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.

State Pension Age (Women)

Wayne David Excerpts

Wednesday 11th May 2011 Westminster Hall

[Teresa Pearce (Erith and Thamesmead) (Lab)]

It is a privilege to have the debate under your chairmanship, Mr Weir. I asked for the debate because, like many other hon. Members, I have been contacted by many women in my constituency who will be badly affected by the Government’s plans to accelerate the timetable for equalising the state pension age. That has come as quite a shock to many of them. They thought that they were nearing the end of their time in the labour market and had been looking forward to and planning for their retirement.

The Pensions Bill is due to be introduced in the House of Commons shortly, so I am grateful to have the opportunity to talk about the proposal in advance of its being spoken about in the Commons. I hope that this debate will also help to raise awareness of the issue among hon. Members and possibly their wives, sisters and mothers, and among other women who will be affected by the change but have not yet realised that.

All the main political parties accept that overall life expectancy is increasing and that the state pension age for women should rise and be in line with the age for men. I do not oppose the equalisation of the state pension age, nor do many of the women for whom I am speaking. In fact, they have already accepted an extension of the date when they will receive their pension. The issue is how the Government are going about accelerating that. Like many others, I think that the Government’s accelerated timetable is unfair and will have wider implications for our pensions system and for society as a whole.

It is worth taking a few moments to set out some of the background to the debate. Under the current timetable, women’s state pension age was scheduled to rise to 65 to be equalised with that for men in 2020. It was then to rise to 66 for both men and women by 2027, to 67 by 2036 and to 68 by 2046. Under the Government’s new plans, the state pension age for women will follow that schedule only up to 2016, when it will rise to 63. It will then rapidly accelerate to 65 by 2018 and to 66 by 2020.

The overall impact of the change means that 2.6 million women and 2.3 million men will have to wait longer than expected to qualify for their state pension. However, there is a small cohort of women who will be hardest hit by the change simply because they were born at the wrong time. I have to declare an interest as one of the 500,000 British women born between 6 October 1953 and 5 March 1955. They will have to work for another one to two years before they reach the state pension age. The women who will have to wait two years stand to lose £10,000 in pension income and up to £15,000 if they would be in receipt of pension credit. Under the Government’s plans, we will have a deeply unfair situation in which, for example, a woman born on or before 5 April 1953 will reach the state pension age at 62, but those born on 6 April 1953 will retire at 65. Many of the women who have written to me consider that age discrimination, and they have a point.

It is important to note that the proposal was unexpected—it has been sprung on these women. It was in neither the Conservative nor the Liberal Democrat general election pledges and it was not in the coalition agreement. The women who will be affected by the Government’s U-turn will not have enough time to plan for the further change in their circumstances.

[Mr Wayne David (Caerphilly) (Lab)]

Like many other hon. Members, I have constituents who are affected by this issue. For example, my constituent Mrs Janet Davies of Tydfil road, Bedwas, has been to see me and expressed very clearly the predicament that she faces. She was born in February 1954 and, as my hon. Friend said, stands to lose £10,000. What advice would she give Mrs Davies? How should she respond to the situation?

[Teresa Pearce]

I thank my hon. Friend for his intervention. I totally agree. The unexpectedness of the extension of the time is the problem. I really do not have an answer as to how my hon. Friend’s constituent will manage that. I will put some questions to the Minister later.

The accelerated timetable will start in 2016, so the proposal will affect women who would have previously reached the state pension age in about five years’ time. The worst affected will have to wait a further two years to reach their pension age, so they are seven years away from their pension date, which is well below the 15 years’ preparation time recommended by the Turner commission.

It is important to remember that women are already at a significant disadvantage relative to men when it comes to pensions. The median pension saving of a 56-year-old woman is just £9,100, almost six times lower than that of a man, which stands at £52,800. Women’s pensions are traditionally lower because many have taken time out of paid work to raise children or to care for parents.

