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Child Support (Miscellaneous and Consequential Amendments) Regulations 2009

My Lords, the Child Support Agency, as part of the Child Maintenance and Enforcement Commission, continues to have responsibility for administering applications for child maintenance under the existing statutory schemes. This package of regulations is intended to aid it in that task. Noble Lords will be aware that the commission came into being as a result of the Child Maintenance and Other Payments Act 2008. The 2008 Act provides for a new system to calculate maintenance payments, which will use gross income details supplied by HMRC, as well as tougher enforcement powers and other administrative changes. The majority of the provisions contained in the 2008 Act are, however, yet to be commenced. We must therefore ensure that the existing system operates as well as possible prior to the new powers coming into force. The regulations will add to the conditions in which child maintenance liability can be recalculated where non-resident parents take steps to divert their income and so reduce their maintenance payments; disregard certain credits paid to both the non-resident parent and the parent with care for the purpose of calculating the maintenance liability; and make consequential changes to legislation to bring it up to date with the equalisation of state pension age for men and women. The amendments to the diversion of income provisions within the variation and departure direction regulations became necessary following a recent Upper Tribunal decision. The judge, formerly known as the Child Support Commissioner, held that where the non-resident parent was diverting a significant amount of his income into a pension scheme, and in doing so was driving down the amount of net income that could be included to calculate the maintenance liability, the maintenance calculation could not be altered, as doing so would be outside the scope of the regulations as currently worded. For child maintenance applications which have effect from 3 March 2003, known as the current scheme, pension contributions are wholly disregarded from the calculation to establish the liability amount. That means that net weekly income is reduced by the amount of the contribution. For applications which take effect prior to 3 March 2003, which are known as the old scheme, half of all pension contributions are disregarded. A change to HMRC rules in April 2006 removed the cap on pension contributions so that up to 100 per cent of earnings may be contributed to a pension scheme without loss of tax privileges, subject to a lifetime cap. Of course we must encourage people to make provision for their retirement, and those changes to pension rules are an entirely reasonable way to achieve that, but a potential loophole in child support legislation has come about as a result of that and the Upper Tribunal’s decision. Although most non-resident parents pay a sensible proportion of net weekly income into a pension scheme, the commission is aware of a small number of cases where non-resident parents are making significant pension contributions and using other income not assessable for child maintenance to live on, such as a partner’s income. The child maintenance liability can be severely depressed as a result. However, where the non-resident parent is diverting high levels of income into a pension scheme or other form of otherwise allowable expense, it has always been our intention to allow the maintenance liability to be altered following an application from the parent with care. Regulations 2 and 4 therefore simply restore the original intention by amending the departure direction regulations for the old scheme and the variation regulations for the current scheme. I hope that noble Lords will agree that non-resident parents should not be able to make substantial pension payments at the expense of their children’s upbringing and that a sensible balance should be struck between paying child maintenance and saving for retirement. These regulations will help bring about that balance. Regulation 3(5) enables the Commission to disregard in-work credit, better-off-in-work credit and return to work credit for old-scheme maintenance applications, by making the necessary amendments to the Child Support (Maintenance Assessment and Special Cases) Regulations. It is already possible to disregard these credits for the current scheme by using the existing legislation, and amending regulations are not therefore needed in this respect. These credits are paid weekly for a maximum of 52 weeks and are intended to help people move into work for at least 16 hours a week and not return to benefits. They are not part of the tax credits system. These credits were disregarded for a range of different purposes, including national insurance, council tax benefit, housing benefit and tax credits. These credits are there to aid the transition from welfare to work, and it would not therefore be appropriate for the Commission to treat them as income. Doing so would, I believe, risk undermining the underlying principle that led to the creation of these payments. While both parents have a right to expect that they are assessed fairly for maintenance payments, in that all forms of relevant income are taken into account, treating these credit payments as income could lead some people to conclude that it is in their best financial interests to remain out of work and on benefits. If that were to happen, the Commission would not collect anything more than the minimum payment from non-resident parents and parents with care, whose income is taken into account in the old child support scheme, would be unable to improve their own financial situation, and that of their children, by finding work. If, on the other hand, they were able to find stable employment, those parents would be able to contribute much more to the maintenance of their children. The rest of Regulation 3 makes amendments consequential to the equalisation of state pension age. Under the Pensions Act 1995, equalisation of state pension age between men and women will be gradually phased in between 2010 and 2020. As a consequence of equalisation of state pension age, the disability premium in income support will in the future be payable up to the qualifying age for pension credit, which will increase in line with the state pension age for women from April 2010, whereas it is currently payable where the qualifying person is aged under 60. The regulations therefore refer to the non-resident being under 60 years of age. This needs to be updated so that it is in line with the increasing age of qualification for Pension Credit. I am satisfied that the statutory instrument before us is compatible with the European Convention on Human Rights and I commend these regulations to the House.