Child Support Agency

Pamela Nash Excerpts

Thursday 7th March 2013 Commons Chamber

[Pamela Nash (Airdrie and Shotts) (Lab)]

I am very pleased to secure the debate, and to have the opportunity to exchange views with the Minister on the problems still being faced by parents assessed by the Child Support Agency under the 1993 scheme. I will concentrate on how this has severely affected one of my constituents, about whose case I have already been in correspondence with the Minister and the Department. It may seem odd to request a debate at the moment, when the Government have recently launched the most recent incarnation of the Child Support Agency. However, I would like to stress from the outset that I do not believe my constituent’s experience is an isolated one, and wish to take this chance to explore what might be a larger, underlying problem.

It is in the mood of cross-party co-operation that I wish to conduct the debate, as it would not be fair or helpful to blame any one party or Government for the numerous IT policy failings that have occurred in the administration of the Child Support Agency, from its inception to the present day, under different Governments. The contentious issue of ensuring that parents support their children after the breakdown of a relationship has undergone repeated, technical and bureaucratic tinkering by successive Governments.

When established in 1993, the CSA was originally designed simply to collect and enforce the child maintenance payments of non-resident parents on a formulaic basis. Government intervention was necessary following a long line of failures by the courts to establish a fair and consistent process of addressing the situation. However, the system created out of the Child Support Act 1991 was a product of the previous recession. As a result, it has been widely accused of being driven with the aim of saving the Government money, rather than collecting it for the children to whom it was owed. I remember only too well CSA letters dropping through my own letterbox as a child, and I can tell the Minister that the content of those letters pleased neither my mum nor my dad. Despite repeated attempts to fix the problems of the CSA, I find it unacceptable that there are still people being assessed under the same system that could not help my own family more than 20 years ago.

My constituent, Gordon Russell, was first assessed by the CSA in April 2002, and he has paid what the CSA assessed he was due to pay up until very recently. Because of the date of his original assessment, his payments were assessed under the 1993 scheme. This week the 2003 scheme is 10 years old, and yet Mr Russell has never been allowed to change over to it. He and I have calculated that, had he been reassessed under the 2003 scheme when he expected to be in 2004, he would have paid more than £23,000 less in child maintenance than he has paid as a result of being assessed under the 1993 scheme.

I want to demonstrate how the systemic failures of both the 1993 scheme and the revised 2003 scheme have impacted on Mr Russell, and possibly many others. It is the Government’s responsibility to ensure that policies are, and are seen to be, equitable—that is, that two people in almost identical situations should never find themselves in very different financial positions solely as a result of Government policy. However, by running the 1993 scheme concurrently with the 2003 scheme, that is precisely what has happened to Mr Russell, who is expected to pay almost double the amount paid by others in exactly the same financial and personal situation who were assessed post-March 2003.

Mr Russell contacted my office early in my parliamentary career. He is a non-resident parent of two children. Initially, following his separation from his wife in 2000, they agreed a sum for maintenance between themselves. They arrived at it after he contacted the Child Support Agency for advice on how to proceed. He says he was told that the system was very complex and was about to be amended. With that in mind, Mr Russell and his ex-wife used the 1993 scheme as a calculator, but at that point the CSA was not directly involved in the assessment or the administration of the payments. In 2002, for various reasons, that voluntary agreement broke down and the CSA was contacted by Mr Russell’s ex-wife. At that point a new CSA case was opened and an assessment made under the 1993 scheme of the time. The resulting calculation was a monthly payment by Mr Russell of just under £585. Again, the CSA was not involved in the administration of the payments, which I understand Mr Russell made on a voluntary basis to his ex-wife.

In spring 2003, Mr Russell received a letter from Doug Smith, the chief executive of the Child Support Agency, informing him of the new assessment scheme—I expect it was sent to many people in his position. The letter stated:

“The introduction of the new scheme will be a complex task, which must be planned and handled very carefully. When the Government is sure that the changes are working well for new applications, I will write to you again. I will then explain when your child support maintenance will change and what this means for you.”

