Clause 15
Child Maintenance and Other Payments
10:30 am

Andrew Selous (Shadow Minister, Work & Pensions; South West Bedfordshire, Conservative)

I beg to move amendment No. 18, in clause 15, page 7, line 10, at beginning insert—

‘(1) Subject to subsection (2),’.

Christopher Chope (Christchurch, Conservative)

With this it will be convenient to discuss the following amendments: No. 19, in clause 15, page 7, line 10, after ‘(c. 48)’, insert ‘shall’.

No. 20, in clause 15, page 7, line 18, at end insert—

‘(2) When applying section 57 of this Act the Secretary of State shall only bring the provisions of subsection (1) into force on such day as he by regulations amends the provisions set out in subsection (3) below, so as significantly to increase the amount of child maintenance which is to be disregarded when calculating income other than earnings for income support or jobseeker’s allowance purposes.

(3) The provisions referred to in subsection (2) above are—

(a) paragraph 73 of Schedule 9 to the Income Support (General) 1987 Regulations;

(b) paragraph 70 of Schedule 7 of the Jobseeker’s Allowance Regulations 1996.’.

No. 45, in clause 15, page 7, line 18, at end insert—

‘(2) Subsection (1) shall not have effect until the Secretary of State has, by regulations, amended the provisions set out in subsection (3) below so as significantly to increase the amount of child maintenance which is to be disregarded when calculating income other than earnings for the purposes of income support or jobseeker’s allowance.

(3) The provisions referred to in subsection (2) above are—

(a) paragraph 73 of Schedule 9 to the Income Support (General) 1987 Regulations;

(b) paragraph 70 of Schedule 7 to the Jobseeker’s Allowance Regulations 1996.’.

Andrew Selous (Shadow Minister, Work & Pensions; South West Bedfordshire, Conservative)

I welcome you back to the chairmanship of our Committee after the long summer break, Mr. Chope. I am sure that the Ministers have had the same joy as Opposition Members in getting back to speed on our earlier discussions. I am sure that  we will all get back into the swing of our deliberations, which proceeded in a focused and constructive manner in previous sittings. The hon. Member for Rochdale will, no doubt, discuss amendment No. 45 in due course.

The clause makes a major change to the current system of child support by repealing sections 6 and 46 of the Child Support Act 1991. Section 6 requires those in receipt of benefit to lodge an application for child maintenance with the Child Support Agency, which is, in broad terms, a reform that the official Opposition support. It will provide equality of treatment to all sections of the population and will not force one section to go down a route that they might not want to go down. However, as with any change of this nature, that inevitably raises a number of other questions, which I hope will provoke a debate and a response from the Minister.

It is worth putting on the record a few facts relating to the abolition of section 6. At the moment, only 31 per cent. of parents with care who are on benefit received child maintenance in the previous three months. That comes from the CSA’s quarterly statistics of March 2007, table 13.1. Therefore, the requirement in section 6 is not working, as 69 per cent. of parents with care who are on benefit are not receiving child maintenance to start with. Two thirds of the cases that are taken on because a parent with care has claimed benefit never reach the stage of an initial calculation and payment set-up. That information is also from the CSA’s quarterly statistics of March 2007, table 2.2. We also know, as was explained by the Minister’s colleague Lord McKenzie in our evidence-taking session, that many parents with care also withdraw before a calculation has been made, because they go off benefit, so we understand and are broadly sympathetic to what the Government are doing.

Tim Boswell (Daventry, Conservative)

Does my hon. Friend agree that another important motive in the initiation of that structure was saving public funds by recovery from the parent without care? Can he advise the Committee, or hazard a guess, as to the amount of public money that ought to be recoverable and is not or, conversely, the amount that is scored in benefit and that is either reclaimed against individuals or is not eventually recovered from the parent without care?

Andrew Selous (Shadow Minister, Work & Pensions; South West Bedfordshire, Conservative)

I am glad that my hon. Friend has raised that point, and he is absolutely right to do so. It is worth putting on the record that the change is major, because one of the original objectives was to ensure that the public purse did not lose out—he will have sat through those earlier debates with my hon. Friend the Member for North-East Bedfordshire (Alistair Burt) and others who were Ministers at that time. We have to say that that intention has had a chequered history, as some of the statistics that I have read out have shown. That point is worth making, so that we are all conscious of the change that we are bringing about.

Above all, we need to focus on a system that works and that gets money to parents who are looking after children. We must ensure that there is a focus on lifting those children out of poverty and on ensuring that they have the income to which they are entitled. My hon. Friend the Member for Daventry—indeed, the whole  Committee—could regale you for some time with endless statistics about how things have gone wrong in the past, but you would not allow it, Mr. Chope. There is agreement on that issue, which is why the Government have introduced the legislation. However, my hon. Friend has made an important point and I am grateful to him for putting it on the record.

The Child Maintenance and Enforcement Commission will be able to focus on applications from parents who actively want to use its services, which should make a difference. It will not be plain sailing, because there is often severe antagonism between the parents, and there may be recalcitrant non-resident parents who do not want to pay. Part of the challenge for the Bill, and for the changed culture that we hope will go with it, is whether there will be a change of heart as far as those non-resident parents are concerned.

Section 6 of the 1991 Act provided a mechanism to bring parents with care who are on benefit into the child maintenance system. There is a worry that there may be parents with care who will not pursue a voluntary arrangement when, perhaps, they should. My hon. Friends and I have tabled an amendment that will allow us to debate that very point later. However, there is an issue about the decision to delay the introduction of a higher maintenance disregard until 2010. With the Bill likely to gain Royal Assent and come into effect next year, there is a worry that there will be problems between the later implementation of the maintenance disregard and the Bill coming into effect. That is a timing issue, and it is possible that the number of lone parents on benefit seeking maintenance will decrease, because the current £10 disregard is not a great incentive as far as they are concerned.

I do not know when the Government will announce the level of disregard for child maintenance income, but I hope that it will be sooner rather than later—I understand that discussions are ongoing with the Treasury and others on that point. Projections have been made about higher levels of disregard, the number of children that would be lifted out of poverty and the cost that would result from a higher level of disregard. One Parent Families and other groups maintain that this is a cost-effective means of lifting children out of child poverty. However, we also need to look across the piece to see what the effect will be as far as parents are concerned, and I will say more about that later. A full maintenance disregard would cost about £230 million. According to some analyses, that would be cost-effective in terms of lifting children out of poverty, compared with an increase in tax credits, for example.

