Public Bodies (Child Maintenance and Enforcement Commission: Abolition and Transfer of Functions) Order 2012

Lord Freud Excerpts

Thursday 12th July 2012 Grand Committee

Moved By

[Lord Freud]

That the Grand Committee do report to the House that it has considered the Public Bodies (Child Maintenance and Enforcement Commission: Abolition and Transfer of Functions) Order 2012

Relevant documents: 1st Report from the Secondary Legislation Scrutiny Committee, 1st Report from the Joint Committee on Statutory Instruments.

[The Parliamentary Under-Secretary of State, Department for Work and Pensions (Lord Freud)]

My Lords, the order was laid before Parliament on 23 April under the powers granted by the Public Bodies Act 2011. It provides for the abolition of the Child Maintenance and Enforcement Commission and the transfer of its functions to the Secretary of State for Work and Pensions. I am satisfied that this instrument is compatible with the European Convention on Human Rights.

Before addressing the order in detail, I emphasise that there is no intention to change the services currently delivered by CMEC when its functions are transferred. The promotion of financial responsibility and child maintenance, the provision of information and support and the delivery of the statutory service will all continue. However, it would be helpful to provide some background on CMEC and the proposed abolition and transfer.

CMEC was established by the Child Maintenance and Other Payments Act 2008 and took over responsibility for the child maintenance system in Great Britain. Its primary objective is to maximise the number of effective child maintenance arrangements in place for children who live apart from one or both of their parents, whether these are made collaboratively between parents through family-based arrangements, by court order or through the statutory scheme. To achieve this objective, CMEC has three core functions: promoting the financial responsibility that parents who live apart have for their children; providing information and support to help parents make effective maintenance arrangements; and providing an efficient statutory child maintenance service with effective enforcement.

CMEC currently has two delivery bodies: Child Maintenance Options, which provides a free and impartial information and support service, and the Child Support Agency, which continues to administer the two existing statutory maintenance schemes. Together they are staffed by some 8,000 committed and dedicated people but, despite their best efforts, CMEC does not properly achieve its key purpose. Noble Lords are well aware of the complexities, inefficiencies and poor IT that have been a well publicised feature of the existing schemes but, crucially, around half of children living in separated families do not benefit from effective child maintenance arrangements—that is more than 1.5 million children.

CMEC costs taxpayers £500 million a year, but at present the Government spend less than 10% of that on positively helping families to address relationship issues or helping them to work together for the benefit of their children. That is why the system needs reform, and that is what we are working towards. I know that there will be particular interest in the planned reform of the child maintenance system but I do not propose to dwell on those matters here. I will write to noble Lords soon, inviting them to a meeting to discuss our proposals in more detail.

The proposal to abolish CMEC was announced as part of the Public Bodies Bill review on 14 October 2010. The review’s overriding aim was to increase transparency and accountability as well as to cut out the duplication of activities. Three criteria were set out by the Minister for the Cabinet Office in the Public Bodies Bill review which determined whether a body or function should be delivered at arm’s length from Ministers. I am satisfied that CMEC does not meet any of these criteria because, first, it is not a technical or fact-gathering body that needs independence, nor does it require political impartiality to discharge its responsibilities, nor does it need to act independently to establish facts. CMEC performs an administrative function and the services that it provides should be managed within the Government rather than by a non-departmental public body.

Child maintenance is an important part of the Government’s central aims and objectives in supporting families, particularly the 3 million-plus children living in separated families. It is right that Ministers should be directly accountable and responsible for the operational delivery, strategic direction and policies relating to child support without an additional layer of external management, as currently exists with the CMEC board. As I have already mentioned, the current system needs reform, and the proposed integration into the Department for Work and Pensions will enable us to do that much better. In the longer term, efficiencies can be achieved and I am convinced that the change will enable a better service to be provided to parents and children.

In accordance with requirements of the Public Bodies Act, which this House requested, a consultation on the abolition of CMEC ran from 10 October 2011 to 3 January 2012. Only 11 responses were received, a rate that indicates that this really is not a contentious change. Indeed, five responses were broadly supportive of our proposals, either agreeing with or welcoming the change, albeit with some minor concerns. Three responses disagreed or asked for reconsideration. One respondent had no comments to make and another had misunderstood the consultation criteria.

