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Child Support Agency

– in the House of Commons at 12:16 pm on 9th February 2006.

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Photo of John Hutton John Hutton Secretary of State, Department for Work and Pensions, The Secretary of State for Work and Pensions 12:16 pm, 9th February 2006

With permission, Mr. Speaker, I should like to make a statement on the future of the Child Support Agency.

The previous Administration established the Child Support Agency because the system of collecting maintenance through the courts had lost the confidence of parents. That was the right decision to make. Different courts applied different criteria, resulting in widely differing settlements for families in similar situations. Too often, cases took months to come to court. Enforcement was difficult and costly.

The Child Support Agency was designed to provide better support to children and families, by making sure that parental responsibilities were properly enforced. Those were the right foundations upon which to build the new agency, and it is why the Child Support Act 1991 enjoyed widespread support. But as we know, over the years, those good intentions have not been translated into good performance. When we came to office, the agency was still costing more to run than it collected in maintenance and taking longer to process claims than the courts.

The Child Support, Pensions and Social Security Act 2000 made important changes. Maintenance calculations were simplified. For the first time, parents on benefits could keep up to £10 of the maintenance that they received. Tougher enforcement measures were introduced.

The performance of the agency has improved. It has nearly doubled the number of children receiving maintenance payments. About £600 million of maintenance will be collected this year—twice the level of 1997. That improved performance is a credit to the hard work of the agency staff, who are doing a good job in very difficult circumstances. They have had to cope with a great deal of criticism—much of it unfair—and I want to place firmly on the record today my appreciation of their commitment and dedication. Notwithstanding the efforts of its staff, the performance of the agency remains unacceptable.

The agency currently manages 1.5 million cases. Of the 670,000 cases assessed as having a positive maintenance liability, just over 400,000 parents with care are actually receiving any payment via the collection service or have a Maintenance Direct arrangement in place. There is a backlog of over 300,000 cases. Despite having collected £4.5 billion in maintenance, more than £3 billion of debt has also built up, and it has already cost the taxpayer well over £3 billion to administer.

Only 30 per cent. of lone parents receive any maintenance. Less than 15 per cent. of lone parents on benefit receive any maintenance through the CSA. There is little evidence to suggest that outcomes are any better than under the court system that it replaced. That is why, last April, my right hon. Friend Alan Johnson, now the Secretary of State for Trade and Industry, asked the new chief executive of the CSA to undertake a review of the agency's operations. Today I am publishing his recommendations on my Department's website.

The review recommended a restructuring of the agency's operation to increase productivity and performance. It proposed a plan that included migration and conversion, new legislative powers to write off debt and close cases and the greater use of outsourcing to support the removal of backlogs and collect debt. The plan required an additional £300 million of public money over the next three years, over and above the agency's £400 million a year current budget.

Even if the plan were fully implemented, however, at the end of the three-year period only half of lone parents would receive maintenance, only one third of lone parents on benefit would receive any money, and although more parents would receive maintenance, about half those assessed would be eligible to receive only £5 or less per week. In those circumstances, I do not believe that it would be right to commit £300 million of additional public money in that way.

As we all know, the CSA deals with many of the most difficult cases. In one in five cases the parents have never lived together; 5 per cent. question paternity; half of absent parents have no contact at all with their children; about 15 per cent. have links to other cases—often more than one; and 70 per cent. of new applicants are on benefit and thus have no choice but to use the CSA.

Given that complexity, we should be suspicious of simple solutions, because there are none. Walking away is not the answer, nor is handing over wholesale the work of the CSA, in its existing structure, to another Department. More than 500,000 children currently benefit from maintenance payments collected through the CSA and we must ensure that that continues, but it is time for fundamental change.

Having had an opportunity to consider the matter over the past three months, I have concluded that neither the agency nor the policy is fit for purpose. I have, therefore, asked Sir David Henshaw—a distinguished public servant—to redesign completely our system of child support. The primary objective must be to ensure the welfare of children. Sir David will set out both the policy and the operational structure needed to achieve that. He will need to consider how best to ensure that parents meet their responsibilities to their children, while minimising the cost to the taxpayer.