On the notification by Jobcentre Plus of the current £10 disregard, Jobcentre Plus must notify the agency, which must then split the maintenance payments made by non-resident parents, so that only £10 goes to the parent with care and the rest is diverted to the Secretary of State. When the parent with care goes back into work, Jobcentre Plus must notify the agency again to redivert all child maintenance to them. Those are some of the practical problems that amendments Nos. 18, 19 and 20 seek to address.

Empirical evidence from the United States, which can be found in the Department’s own research report No. 402 of 2007, shows that increasing the level of the  disregard has not had an adverse effect on the employment rate. I would be grateful if the Minister would comment on that and let us know when we are likely to have that key information, which is critical to the future successful transfer of child maintenance, because, in a sense, we are discussing this part of the Bill with a big hole in front of us. I will be interested to hear the Minister’s response to this debate.

Paul Rowen (Shadow Minister, Work & Pensions; Rochdale, Liberal Democrat)

I, too, welcome you back, Mr. Chope, after what has been an unusual break. Some of us did not know whether we would be completing this process today.

I want to discuss amendments Nos. 18, 19 and 45. We are considering the repeal or abolition of sections 6 and 46 of the 1991 Child Support Act. Although that move might be welcome, we have tabled the amendments, because we are concerned that the it may have some adverse effects, as has been mentioned by the hon. Member for South-West Bedfordshire, and not necessarily be of overall benefit. We are also concerned about the delay announced by the Government to the point at which an increased child maintenance disregard can come into place.

The abolition of child poverty is something that all three political parties can sign up to. I shall quote the Prime Minister in July 2004:

“the great and unacceptable concentration of poverty amongst households with young children—is the greatest indictment of our country in this generation and the greatest challenge of all.”

That sums up what we all perceive to be an important target. If the Government are to meet their 2010 target of halving child poverty, child maintenance and its payment has a part to play. We are concerned that the £10 disregard, which will be introduced next year, will only affect some 47,000 parents. We know already from this year that the number of children in poverty has grown. We also know, as has been mentioned, that only 31 per cent. of parents with care on benefit have received child maintenance. If section 6 is abolished without the increased child maintenance disregard, the number of children who receive child maintenance will fall. The figure of £10 that has been quoted may be the maximum amount paid by the non-resident parent.

We must accept that section 6 has not been good value in terms of the amount of money recouped. Last year, £110 million was recouped, yet the administrative costs of the agency were around £425 million. Section 6 has not been successful in its original purpose, and it has acted as a disincentive for the formation of voluntary arrangements. That point was acknowledged in the Government White Paper:

“reclaiming most of the money for the State, rather than passing it through to children, still means that neither parent has a strong enough incentive to co-operate. This undermines the extent to which child maintenance can contribute to the eradication of child poverty.”

That is a key point. If we are serious about eradicating child poverty, we must use the child maintenance system as a tool.

Consider the comparison between the tax credits system and the child maintenance system. If the Government were, for example, to introduce a total  higher maintenance disregard, it would cost in the region of £230 million. That is what we would like to see, and I know that the Chancellor has received a letter requesting that he announces such a change in today’s pre-Budget statement. Using the child maintenance system, it costs £2,875 to lift a child out of poverty. Using the tax credits system, however, the cost to the taxpayer is £4,300. Whichever way one looks at it, if the Government are serious about eradicating child poverty and meeting their 2010 target, they should consider the rapid introduction of the full maintenance disregard.

Tim Boswell (Daventry, Conservative)

Will the hon. Gentleman take this as a genuine comment? Is he not concerned with the equity of the position of somebody who is in receipt of full benefits and who also receives child maintenance—albeit perhaps an inadequate amount—compared with somebody who simply receives benefits and who does not have the advantage of the receipt of child maintenance? The needs of the child are the same in each family, but the resources, whether public or private, are very different, and the result in terms of poverty is also likely to be very different.

Paul Rowen (Shadow Minister, Work & Pensions; Rochdale, Liberal Democrat)

I understand the hon. Gentleman’s point. At the moment, the system is a barrier for parents who are going through the process, because of the hassle involved. My concern is that if one sticks at the £10 disregard, or if it is increased to £30 or whatever, that will be the amount that the non-resident parent agrees to pay. That will not help to deal with the issue of child poverty.

Andrew Selous (Shadow Minister, Work & Pensions; South West Bedfordshire, Conservative)

Although I agree with what the hon. Member for Rochdale has said, everyone needs to take my hon. Friend’s warning note on board. It is the case that poverty in two-parent families has increased. It has gone up from 57 per cent. in 2002-03 to 60 per cent. in 2005-06, according to the households below average income figures for 2005-06. That does not run counter to anything that my hon. Friend and I have said. My hon. Friend’s warning must be heeded, if we are to be fair to everyone and to ensure that we lift all children out of poverty.

Paul Rowen (Shadow Minister, Work & Pensions; Rochdale, Liberal Democrat)

I understand the hon. Gentleman’s point. The problem is that although we are dealing with child maintenance, this amendment seeks to do something for one group of parents.

Save the Children gave me some interesting figures yesterday, which are apposite to the hon. Gentleman’s point. I am sure that members of the Committee have seen the briefing from Save the Children on the elimination of child poverty. If we carry on at the current rate, it will be 2049 before the Government meet their target of halving child poverty. That is because the disparity in income has grown between people at the top and at the bottom, and there is therefore a disparity in the time that it will take for parents to reach 60 per cent. of median income, which the norm to which we aspire. It is frightening to consider the year 2049, when we have a target of halving child poverty by 2010. Given that the costs are £200 million, we must ask ourselves—I hope that the  Minister can answer this—what the real barriers are to introducing the full disregard more quickly than is proposed at the moment.

