New Clause 3 — Objectives of the Commission

Orders of the Day – in the House of Commons at 4:45 pm on 3rd December 2007.

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'(1) The Commission shall have the following objectives—

(a) to seek to ensure that every child who is living apart from one or both parents continues to share in the income and prosperity of both parents throughout their childhood, through the establishment of effective maintenance arrangements;

(b) to enforce liabilities incurred pursuant to the Child Support Act 1991 (c. 48), whether or not a current liability for a child exists.

(2) In promoting the establishment of effective maintenance arrangements for a child under subsection (1)(a) the Commission shall—

(a) encourage and support the making and keeping by parents of appropriate voluntary arrangements for their children;

(b) support the making of applications for child support under the Child Support Act 1991 and secure continuing compliance, when appropriate, with parental obligations under that Act.

(3) The Commission shall aim to pursue, and to have regard to, its objectives when exercising a function that is relevant to them.'.— [Andrew Selous.]

Brought up, and read the First time.

Photo of Andrew Selous Andrew Selous Shadow Minister (Work and Pensions)

I beg to move, That the clause be read a Second time.

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

With this it will be convenient to discuss the following:

New clause 7— Approval of Operational Plan

'(1) The Commission must—

(a) prepare an Operational Plan to establish how it will meet its objectives under section 2 of this Act and;

(b) publish the Plan in such manner as the Commission considers appropriate.

(2) The Secretary of State must lay before Parliament a copy of the Operational Plan published under this section.

(3) The Operational Plan shall not have effect unless, within three months of the date on which it is laid before Parliament, a motion has been made in each House considering the Plan.

(4) The Secretary of State may by regulations determine the categories of information to be included in the Operational Plan.

(5) Regulations made under subsection (4) may include details of staffing levels the Commission considers it appropriate to maintain in order for it to fulfil its functions.'.

Amendment No. 12, in page 1, line 7, leave out Clause 2.

Amendment No. 17, in clause 2, page 1, line 10, leave out subsection (1) and insert—

'(1) The Commission's main objectives are—

(a) to maximise the number of those children who live apart from one or both of those parents for whom effective maintenance arrangements are in place;

(b) to secure the payment of any arrears of child support maintenance including sums owed pursuant to the Child Support Act 1991 (c. 48) prior to the establishment of the Commission.'.

Photo of Andrew Selous Andrew Selous Shadow Minister (Work and Pensions)

I am sure that the Government will agree with the objectives of the new clause, which are primarily to ensure that CMEC is reminded of its specific and important obligation to chase up and secure the historical arrears of child support liability. The arrears able to be collected and paid are reckoned to be £1.4 billion. That massive sum should have been paid through to the children of this country but has not, and we are determined that it will not be forgotten or pushed under the carpet.

I accept the Government's genuine commitment to this area of debt, and I do not doubt either the veracity of what the Minister said in Committee or his intention. CMEC will be a non-departmental public body and it is vital that this matter of debt is included in the Bill. That is why we have adopted the draconian approach of proposing to remove clause 2 and drafting new clause 3. The Minister will recognise much of clause 2 in new clause 3. He will be pleased that we have not really proposed removing anything—we have merely proposed adding the highly important requirement that the historical debt should be recorded in the Bill.

We have also proposed that "every child" should have a right to continue

"to share in the income and prosperity of both parents throughout their childhood".

Clause 2 has a slightly different wording. It aims

"to maximise the number of those children...for whom effective maintenance arrangements are in place."

The Minister may think that we are merely proposing a small change of words, but the phrase "every child matters" is significant—he will recognise it from elsewhere within his Government.

It is important to focus on the issue of debt. In June, 881,300 non-resident parents were in arrears, 91,470 of whom owed £10,000 or more. Some of my constituents have debts of £30,000 to £40,000 owed to them, which they want paid over to their children. We welcome the CSA's operational improvement plan target to collect an additional £213 million of debt by March 2009, but we want CMEC's instructions in this regard to be clear in the Bill.

The CSA's 2006-07 annual report has not yet been published, so we do not know the current level of debt. The report is overdue, and we hope that it will be published soon.

In Committee, Ministers described effective maintenance arrangements as those that are working, where money is flowing and in which parents meet their financial responsibilities. That is right as far as it goes, but it contains no reference to the historical debt. Indeed, it refers to cases with a continuing maintenance obligation, and in many cases of debt there may be no current maintenance liability, perhaps because the child has left secondary education or is living with the former non-resident parent.