In undertaking his task, Sir David will need to address several difficult choices and questions. What support and advice can be given to help parents reach a fair solution as to how best to support their children if their relationship breaks down? Can we find a more cost-effective way of ensuring that children get maintenance payments? What is the right balance between enforcing responsibilities and getting more money to children and value for the taxpayer? Should benefit claimants be forced to use the agency even if they have informal arrangements in place? Should the Government continue to chase cases where the parents have decided to get back together again and restart their relationship? In some instances, the agency is chasing cases where the end result will be recycling money in the same household, with no benefit whatever to the child.

There will be an opportunity for all those in the House and beyond to make their views known to Sir David and his team. He will seek the widest possible involvement in his work. Just as the original proposals commanded widespread cross-party endorsement, my ambition is to ensure that the new framework enjoys similar support. I have asked Sir David to deliver his findings to me before the summer recess, and today I have placed in the Library copies of the terms of reference for his work, which have been drawn as widely as possible to allow all options for reform to be considered fully.

The Government have a clear responsibility to those already using the agency to ensure that it delivers for children and parents, so today I am publishing proposals that will help to stabilise and improve the performance of the agency in the short term. The plan will make more effective use of current enforcement powers, improve the productivity and effectiveness of the new IT system and increase debt recovery. I am thus making available from the Department's existing resources investment of up to £90 million over the next three years, to support that short-term recovery.

That investment will of course be subject to review in the light of Sir David's work and the achievement of agreed milestones. In addition, I am making available a further £30 million to contract out some of the agency's debt recovery. I expect that to result in a substantially increased recovery of the current debt owed to parents with care.

The CSA will take quicker and firmer action against those who default on payment. Supported by changes to secondary legislation, we will increase the use and effectiveness of deduction from earnings orders. The CSA will also be able to make more progress in clearing up the growing backlog of cases, and we will draw on data held by credit reference agencies to help speed up enforcement. I will consider tougher enforcement measures that require primary legislation, but they will need to be addressed as part of the redesigned child support system. That extra investment will mean that by 2008 we will improve compliance rates, ensure that 200,000 more children benefit from maintenance payments, be on track to help lift an additional 40,000 children out of poverty and see a significant increase in the number of parents receiving the child maintenance premium.

Given the considerable cost and risks involved, the stabilisation and improvement plan will stop short of converting all the old scheme cases to the new scheme. I know that conversion is of concern to many Members—rightly so—and I have asked Sir David to consider it as part of the redesign of the child support system. We must come to a decision on the right way forward as soon as possible.

I believe that Members on both sides of the House continue to support the original objectives of the Child Support Agency. The measures that I am announcing today are an important step towards improving the current arrangements and, critically, putting in place the foundations for a system of child support that will have a better chance of meeting those original objectives.

As we all know, relationships come to an end, but responsibilities do not. I know that every Member of the House will want to make sure that that fundamental truth underpins any new arrangements.

I commend the statement to the House.

T

To anyone in Liverpool, it is absolutely amazing that Hutton has appointed Henshaw. As chief executive of the city council Henshaw mounted an attempted coup d'etat against the Leader of the Council, Mike Storey, when the city council turned down Henshaw's bid for a £360,000 pension deal. In a typical fit of pique, Henshaw announced his retirement when the council turned him down (this was in March last year) and then appears to have changed his mind. However he got rid of his media chief, Matt Finnegan (suspended on trumped up charges) because he did not like the publicity that his announcement and the council's decision had attracted. Then he got access to Finnegan's computer and used emails from the Leader of the Council, expressing his opposition to the pension deal, to try and blackmail Storey and then to try and get rid of him! Everyone in Liverpool knows Henshaw is a greedy little (literally) bully who is only interested in himself. Other MP's - former health minister Jane Kennedy - have objected to other lucrative part-time jobs that Henshaw has secured since finally retiring from Liverpool in March. Henshaw is also getting more money than the Head of the CIvil Service for this CSA job! Try icliverpool or the guardian or telegraph for more on Henshaw. It is absolutely incredible. Rumour has it that this report has been done months ago and they just want Henshaw to front it. He's an arrogant, nasty piece of work, who is full of bull.

Submitted by Tony Parrish Read 1 more annotation

Photo of Philip Hammond Philip Hammond Shadow Secretary of State for Work and Pensions

I welcome the Secretary of State's decision to publish the internal review of the problems at the CSA—something for which we have been pressing since he received it.

