draft Child Support (Deduction Orders and Fees) (Amendment and modification) Regulations 2016
(8 years, 2 months ago)
General CommitteesRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Parliamentary Under-Secretary of State for Work and Pensions (Mr Shailesh Vara)
I beg to move,
That the Committee has considered the draft Child Support (Deduction Orders and Fees) (Amendment and Modification) Regulations 2016.
It is a pleasure to serve under your chairmanship this morning, Ms Ryan.
The draft regulations were laid before both Houses on 8 February this year. They enable the Department to waive collection and enforcement fees on the 2012 child maintenance scheme for a specific group of cases for a limited period of time. That is to allow non-resident parents with a poor history of meeting their child maintenance obligations the chance to demonstrate a change in behaviour. Some minor technical amendments are made to enforce the orders.
A comprehensive reform of the child maintenance system began in 2012 with three express aims: to incentivise parents to collaborate in the best interests of their children; to move away from the idea that applying to a statutory scheme should be the default option for separated parents; and to offer an improved statutory scheme. Alongside that, an ongoing programme to close all existing Child Support Agency cases is giving parents a fresh chance to consider what arrangement for providing financial support for their children best suits their circumstances.
When approaching case closure, we are taking careful steps to minimise the risk of child maintenance payments being disrupted, in particular with those cases in which money is only flowing as a result of enforcement being undertaken on the CSA case, addressing key concerns raised at consultation. We will close cases in which money is flowing as a result of enforcement action last, and we will introduce a new positive test of compliant behaviour for such non-resident parents, which is to be known as a compliance opportunity.
The compliance opportunity will last for six months, provided the non-resident parent pays maintenance in full and on time. During that period, the non-resident parent will be required to pay half the maintenance liability via the collect and pay service through a voluntary method of payment. Where case circumstances allow, an enforced method of payment will be put in place to collect the rest of the liability. That payment safeguard is intended to minimise the risk of payment disruption for the parent with care during the compliance opportunity.
The non-resident parent will be expected to make all payments on time and in full, and if they miss one payment they will fail. Only in exceptional circumstances, when the non-resident parent is not at fault, will an exception be made. If all payments are made, the parent will pass. The outcome of the compliance opportunity will inform a decision on whether the parent’s 2012 scheme case should be a voluntary, direct pay arrangement or a collect and pay arrangement in which the Child Maintenance Service manages collections and charges apply.
Following consultation with stakeholders, we now propose to offer the compliance opportunity in the first six months of the new 2012 scheme case, rather than the final six months of the CSA case. That avoids unnecessary disruption to clients who do not wish to apply to the new scheme, and it can be delivered at a lower overall cost to the public purse.
We will still use enforced methods of payment as a payment safeguard for the duration of the compliance opportunity, when case circumstances allow. Ordinarily, that would attract collection and enforcement fees, so introducing a waiver for those clients during the compliance opportunity will ensure that they are not required to pay until we know it is absolutely necessary.
The draft regulations will also make minor technical amendments to the rules governing regular deduction orders and lump sum deduction orders. I commend the statutory instrument to the Committee.
Debbie Abrahams (Oldham East and Saddleworth) (Lab)
It is nice to see you in the Chair, Ms Ryan.
I thank the Minister for his opening remarks. As he said, the draft regulations propose two changes to the 2012 child maintenance scheme, administered by the Child Maintenance Service: first, to allow collection and enforcement fees to be waived for six months for certain groups transferring to the 2012 scheme; and, secondly, technical changes to the regulation deduction orders and lump sum deduction orders to
“increase operational efficiency by allowing the collection of fees in certain circumstances not already covered by existing regulations”,
as well as enabling arrears accruing in earlier child maintenance schemes to be collected. However, the Government need to address a number of issues relating to the changes, and I would be grateful for the Minister’s response to the following questions.
Parents on the three previous child maintenance schemes are only being invited by the Government to apply to the 2012 scheme; transfer is not automatic. Will the Minister explain why it is not automatic and the administrative implications? I understand what he has said about people not wishing to apply, but I think there are assumptions that have not been fully explored.
What is the progress in transfer to the new scheme for the different segment groups and when is the transition of all live CSA cases expected to be completed? Will the Minister explain why, from the quarter of a million invitations to CSA cases to transfer to the child maintenance service, only 28,800 have been transferred to date?
Whereas there are no collection fees under the legacy schemes, that is not the case with the transfer to the 2012 scheme. In particular, can the Minister explain the Government’s thinking in relation to non-resident parents currently in segment 5—those who are subject to some CSA enforcement action as a result of non-payment of child maintenance? As I understand it, non-resident parents who have in the past not complied will be given a six-month grace period under which they will be able to demonstrate that they will fulfil their obligations by providing the necessary child support for their child or children. That will determine whether they can move on to the direct pay system or the collect and pay system via the Child Maintenance Service, with the associated charges.
