Good afternoon. Thank you for coming, Professor Wikeley, and thank you for your paper, which has been circulated to our members and others. It would be best if you introduced yourself briefly and explained your background involvement with previous reports leading up to this piece of legislation.
Professor Nick Wikeley : My name is Nicholas Wikeley. I am a law professor at the university of Southampton. My research specialisms include social security law and child support or, as we should now call it, child maintenance law. I have done both qualitative and quantitative research in the area, and I have written extensively on the subject. I sit as an appeal tribunal chairman in a part-time judicial capacity, although I do not hear child support appeals, and I am also a social security and child support commissioner. Therefore, I should make it clear that I am giving evidence in a personal academic capacity, rather than a part-time judicial capacity.
Professor Wikeley: My general reaction was that, although I was expecting what I saw in the Bill, I was rather underwhelmed. A lot of it was well trailed beforehand so it would be fair to say that there were no huge surprises. In terms of what will work and what will not, that is the fundamental question because operational efficiency is what the system has been lacking. I am clear in my own mind that there need to be changes to the enforcement procedures. Whether they are the changes that I suggest is a separate issue, but clearly there need to be changes.
The big question is whether the emphasis on what academic lawyers would call private ordering will deliver in encouraging people to make private arrangements. I am afraid that I am a bit of a sceptic on that, but would like to be proved wrong.
To push you a bit further, do you think that we need a new Bill to see something out of it? You are saying that we are not in a perfect situation, but you are underwhelmed by the Bill. What were you looking for that is missing from the Bill?
Professor Wikeley: I would like tohave seen a Bill that went back to first principles—to the basic principles of child support, which the Bill does not do. The root of some of our problems is that the Child Support Act 1991 simply says that non-resident parents have a duty to pay child support. It does not say that children have a right to child support. It does not say that parents with care have a right to child support on behalf of their children. That seems to me a fundamental issue and it is sidestepped completely.
Professor Wikeley: It is difficult to see how you could step much further backwards, given the mess that we are in at the moment. I would like to say that it is a step forward, but maybe only one step. However, as I say, I remain sceptical about the emphasis on private ordering. I say that because when the 1991 Act was passed, we all assumed, wrongly as it turned out, that the agency would take over the role of the courts. That has not happened.
What has happened is that private arrangements, or private absence of arrangements, have taken over the role of the courts. Obviously it is better if people can make private arrangements and compliance rates are better. However, the reality for most people—well, those that are not on benefits—is that they have had that option for years and have or have not been doing it as the case may be. I do think that there is a huge pool of people out there desperate to do private arrangements who have somehow been frustrated by the existing system.
What would be the difference in outcome if the Bill accepted your premise of the child’s right to support rather than the non-resident parent’s duty to pay maintenance?
Professor Wikeley: I am not saying one instead of the other, but that one is a correlative of the other. If you have a duty to do something, presumably someone else has a right. It is a question of articulating that right. That is part of ensuring that one creates a culture of compliance. Children have a right to maintenance and you must establish a societal acceptance of that right. The way that existing legislation is phrased, it is seen simply as an onerous duty imposed on non-resident parents as a means of saving the Treasury money. We are obviously moving away from that, but it is a question of building a culture of compliance.
It would be more a cultural issue in terms of rights and responsibilities of parents and children than a change in the outcome. Is that what you are saying?
Could I press you on the matter of what you call private ordering or private arrangements? You said that that was the area you were most sceptical on.
Professor Wikeley: They need things that are inherent in the private arrangements, but there is also the question of the external environment—it is a combination of the two. So far as things that are internal to the private arrangements are concerned, I do not think that they will work unless people have proper, adequate advice. The Bill is promising us information and guidance—not advice. At the end of the day, we are talking about people’s legal rights and duties, and that will require, at times, legal advice. Carrying on from that, there is also a point about the relationship between the parties. We know from existing research that parents with care will take what they are offered, regardless of whether it is a fair and just outcome for the children. That is because of the imbalance of power in relationships. Having an external source of advice, rather than simply information and guidance, is one way of redressing that power imbalance so that you protect the interests of vulnerable people. Contrary to popular misconception, that is largely what lawyers are about, certainly in family law. Family lawyers do not like conflict—it is parents who like conflict.
There are also issues about the external environment. You would have to have an efficient agency that is an adequate threat, which will step in if the private arrangement breaks down.
I have one more brief question. The Government line, we heard this morning, is that the big stick to make private arrangements work is the Child Maintenance and Enforcement Commission system. From your experience of looking at child support around the world, is that sufficient? Does it need more teeth, or is the threat of being dragged into the tender embrace of CMEC going to be enough to make non-resident parents in particular keep the money flowing on a regular basis?
Professor Wikeley: As I said, we need to look at the enforcement system. It is a mistake to concentrate on the big stick, because that sends the wrong message about compliance. It says that anyone involved in child support is, by definition, a bad dad or a deadbeat dad. It is about creating a culture in terms of responsiveness towards people and their circumstances—for example, making sure that direct payment from salary is seen just as something you do like paying utilities by direct debit, not as a punishment for someone who has not performed their duties. Yes, there is a place for extra sanctions, but it certainly is not the be-all and end-all. Over-emphasis on that sends entirely the wrong message.
We are all in this because we want compliance to be better, and there are various strategies that we can use, one of which is to focus on deterrents. However, it does not seem to me, from past experience, that that is necessarily the most efficient way, either in child support or other fields. You are much more likely to improve compliance if you build a consensus about what is socially acceptable and socially unacceptable. My recollection is that 20 or 30 years ago people used to drink and drive and it was not really regarded as a serious problem, but it is now. Other examples are the wearing of seatbelts and smoking in public places.
You said that parents tend to take what they are offered. We had a conversation this morning about parents being allocated a key worker or case worker who would see their case through. The case worker would probably deliver a better service, because they know that they will deal with that parent on an ongoing basis, and the parents would be offered some additional comfort. However, we were told that that is not possible. I would imagine that one reason why parents take what they are offered is that they feel vulnerable and think, “Let’s take this now while it is on the table, because it may go off the table and there may be nothing else.” Would you support the case for parents having one person within the department who deals with their case? It would give them the additional confidence that they might need if they knew, that if they did not take what they were offered, someone would be there, continuously dealing with the case and helping them to get a better deal.
Professor Wikeley: In common-sense terms, I can see the force of that argument. Thank heavens, I am not a Child Support Agency manager. But if I were, I would say, “I have staff who are trained to a certain level to do certain jobs and there is an issue about how far I can reasonably expect them to do all the tasks that the agency does.” Having said that, it is certainly the case—empirical research shows this—that a frequent complaint, which you have doubtless heard in your constituency surgeries, is, “Every time I ring up, assuming I get through, I speak to someone different.”
That just exacerbates the complaints and the ongoing situation. There would be a much better outcome for everybody, including the employees, who would get to know clients over the telephone, and the clients, who would know who was looking after their case. Then, perhaps, there would be swifter resolutions and better deals and it would work better all round.
Professor Wikeley: I do not wish to pour cold water on what is, on the face of it, a common-sense idea, but look at the staff turnover in the agency and think about holidays and sick leave. You have to provide some sort of system that can deal with that. One way of doing that might be—off the top of my head—to have a smaller number of people dealing with a case than is sometimes currently so. You might wish to have one person or one part of a team dealing with assessment and someone else perhaps dealing with enforcement.
I want to talk to you about the David Henshaw review, in which he talks about avoiding cross- contamination and so on. Do you think that the Bill provides the clean break proposed by David Henshaw in his review?
Professor Wikeley: No, I do not think it does. However carefully you try to present it, so far as Joe Public is concerned, this will look like the CSA under a different name. Joe Public is not going to appreciate the difference between an Executive agency and a non-departmental public body. He will know that it is basically the same people in the same building using—or perhaps not using, one hopes—the same computer systems.
Sir David Henshaw, of course, recommended two bodies: one that would take forward the new system and a residuary body to deal with the past cases, handling those as they saw their time out, as it were. Clearly, that is not what is proposed here. We are going to have one organisation, which, if people wish it to, will take on the old case load. If that is a clean break, well—
We have already touched on this issue, to some extent. In your paper you say that you are not optimistic about the operation of the information guidance service. From what you were saying earlier, you almost seem to be arguing that we need to go back to the old position, where each party had separate legal advice before coming to an agreement. Is that your view?
Given that it was suggested on Second Reading that things would be web-based and telephone-based and this morning we heard some evidence that there would be, to some extent, a face-to-face service, how should the service operate to get the best out of the system?
