Groceries Code Adjudicator

Debate between Baroness Sherlock and Lord De Mauley

Tuesday 20th March 2012 Lords Chamber

[Lord De Mauley]

I agree with the noble Lord and that is why anybody will be able to complain.

[Baroness Sherlock]

My Lords, will the Minister explain why these powers for financial sanctions will not be available from day one? Given that the point of setting up the adjudicator was to deal with the findings from the Competition Commission that supermarkets were transferring over excessive risk and unexpected cost to their suppliers, why would not the strongest possible signal be sent out right from the start?

[Lord De Mauley]

My Lords, I understand the noble Baroness’s position. On balance, we think that it would be better to start with the regime that we have proposed. As I said earlier, and as she acknowledges, we may well have to move on to what she suggests, but we would like to consider it further. One advantage of doing that is that we would have the benefit of the adjudicator’s input and experience of deciding on the framework for fines.

Welfare Reform Bill

Debate between Baroness Sherlock and Lord De Mauley

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?

Welfare Reform Bill

Debate between Baroness Sherlock and Lord De Mauley

Tuesday 17th January 2012 Lords Chamber

[Lord De Mauley]

My Lords, I hoped that I had emphasised that point. A great deal of work has been done with local authorities explaining the proposal and the intentions behind it. We have encountered considerable enthusiasm for the principle. We have put a lot of effort into helping and educating local authorities which will be making the decisions. I hoped that I had emphasised the importance of that point. I am agreeing with the noble Baroness but I do not think that I can go very much further than I have gone.

[Baroness Sherlock]

I am obviously being very slow. What will the Government do if a local authority spends the money on a swimming pool?

[Lord De Mauley]

My Lords, the local authority will not spend the money on a swimming pool.

Welfare Reform Bill

Debate between Baroness Sherlock and Lord De Mauley

Wednesday 11th January 2012 Lords Chamber

[Baroness Sherlock]

I asked specifically whether the Government had sought or received any legal advice about whether or not this proposal was compliant with the UN Convention on the Rights of the Child. Can the Minister answer that question?

[Lord De Mauley]

Perhaps I may come to that in a moment.

[Baroness Sherlock]

I shall look forward to it.

[Lord De Mauley]

My noble friend Lord Kirkwood asked about the structure of what is being transferred. The current Social Fund AME allocation of £178 million will fund the new local provision. It will be distributed based on spend at the point of transfer nationally between England, Scotland and Wales. In England, the funding will be devolved to upper-tier local authorities. Again this will be based on Social Fund expenditure. The AME funding splits £141 million to replace community care grants and £36 million for emergency provision. The first year of the new system will be 2013-14 and the funding will be the same as the amounts in 2012-13.

My noble friend asked about the Social Fund Commissioner. The Independent Review Service changed 20,886 decisions in 2010-11. The number of crisis loans, budgeting loans and community care grant decisions made was 5,595,000. The IRS makes decisions on cases that can go one way or another depending on the discretion of the decision-maker. All decisions on the discretionary Social Fund are also first subject to an internal review in Jobcentre Plus.

My noble friend asked about the possible substitution for cash and white goods and indicated that he thought it might not meet the needs. There will of course still be national provision of advances of benefit through the new payments-on-account scheme that will replace budgeting loans and crisis loans for alignment.

The noble Baroness, Lady Hollis, asked how the mixture of AME and DEL will be managed. All the money is AME. There will be, of course, additional admin funding on top to cover the cost of the new burdens.

Welfare Reform Bill

Debate between Baroness Sherlock and Lord De Mauley

Monday 28th November 2011 Grand Committee

[Baroness Sherlock]

I thank the Minister for explaining what will happen to the options service. I confess that I have had the opportunity to listen in to the options service in action in a previous role and, as I understand it at the moment, when a parent with care phones the options service to ask for advice and information, it would steer her towards making an arrangement—because that is the objective—but it would not try to steer her to make it in one direction or the other; it would give her the information she needed to make a choice. Is it the Government’s intention that these replacement services will steer that parent with care away from the statutory service and to another service, irrespective of whether the best interests of herself and her child might be served by it?