The order was laid on 23 April 2012. Orders under the Public Bodies Act have a minimum 40-day scrutiny period, with a Committee of either House able to extend that to 60 days by resolution if it feels it is necessary. The order has been scrutinised by several committees within Parliament: in this House by the Secondary Legislation Scrutiny Committee, as it is now called; in the other place by the Work and Pensions Committee; and collectively by the Joint Committee on Statutory Instruments. None of those committees chose to trigger the optional 60-day scrutiny period.

The Secondary Legislation Scrutiny Committee reported on the order on 15 May and concluded that it increased direct ministerial accountability by reversing the provisions of the Child Maintenance and Other Payments Act 2008. In the other place, the Work and Pensions Select Committee held an evidence session on the draft order on 25 April, which the Child Maintenance Commissioner and the Minister for Disabled People attended. The committee raised a number of issues, including how CMEC’s current objectives and functions would be pursued, how its activities would be reported following the transfer and whether the transfer could be justified on the grounds of improving value for money.

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[Lord Kirkwood of Kirkhope]

My Lords, I am delighted to follow the noble Baroness, Lady Sherlock, because she said just about everything I had in mind to say. I concur with the important points that she made.

I am very pleased that the noble Lord, Lord Freud, offered us a meeting later in the year. That is part of his unique way of doing business and it is very helpful to the rest of us as we try to understand what is going on. I understand that he and his colleague in the other place are putting a great deal of work in to this important area.

I will stress—because it is easily forgotten—that the client group with whom we are dealing may be disproportionately affected by the impact of the austerity measures that the country faces. I am sure that the Minister and his advisers are already aware of this. As a board member of the Institute for Fiscal Studies, perhaps I could draw his attention to the analysis by James Browne that was published by the IFS for the Family and Parenting Institute in January 2012. It predicted an 8% net loss of income for working single parents and a 12% loss for non-working single parents. We are dealing with a particularly vulnerable client group here, and we all know that. The IFS analysis is useful as a reminder of the importance of getting it right. I know how concerned the noble Lord, Lord Freud, is about these vulnerable groups because he is doing a lot of work on universal credit to try to make sure that these issues are addressed.

In addition to the points addressed to the Committee by the noble Baroness, I will say that other NAO and PAC reports that came out earlier this year—particularly on client fund accounts and on CMEC’s plans to reduce its own spending, which was in an NAO report on 12 February this year—raised matters about which we should all be concerned, including the ability of CMEC to achieve its estimated £117 million savings between now and the fiscal year 2014-15. That is something I would like to put on the agenda for the meeting later in the year, which I would be very pleased to attend—if I get an invitation after this speech.

The NAO was also concerned about the plans to levy charges. I do not need to repeat the point that there is some disjunction between the early planning and the work that the NAO did in highlighting some of the gaps. This will have been worked on and I hope that there will be further and better particulars available. At any future meeting I would like to try to understand how much risk there is in the levying charges policy that is currently being publicly promoted, at least by CMEC.

I agree with the NAO analysis about planning for a 71% take-up of the new statutory system. I have no way of knowing the metrics, systems or processes that CMEC has for measuring that 71%. It is relying very heavily on that as an income stream from which it hopes to move forward. The Comptroller and Auditor-General, the NAO and the PAC were interested to learn more about that, and again expressed concerns. I will also reinforce the point about maximising payments. That is an important duty that will be lost. Any system, whether or not it involves annual reports, should underpin efforts to win back as much of that as we can in the circumstances. That would be useful.

Finally, we still expect a consultation on charging mechanisms. That is a very important piece of outstanding work in which the community, pressure groups and others to whom this area of public policy applies are particularly interested. Perhaps we could add that to the agenda of what now looks like quite a busy meeting some time in the autumn.

This is an important area. I am very ambivalent about this change but I can understand that the costs have to be reduced in a sensible way. I just hope that we are able to do that in a way that does not disproportionately affect the client group we are seeking to serve here. But I have trust that my noble friend Lord Freud is aware and alive to all these things. I hope that the Committee can look to him to give us reassurance, whether privately or publicly, going forward.