Obviously, we have not yet had a chance to study the report, which I understand will soon appear on the Department's website, but on the back of it the Secretary of State has concluded that the present structure of the CSA cannot be made to work and this morning he has set out his plans for what amounts to a further review—no matter what he may choose to call it—of the system for assessing and collecting child maintenance payments.

Although the decision to redesign the system from scratch may be the right one, the truth is that the Government must accept responsibility for the lamentable failure to get to grips with the problem much, much earlier. That is not a criticism of the Secretary of State—he has been in his post for only three months and nobody could criticise the speed with which he has dealt with a report that landed in his in-tray only just before Christmas; but it is a criticism of the Government and the failure of political leadership at the Department for Work and Pensions over a long period, as successive short-lived Secretaries of State played revolving doors, without engaging with the fundamental problems that were self-evident to every Member of the House, because we have to deal with them every week in our constituency surgeries. The problems are evident to many of the parents who have to engage with the system and were evident more than a year ago to the Select Committee on Work and Pensions, which called for action in its report of January 2005.

The CSA's track record is not a happy one. The new computerised system that the Government introduced in 1999, in which they "invested" £0.5 billion of taxpayers' money, was two years late getting started and has never worked properly. Now the Secretary of State is writing it off.

While the Government fiddled around with the problem, 330,000 applications for child maintenance piled up, unprocessed due to the IT and management problems in the agency—330,000 single mums going without the financial support they need and to which they are entitled. The Government have failed them.

Some 920,000 cases have remained on the old assessment system, which has left parents who were promised a rapid transfer to the new system worse off and unfairly treated in comparison with new claimants. The Government have failed those parents. Some £3.3 billion of arrears have been allowed to accumulate, while the agency's enforcement unit last year managed to collect just £8 million at a cost of £12 million. That was less than £1 collected for every £40,000 outstanding. The money is owed to single-parent families, but the agency has made no effective attempt to collect it. The Government have failed those families, too. Complaints have risen by 30 per cent. over a year, and face-to-face contact between agency staff and parents has halved since 1997. Compliance under the new system has dropped to 61 per cent.

In the face of such a catalogue of evidence, the Secretary of State's predecessor asked the chief executive of the agency to examine not the fundamental design of the system, but the internal workings of the agency. Now that the Secretary of State is dropping that internal report in the wastepaper basket, it looks like the wrong question was asked of the wrong man. That has created an additional nine months' delay to eventual reform—nine months in which chaos and injustice continues.

Some have suggested that the CSA should simply be handed lock, stock and barrel to Her Majesty's Revenue and Customs. While I and, I am sure, the Secretary of State would not want to rule out a future role for the tax authorities in an alternative system, does he agree that it would be completely inappropriate to suggest that HMRC should take over the present system? Does he agree that such a move would effectively transfer the burden to employers under the pay-as-you-earn system, and that it would compromise the Revenue's core functions, not to mention its ongoing struggle to sort out the problems in the tax credits system?

Will the Secretary of State confirm that the new enforcement powers that he announced will be used against only seriously non-compliant absent parents? Conservative Members will support greater powers to track down and deal with parents who try to dodge their responsibilities to their children. We welcome the use of private debt collectors, which will be an effective step, but such greater intrusion into people's private lives can be justified only when there is serious non-compliance, so I urge him to ensure that it does not become part of the routine process at the front end when dealing with applications.

The Secretary of State told the House that the terms of reference for the belated review will be to redesign completely the child support system. Will he confirm that, whether or not much cash is raised in individual cases, he still believes in the principle that every parent should contribute something towards the maintenance of his or her child? That principle, on which the CSA was founded, was—and remains—important, so it should not be lost in the redesign of the system.

The Australian child support agency is often cited as a model and has many features to commend it, but in Australia, nearly all parents use the agency when families split up. In this country, the majority of families make entirely private arrangements. Will the Secretary of State confirm that the Government remain of the view that voluntary arrangements are to be preferred when it is possible to make them and that the state should get involved only when it is not?

Will the Secretary of State discuss with the Secretary of State for Education and Skills whether Sir David's remit should include an examination of the impact of decisions about access, which are managed by CAFCASS—the Children and Family Court Advisory and Support Service—on the operation of the child maintenance system—and, indeed, vice versa? There was a report in some of the media this morning that the public sector unions have been given a promise that the CSA will not be broken up. Will he categorically confirm that no such undertaking has been given? Will he tell the House the lessons that he has drawn from the IT disaster in the CSA, which deals with 1.5 million cases, that he can share with his Cabinet colleagues before they ask the House next week to commit to an IT system that would have to deal with 60 million people?