[Lord De Mauley]

No, my Lords. I shall come to that, if I may, in a moment.

The purpose of the “gateway” clause is to give all parents the opportunity fully to understand their range of choices and the support that is available to overcome barriers to family-based arrangements. It is in no way intended to prevent them accessing the statutory service if that is the best option for them. We simply want that to be a considered choice. Parents can come back to the statutory service at any time if a family- based arrangement does not work out.

The “gateway” will take the form of a telephone conversation with an agent who will simply explain the available maintenance choices to the prospective applicant and signpost them to any associated help they might need. At the end of that conversation, if the parent feels that the statutory service is the best option, they will be transferred to the statutory service to begin the application process. We will develop an analogous approach for parents wishing to apply online.

We are also aware that a variety of support services for separating families already exists in the voluntary and community sector. However, we all know that there is a multitude of complex issues to be addressed during separation and it can be difficult, especially at a time of distress, for parents to find the information and support that they need. The gateway will also help signpost parents to such support so that if, following the conversation with an agent, they decide that they want to try to establish a family-based arrangement, we can help them find the support they need to do so.

--- Later in debate ---

[Lord De Mauley]

My Lords, I take the general point that they should not come in immediately. We are in fact proposing to introduce the new service and run it for six months before we introduce charges.

The behaviour that my noble friend’s specific amendment would take into account on the part of the applicant is consistent with one objective of the application charge—pursuing alternatives to the statutory service before applying to it—so in that sense it is consistent with our thinking. I would argue, though, that there would be difficulties in collecting hard evidence to show that a parent with care had taken reasonable steps without an inappropriate degree of intrusiveness. However, the amendment does focus our attention on the fundamental issue of access to the statutory service for those who need it.

[Baroness Sherlock]

The Minister thinks it will be very hard to get evidence as to how an applicant had made reasonable steps. New subsection (2A) of Section 9 of the Child Support Act 1991, as inserted by Clause 131(1), says:

“The Commission may, with a view to reducing the need for applications under sections 4 and 7 … take such steps as it considers appropriate”,

and,

“before accepting an application under those sections, require the applicant to take reasonable steps to establish whether it is possible or appropriate to make such an agreement”.

How does he propose to enforce that?

[Lord De Mauley]

I agree that that is a good question. The Government will accept that making a phone call to the gateway is taking reasonable steps.

I said earlier that I agreed with the last Government that it is acceptable to charge for the statutory system. I am, however, very sympathetic to the concerns that have been raised today and I have listened very carefully to noble Lords’ views. What is critical is the amount that the applicant is charged to access the service. Concerns have been raised about the figure that has been mentioned. The noble Baroness, Lady Lister of Burtersett, in the last debate, and the noble Lord, Lord McKenzie, in this debate, mentioned a figure of £100. Both of them suggested that that figure is too high. I sympathise with this view, so I undertake to the Committee to have discussions with my ministerial colleagues and to make that point very vigorously. I thank noble Lords for their contributions today because they will strengthen my hand in those discussions. I also remind noble Lords that we will also consult in due course on our charging levels and debate the regulations in Parliament.

Amendment 113E explores the idea of relating the waiver or reduction of fees to the level of a parent’s income. In a simple way, this is already built into the proposed application charges, with a different, lower rate for those applicants on benefit. Rather than attempt to build further complexity into the IT system, I would prefer, as I have said, to take another look at the overall level of the application charge.

I understand that the matter of an ongoing collection charge is also a concern. The right reverend Prelate the Bishop of Blackburn referred to this. I will take this opportunity to point out to noble Lords that such a charge will be incurred only if maintenance is actually being received; by definition, therefore, people will have to pay for a service only if it is working. I have explained some of the improvements that we plan to make to the service. I am sure noble Lords will agree that it badly needs improvement.