For non-resident parents who demonstrate that they have complied during the six-month period, will the Minister clarify what happens to the arrears owed in child maintenance from the legacy schemes? I understand that a system of arrears cleansing is currently under way to ensure that a precise figure of what the non-resident parent has failed to pay in child support can be reached, but why is that taking so long? When will it be completed and why was that not done at the outset, so that non-resident parents’ willingness to pay could be tested for both the new and old child support schemes? Will the agreed arrears be collected by the same enforcement method or, having been found compliant with the new scheme, will the parent be able to transfer to direct pay or collect and pay? What assessment has been undertaken of the likely non-compliance in arrears repayment for the different scenarios, and what does that mean for delays in child support to children?
I understand from Gingerbread that an estimated £700 million in arrears is owed to children. Will the Minister explain why some parents with care are getting letters saying,
“Some clients in a similar position to you tell us that they do not want their child maintenance to be managed by the new organisation and wish to make a fresh start by writing off their arrears”?
I am concerned about that and would appreciate the Minister’s response. It seems to be a pressure in terms of writing off debt.
On deduction from earnings orders, can the Minister explain what enforcement methods will be used during the compliance opportunity for the bit that is being enforced alongside the voluntary partial payments? The Minister in the other place mentioned using DEOs, but in some cases, such as self-employed non-resident parents, a DEO is not appropriate. What other tools will be used for the enforcement part of that payment if a DEO is not appropriate? For example, will deduction orders or freezing orders, or setting aside of disposition orders, be available during the compliance period? Finally, as the Minister in the other place was unable to answer this question—and a number of others, I have to say—I would be grateful if this Minister could explain what powers the second regulation will give the Government that they do not have now and in what circumstances they envisage using them? Will he confirm that all the cases covered by the regulations will still have statutory maintenance arrangements, not voluntary or family-based arrangements?
It is absolutely right that parents who are separated or divorced fulfil their obligations to their children and provide financial support, as well as other support. As the noble Baroness Sherlock said in the other place:
“It is the responsibility of the Government to demonstrate that, in their desire to save money running a child maintenance service, they have not reduced the incentive on non-resident parents to take responsibility for their children, and reduce the incomes of their children as a consequence.”—[Official Report, House of Lords, 14 March 2016; Vol. 769, c. 216.]
Mr Vara
I thank the hon. Lady for that huge series of questions. I will try to address as many as I can. She raised several points, one of which was to ask why the transfer is not automatic for all cases. If the cases were transitioned into the 2012 scheme automatically without requiring a new application, it would lead to excessive complexity and confusion and undermine the Government’s fundamental commitment to offering a fresh choice to all parents regarding their child maintenance arrangements.
The hon. Lady asked when the transfer can be completed. We do not publish information on the timetable for individual segments, but I can assure her that we are on course to have ended the liabilities for all segments by 31 December 2017.
The hon. Lady asked how long the arrears cleansing process takes. It can take up to six months from the point at which CSA liability ends. In most cases the process takes less than six months, but the time can vary based on the complexity of the case. As for how CSA arrears cases are dealt with in the context of a compliance opportunity, if CSA arrears are transitioned to the 2012 scheme during the compliance opportunity, they will be included in the payment schedule. Failure to comply with the schedule will mean that the non-resident parent fails the compliance opportunity.
The hon. Lady asked whether the transitions arrears in the 2012 scheme will be dealt with in the same enforced way as they were in the CSA. If the non-resident parent complies with the schedule, the historical arrears will be recovered, so nothing will be gained by enforcing collection. If the non-resident parent does not comply with any element of the schedule, that will be taken as evidence that they are unlikely to pay and action will be taken to enforce payment of the arrears and the ongoing liability.
The hon. Lady asked whether the letter asking parents whether they want to write off their debt is to be sent to all parents with care. The answer is yes. She also discussed regulation 2. It makes minor consequential amendments to powers we already have to deduct fees from a person’s bank account, alongside maintenance by regular and lump-sum deduction orders. Regular deduction orders may also be varied to include legacy scheme arrears that have been transitioned to the 2012 scheme. The measures are tidying-up provisions to ensure that the legislation in this area is consistent. There is no change to the policy as a result. In a nutshell, we are introducing new powers that make minor consequential amendments to make the process easier.
As for what would happen in cases in which we are unable to use a DEO as a payment safeguard, the parent would be required to pay 100% of their liability by an enforced method of payment. When a payment is missed, swift action will be taken to enforce the resulting arrears.
The hon. Lady asked about statutory maintenance arrangements. All cases covered by the regulations will be managed in the statutory scheme. She asked several questions and I have given several answers. I hope that she is satisfied with them and commend the regulations to the Committee.
Question put and agreed to.