A generation of children have lost out on the vital financial support that Parliament said they should have because of the failure of the non-resident parent to pay child support and the failure of the CSA to enforce those liabilities. Those debts must not be forgotten. Non-resident parents must not be allowed to escape their obligations. The legacy of failure cannot be simply brushed aside as many families are still owed large amounts of money.

The CSA already has an enormous armoury of enforcement weapons at its disposal and it has not always used it with sufficient rigour in the past. The problem has not been a lack of tools, but the fact that debt collection and enforcement has not been as high a priority as it should have been in the CSA. The processing and collecting of current maintenance was given higher priority. New clause 3 would ensure that past debt has equal priority, and that would be laid down in primary legislation.

When the new commission configures its business model, it should do so around two equal objectives—the responsibility to establish and actively support continuing child maintenance, and the responsibility to collect past debts. On that basis, I hope that the Minister will look favourably on new clause 3.

Photo of Paul Rowen Paul Rowen Shadow Minister, Work & Pensions

I shall speak to new clause 7 and amendment No. 17. The latter would do what Andrew Selous seeks to achieve with new clause 3, and we will support him if he chooses to press that to a Division. We made the point in Committee that the new commission must make a commitment to the collection of historical debt.

On the basis of figures from March 2006, £3.5 billion has not been collected by the CSA, and the total rises by £20 million a month. That is according to last year's CSA report, and the 2006-07 report will probably show a further increase. We all have examples of non-resident parents who have gone missing and owe the parent with care tens of thousands of pounds. A lady who came to see me last year is owed £24,000, which has placed a huge burden on her. It means that her children are not getting the support that they deserve and the non-resident parent has got away with evading his responsibilities.

We have all signed up to the main aim that CMEC should be a fresh start—a clean break from the CSA and the failures of the past. Some of us argued that it might be better if the past debt were dealt with by a residuary rump, which could concentrate solely on that. The Government did not come to that decision, but it is important that CMEC's objectives should state clearly that it has a major commitment to clearing that historical debt.

A generation of children has already grown up without the benefit of the support that the CSA was supposed to provide for them. They have gone through the system, but in establishing CMEC we need to ensure that the actual collection of the historical debt has equal priority with the new arrangements for a new generation of children. As the hon. Member for South-West Bedfordshire said, almost 100,000 of the 881,300 non-resident parents with arrears owe more than £10,000. That is a huge amount, so it is important that we make that debt a major priority.

New clause 7, which we shall press to a vote, would make provision for Parliament to approve the operational plan. The plan would have to be laid before Parliament by the Secretary of State and considered by both Houses within three months. Regulations under the operational plan would have to give detail about the staffing levels the commission considers appropriate.

A major concern about the Bill—expressed by Janet Allbeson of One Parent Families, who gave evidence to the Select Committee—is that it is very much a skeleton, and much of its detail will be in regulations, which, of course, are impossible for us to amend. It is true that CMEC will have to provide an annual report to the Secretary of State, which can be laid before Parliament. With great respect, however, I suggest that an annual report is just that; it looks back at the year that has just finished. It does not give Parliament the wherewithal to hold that new arm's length agency accountable for what it plans to do in the coming 12 months. Insisting that the operational plan be laid before Parliament would deal with many of the issues that we raised in Committee, such as the IT systems, the staffing levels or the giving of information and advice, provision for all of which is to be made later. Some of the regulations have been produced for us, as the Minister promised in Committee, but they are still only in draft and we do not have all the information.

One of our major concerns is about staffing. The regulatory impact assessment is that CMEC's caseload will be reduced from the current figure of 130,000 for the CSA to 100,000. That may be the case. The staffing cuts already programmed envisage a 15 per cent. reduction for CMEC, taking the head-count down to 9,500 by March 2008, which in a perfect world might be okay. However, the problem that we have, and the concern that we raised in Committee, is that we have no evidence yet as to whether the case load will reduce as quickly and as drastically as is envisaged in the plan.

