Clause 21

– in a Public Bill Committee at 10:00 am on 11 October 2007.

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Photo of Mark Harper Mark Harper Shadow Minister (Work and Pensions) 10:00, 11 October 2007

I beg to move amendment No. 101, in clause 21, page 9, line 15, after ‘current’, insert ‘or deposit’.

Photo of David Taylor David Taylor Labour, North West Leicestershire

With this it will be convenient to take amendment No. 102, in clause 21, page 9, line 38, after ‘current’, insert ‘or deposit’.

Photo of Mark Harper Mark Harper Shadow Minister (Work and Pensions)

These amendments were tabled to test the breadth of the powers that the Government wish to give the commission to go after a range of accounts that people may have. I suspect that “current account” was mentioned to ensure that the Bill refers to the type of account that it is possible to set up regular payments against and make deductions from. However, in the banking world the distinction between a current account and a deposit account is much less severe than it used to be, in the sense that people can get hold of electronic payments. I am testing whether the current wording leaves an opportunity for somebody effectively to transfer all their money into a deposit account to keep it away from CMEC’s ability to go after it with deductions and regular payments. With the onset of electronic banking, an individual will not suffer any penalty from only operating a deposit account, because with electronic banking they can move their money around flexibly.

Although the amendment may not be the right way to proceed, I want to explore the extent to which the Government have considered whether there needs to be any extra flexibility in the powers available to CMEC to ensure that people cannot, by using crafty financial management, avoid its getting its hands on their money.

Photo of Tim Boswell Tim Boswell Conservative, Daventry

Given that we are discussing financial guarantees, does nearly the same consideration apply where people have multiple current accounts or different types of account? CMEC may not be able to capture such accounts within the deduction from earnings order if it cannot grasp the whole of somebody’s income or resources?

Photo of Mark Harper Mark Harper Shadow Minister (Work and Pensions)

I thank my hon. Friend for that point, which backs up the case that I am making. I will be interested to hear the Minister’s comments, just to ensure that, as my hon. Friend said in previous debates, we prevent opportunities arising for people who are trying to avoid meeting their responsibilities for their children to use crafty financial management, thereby putting them outside the grasp of the commission.

I am not confident that the clause gives the commission sufficient powers. The drafting may need to be a little wider to give the commission powers to prevent people from escaping. I would be grateful if the Minister were to comment on the extent to which Ministers have thought about that and whether there is any scope for the Bill to be strengthened in that area.

Photo of Danny Alexander Danny Alexander Shadow Secretary of State for Work and Pensions

I will not detain the Committee for long.

The amendment raises some useful questions. In proposed new section 32A(1), paragraph (b) specifies that and paragraph (c) states that

There is quite a range of accounts between those two. Although I understand the obvious reasons for excluding trade or business accounts, perhaps the Minister will explain the definition of a current account for these purposes and, if appropriate, seek to widen it or accept the amendment to allow, as the hon. Gentleman has said, a wider range of accounts to be included for those purposes, so that what he called “crafty financial management” cannot be used to shuffle money between accounts to avoid it looking like someone has an account that could be subject to the deduction orders.

Photo of Anne McGuire Anne McGuire The Parliamentary Under-Secretary of State for Work and Pensions

I will give the hon. Member for Forest of Dean a little, but not a total, taste of victory here, because he has made a valid point, which was confirmed by the hon. Member for Inverness, Nairn, Badenoch and Strathspey. I know that the issue causes similar concerns among my hon. Friends.

The hon. Member for Forest of Dean has identified the fact that there is now an array of accounts available to people. I remember when one was allowed to open only a deposit account in a bank, because there was no such thing as a current account. I have given my age away—you may remember those times, too, Mr. Taylor. We recognise that it may be helpful to revisit the clause and to give further consideration to the amendment. We want the commission to have the power to impose deductions to maximise the amount of maintenance that it can recover. I think that we have all recognised throughout the debates in Committee and in conversations elsewhere that there are some deliberately evasive non-resident parents who will manoeuvre things to avoid paying what they should be paying. However, given the seriousness of the power, we want to reconsider it. Given our commitment to revisit the clause, to consult the relevant parties and to come back at a future time, I ask the hon. Member for Forest of Dean to withdraw the amendment.