Oral Answers to Questions

Wayne David Excerpts

Monday 28th March 2011 Commons Chamber

[Maria Miller]

I thank my hon. Friend for his question and share his concern about the lack of understanding that people sometimes have about what we are trying to do. I can reassure him that the Government’s reforms are all about putting integrity back into the support available for disabled people, moving away from a discredited system of DLA in which, in terms of the higher rate for the DLA mobility component, more money goes to people who are drug and alcohol addicts than to people who are blind.

[Mr Wayne David (Caerphilly) (Lab)]

What can the Minister say to my constituent, Jordan Owen, who is deaf and blind, currently attending school and in receipt of the mobility component of DLA, but who may well lose it when he leaves school and moves into residential care?

[Maria Miller]

The hon. Gentleman will of course have heard the earlier exchanges in which I said that the Government are not removing the mobility component of DLA from care home residents from 2012. We will ensure that the needs of individuals in care homes are assessed in the same way as those of everyone else in receipt of DLA as part of the PIP reforms.

Disability Living Allowance

Wayne David Excerpts

Wednesday 9th March 2011 Westminster Hall

[Mr Wayne David (Caerphilly) (Lab)]

I should like to refer to one case in particular: that of Mr and Mrs Owen and their deaf and blind son Jordan. They attended my surgery some months ago and explained the situation in which they find themselves now and what they fear might happen in the future. Their son Jordan is a big lad—17 years of age. He currently attends the Trinity Fields special school in Ystrad Mynach and is in receipt of disability living allowance and the mobility component as well. The family put that to good use and provide mobility for him and the family. In the near future, when he becomes an adult, he will leave the special school and go to a residential home. However, it is likely that that residential home will not be anywhere near where he lives in Tir-y-Berth, Hengoed. It is likely to be in Monmouth, or possibly in England. There is a real concern among the family that, because of the changes that may come about, he will no longer be in receipt of the mobility component of DLA.

Jordan is a member of an ordinary working-class family. He has tremendous support from his parents, and from the charity Sense, which has done excellent work with the family. Naturally, however, when he does go to a residential home, the family will want to visit him and take him out from the home and give him the best experience of life possible for that young man. The family is concerned that, if the mobility component is taken away, they will not be able to visit him as frequently as they would like or to take him out from the residential home. In fact, they might have to leave to one side the opportunity of going to a residential home, even though that would probably be best for him, but ensure that he stays at home, so that they can give him proper love, care and support. That would obviously not be the best for him, and probably not the best for the family as a whole.

I should like to make it clear that I am not against welfare reform. In fact, I am strongly in favour of welfare reform. What I find difficult to understand, however, is the rationale of making someone like Jordan so fearful for his future. There could well be a cut. Of course, I can understand the financial saving to the state, but that is not what welfare reform should be about. That is why I am particularly concerned about clause 83 of the Welfare Reform Bill. It is important when we talk about welfare reform that such things are made fair and streamlined, but particular care must be taken to ensure that people such as Jordan do not lose out. For example, I was concerned that, when the Prime Minister was asked about changes to the mobility component at Prime Minister’s Question Time, he said:

“our intention is very clear: there should be a similar approach for people who are in hospital and for people who are in residential care homes.”—[Official Report, 12 January 2011; Vol. 521, c. 282.]

I simply point out that the needs of people in hospital are not the same as those of people in care homes. That is a fundamental point. We need to move away from the mechanistic, bureaucratic approach and to recognise that people in residential care homes have particular needs, and the Prime Minister, to start with, should recognise that.

I hope that we have a respite. The Government have said that they will delay implementation for at least 12 months. I hope, however, that in the interim the Government will look at cases, such as that of Mr and Mrs Owen and their son Jordan, and recognise that welfare reform must be tailored to the needs of individuals, so that young men like Jordan do not lose out.