[Lord Freud]

My Lords, as ever, there have been some very thoughtful and knowledgeable speeches. Why am I not surprised? I will set the context of the process we are going into in terms of consultation. I deliberately kept my speech very focused on this order. As we are all aware, there are a lot of issues around CMEC charging generally, which we will have a lot of time to address. As I said in my opening remarks, I plan to write to noble Lords reasonably soon. I made a commitment to involve noble Lords particularly in the charging process and the plans that we have. I said that I would do that at two points: first, at the outset in order to allow noble Lords to see plans at the beginning as we develop and discuss them and, secondly, before regulations are laid towards the end of the process as the debate has gone through. There is time outside the formal calendar in which to go through this.

I am conscious that when things are difficult—and in this area of child maintenance there is a lot of sensitivity and concern—an involved process is much better than just slamming a set of regulations on the desk. That is why I have done it in that way and have made some cuts. We could easily spend all night on this and I am trying to concentrate just on the core transfer.

There were quite a few questions from noble Lords on the reporting process and the data process. The group will be included in the DWP’s annual report and accounts. It will continue to publish a quarterly summary of statistics of child maintenance and the figures will be included in the biennial Understanding Society survey. We will respond to the question asked by the noble Baroness, Lady Sherlock, and the PAC through a Treasury minute, which will be published in the near future. I do not have a translation for “near future”, so we will have to go on the commonplace interpretation of what that means.

My noble friend Lord German asked about historic debt and our strategy. It remains a priority. We have a debt of £3.8 billion outstanding. We want to collect as much of that as we can and are using all the powers available to us to do so. He also asked about effectively co-ordinating family support services. A number of principles are involved here: we need to make sure that families have the right information when they separate and that they are encouraged to have a collaborative relationship. That, as noble Lords are fully aware, is a core part of the Government’s strategy here. In the main, services will be voluntary and community sector-led. That is why we have formed a steering group of representatives from the sector to inform our thinking and propose how best to evolve those services. My colleague, the Minister for Disabled People, Maria Miller, announced in January that £20 million was available to support this work and on 25 June she confirmed that £14 million of it would be placed in a new innovation fund to finance effective and innovative interventions. I will not go into that in any greater detail.

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[Baroness Sherlock]

I would accept a letter from the Minister.

[Lord Freud]

Actually, I would like to turn that around on the noble Baroness; I will accept a letter from her on the lessons from history, and I will pass it on and make sure that they are applied. I look forward to receiving that.

On my noble friend Lord Kirkwood’s question about how we will achieve the savings, we are talking about securing ministerial accountability—this is not about driving savings. The amount of savings from this measure is pretty modest: direct savings are probably running at about £500,000 a year, and that is due to changes to IT systems and one-off costs. We would hope to see longer-term savings from integrating services more deeply into the department. I think, and this point was raised by my noble friend Lord German, that there are some real opportunities here to get holistic support. The longer that I have been in this job, the more I have realised that bringing support together for people and families in trouble is the way to go. There is an opportunity for us to pull the services together in this context as well as in other contexts.

I am tempted to offer to write to the noble Lord, Lord McKenzie. I always feel that it is a triumph if I can get out without offering him a letter because I can answer all his very clever questions. I think that I am down to the one on adverse tax consequences. Although it is always difficult to prove a negative, I cannot imagine how there can be adverse tax consequences because we do something in the middle of the year, when they are both effectively Crown bodies. If that is a wrong tentative statement, I will commit to write, but I hope that I will have avoided any need to put pen to paper for him on this occasion; that would be one of my personal targets. This is about making sure that Ministers are fully accountable to Parliament.

[Lord McKenzie of Luton]

So that the Minister does not have to commit anything to paper, will he deal with the question about the enforcement powers? There is a whole raft of them in the 2008 Act. Those are all presumably going to be taken over by DWP. Where is the department on bringing those into effect?

[Lord Freud]

My Lords, the noble Lord is right: we just transfer those powers over. There is no change in them. As to the detailed timetabling of all that, we are preparing to show that to noble Lords. The easiest way is if I come to that, unless I have a miraculous answer—which I do not think that I have to this specific question. I will deal with that when we assemble, quite soon, on that issue. I will not write.

I close by reassuring noble Lords that ensuring that children get the support that they require, both financial and otherwise, when their parents cannot live together and ensuring that they have the best opportunity to thrive during their childhood is what this is about.

Motion agreed.