It is clear that Mr Russell and the others who received these letters were continually reassured by the CSA that their cases would eventually be transferred to the new scheme, but that never transpired. The reasons given for the failure of the administration of the 1993 scheme centred on an over-complicated calculations process, an inadequate enforcement procedure and multiple IT failures. The 2003 scheme was sadly also plagued by IT problems. I understand that one issue for the new system was that cases from the old scheme could not be transferred to the new scheme’s simpler assessment process. That resulted in the CSA being left to administer two different systems concurrently, in a twin-track process. When Doug Smith departed the CSA, not long after he wrote that letter, he declared:

“I and the senior management team have done a good job over the last year to mask the worst impact of this IT system from the people who really count in this, who are our clients.”

Lord Kirkwood, then Chair of this House’s Select Committee on Work and Pensions, disagreed, saying of the CSA’s problems:

“This is not just about computers. It is a systemic, chronic failure of management right across the totality of the agency.”

For eight years Mr Russell paid the amount agreed with the CSA under the 1993 scheme. His expectation that he would be transferred to the new scheme was never met. In 2012, Mr Russell’s daughter celebrated her 19th birthday, which under the CSA’s rules meant that his maintenance payment for his children needed to be recalculated. He was told at that point that his monthly payment would be £511 for only one child. He challenged that figure, as it was only £74 less than he was paying for two children. As a result, a new assessment was made, still under the 1993 scheme, which concluded that he was in fact due to pay £618 a month—more than he was previously paying for both children. At that point Mr Russell decided he had to take a stand on this inequity, as he felt—indeed, he has been advised—that he should be on the 2003 scheme, under which he would be paying almost half that amount. In fact, he could no longer afford to pay that much money and felt that he should not have to. At that point he took the decision to pay the sum of £350 a month, which was what he calculated he would be paying if he had been assessed under the 2003 scheme. As a result, Mr Russell started to accrue arrears, and only two weeks ago, his wages were arrested.

For the past few months, I have been acting in support of Mr Russell’s case, the essence of which is that there is a gross inequity between his position and that of someone in identical circumstances who just happened to be introduced into the CSA scheme a few months after he was. To be clear, a non-resident parent like Mr Russell with children of the same age living with a parent with an identical financial situation to that of Mr Russell’s ex-wife, and with the same salary and financial commitments as Mr Russell, could pay much less child maintenance if they had been assessed post-March 2003.

I do not see how the Minister or anyone else can argue that that is a fair system. It is unfair to the non-resident parent who pays double the amount, and it is unfair to the children and parents who receive less under the same scheme. I would appreciate hearing from the Minister how many non-resident parents are still paying maintenance calculated under the 1993 scheme, and how many of those parents are paying more than they would be paying if they had been assessed under the 2003 scheme.

The Child Maintenance and Other Payments Act 2008 made provision for a new system of child support to replace both the existing systems and to end the twin-track approach. Subsequently, it was decided that cases would not be transferred after all from the pre-2003 caseload to the post-2003 system as planned. Instead, all cases would eventually move over to the new system, once it was up and running. That sounds fair, but unfortunately there appears to be a nine-year gap between when the decision was first taken under the previous Government and its being implemented by this Government, and 2017 is the date when all cases are planned to have been moved over. That means that cases such as that of my constituent will have to continue under the current arrangements unless there is some other reason to convert the case. That would normally apply if a parent on the pre-2003 system made a new application to the CSA in relation to a second child, in what is known as a linked case.

My understanding is that it is impossible to change from the 1993 scheme to the 2003 scheme, or indeed to the new scheme, unless the paying parent has another child or the receiving parent has another child with another non-resident parent who they are claiming maintenance from. I would appreciate clarification from the Minister on whether that is correct. I see him nodding. In that case, I want to ask him why that is the case. The CSA’s own documentation says that that is the case so that all children in linked cases are assessed under the same scheme. I presume that that is to make it fairer for all concerned. I would argue that, to ensure the system is fair, surely all cases in the UK should be assessed under exactly the same scheme.

Reassessment is made regularly in a whole range of changes of circumstances, including parents getting married or moving jobs. I am still not clear about the obstacle to reassessing a person’s case on a different scheme when many changes of circumstances result in a recalculation anyway. I cannot help but guess that cost might be a factor. I would appreciate it if the Minister could provide an estimate of the administrative cost of moving an individual from the 1993 scheme to the 2003 scheme.