We argued in Committee that there should be no reduction in staffing levels until CMEC has proved that it is functioning at the required standard. One of our concerns is that a new series of arrangements will have to be put in place, a new series of advice and information will have to be set in train, and new cases operating under the third type of child maintenance system will have to dealt with—at the same time as dealing with the huge historical debt and the nearly 900,000 non-resident parents who are in arrears. If that happens, and the staffing reductions continue, Parliament will have no recourse to hold CMEC to account.

It is unfortunate that so much of the detail of how CMEC will operate has not been included in the Bill, although both Opposition parties moved amendments to try to change that. The new clause would make CMEC more accountable to Parliament. The new commissioner has already been appointed, despite the Prime Minister's statement about appointments being approved by Parliament. That has not happened in this case. The rest of the board, however, has not been appointed, and the House should have some say in how CMEC is going to be run. Giving it a statutory duty to present to Parliament an annual operational plan that looks forward not back—which is what we believe that the annual report will do—will give the House a proper opportunity to make sure that, at the third attempt, following the setting up of the Child Support Agency, CMEC delivers on its objectives.

Although we have signed up to the broad brush of what the Government are trying to do, we believe that a lot of the detail has still not been filled in—detail that is vital to the success of CMEC. I am talking about staffing levels, IT support, and the provision of information and advice. None of those things are decided yet. If the operational plan were laid before Parliament, there would be an opportunity for Members on both sides to contribute positively to ensuring that CMEC gets the start that we all want. I hope that the Minister will support the new clause, which is not controversial. Implementing it would involve no additional costs. However, it would ensure that hon. Members could play a full part in ensuring that CMEC delivers on its objectives.

Photo of Michael Weir Michael Weir Shadow Spokesperson (Trade and Industry), Shadow Spokesperson (Environment, Food and Rural Affairs) 5:00 pm, 3rd December 2007

In principle, I support what hon. Members are trying to do. Like other hon. Members, I have many constituents—mostly, but not exclusively, women—who are owed huge debts by absent parents. Those absent parents have been chased for many years, but, to date, there has been little success in obtaining the money. However, there is one point that gives me some concern. The question of how the historical debt arose was raised during the evidence session in the first sitting of the Public Bill Committee. In particular, in the early days, if the CSA could not get in touch with somebody or somebody did not respond, it would often put in an assessment on the basis of an assumed income, which was much higher than the person's real income. As a result there is a large historical debt, going back many years, based on an income that the person who owes the debt never had. One could argue that that is the person's own fault for not dealing with the CSA in the first instance. However, it raises the question of what we are going to do about setting out the true level of historical debt.

When we asked Lord McKenzie about that point in the evidence session, he said:

"We would like as many of those old debts to be cleared as possible. Obviously, that is quite resource-intensive...One of the things that it is proposed we do is, rather than write off debt, create a provision for reflecting the effect of inflated or uncollectible debt in the account. However, those debts would remain in being and would not be written off until there is consent from the parent with care."

The difficulty with that approach is that there could be a large debt that was not actively chased on behalf of the parent with care. In fact, nothing would be done with it—it would simply sit on the accounts of the CSA or CMEC. When Stephen Geraghty was asked about this, he said:

"There comes a point in any debt collection exercise where it is a question of how much we can get. I think that we are a long way from that, but presumably the commission and Parliament will, at some point, want to consider whether they want to keep the debts going." ——[Official Report, Child Maintenance and Other Payments Public Bill Committee, 17 July 2007; c. 34-35, Q83-84.]

There could be two types of debt: debt due to the Treasury; and debt due to parents with care. While I fully support what Andrew Selous is trying to do—I do not want real debt to be written off either; I want it to be pursued—I am a little worried about how we set the level of the debt. Will we take any account of what was, presumably, inflated debt in the first instance?

Photo of Paul Rowen Paul Rowen Shadow Minister, Work & Pensions

Does the hon. Gentleman accept that our experience of the poll tax was that local councils dealt with high levels of non-compliance and non-payment? The bulk of that debt has now been collected through continued enforcement action, and very little has been written off. How much of the £3.5 billion does he think should be written off?

Photo of Michael Weir Michael Weir Shadow Spokesperson (Trade and Industry), Shadow Spokesperson (Environment, Food and Rural Affairs)

I understand what the hon. Gentleman is saying, and I am not suggesting that the debt should be written off. However, there is a fundamental difference between debt involving the poll tax and that involving the CSA. The poll tax debt was known to be correct—people simply did not pay—and there is still a fair amount outstanding in many local authorities. I would like to know what is proposed to address the problem that there might be a lot of ancient debt that does not reflect the true liability.