Draft Companies (Address of Registered Office) Regulations 2016
Draft Registrar of Companies and Applications for Striking Off (Amendment) Regulations 2016
(8 years, 2 months ago)
General CommitteesRead Full debate Read Hansard Text
The Minister for Small Business, Industry and Enterprise (Anna Soubry)
I beg to move,
That the Committee has considered the draft Companies (Address of Registered Office) Regulations 2016.
The Chair
With this it will be convenient to consider the draft Registrar of Companies and Applications for Striking Off (Amendment) Regulations 2016.
Anna Soubry
It is a pleasure to serve under your chairmanship, Mr McCabe. The two sets of regulations provide new procedures to protect innocent parties when there is inaccurate information on the public register about a company’s registered office address or the appointment of a company director.
I will discuss first the regulations that deal with registered office addresses. Every company must have a registered office to which all communications and notices may be addressed. The company need not trade from that address. It can use the address of a third party—for example, a firm of solicitors—as its registered office. The registrar of companies receives complaints that some companies use the address of another business or a private individual that they are not authorised to use. If someone finds that their address is being misused in that way, the impact can be significant and, of course, distressing. In the worst cases, bailiffs can be sent to the address in the false belief that it is linked to the company; they do not know otherwise. However, the existing provisions in the Companies Act 2006 allow only the company itself to apply to have the address removed from the public register.
The regulations provide a new procedure to prevent a company from continuing to use an address when it is not authorised so to do. A person will be able to apply to the registrar for a registered office address to be changed on the grounds that the company is not authorised to use it. The registrar will send a notice to the company, directing it either to change its registered office address or to provide evidence that it is authorised to use the address. If the registrar is satisfied that the company is not authorised to use the address, they will change the registered office address to a temporary default address. The intention is for the registrar to operate an address at Companies House for that purpose. That is eminently sensible and will help innocent parties caught up in no doubt illegal, shoddy and shameful dealings to clear their name. One can imagine that if they were the occupier of a house, it would be particularly distressing, especially if bailiffs tipped up on their doorstep.
I come now to the regulations on disputes about director appointments. Companies must inform the registrar when a director is appointed or removed, or when a director’s details change. At present, a person who appears on the public register as a company director can apply to have their name taken off on the grounds that they did not agree to the appointment. However, the company can stop an application merely by objecting, without having to provide any evidence to support its objection. The regulations change that by requiring the company to provide evidence that the person consented to become a director. If the company supplies that information, the person’s name will stay on the public register. If the company does not, the person’s name will be removed from the public register.
The two sets of regulations share the aim of providing a more effective way of correcting information on the public register. They will enable the registrar quickly to change addresses to protect innocent third parties and make it easier to resolve cases in which people have been appointed as directors without their agreement. There is a very good explanatory note with each draft statutory instrument. I nearly said that my speech is almost word for word the same, but it is not. However, the explanatory notes could not be clearer, so I pray them in aid of all that I am saying.
I hope that the regulations will be passed. If we need to debate them, I am happy to do so. They will mean that the things that I have described can be done. They are really about tidying up injustices and inefficiencies to make things better for everyone, including businesses. We do not anticipate that they will add further cost or burden to businesses, especially small businesses. I therefore commend both sets of regulations to the Committee.
Kevin Brennan (Cardiff West) (Lab)
Happy St Patrick’s day to you, Mr McCabe, and to the Committee. I have to say that, as the son of a man from west Cork—my late father, who is sadly no longer with us—but happy St Patrick’s day to one and all.
There is a small burden to business set out in the impact assessment. I am sure that the Minister would like me just to correct her on that. I think that £180,000 is given as the net cost to business of resolving disputes about registered offices that companies state on the public register of companies. However, the Minister is right that the measure is not controversial. I think everyone would agree that it is entirely improper that companies are able easily to register someone else’s address as the address of a business, whether by error, as does happen, or with more malevolent intent. That can be done to avoid the serving of writs or other measures such as bailiffs calling, or even to avoid customers contacting the company via its registered address at Companies House.
There should be a quick and easy procedure to rectify such occurrences, without affecting the business or individual whose address might have been registered in that way. Clearly, it could be distressing and damaging to the reputation of an individual or company if bailiffs called at their address in relation to something that was nothing to do with them. The reputational damage, not to say the distress and cost, could be great.
It is right, therefore, that the Government should seek through the regulations before us to rectify the problem, just as it is right to rectify the problem that directors are often wrongly registered with companies. According to the Government’s impact assessment, there are 500 or 600 cases of that a year. That is a relatively small number, given the number of directors that there are, but for each individual it could be the cause of considerable embarrassment or difficulty. Being wrongly registered as a director of a company could lead to their being drawn into disputes that are nothing to do with them. Again, it is wrong that a person should be prevented from removing their listing as a company director simply because the company objects, as the law currently states. The registrar should be able to resolve the dispute in a straightforward and proper manner, using a simpler procedure.
