Child Support Management of Payments and Arrears (Amendment) Regulations 2012

Lord Kirkwood of Kirkhope Excerpts

Tuesday 20th November 2012 Grand Committee

[Lord Kirkwood of Kirkhope]

My Lords, it is a pleasure to follow the noble Lord, Lord McKenzie, on this important set of regulations. I should say at the outset that, like him, I have no objections to the technical provisions therein contained. I recognise the genuine progress that the Child Maintenance and Enforcement Commission in the current set-up, which will eventually morph into the Child Maintenance Service, has made in some areas over recent years.

That does not deny that a huge amount of work is now going to unfold, starting from next year with the closing down of all existing CSA cases. The department has the job of getting to grips with the mountains of child maintenance debt that have accumulated over the past 19 years. It is reassuring to hear the Minister say that we will soon be able to see the child maintenance arrears strategy. It was supposed to be published by the end of this calendar year, so I hope that we will still see it within that timeframe. Although the regulations are important, they are relatively small scale compared to the longer-term problems that we may face.

Like the noble Lord, Lord McKenzie, I have a list of elucidatory questions to ask. I do not think that it will be possible for the Minister sensibly to answer them all in the time available this evening, so I am perfectly happy to take some written guidance if that is found to be convenient to the Committee and the Minister. Although the regulations are important, they merely tidy up some peripheral areas. However, the context behind the whole policy or subject area is complicated and concerning and it bears some examination before we approve the regulations.

I start with the position taken by the Comptroller and Auditor-General on the last client fund accounts published by the Child Maintenance and Enforcement Commission. I accept that they are historic; the last audited figures we have are for 2008-09 and 2009-10. These suggest that at 31 March 2010 the commission regarded that total maintenance arrears amounted to £3.7 billion, and I believe that that figure will have increased by now. At that stage the commission took the view that only 28% of it was potentially collectable. That is just about £1 billion, and of that only about £0.5 billion, 13% of the total reported arrears, was likely to be collected. That is the size of the mountain we are setting out to climb next year, and we know that it is against a background of inaccurate maintenance assessments, processing errors, overstatements and understatements in the reported accounts, the arrears being available only at financial statement level, not at the individual case level, and arrears collection targets consistently missed year after year, year in, year out. On the basis of the information presented in the last audited client fund accounts, the Auditor-General concluded that,

“the scale, age and collectability of the outstanding maintenance balances which have accumulated since the inception of the statutory child maintenance schemes, mean that the Commission continues to face a significant challenge to collect a large proportion of these arrears”.

That continues to be the case. The regulations we are discussing are a constructive step forward, but only a small step.

The Public Accounts Committee, responding to the opinion of the Comptroller and Auditor-General, took the view that the department had to do more to communicate positively and constructively with the parents involved, particularly the parents with care. In the Government’s response to the PAC’s conclusions, they said they would make a determined attempt to collect the £2.7 billion deemed, according to the C&AG’s report, not to be collectable. They would do that by undertaking a trial with a small number of clients to try and improve communication with parents with care to keep them au fait with what is happening in their individual cases. I understand that this trial has started. It would be of great benefit to us all to learn more about it. I think it started in June. I would like to know how many cases it has covered and whether there has been any evaluation of its success in terms of improving communication.

The work has significance for the future prospects of collection in the longer term and I would certainly like an assurance that when it is completed it will be published in full so we can see exactly what difference it can make by notifying parents of what action is planned to recover the sums owing to them. It should also tell customers of any debt it believes is too costly to pursue rather than leaving parents in limbo, which has been the case in the past. The DWP and new Child Maintenance Service understand that we need to work harder to make sure that the unvarnished truth is made available at every opportunity to the parents with care. If we had some assurances about that and the pilot scheme works well, then I hope we will seize the opportunity to make improvements in that direction.

I have a couple of other questions and, again, a written response is perfectly acceptable because some of these things get quite complicated. I want to ask about the validation of cases. When the CSA closes down a case, the DWP always separately undertakes a validation of the debt before it is transferred. I understand that only validated CSA arrears will be transferred into the new IT system; that is, those amounts that have been properly validated. In passing, I hear that the computer system being used at the moment is incapable of fully dealing with part payments. That may be a temporary situation, but if it is true, there is a long history, which I remember as well as anybody, of glitches in IT systems costing the system dear and contributing to accumulating arrears. If the new IT system is fully capable of taking part payments, particularly if they are used extensively in the future, that would be good.

However, we have a validation system which will almost inevitably mean that the number of individual cases will be reduced. I would like a reassurance that if and when that happens, there will be a full exchange with the parents with care as to what has happened, what the write-off has been, and a full explanation of the validation process and how it will affect their casework. These draft regulations provide for an arrears write-off, as the Minister has said, where a parent with care no longer wants the arrears. As part of the case closure process, will parents with care be asked whether they still want the arrears and, if so, at what stage? I would like to understand better the validation process as applied to these regulations, how it will be handled and how this work will unfold during the case closure process.

