Child Support (Miscellaneous Amendments) Regulations 2018

Lord Kirkwood of Kirkhope Excerpts

Tuesday 30th October 2018 Grand Committee

In conclusion, I am of the opinion that these regulations will strengthen the statutory Child Maintenance Scheme by enabling greater compliance by the small number of parents who deliberately try to reduce their child maintenance liability or to evade their parental responsibilities. It will bring certainty to families with historic CSA debt by offering a final chance of collection of that debt, where it is possible at reasonable cost to the taxpayer. I am satisfied that this instrument is compatible with the European Convention on Human Rights, and I commend these regulations to the Grand Committee.

[Lord Kirkwood of Kirkhope (LD)]

My Lords, I am very grateful to the Minister, who, in adversity, has done a splendid job in explaining these regulations. I cannot help but believe that somewhere on the premises there must be a parliamentary sedan chair, which I happily will take one end of until she is better, and I hope that that happens soon.

I am a member of the scrutiny committee, and its report is part of the discussion this evening. It was interesting scoping the report, and we got some really compelling evidence from both sides of the argument, from non-resident parents as well as parents with care. My track record on all this stuff is longer than I care to admit. I was around in 1991 when the original legislation was brought forward and produced the 1993 scheme. The economic environment within which these schemes were started is now different. In the past, I have always taken a Gingerbread approach to this. In 1991 and 2003, the thing that really exercised me was that there were people acting in bad faith as non-resident parents with considerable amounts of money, and, because of the bad blood between the parents, they were taking it out on the children. That is what set my measuring stick for working out how this happens. It is very difficult for the state to go behind the front door of any family and interfere in these circumstances, and we learned that the hard way. It is true to say that under both Governments—and I could not help either from the place I sat in in the House of Commons or in the House of Lords—the two legacy schemes have been really difficult for families. Misery is not too important a word because they exacerbated the relationship between the separated parents.

None of this is easy, and my heart goes out to the professionals who have been running these schemes. They have been dogged by IT difficulties, and the collection process has struggled. The honest truth is that the elements in these regulations, which largely I support, should have been carried out years ago. I was part of the 2008 Act that gave passport legislation authority to the department, and now in 2018 we are actually implementing some of that. In parentheses, there is an interesting question about why that is not happening in Northern Ireland. It may be that there are special provisions for Northern Ireland at the current political moment, for all I know, but I would be pleased to know why it is an exception, because I cannot think of any other reason than the fact that it is getting special treatment.

When the Secondary Legislation Scrutiny Committee looked at this statutory instrument, it looked at the fact that there is still only a 57% payment compliance rate. My colleagues on the committee, who have not been studying this legislation as long as I have, found it very hard to understand why a scheme of this duration was still getting only 57% payment compliance, and that is still an issue for me as well.

Concerns were expressed about the way in which assets are still being protected from actions in bad faith because of the difficulties of valuation. I understand that with physical assets such as works of art it is difficult to know how much they are worth, who owns them and so on, but we heard evidence in the committee’s investigation of this SI which demonstrated that yachts are being bought which, even under these regulations, cannot be attached to the liability due by the non-resident parent. That is too complacent. There must be some way of obtaining an independent valuation of an asset’s worth. I support the notional wealth which the regulations attach to assets but they do not go far enough, certainly in relation to some of the physical assets that the Secondary Legislation Scrutiny Committee heard about in evidence when considering these regulations. I will be interested in what the Minister has to say about that.

The evidence we received from non-resident parents led me to think again about the relatively different economic environment for child poverty that we are facing. Non-resident parents have that problem as well as parents with care. They do not get any credit within universal credit for making maintenance payments, which must be difficult for some non-resident parents. They made that point with some force in the course of the evidence they gave. The department made a fist of answering some of these points, but we were still left with real concerns.

People are nervous that we are closing down these schemes—no one will miss them when they go—but, when we move into the new child maintenance scheme, are we taking proper advantage of the opportunity to look at this in a slightly wider context than merely these regulations? They are welcome as far as they go. The weekly value of assets being considered is good, deduction orders, lump sums and additional write-off powers are understandable, and I have mentioned passports, but the communities which will be deprived of pursuing some of these liabilities in future deserve better legislative consideration of the impact that will be felt by them when all of these dramatic things happen.