In terms of the differences between the two schemes, I find it unacceptable that, in the case of Mr Russell, I have recently received correspondence from CSA officials and from the Minister indicating that, in the view of the Government, it is simply a matter of moving between two equal but different systems. For example, the Minister stated in a letter to me that:

“For every parent who believes they will gain under the 2003 scheme, there is a parent who may lose out. While in most 1993 scheme cases one of the two parents would prefer to move onto the 2003 scheme for financial reasons it would not be fair or practical to transfer a case for this reason.”

That argument was reiterated by Andrew Jackson, a CSA senior client service manager, in a letter to me stating that

“for every parent who may believe they will gain under the new rules, there is a parent who may lose out.”

Surely what they should be arguing is that all parents, and all children for that matter, should be treated equally.

The 1993 scheme was deemed unfit, and a new scheme was therefore put in place. That was a replacement improved scheme, and it was never designed to be run long term alongside the previous scheme. By definition, as a replacement scheme it was introduced as it was thought to be fairer. I find the Government’s argument somewhat bizarre—namely, that for every loser as a result of the two-track approach to CSA there is a corresponding winner—as if someone gaining from an unfair system somehow compensates those who lose out. In my opinion, this argument about swings and roundabouts to support an indefensible two-track system is not worthy of the Department or the Minister.

If the IT problems of the CSA did not exist, would they continue to run two systems on the basis that, on average, one person’s loss is another person’s gain? Of course not. If the administrative, managerial and IT problems did not exist at the CSA, we would have had a single system many years ago. Yes, within such a system, there could be some winners and losers, but the important point would be that everyone would be assessed under the same rules. I appreciate that that is what the new system coming into play is planning to do but, as I said earlier, people will have to wait a long time before they go on to it, which is not good enough.

The most recent correspondence I received from the CSA about this case was from a complaints senior review manager and it is littered with serious errors about the basic facts of the case, including the accusation that Mr Russell has been paying only £350 a month since April 2002, when in fact he paid the full assessed amount up to June 2012. Since then, he has chosen to pay what he would pay if assessed under the 2003 scheme. I appreciate that this is a small and specific example of a mistake, but how can my constituent—or, for that matter, anyone—have faith in the CSA’s ability to run such an important system when it gets simple facts wrong in respect of a serious complaint by a Member of Parliament leading to months of correspondence between myself and the organisation?

In conclusion, the system was changed in 2003 because the previous one was not working—it was not fit for purpose and it was unfair. The figures I have cited this evening are not just figures on a balance sheet, and cannot be put down simply to bad luck if a person was assessed under the 1993 scheme. Successive Governments have had a decade to fix this, and lives have been ruined in the meantime. I hope that the Minister is able to answer some of the points I have raised, particularly about how many people are still paying maintenance assessed under the 1993 scheme. Why exactly have all those people never been switched over to the 2003 scheme? What are the Government going to do to stop this situation continuing and to compensate those who have suffered as a result? How long will it be before those assessed before March 2003 are moved on to the latest scheme? If the 1993 scheme was found to be unfair, why did the Government continue to use it for another 10 years?

[The Minister of State, Department for Work and Pensions (Steve Webb)]

I congratulate the hon. Member for Airdrie and Shotts (Pamela Nash) on securing this debate and on the assiduity with which she has represented her constituent. I have looked into the individual case and corresponded with her a number of times about it. I will frame my remarks in a more general way, however, so as not to disclose any further personal information about her constituent, save to say that if the Child Support Agency has sent a recent letter containing factual errors, I hope she will send me a copy as I would be happy to look further into that specific issue.

The hon. Lady raised an important point about the fact that there are still 261,000 cases of people being assessed under the 1993 rules. Perfectly reasonably, she said that she did not want to approach the debate in a partisan manner, and neither do I. I will simply observe, chronologically as it were, that the 2003 system came in. I shall say more about the reasons for that, but it was not because the 1993 system was felt to be fundamentally unfair or that the figures the system produced were somehow wrong. Rather, it was about the massive bureaucracy and complexity of assessing anybody, which meant vast amounts of time were required and vast amounts of evidence had to be gathered. That is why the decision was taken by the previous Government to streamline all that—not because the answers of the 1993 system were inherently wrong or worse than under the 2003 system, but because of the awful amount of time and effort involved. It was fundamentally a streamlining process.