The action that the Secretary of State has announced to address the crisis in the child support system is certainly too late. Let us now all work together to ensure that it does not turn out to be too little. We will continue our work on child support and seek, with his agreement, the opportunity to feed that work into Sir David's review.

There are grounds for optimism. It is possible to run a workable child support system because international experience tells us so. However, for parents who receive CSA payments, this will be a time of uncertainty and anxiety as they face the prospect of further turmoil and change. We owe it to them, as well as the many hundreds of thousands of parents for whom the CSA is not delivering, to ensure that we move forward as rapidly as possible with clarity and, hopefully, consensus on how best to deliver a simple and effective system for the 21st century.

Photo of John Hutton John Hutton Secretary of State, Department for Work and Pensions, The Secretary of State for Work and Pensions

I welcome the hon. Gentleman's support for the work that Sir David Henshaw will initiate to help us to redesign a more cost-efficient and effective child support system. I make it clear to all hon. Members, as I have made it clear to the hon. Gentleman, that their views will be welcomed, and I am sure that Sir David will want to follow that up.

It is not true that there have been no improvements at all to the operation of the Child Support Agency since 1997. It has improved in several key areas, but I have not come to the House to say that the agency's performance is acceptable—quite the opposite. We have to move beyond that now, so I am not going to quibble about the statistics that the hon. Gentleman cites, which are right. The agency's performance has simply not been good enough. My predecessors worked hard to try to make the CSA work, but it cannot work. Rather than investing more money in it, let us design a sensible new system to replace it. I agree that it would make no sense to transfer the CSA's existing functions to any other Government Department or agency, including HMRC, given the CSA's range of functions, which other Departments clearly would have no expertise—or legal basis—to perform.

Clearly, the new enforcement powers will need to be focused on non-compliant parents or used if there is a risk that a parent will become non-compliant. I do not believe that the right way to solve the problems would be to construct a mini-dictatorship at the centre of Government—absolutely not. However, we have a responsibility.The hon. Gentleman asked whether I thought that every parent should contribute—yes, absolutely.

We must be prepared to take some of the decisions that I have suggested that we should take to give the CSA the tools that it needs to do its job. I know that many hon. Members have had the same experience as me when talking to people in the CSA. They often say that they are fighting the war—that is what it feels like to them—of getting absent parents to pay what they should be paying for their children with one arm tied behind their back. We cannot ignore that any longer, so we have to get tough, which is what I propose that we should do with non-compliant parents. I hope that Opposition Members will lend their support to measures to achieve that.

Of course voluntary arrangements are to be preferred and it would be an immensely good and important step forward if they were in place for more parents. Sadly, as we all know from our constituency work, relationships that break up often do so in turmoil and involve a lot of emotional upset. It is thus not always possible for such agreements to be reached, so I remain convinced that we will continue to need a strong and effective system to ensure that maintenance is paid when relationships break up. We do not have such a system now, so we must address that problem.

It is true that the CSA needs to focus on its existing responsibilities. The stabilisation plan will allow it to do that and there is no question whatsoever—I hope that this is clear—of us, or anyone else, backing away from giving the CSA in its present form all the support that it needs to ensure that non-compliant parents meet their financial responsibilities to their families.

Photo of Frank Field Frank Field Labour, Birkenhead

I thank the Secretary of State for the most honest statement about the CSA that we have heard from the Treasury Bench for many a long year, but I suggest that one aspect of his statement that will cause disquiet on both sides of the House is the question of what we can do for those whose cases are trapped on the old system—the hundreds of thousands of people who are paying nothing and who should be making a modest contribution, and those who are paying substantially more than Parliament said they should be paying from 2003. My guess is that his staff have told him that it is impossible to do much to transfer those cases to the new computer. To test whether that advice is correct, will he and Lord Hunt—the Minister in charge of the CSA—spend a day in the office with staff and see whether, in fact, they can start to transfer those cases to the new system?