It would help if there could be an update on how these schemes are proceeding towards closure—what the time frames are and whether there has been any slippage from the last time we discussed this in Parliament. I am still concerned about some of the issues that were raised by the National Audit Office report of March 2017. I am delighted that the Select Committee in the House of Commons is still interested in actively pursuing some of these issues. However, the NAO report did not make happy reading either.

There are a couple of issues I wish to ask questions about. The NAO made special reference to the fact that the department does not tell non-resident parents who have arrears that there is an opportunity available to them to renegotiate the debt on cause shown where hardship can be demonstrated. However, the department does not do that, I suppose for the obvious reason that it gives people an excuse to pay less, but in the situation that we facing in terms of child poverty and for the next couple of years, I think that some non-resident parents should be told about that. The claim they make for a reduction in their maintenance liabilities can be contested by the department and controlled in that way. The NAO was right to raise that. Keeping it secret is no longer defensible and I hope the department will think about that.

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[Baroness Buscombe]

I thank noble Lords for their contributions to this debate and for the constructive approach that they have taken towards today’s proceedings. I will now respond to some of the key issues raised. I will attempt to do this in order but I doubt whether I will succeed. I will do my best and if I fail to answer any questions, please be assured that we will write to the Committee following the debate.

I wish to put into context the justification for what we are doing. This has not been a quick or easy decision; it has involved exhausting other approaches to deal with the debt. We have also had numerous long debates and discussions within the department in trying to decide the best thing to do. We are talking about huge sums of money here. I say immediately that when considering resources and budgets, the truth is that we have to be proportionate—what is reasonable in the circumstances; what is more pressing; and what is more important. In our department we are already spending 25% of the entire government budget across Whitehall, so we have to think about resources and the degree to which we want to protect and support children going forward versus the difficulty of writing off such a considerable debt. We have to balance that against the fact that if we do not write it off and keep it on our books it would cost us approximately £30 million a year, which would not be money well spent. It has been a difficult balancing act.

Moving all the debt to the CMS IT systems would incur a one-off cost of at least £250 million, without the resources to action it. We have taken various actions to collect this debt, including using debt collection agencies to chase what is owed. More than 63,000 cases were passed to debt collection agencies for them to arrange collection, but after three years we took back 55,000 cases because the DCAs had not been able to make any debt collection arrangements.

This is our approach following exhaustive discussions, debates and thinking through what is fair to the taxpayer. As the noble Baroness, Lady Sherlock, said, the most important thing is to put the children at the forefront of our minds while seeking ways to send out the critical message that no one should cease to be responsible for their children. Enforcement matters.

I say to the noble Lord, Lord Kirkwood, that I absolutely respect his considerable and lengthy involvement on this really important subject. Of course, there have all along been compelling arguments on both sides. It is interesting what he said about the economic environment being different. Maybe there is also a sense that people are becoming more artful in how they seek to avoid their responsibilities, which is depressing. I am not sure what that says but the truth is that we must have the well-being of children at the forefront of our minds. In a sense, yes, these regulations are overdue, so it is important that we look forward. It is also important to say here that they form the first of two packages. We plan to lay a further set of regulations in 2019 to secure the remaining powers to deliver the 2018 compliance and arrears strategy. These will allow us to take a consistent approach to deduction from benefits.

I should explain that the regulations are being laid in two packages because the Social Security Advisory Committee needs to consider the regulations that make changes to deductions from benefits. But we would not wish to delay the rest of the regulations so that we may lay them all together. Those regulations are not yet drafted, so there is still time—I stress this—to take into account any thoughts on these provisions from noble Lords and honourable friends in another place. We welcome any input on that.

[Lord Kirkwood of Kirkhope]

That is an opportunity perhaps, under an SSAC consideration of the second package of regulations, for affected parents with care and non-resident parents to make submissions to the SSAC scheme later this year. If I understood what the Minister was saying, the Social Security Advisory Committee will undertake a normal consultation and will be looking for people to make submissions for consideration as the committee makes its recommendations. Am I right in thinking that?