The original intention was, as the hon. Lady said, to migrate people across, and for several years the previous Government sought to do that in good faith. That is why letters of the sort she mentioned from Doug Smith were sent. Those letters were subject to the caveat that when the Government were convinced things were in order, those people would be moved across—but they never were. In fact, it was the independent Henshaw report that finally put the nail in coffin of this idea back in 2006. So well into the period of the last Government, it was decided that it was simply not feasible to bulk transfer people across. As the hon. Lady will have gathered—now there are more than a quarter of a million of cases; back then, there were far more—the IT issues, the compatibility of the data and the whole difficulty involved in moving things across meant that bulk transfer and bulk case closure were simply not an option.

The hon. Lady asked why, if a single constituent had calculated that he would pay less under the 2003 system, we could not just transfer that one person. Within the total of 261,000, there will be an awful lot of people who are potentially in that position. I do not know how many precisely, because we have not made 261,000 calculations; if we had, we could probably transfer all the people concerned. However, it is clear that there will be a proportion of people of whom that is true, and a proportion of whom the opposite is true.

I was pleased when the hon. Lady rightly said that what matters is the well-being of the children. A unilateral case-by-case closure is currently against the law, but if we changed the law to enable all the people who did not fancy their ’93 assessment because they thought it was bigger than the 2003 assessment simply to transfer to the latter, tens of thousands of children—perhaps hundreds of thousands—would receive less child maintenance.

The position would be asymmetrical, because parents with care who calculated that they were receiving more under the old system would presumably not have a right of veto. All the non-resident parents who were paying more under the old system than they would under the new one would be transferred, although there would be a massive take-up problem: people would be asking us to do calculations and all the rest of it. If people opted to be transferred in tens of thousands of cases, tens of thousands of children would receive less money and no one would receive more, because no one would move in the other direction.

I hope the hon. Lady recognises that that would create a different kind of unfairness. How is it fair for someone who would pay less under the new system to be able to move to that system, while someone else—a mother, for example—who would receive a larger amount under the new system because the maintenance would be higher, as it will be in some cases, cannot do the same? That person will then persuade her Member of Parliament to hold an Adjournment debate and say, “It’s not fair. My ex-husband could transfer because he wanted to pay less, and I should like to be in the system in which I receive more. Why can he do what he wants and I cannot?”

[Pamela Nash]

I would argue that if non-resident parents are to be allowed to ask to be transferred, resident parents should have the same right.

Will the Minister clarify his position on cases in which there is such a large discrepancy between the amounts being paid under the two schemes? How can both schemes be seen to be fair when according to one assessment my constituent should be paying £350 a month and according to the other he should be paying nearly £600 a month?

[Steve Webb]

The aim of the ’93 system was to produce a tailored figure, and it took account of factors such as housing and travel costs. I believe that in some cases nearly 100 items of data were required to calculate the assessment. The incomes of the new partner and the parent with care had to be assessed, for instance. There are different answers to different questions. If those doing the calculations take the view that all the complexities of people’s circumstances should be taken into account, they will come up with one number; if they take the view that what is wanted is a rough and ready, quick calculation—15%, 20%, 25%; now let us get on with our lives—they will come up with a different number. Is one right? Is the other one right? Who is to say?

It could be argued that a comprehensive system is fairer because it is tailored to individual cases, but the calculation takes for ever. The last Government took the view that we were spending all our time doing complicated sums instead of getting child maintenance to people. The change was not based on the view that the 1993 figures were wrong—that they were inherently unfair to one party or another.

The hon. Lady asked about the process of migration. That is obviously important to her constituent, and I should probably put something on record now, because we have not said a great deal about it so far. The new system is intended to turn things around. That may be more difficult in the case of those who have been in the system for a decade or more, but, in general, we are trying to make sorting things out the default.

For many years the couple to whom the hon. Lady referred seem to have talked to each other and resolved matters. We know that children do better when mum and dad sort things out between themselves, and our goal is to make the child maintenance service a last resort. We are investing resources in help and support for separated families—in web applications, advice services and so on—to help people to sort things out for themselves, and if they contact us, we will signpost them and advise them on how they can do that. Clearly, however, some will still come to us, and about 1 million cases remain in the system, so we will have a migration process. Let me explain how that will work.

Pre-Christmas, in December, we started the process for new cases where there were four or more children. It is a very slow pathfinder system trying to learn from the ’93 and ’03 failures. Those cases will go straight into the new system and later this year, when we are convinced that it is working—it is going well so far—we will bring in the two-child-and-above new cases, and later still in the year all new cases. Once we are convinced all of that is working, we will begin the process of migration.