Photo of John Hutton John Hutton Secretary of State, Department for Work and Pensions, The Secretary of State for Work and Pensions

I am grateful to my right hon. Friend for his words. We have a major problem in converting cases from the old scheme to the new one and I shall not pretend that we have solved that problem. Clearly, we have not. The advice that I have received is that we cannot make those transfers easily. That is a significant problem, especially in relation to the payment of the child maintenance premium. A clerical operation in which we went through all 900,000 such cases would be required to make those payments. My right hon. Friend is right to say that that is where we must focus our immediate concern. Sir David Henshaw will have to examine the problem as part of his redesign work, and I hope that we will shortly be able to come to the House to deal with that question.

Photo of David Laws David Laws Shadow Secretary of State for Work and Pensions

I thank the Secretary of State for advance notice of his statement. He knows that, where we agree with him on policy issues, we are not afraid to say so, but today I wish to express the anger of many of our constituents about the ongoing failures at the CSA and the Government's ongoing inability to put in place a clear set of policies for its reform. The Government have been talking about dealing with the CSA since coming to office in 1997. The Prime Minister said in 1998 that urgent reform was needed, but we still await a clear decision by the Government on what that urgent reform will be—and that is no clearer today, after the statement.

Does the Secretary of State accept that what we have in this country is the most inefficient child support agency in the world and that, even though CSA staff are doing a difficult job, the standard of performance is not acceptable? Does he also accept that it is shambolic and absurd that after a one-year review, we are to have another review, which will take a further six or nine months to reach a conclusion? What on earth have his Department and his predecessors been doing since the Select Committee reported in January 2005 and called for his Department to put in place an alternative set of policies? Why is he having to brief newspapers today that he is going back to the drawing board, that he has a blank sheet of paper and that, as he said in his statement, all the options for reform are open? Why is that the position when a review has been going on for the past year? Why has that review not reached a conclusion? Is the problem that the Secretary of State believes that the CSA should be transferred to the Inland Revenue but does not have the agreement of other parts of the Government?

Why, in spite of the recommendations that the Select Committee made a year ago, have the reductions in back office and support staff at the CSA continued for the past year? What is the magnitude of those cuts and have they contributed to the fact that there is now an absurd delay of 470 days in processing outstanding unprocessed new claims? Does the Secretary of State agree that that is wholly unacceptable? When, under his new proposals, will that 470 days be reduced to the 42 days that used to be the Government target? What has happened to the gimmick of tagging about which we heard so much two or three weeks ago, but which was not mentioned today? Has that idea been totally rejected?

I accept that the Secretary of State inherited a mess from his numerous predecessors, who failed to act in respect of the CSA. I accept also that, in so far as one can establish his direction of travel, he is edging in the right direction today. It is tempting to feel sorry for him, given the position in which he finds himself, but most of us feel much sorrier for the people who have suffered for too long as a consequence of the agency's failures. Today, those people were expecting action and fundamental reform but instead they have got patching and another review. Does he accept that that will not be satisfactory to most people?

Photo of John Hutton John Hutton Secretary of State, Department for Work and Pensions, The Secretary of State for Work and Pensions

I am not asking for the hon. Gentleman's sympathy. I am asking for his support to solve the problems. He can carry on dancing around, as he has today and on previous occasions, hinting at his wisdom, knowledge and superior assessment of the problem, but the fact is that he does not have a sensible policy to offer. There is a golden rule in this House: it is best not to throw those kinds of stones from a position of total intellectual bankruptcy. His policy is not a sensible one. I am happy to help him out of his predicament: he should help us and work with Sir David Henshaw to achieve a resolution.

I do not want to get party political—[Hon. Members: "Go on."] All right then, I will. It is fashionable to accuse the Liberal Democrats of flip-flop but that accusation is proper in relation to their policy on child support arrangements. The hon. Gentleman has gone from supporting a return to the courts to transferring the CSA to the Inland Revenue, but both policies are risible.

I have made it clear today that the CSA's performance is not acceptable. Of course that is the Government's responsibility—there is no one but us to stand here and defend the agency's performance and that performance has not been good enough. Now, we have to engage with the fundamental issues and put in place the foundations of a more acceptable solution. However, as I said in response to Mr. Hammond it is simply not true to say that nothing has been done in the past eight years. We now have a much better formula in place and performance in key areas of the CSA has improved, but I shall not trade statistics on inadequate performance with the Opposition spokesmen, because the truth is there for all to see.