I accept the point made by the hon. Member for Daventry that we must consider the issues not only for single parents but across the piece. Given that this measure would cost £200 million and would have a dramatic effect in reducing child poverty for a significant number of single parents, why are the Government being so slow to introduce it? Also, will the Government accept the concern that if section 6 of the 1991 Act is abolished without full income disregard, the effect may well be that fewer parents, and therefore fewer children, will receive child maintenance? We all want an increase, not a reduction, in the number of parents receiving child maintenance.

I hope that the Minister will explain why we have to wait until 2010. We may have to wait only until this afternoon, when the Chancellor will give his pre-Budget statement. I hope that the Minister can answer those points.

James Plaskitt (Parliamentary Under-Secretary, Department for Work and Pensions; Warwick and Leamington, Labour)

It is nice to be back, Mr. Chope. I am sure that we will continue our deliberations in the same constructive way as before the recess, and it is nice to know that we will be able to conclude them.

I thank the hon. Members for their amendments and comments. I am grateful that the important reform at the centre of our proposals has been welcomed by both hon. Members who have spoken. The reform is a major change, and it is very important.

Our aim is to encourage parents to make arrangements for maintenance on their own, if they can, while maintaining a statutory maintenance service for those who cannot. To achieve that, we propose to repeal sections 6 and 46, making the removal of compulsion the first step in moving to a new system of child maintenance.

Hon. Members have referred to the Government “delaying” the implementation of the larger disregard. That implies that a clear option was open to us immediately to go to the higher disregard level and that a decision has been made to put it off. That is not the case. It is not a matter of delay; it is a matter of doing all the necessary preliminary work to ensure that the higher disregard levels can be introduced.

What has to be done? First, there is research, which neither the hon. Member for South-West Bedfordshire nor the hon. Member for Rochdale mentioned. We must carefully consider the interaction between higher disregards and work incentives. If the objective is to reduce child poverty, as both hon. Members have said and as I agree, we must take that factor into account. If we were not certain of the impact of the changes in terms of work incentives, and we subsequently found that the change encouraged more people to stay on benefit and not to seek work, we might not be serving the objective of reducing child poverty. It is therefore important thoroughly to assess all the impacts.

There is existing research, and the hon. Member for South-West Bedfordshire has mentioned the United States. That is not exactly the same system, so we cannot necessarily assume a simple transference  from the American experience to here. We have commissioned some research of our own specifically to consider the circumstances pertaining to the UK. The research is very close to conclusion, and we hope to publish it very shortly. We must think carefully before making decisions on the implementation of the higher disregard.

Paul Rowen (Shadow Minister, Work & Pensions; Rochdale, Liberal Democrat)

My understanding is that DWP research shows that the vast majority of lone parents want to work. A 10-year study of British lone parents and their children from 1991 to 2001 found that, controlling for other factors—in other words, aside from matters such as education and occupation—receipt of child maintenance is positively associated with parents moving into work, and not the opposite. There should be no need for any more evidence, because the existing research shows that worklessness and being a lone parent are not related. Lone parents are just as willing and eager to work as other parents.

James Plaskitt (Parliamentary Under-Secretary, Department for Work and Pensions; Warwick and Leamington, Labour)

The hon. Gentleman is right in the sense that so far the analysis is encouraging. I hope that he agrees that it is crucial to be sure that we have this absolutely right, so that the reform, as we introduce it, serves our common objective of reducing child poverty. I also want to stress that that is not the only aspect of disregard reform. Other changes, such as the extension of the £10 disregard, will be introduced more quickly. There will inevitably be sequencing to ensure that the systems work and that the reform achieves our objectives.

Tim Boswell (Daventry, Conservative)

We are having a consensual discussion. Does the Minister agree that the research should take into account the relative equity between persons who are, or should be, in receipt of child maintenance on the one hand, and persons who may well be in other parts of the benefits system but who are not affected by child maintenance issues?

James Plaskitt (Parliamentary Under-Secretary, Department for Work and Pensions; Warwick and Leamington, Labour)

That is being looked at as part of our research, as the hon. Gentleman will see when it is published. We will encourage parents to arrange child maintenance alongside the repeal of section 6, whether through making their own arrangements or through applying to the statutory maintenance service for a calculation. As part of this, as we discussed before the recess, CMEC will introduce a high-quality information and support service. It will draw in low-income families and support them to make an informed choice about which maintenance option suits their circumstances best. In addition, we have already announced our intention to extend the existing £10 disregard to all cases on the original scheme by the end of next year. Around 80,000 children already benefit from the disregard. The extension will extend that benefit to a further 55,000, which is quite a significant step in terms of tackling child poverty.

We have made clear our intention to increase significantly the maintenance disregard for all parents with care from 2010-11, which will deliver on our twin objectives of reducing child poverty and supporting parental responsibility. However, we also recognise that  this is a complex issue, where many potential impacts need to be considered. We need to ensure that we achieve the right balance between the incentive to seek and pay child maintenance, and the incentive to move into work. Securing that balance will provide the real child poverty gains that we all seek to achieve. It is critical to get that right. Continuing to overturn satisfactory arrangements or forcing parents to justify why an application should not be made and imposing benefit penalties on the most vulnerable parents are not appropriate.

We will encourage parents to make maintenance arrangements as soon as possible, and we should not make the timing conditional on the significant increase in the benefit disregard. There is enough in the new system from the outset, in the extended disregard and the new information and support service, to encourage positive parental choice. We will build on that with the significantly higher disregard to ensure the longer-term success of the new system. I hope that for those reasons the amendment will be withdrawn.

Andrew Selous (Shadow Minister, Work & Pensions; South West Bedfordshire, Conservative)

I have listened with interest to the Minister’s response. I want to leave on the record my concern that I am not sure that he addressed the issue of equity between families on benefits who are not in receipt of maintenance and those who are in receipt of maintenance. He said that the research was looking at that, but I again have to express disappointment that it is not before the Committee. It seems slightly the wrong way round to have the research commissioned while the Committee is sitting, so that we are conducting our deliberations without the benefit of research that the Government are conducting. As I said, we are also ignorant of what the proposed significant increase in the level of the disregard will be, but having heard what the Minister has said, I beg to ask leave to withdraw the amendment.

Michael Weir (Spokesperson (Business, Enterprise and Regulatory Reform; Energy; Work and Pensions); Angus, Scottish National Party)

I beg to move amendment No. 90, in clause 15, page 7, line 18, at end add—

‘(c) section 4(10)(aa).’.

