Committee a number of months ago, will be in everyone's interests, particularly those of children. This form of earlier intervention must be a wiser use of resources than waiting for problems to become so intractable, and for conflict to become so entrenched, that voluntary-based arrangements, frankly, become quite impossible.

As a former chair of the Kids in the Middle coalition of charities, I know that high levels of conflict in family relationships are bad for the well-being of everyone involved, particularly the children. Research makes it clear that the two most damaging issues for children when parents separate, which often make effective and enduring co-parenting far more difficult, are high levels of conflict and a lack of contact between both parents after separation. It will hardly be a surprise that the two often go hand in hand and, crucially to the debate today, that where there is contact between the child and the non-resident parent then often financial support arrangements flow as well. There is good evidence for the impact that co-ordinated services can have in this area, addressing financial, legal, housing and practical advice but also emotional support, mediation and a range of other things. I will not detain the House any longer by going through the research evidence that exists in this area, but I find it persuasive.

I stress, as I did in Committee, how detrimental it is to any child to grow up not simply without enough income and financial support but without any role model of a father—as generally the non-resident parent is—as a key figure in that child’s life, providing practical, emotional and financial support.

--- Later in debate ---

[Baroness Sherlock]

I came across a quotation from the Committee stage:

“For even though marriages may break down, parenthood is for life. Legislation can't make irresponsible parents responsible. But it can and must ensure that absent parents pay maintenance for their children”.

That was said by the noble Baroness, Lady Thatcher, in 1990. She went on to talk about setting up the CSA. We have heard a lot about the failings of the CSA, but more than £1 billion changed hands last year through it. Before it was set up, lone parents had only the option of going to the courts to try to enforce maintenance, and in the vast majority of cases, they could not afford to go and could not afford to enforce it if it happened.

There are two very simple reasons for backing this amendment, which is why my name is on it. The first is simple compassion. There is no good reason why a single parent should have to hand over to the state not only £100 up front but up to 12 per cent of the money that is currently going to her children simply to have what is owed to her in law paid.

The second is a question of justice. If the Government’s intention is to change behaviour and to make sure that the absent parent pays up, they should charge him. What can the lone parent possibly do, other than ask, to make him pay up? Yet she will be penalised for his failure to pay. There is no behaviour change that she could possibly undertake, other than to ask nicely. She cannot do anything. That is why she has gone to the state in the first place. She has come to the state to ask for the help that the noble Baroness, Lady Thatcher, recognised all those years ago and set up an agency to give. We must not fail her today.

[The Lord Bishop of Manchester]

My Lords, many of my parish priests would endorse the kind of things that we have heard of this afternoon, the many cases where single parents—97 per cent of them mothers—are placed in a most cruel and unfair position. It is only recently, I think, that the Prime Minister said that our society must do more to make fathers understand and take responsibility for their paternal aspects which they have taken on by becoming fathers. What I do not think he said but, unfortunately, what this Bill does is that the mother who is left on her own without any financial backing from that father should therefore pay this huge penalty. That is what this Bill is requiring at the moment. It seems to me that what the noble and learned Lord, Lord Mackay, is putting before this House is a very sensible and compassionate way of undoing an injustice which I do not believe the Government really intended in the beginning. I hope that the Minister will see his way forward to recognising the great power of opinion that he must surely have heard this afternoon in this House.