[Baroness Buscombe]

I ask the noble Lord to bear with me, because I do not want to get this wrong. The answer is: only if the committee decides to report the regulations.

I will focus on some of the questions put to me, which are welcome. I start with the question from the noble Lord, Lord Kirkwood, on case closure timescales and the fact that there has been slippage. We are still on course to have ended all existing liabilities on CSA cases by the end of this year, 2018. The noble Lord referenced the NAO report. In that context, it is really important to say that we are continuing to consider the recommendations in the report. The department, in a broader context, has really taken on board that we need to be much better at listening. We thought that we were doing enough perhaps, but there is always more that we can do—within time and resource constraints, of course—but it is very important that we listen.

The noble Baroness, Lady Sherlock, asked how the representations will be sought. Will each parent to whom money is owed be written to individually? Depending on which category a case falls into, a client will receive a different letter or series of letters explaining what is happening and why, and, where appropriate, giving them the opportunity to ask us to try to collect their debt. These letters will be sensitively worded and will acknowledge that this may not be the outcome a client is hoping for. I was asked whether, if there has been a payment in the last three months, we will continue to collect. The answer is yes. If the case is in payment, we will continue to collect any arrears still outstanding for as long as the case remains in payment.

I was also asked whether our power to confiscate passports will be used only in a few cases. We will use this power in a targeted, proportionate way. I noted what the noble Baroness, Lady Sherlock, said about our having tried driving licences and asking whether that worked. The keyword here is “deterrent”. The vast majority of parents, we must stress, willingly pay towards their liabilities; we will seek to apply sanctions only in cases where parents wilfully refuse to pay. This happens only in limited circumstances. As with other enforcement powers, such as removing driving licences, the threat of exercising it can be very persuasive. The threat of denying people a passport is certainly something that stood out, when I first read the draft regulations, as something quite exceptional. I hope noble Lords will agree that it should send out a strong message to those who, frankly, are consistently refusing to take responsibility for their children.

The noble Baroness, Lady Sherlock, and the noble Lord, Lord Kirkwood, enquired about compliance rates for cases of collect and pay, asking what we are doing to improve the figure of 57%. The latest data, published in September, for collect and pay compliance shows it is going up; it is now 62%. Of the £1.85 billion due to be paid since the Child Maintenance Service began, £1.6 billion has been arranged through direct pay or collected through collect and pay while £290 million is currently unpaid—around 12% of the total. This percentage share continues to decline from 12.4% last year and 13.1% two years ago.

The CMS is not the only option available for separated parents to arrange child maintenance; it is there for people who cannot work together to make their own arrangements. The collect and pay service is in place for those parents unable to work together, who are less likely to be compliant. This means that the caseload is smaller but naturally more challenging than the CSA caseload.

The noble Baroness, Lady Sherlock, asked how many cases will be affected by the notional income power each year. We have not made projections on this point, but we anticipate the number to be small as, historically, only a small number of parents attempt to avoid their liabilities in this way. On the question of how many passports we expect to be disqualified every year, the figure referred to indicates that we project 20 applications for all types of sanctions will be made in the year. These include commitment to prison and disqualification from driving. Sanctions must only ever be a last resort; this is not just about how many we pursue but about targeting the right people. The threat often results in payments restarting.

The noble Lord, Lord Kirkwood, asked why the passport power is not being introduced for people in Northern Ireland. I can assure the noble Lord that this is not a particular sop to those resident in Northern Ireland who do not respect their responsibilities for their children. This is not being introduced in Northern Ireland simply because Northern Ireland citizens are entitled to an Irish passport; they have options for dual nationality, which would reduce the effectiveness of the power—they would simply find an easy way around it.

The noble Baroness, Lady Sherlock, asked whether giving periods of representation to account holders would mean that NRPs can move money to other accounts. This change is intended to close down a known loophole. If we intend to deduct a lump sum from a joint or business account, the funds will be frozen during the representation period. If parents move their funds to another type of account—for example, a sole account—we will target that account. If the funds are moved to an account we are unable deduct from, we will use our other strong enforcement measures to collect the debt.