Photo of Mark Harper Mark Harper Shadow Minister (Work and Pensions)

Surprised as I am that I have had just a soupçon of victory there, I will try not to get carried away. I am very grateful for the Minister’s comments and her commitment to consult. The amendment was intended to provoke another look at the clause. However, just inserting the word “deposit” does not add the full breadth of what is necessary. Given the Minister’s commitment to consult interested parties and to return at a later stage, perhaps on Report, with a Government amendment, I beg to ask leave to withdraw my amendment.

Amendment, by leave, withdrawn.

Photo of Mark Harper Mark Harper Shadow Minister (Work and Pensions)

I beg to move amendment No. 103, in clause 21, page 11, line 29, leave out ‘may’ and insert ‘shall’.

Photo of David Taylor David Taylor Labour, North West Leicestershire

With this it will be convenient to discuss the following amendments: No. 122, in clause 21, page 11, leave out line 32 and insert—

‘(a) if he is aggrieved by the making of an order under section 32A or by the terms of such an order’.

No. 104, in clause 22, page 16, line 10, after ‘section’, insert ‘32D or’.

No. 105, in clause 22, page 16, line 14, leave out ‘may’ and insert ‘shall’.

Photo of Mark Harper Mark Harper Shadow Minister (Work and Pensions)

This is a small change in language but with a very important effect. The Bill states:

I want to strengthen that so that the Secretary of State has to—rather than “may”—make regulations to provide that appeal method. Given that we have made provision for an appeal, it is important that those regulations are made and that we are not left with a situation in which the Secretary of State has not made those regulations and someone is unable to exercise their right to an appeal. That is all I need to say, and I want to hear the Government’s view.

Photo of Danny Alexander Danny Alexander Shadow Secretary of State for Work and Pensions 10:15, 11 October 2007

I want to discuss amendment No. 122, which makes a slightly different point from the one that the hon. Gentleman has made. This is a probing amendment to try to understand the Government’s thinking around a provision that appeared in section 32(5) of the Child Support Act 1991, which provided that regulations may include a provision that

The Minister can confirm that the Secretary of State has never taken advantage of the full extent of these powers. The current regulations only provide for an appeal against the deductions of earnings order if the terms of the order are defective or the payment in question does not constitute earnings. In addition, there is no right of appeal in respect of the amount to be deducted each week for historic arrears. There are a number of issues that I hope the Minister will flesh out in this short debate.

The amendment would allow regulations to be incorporated, as envisaged under previous legislation, to allow an expansion of appeal rights for non-resident parents. In essence, the point that has been made to me is that the current regulations make an appeal very hard, and in some cases almost impossible, to carry through.

Photo of Tim Boswell Tim Boswell Conservative, Daventry

Does the hon. Gentleman agree that a typical case—I have encountered this on a number of occasions—involves somebody who is in the “can’t pay” rather than the “won’t pay” category, and who has fluctuating earnings that are highly dependent on overtime or seasonal earnings, finds that the order does not fit their income stream, even if it were to average out over a year?

Photo of Danny Alexander Danny Alexander Shadow Secretary of State for Work and Pensions

I agree with that intervention. In my experience, similar circumstances apply when somebody is in and out of work—moving from benefit into work and back again. That often occurs in places where seasonal work proliferates, such as my constituency.

In addition, the Bill includes a move to gross income for the purposes of calculations. Present regulations state that up to 40 per cent. of a person’s net income can be taken, and no percentage figure has been given on the limit on what can be deducted when the move to gross income takes place. Clearly, that may also have an impact on appeals. Quite rightly, the Government are making efforts to recover the majority of the existing arrears, and I applaud those efforts. While that is the correct approach, there is a need for safeguards for the non-resident parent in terms of appeal, because little detail is known about the percentage of a person’s income that may be deducted in payments to meet arrears.