Professor Wikeley: First, you have to make the distinction between offering information and guidance and offering advice—they are very different functions. In terms of information and guidance, one can see that that could be done through a number of methods and it has to be done in ways that meet the need of the client group out there, whether by telephone, a web-based service or face to face. Of course, the most vulnerable people will probably need a face-to-face service, for whatever reason: they may not be able to access either the telephone or the web-based service, or comprehend the full import of what it involves. The best advice on specific circumstances is always face to face, from someone you can exchange with.
In that scenario you are effectively going to have double the number of people involved. Each party will need separate advice on the terms of any agreement that they are entering into. The parent with care can obviously go to CMEC. Do you envisage a situation where the other parent will also get advice from CMEC? Is there a conflict of interest immediately there?
Professor Wikeley : Ultimately that is a matter for CMEC to determine, but if it is providing services only to one party to the dispute, that has implications in terms of compliance and what the public perception is. There is widespread belief among non-resident parents that the agency believed only what the parents with care say. If you speak to parents with care they will tell you a different story.
Professor Wikeley : Maybe I am wrong, but my understanding was that it was envisaged that CMEC would not itself offer this information and guidance. A lot of it would be contracted out. Then there are issues about whether the capacity is there in the private or voluntary sectors to do that sort of work.
Even if it is contracted out, it is contracted by CMEC to a third party. Therefore, it would still be done under the auspices of CMEC, albeit not directly. Are you concerned that in a lot of cases CMEC might be seen as acting not only as an adviser to one party, or perhaps both parties, but as the enforcer in the event that the agreement breaks down or one cannot be reached?
Professor Wikeley : Yes. Let me put it another way. We have heard several times from Ministers and from the previous Prime Minister that the problem with the child support system is that the CSA is involved with assessment, collection and enforcement and that it cannot do those three things. Well, the Inland Revenue does those three things and CSA Australia does those three things. It is possible for the same organisation to assess, collect and enforce. Whether it is appropriate for the same organisation to advise is, I agree, a separate issue. Would we necessarily expect the Revenue to offer me impartial advice about my self-employed tax position? I think I can rely on it to give me some sort of information and guidance, but if I want advice, I will hire an accountant.
Picking up on what Mrs. Dorries was asking earlier, do you think that there will be pressure on parents with care to make private arrangements that may not be in their best interests as a result of this?
We had a discussion this morning on the possibility of having a register of agreements and some sort of monitoring of private agreements that are entered into. Do you think that that is necessary to see whether this is working in the interests of parents with care?
Professor Wikeley : I am conscious that they do things differently in Scotland, for example, with minutes of agreement. We do not have a similar system south of the border. I have seen some of the research on that, which suggests that it is not always entirely satisfactory. People feel, even in that sort of environment, forced into an agreement. They accept the best that is on the table, going back to our earlier conversation. If you try to create something like that nationwide, the problem is how will you monitor it. How will you police it?
That comes back to the point. There is nothing in the Bill that says specifically, although it may come in regulations, that agreements even have to be in writing. If we just allow people to go out and make agreements, if there is no monitoring and quality control, how do we know whether they are working in the best interests of parents with care and children? Is there a need for some sort of monitoring or quality control?
Professor Wikeley: I certainly think there is a case for laying down certain basic standards or criteria, basic terms or templates, that the agreements could meet. I think of the Australian experience. Unlike us, Australia has a universal system. Basically, everyone is in the agency. More than 90 per cent. of eligible people are in the agency, but of that huge pool about half are in only at the beginning for an assessment. After that, they deal with collection privately. The problem is that no research has been done, so we do not know how effective those private agreements are. No one has asked. If you ask, the agency will say, “Well, if they weren’t being complied with we’d hear about it, because they’d apply for agency collection.” That may or may not be true. People might settle for a quiet life rather than do that.
I have one final question. It has been suggested—was it on the web?—that there will be a standard template agreement. Are people going to adopt that template and fill in the appropriate percentages? Is that likely to be the outcome?
Professor Wikeley: Yes. Indeed, there is some evidence that it is going on already. Certainly practitioners say that 15, 20 or 25 per cent. is understood—a huge advantage on the old formula—and that people accept that that is the rate, so that is what they operate on. The number of hits on the agency website suggests that, to some extent, people are already doing that.
You spoke earlier about the importance of changing the culture in a positive and responsible way in order to make a success of child maintenance. From your knowledge of the Australian system, do you think it would be useful for us to adopt any of its practical guidance and support in order to help non-resident parents to be good parents from a distance, and do you see that as part of the change needed to lead to the willing provision of reliable financial maintenance?
Professor Wikeley: Yes I do. It is fair to say that the agency and the Department are aware of what the Australian agency has been doing in that regard.
I preface my comments by saying that the Australian system is deeply unpopular—it is as unpopular as ours. The difference is that, by and large, it works, although it has some wrinkles. For instance, it is not that good on self-employed cases, but show me a child support system that is. The difference is that although Australia has a system that works, it is hugely unpopular because, of course, it requires people to pay money in circumstances in which they would rather not pay.
You say that the Australian system is unpopular. I have just been looking at the comments of separated parents on the back of the guides to long-distance parenting published by the Australian support agency. I do not know whether it is a highly selective sample of quotes, but separated parents, both mothers and fathers, are hugely appreciative of the practical nuts-and-bolts, week-by-week guidance on how to make their relationship with their children work. People never like parting with their money for all sorts of reasons, but I am keen to see such advice and guidance being given here, and we need to establish that now. What is your take on that?
Professor Wikeley: I have two things to say. First, when I say that the Australian system is deeply unpopular, the Australians say that in customer satisfaction ratings the agency rates quite highly—roughly an 80 per cent. satisfaction rating, which is very high. Having said that, the agency still generates a lot of bad press in Australia, and it still generates a lot of complaints to the Commonwealth ombudsman. Yes, there is a hard core of seriously disgruntled people.
Secondly, I accept the appreciation of the new initiatives that have been undertaken, but it is not simply putting leaflets on the web. The agency’s people go into workplaces to talk to workers about how the system works. Again, it is part of a bigger system. It is too early to know how it is working, but, as I am sure you know, the Australian Federal Government have set up a system of family relationship centres, which is part of a wider development in family law. Again, family law judges here receive a lot of criticism about secrecy and so on, but Australian family law judges take far more criticism. The family relationship centres are part of an initiative to nip those sorts of problems in the bud.
Professor Wikeley: At one level, you can see the argument that CMEC should have the power to charge fees for providing a public service. If you go to court, you expect to pay fees. In some ways, this is an alternative to court, and so you can see the Treasury’s argument for fees. On the other hand, we know that the difficulty in child support is getting the money out of people, and getting additional fees out of them would add to the problem. If the purpose, or the primary purpose, of child support is to try and attack the child poverty targets, we cannot levy fees on parents with care, because that will be a disincentive to them using CMEC, if they cannot reach a private agreement. The question is whether you just charge non-resident parents, but there is the parity of treatment argument.
Professor Wikeley: My view is that we should not even think about it until then. I am pretty sure that the Australian system does not operate fees. It is paid for by the taxpayer. Obviously, it levies penalties in the same way that the Revenue levies penalties here if you are late with your payments, but it does not operate fees.
What do you think will be the effect of the removal of compulsion for those on benefits to apply to the CSA by the repeal of section 6 of the 1991 Act?
Do you think that there is a real danger of more parents with care not having any child maintenance in place as a result of that change?
Does this not take us back to our earlier discussion about monitoring the effects? Do you feel that a system has to be in place to monitor the effects of the changes on the receipt of child maintenance by parents with care?
It seems to me that although the movement to private agreements has been widely welcomed, there is a danger of people falling through the net. I am trying to get at whether safeguards should be in place to monitor whether some people fall through the net where there has been a separation and maintenance is being paid. Do you have any idea how such safeguards could be put in place? Or should we not be repealing section 6 at all?
Professor Wikeley: Clearly, the repeal of section 6 is the one really radical step in the Bill. It is quite clear that it has been widely welcomed by those who represent parents with care, so I think that it would be churlish to say that section 6 should stay on the statute book. Having said that, the repeal of section 6 will not help to establish the payment of child maintenance as a primary obligation. Potentially, it will undermine that cultural acceptance of the payment of child support. It would certainly put us out on a limb as being fairly exceptional; so far as I am aware, in Europe only Belgium and Denmark have systems in which welfare claimants are given a choice whether to apply. Most systems worldwide require claimants to make an application.
Professor Wikel e y: Yes. Sir David Henshaw’s report quoted a figure that I must admit was contained in research that I did some years ago with a number of colleagues at Southampton and elsewhere. That suggested that, if the compulsion were removed, something between a third and a half of those subject to it might choose not to use the agency and might go private. More recently, small-scale research commissioned by the Department suggests that that figure might be lower—more like 15 to 20 per cent. If we consider the current eligible population, we know that the divide is actually something like half and half—as far as we know, about half of the eligible population have no child support arrangements in place. That means that there is a risk that, if section 6 is removed, those people will enter the pool of those with no agreement, rather than a private agreement.
