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Child Maintenance and Other Payments Bill

moved Amendment No. 51: 51: Schedule 7, page 76, line 18, at end insert— ““(1A) In section 4(10)(aa) (child support maintenance), for ““one year”” substitute ““four years””.”” The noble Lord said: My Lords, it is very rare for a member of the Opposition to move an amendment to a schedule that is solely concerned with minor and consequential amendments. At first blush, it would seem that this is a technical amendment. However, it seeks to make a very important point. It replaces the phrase ““one year”” with ““four years”” in cases where a court order for maintenance and financial settlement following a divorce may be overturned by CMEC. Its purpose is to create consistency between the objectives of the commission and its likely operation in the light of the experience that we have had of the CSA. I will summarise the background to the amendment. CMEC’s main objective will be to maximise the number of effective maintenance arrangements for children of parents who live apart. Subsidiary objectives include encouraging parents to make and keep voluntary arrangements for the support of their children. Perhaps it would be useful to point out that this subsidiary objective is a change from the original objective, which was to incorporate, stage by stage, all financial arrangements within the auspices of the Child Support Agency. This necessitates taking careful stock of the structures of the original Act. I contend that such retention from Section 4(10)(aa) of the Child Support Act 1991, in its current form, will undermine these objectives. The amendment seeks to close a loophole that is used by those who seek to reduce maintenance payments to children. Currently, parents may agree financial arrangements for children and have them made by court order. However, that obligation will end 14 months later if either parent wishes to take advantage of the ““one-year rule”” by making an application to the Child Support Agency. The solicitors’ association group Resolution relayed a story that neatly summed up the disadvantage of what we might call, for convenience, ““the 12-month rule””. One of Resolution’s lawyers recently acted on behalf of a wife. She was in part-time employment with a local bank. There were two young children. The husband ran a popular veterinary surgery in the local area. The parties had a good standard of living during their marriage. The husband met someone else and the marriage came to an end. The wife and husband negotiated a good settlement, largely between themselves, but also with assistance from legal representatives. One of the stumbling blocks was maintenance. The husband reinvested a lot of the profits back into the company, but also recognised that the wife needed money for the children. It was therefore agreed that he would pay a larger amount of child maintenance. They did the sums, using the 20 per cent net income figure, minus deductions for overnight stays, and the result was to agree a significantly higher figure than this. The husband also agreed to contribute to childcare costs. Had Resolution gone through the CSA or used its formula, the wife would not have been able to continue living where she was. She was made aware by Resolution lawyers that the husband could change his mind after 12 months, but she was still content. However, as predicted, after 12 months the husband is no longer sticking to the agreement. The wife has now met someone else and the husband fails to see why he should contribute to the household pot. The wife does not want to go through the Child Support Agency, having heard the horror stories. She therefore accepts a reduced amount that is causing her what was put to me as ““no end of financial difficulties””. This is the loophole of child maintenance arrangements that is exploited by paying parents who apply to terminate higher court awards and have them replaced with lower agency calculations. This is what I would like to put an end to through my amendment. Generally, agency decision-making proceeds slowly, particularly in complex cases, and there is likely to be a delay of many months, during which there is no obligation to pay at all, resulting in a hiatus of payments for the child. As such, the current system permits the unscrupulous to settle their court case on one level of obligation, knowing that after one year they can endeavour to surprise the other parent by a reduction in payment. That is patently contrary to the interests of the child and is at odds with government aspirations to reduce child poverty. The new system should seek to stop such behaviour and create safer, longer-term arrangements for the support of children. The current rules prevent parents making reliable settlements of other claims between themselves. When parents divorce, they may divide pensions, assets, contents of the home, maybe even the home itself, and they may make decisions about the occupation of the home or spousal, rather than child, maintenance. They do so usually by balancing ability to pay and need. To be able to do that, they must predict what award will be made by the CSA or, in due course, CMEC. Unfair settlements can result where one side opts to have a second bite of the cherry by relitigating support for the child through exploiting the one-year rule. Parents may reach agreement as to the level of payments that should be made. However, most parents will still want a binding obligation to pay. That can be offered by obtaining a confirmatory court order by agreement. Retention of the one-year rule undermines Parliament’s objective for the new commission by making that arrangement vulnerable to termination after 12 months. Merely sanctioning compliance with the threat of an award by CMEC of an uncertain amount is inadequate. Further, it will increase the demands made upon CMEC, thus undermining the meeting of its objective of encouraging parents to reach their own agreements without recourse to the commission. My amendment recognises that circumstances change. Many families find that after four years it is time to reconsider whether the level of maintenance is appropriate. Families may then want to take advantage of the CMEC scheme if they are not otherwise able to reach agreement. My amendment has other significant benefits that I doubt the Minister can refute. By abolishing the 12-month rule, families are enabled to retain greater control of how they address their financial issues. That will reduce conflict on financial questions; conflict is the feature that is most likely to bring damage to children experiencing the separation of their parents. Another consequence is that the amendment will protect mediation agreements that otherwise risk being undermined by the CMEC jurisdiction. Lastly, the amendment will avoid the potential ping-pong of cases between the CSA and the court. Where the CSA assessment is followed by a court order, there is a risk that the CSA will return to request a review, following manipulation or a change in the formula’s variables. Such a change will either undermine the intention of the court order or lead to a variation of the spousal maintenance order. I beg to move.