Christopher Chope (Christchurch, Conservative)

With this it will be convenient to discuss amendment No. 125, in clause 15, page 7, line 18, at end add—

‘(2) In section 4 of the Child Support Act 1991 (Child support and maintenance), for subsection (10) substitute—

“No application may be made at any time under this section with respect to a qualifying child or any qualifying children if there is in force a maintenance order in respect of that child or those children and the person who is, at that time, the non-resident parent.”.’.

Michael Weir (Spokesperson (Business, Enterprise and Regulatory Reform; Energy; Work and Pensions); Angus, Scottish National Party)

It seems like “Groundhog Day” because we are discussing matters that I have been raising ever since the re-design of the Child Support Agency was first mooted. This is perhaps the last throw of dice to try to persuade Ministers to look at the matter anew.

The introduction of voluntary maintenance agreements has been widely welcomed. It provides the possibility of removing many people from the statutory system and creating agreements that are acceptable and  which work well—something that the current CSA has, frankly, failed to do. Unfortunately, section 4(10)(aa) of the 1991 Act will, I believe, act as a serious deterrent to many people who would otherwise go down the route of a voluntary agreement. I note in passing that Sir David Henshaw in his report recommended the abolition of the 12-month rule, but the Government have not gone down that route and I would be interested to hear the reason for that.

The brief history is that the original 1991 Act intended that the CSA would take over child maintenance, but that soon proved to be beyond the agency’s capabilities, and it clearly still is. Under the Child Support, Pensions and Social Security Act 2000, the Government attempted one of their many efforts to improve the agency by introducing the section that allowed couples to reach an agreement, but they set a 12-month time limit after which either party could apply to the CSA to overturn the terms of the agreement. The rationale behind that was to give the agency a breathing space during which couples could still reach an agreement, but ultimately everything would come under the auspices of the CSA.

Given that we are considering a change and, as the Minister said, we are encouraging parents to reach their own agreement, the continued existence of the rule will be a serious stumbling block to the widespread use of voluntary agreements. I am sure he will say that we cannot have an agreement that is set in stone for eternity. In essence, that is correct, but the majority of agreements will have within them a provision that allows for variations if there is a change of circumstances. That was a standard clause in my previous life as a solicitor when we entered into many such agreements prior to the CSA. We recognised that child support was a long-term matter. It is not for one year or five, but 16 or 17 years in some cases. There must be allowance for variation. I suspect that the standard agreement produced by CMEC will contain something similar to that—unless it is the Minister’s intention that the CMEC agreement be renegotiated each year, which will lead to some friction.

If voluntary agreements merely mirror the statutory agreements, and if all we have is a standard form into which the parties agree to pay statutory percentages, an important chance will be lost to allow separating parties to agree a clean break and reach agreements that reflect accurately the particulars of the specific circumstances and provide a much more solid basis for child contact to continue into the future, which is the essence of such matters.

As the Committee has discussed the matter, I have become slightly worried about whether voluntary agreements will provide a serious alternative to the statutory system. In our first evidence sitting, I raised specifically the Scottish minutes of agreement, and Hilary Reynolds, the civil servant in charge of the Bill, responded by saying:

“It is worth noting that when we have talked to some clients about what they find important in a voluntary agreement, sometimes it is not regular payments, but lump sums, mortgage or school uniform payments, or whatever. What suits the parents of the child or children will be a variety of things, not just the standard x amount per period.—[Official Report, Child Maintenance and Other Payments Public Bill Committee, 17 July 2007; c. 29.]

I agree with that statement, but I do not believe that it would be possible under the proposals. If such an agreement were entered into by parties, CMEC can intervene after the year has passed and overturn it.

Tim Boswell (Daventry, Conservative)

The hon. Gentleman makes a powerful case, to which the Minister should at least give an answer. In his experience of the current formulas, does he agree that a great deal of the concern that is expressed by parents relates to agreements about particular payments that are not taken into account in a formula and might therefore be said to have left a lasting sense of unfairness?

Michael Weir (Spokesperson (Business, Enterprise and Regulatory Reform; Energy; Work and Pensions); Angus, Scottish National Party)

The hon. Gentleman is correct. We have all met people in our surgeries who are paying for x and y and who have said to the agency, “Look, I have done this”, but the agency will not take it into account. To be fair, sometimes there is little evidence of what people have been doing because the parties have handled things in cash. I appreciate that that is a problem, but it leaves a sense of bitterness in many relationships and poisons them after the break-up.

A serious problem arose in respect of the Child Support Agency in that it would in effect look only at the regular payments made by the non-resident parent to the parent with care, irrespective of whatever arrangements may have been agreed. In many cases, parties had entered into a minute of agreement that might, for example, have transferred a large capital sum or the whole matrimonial home to the parent with care in exchange for a reduction in payments or instead of regular payments. That may well have allowed the clean break, especially when new relationships were being formed or other children were involved, which is often the crucial point because the new relationship can start to break down because of the pressures and payments in the old relationship. Many of those agreements were overturned subsequently and the CSA pursued the non-resident parent for increased child maintenance irrespective of what had gone before. That was unfair and led to great tension between couples.

If the 12-month rule continues, what is the point of entering into an agreement other than of the standard variety? In our evidence sitting, Lord McKenzie said:

“The one key change will be that, once the section 6 compulsion goes, a claim for benefits by one or other of the participants will not break the agreement. It will continue, subject to the 12-month rule, under which either party can elect to come out of the agreement.”——[Official Report, Child Maintenance and Other Payments Public Bill Committee, 17 July 2007; c. 5.]

In other words, a party to an agreement cannot be sure that it will last for more than 12 months. The Minister assured the Committee that

“an application can be made to the statutory maintenance service at any point by either parent. That would override any existing voluntary arrangement.”—[Official Report, Child Maintenance and Other Payments Public Bill Committee, 19 July 2007; c.125.]

There is no point in a party entering into a voluntary agreement that undermines the essence of what the Bill is trying to do. As I said at the time, it will undermine those who wish to make a clean break by agreeing to a different method of dealing with ongoing support rather than periodic payment. By implementing the rule, the Government are giving with one hand what they are taking away with the other.