I have a slight issue with your central thesis. As I understand the Bill, part of it is about moving things into voluntary arrangements, which, by your own admission, are far more successful and far more likely to be adhered to. It is also about stopping things from just falling by default into the remit of the CSA or in this case CMEC. That shift is what David Henshaw’s report was fundamentally about, and the voluntary arrangements were one of the radical departures mentioned in it. I would like to find out whether you think that the proposals are fundamentally a move forward or backward, because I feel that there is a slight contradiction in your evidence.
Professor Wikel e y: I am sorry that it appears that way, and I shall try to explain my concern more clearly. Let us return to the point that there is already a substantial opportunity for people to make private arrangements, which private clients enter into or not, as the case may be. It is difficult to see that the reforms will necessarily encourage more private cases to make an arrangement.
They will do that by taking away the default. There will no longer be a default that people will fall into. That is exactly where things like the removal of section 6 might assist.
Professor Wikel e y: Yes, but I am thinking of genuinely private cases in which there is no issue of claiming benefits. At the moment, those cases are in a sense outside of the scope of the agency anyway, and a private agreement can be made in relation to them. Clearly that does not happen in a substantial number of cases, because something like 50,000 cases a year do not make a private arrangement and end up with the agency or CMEC.
When you refer to private arrangements, do you mean situations in which both parents are working and neither is on benefit?
Professor Wikel e y: In practice, yes. At the moment, the agency gets some 50,000 such cases through its doors each year. These are people who do not need to use the agency, but they end up there because they cannot make a private arrangement themselves. I am not convinced that that number will fall substantially—it is just a fact of life. They have the opportunity to make a private arrangement, and they, or one of them, will not take it.
Professor Wikeley: That is a very difficult policy question. It seems strange that under the existing system there are parents with care under the old scheme who have no disregard whatsoever, there are parents with care under the new scheme who have a grand £10 a week disregard, and there are parents with care who may also work on the checkouts at Asda for more than 16 hours a week and claim working tax credit who have a complete disregard, although their actual circumstances are not significantly different. It seems difficult to justify giving the person working 16 hours a week a complete disregard, so that all their child support is cash in hand, whereas the parent with care who works 15 hours a week is subject to a disregard of £10 or even nothing. That seems unsustainable, and I simply do not buy the labour incentive arguments. I think that there are all sorts of other reasons why people want to be in work—partly monetary, partly social—and those are much more powerful than the level of the disregard.
That would seem to suggest that I speak in support of a complete disregard. However, there is obviously a cost attached to that which the Treasury can doubtless calculate. If a particular figure is set, there is clearly a danger that that becomes the maximum amount of child support, even if the circumstances are actually such that more should be paid. I know that Professor Parkinson from Australia, who chaired the Australian taskforce and inquiry, is very critical of the British proposals. His argument is that the only people who will benefit from a large, fixed disregard are well-to-do non-resident parents.
It is clear from what you have said that you favour the full disregard, although you do not accept it as a disincentive to work. Do you accept that the Government are trying to help alleviate child poverty, and that 100,000 would be taken away from that?
Professor Wikeley: That is clearly the aim and objective, but there are other issues about whether that amount will become the maximum in all cases, even though there may be cases where more money should be paid. There are issues about equity with other families who are not separated and who do not see that benefit, which is why I say that it is a difficult policy question. However, it seems strange to take away section 6 before increasing the disregard.
Moving on from the discussion about the disregard, I see that in paragraph 18 of your useful paper, you criticise clause 40, which takes away the ability to recover public expenditure on benefits in other areas. You have made the point that that measure would overturn some 400 years of British social security custom. Can you elaborate a little on that, and perhaps give a general perspective on the fact that the taxpayer as such will no longer be compensated for the costs of feckless behaviour by others? Should we shed just a small tear in the passing of that?
I have a second, slightly separate point about the disregard from the point of view of equity. I was wondering about the position of widows in relation to separated mothers and the disregard, in cases where there is a £10 disregard. Do you hold the view that they should move together, from the point of view of fairness?
I was being specific. There is a £10 disregard on the widowed parent’s allowance that matches the £10 disregard for separated parents in the new system. Were the Government to move from an equity perspective, I wondered if your view would be that they should move equally in both classes?
Professor Wikel e y: Yes, I can see the argument for that, although you may not be comparing like with like, so I would reserve my opinion. In so far as clause 40 is concerned, there is not much doubt that one of the agency’s major presentational problems over the years is that it has been seen as simply a Treasury recovery mechanism. Personally, I welcome the change, as combating child poverty will be seen as one of the major objectives of the child support system—if not the major objective. It seems wrong to throw away completely, in all circumstances, the issue of benefit recovery. Partly that is with a view to creating public acceptance for the scheme; we know that most people will form relationships with people of the same socio-economic class—that is the way that the world works. However, there may still be situations where the parent with care ends up with the children, on benefit and on a very low income, and the non-resident parent has a substantial income.
If the parents do not make a private arrangement, because they cannot or do not want one, for whatever reason—the mother may not want the father in the children’s lives any more—then clause 40 is saying that the state has no interest. That is even though the state is directly or indirectly supporting the parent with care and the children, when the man—if it is a man—has a substantial income which is not being used to support the children. That seems difficult to justify to the population at large, let alone to the Public Accounts Committee.
As an add-on, could you envisage a time when a woman might agree under duress to an arrangement? I am thinking of people who have been in abusive relationships, who do not want the hassle any more, and who would agree to anything that their partner proposed.
Professor Wikeley: I do not have a huge issue with whether it is net or gross. I am slightly intrigued by the change to gross, because the point was discussed in 2000, and the Government White Paper said that the net figure would be used, because it is closest to what people actually have in their pockets—it is what people understand. Obviously that argument has now been put to one side, and the link with Her Majesty’s Revenue and Customs means that we have gone over to gross.
The fundamental question is what we mean by income, and how income is calculated. I am not privy to the discussions between the Department and Her Majesty’s Revenue and Customs, but it is clear to any outsider who knows anything about the system that Revenue and Customs already operates different methods of calculating income for different purposes. Income is slightly different for income tax and national insurance contributions and certainly for tax credits. We already have problems within the child support scheme in defining income. Under the old scheme, all income was counted as income unless it was disregarded. Under the new scheme, it is counted only if it comes within one of the specified categories. We, therefore, have major problems with benefits in kind, dividend income and so on, which are not taken into account under the new scheme formula.
Professor Wikeley: I suppose it is to do with the interrelationship with the courts. They still have jurisdiction to deal with child maintenance cases in very special circumstances, such as where the child has a particular disability that creates needs or where very high-income families are involved. So, I suppose it is part and parcel of that. It is fair to say that this has never been a large proportion of the agency’s work.
What is your feeling about the increase in the flat-rate payment from £5 to £7, which does not, on the face of it, seem to be that significant? Do you really think it will make an impact on child poverty?
Professor Wikeley: No. The argument could be that it will have a significant impact on the income of the non-resident parent on benefit, who is on a low income to start with and who may have a second family. It is a 40 per cent. increase. I do not believe that the retail price index has gone up 40 per cent. in that period—I certainly do not believe that benefit rates have done so.
The 25 per cent. income variation has aroused a certain amount of comment. Do you think that there is perhaps a case for reducing it in terms of lower-income non-resident parents? If you are poor and you have a 24 per cent. fall in your income, this is a pretty significant rule. If you are on a hefty income, it does not make so much difference, but it is a blunt instrument for people who are counting the pennies week by week and trying to do the right thing. Would it be possible to have some sort of scale, perhaps even varying things a bit more at a higher level, so that overall this is not a cost to the Exchequer and just helps people lower down the income scale?
Professor Wikeley: You have to remember why the suggestion has been that we move to a 25 per cent. tolerance and to think about the problems that we have with existing schemes. Those problems are that both the new and the old schemes are built on the social security model, so frequent changes and frequent reassessments occur, and you get on to a hamster wheel where assessment chases assessment and change chases change within the system. There is a trade-off between dealing fairly with people’s circumstances, making the system operationally manageable and not having too many changes of circumstances.
The question then becomes a judgment call as to where you fit that level. As I indicated in my evidence, the Australians use a 15 per cent. tolerance. If your income is 15 per cent. or more down on the year, you can get a change. Another way of doing it, rather than having a universal figure, would be, as you have said, to have bands. For example, under £20,000 your tolerance level would be lower; between £20,000 and £25,000 it might be intermediate; and above £25,000 it might be higher. The problem is that you then introduce extra complexity into the system, and we know from experience that more complexity makes the system more difficult to administer.