I turn briefly to the deprioritisation of older cases. It is stated Government policy, and the new Child Maintenance Service has made it explicitly clear in a way that has caused a great deal of concern, that the existing arrears in older cases—cases that are out of payment because the children are beyond the age of minority or have gone on to university—will not get the same priority to be chased down as those of parents with care for children who are of the age group which is currently eligible to accrue payments from non-resident parents. I have real concerns about this. This issue obviously goes wider than these regulations. I shall lay down a marker that when the Child Maintenance Service arrears strategy is published in full later in the year or whenever it comes, I hope that serious consideration will be given to what steps will taken. If older cases are not prioritised, what will happen to them? They cannot just be left because that is an abrogation of responsibility by the department and the Child Maintenance Service. It is effectively giving a green light to non-resident parents who have successfully evaded their responsibilities so far. That needs further and better consideration.

Penultimately, I raise the question of compensation. There will be some cases in these regulations where there will be a prima facie case where maladministration within the CSA or CMEC in the past has demonstrably led to arrears being greater than they normally would have been. I do not know exactly what the policy is at the moment but in the intimation of any such set of circumstances where the arrears are judged to be no longer collectable and there is a bona fide case to be made that the Child Support Agency contributed to that, compensation should be offered. We should be clear about what those compensation details are for the cases that they affect. They will not only affect these regulations, but the whole childcare arrears strategy in the longer term.

Finally, under the new statutory child maintenance schemes, cases will be admitted to the new child maintenance collection service only once a direct payment arrangement has actually broken down. That means that all the new cases that are assumed will come with arrears. The future strategy that is yet to be published needs to take a clear hold of that and deal with it, otherwise, we will end up in five or 10 years’ time dealing with new cases with uncollected arrears. If that was allowed to happen, we would not have learnt the lessons of the past. That would be very disappointing and regrettable. What I am really asking for—as did, I think, the noble Lord, Lord McKenzie—is an early clarification of some of the wider policy intentions of the Child Maintenance Service in relation to outstanding arrears.

We will monitor these regulations carefully. The questions the noble Lord, Lord McKenzie, and I have raised deserve some response, but I am content to rest on what has been suggested and watch the future policy roll out. The Government can be sure that we will be watching very carefully to see whether these regulations are implemented properly and effectively so that child maintenance flows to the children that it seeks to serve.

--- Later in debate ---

[Baroness Stowell of Beeston]

I am grateful to the noble Lord—he is demonstrating his experience in this area. That is one fewer letter for us to have to commission and I am sure that my friends behind me will be grateful for that. The noble Lord asked if there is scope for the non-resident parent to disagree between allocations to the Secretary of State and the parent with care. We will give the parent with care’s debt the priority and both clients will be informed of this. The non-resident parent can specify which parent with care, as I explained in my opening remarks, but the department will decide the priority hierarchy after that. Obviously, we will give the parent with care priority over the Secretary of State.

The noble Lord asked what was defective about the enforcement powers that might lead us to this arrangement for part-payment. The enforcement powers are not defective, but there are circumstances in which there is no suitable action to take; for example, where a non-resident parent is self-employed and has no assets. In this example, there is often no way of collecting the debt in full—I think that might address one of the points of the noble Lord, Lord Kirkwood, as well.

The noble Lord, Lord McKenzie, asked about the lump sum of part-payments and clarified why instalments have to be regulated for at a later date. This is one of those technical answers. If we regulated to allow for that now but could not facilitate it in practice I am advised that we could face legal challenge. We can therefore only introduce the legal power once we know that we can deliver it in practice. So we would if we could, but we cannot.

[Lord Kirkwood of Kirkhope]

That is a first.

[Baroness Stowell of Beeston]

I shall ignore the remarks of the noble Lord from a sedentary position and keep moving on.

The noble Lord, Lord McKenzie, also asked how the department will stop non-resident parents using the part-payment powers to play the system—“Where are the risks?”. The noble Lord may not have used that phrase, but I think he was asking where the risks were in this. If a non-resident parent enters into a part-payment agreement and subsequently defaults, the legislation provides that the commission may cancel the agreement and pursue the non-resident parent for the total amount of the arrears that they owe. Both parents would be notified of this before entering into a part-payment agreement with the commission. A non-resident parent will therefore have an incentive to remain compliant with their part-payment agreement.

The noble Lord, Lord Kirkwood, talked about older cases and asked whether arrears in these cases will get the same priority as more recent ones. The strategy to which we have already referred, and which is due for publication soon, will set out what we plan to do to stem the growth of arrears and manage arrears in all types of cases. It is an issue that we recognise and it will be addressed. He also asked about any arrears that have built up on the existing schemes once a case has been closed. This subject will be brought before the House for debate next year—I look forward to debating it at that time and I will ensure that I am fully equipped to answer the noble Lord then. Arrears of maintenance accrued under existing schemes will continue to be owed to the parent with care unless that parent requests that it not be collected.

I have covered the points raised by the noble Lord, Lord Kirkwood, and I believe that I have done the same for the noble Lord, Lord McKenzie. I will conclude by restating my thanks to the noble Lords for their support for these regulations.