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

Lord Kirkwood of Kirkhope Excerpts

Thursday 12th July 2012 Grand Committee

[Baroness Sherlock]

My Lords, first, I apologise to the Minister for having missed the beginning of his opening remarks. I am afraid that I misjudged the timings somewhat. In speaking to these regulations, I remind the Committee of my registered interests. In particular, although the Child Maintenance Enforcement Commission had a brief life, I managed for two of its years to be a member of its board, serving as a non-executive director until 2010, shortly after I entered the House. I also declare that I am a former chief executive of One Parent Families, now Gingerbread, to which I am grateful for the briefing.

These are small regulations to effect a major reorganisation. I want to ask the Minister a couple of questions, picking up some points made by my noble friend Lord McKenzie. When CMEC was set up by the Child Maintenance and Other Payments Act 2008, its primary objective was,

“to maximise the number of those children who live apart from one or both of their parents for whom effective maintenance arrangements are in place”.

The wording is significant. As the Minister knows, this does not refer simply to maximising the number of maintenance arrangements made through the statutory system but to maximising the number of arrangements in total. In other words, CMEC had a duty, which it took very seriously, to maximise the number of private maintenance arrangements alongside those undertaken using the statutory system. Given that, what assurance can the Minister give us that this objective will be taken on by the Secretary of State, to whom CMEC’s functions are being transferred? How will that be discharged? The noble Lord, Lord German, suggested that perhaps a report to Parliament might work.

Before CMEC was created, when the Secretary of State had responsibility for child maintenance, the Secretary of State actually issued targets and then reported publicly to Parliament on the extent to which those targets had been met—or not. That might be something that the Minister might like to take on board. Can he tell us if the Secretary of State would be willing to do that, and if not, what other mechanism is there for reporting to Parliament and for ensuring that Parliament can have some criteria for judging the report that is thus made?

The Minister, I am sure, will have read the report on CMEC by the National Audit Office of 29 February 2012, as well as the report of the Public Accounts Committee from April. In relation to the decision to charge parents for using the statutory maintenance service, the PAC report noted:

“A successful fee regime will depend on the Commission being able to deliver reasonable standards of service”.

However, it also said that because of problems with the service, there was a danger that parents would not want to use it. The committee noted:

“The risk is that parents who cannot agree private arrangements and do not trust the statutory system are left without effective child maintenance arrangements and that could impact on child poverty. The Commission should work with stakeholders to monitor whether more separated families agree their own arrangements and understand any service-related reasons for lower than expected applications”.

It also suggests that:

“The first monitoring report should be carried out six months after the introduction of fees”.

What is the Government’s response to that recommendation from the PAC? I apologise if the Minister mentioned that in the first five minutes of his opening remarks. Will the Government accept that recommendation and the timetable, and if not, by what other means are they going to address the concerns raised by the PAC?

Can the Minister give the Committee some assurances about the readiness of all involved for this transfer? The PAC report also noted that the commission’s plans to deliver the £117 million of cost reductions imposed on it by 2014-15 were “high risk”. It said:

“There is a £16 million funding gap for 2014-15 which could widen by some £3 million for every month the new IT system is delayed. A further shortfall of up to £30 million could arise in 2014-15 if projected fee income does not materialise”.

What assurances can the Minister give the Committee that the statutory service has adequate funding to deliver the service promised when the Welfare Reform Act was passing through this House?

Finally, I know that the Welfare Reform Act has made the decision to transfer this but can the Minister tell us what lessons the Government have learnt from history? The department has had the opportunity to see the CSA operating both inside and outside government. In bringing it back in, what lessons has the department learnt and how does it hope to avoid some of the very considerable problems the CSA had in the early 1990s?

[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.