So overall you are comfortable with administrative ease, if we may call it that, taking precedence over some pretty rough justice at the lower ends of the income scale. Can clever computer programs not work this sort of thing out without tying up the agency in knots? None of us wants to see CMEC staff back on that hamster wheel. I want to probe you a little more on your experience from around the world. Can we do this in a slightly less blunt fashion for people who will be significantly affected?
Professor Wikeley: As I have said, the Australians use a 15 per cent. approach, and I have not heard from those working in the agency that they are flooded with changes of circumstances. Perhaps there is something about the economic position of non-resident parents there that is different from the position here. I would be more comfortable with a lower figure. I am not sure whether that should be a banded figure, because that is a difficult operational judgment.
We touched again on the self-employed. One of the things that we often hear in our constituency cases is the allegation that someone’s lifestyle does not match with their declared income. Now we are going on to HMRC figures, do you think that will be sufficient to allow this to be addressed, or is it just entrenching it in the system?
Professor Wikeley: I do not see how moving to HMRC figures will address the problems in the variation scheme—the lifestyle inconsistent cases. Obviously, it will depend on what you mean by gross income and how far you take into account business expenses, capital allowances and so on. I return to the point that I made in the paper that I put before the Committee: income is not a scientific process; income is what you want it to mean—it is a bit Alice in Wonderlandish.
But we are asked to accept HMRC as being the arbiter of what an income is. Is it possible to design a system that will get round a perceived problem that the self-employed are able to have an apparently lower income than their lifestyle would suggest?
Professor Wikeley: I am not expert on the tax system. I have talked to those who are, and my understanding is that the Revenue, not surprisingly, concentrates its investigative resources on the cases that it thinks are the most serious and that will produce the most return to the Exchequer. That makes good sense. Such cases will not involve whether a plumber is earning £15,000, £20,000 or £25,000 a year. For self-assessment purposes, if £15,000 or less were involved, we would be talking just about three-line accounts, which could hide all measures of things. Even above that figure, if it is in the band of what one might expect a plumber to earn, HMRC will leave it and will not look at it from a tax point of view. I do not see how HMRC will suddenly undergo a cultural shift and start examining these relatively small cases from a child support perspective.
So, the same problem will continue under the new system.
Let us move on to another matter. Obviously, there are proposals to transfer cases to the new rules, but one of the gripes that we often hear from constituents is the fact that there are already two systems running in parallel within the CSA, providing totally different outcomes depending on when the case first went to it. We will now have a third system, and it may be some time before things are transferred over. Are you confident that there can be a successful transfer of cases from the CSA to the new maintenance calculation of CMEC?
Is there a danger that we will be running three different systems, with even more unhappiness among those who are subject to CMEC or child maintenance? Is there a way around that?
Professor Wikeley: I wish that I knew the way around it. The answer might be that there is clearly no intention for existing old and new cases automatically to transmogrify into brand new CMEC cases. People will be given a choice. The options will be explained to them: they can stick with the amount that they have and come into the new system on that basis, or make a fresh application. That is my understanding.
There will then be potential for disputes between the parties. Many non-resident parents who are subject to the old rules might wish to come under the new CMEC rules, but that might not necessarily be in the interests of the parent with care. How will CMEC balance the views of both parties and arrange for a transfer? Should not there be one rule for transfers? Otherwise, we will end up in the position that we are in now, with two systems running in tandem.
Professor Wikeley: Yes. I have only recently seen the very long document about delegated powers that the Department produced. I must admit that I have not yet gone through it in detail, because it has only just become available. I do not know how it is proposed that it will be done, but I am quite sure that I will not get the answer from reading the Bill. I am not 100 per cent. convinced that, when the regulations are available, I will get it from reading them, either.
Professor Wikeley: The obvious riposte is that the agency already has extensive enforcement powers but, historically, has not used them. In the debates on the 1991 Act, the complaint was that a new agency with Gestapo-type powers was being created. There was a lot of debate about that, especially in the House of Lords. What happened, certainly in the first 10 years or so, is that, by and large, the agency simply did not use those powers. The figures show that there has definitely been a change in the past two or three years. The agency has begun to put more resource into enforcement.
It is a perfectly respectable argument to ask why the agency should have any new powers until it has proved that it can use its existing ones. Having said that, we know from overseas regimes that different systems use different sanctions, so there might be other appropriate penalties in particular cases. When I gave evidence to the Work and Pensions Committee in 2004, I put the case for withdrawing passports, or something similar, in very extreme cases. The Australians use a slightly different system, but it is basically the same sort of idea. I can see the case for that as a high-order sanction that might be more effective than imprisoning people or taking away their driving licences, for example.
One of the problems that I pick up on regularly in my surgeries is that enforcement is pretty draconian for those who are within the ambit of the CSA and therefore already in the net, but it does not seem to affect at all those who have not yet been tracked down and who remain outside the system. People are sceptical about what enforcement means.
I understand that, at the moment, only 19,000 of the 247,000 non-compliant cases are with the enforcement directorate. I am broadly in favour of the new enforcement powers, because I have had too many parents in my surgery with woeful tales of not getting the maintenance, and I recognise the need to do something about that. It is crucial to ensure that the enforcement directorate is able to up the proportion of cases being investigated. What is your feeling on how CMEC would cope with that as it goes forward?
Professor Wikeley: My understanding is that, certainly in the past, the agency itself had real problems in identifying what the most serious cases were that needed enforcement action. Again, that is beginning to be turned around, which may be shown in the figures to which I referred earlier. In answer to your question, I would simply say that it will depend on the calibre of the staff and on the resources that they have available. We know that the tax inspector is a pretty efficient enforcer.
What is your view on deduction from earning orders as the first way of proceeding. Are you in favour of that? We understand that it happens in other jurisdictions.
Professor Wikeley: Deduction from earning orders in this country have always been seen as a penalty or sanction. There is clear evidence from both the United States and Australia that, if a direct deduction from salary is offered at an early stage as simply a compliance mechanism—one way of paying—it helps boost compliance. I am certainly in favour of it being used more widely. It will not be a panacea. People change jobs and it is a burden on employers, but it is certainly an important part of an effective collection strategy, not an enforcement strategy.
Professor Wikeley: Regarding the problems that we have had in the past, if one speaks to practitioners in the field, they will give you stories of cases where the agency has failed to take enforcement action and to make applications for liability orders when it should have done. Equally, there are other cases where it has taken action precipitously or on the basis of inaccurate assessments. Either way, it has not worked out. If the decision is that the liability order should be an administrative mechanism, we must have proper accountability and a proper and efficient appeals system, and I am not convinced that the model in the Bill is necessarily the system for that.
Professor Wikeley: You say “does not take for ever”, but the argument in favour of taking the power away from the courts—or, at least, removing the obligation on the agency to make an application to the courts—and bringing it in-house within the agency is that the courts take too long, as stated in the White Paper. I have not seen the empirical studies on which that was based, and it is not clear to me whether that delay was caused by the courts delaying the processing of the cases or by the agency’s inefficiency. Cases sometimes get more than one adjournment, and that may well be the agency’s responsibility and not the court’s problem. There is an issue about the basis on which the decision is made.
It seems strange to me that, in the proposal on the right of appeal, there is a right of appeal to a tribunal. I can see the point of that, given that tribunals have expertise in the child support field, but the tribunal is denied the right to look at the underlying assessment. On the top of page 18 of the Bill, proposed new section 32K(3) states: “On an appeal under this section, the appeal tribunal shall not question the maintenance calculation by reference to which the liability order is made.” That seems to me to be nonsense.
I shall move on to the issue of disqualification from holding or obtaining travel authorisation. There were some comments on Second Reading about the different attitude towards removing a driving licence, which could stop someone from being able to earn their living, as opposed to removing their passport. What would happen with an ID card? As far as I understand it, the experience from Australia and America seems to suggest that these sanctions work. What comments do you have on that?
Professor Wikeley: The evidence from both Australia and the US shows that that can be a valuable weapon in cases in which other types of sanction have not worked. Having said that, they operate different system. The Americans operate a passport revocation system. The Australians, on the other hand, do not revoke passports; they simply stop you from leaving the country. The advantage of that is that it applies to everyone, regardless of their nationality.
Revoking or withdrawing people’s passports is not going to stop people with dual nationality from travelling—they will travel on the other passport—and it certainly will not stop non-British nationals from travelling. Presumably, there is no suggestion that we start taking away the passports of French citizens who are working in London. Therefore, a departure prohibition process casts a wider net.
Professor Wikeley: That of course was not something that Sir David Henshaw proposed. To my knowledge, curfew orders are not used in other systems worldwide. I am slightly hesitant because I suspect that there are probably some American states that use them, but I simply do not know. I have not seen any literature on their effectiveness.