I do not suggest that such an agreement would suit everyone; clearly it would not.

Andrew Selous (Shadow Minister, Work & Pensions; South West Bedfordshire, Conservative)

The hon. Gentleman’s point brings to mind some of the questions that my hon. Friend the Member for Weston-super-Mare posed to the Secretary of State on Second Reading about the enforceability of private agreements. Would the hon. Gentleman like the voluntary agreements to have legal force and for the organs of the state to ensure that they are adhered to?

Michael Weir (Spokesperson (Business, Enterprise and Regulatory Reform; Energy; Work and Pensions); Angus, Scottish National Party)

That is exactly my point. I cannot speak for the English law, as I am not certain of the position in England, but in Scotland once a minute of agreement has been entered into and registered in the books it has legal force. It can be implemented in the same way as a decree of court without any proper procedure for going back to court. It is a very effective, clear way of dealing with such problems.

I reiterate the point: most agreements would recognise that circumstances change. If there is a material change in circumstances, the parties could go back to court and renegotiate the agreement. Most parties to these agreements have undertaken independent legal advice on their interests. It is not a case of it being imposed by one party on the other; the agreements are usually negotiated with independent legal advice in respect of the future.

I tabled amendment No. 90 to delete the clause that implements the 12-month rule. Resolution approached me and pointed out that the effect of my amendment would not be what I intended as deleting the 12-month rule may mean that someone could go back to the court at any time; it suggested amendment No. 125 as an alternative. It made much the same point as I made, referring not to the Scottish minutes of agreement but to the English system of court order in which once a court order has been made either party can apply to the agency for a calculation after a 12-month period, which only serves to undermine the basis of agreements reached between the two parties concerned.

The 12-month rule clearly facilitates a non-resident parent to transfer between the two state systems, using that as a delaying tactic for the payment of child maintenance in the future. Practitioners say that it has frequently been used as a tactical ploy, and has undermined any trust that may have been created between the parties on reaching an agreement.

I have raised this important point on numerous occasions and I would like the Minister to reconsider it. The Government are trying to get parties to agree between themselves, which is the way forward, as agreement can defuse much of the tension and bad feeling in the break up of a relationship. However, if there is uncertainty and a period when either party can simply go to the agency and overturn any agreement after a period of 12 months, it will undermine the good work done in other parts of the Bill. The proposal needs to be reconsidered and I shall be interested in what the Minister has to say about it.

James Plaskitt (Parliamentary Under-Secretary, Department for Work and Pensions; Warwick and Leamington, Labour)

I acknowledge the hon. Gentleman’s determination. As I think he knows, the existing 12-month rule applies where parents have a consent order, or a minuted agreement in Scotland, made on or  after 3 March 2003. It operates to prevent parents from applying for a maintenance calculation for the first 12 months that a consent order or minuted agreement is in place, but either parent may apply for a maintenance calculation once the year has expired, thus overturning the order. Amendment No. 90 would mean that parents who had consent orders or minutes of agreements in place would be prevented from having access to a maintenance calculation made by the Secretary of State or the commission.

We do not wish to restrict any effective and agreed maintenance arrangements, in whatever form, to 12 months or any other period. In fact, the repeal of section 6 would break the link with the benefits system, so that any existing maintenance arrangements will not be overturned simply because the parent with care claims benefits—only the action of one or both of the parents can do that. We want to encourage dialogue and agreement between parents that leads to effective maintenance arrangements providing ongoing support for children. We hope that parents will not need to turn to the commission for a calculation under the statutory scheme.

The agreements will continue and benefit the children for as long as both parents want them to. However, if things go wrong or a parent decides that another type of arrangement would be more suitable for their children, they need a readily available route into the commission. Children must not be left for considerable periods with no maintenance or inadequate arrangements, and we should not lock parents into agreements that are no longer working. The 12-month rule is an important component of the overall child maintenance system. It encourages settlements that contain fair levels of child maintenance that are broadly consistent with the amount calculated under the statutory scheme and discourages old-style clean break agreements that divide property and assets between adults but leave children without regular ongoing payments of maintenance.

Tim Boswell (Daventry, Conservative)

For clarification, when the Minister was talking about the various circumstances in which the agreement may no longer be appropriate, did he primarily have in mind cases where the agreement had not been complied with by one of the parties and in that sense had broken down, or where the agreement between the parties was no longer fair? Those are somewhat different circumstances. If one could introduce a sort of judicial process, one would like to be friendly if the situation were unrealistic and perhaps more intolerant if the situation was simply non-compliant.

James Plaskitt (Parliamentary Under-Secretary, Department for Work and Pensions; Warwick and Leamington, Labour)

I understand the hon. Gentleman’s point. A number of circumstances can lead to a breakdown of an arrangement and, whatever those are, it is important that we give parents the chance to come to the commission, if they have to, to get the issue sorted out. We must remember that the overriding interest is the flow of maintenance to the children. Any number of circumstances can lead to a breakdown. We want a system to be behind the parents to provide support in resolving a disagreement and to put an alternative agreement or arrangement in place to get  the maintenance flowing again. If parents are stuck in a court agreement without the option of coming to us, that is not working in the interests of the child or children who are being supported.

Michael Weir (Spokesperson (Business, Enterprise and Regulatory Reform; Energy; Work and Pensions); Angus, Scottish National Party)

These agreements are enforceable. If one party is not implementing the agreement, there is a route whereby that could be enforced relatively quickly. It is not a case of there being no flow of maintenance. The danger in what the Minister proposes is that, if an agreement is entered into and one party suddenly decides after 12 months, for whatever reason, that they want to overturn it, it can be overturned by going to CMEC, irrespective of whether it is fair. That will lead to a dispute between the parties that will lead to people being reluctant to enter into agreements in the first place.

James Plaskitt (Parliamentary Under-Secretary, Department for Work and Pensions; Warwick and Leamington, Labour)

It is fair enough for the hon. Gentleman to mention risks, but there are risks in what he is proposing as well. That is why it is important that we try to strike a balance. We are anxious not to have a situation where we revert to encouraging clean-break arrangements with no account being made of the flow of maintenance for the children. That has to be balanced against what he says.

