My Lords, these regulations amend child maintenance legislation to enable the delivery of the child maintenance compliance and arrears strategy. The new child maintenance scheme was launched in 2012. It is underpinned by the key principle of encouraging and supporting parents to take responsibility for their children’s upbringing. We know that children have better outcomes when their parents work together.
Following separation, we want parents to make private, family-based arrangements for child maintenance where feasible, avoiding state intervention altogether if possible. Where parents are unable to make a private arrangement, the Child Maintenance Service can support them. This can be done by calculating a maintenance liability and enforcing payments where appropriate.
Following staged implementation, the Child Maintenance Service is working well and avoiding the widely recognised problems encountered by previous schemes. This Government now want to build on and make further improvements to the Child Maintenance Service.
Last November, this House approved regulations which closed known loopholes, introduced tough new sanctions for those who evade their responsibilities, and addressed the historic arrears built up under the Child Support Agency. This package of regulations would introduce further measures to support the compliance and arrears strategy. It includes provisions to make deductions from benefit more consistent, improve information-gathering processes and address uncollectable debt. This is alongside clarifications to the calculation and fees regulations so that they better reflect the intent of the 2012 reforms.
I will first explain the proposed changes to deductions from benefit payments. This Government believe that all parents should support their children, irrespective of their financial circumstances. Therefore, where a parent is in receipt of benefit, they should continue to contribute to their children in line with their income. This has been a long-standing feature of successive child maintenance schemes.
Under the current scheme, parents receiving certain benefits are liable to pay the flat rate of maintenance. Where a parent does not make payments voluntarily, the CMS can deduct the child maintenance they are liable to pay directly from their benefit payment. The regulations before you today are designed to make these deductions more consistent, as currently there are different rules governing what can be taken for ongoing maintenance and towards child maintenance arrears.
At present, the Child Maintenance Service can make weekly deductions of £8.40—£7 plus £1.40 in collection fees—towards ongoing maintenance from certain benefits and, at the same time, £1.20 towards arrears from a smaller list of benefits. So some parents have deductions of £8.40 per week whereas others contribute a total of £9.60.
The proposed changes to legislation would enable deductions towards arrears to be made from the same benefits from which deductions can be made towards ongoing maintenance. The regulations also ensure that £8.40 per week is the maximum that can be deducted from a parent’s benefit in all cases. This will prevent deductions towards arrears and ongoing maintenance being taken at the same time, as well as ensuring that deductions towards arrears will be taken only after ongoing liability has been satisfied. These changes send a clear message to parents who fail to pay for their children.
Additionally, the Government are proposing changes specific to deductions from universal credit. The Child Maintenance Service can already deduct £8.40 towards ongoing maintenance from universal credit if the paying parent has no income from employment. The new regulations will allow the service to do the same where the paying parent has earnings, in line with other benefits. This will apply only in cases where the paying parent is liable to pay only the flat rate; that is, based on earnings of £100 a week or less. The collection of maintenance and arrears will be more efficient from parents who are in receipt of universal credit and are also in work. At present, deductions would have to be made directly from their earnings if payments are not made voluntarily. This change introduces a more consistent approach to clients with similar financial circumstances.
I will now move on to the proposals surrounding protected trust deeds. A protected trust deed is an arrangement in Scots law between a debtor and their creditors. Scots law provides that child maintenance arrears that are covered by the deed cannot be collected once a parent enters into its terms. Currently, arrears covered by such a deed are permanently suspended on the child maintenance computer systems. Although dividends may be received towards arrears while the deed is in operation, once it expires any arrears covered by the deed are legally uncollectable. These regulations will extend the write-off powers of the CMS to cover arrears that are within the terms of a protected trust deed once the deed has expired. This change stops the CMS from holding on to information about uncollectable arrears at a cost to the taxpayer and keeps our legislation in line with that in Scotland, providing clarity to parents.
We propose changes to regulations relating to the powers of entry used by the CMS to access private properties. Sometimes there is a need for the CMS to enter private properties to gather information. These powers of entry provisions allow CMS to gather information to recover arrears, trace a parent, or make sure that the maintenance calculation is up to date and accurate. In 2012, Parliament passed the Protection of Freedoms Act. This Act placed a requirement on all departments to consider their powers of entry and decide whether they were still necessary, and, if so, whether any additional safeguards could be put in place to protect the public from unnecessary intrusion.
With this in mind, the Government are proposing an additional safeguard. This will mean that an inspector will be required to apply for a judicial warrant where they are refused, or expect to be refused, access to premises, or where they cannot contact the occupier. Although the CMS cannot use its current powers of entry to access a wholly private dwelling, it is my belief that this small change would give reassurance to the public that judicial consideration has been given when inspectors request access to dwellings to request information. We estimate that around 20 judicial warrants will be sought by the CMS each year. The occupiers of these premises will retain all the usual rights of appeal available via either the magistrates’ court in England and Wales, or the sheriff court in Scotland.
The next proposed change that I will explain covers improvements to how we gather information. Where there is a need to trace a parent, to decide on the best enforcement power to use, or to calculate a maintenance liability, mortgage lenders and occupational pension providers can be a valuable source of information. To collect information from such organisations, at present there is a requirement for the CMS to arrange for one of its inspectors to schedule a visit to their premises. This can be time-consuming and intrusive for them and costly for the taxpayer. Repeat visits are often needed as the information is not available on the first. We therefore propose to add mortgage lenders and occupational pension providers to the list of persons required to provide the service with information, in writing, on request.
I will now move on to outline a technical change to the regulations, concerning the way in which expenses are taken into account within the maintenance calculation. When calculating child maintenance, the CMS aims to produce a reasonable reflection of what is affordable for the paying parent. Usually, this figure is drawn from the taxable income provided by HMRC. Currently, the income figure given to the Child Maintenance Service by HMRC is supplied after any deductions for pension contributions are made, but before any deductions for non-taxable allowable expenses are made. This means that parents need to notify the service directly to get these non-taxable expenses deducted from their income figure. I am proposing this change to make it clear in law that the income figure that is used to calculate maintenance must be used after deductions for allowable expenses have been made.
In 2014, the CMS introduced collection fees for cases where parents could not agree the transfer of maintenance payments between themselves. These are aimed at incentivising collaboration, and can accrue alongside ongoing maintenance. As with the maintenance liability, they can also accumulate when left unpaid. Collection of these outstanding collection fees can be enforced as if they were unpaid child maintenance. When a parent does not pay their child maintenance liability, and the CMS is unable to collect the debt using its administrative powers, the CMS can apply to court for a liability order.
During a recent liability order application in a Scottish court, the way the sheriff interpreted the regulations meant that the liability order was granted, but did not include the collection fees. In this interpretation, fees would be included in the liability order only where some maintenance payment had previously been made, but would not be included where no maintenance had ever been paid. This creates a clear incentive for greater non-compliance, and is not in line with the intention of the policy. As such, I am proposing a change aimed at clarifying the policy intent. This change will provide the courts with a clear direction on fees when a liability order is sought. In addition, this will support the use of collection fees, helping to incentivise parents to work together where possible.
These regulations are designed to build on the continuing success of the child maintenance reforms. They improve collection measures and information-gathering powers further, and help make child maintenance fairer for all separated parents. In short, these amendments to the regulations ensure that the commitments in the compliance and arrears strategy are fully realised. I commend this instrument to the House.