Child Support Payments

Wayne David Excerpts

Tuesday 20th December 2011 Westminster Hall

[Mr Wayne David (Caerphilly) (Lab)]

Earlier this year, I was approached by Miss Nicola Richardson of Gilfach, Bargoed, who was concerned about the lack of financial support from her non-resident ex-partner for their two children. My constituent explained to me that her ex-partner did not have to pay any maintenance to the Child Support Agency, as he was a retained, or part-time, fireman, and his income from that work was excluded. The CSA assessment that Miss Richardson received stated that her ex-partner was to pay zero pounds.

Understandably, my constituent thought that to be extremely unfair, and I could think of no logical reason why she should have received such an assessment. I therefore made inquiries to the CSA and was informed that what my constituent told me was accurate. According to paragraph 4(2), schedule 1 of the Child Support (Maintenance Calculations and Special Cases) Regulations 2000,

“any payment made in respect of the performance of duties as…a part-time fireman”

is not included within the calculation of a non-resident parent’s net weekly income.

The CSA informed me that similar exclusions apply for other occupations, including

“members of the auxiliary coastguard in respect of coast rescue activities, persons involved part-time in the manning or launching of a lifeboat, local councillors and members of the territorial or reserved armed forces”.

I was told that the purpose of the exemptions for those occupations is to encourage voluntary public service and to ensure that maintenance calculations can be made efficiently.

The explanation went on to state that, if such earnings were not exempt, the calculation of a non-resident parent’s net weekly income would be dependent on attendance-based earnings for the performance of duties, which could vary from week to week. According to the CSA, that would mean that there was a necessity to recalculate the amount due to be paid weekly. It also stated that that would have a “significant effect” on its ability to keep cases fully up to date, and therefore on its ability to provide

“an acceptable service to the vast majority of our clients”.

I found that to be quite a remarkable reply. To begin with, how can such exemptions, particularly in the case of part-time firefighters, be to encourage voluntary public service? Part-time firefighters are on an annual salary, ranging from £3,622.50 to £15,390. In the case of Miss Richardson’s ex-partner, he has been a part-time fireman for some 12 years, and my guess is that his salary is towards the upper end of that range. The work of part-time firefighters is to be commended, but by any stretch of anyone’s imagination, it is certainly not voluntary.

The other justification of the CSA is basically down to the fact that it finds it too much of an inconvenience to bother to work out a fair payment based on a variable salary. The result is that hard-pressed mothers and their children are being deprived of much needed financial assistance to which they are certainly morally entitled.

Having been amazed by the regulations and the CSA’s interpretation, which I have no doubt is accurate, I wrote to the Department for Work and Pensions and the Minister responsible, the Under-Secretary of State for Work and Pensions, the hon. Member for Basingstoke (Maria Miller). She confirmed to me that what the CSA indicated was accurate, about which I have no doubt. In a letter to me in August, she stated that

“the law is quite clear on this matter”—

indeed it is. Disappointingly, in response to my question about whether the Government had any intention to review the law, I was informed in no uncertain terms that there are

“currently no plans to change this legislation”.

I hope that she will today have second thoughts.

I hope that I have highlighted an aspect of the CSA regulations that is clearly unfair. Understandably, my constituent feels strongly about the issue. She has organised a local petition—I have a copy of it with me—which has already attracted many hundreds of signatures. The petition makes the essential point that, because of the regulations, children are being denied the support that they need and to which they are surely entitled.

At the end of the day, the issue is not about the efficacy of regulations, but about ensuring that the resident parent has the financial means to enable their children to enjoy a healthy and secure childhood. That is why I strongly believe that it is necessary to have a discussion about it. I recognise the complexity, but let us stand four-square behind the principle of fairness and change the regulations once and for all.

[The Parliamentary Under-Secretary of State for Work and Pensions (Maria Miller)]

It is always a pleasure to serve under your chairmanship, Sir Alan. I congratulate the hon. Member for Caerphilly (Mr David) on securing this debate. He has experienced a problem that many other hon. Members have encountered, and the debate gives us an opportunity to ensure that there is absolute clarity on how the Government will address the special occupation rules that he has drawn to the attention of the House today.

First, it is absolutely important for me—I am sure that I also speak for the hon. Gentleman when I say this—to pay tribute to the vital role played by people in the occupations that he has mentioned. Whether part-time firefighters, lifeboat men, servicemen, our councillors or auxiliary coastguards, among others, they carry out absolutely vital roles at the heart of our communities and with our armed forces; roles that keep our communities moving forward. That group of people—I am sure that he will agree with me—give a great deal to our community and understand the importance of duty and service. A broken child maintenance system is failing them, letting them and many other people down.