Furthermore, collection charges can be avoided at any time if maintenance direct is selected. The noble Baroness, Lady Sherlock, asked whether victims of domestic violence will pay collection charges. I will come back to victims of domestic violence in a moment, but in the context of collection charges I must say that I do not think it is unreasonable to levy a charge for a service. What is important is the quality of the service and the level of the charge. I hope that I have gone some way to demonstrating that the service will be an improvement on what it has been.

Turning to victims of domestic violence, I reiterate that, as outlined in the Green Paper, Strengthening Families, Promoting Parental Responsibility: the Future of Child Maintenance, we are committed to exempting victims of domestic violence from the application charge. I reiterate that we will honour this commitment. Victims of domestic violence will not have to pay an application charge and they will be fast tracked through the gateway. We accept that applicants who have been victims of domestic violence cannot be expected to make family-based arrangements and so should be exempt from the application charge. However, we do not think it is unreasonable that they should make a contribution, as I have just said, to the cost of the statutory service once they are in it.

To assist them wherever possible to move into maintenance direct and so avoid collection charges and recognising that applicants in these circumstances will not want to have direct dealings with their ex-partner, we are developing a payment support service so that payment can be made outside the collection service without the parent with care having to divulge any personal details to the non-resident parent.

The noble Baroness, Lady Sherlock, asked about the definition of domestic violence. The commission has been working with the Home Office, which has the lead on domestic violence across government. In 2004, the Home Office replaced the 14 previous definitions of domestic violence used across government with a single cross-government definition. We will, of course, be using that definition.

We are still considering how the parent with care can prove that they have been a victim of domestic violence, but I can assure noble Lords that what is designed will not be onerous or burdensome.

Finally, I turn to Amendment 114. In the current child maintenance schemes, the Government have the ability to collect child maintenance by deducting it directly from the benefits of non-resident parents, which is an effective method. The purpose of this amendment is to enable us to continue to do this upon the introduction of universal credit. The amendment will allow, where necessary, for deductions in respect of child maintenance to be made from a non-resident parent’s universal credit award.

We envisage allowing most non-resident parents in the new statutory scheme the opportunity to pay their child maintenance directly to the parent with care—that is maintenance direct, which most noble Lords are familiar with. This should mean that in most cases use of the collection service and deductions from universal credit will be necessary only if the non-resident parent fails to pay by this method. In the current scheme, the ability to make such deductions is limited to where the non-resident parent is liable for the flat rate of maintenance, which could potentially rule out this option for a significant proportion of universal credit claimants who could be liable to pay more. The amendment will remove that restriction.

The amendment also makes clear the position in relation to charging. In the new child maintenance scheme, it is proposed that ongoing collection charges are payable by non-resident parents on top of the maintenance due where it is necessary for the maintenance to be collected using the collection service. The amendment ensures that any charges payable by non-resident parents can also be deducted directly from their benefit payments or universal credit, where this is appropriate. It also allows arrears to be deducted.

My noble friend Lord Newton asked about the appeals system. I should clarify that when I said there was no appeal with the gateway, it is because no one will be stopped from applying to the statutory service, so there is nothing to appeal against. The parent with care just needs to make a phone call and will be granted access to the statutory service.

The noble Lord, Lord McKenzie, asked for an update on the powers taken in the 2008 Act. The Government remain committed to pursuing arrears and will continue to use all their expanded powers to this end while the Child Support Agency schemes remain open. We frequently use deductions from earnings orders, lump sum deductions and deductions from accounts. Parents who fail to pay now face tougher sanctions, including having money deducted directly from their bank account or having their home seized. Primary powers enable the Government administratively—without application to a court—to disqualify a non-resident parent from holding a driving licence or passport where we are of the opinion that the non-resident parent has wilfully refused or culpably neglected to pay child maintenance. These powers are not yet in force. Prior to any final decision being made to commence them, there would need to be public consultation on the detail of how they would work. If the noble Lord so wishes, I can write to him detailing exactly what powers we currently use and what we still plan to bring forward.