John Penrose (Weston-Super-Mare, Conservative)

I am intrigued by what the Minister says about trying to discourage clean-break arrangements, because the whole tenor of the rest of the Bill is to try to encourage voluntary agreements between parents. They will understand what is best for the ending of their relationship and for the children who have resulted from it. The Government do not seem to trust them that far, and seem to believe that if there is a division of assets, which may then have an impact on income and therefore the ability to support the children and provide child maintenance in future, that is not an acceptable arrangement. I wonder why the Government want to draw a boundary around that.

James Plaskitt (Parliamentary Under-Secretary, Department for Work and Pensions; Warwick and Leamington, Labour)

With respect, that is not quite the point that I am making. The clean-break arrangements to which I am referring have come out of the court system in the past, whereby the terms of the divorce or separation settlement deal only with assets and property, and do not deal with, or make provision for, ongoing child maintenance. That is a different point. The hon. Gentleman is right: of course we want to encourage parents to come to their own arrangements, and I believe that the vast majority are capable of doing so. Some will need support to do it, and that is why the support service is there. Some who cannot do it, for whatever reason, need a statutory scheme to which to refer in order to put the maintenance in place.

John Penrose (Weston-Super-Mare, Conservative)

If, for example, there were a situation in which a parent with care had a modest income that would not be sufficient to provide a decent upbringing for the children because he or she would have to make mortgage payments on the family home, it is possible that the parent who is leaving would say, “You take over the family home. You might be mortgage-free.  That would therefore free up a lot of your income and you will be able to provide for the children, and that capital sum is the equivalent of an endowment instead of an ongoing income payment.” Why do the Government not accept that? Why are they actively undermining it and preventing it from happening?

James Plaskitt (Parliamentary Under-Secretary, Department for Work and Pensions; Warwick and Leamington, Labour)

I would not go so far as to say that that is what we are doing. What we are saying under the CMEC arrangements is that parents might want to come to their own arrangements or agreements. They may come to an agreement of that nature, but the point is that part of the advice and support service that we are setting up gives separating parents an indication of what is reasonable to expect and what they should be going for if they are not certain. We had a lengthy discussion about that before the recess. It is not for us, at the end of the day, to say that that is what people must do. We are turning towards people’s sense of responsibility, but we are saying that there is guidance as to what we would put in place if people were to refer to the statutory scheme. People could infer that that is deemed to be a reasonable settlement, but it is important for us to have in place, behind all those voluntary arrangements, a statutory scheme that will put an arrangement in place if parents cannot reach agreement.

Michael Weir (Spokesperson (Business, Enterprise and Regulatory Reform; Energy; Work and Pensions); Angus, Scottish National Party)

In effect, the Government are saying that people have to go down this route. Otherwise, why would anybody do it? Why would anybody enter into an agreement where, in effect, the Government are saying that that is what they expect? One party can go to CMEC after 12 months, overturn the whole agreement, and go down the statutory route. In effect, the Government are saying exactly what the Minister seems not to be saying.

James Plaskitt (Parliamentary Under-Secretary, Department for Work and Pensions; Warwick and Leamington, Labour)

We are getting stuck on this, because I do not agree with the hon. Gentleman. It is about striking a balance between the various risks that are at play, and we believe that by sticking to our position on the 12-month rule, that is exactly what we are doing.

John Penrose (Weston-Super-Mare, Conservative)

Can the Minister give an example of an occasion when it would make sense to suggest to a parent without care that they should make some sort of up-front capital grant to the parent with care in lieu of ongoing maintenance payments in, for example, the situation that I have described where a family home is encumbered by a mortgage? Why would that ever make sense under the situation that the Minister is describing?

James Plaskitt (Parliamentary Under-Secretary, Department for Work and Pensions; Warwick and Leamington, Labour)

This is not as difficult a concept as we are making it. It is the case that in some instances where couples separate they might try to come to an arrangement about the asset that they have jointly owned and contributed to. We know that that is a common feature, and we have all dealt with such cases. However, the point is what is done with that asset when the couple separates. Most people will not assume that an arrangement about that is adequate to cover child maintenance, which could be ongoing for many years. Most couples would not want to see that as part of an accepted settlement and would not feel it to be an  appropriate arrangement. That arrangement is made at one point in time when couples break and is a decision about how to divide jointly owned assets. There is then the ongoing issue of what provision is to be made for the maintenance of children. At the point of separation couples might need to buy separate homes. All sorts of other issues might occur in the future that cannot be anticipated when the assets are divided up.

What couples want to do—and what the vast majority do—is to decide on the split of assets and then decide on ongoing child maintenance. Most see those as entirely separate things. If parents are unable to reach an agreement on that, there is a statutory scheme under the CMEC plan to which they can turn and an advice service on which they can build any agreement to which they are trying to come. That is an advance on the current situation.

Mark Harper (Shadow Minister, Work & Pensions; Forest of Dean, Conservative)

It is not the case that an asset transfer is a one-off event? With a significant transfer in assets, there is an ongoing income stream or a non-expense stream of payments that have been avoided. It is an ongoing thing. No professional adviser in this country would advise somebody to make a capital payment if somebody can then come after them for income. No one is going to advise that because it would be a failure of their professional duties.

James Plaskitt (Parliamentary Under-Secretary, Department for Work and Pensions; Warwick and Leamington, Labour)

We are trying to anticipate the very wide set of circumstances in which couples separate. The whole thrust of the legislation is to encourage couples to come to their own agreements and arrangements. The decisions are for them to make about what is appropriate. The whole thrust of this reform is to not draw people unnecessarily into a system in which they do not need to be. However, there needs to be a system in place to provide an arrangement for those who cannot come to an agreement. It is not for me, or anybody else, to say what a couple should do. There are plenty of sources of advice to which they can turn in coming to a decision about how to make their clean break. We are in the business of supporting couples who are trying to make that arrangement, giving them an advice and support service to help them decide how it is done, and, as a failsafe, having a statutory scheme to which they can turn if they cannot reach agreement.