Photo of Andrew Selous Andrew Selous Shadow Minister (Work and Pensions)

If the hon. Gentleman looks at the Bill, he will see that clauses 29 to 32 address debt management powers. There is universal agreement on both sides of the House that the figure of £3.5 billion is artificial. It was created along the way when some extra liabilities were imposed, almost to try to get the attention of non-resident parents. I am focusing on the £1.4 billion figure. If addressing that amount was one of CMEC's objectives, I would be happy.

Photo of Michael Weir Michael Weir Shadow Spokesperson (Trade and Industry), Shadow Spokesperson (Environment, Food and Rural Affairs)

I thank the hon. Gentleman for that clarification, which has put my mind at rest to some extent. However, his proposal does not say that; it refers only to the debt. There is a danger that if we are saying to parents with care, "We will pursue your debt," we may well be thinking about different figures. They might be thinking that they are due a sum of £30,000 or £40,000, but the true figure might be less than that. I would not like to raise false expectations of the amount that they might get.

Photo of James Plaskitt James Plaskitt Parliamentary Under-Secretary, Department for Work and Pensions

I am grateful to the hon. Members for South-West Bedfordshire (Andrew Selous), for Rochdale (Paul Rowen) and for Angus (Mr. Weir) for their contributions to the debate. Reference was made to the agency's 2006-07 accounts, and I am happy to confirm that they have been laid today.

We believe that the existing objectives are right, and remain the best way to achieve the outcomes that we want for children. The amendments would give the commission two main objectives rather than a single overarching one. They would give the commission a second objective, of equal standing, requiring it to secure payment of arrears accumulated under the Child Support Act 1991. However, the objectives, as drafted, already set the collection of debt as a priority for the commission. The last part of the second subsidiary objective is to secure parental compliance under the Child Support Act. As I explained in Committee, that sets the commission a clear objective of securing compliance with all liabilities under the Act, including the collection of arrears, regardless of when they arose.

We believe that it is right that that is a subsidiary objective. The overriding priority of the commission must be to get effective maintenance arrangements in place for as many children as possible. By focusing on that, the commission will be helping to eradicate child poverty, and it is difficult to envisage a more important objective. However, I stress again that the arrangements do not allow the commission to ignore existing debt in any way. I hope that I have sufficiently emphasised the fact that the subsidiary objective prevents that. In addition, we expect the commission to have clear targets underpinning each of the objectives, including those on debt. The collection of arrears is vital to the successful delivery of the main objective. The system will not work unless the commission is seen as an effective collector of the money owed to parents with care.

We have concerns about the wording of the first main objective in new clause 3. First, we do not believe that it is feasible to require the commission to ensure that there is a maintenance arrangement in place for every child; indeed in some cases—for example, where the non-resident parent is violent—it may not even be appropriate. Requiring the commission to maximise the number of effective maintenance arrangements in place achieves the same clear goal, but without the difficulties. Secondly, although we wholeheartedly agree in principle with children sharing in the income and prosperity of both parents, we do not believe that the wording of the new clause is necessary; in fact, it may present problems.

The current objectives have broadly the same effect as those proposed in the new clause. The commission must maximise two types of arrangements: arrangements established through the statutory maintenance service, which are, of course, based on the income of the non-resident parent, and appropriate voluntary arrangements. "Appropriate" means arrangements that are suitable given the particular circumstances of the parents in question, and arrived at in full view of all the available information. That information includes the amount that would be received through the statutory maintenance service, and we expect most voluntary arrangements to be broadly in line with the formula. That will ensure that children share in the income of both parents.

However, the whole point of voluntary arrangements is that they are flexible and can be tailored to the specific needs of parents. We want the commission to support parents in reaching the arrangements that are best for them. We do not want the commission to interfere in an attempt to ensure that arrangements are closely linked to the non-resident parent's income. The final part of the proposed first objective refers to

"the establishment of effective maintenance arrangements".

We deliberately want the focus to be on arrangements being "in place", as the Bill says, rather than just being "established", so as to emphasise the importance of arrangements being sustained, not just set up.

