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Child Maintenance and Other Payments Bill

moved Amendment No. 88: 88: Schedule 4, page 65, line 21, at end insert— ““(1A) Provide for a calculation of income to include any interest, dividend or other income derived from capital.”” The noble Lord said: It has been a somewhat rare occurrence during the almost three days in Committee that the minds of the noble Lord, Lord Kirkwood, and myself have actually chimed together. However, in this group of amendments that is the case. His Amendment No. 92 is almost identical to my Amendment No. 88. We both point out that there is a problem in the proposals, as they insist that any calculation must have factored into it interest dividend or any other income derived from capital. As we all know, income is treated differently under what are known as the old scheme cases in the Child Support Act 1991 and the new scheme cases, which happened on or after 3 March 2003. Under the original Act, dividend income was taken into account by means of the Child Support (Maintenance Assessments and Special Cases) Regulations, SI 1992/1815, in paragraph 13 of Schedule 1. In particular, in the part on other income, it included: "““Any interest, dividend or other income derived from capital””." As such, dividend income was caught. There was a failure when the new scheme was introduced under the Child Support, Pensions and Social Security Act 2000 to include a wider income clause. I do not remember being involved in discussion on that Bill, but I may have been. My noble friend Lord Higgins was in charge in those days, and I may have been asleep—it is always possible. The scheme defines net income specifically as earnings from employment, income from self-employment tax credit and other income. Other income is simply restricted to any periodic payment of pension or other benefit under an occupational or personal pension scheme or a retirement annuity contract, and so on. But there is no reference to, "““interest, dividend or other income derived from capital””," as provided for in the original scheme. Thus, such income is not automatically taken into account. This loophole has some unpleasant implications for child maintenance. Parents can use it to avoid paying what is due from them. Dividend income can be a considerable source of income for a self-employed, non-resident parent and it has often been used to avoid child maintenance responsibilities. To incorporate dividend income under the 2003 and proposed scheme would require an application from the parent with care for a variation based on diversion of income, under the Child Support (Variations) Regulations, SI 2001/156. As we all know, a number of technical hurdles have to be leapt, which means that an application for variation cannot by any means be guaranteed—or rather, the success of the application cannot be guaranteed. Additionally, the onus to apply is on the parent with care, who may be unaware of any dividend income received by the non-resident parent. Indeed, the Minister appears adamant that the parent with care should not be so aware, from remarks that he made earlier this afternoon. Furthermore, the parent with care is likely to be unaware that such income is not automatically taken into account. If that parent with care becomes aware of the position only at a later date and at that time makes an application for a variation, it is from the date of application for the variation only that such dividend income can be taken into account. I hope that I have got that right. As I understand it, the award variation cannot be backdated to before the application was sent in. Variation applications are typically referred to an appeals tribunal, which takes time and resources that would be reduced if the definition of income was expanded in accordance with the original Act. Therefore, I look forward to hearing how the Minister can reasonably assure me that the exclusion of such variables can still mean that calculations for the amount of child maintenance owed is true or fair. I doubt that he will achieve that objective. Having spoken for longer than I intended, especially with the presence here of the Chief Whip, I shall not comment on the Liberal Democrat amendments. They are quite capable of doing that for themselves. I beg to move.