As it would carry forward suggested powers made under previous legislation, the amendment might allow a broader range of circumstances, such as those outlined by the hon. Member for Daventry, to be taken into account in making an appeal. It would ensure that while the system continues, as the Minister has rightly stressed, to get the money to children as quickly as possible, there is fairness in the system, which has been stressed throughout our deliberations. The system must be seen to be fair to those non-resident parents who are seeking to make payments.

Photo of Anne McGuire Anne McGuire The Parliamentary Under-Secretary of State for Work and Pensions

I thank the hon. Gentlemen for tabling this group of amendments. First, I would like to address amendments Nos. 103 and 105, which would change the nature of the regulation-making powers from permissive to mandatory. Both amendments would force the Secretary of State to make regulations providing for appeals.

I hope that the Committee will accept that there is no question that we would not provide for a right of appeal, but I appreciate the point made by the hon. Member for Forest of Dean that as the clause says “may” instead of “shall”, the intention could be open to question. I will give the hon. Gentleman a second little taste of victory today—the issue has also been raised by Government Back Benchers. We certainly intend that the regulations will provide a right of appeal, and we Column Number 326 want to consider the two amendments further in the light of what may or shall be a misinterpretation, which could undermine our intention for the Bill. I hope that the hon. Gentleman will withdraw his amendment, given our commitment to consider whether there is sufficient clarity in the Bill.

Amendment No. 104 would give any person affected by the interim order stage of a lump sum deduction a right to appeal against the making of that interim order, which is a point raised by the hon. Member for Inverness, Nairn, Badenoch and Strathspey. He is right to highlight that in our eagerness over the policy intention of getting money quickly to the parent with care and the child, we must be clear that there is fairness in the system and that the system is robust. I hope that I can allay his fears and those of other hon. Members by explaining that safeguards are already in place on that provision.

An interim order acts to freeze an amount of funds before the application of the final order. That period of freezing allows the non-resident parent to make representations to the commission regarding whether all or part of the funds should be deducted under a final order. If a final order is made without considering those representations, the non-resident parent has the right to appeal to a magistrates court or, in Scotland, to the sheriff. In addition, during the freezing period the non-resident parent will have the ability to apply to the commission for funds to be released in certain circumstances. That will be provided for in regulations, and should the commission withhold consent for the release, the non-resident parent may again appeal.

Finally, amendment No. 122 raises an interesting point for discussion, but I respectfully suggest that it does not change the intent of the clause. The clause allows for regulations, which in turn will allow any party affected to appeal against the making of a current account deduction order. That includes the right to appeal against the terms of the order. Therefore, I hope that I can assure hon. Members that there are sufficient appeal rights in relation to current account deduction orders. As in earlier discussions, “current account” is the generic term that I will use. We feel that those appeal rights are fully provided for in the clause. I further reassure the hon. Member for Inverness, Nairn, Badenoch and Strathspey that there is a maximum amount that may be deducted by deduction orders, and the situation would be the same with a maximum deduction amount based on an assessed order, where arrears and a lump sum are to be taken into account.

In closing, it is also worth noting that there are separate appeal rights in respect of the maintenance calculation and that deduction orders will be used only when a non-resident parent has failed to pay. Furthermore, given that the commission cannot impose the final order stage of a lump sum deduction without first considering the representations that have been made, the safety nets to ensure that there is fairness in the system are there at all points of the process. Therefore, I ask the hon. Member for Forest of Dean to withdraw the amendment with the reassurance that we will consider the points that he has made.

Amendment, by leave, withdrawn.

Clause 21 ordered to stand part of the Bill.

It being twenty-five minutes past Ten o’clock, The Chairman adjourned the Committee without Question put, pursuant to the Standing Order.

Adjourned till this day at half-past One o’clock.