New clause 7 proposes that we legislate to require the commission to prepare, publish and lay before Parliament an operational plan detailing how it will meet its objectives. Let me see whether I can dissuade the hon. Member for Rochdale from pressing that new clause to a Division. It is clearly essential that the commission produce robust plans and shows how it will meet its objectives. However, we do not need to legislate for that, as Treasury guidelines already make such actions a requirement of the commission's funding.

The framework document that must exist between the sponsor Department and an arm's length body requires that a number of financial and management documents be in place. They include a corporate plan looking three years ahead, which the body must submit annually to its sponsor Department. Treasury guidance sets out the key matters that should be included in the plan. Those matters include: the key objectives and performance targets for the future years, and the strategy for achieving those objectives; alternative scenarios and an assessment of the risk factors that could affect the plan but which cannot be accurately forecast; and other matters that can be agreed between the Department and the body.

The first year of the commission's corporate plan will form the commission's business plan and must include key targets and milestones for the year immediately ahead. It must also include budgeting information to enable the Department to identify the resources that will be allocated for specific objectives. Of course, we expect that to cover staffing levels—an issue that the hon. Gentleman mentioned. Treasury guidance also requires the corporate and business plans of all non-departmental public bodies to be published on their websites, and to be made available to staff separately.

We believe that that is sufficient to allow scrutiny of the proposals, and that it would be inappropriate for arm's length bodies' business plans to be subject to approval by Parliament. It is worth noting that the commission is already accountable to Parliament through its annual report and accounts, which must be laid before Parliament. The Secretary of State is accountable to Parliament for the commission's overall performance.

Photo of Paul Rowen Paul Rowen Shadow Minister, Work & Pensions 5:15 pm, 3rd December 2007

Does the Minister not accept that there is a fundamental difference? Treasury guidance advises that business plans be put on the website. The Bill is a skeleton measure, and we want to make sure that working arrangements are subject to scrutiny by Parliament, which is a fundamental difference.

Photo of James Plaskitt James Plaskitt Parliamentary Under-Secretary, Department for Work and Pensions

With respect, I do not think that the hon. Gentleman has made the case for making the detailed operational plans of a non-departmental public body subject to approval by the House of Commons. There is no precedent or argument for doing so. I entirely accept his desire to subject the commission's activity to adequate parliamentary scrutiny—of course, that is right—but as I tried to explain, the commission is obliged to publish its accounts and annual report, and it remains answerable to Parliament via the Secretary of State, who must appear before the House. I believe that those provisions are adequate, and it is not appropriate to go further and try to micro-manage the department's operational plan on the Floor of the House. I hope that, with those reassurances, the hon. Member for South-West Bedfordshire will agree to withdraw the new clause.

Photo of Andrew Selous Andrew Selous Shadow Minister (Work and Pensions)

I listened carefully, as always, to the Minister. I welcome the fact that the CSA's accounts have been laid before Parliament, but if they had come out on Friday we would have had a little more time to look through them.

I listened carefully to what the Minister said about new clause 3. May I reiterate what I said to Mr. Weir and others? I have no problem at all with authorities using the powers in the Bill, with the permission of the parents with care, to write off debt that is uncollectable and should probably never have been accumulated in the first place. That is common ground, but I remind the Minister that we have a long history of getting this wrong, and the failure to collect debt has undermined the CSA's work in the past, and will undermine CMEC's work in future. It will not help that fundamental change of culture that we want—the willingness to pay child support—which will be a key component of CMEC's success.

Turning to new clause 7, the CSA had a troubled history, and this is Parliament's third attempt to get that incredibly important area of law right. Hon. Members play an important role, and they should be forced to take an interest in what CMEC does. Many of us were not entirely happy with the decision to set up CMEC as a non-departmental body, and we failed to see why it should not become an executive agency of the Department for Work and Pensions. It is even more important, given that it is to become a non-departmental body, that Parliament should have the role of scrutinising its plans in future. Should Paul Rowen wish to press new clause 7 to a vote at the appropriate time we would support him, and I shall now press new clause 3 to a vote.

Question put, That the clause be read a Second time:—

The House divided: Ayes 184, Noes 262.

Division number 15 Orders of the Day — New Clause 3 — Objectives of the Commission

Aye: 184 MPs

No: 262 MPs

Ayes: A-Z by last name

Tellers

Nos: A-Z by last name

Tellers

Question accordingly negatived.