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Child Maintenance and Other Payments Bill

My Lords, the amendment would remove Clause 40 from the Bill and thereby prevent the Child Maintenance and Enforcement Commission disclosing information about non-resident parents to credit reference agencies. Clause 40 has not yet been the subject of debate within your Lordships’ House or in the other place. To clarify, we intend that the commission should have the ability to disclose information about non-resident parents to credit reference agencies for the purpose of linking payments of child maintenance with ability to obtain credit. Where ability to obtain credit is affected—either favourably or adversely—this may result in a tangible impact on the non-resident parent’s lifestyle and thereby create a powerful incentive to make child maintenance payments. We intend that the information will be shared with credit reference agencies by way of electronic data transfer. Any sharing of data will, of course, comply with the Data Protection Act 1998 and Cabinet Office guidelines, in particular the Manual of Protective Security. Disclosure may take place either where the non-resident parent gives his or her consent—presumably where it would have a favourable impact on the credit reference—or where a liability order is in force. Financial services companies considering applications for credit or other services will, after carrying out a credit check with a credit reference agency, have the opportunity to take the maintenance liability into account. In January, we published an evaluation which explored the value of child support information in predicting credit behaviour. The indications are that making child maintenance payment information available to financial services companies that are assessing a person’s financial standing would mean that compliance with a child maintenance liability could lead to an improved overall credit rating. Conversely, non-compliance could have a negative impact on credit worthiness; so it should. Further research will be carried out prior to this provision being implemented. Subject to the results of that further research and consultation, disclosure of information about non-resident parents to credit reference agencies will be a significant addition to the commission’s compliance and enforcement tools. It will provide non-resident parents with a real incentive to meet their maintenance liabilities. I acknowledge that the disclosure of information held by the public sector to outside bodies is a sensitive issue, and individuals have a right to expect that their information is processed fairly and accurately. I firmly believe that disclosure of information about non-resident parents to credit reference agencies is justified in this context. The noble Lord, Lord Kirkwood, asked whether, where the liability order is imposed, details about non-resident parents will be disclosed to credit reference agencies automatically. The answer is no. The commission would have to consider whether in any individual case the sharing of information is justified. In part, that goes to address the point made by the noble Baroness that in any case where the disclosure could not be so justified, the commission, as a public authority, would be under an obligation to exercise its discretion so as not to share the information. The noble Baroness, Lady Verma, asked about people being denied access to mainstream credit as a result of the policy and asked whether that would not effectively add to social exclusion. Payment of child maintenance is both a legal and moral obligation and the amount payable by each non-resident parent is based on his or her income. Individuals are responsible for managing their own finances and should ensure that they take payments of child maintenance into account when considering their day to day living expenses and any subsequent application for credit. The key point is that in securing child maintenance payments from the non-resident parent, the commission is guarding against future social exclusion by increasing the income of vulnerable children. Under current arrangements, where a liability order is in place, information is registered with Registry Trust, which is held electronically. The problem is that, as a practical matter, that has not been helpful to the credit reference agencies in helping to assess individuals’ credit ratings, because it does not give sufficient information. That there has been something disclosed in some public way would not in itself be new when there is a liability order in place. As I said, it would only otherwise be disclosed if there was the consent of the non-resident parent to disclose it. I hope that has allayed the fears. We need to proceed cautiously with this and further research needs to be undertaken. We see it as quite a powerful additional tool in the armoury of enforcement that the commission will need.