It seems that you can use curfew orders for two reasons. One is to keep track of people; to locate them. I assume that that is not the purpose. The other reason is as a simple penalty and an alternative to imprisonment. We all know the problems with prisons. Anything that keeps people out of prison—if they are not a danger to society—is presumably a good thing.
Having said that, I am slightly concerned that curfew orders are part of the big stick mentality, which may not necessarily help to engender a culture of compliance. There is also an issue here of parity of treatment. Curfew orders were an option that was considered for parents who unreasonably refused access to the non-resident parent. That measure was dropped from what is now the Children and Adoption Act 2006. There is a question here of treating people equally in like circumstances. If the sanction is inappropriate there, why is it suddenly appropriate here?
There is often a problem with arrears. Sometimes part-payment of arrears is accepted as payment in full. Do you think that that process should involve a parent with care?
Professor Wikeley: I do and although it is not mentioned in the Bill, my recollection is that either the White Paper or the regulatory impact assessment says that there will be consultation with the parent with care. Personally, I would be happier if that was built into the Bill rather than left to regulations, especially when one is dealing with private cases in which there has never been any state involvement. It seems that, fundamentally, it is a private dispute between two parents. If that is the case and if there is going to be any partial satisfaction, the person entitled—the payee—should have their rights protected in primary legislation.
I feel some amendments arising from that. Do you have a view about the amount of debt that it is legitimate to write off? Should there be a requirement to prove before it is written off that, in practice, it really is absolutely beyond recovery?
Professor Wikeley: I do. Having said that, we need to be quite careful about the different types of debt. Some of the debt total relates to interim maintenance assessments, which were a completely unsuccessful attempt to wave a big stick and make people comply. All it meant in a sense was that rather artificial arrears just built up. I can certainly see a case that interim maintenance assessments should be revalued on that basis. When talking about proper maintenance assessments—if I can put it that way—based on people’s actual incomes, writing off is more problematic.
Professor Wikeley: At present, the agency operates a financial address system as a Department for Work and Pensions agency. It is not entirely clear how that would operate in the context of a non-departmental public body. The legal route appears to have been closed off in that the Court of Appeal decided quite recently that the agency owed no duty of care to parents with care or, indeed, their children. Therefore, there is no possibility of parents with care or their children suing the agency for negligence for poor administration. The only way would either be presumably through the Department’s financial address scheme or through the ombudsman. If a system has promised to deliver, and it has failed to do so, it hard to see why people should be denied compensation.
Professor Wikeley: The Appeal Court ruling was on the basis of both the statute and the common law. The Court of Appeal was quite clear that there was no duty of care and therefore no liability for negligence. Whether it is appropriate for such a duty of care to be imposed is a difficult issue, both on a policy and political basis.
There is power in the Bill to factor debt to private debt collection agencies. Do you think that that would be a right approach for the Government or CMEC to take?
Professor Wikeley: It is an approach that has already been taken in terms of contracting out the process of debt recovery under the existing system, although there is not as yet a power to factor the debt itself. There is something intrinsically uncomfortable about factoring debts in that way, but if the object is to recover the money for children—and if that is a more efficient method of doing so—perhaps it is an option that should be considered.
Is there a danger of an historic debt, which is factored out to debt collection agencies, impacting particularly on low-income or vulnerable families?
Do you think that there would be much demand in the private sector to take on that business?
I am particularly interested in the retrospective impact with the mesothelioma payments. Should the compensation recovery process be a retrospective payment for mesothelioma sufferers or their dependents?
Professor Wikeley: Although I have done research on this area in the past, I have not looked in detail at the Bill’s provisions on mesothelioma. However, a significant number of people certainly have no adequate form of redress at present. For whatever reason, they are unable to establish a claim in tort or under the industrial benefit system. Obviously, making it retrospective opens up a significant number of cases.
The delegated powers memorandum states that “the recovery of lump sum payments is significantly different from the existing recovery of benefits scheme” and “it would require major changes to and modification of the 1997 Act”. That, by itself, gives the Bill quite sweeping regulation-making powers. What do you think the Government should include in those regulations?
On a more general point, the Bill also provides for regulations to set out the amount to be paid. That varies according to circumstance. What do you think those circumstances should be?
Professor Wikeley: Well, it depends what the objective of the scheme is. We already have a scheme under the 1979 Act, whereby people are compensated primarily according to age. Age is a crucial factor. There are factors that will always be relevant: the person’s age, the number of dependents and the earning potential that they have lost. All of those things are clearly significant. I would say that the awards under the 1979 Act, which are apparently going to be the model for these awards, are definitely at the low end of personal injuries awards.
Thank you for coming along. I think that you have been listening to earlier parts of the proceedings as a member of the audience. We have until 7 o’clock. I am not sure whether we will take all of that time, but please address your comments on the basis that that is the maximum time that we have. You have not submitted a formal memorandum, but some hon. Members have pieces of paper, which may have been circulated in some form of briefing. Rather than invite you to make a preliminary statement, perhaps you will say who you are and where you come from and from where your interest in the Bill emanates. We will then move on to the first question.
Janet Allbeson: I am Janet Allbeson. I am a policy advisor at One Parent Families, and I am responsible for its work on child maintenance. One Parent Families has had a long-standing interest in getting a decent child maintenance system in this country, right from its founding objectives of 1918, which we are still trying to fulfil.
We support the Government in trying to get the child support system right, and we have been involved since Sir David Henshaw’s review was announced. We run a series of seminars that bring together front-line advice workers, family lawyers, civil servants and anyone with an interest in child maintenance to give their views on future reform. We ran four seminars that looked at different aspects of child maintenance. We have been fully engaged and are keen to help the Department to get it right, although we have a lot of questions and issues to be addressed.
In moving forward and getting things right, as you put it, do you think that the Bill will work? Which parts of it do you favour and which parts do you think do not go far enough?
Janet Allbeson: The Bill is a skeletal document. A lot of the issues that will determine whether or not the new scheme is successful relate to big questions that are hard for Parliament to address. For example, the Department’s budget will have a 5 per cent. cut, year on year, between 2008 and 2011. There are big issues to do with resources and delivery mechanisms, such as procurement policy, IT systems and project management. Delivery has been the big failure of child support. In the past, a lot of time was spent discussing policy questions and getting the policy absolutely right; far too little attention was paid to how it worked alongside effective delivery. A lot of the big issues are not mentioned in the Bill, such as the transition from two schemes running side by side to one new scheme or, in fact, three variations. There will be an information and advice service to support voluntary agreements, a cash collection service in another tranche and a new scheme. That transition is a huge mountain for CMEC to climb, but there is very little information in the Bill about any of that.
Janet Allbeson: There are certain things in the Bill that we are pleased about, such as the priority that the Government are giving to child poverty. They are looking at the child maintenance disregard, which they want to maximise. Debates are still going on with the Treasury about the level of that disregard, but there is a clear interest in recognising the importance that child maintenance can play in combating child poverty, which we are pleased about. Children in lone-parent families are more at risk of poverty than other children. There are good things in the Bill, and getting an effective child maintenance system really matters for children in lone-parent families.
Janet Allbeson: I think that it is too early to say, to be honest. The intentions are good, but a lot of the detail of delivery still has to be worked out. On the new assessment process, everyone is enthusiastic about using tax data from HMRC, but there is a danger of everyone saying, “Oh that’s jolly good—tick, let’s move on.” That is what has happened in the past with child support. Everyone has agreed with the principles and turned away from considering how it will work in practice. Is HMRC up to it? Is it going to deliver? We are still making up our minds, and it is too early to tell whether it will work or not.
I am sure that colleagues in the Committee will agree that we do not say, “Great, let’s tick the box,” because we get the casework. I think that you are saying that you agree in principle to many parts of the Bill, but that you are cautious about the delivery, because of past experiences.
Janet Allbeson: Yes. We are in favour, for example, of the abolition of section 6 and the requirement automatically to use the agency if you are on benefit. We think that it is right that all parents are given a choice about how they make the best maintenance arrangements for their children. We are sceptical about the degree to which voluntary arrangements will work for a large number of parents who are bringing up children on their own, so we are keen to see a really good statutory scheme for parents who need to use it, whether they are parents with care or non-resident parents.
Janet Allbeson: We can certainly see the need to rebrand the whole business of child support and child maintenance. The old system—the CSA—had really lost the trust of parents and the public. There is clearly a need to say, “We’re new, we’re different, we’re going to do things differently.” As to whether that will be achieved—there is a window of opportunity but various things remain the same, as Professor Wikeley has pointed out. It is the same staff, the same computer system and a lot of the rules will be the same.