When the second child maintenance scheme was established in 2003, it was felt that earnings from such occupations should not be included as income when calculating what child maintenance to pay. That decision was taken to simplify the system. Such simplification proved to be desperately necessary, not least because the new IT system introduced in 2003—a specifically designed and built bespoke system—could not cope with the demands made of it.

A great deal has been learned in the intervening eight years about how best to approach computerised databases, and today the Government take an entirely different approach. For example, the new IT system introduced for personal independence payments and the new child maintenance system—the future scheme—will use out-of-the-box solutions; they will be applied to a situation, but have not been developed specifically for that situation. With personal independence payments, we are using an IT solution that is already in use in Canada, Australia, New Zealand and Ireland.

Back in 2003, the new IT system for the Child Support Agency had been built from scratch. There were significant problems—I am sure that the hon. Gentleman will remember them, because he has served in this place longer than I have—from the word go with the coding and build of untried systems. At that time, the payments made to clients from the occupations that we are talking about tended to be relatively small. That is no longer always the case, and I have an enormous amount of sympathy for the hon. Gentleman’s constituent.

Although the current position was established for a number of reasons, I believe that it is unsustainable. No matter how praiseworthy the efforts of those in part-time professions are, they are often parents, and their children must be at the forefront of our minds when we develop such policy. I pay tribute to my colleagues in the Child Maintenance and Enforcement Commission, who work tirelessly to secure money for children from separated families.

The hon. Gentleman will be aware that the current IT system continues to be a source of grave concern, which is why we are launching a new child maintenance scheme next year that will replace the current Child Support Agency schemes and its two IT systems. Hon. Members may also be aware that the second system continues to have significant problems. Some 100,000 cases can no longer be dealt with in the system and must be handled clerically at almost double the cost. In practice, a third IT system must be deployed.

As part of developing the new scheme, I have considered whether non-resident parents should have the income from so-called special occupations taken into account. The effects of the current position can be serious. For example, a non-resident parent, who is a member of the Territorial Army deployed to Afghanistan for a number of months—I am sure that the hon. Gentleman, like me, has constituents who are in that position—and who derives their sole income for this period from their pay as a soldier has a child maintenance liability of nil. That is different from the position of the regular soldiers serving alongside them who continue to be liable to pay maintenance and of their colleagues whose children continue to be part of their current family. The effect is to leave the children of TA soldiers and any others who fall into this category who are non-resident parents and are deployed on operations entirely unsupported for an extended period. Not including this income within the child maintenance calculation is unacceptable. I agree with the hon. Gentleman’s comments and believe that we should change the rules.

For the new child maintenance scheme, we propose to base the liability of such non-resident parents on their total weekly income. By using Her Majesty’s Revenue and Customs income data, we will avoid the administrative complexities that arose in the original scheme and provide a fairer system for the children of such parents.

A consultation on the Child Support Maintenance Calculation Regulations 2012 was launched on 1 December 2011 and will run until 23 February 2012. The hon. Gentleman referred to the letter that I wrote to him in August. What I said was correct at the time. I was actively looking at the issue, but as I was unable to bring it to the attention of the House, I was not able to fill him in on the details. I thank him for giving me the opportunity to do so today.

The regulations as drafted would remove the special occupation exemptions. The hon. Gentleman is a trail blazer in this area. We are very like-minded, and I hope that, as a sign of some Christmas spirit in this place, we will find a common understanding and a common approach to this really important issue.

[Mr David]

I thank the Minister for her comments. I welcome the fact that she has accepted my argument and recognised that there is a huge anomaly that morally needs to be addressed and that will be addressed with the new regulations. However, will those who are on the current system be able to transfer to the new regulations? Will those who currently lose out, and whose children lose out, be able to have the situation addressed under the new system?

[Maria Miller]

The hon. Gentleman was reading my mind; I was about to move on to that very issue. Let me reiterate, though, that I inherited the anomaly. I commend my colleagues for acting so swiftly that we can introduce regulations to address this matter under the future scheme. I hope that the hon. Gentleman will be able to support the measures in the Welfare Reform Bill, which will support the introduction of the new scheme, including the IT system, and to encourage his constituents and his hon. Friends to make their views known as part of the consultation. None the less, as he rightly says, people face financial problems now. I should certainly like to make such changes to the existing child maintenance scheme, and I have considered doing so in some detail. However, we inherited a situation in which 100,000 cases have fallen out of the system due to its failings and the prohibitive cost to the taxpayer continues to be borne.

