Draft Child Support (Miscellaneous Amendments) Regulations 2018

Mike Amesbury Excerpts

Monday 12th November 2018 General Committees

[Mike Amesbury (Weaver Vale) (Lab)]

It is a pleasure to serve under your chairmanship, Mr Sharma. I thank the Minister for explaining the regulations. As hon. Members know, much of the detailed work of the House goes on in legislative Committees such as this one, away from the political knockabout of the Chamber. It is vital that the Opposition take the chance to scrutinise proposals and identify concerns, issues and improvements. We hope to do that today, because parts of the regulations cause concern and could be modified, but on an issue such as the one before us, it is important that we do so in a considered and constructive manner. We must not lose sight of the fact that we are talking about children and families, so when we hold the Government to account on the proposals, we do so with the sole aim and objective of ensuring that money reaches children and families in a fair and timely manner. It is right for the Opposition to highlight where the Government could make improvements and where their actions and approach have fallen short in relation to child maintenance policy.

We recognise that some of the challenges that we face have their roots in the actions of successive Governments over the years. The question is this: how do we make the system work effectively? On this issue, we do not believe that the current approach is delivering, and we and others have a number of concerns. As my good friend Baroness Sherlock has identified elsewhere, although some people believe that there is a case for writing off some historical debt and introducing new compliance measures, we have to ask the following questions. Are the proposals likely to achieve the objective of getting more money to children, and do they do that in a fair way? As the Opposition, we have further questions. First, before we consider new measures, it is incumbent on the Department for Work and Pensions to show that, in relation to current child maintenance liabilities, there is effective enforcement. If there is not, writing off historical debt risks sending a message to parents who have not paid to support their children that if they just do not pay, the Government will eventually give up.

No Government have a perfect record in this area but, like many other hon. Members in the room, I know from my own case load that many children and families are losing out as a result of the failure by some parents to pay what they owe. Arrears are rising under the new service. Only 62% of paying parents on Collect and Pay paid something in the quarter ending in June 2018, and 44% of all maintenance due under Collect and Pay still had to be paid in that quarter, so there is some way to go before we will be confident that everything that can be done is being done.

We also have concerns about parts of the proposals in relation to debt that is considered too expensive to collect. We recognise that there is some logic to this. Some debts may be perceived to be uncollectable, and others will cost more to collect than will be gained by retrieval. However, the regulations give rise to a number of concerns. For example, they allow wide discretion for caseworkers to decide whether a case is worth pursuing. They place the onus on receiving parents to make representations so that the DWP continues to try to collect the maintenance owed. The cash thresholds disproportionately affect those parents who are least well off. A sum of less than £500 may be a lot of money to someone managing on a very low income. The DWP says that it expects to collect historical debts in only 10% of outstanding cases and less than one fifth of the total amount of outstanding debt. As a result, many parents may lose out—the responsibility is not theirs but the system’s. When that happens, the Minister needs to answer the following question. Will parents be able to claim compensation in cases in which the outstanding debt was due to the failings of the DWP system?

Additionally, when looking at this area, we must do more than a simple profit-and-loss calculation. As with any policy, we have to consider the message that it sends and the effectiveness of the manner in which it is applied. The explanatory memorandum says that there are uncollected arrears of £3.7 billion, of which £2.5 billion is owed to parents and £1.2 billion to Government. The Department for Work and Pensions says that it would be too expensive to try to collect it all, so there are proposals to try to split hairs and claw back some of the unpaid debt. Crucially, the benchmarks, as the Minister stated, are where there has not been a payment in the last three months or, in certain cases, where the DWP asks clients if they want to try to collect the debt. If no representations are received, or the collection of the debt is not possible, it may be written off.

As my colleague Baroness Sherlock has said elsewhere, we need to ask how representations will be sought and whether each parent to whom the money is owed will be written to individually. In addition, where there has been no payment in the last three months, the case started on or before 1 November 2008 and the debt is less than £1000, or the case started after 1 November 2008 and the debt is less than £500, or the debt was less than £65 when it started, the debt can be written off without asking the parents at all.

That is where there is concern about the three-month cut-off point. When the DWP contacts parents to notify them that a debt will be written off unless they make representations, it places the onus on receiving parents to ensure that the case is pursued. We are concerned that that risks sending a message to parents who have not paid to support their children that, if they just do not pay, the Government will eventually give up. We fear that a tiny minority of parents who deliberately refuse to comply will try their luck for three months if it means they will no longer have to pay at all. That is morally and practically wrong. I would welcome the Minister’s thoughts on that.

We also note that the regulations create new powers of enforcement and extend the kinds of income taken into account when assessing the child maintenance that a parent should pay. Again, in principle, we support greater enforcement powers and a better approach to how ability to pay is defined. Many of us will know from our case load that there can be differences between declared assets, income and apparent lifestyle. When that happens, it is often children who lose out; in some cases they are living in poverty as a result. Why therefore did the Government reject reintroducing the lifestyle variation? Will the assets that will now come within the scope for calculating maintenance include just the UK, or also assets outside the UK?

Once again, we ask whether any new powers will have a major impact, since the CMS does not seem to be using its existing powers of enforcement effectively. Charities such as Gingerbread are concerned that even new regulations could leave loopholes via which people could transfer money elsewhere to avoid their responsibilities. Why would a non-payer fear enforcement action, if they are already getting away with not paying their fair share under the current system? We need to ask how much additional child maintenance the Government expect to collect as a result of these changes, and whether they will set a clear target for improving compliance. Getting the existing house in order must be a priority.

We also have concerns about the charges. These new regulations fail to address the fact that the Government actively dissuade parents from accessing CMS through charges: first, through a £20 application fee to enter the services and secondly, if the collection service is needed due to the other parent not paying. The Government believe that charges encourage compliance, but without evidence of compliance under direct payment, we cannot know. There is no information available on amounts paid under direct pay or for those who paid in full under Collect and Pay. DWP’s own research published in 2016 showed that many charges are ineffective, and in cases where there is domestic violence direct pay arrangements are likely to be inappropriate.

However, charges are likely to deter parents from using Collect and Pay. The Department for Work and Pensions should be much more transparent about it, so that an informed judgment can be made about whether charges incentivise behaviour as the Government intend. In our view, there is a major question about that, and it is incumbent on the Government to answer it.

Finally, we cannot consider the proposals entirely in isolation. They come at a time when many children are feeling the effects of other changes in social security, with more to come—lone parents will be particularly affected—and they bring into sharp focus the importance of ensuring that child maintenance money goes, as intended, to the child. We believe that that must be the focus of the proposals.

We accept that the regulations are made in good faith, but much more needs to be done to ensure that there is compliance within the current system, if people are to believe that the powers will be more effective. Many others will see the writing-off of money that was destined for children, often resulting in children living in poverty, as a bitter pill when the Department is failing effectively to tackle non-payment under the current CMS. It is hard not to see that as an acceptance of failure and, worse, a failure whose consequences are borne by those who did nothing to cause it—children.

We therefore do not support the regulations, taken as a whole. There are positive steps forward, but there is a real danger that writing off historical debt without taking effective action to tackle arrears under the current system will send the wrong message. The Government should produce a strategy aimed at ensuring that more people make maintenance arrangements—that should mean addressing the issue of charges—and at increasing compliance rates. Existing collection rates are too low, and questions remain about the effectiveness of charges and other approaches, so we cannot give the proposals unqualified support.

The Government must get their act together on collection, using existing powers more effectively, and must provide clear evidence that their charging policy works and is fair. We urge the Minister to ensure that that happens, and, in doing so, to make sure that the policy and approach work for those for whom they are intended—the children.