Will it be a clean break? There is an opportunity to show that it is different. One thing would be to give more through the child maintenance disregard, so that what you are saying from the start is that the scheme is about money going to children, not to the state. That gets the public on board and makes it clear that, if a non-resident parent does not pay, he is cheating on his children, not outfoxing Gordon Brown or, now, Alistair Darling. That is very important. Can there be a clean break, for instance, from the debt that is owed? We are concerned that CMEC should not walk away from the legacy of non-payment and of children being brought up without that money. We want more attention to be paid, in terms of the objectives of CMEC, to recovering that money.
Another issue about whether there can be a clean break will be whether it is seen to work right from the start. In the case of both the last schemes, they went wrong right from the start. It should not happen again this time. People will be looking to the new scheme, and they are quite hopeful. Parents and the staff, too, are hoping that it will work. The scheme started to fall apart in 1993 and then in 2003, when the delayed new scheme came in, and it was clear almost straight away that it was stumbling. If there is going to be a fresh start, we are keen that the Department should frontload and should not make the mistake of trying to pull staff and resources too early out of the new department. It should put the resources in at the start, and only after 2013, once it is really starting to work and once it is over the mountain of transferring cases, will it see whether it can reduce the staffing and resources put in. Yes, let us make a fresh start, but a lot needs to be done to do that.
I think that we all will be fairly familiar from our constituency postbag with cases—I want you to confirm that there are such cases—where the absent parent resorts to various tactics, such as physical mobility, job mobility, redefinition of employment as self-employment and so on. You are nodding, so I take it that you confirm, at least, that it is not unfamiliar to you. Clearly, the result for the parent with care is pretty ghastly. Can you give us any indication—it might be relevant to the future of the new scheme—of how much you think that is related to what might be termed “malicious contacts”, whereby people take advice on the internet or otherwise on how to subvert the existing system? Do you have any confidence that the new system will be robust against such an organised attack? Ministers have clearly given some attention to that.
To single out a particular case in which there is an inequity, what about the situation in today’s world of complex families whereby a parent is paying maintenance in respect of a child from a previous relationship but failing to receive it for a child whom they are now maintaining? That seems to aggravate the sense of unfairness and unacceptability about what has been happening and what none of us wants to happen in the future.
Janet Allbeson: There is a huge spectrum of non-compliance. Non-payment is part of it, but there are also all the other ways in which NRPs can avoid paying, such as by readjusting their financial affairs, so that they seem to have little income. At one end of the spectrum there are people who would cut off their right arms rather than ever pay, but there are people at the other end who maybe do not have much money or who have a lot of debt. They may be in a new relationship and have a new family, and they might be in and out of work and casual employment. It can be very hard to pay.
We think that CMEC has a role to play in a lot of circumstances. There could be a situation in which someone is willing to pay but relations are so bad between a couple, particularly about money, that both agree, “Let’s get CMEC to sort it out, to take some of the bitterness out, and we can deal with sorting out contact more amicably without having to argue about money.” So CMEC does have a role.
It is incredibly hard to get money from people who duck and dive and are reluctant to pay, and there has been a sort of naivety about the ability to do that. Sir David Henshaw, for example, said that it was a bit like collecting electricity costs or parking fines. Well, it is not, because there is a degree of emotion and bitterness that can build up and that we have to acknowledge. That goes for some of the contracted-out things lower down the line. We have to recognise that the case load is quite specific.
CMEC must be more than just a big stick, being hard-edged and going after people. It must acknowledge that there is often a sense of bitterness and grievance, to do with not seeing your child any more and having to parent from distance. People need support in how to do that, and they need their grievances addressed. They might need good information and advice. They might have a sense of grievance that turns out to be misplaced.
There was a departmental report on compliance, and what became apparent from reading it through was how many non-resident parents were really angry about their assessments but had not appealed against them. They had not realised that they were interim assessments, which was clear from looking at them, even to me. They assumed that that was how much they had to pay; they never realised that they could go back and sort it out. Those people may have debts.
If you can deal with some of the wider problems about why an NRP is not paying, you can maybe get the maintenance flowing again. Ideally, a good information and guidance service would offer that. As Professor Wikeley was saying, that is not just information; it is advice. It is about sitting down with someone and sorting out some of their problems, so that you unplug the gaps and help them pay. CMEC can also be a good service for people who find it difficult to pay regularly and have chaotic lives. Let us offer it as a service, not just a big stick.
Thank you for that. As a follow-up, may I ask you for a quick comment on your take on what happens when this begins to break down? It may be that the parties have good faith and, through the mediation or intervention of CMEC, have entered a private arrangement. If one party to that arrangement either disputes its terms or is just not compliant, or maybe gets into difficulties, will that be a CMEC function? What is the best way of handling it?
Janet Allbeson: Ultimately, if a voluntary agreement breaks down, CMEC must be there to step in. That is the simplest way of dealing with it. We want CMEC to focus on running a good statutory scheme. In our view, that is its primary responsibility, and if it can get an efficient statutory scheme going, voluntary agreements will be encouraged in the shadow of it, because people will know that, if they do not stick to their voluntary agreement, the agency will step in smoothly and efficiently—not necessarily belligerently—and get the money going again.
On offering a really good service of information and advice for parents, often when they are at the point of separation and relationship breakdown, there will be a lot of bitterness and pain. There will be many issues to sort out, of which child maintenance will be just one small part. There might be debt, housing, and rights on cohabitation and contact to sort out. CMEC is stepping in to a wider spectrum where that maintenance arrangement will work only if that wider picture is dealt with properly. The DWP cannot do that on its own.
We are proposing, at least, that pilots be set up. Let us consider advice services run by other Departments: we have a relationship breakdown programme run by the Ministry of Justice and the Department for Children, Schools and Families. The DCSF also runs a parent know-how fund, which gives advice on parenting. The Department of Trade and Industry runs financial inclusion of debt services. There are a lot of different pots of advice and information out there.
We wrote to the Chancellor, to the Secretary of State for Children, Schools and Families and to the Secretary of State for Justice saying that we wanted some pooling of resources to pilot a service for separating and separated families that would help them manage and support them in order to get the best outcomes for children. Research suggests that non-resident parents are more likely to pay maintenance if there is some parental involvement. There has been a lot of fuss about lone parents supposedly refusing contact. Well, lone parents have said to us: “We want more contact. Why does he not get more involved?” There is a sort of consensus that, if non-resident parents can be more involved—providing it is safe, of course—it has very good outcomes for children. We wrote a joint letter with Fathers Direct, and got a lot of other parents organisations to sign up with us, asking for cross-Government funding and backing for a new service for separated and separating parents.
Returning to CMEC, we are sceptical about how effective the information and guidance system will be in supporting voluntary arrangements. A telephone line and a website are a start, and we know from our own research into the advice needs of lone parents that they like the telephone, because they can ring when they get home from work or after they put their kids to bed. So it is a good start. Often you can get a diagnosis over the phone about your problems and advice on where to go, but where do you go? There is a lack of capacity, because parents also want face-to-face discussion about their options. Should they go for the mortgage being paid or for child maintenance? What about getting their debts paid off first? Would that help? People have individual situations that need to be sorted out. There is a need for advice and information, but given the limited resources that the DWP has to devote to this, we are sceptical about whether it can do what is necessary in order to really increase voluntary arrangements.
You said earlier that you have come across non-resident parents who would rather cut off their right arms than pay maintenance. Another issue that many of us have come up against as constituency MPs is an unrealistic assessment by the non-resident parent of how much it costs a week to support a child—how much of a contribution should be made. Sometimes it is not only how much the assessment is but whether they think it too high. I have had parents telling me that the CSA assessment was unrealistic and that £30 a week was more than adequate to keep a child. Can we reconcile that perception through CMEC or some other mechanism?
Given what you said about managing all the other issues—I do not disagree that there is a mishmash of them: the breaking-up of relationships, or non-resident parents thinking that they should have different access arrangements and all the rest of it—how should we manage that sequence of events, that process which reconciles all the other things, yet at the same time ensure that the resident parent still has adequate resources every week to maintain the child?
There are two issues. The first is people’s expectation of how much it takes to keep a child. The second is how to deal with all those other things—the priorities of the non-resident parent, who may think that paying for their car is more important than contributing to the upkeep of their child. I say that with some experience, and I am sure that my colleagues have had similar discussions with non-resident parents.
Before you answer that extremely long question, may I point out the danger of questions—and answers—getting longer? It is likely that we shall lose 15 minutes of our allocated time to a Division, and we may lose even more than that, so if we are to make the necessary progress we will have to be much more succinct.