Tim Boswell (Daventry, Conservative)

I think that we have rattled this quite firmly, but will the Minister at least take away the thought that there could be a couple—not necessarily the typical couple—in which one of the parties might be quite disingenuous or cynical and enter into an agreement on a voluntary basis in the sure and certain knowledge that 12 months later, irrespective of how sensible the arrangement, it can be pushed into the statutory CMEC formula? I cannot give the Minister the precise wording and can understand how complex it would be, but will he consider a change so that irrespective of child maintenance, which I appreciate is its proper concern, CMEC could take into account some of the circumstances which had led up to its involvement and the reasonableness of the parties? I think that it would be very difficult to do that, but the people who have raised this issue have a serious point. We all want voluntary agreements if possible.

James Plaskitt (Parliamentary Under-Secretary, Department for Work and Pensions; Warwick and Leamington, Labour)

I understand that point entirely and appreciate the way in which the hon. Gentleman makes it. I will consider it, but we have given great thought to this issue and have thought very hard about what Sir David Henshaw recommended. We have not agreed with his recommendation for very good reason. I am happy to look at the matter again, but underline that great consideration has been given to this important subject. We believe that a 12-month period strikes the balance between giving court orders a chance to bed in and work, and providing the means to resolve difficulties quickly and keep payments flowing.

When problems arise in the first 12 months, the parties can return to the court and reinforce the order. Where arrangements break down or circumstances change, the 12-month period allows swift intervention by the commission to keep maintenance flowing to children, which therefore puts parents with consent orders or minutes of agreement on the same footing as any other separated parent. I appreciate that there is great interest in the issue. I certainly accept its importance, but I hope that, having given those reassurances and responses to interventions, the hon. Member for Angus will withdraw his amendment.

Andrew Selous (Shadow Minister, Work & Pensions; South West Bedfordshire, Conservative)

I have listened with great interest to the debate. The hon. Member for Angus has made a sensible point. By tabling the amendment, he has tried to help the Government to achieve the central thrust of the Bill, which is to get more effective voluntary arrangements in place. I think that he is actually on the Minister’s side.

I will not recap the other points, other than to add that it is worth thinking for a moment, on a human scale, of the effect of what the Minister is proposing. The measure would involve removing children from the family home, which they love and know, and from the place where they have friends and attend school, because fewer non-resident parents will say, “You keep the house and that is part of my settlement,” which, as the Minister has said, can be undermined.

I will not reiterate the other points, because they were made clearly. I agree with the points made by my hon. Friends the Members for Forest of Dean, for Weston-super-Mare, and for Daventry. If the hon. Member for Angus chooses to press the amendment to a vote, we will support him.

Michael Weir (Spokesperson (Business, Enterprise and Regulatory Reform; Energy; Work and Pensions); Angus, Scottish National Party)

I have heard what the Minister has said, but this is an important point. I accept the defects in amendment No. 90, but I want to press amendment No. 125 to a vote.

I beg to ask leave to withdraw the amendment.

Christopher Chope (Christchurch, Conservative)

With this it will be convenient to discuss new clause 1—Application to Commission by third party—

‘Where a child’s welfare is at risk because appropriate maintenance arrangements have not been established, a third party specified by the Secretary of State can, on behalf of the child, make an application to the Commission.’.

Andrew Selous (Shadow Minister, Work & Pensions; South West Bedfordshire, Conservative)

New clause 1 gives a power to institute maintenance arrangements, where they have not been put in place by a parent with care. It would apply only in extreme circumstances in which the parent with care is considered not to be acting in the best interests of the child. The power would be exercised as an extreme fall-back position in, hopefully, very few but none the less important cases, if the welfare and financial well-being of the children concerned is not being taken into account and promoted by the parent with care. We are considering a case where a parent with care has recklessly failed to pursue maintenance and is not acting in the best interests of the children concerned.

Social services or the courts might wish to exercise the power in question. In some circumstances, parents with care are deemed by social services to be fit and proper parents and can continue to care for their children, but, perhaps due to addiction problems or a lack of willingness to engage with the financial process, they might not see fit to approach CMEC or to establish a voluntary arrangement to get the maintenance flowing to them and their children. We do not imagine that such a thing would happen in a wide range of circumstances, but, following our debate on clause 15, many parents with care will come out of the child maintenance system, because they cannot be forced into it due to being in receipt of benefit. Do we imagine that all such parents with care will want voluntarily to establish maintenance agreements? Hopefully, a large number of them will do so, which is the Minister’s wish and the wish of all Committee members. However, there will be hard cases where parents do not act in the best interests of children, and new clause 1 would allow others to put maintenance arrangements in place.

It goes without saying—although Committee members will, perhaps, raise the issue—that domestic violence and fear are real for all our constituents, as are instances of people being pursued. I want safeguards to accompany the exercise of this power, so that it is used only if the safety of the parent with care is absolutely guaranteed. The parent concerned may be in a women’s refuge at an address unknown to the non-resident parent, where their safety is guaranteed.

Paul Rowen (Shadow Minister, Work & Pensions; Rochdale, Liberal Democrat)

Will the hon. Gentleman tell the Committee who he envisages being able to make such an application? Which groups of professionals does he mean? He was eliciting some examples of at-risk situations, but how would he define “at-risk”, thereby enabling people to make an application?

Andrew Selous (Shadow Minister, Work & Pensions; South West Bedfordshire, Conservative)

The hon. Gentleman has asked two questions, the first of which is who might make such applications on someone’s behalf? I am referring to professional people in contact with a family and the parent with care who are charged with having an overview of that family’s welfare. We are talking about people working in social services, court staff, Jobcentre Plus staff—if they were aware of the circumstances—and accredited welfare rights officers, perhaps at the citizens advice bureau.

For some people, the whole world of finance is an unknown. Given the lamentable state of financial education, our deliberations, and even knowledge of the new Bill, will pass far over the heads of large numbers of our fellow citizens throughout the country, who will never hear about this. Under section 6, people were dragooned into the system, and we have been through the arguments why that is not appropriate. The new clause reserves an important residual power, which would be exercised with discretion, caution and absolute concern for the safety of the parent with care.

The hon. Gentleman had a second part to his question. Will he remind me what it was?

Paul Rowen (Shadow Minister, Work & Pensions; Rochdale, Liberal Democrat)

It concerned the hon. Gentleman’s definition of “at risk”.

