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Child Support (Miscellaneous and Consequential Amendments) Regulations 2009

My Lords, I am a member of the Merits Committee and have been so for approaching three years. This is a short instrument about a complex matter which has a long history and I am very grateful for the full explanation given by the Minister this afternoon. I would just like to suggest to him that it would have been better if most of that had been in the Explanatory Memorandum. It is surely the wrong way round to put forward a very short and rather sketchy memorandum—I fully accept that the Commission is a new body—and then to have the very full explanation in the House. It would be better if the full explanation were in the Explanatory Memorandum, which would, no doubt, shorten your Lordships’ proceedings. On February 10, and reported on February 12, the Merits Committee considered this instrument. If we look at it from the point of view of the Merits Committee, it is a paper chase. There are eight Acts of Parliament involved in this instrument and four existing sets of regulations, apart from the draft regulations in front of your Lordships this afternoon. There are two schemes, the older and the newer scheme, as the Minister told us, using different definitions but covering essentially the same issues. On top of all that, there is the new Commission, for which Regulations 2 and 4 are made, transferring the responsibility from the Secretary of State to the new Commission. The new Commission came into existence in November 2008 and it is a bit soon to expect it to be fully up and running—I think there are only two commissioners at the moment. Its website is, no doubt, going to become very informative. It is not tremendously informative at the moment. This all means that complex consideration needs to be given to this matter in a very short period by the Merits Committee and its staff. I wonder whether the Minister enjoys the complexity with which we are faced. Is it in the public interest that matters are so complicated? If not, what is to be done about it? I would be the first to say—I shall say it this afternoon—that the two advisers to the Merits Committee, Jane White and Paul Bristow, are, first, extremely skilled at their job and, secondly, incredibly diligent. However, they depend very strongly on the paperwork presented to them—in this case, by the commission—and particularly in the Explanatory Memorandum. In the provision of additional information and, indeed, in a telephone call that I have had with an official today, the commission has been extremely helpful. There is absolutely no question but that it has tried to fill in all the gaps that we thought we had found. However, I repeat that the Explanatory Memorandum, as presented, was sketchy and almost opaque. Subsequent to the Merits Committee meeting, I have given the matter further thought and carried out further research, and, other than quoting the committee’s conclusion, what follows is my personal view. My personal conclusion is that what was presented to the committee was the tip of an iceberg. I hope that I will be pardoned for putting it this way but when we drew this instrument to the special attention of the House, we just knew that it should be for special attention, although we did not quite know why. We said: "““The Committee particularly noted the first of these changes to the ‘diversion of income’ ground for a departure or variation, which was needed because a recent Tribunal Case””—" referred to by the Minister— "““concluded that a non-resident parent could take advantage of changes to pension contribution legislation to reduce or avoid his child maintenance liability. The Regulations aim to close that loophole””." Indeed, this afternoon the Minister gave us the date of 2006 as a change in the pension contribution conditions. However, none of that appears in the Explanatory Memorandum. I considered whether there was a loophole and, if there was, exactly what it was and how it would be closed. The regulations confer some sort of power to do something about pension contributions but that would appear to depend entirely on a judgment of what is reasonable as against a judgment of what is unreasonable. How will members of the public who are affected by the change in the circumstances be informed? Again, the Explanatory Memorandum simply says that a way of communicating with the public is being developed. I cannot remember which paragraph that appears in but I can quote it in terms. I suspect that the key to the Government’s thinking is in paragraph 7.8 of the Explanatory Memorandum. I paraphrase it because it is written in quite a derogatory way and I shall try to take out that loaded part of it. It says that the existing diversion of income provisions do not apply to high pension contributions. Again, I think that that point has been well covered by the Minister. Indeed, that is what the tribunal found in the case that has been quoted, but I believe that it is not the only case in which these matters have been considered. My point is that in the original policy it was never intended that the provisions should cover pension contributions, because that was in the days when contribution limits were between 17.5 and 40 per cent. However, under the old scheme only half of those contributions applied as a disregard, giving a maximum of 20 per cent, and under the new scheme a higher maximum of 40 per cent. It is interesting to note that, at the time that the new scheme came in—which was before 2006—the Secretary of State could not have been worried about these pension arrangements being challenged as unreasonable. It was the Government’s decision, in the two schemes, to make a departure a 50 per cent provision and to make a variation a 100 per cent provision. It was the Government’s decision at that time to improve the circumstances of people subject to maintenance orders in respect of their pension contributions. When did the Secretary of State start to challenge this pension arrangement as being unreasonable? Is the case that has been referred to the only time that he has been, as it were, pushed back, or have there been others? Surely it must have been when the pension contribution limits were changed—very surprisingly in my opinion—to up to 100 per cent of income for both personal pensions and salary sacrifices in 2006 that the problem arose. Of course, the maximum then moves from either 20 per cent under the old scheme, or 40 per cent under the new scheme, to 50 per cent under the old scheme and, potentially, 100 per cent under the new scheme. This is why we get draft Regulations 2 and 4, which attempt to capture the present pension regime within the scheme of reasonable and unreasonable, so that high—or ““extremely high”” as it says in the Explanatory Memorandum—contributions can be captured. However, my question is: will they be so captured? Will the commission be able to override the present law on departure and variation pension provisions? These draft regulations add a criterion, but do not revoke the present, quite clear, arrangements for the treatment of pension contributions. What, indeed, will happen if these matters go again to the courts, as they have in the past and undoubtedly will again? These are highly emotional and difficult situations. It is unlikely that people will agree easily to the commission’s definition of what is reasonable and what is unreasonable. I am pretty sure that that will be continuously challenged. There must be a better way. Before outlining that, I would be grateful for an assurance that this amending regulation is intended only to capture pension contributions, and that nothing else new is contemplated under the familiar heading of ““diversion of income””. If so, is there not a simple amending route, which would be to introduce a cap on the proportion of pension contributions that can be taken into account? Then, of course, these regulations could be revoked. Rough justice might indicate a cap of 40 per cent of income. It was, after all, an unintended consequence of un-joined-up government that led to the possibility of 100 per cent of income in some cases. It seems that there is a tremendous reason why we should introduce certainty, clarity and simplicity and not have a situation in which there is contention between the courts and the commission, the parents and the absent parent about what is reasonable and what is unreasonable. There is not, I submit, a very good way of solving this problem.