Janet Allbeson: The statutory scheme is obviously there as a back-up; it gives the amount that the state says you should contribute to your children. It is the backstop. If the non-resident parent in negotiations comes up with an amount that does not reflect the true cost of raising children—there can be a debate about the extent to which the full cost is recognised, including paying the bills and housing costs as well as the pocket money and the clothes—the state will step in and say, “This is the amount that we consider reasonable.” To a large extent, the amounts set under the 2003 scheme have not attracted much controversy in terms of affordability.
I have two questions. You said in your reply to Mr. Boswell that you wanted an efficient CMEC as an alternative to private arrangements, as people would know that there was a backstop. If CMEC is efficient and deals with things competently, will not people go to it as the first port of call? It would be more straightforward than the CSA. Their experience of the CSA may not be good, and they may not want to get involved, but if they went to CMEC it could end up dealing with all cases. Alternatively, do you prefer the Henshaw view that CMEC should deal with the smaller number of more difficult cases, and that it would be better if the bulk of cases were dealt with through private arrangements? Which of those two visions do you agree with?
Janet Allbeson: One has to look pragmatically at who is able to reach an agreement and who is not. Research suggests that those who can reach agreement tend to have been married or to have been in a long-term relationship. There is usually some degree of parental involvement, and the break will have been reasonably amicable. Sadly, that is not the case for a large number of couples, as there has been tension and they do not get on. We cannot expect them to make voluntary arrangements. CMEC has to be there for them. It has to be a decision for them—for the people who use CMEC, or at the moment the CSA.
Cases in which people choose to use the CSA tend to be those in which there is a lack of trust between the parties or in which they do not want contact with each other. The CSA has a valuable role as an intermediary in ensuring that the money is paid in those cases.
Janet Allbeson: The big unknown is the number of current benefit cases in which people might choose to make their own arrangements. We are keen for the Department to estimate that number quite conservatively, because in the past the danger was over-optimism about the willingness of non-resident parents voluntarily to agree to pay money over. By all means let us offer the facility and give information and advice, but let us not count our chickens before they are hatched. There is a culture of non-compliance in this country—although I hope that it will change. Time and again, the CSA has suffered disappointments. The attempts at a system that assumed that NRPs would co-operate have failed.
My question has probably been covered. I was interested in what you were saying about your view of the operation of the advice and assistance scheme. Given your vision of that advice scheme, do you think that CMEC can act as both adviser and enforcer?
Janet Allbeson: It can provide information, and it clearly has a role in telling people how the system works, what their options are, and perhaps even in giving them model agreements and useful information about how best to manage their finances in order to pay. Beyond that, the detailed information that people need to make sure that arrangements can work relates to more than just child maintenance; it relates to a lot of other issues as well. People need access to an independent person whom they can trust. Given that it will be collecting money and enforcing, CMEC will not necessarily have that relationship of trust.
Normally, in a separation or divorce, people might go to see a lawyer to deal with the other aspects of the break-up, and enter into some sort of agreement or go to court to deal with that, while the child maintenance is dealt with by the CSA. Are you suggesting that we are looking at having two agencies: one to deal with advice and one to deal with collecting and enforcement of maintenance?
Janet Allbeson: I think that CMEC is planning to contract out its information and guidance function. Our view is that having a source of impartial and independent information, advice and guidance is a good idea as far as it goes. However, there is a capacity need beyond that. Beyond the call centre and the website there is a need for a comprehensive, face-to-face service, and we are sceptical about the ability of DWP to fund that, because there is a capacity issue with existing resources. We know that citizens advice bureaux budgets are being cut, along with budgets for lawyers and legal services. Family lawyers are very unhappy at the moment about the extent to which they can deal with services.
Even if CMEC contracts out its advice section, the advice will still be given under its auspices. There are two parties to any agreement. Non-resident parents often need advice and assistance as much as the parent who has care. Will CMEC be able to offer advice to both sides impartially in such situations?
Finally, do you think that the new system will put pressure on parents with care to make private arrangements that may not be in their best interests or in the best interests of the children?
Janet Allbeson: We are certainly worried about the potential institutional bias where the organisation has a business interest in steering people away from using its services because of the cost. The Government’s response to the Henshaw review was to say that too much money is spent chasing too-small sums of money from poor people. Of course, potentially, poor lone parents stand to benefit from this system. We do not want to see children in lone-parent families, 50 per cent. of whom are poor in terms of the children, in any way steered away from using a system that offers them the potential to get maintenance. The regulatory impact assessment says, at paragraph 117, that every 10 per cent. increase in case load would cost £20 million. Potentially, there is a risk of that business imperative pushing people towards voluntary arrangements, which we know will only work for some.
The research looking at voluntary agreements shows that there is an imbalance of power. In all the agreements that were looked at, overwhelmingly it was a non-resident parent who was in the driving seat when it came to deciding the terms of the arrangement. That is worrying.
Given that, do you feel that there needs to be at least initial stages of monitoring and some sort of quality control about the type of agreements being entered into, to see if those are working in the interests of parents with care—especially those more vulnerable parents with care?
Janet Allbeson: We suggested that, in the Bill, there should be no institutional bias towards voluntary arrangements and that the Child Maintenance and Enforcement Commission should have the job of getting child maintenance per se and should be helping parents work out what is the best option for them.
On monitoring voluntary agreements, the Bill talks in clause 2 about the commission’s obligation to set up “appropriate voluntary maintenance arrangements”. There is a question about what that means and, if there are any objections to the commission’s achieving that, how it will judge whether it has achieved it or not. There has to be some monitoring, simply to know whether it is reaching its objectives.
I was heartened by what you said about wanting CMEC to be a service, not just a big stick. You also talked about the cross-departmental collaboration and said that you had written a joint letter to the Chancellor about that with One Parent Families and Fathers Direct. That was all music to my ears. However, I am concerned that none of that is in the Bill. When CMEC is under pressure, the Bill will be driving its priorities. Would you agree that to get an all-round concept of child support that is financial—but more than just financial in terms of the distance parenting and so on—you would like to see something in the Bill about CMEC being responsible for ensuring that that type of advice is provided in an all-round sense, if not providing it itself?
Janet Allbeson: We are a bit torn really. That service is definitely needed, but the question is whether CMEC is the right body to provide it. In response to the December 2006 White Paper, the Secretary of State said that the information and guidance service would come out of the DWP budget and that he would have to fund the whole thing from his budget. That instantly limits what can be achieved. So there is a need for such a service, but we are not convinced that the right place to locate it is solely within the DWP’s budget. With child maintenance, the service that is needed requires a greater stretch of public funds, apart from the DWP. CMEC has to focus on getting the statutory system right.
So you would agree with the main critique of Professor Parkinson in Sydney that this will work only if it really follows through what is happening cross-departmentally, in terms of family policy, and supports the objectives that you were talking about earlier?
Janet Allbeson: Yes. One should not underestimate the task of getting a good, efficient statutory scheme going. It is an enormous, challenging task that has not been got right yet. We are asking CMEC to do that while running an information and guidance service and a cash compliance service somewhere in the middle. We are asking an awful lot of CMEC, but our priority is to get the statutory scheme right. Yes, information and guidance is definitely needed, as there is a real shortage, but let us be realistic about what the new body can do, and let us consider other ways of getting Government funding to provide a proper service for separating and separated couples. That is a bigger project than CMEC.
There is provision in the Bill for CMEC to be able to charge fees. What is your view on the principle of charging fees? Where do you think it is appropriate, if at all?
Janet Allbeson: I suppose that we have a pragmatic response in that the obvious place to levy them is against non-resident parents who fail to pay. It is hard enough getting them to pay, let alone pay fees. That is what interim maintenance payments were, essentially—a kind of penalty. In the past, fees were charged, but had to be stopped because the service was so appalling. The Minister spoke this morning about possibly levying fees against parents with care who want to use the statutory system when the non-resident parent says that he wants a voluntary arrangement.
All the research suggests that voluntary arrangements are much more popular with non-resident parents: the arrangements are more flexible, they can pay lower amounts and there is no mechanism to step in instantly and enforce the arrangements if they do not pay. Is it surprising that parents with care are not quite so happy about voluntary arrangements, because flexibility means that they do not get the money regularly, and reliable maintenance is quite important? Of course they want a decent amount to support their children, and ideally they want a firm hand, so that the non-resident parent knows that if he does not pay, someone will step in and make sure that he does.
We would be very reluctant to deny a parent with care the right to use the statutory system, because who decides? If she thinks that she needs it because she does not trust him, is CMEC going to tell her that she is wrong? Fees sound good in theory, but in practice we could end up having a whole new enforcement machinery simply to collect the fees, which could be a diversion.
One argument for charging fees to parents with care is that it would deter them from using it as a weapon against the non-resident parent. In your experience, is that large number of people? Is it something that should be considered?