To make fuller changes to the existing scheme rules and the underpinning IT systems risks further problems and added costs to a system that already presents the taxpayer with a bill of £450 million per annum. I share the hon. Gentleman’s frustration, but I hope that I can garner his support for the implementation of the new scheme as soon as possible. That is dependent on the enactment of the Welfare Reform Bill.

[Maria Miller]

I thank the hon. Gentleman for his intervention, which gives me the opportunity to talk a little about the staff at the Child Maintenance and Enforcement Commission. I was in Belfast recently, visiting the arm of the commission that deals with his constituents in Northern Ireland and the constituents of a region in England. I was impressed with its capability and its commitment to do a good job for all of our constituents.

The issue lies in the failings of the IT systems, the approaches taken in the past and the complexities of previous systems. As we look to the new scheme, I urge hon. Members to remember that simplicity and replacing the current IT system are critical if we are to effect the sort of changes that the hon. Gentleman advocates.

[Mr David]

Basically, I understand what the Minister is saying, but it is not a positive message for people such as my constituent who are losing out and whose children are losing out because of the failings of an IT system. It is not of benefit to them to say, “Things will be better in the future with a new IT system and a new scheme, but they will not apply to you.” When MPs get in touch with the CSA, they often find it very helpful. It allocates individuals to specific cases, and quite often individual cases are tremendously complex. It should not be beyond the wit of the Government to ensure that a system is in place that gives special consideration to individuals who lose out at the moment and whose neighbours face similar circumstances, so that they might be okay in the future.

[Maria Miller]

The hon. Gentleman raises an important point, and we want to ensure that more children benefit from positive financial arrangements. Too often, that is not the case at the moment. Half the children who live in separated families do not have a secure financial arrangement in place. However, more than half the parents within the child maintenance system feel that they could make their own financial arrangements with the right support. So I urge the hon. Gentleman to consider what support he could give to his constituents, so that they can consider making their own financial arrangements. There is no requirement now for anybody to make their financial arrangements through the Child Support Agency or the Child Maintenance and Enforcement Commission, but there is a requirement for people to meet their parental responsibilities and have a financial arrangement in place to support their children.

As I say, more than 50% of people with arrangements within the CSA feel that they could make their own arrangements with the right support, and that is very much at the heart of the approach that we are taking with the new scheme that we will put in place in 2012. The new scheme will address many of the failings that we have discussed today and that hon. Members will have experienced on an ongoing basis. It will be underpinned by a new IT system, which has been tried and tested by using systems in the commercial world. It will use HMRC data to enable parents to get financial support for their children in place, either within the statutory scheme or outside it.

In addition, we will introduce charges for the new scheme, to encourage more people to take responsibility to make the arrangements themselves. That approach is much better not only for the state—in terms of reducing costs—but for the children involved. The application charge, for which there will be an exemption for victims of domestic violence, will provide another vital incentive for people to consider a family-based arrangement before turning to the state for support.

We will also introduce collection charges and penalty fees if we have to use enforcement action. As I am sure the hon. Gentleman will agree, all too often people appear to feel that paying child maintenance is an optional extra. It absolutely is not—parents have a clear responsibility to make financial provision for their children. We want to promote a real attitude change, which perhaps has not been achieved before, to help to deter parents from failing to meet their responsibilities and to help them to think carefully about taking responsibility themselves.

The scheme will remain heavily subsidised by the taxpayer, and parents on benefits will still have all their maintenance disregarded, so that they keep all their benefits and all their child maintenance. That will help to ensure that more children have the necessary financial support in place.

The hon. Gentleman rightly asks, “Why can’t we do something now?” My concern is that we must ensure that the current system continues to operate, although in a very difficult set of circumstances, until the new scheme can be put in place. I must take the judgment that adding further complexity to the already broken system that I have inherited will not be best for the vast majority of parents. Put quite simply, the current IT system can barely cope at the moment and to add more complexity to it would cause more concern in the future. However, there is nothing stopping the hon. Gentleman’s constituent or, indeed, anybody else who is following the debate today from taking action to ensure that their children receive fair financial support following separation.

With the new scheme, I am talking about a strong package of reform, not for some distant future but for 2012, when we will roll out the scheme for parents and children who are currently within the statutory system. It will address the hon. Gentleman’s concerns; it will be fairer for parents and the taxpayer; and most importantly, it will support children in the right way, with parents taking real responsibility for their children’s welfare regardless of their own adult relationships.