There has been no reduction in CSA staff—Mr. Laws is quite wrong. It is clear in the plan that I published today that additional staff will be recruited to ensure that we make progress on the backlog and shift the focus from the back office to enforcement and debt collection to make absent parents who are not paying fulfil their responsibilities to their children.

Photo of Dennis Skinner Dennis Skinner Member, Labour Party National Executive Committee

The CSA was born during those grey Major years—uninspiring and unworkable and within three years, I and a few other Labour Members voted to scrap it. I am the first to acknowledge that when we did so, we—my right hon. Friend Mr. Field and I—did not have a joint answer to the problem, but we knew that the agency might not work. Several attempts have been made to solve the problems, including a recent one, which also failed. Today, I am pleased that an effort is being made to start afresh. If there is to be a fresh, blank, white sheet of paper, that is good. I hope that we are going get away from that uninspiring proposition that came out of those grey Major years and do something that saves the situation for millions of people in Britain.

Photo of John Hutton John Hutton Secretary of State, Department for Work and Pensions, The Secretary of State for Work and Pensions

I am grateful to my hon. Friend for his support. As he says, it is time to get serious and design a proper, more cost-efficient system. I suspect that some of the Labour Members and people outside the House who supported the creation of the CSA were concerned about the real motivation of its creators. Was the aim to help families or to save benefit? We can now afford to leave that behind us as we focus on designing a new system and I look forward to my hon. Friend's support during that process.

Photo of Alistair Burt Alistair Burt Shadow Secretary of State for Communities and Local Government

I appreciate more than many the difficulties that face the Secretary of State and Lord Hunt, the Minister responsible for the CSA. There was a collective failure in the House to scrutinise the original proposals and intentions, and since then there has been a collective failure to breathe life into a corpse. No matter how hard agency staff have tried, I agree with the bottom line suggested by the Secretary of State, that perhaps the agency has reached the end of its days and something radical is needed.

Will the Secretary of State confirm that, although he has given Sir David Henshaw proposals for practical development, he will have some policy input in setting parameters for the review on key policy areas such as maintaining the link between parents and children, and perhaps also in differentiating more effectively between the deliberate non-payers, who have always been a problem under every system, and those who voluntarily want to maintain contact? Will he—

Photo of John Hutton John Hutton Secretary of State, Department for Work and Pensions, The Secretary of State for Work and Pensions

I am grateful to the hon. Gentleman for his candour and honesty. He worked very hard to make the CSA work, but he experienced exactly the same problems that we have experienced. I therefore welcome his comments. I am sure that he will have something to contribute to the work of Sir David Henshaw's team.

Photo of Tony Lloyd Tony Lloyd Labour, Manchester Central

I, too, strongly welcome my right hon. Friend's honesty with the House, as it shows that we are determined to achieve proper solutions. There are two groups of people. One group is trapped under the old system, to which my right hon. Friend Mr. Field referred, and the other group is simply receiving nothing at all. For some of our constituents, there is no justice at the moment so, in the short term, would it be possible to provide rough justice to achieve solutions that are not necessarily elegant or perfectly bureaucratic solutions but which will simply make sure that money goes to the families who deserve it?

Photo of John Hutton John Hutton Secretary of State, Department for Work and Pensions, The Secretary of State for Work and Pensions

I agree. My hon. Friend will have a chance to look at the detailed plan published by the chief executive of the CSA today. In crude but simple terms, over the next two or three years, the CSA will focus on doing exactly what my hon. Friend said. Its priority should be to make sure that more parents receive more maintenance from absent parents more regularly, and the plans that Stephen Geraghty has set out will help it to do so.

Photo of Michael Weir Michael Weir Shadow Spokesperson (Work and Pensions), Shadow Spokesperson (Trade and Industry)

The one big disappointment for many people in the statement is the lack of action on migration, which causes people more heartache than anything else in the system. The Minister said that £90 million will be made available over three years for the stabilisation scheme. Does he think that it will be another three years before the Henshaw review is put into effect, so that it will be six years before the new system is introduced? People will still be on different systems which, as I said, causes much anguish. If the new system is to receive public backing, it must be a fair one that treats everyone the same. On debt recovery, if the right hon. Gentleman is going to use private debt collectors, can he assure us that there will be strict monitoring of their effectiveness and, importantly, the methods that they use to recover payment, as the industry has more than its fair share of shady characters?