Jobs and the Unemployed

Wayne David Excerpts

Wednesday 7th July 2010 Commons Chamber

[Chris Grayling]

My hon. Friend is absolutely right, and I would ask the House this question. Why would we take Labour Members seriously on youth unemployment when they had such a terrible record on youth unemployment over 13 years in government? What we saw from Labour in office was at best incompetence, at worst a wilful disregard for taxpayers’ money, and a failure to understand how to create long-term sustainable jobs in the economy.

[Mr Wayne David (Caerphilly) (Lab)]

Has the right hon. Gentleman made any estimate of how unemployment will increase because of his Government’s policies?

[Chris Grayling]

We have taken a decision—and rightly so—to push out of Government the job of economic forecasting. That is the purpose of the Office for Budget Responsibility. Its analysis, independent of Government, is that unemployment will fall and employment will rise as a result of the decisions that we have taken in the Budget. That is the direction in which we should be heading.

Those in the previous Government cannot simply blame the recession for this mess. Despite 10 years in power, even before the global banking crisis started, more than 15% of our children—1.75 million children—lived in households where no one worked. We have one of the worst rates of workless households in the EU. I am therefore delighted to take on the right hon. Member for Normanton, Pontefract and Castleford on employment today, and to remind the House and this country what a terrible record the previous Government had in their 13 years in office.

There were fewer jobs in manufacturing. We have heard a lot of talk today about the 1980s, but let us be clear: the big drop in manufacturing employment in this country and the big slump in the proportion of the economy taken up by manufacturing took place under the Labour Government, between 1997 and 2010. Labour should be ashamed of the previous Government’s calamitous record on supporting manufacturing business in this country and creating a regulatory environment that drove so many firms out of business and overseas. The previous Government constantly missed their targets on apprenticeships. We heard again and again of how they were going to deliver hundreds of thousands of apprenticeships, but they never hit their targets. They spent massive amounts on employment programmes—designed in Whitehall but ineffective in practice—and they left the biggest deficit in our peacetime history. After all those promises about ending boom and bust, Labour finished with the longest recession in the western world.

--- Later in debate ---

[Mary Creagh]

I am so grateful to the hon. Gentleman for that basic lesson in economics. He may not be aware of my past working as an adviser to small businesses and to MBAs at Cranfield university on how to set up small businesses. Our economic record between 1997 and 2005 was extremely good when it came to ensuring that new businesses were created—[Interruption.] Would he care to listen to my answer or does he just want to keep commenting from a sedentary position? He claims that we turned the tap on too fast and then turned it off. It is understandable that when Governments end up owning majority shares in banks, they want to ensure that credit flows to businesses—and we ensured that that was happening through the small firm loan guarantee scheme. Now, the banks are almost in a monopoly position, and we need more competition for high street banks and to change their risk aversion when it comes to lending to small businesses.

We are straying from the point, which is the effect of the Budget on unemployment. The OBR has had an extraordinary few weeks. It was set up and has published its little forecasts, but now suddenly Sir Alan Budd—who set it all up—is to leave. I have been in politics a few years now and when someone leaves unexpectedly, I try to work out why. Why is it that someone in a brand-new, start-up situation who wants to perform a public service is leaving? I wonder whether there has been a row. Perhaps in the future we will find out the real reason—perhaps that he was leant on for the employment figures, which are heroically optimistic. The OBR claims that more than 2 million jobs will be created in the private sector over the next five years, but John Philpott, the chief economist at the Chartered Institute for Personnel and Development, has said:

“There is not a hope in hell's chance of this happening. There would have to be extraordinarily strong private sector employment growth in a…much less conducive economic environment than it was during the boom.”

The hon. Member for Beverley and Holderness (Mr Stuart) says that we funded small businesses through the boom, but the OBR and the Treasury now claim that we will have a similar level of employment growth—another boom—but there is no credit to finance it and, by the way, they are cutting huge amounts out of the public sector. I will give way if any Member opposite can tell me how that will happen. I thought not.

[Mr David]

Does my hon. Friend agree that in many areas, including south Wales, there is a close relationship between the public sector and the private sector? Draconian cuts to the public sector will have knock-on effects on the private sector.