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Child Maintenance

With permission, Mr. Speaker, I should like to make a statement on the future of the child maintenance system. The Child Support Agency was set up to tackle a failing system of court-administered child maintenance. However, despite the best efforts of its staff, the CSA has never properly fulfilled its mission and its failings have been obvious and apparent for some time. That is why, earlier this year, I asked Sir David Henshaw to advise on a fundamental redesign of the child maintenance system. In July, we accepted the broad thrust of his recommendations for an entirely new approach. Today’s White Paper makes proposals in five key areas. First, we will remove the barriers that prevent parents from reaching private settlements. Secondly, we will create a simpler and more efficient system for assessing and processing child maintenance liability. Thirdly, we will replace the existing Child Support Agency with a new non-departmental public body—the child maintenance and enforcement commission. Fourthly, we will significantly strengthen the enforcement regime. Finally, we intend to do more to promote joint parental responsibilities. Let me take each of these measures in turn. The new system of child maintenance will promote parental responsibility and tackle child poverty. Too often, once parents break up, the current system works against both. The requirement for parents with care in receipt of benefits to use the CSA leads to the overturning of mutually agreed maintenance arrangements and undermines parental responsibility. Prioritising the recovery of benefit expenditure creates the incentive for many non-resident parents to refuse to pay maintenance because their payments go to the Government rather than to their children. Following legislation, from 2008 we will remove the requirement that all parents with care claiming benefit must use the child maintenance system. At the same time, where maintenance is being paid, we will extend the £10 per week benefit disregard to cases on the original scheme, thus helping around 55,000 children and 40,000 parents with care. Moreover, from 2010—when we expect a new system of assessment to be in place—we will introduce a significantly higher maintenance disregard for all benefit claimants, so that more children benefit from the maintenance that parents pay. I believe that those changes will help encourage more parents to reach their own maintenance agreements. I also believe that we can do much more to reduce the bureaucracy of the assessment process. We will take new powers to make fixed-term awards for child maintenance based on the latest tax year information, unless current income differs by at least 25 per cent. Those awards will last for a year. We will use gross income, rather than net. As a result, only three pieces of information will be required to determine maintenance liability in the new system: gross income, the number of qualifying children and the number of children living with the non-resident parent. The assessment process will no longer be frustrated by a non-resident parent refusing to give information on their earnings; we will have obtained it from Her Majesty’s Revenue and Customs. Changes to policy alone, however, will not, I believe, be enough. Sir David argued that the existing Child Support Agency was not equipped to administer the new system. He recommended a clean break with the past. We agree. A new non-departmental public body: the child maintenance and enforcement commission, or C-MEC, will therefore be established, and will be led by a child maintenance commissioner. C-MEC will have primary responsibility for all aspects of operational policy and delivery, overcoming one of the flaws in the existing division of responsibilities. The commission will be given extra powers to recover maintenance from those who repeatedly fail to pay. That will include the imposition of new curfews and surrendering of passports; piloting the mandatory withholding of wages as the first means of collecting maintenance; and exploring with the financial services sector new powers to collect maintenance from accounts held by financial institutions. We will remove the requirement to apply to the courts for a liability order before taking enforcement action, and we will take powers to recover debt from deceased estates. In future, I expect that C-MEC will charge the non-resident parent for its services and that we will publicise the names of non-resident parents who are successfully prosecuted or have a successful application made against them in court. About 7 per cent. of births in the United Kingdom are registered solely to the mother, yet in about half those cases mothers continue to have significant contact with the father following the birth. The law currently automatically assumes that married couples will be jointly registered, whereas unmarried parents both have to agree before a father’s name can appear on the birth certificate. As a result, the CSA has to close nearly a tenth of cases simply because the father cannot be successfully traced. The Government have concluded that more should be done to promote joint birth registration. Current legislation should be changed to require both parents’ names to be registered following the birth of their child, unless it would be unreasonable to do so. I think that is an area where it is right to consult in more detail and to legislate only once we are sure that robust safeguards can be put in place to protect the welfare of children and vulnerable mothers. Two further issues will, I know, be of particular interest to many Members on both sides of the House: first, the management of existing debt and, secondly, the transition to the new system. The CSA has accumulated about £3.5 billion-worth of debt—approximately half is owed to parents with care. In his report, Sir David suggested that the Government consider taking a power to write off that debt. I have decided against any general write-off power. I believe that parents have a right to expect that the Child Support Agency and its successor body will use every power available to recover that debt. There are some limited cases where we will need to deal with completely irrecoverable debt: for example, where the parent with care or the non-resident parent is dead, or where the parent with care has asked for cessation of recovery activity—often following a mutual reconciliation. In total, I do not expect those debts to exceed £50 million. I agree with Sir David’s suggestion that the CSA and its successor body should be able to negotiate offers to settle debt, including factoring debt, but I want to make it clear that where the debt is owed to the parent with care, any decision to factor debt or to accept less than the full amount will be taken only with their full agreement. I believe that we should revalue punitive interim maintenance assessments so that they more realistically reflect a parent’s actual liability. That will provide a stronger basis for the CSA and its successor body to chase down those debts and get money flowing to parents with care. Let me turn, finally, to the issue of transition. Unrealistic expectations about moving from one system to another have blighted previous attempts to reform child maintenance. In moving to a new system we will need to strike a balance between providing a clean break for the C-MEC organisation and ensuring that maintenance payments that are flowing can easily continue. Following legislation later this Session, we aim to establish C-MEC in 2008. It will prepare and procure for the new system of assessment and delivery to be in place within two years. Existing cases will either be able to make private arrangements or, if they prefer, move to the new system over a three-year period or take advantage of a simple cash transfer service. The cash transfer service will, where both parents agree, minimise disruption by continuing to move maintenance payments between parents based on their current maintenance award. The final details of the transition process will be worked through by C-MEC, but I am confident that the approach set out in the White Paper will effectively balance the interests of existing as well as new clients. The White Paper sets out a fundamental redesign of the system of child maintenance. I am confident that it provides a proper foundation for a much more effective and efficient system. It will realign policy in this area with the reality on the ground. It will help address child poverty much more directly. I commend these proposals to the House.