Photo of John Hutton John Hutton Secretary of State, Department for Work and Pensions, The Secretary of State for Work and Pensions

Of course there is migration from the old scheme to the new one. Conversion is a different issue. The chief executive has looked at it in depth and made his recommendations to Government, but the cost of making conversion a practical reality will run into hundreds of millions of pounds. We must therefore make the position clear, as it is an important issue for Sir David Henshaw's team to consider so that, as I told my right hon. Friend Mr. Field, it can return quickly with suggestions for more sensible arrangements. As for bailiffs, we must work properly, fairly and reasonably, and I am sure that the CSA will. I have no qualms whatsoever about allowing non-compliant absent parents who do not pay up to hear the knock on the door from the bailiffs saying it is time to pay up. I hope that the hon. Gentleman supports that.

Photo of Vera Baird Vera Baird PPS (Rt Hon Charles Clarke, Secretary of State), Home Office

It is important to acknowledge the professionalism of the CSA staff who, for years, have tried to make the system work, particularly when the IT repeatedly failed. They must have dealt with crowds of anguished and angry parents on the telephone. Their morale is low now and it may not have been elevated by my right hon. Friend's announcement. What reassurance can he give CSA workers about their jobs and what can he do in the relatively short term to try to improve their low morale?

Photo of John Hutton John Hutton Secretary of State, Department for Work and Pensions, The Secretary of State for Work and Pensions

I agree that that should be one of our top priorities. I can only repeat what I have found when I have visited CSA offices. The staff want the system to work and the single biggest reason why morale is low is that it is simply not doing so. They want to find a way to change that. In the short term, the stabilisation plan published by the chief executive, which I support, will result in significant additional investment in the CSA, including additional staff. However, it will be a difficult job to manage, which is why I intend to give my full support to the chief executive for his work to make sure that the CSA delivers the job that Parliament has asked it to do. I hope that hon. Members on both sides of the House will lend him their support too.

Photo of Angela Watkinson Angela Watkinson Opposition Whip (Commons)

The Secretary of State rightly focused on the backlog of unheard cases and those of non-compliant absent parents. Will he give serious consideration to the way in which we could help another group—compliant absent parents, who often pay so much that they do not have money to keep a roof over their own heads? Sometimes, they are paying money to a former partner who is now in favourable financial circumstances and withholding access to the children.

Photo of John Hutton John Hutton Secretary of State, Department for Work and Pensions, The Secretary of State for Work and Pensions

It is always possible for someone in those circumstances to seek a reassessment under existing legislation. I have not announced any changes to that today. The hon. Lady may have dealt with specific cases in her constituency, and she is welcome to bring them to our attention, but our focus and priority must be the children. We must find a sensible way of doing what she, I am sure, wants and what I want. We must balance those responsibilities to make sure that children are not the losers because I am afraid that, far too often, they are.

Photo of Wayne David Wayne David PPS (Rt Hon Adam Ingram, Minister of State), Ministry of Defence

I thank the Minister both for his statement and for the frankness that he displayed. When the redesign of the agency is carried out, will models used in other European countries be taken into account?

Photo of John Hutton John Hutton Secretary of State, Department for Work and Pensions, The Secretary of State for Work and Pensions

Yes, I think that Sir David should be free to consider all the available options that could contribute to the design of a more cost-effective and cost-efficient system.

Photo of Mark Francois Mark Francois Shadow Paymaster General

I agree that, given the myriad problems with tax credits, the solution is not to pass the buck to HMRC. I do not think that that would work. Like many hon. Members, I have seen single mothers in tears in my surgery because they are frustrated with the weaknesses of the system. We must do better. My personal view is that the agency is irretrievably broken but, given that the Department has already had months, if not longer, to review the problem and that the Secretary of State's answer is essentially that there will be yet another review, is there anything more positive that he can offer parents who are suffering under the broken system?

Photo of John Hutton John Hutton Secretary of State, Department for Work and Pensions, The Secretary of State for Work and Pensions

The hon. Gentleman will need time to study the detail of the plan that was published today, as it contains a series of measures that will make a significant difference to the performance of the CSA, including for his own constituents. May I make it clear that we have not announced another review today? We have announced a redesign of the current system. We are not reviewing the Child Support Agency. I agree that we need to move on, so we have announced that, in the next four to five months, Sir David Henshaw will redesign the essential parts of the child support system. I hope that we can then take the next steps and make sure that we can legislate to create that new system.