Janet Allbeson: It shows a fundamental misunderstanding of the negotiations that go on around maintenance. It can be quite hard to get a non-resident parent to pay up, so you say, “Okay, if you won’t pay up, I am going to CMEC,” and put in the application. Once there is recognition that you are serious, you might get somewhere in getting the maintenance. Sir David Henshaw thought that that was misuse, or frivolous use, of CMEC, which underestimates the weaker bargaining power of the person with the children who is trying to negotiate an arrangement.
You mentioned that, in the old system, fee charging had to be abandoned because the process was so appalling. If CMEC could prove that it was able to provide an efficient service, do you think that there might then be a case for charging a fee?
Janet Allbeson: Conceivably there might be, if there was a humming, efficient machine that everyone was clamouring to use. You would have to means test it, which would be more bureaucracy. Could you charge people who were above tax credit level or perhaps getting just the family element? I do not know; it is hard to say. It is quite hard to imagine how it would work. It is a long way off.
The repeal of section 6 has been widely welcomed as part of the Bill, but what do you think will be the effect of the removal of the compulsion for those on benefit to go to the CSA or CMEC? Do you think that there is a danger that some parents with care who are on benefit will end up with no maintenance agreement at all?
Janet Allbeson: There is that risk. There is a choice, which means that you have the choice of not getting anything at all. You might take that choice because you want to be independent and stand on your own two feet and you decide that you can manage without. You might also do it for more worrying reasons, or there could be a clean-break agreement in which you make your own settlement and you keep the house. The worrying cases are those in which the parent with care might decide not to seek maintenance because she wants to keep the peace, or because she wants to safeguard the father’s relationship with the children but he has threatened to cut off all contact with them if she seeks it.
That is where the promotion of child maintenance in clause 4, which relates to CMEC’s role in campaigning on the importance of maintenance for children, is very important. Parents with care who are not getting maintenance need to be repeatedly told and retold that CMEC is there for them, that it will help them and make it as easy as possible, and that maintenance will make so much difference to their children. It needs to make the case for child maintenance, not through any particular arrangement, but by telling parents with care that it is important and by using all the outlets to which they might go, such as health visitors, the children’s information service, which deals with childcare, and Sure Start.
CMEC needs to make conversations about child maintenance part of the conversations that you have with separated parents. The same applies to non-resident parents. They should be asked, “You’re a father. Are you paying maintenance? If not, why not? Do you realise what a difference it makes to your children?” That promotional active role, along with the financial incentives to parents with care, will let them know that it is worth their while to seek maintenance.
Janet Allbeson: Nick rightly talked about that research. My take on the DWP’s latest attempt to get a figure—it really does not know—suggests that a third of parents with care who are on benefit would consider making their own arrangements. One has to be aware that they may decide to make their own arrangements, but this is a very long financial relationship that is going to go on for 15 or 16 years. All sorts of tensions can creep in, say if one partner re-partners, or if someone changes job or moves away. Someone may decide on the voluntary option but come back into the system later. It would be unwise to overestimate the number of people who will end up in voluntary relationships.
Janet Allbeson: There are lots of reasons why the previous systems failed. The assessment process was not right; it was too complex and too geared to minor changes of circumstances. Computers were a key factor in the failure on both occasions. I would be cautious about saying that it was because too many people wanted to use it.
Getting rid of section 6 of the 1991 Act works for CMEC for very pragmatic business reasons, in that two thirds of cases that come through the benefit channel never get to an assessment. From a business point of view, that is an enormous churn of resources for very little result. It makes sense to have an organisation that deals with people who want to deal with it. The job of CMEC is really to encourage people to use it or to make voluntary arrangements. The case for maintenance will need to be made.
Janet Allbeson: Research shows that the vast majority of lone parents by far want to work, and maintenance does make a difference to that. Research looking at a group of lone parents, a cohort, between 1991 and 2001, shows that receipt of maintenance—disregarding other things, such as education, home ownership or other factors—is a positive indicator of going into work. Getting maintenance actually assists people in getting into work. That is not surprising when you think about it, because the big hurdle for going to work for a lot of lone parents is insecurity. If maintenance is already flowing, that helps them begin to make decisions about putting together a package of part-time earnings, tax credits and maintenance, which can carry them over the hurdle into work and all the expenses of starting work. They are having to pay child care, of course. You only get a certain amount of help with child care—I think that it is 80 per cent. now; there is another 20 per cent. to pay. Child maintenance can really make work a viable proposition.
I shall put to you briefly what I put to Professor Wikeley earlier about widows, in relation to separated parents. Presumably, One Parent Families has the interests of both groups at heart. There is a £10 disregard on widowed parent’s allowance at the moment. We know that there will be changes in that area. Would you like to see the two move together so that there is equity between them?
Janet Allbeson: Widows and widowers are a group of single parents for whom national insurance makes provision. They get a non-means-tested contributory benefit based on their deceased partner’s contributions. One of the reasons that so many of them work is because they have access to that extra national insurance income, whereas lone parents on means-tested benefits get only £10. I should like to go away and think about it.
I do not want to tie you down to the details, because it is a technical area, but I wondered if you thought in principle that there should be some parity between single women who are single for different reasons, but who still have children to look after and bills to pay.
Some of them are time-limited, but it is probably inappropriate to go into further detail. Briefly, I have a final question on clause 40. It is the same one that I put to Professor Wikeley. The clause will prevent the Department from being able to recover money spent on benefits where a liable parent has not paid child maintenance. Do you have a view on its inclusion in the Bill?
Janet Allbeson: I think that it is a very interesting view for Professor Wikeley. It is a bit of an academic point of view. Once a decision is taken to abolish section 6, effectively, it will become a choice, for very pragmatic reasons. Obviously, one should do everything that one can to encourage parents to seek maintenance and to pay it.
Janet Allbeson: In itself? I am similar to Professor Wikeley. The way that the percentages are changing was designed, at the end of the day, not to change much of the amount being paid over. It is being done to try to use HMRC to get over the problem of identifying the income of NRPs. Whether it can do that is another matter, but we applaud the intention to work more closely with HMRC.
Janet Allbeson: Income support rates, particularly for single non-resident parents, are quite low—£59 or £60 a week. It is a lot of money. The principle is right—one is seeking to establish NRPs’ duty to contribute to their children—but the actual amount seems high. The problem at the moment, looking at assessments, is that 55 per cent. of NRPs are paying £5 or less. We are sceptical about that figure, to be honest. We think that there are a lot of people who have never been reassessed. Nevertheless, one must be realistic about how much money one can get from people who are very poor.
Janet Allbeson: There is a balance to be struck between the operational considerations—what is workable from the point of view of CMEC—and what is affordable from the points of view of the NRP and the parent with care. Looking at the Government’s response to the White Paper consultation, my reading is that operational considerations have determined the 25 per cent. amount. Issues about affordability have not really played a big part. It is about how many cases, pragmatically, CMEC thinks that it can reassess.
The figure needs to be kept under review because One Parent Families has no interest in a system where non-resident parents feel that they have a legitimate grievance about the amount. This system can work only if the public back it. We want non-resident parents to be able to afford their maintenance. We do not want them to become martyrs; that is not in anyone’s interests. It has to be a system that the public back as fair, so the 25 per cent. figure needs to be watched.
One also has to recognise that income changes are not the only changes of circumstance. Income changes are not the only things that bedevil tax credits. Other things change in family circumstances. Relationship breakdown is a time of enormous flux: people re-partner, there are new babies, teenage children move between households. All those changes cause reassessment so I would urge a lot of care to be taken in bottoming out the changes of circumstances with what is the quite volatile group of separated families.
One of the problems that we often come across as MPs is the situation where the non-resident parent is self-employed and there are arguments about what their real income is. The Bill proposes moving over to information received from the Revenue. Do you think that that will help with that problem or will it continue under the new scheme?
Janet Allbeson: The self-employed are a real problem. People have said that they are only 7 per cent. of cases and we have to devise a scheme for the majority. We are very unhappy with that because the self-employed are the group that cause the most problems to the agency and to tribunals. They cause the greatest problem in terms of the public profile of the agency because the employed non-resident parents have a real sense of grievance that they are the easy pickings and that there are all of these chaps laughing at them, who have managed to conceal the money or put it all into rental income that is not touched and they are getting away with it. That brings the whole system into disrepute.
If you tackle the self-employed, you are sending out a very clear message that evasion will not be tolerated. Gross income is quite problematic for self-employed people because if you have your own little company, you can give yourself the profit in a whole variety of ways: you can give yourself a small wage or dividends, you can have a partner in the business—perhaps your new wife—that you give some money to, you can take out a loan and pay yourself dividends through that. You can be quite creative in ways that may be perfectly legitimate for tax purposes, but which minimise your income for child maintenance purposes.