Andrew Selous (Shadow Minister, Work & Pensions; South West Bedfordshire, Conservative)

Any children who are in poverty or on benefits and who could be lifted out of poverty by the receipt of regular child maintenance are, by definition, children who would be “at risk”. The clause would not be used in cases where wealthy couples have separated. We are talking about people in dire financial circumstances.

James Plaskitt (Parliamentary Under-Secretary, Department for Work and Pensions; Warwick and Leamington, Labour)

I am grateful to the hon. Gentleman for tabling his new clause. I have listened carefully to his defence of it, but I think that he will understand why I am going to encourage him to withdraw it. The more one considers the measure, the more one begins to see the real problems in going down that road. There are several problems that make the measure effectively unworkable.

I take the point that the hon. Gentleman is talking about people in extreme circumstances, but the problems arise when such circumstances are looked into. For example, who are the third parties are going to be? That is a real concern. In his speech, he made a  few suggestions about who the third parties would be—I was keeping a list. He mentioned social services staff, perhaps the courts, perhaps Jobcentre Plus staff, welfare officers or people who work for the citizens advice bureau. There are real problems with the idea that we could somehow designate these people and put them in a position of taking the serious step of referring the welfare of another child, with whom they have no relationship, to the commission. They would need to instruct or request the commission to begin the process of determining an agreement for that child, which would be fraught with difficulties. Who will the Secretary of State accredit with the ability to do that? I cannot see any means of coming up with a definitive list of who could be accredited in those circumstances, which is the major difficulty with the hon. Gentleman’s proposition.

Andrew Selous (Shadow Minister, Work & Pensions; South West Bedfordshire, Conservative)

I am a little surprised by the Minister’s comment that those people would have no relationship with the child. I am not particularly suggesting that this category of professional might be one who would instigate this. For example, an educational welfare officer might be intimately involved with a family and visit them at home because the child is not turning up at school. They might find that the reason why the child is not turning up is a matter of finance, due to deep poverty within the home. There are many professionals of the state—employees of central and local government—whose job it is to have an intimate relationship with that family and keep the welfare of the children at heart.

James Plaskitt (Parliamentary Under-Secretary, Department for Work and Pensions; Warwick and Leamington, Labour)

I return to the question of where we draw a line to determine who can or cannot act in that way. With respect, the hon. Gentleman cannot say where that line would be drawn. If we were to pursue his new clause, the line would have to be drawn somewhere, and it would be impossibly difficult to determine who is authorised to make such interventions.

A more profitable route would be to consider the information and advice service. I hope that people dealing with families in the circumstances that the hon. Gentleman has discussed, and who are perhaps aware of the risk to a child who is not receiving the maintenance to which it is entitled, would refer to that service. That is the route that one should take in order to resolve the issue, rather than one in which a third party—especially as there is an issue about who that should be—initiates a process when they do not have a biological relationship with the child. It is better to refer to an information service to encourage either of the parents to initiate the process in support of the child. I am with the hon. Gentleman on his objectives, but I think that the question is one of means.

Tim Boswell (Daventry, Conservative)

We are having the right kind of discussion about this difficult issue. I want to probe the Minister about something he has just said. It is clearly sensible for the information and advice service to advise the parties to do that and to give them all the encouragement they need in what might be a daunting process—issues such as domestic violence may colour  things. I am not quite clear whether any party has the power to refer the circumstance of the case to the information and advice service over the heads of the individuals involved. There are data protection and confidentiality issues that should perhaps be considered.

James Plaskitt (Parliamentary Under-Secretary, Department for Work and Pensions; Warwick and Leamington, Labour)

I do not think that that requires a power. The people working in support services will become aware of the service that we are setting up. They will know of it and will be able to refer to it, just like anyone else. Having done so, they will be able to recommend what action an individual can take.

There are other problems with the new clause. For example, who will make the judgment that the circumstances pertaining to the child are not appropriate? That is very much a judgment call. One individual, as a third party, might look at the circumstances and say, “They are not good enough for the child.” However, another third party might not agree with that view.

Then there is the question of how the commission will respond to such referrals and how it will check their validity. I hope that hon. Members agree that as we go further into what the hon. Member for South-West Bedfordshire has suggested, there are genuine practicality and workability issues. Although I take on board the motive that has driven him to table the new clause, those issues are fatal flaws in the practical step that he has suggested. I therefore hope that he will not press the new clause.

Paul Rowen (Shadow Minister, Work & Pensions; Rochdale, Liberal Democrat)

Will the Minister give way?

Christopher Chope (Christchurch, Conservative)

I think that the Minister has already sat down.

Andrew Selous (Shadow Minister, Work & Pensions; South West Bedfordshire, Conservative)

I am happy to give way if the hon. Gentleman wants to intervene on me. I am grateful to the Minister for his explanation. I am not blind to the definitional issues that he has raised. I concede that they probably are fatal, as far as the new clause is concerned.

Paul Rowen (Shadow Minister, Work & Pensions; Rochdale, Liberal Democrat)

Bearing in mind the Minister’s earlier comments, does he not feel that an enabling order is needed to follow this Bill? We need a clear definition of the steps that can be taken. I am thinking of the cases that the hon. Gentleman was referring to in which there may be an issue about domestic violence and the parent is not making a claim, because of their situation. Clearly, somebody who is independent will see that if action is not taken, the child will suffer.

Andrew Selous (Shadow Minister, Work & Pensions; South West Bedfordshire, Conservative)

I agree with the hon. Gentleman. I would prefer to have that clarity included in the Bill, rather than in secondary legislation and an enabling order at a later date. I very much support what the Minister has said about information and advice. He will probably remember earlier debates, when I said that I would like the Department to go a lot further on that particular angle.

Finally, I will have a bet with the Minister.

James Plaskitt (Parliamentary Under-Secretary, Department for Work and Pensions; Warwick and Leamington, Labour)

I am not a betting man.

Andrew Selous (Shadow Minister, Work & Pensions; South West Bedfordshire, Conservative)

Then I shall put this contention to the Minister: in years to come, when social services have the sad but important duty of removing children from their parents, they will list in their many and varied reasons, the failure to apply for child maintenance. That failure will be one of the factors in perhaps a long list that will contribute to children being removed from their homes, which may be the proper thing to do.