Photo of Liz Blackman Liz Blackman PPS (Rt Hon Geoff Hoon, Lord Privy Seal), Leader of the House of Commons

Is my right hon. Friend satisfied that the extra capacity to deliver improved performance in the next few years is available, and is he confident that it can be drafted in speedily so that all our constituents can experience improvements in the interim before the redesign takes place?

Photo of John Hutton John Hutton Secretary of State, Department for Work and Pensions, The Secretary of State for Work and Pensions

I have every confidence that the new chief executive of the CSA and his management team will deliver the stabilisation and improvement plan that I have announced. Clearly, however, it is something in which my colleagues in the Department for Work and Pensions and I will take a close interest.

Photo of Nadine Dorries Nadine Dorries Conservative, Mid Bedfordshire

Will the Minister reply to the question that my hon. Friend Mr. Hammond asked about CAFCASS? May I point out, too, a mistake that the Minister may have made in the statement? He said that relationships, as we all know, come to an end. That may be a future Labour policy, but in my experience, more relationships endure than end, so could he correct that statement?

Photo of John Hutton John Hutton Secretary of State, Department for Work and Pensions, The Secretary of State for Work and Pensions

Of course I do not want relationships to come to an end, but they do. The job of the Child Support Agency, often in very difficult circumstances, is to try and sort out the mess. It is our job collectively in the House, and specifically mine as Secretary of State, to make sure that we have in place a proper cost-effective and efficient system for dealing with hard cases. My whole argument today is that we do not have that system in place, after many years of effort. All of us must get on, do the work and put a better system in place.

Photo of Rob Marris Rob Marris Labour, Wolverhampton South West

I am heartened that one year after the Select Committee produced its report—as a member of the Select Committee, I was pleased to draft some of it—we are moving on and that my right hon. Friend is indeed talking about redesigning the Child Support Agency, because it has failed. That seems to be the conclusion of the new chief executive in his report, when he wanted so much money.

Can my right hon. Friend reassure me about two things in the interim? First, he spoke today about the huge cost of migration of old cases to the new system. Is EDS, the computer supply company, to be sued for that? Secondly, as an interim measure, will he address the issue that we found when we looked into the CSA—that too many staff were engaged in calculation, leaving none doing enforcement, so that enforcement always took the back seat? Will there be a division now, not after the redesign comes in, to ring-fence some enforcement staff?

Photo of John Hutton John Hutton Secretary of State, Department for Work and Pensions, The Secretary of State for Work and Pensions

Yes, very specifically, in answer to my hon. Friend's last point. The chief executive is looking to redeploy resources significantly inside the CSA, so by the end of the period one in five staff in the CSA will be working in the area of enforcement. That will be a significant change. On my hon. Friend's point about conversion from old scheme to new scheme, it is true that that has been beset by IT problems from the beginning. We have reached a settlement of those disputes with EDS so we are not planning any litigation, but clearly the IT system across the CSA needs to improve very quickly indeed.

Photo of Peter Bone Peter Bone Conservative, Wellingborough

At the start, I welcomed the Secretary of State's statement, but I am getting more and more concerned as I listen to his replies. He said in his statement that Sir David's terms of reference would be drawn widely, yet at the Dispatch Box the right hon. Gentleman has already rejected the idea of going back to the court system and transferring to the Revenue. Is there anything else that he has ruled out?

Photo of John Hutton John Hutton Secretary of State, Department for Work and Pensions, The Secretary of State for Work and Pensions

The hon. Gentleman will have to pay more attention to these proceedings. It was suggested by some on the Opposition Benches and some on the Government Benches that we should transfer all the existing functions to HMRC, and I have said that that makes no sense at all. It is not a serious proposition. The hon. Gentleman will have a chance to study the terms of reference that we published today, and he will find that it makes clear, as I have made clear in my answers, that Sir David Henshaw will able to consider all the options for a more cost-efficient child support system for the future.

Several hon. Members:

rose—

Photo of Michael Lord Michael Lord Deputy Speaker (Second Deputy Chairman of Ways and Means)

Order. We must move on to other business. We now come to another statement.