When we close cases under the existing two systems and bring them into the new system, we will encourage parents to reach family-based arrangements. Cases will be closed over a three-year period from next year, and where maintenance has been hard-won—where a non-resident parent has tried quite hard not to pay but we have got payment—we are thinking very carefully about how we can manage the case closure and migration process to make sure we do not disrupt the maintenance that is flowing. We are thinking very carefully about the sequencing of the way we do that.

We will introduce charges for the use of the statutory scheme, particularly on the non-resident parent. Again, the idea is to encourage both parties to reach a family-based arrangement, rather than to use the statutory system. Both parents can avoid collection fees entirely by paying directly using Direct Pay. Therefore, in the vast majority of cases we will give the paying parent the opportunity to pay the receiving parent directly. This Direct Pay option will give parents access to the statutory service in a way that can help rebuild trust between them.

We want to avoid the mistakes of the past. We acknowledge that some parents are better off under the ’93 scheme and some are better off under the ’03 scheme, but I stress for the record that these are statutory assessments, so people cannot say, “I don’t think the law as it stands is fair, so I will decide what I will pay.” These are legal liabilities, so the amounts are owed; it is not a matter of choice, I am afraid. I appreciate the point that some people, on both sides in many cases, will feel the sum is unfair. That is why if somebody does not pay what they are legally required to pay, arrears build up, and that will remain the case.

The previous Administration originally planned to move all 1993 scheme cases to the 2003 scheme, but it was simply not possible clerically to move 250,000 or so cases one at a time. We want to focus our energies on getting the new scheme up and running and migrating everyone to it—except where we can secure family-based arrangements—rather than put a lot of effort into moving people from the previous-but-one scheme into the previous scheme.

We are trying to ensure what happened in the past does not happen again. We are using tried-and-tested—standardised—software, as one of the problems with the ’93 system was that it was bespoke and unlike anything anyone else was using. We are also introducing the 2012 scheme gradually through a pathfinder approach, so that any issues can be picked up at an early stage, before we have a large case load.

The 2012 scheme, as I mentioned, is now open and progress so far has been good. We will gradually move people across and we have been consulting on the exact sequencing. I cannot give the hon. Lady a date for when her constituent’s case will be moved across, but our idea is to contact people six months ahead of the point at which their case would be due to be closed. We will encourage them to reach a family-based arrangement where possible and will support them in doing that. If that is not possible, six months afterwards the case can be reopened under the 2012 system, which is designed to be simpler and contains charges to encourage people to come to their own arrangements.

Another point that I think is relevant to her constituent’s case is that the 2012 scheme uses more up-to-date income information. One problem with cases on the ’93 system is that they are often stuck in the system untouched, so the maintenance assessments get very out of date, and they can be based on very old income data. I do not know whether that is the case with her constituent, but if someone asks for a reassessment and finds that their liability has gone up, that is often because the previous assessment was based on very old wage data.

The beauty of the new system is that it will use most recent tax return data from HMRC. Rather than our having to go to a non-resident parent, ask for wage slips, wait for them to come back, process them and so on without reassessing the assessment, those data will feed through automatically to us. Once a year on the anniversary we will revisit the assessment and update it with the latest income information so people will not have the rude shock of a sudden hike or drop in their liability, which will be based on the latest income information.

The hon. Lady is absolutely right that there is a set of issues for the people on the ’93 system who are paying more than those on the ’03 system. Equally, a set of parents with care would love to be on the ’03 system but are stuck on the ’93 system. It is important to realise that and perhaps we have not communicated it in correspondence as clearly as we might. We are not saying that because the computers cannot do it there is no issue of fairness, but there are multiple issues of fairness.

What we mean by “for every one, there is another” is that for every parent with care who would receive more under the new system, there is a non-resident parent who would pay less under it. Simply allowing case-by-case migration, quite aside from being unlawful, would create a different set of injustices. That is my conclusion: we want to get as quickly as we can to a new streamlined system that is fair to all and in which we do not have either of the legacy systems while learning the lessons from the past. As the hon. Lady rightly said, the process has not worked as well in the past as it should have done and we want to get to the new system as quickly as we can.

Question put and agreed to.