The measures are uncontroversial and we do not intend to divide the Committee, but I have one or two questions for the Minister. She will know that the free protected online filing scheme, known as PROOF, already gives greater security to a company filing its details at Companies House. It is surprising that not all companies are members of the scheme. The two main reasons are, first, that once a company has joined PROOF, almost all of its documents have to be filed electronically and, secondly, that many officers of small companies have simply never got round to applying to join the scheme. Will she tell the Committee whether there is any intention to make the scheme compulsory for newly registered companies or to promote it more rigorously to companies? That might make it possible to avoid some of the difficulties that the Committee is trying to rectify.
What does the Minister feel is the size of the problem? How many companies have their addresses hijacked each year, and what are the costs to business of trying to resolve those disputes? Although there is a small cost to businesses from introducing the measures, there are also, obviously, costs in the existing situation.
Do the Government intend to look at the penalties and sanctions that can be exercised against rogue companies that hijack addresses? What measures do they have in hand or are they thinking about to tackle that problem? In addition to an easy passage for companies that are victims of the practice, there should, on the other side, be sanctions for those who misuse the system in this way and cause businesses and individuals cost, distress and reputational damage.
It would be helpful if the Minister elucidated those points a little further, but I reiterate that the regulations appear to the Opposition to be sensible and proportionate measures that will assist businesses. Therefore, it is not our intention to vote against them this morning.
Dr Sarah Wollaston (Totnes) (Con)
Will the Minister clarify a question that I have? Currently, an individual will not know whether they have been named as a company director or whether their address has been hijacked until they are alerted to a problem. Do the regulations contain a mechanism whereby there is an obligation for a letter—a “To whom it may concern” type of letter—to be sent to an address to ensure that an individual knows that that is happening in advance, rather than just having a mechanism to deal with it after the event? Likewise, is there an obligation to write to individuals at their known address so that they are notified in advance, rather than waiting for a problem to arise?
Mr Jonathan Djanogly (Huntingdon) (Con)
I wholeheartedly welcome the regulations. They are an important contribution to the fight against corporate fraud.
I have seen addresses being hijacked on three occasions. It can lead to all sorts of complications and go on for a very long time. People who are using the wrong address inadvertently will want proof that it is the wrong address; it can really be very complicated indeed. I take the point made by the hon. Member for Cardiff West that we need to query what penalties there are for people who use addresses wrongly.
Do the regulations on directors extend to shadow directors—not just to a bog-standard director, but to people who should register and therefore should be included in the regulations?
Anna Soubry
We have had some very good and interesting questions. I think I will be able to respond—[Interruption.] Ooh, as if by magic! I may have to write to hon. Members in relation to some of their questions.
Every company must have a registered office to which all communications and notices may be addressed. A company might provide an address that turns out, effectively, to be a bogus one. We have a really good set of regulations to deal with that. I was really struck—and I did not know this until I looked through my notes—that Companies House alone receives 100 complaints a month about the unauthorised use of addresses. That is an astonishingly high number of complaints. There is a real problem out there.
On the basis that companies must provide a registered address, if a company provides one that is then found to be bogus, it is already breaching the law and action can be taken. I suggest to the hon. Member for Cardiff West that there are those powers, because a process will be triggered. Clearly the company does not have a registered address if a complaint has been made that a false address has been used. The company is therefore in breach of existing law.
Mr Djanogly
My right hon. Friend mentioned companies giving a bogus address. What happens if individuals hijack a company and give a bogus address?
Anna Soubry
I do not know the answer to that question, but I might be able to answer it in a few moments. If not, I shall write to my hon. Friend.
In response to my hon. Friend the Member for Totnes, the registrar is now required to write to every newly appointed director, which will give them the opportunity to object if they have been falsely appointed. I hope that that deals with her question.
Returning to my hon. Friend the Member for Huntingdon, the regulations do not extend to shadow directors. They apply only to directors registered as such at Companies House.
Mr Djanogly
The other aspect is alternate directors, who have a duty to register. I would have thought that the regulations should apply to them. Do they?
Anna Soubry
At the moment, I do not know the answer to that. I will write to my hon. Friend. Is it not excellent that we have Members on the Back Benches who know what they are talking about? They have huge experience of these things. [Hon. Members: “Hear, hear.”] My hon. Friend is a very good example of the wealth of experience that exists in this place.
By way of magic, I can say that section 1095 of the Companies Act 2006 provides a way for the registrar to remove factually inaccurate or forged information or material deriving
“from anything invalid or ineffective or that was done without the authority of the company”.
That may be helpful in answering my hon. Friend’s excellent questions.
I am pleased that the regulations are not contentious. Some important and interesting points have been raised, and I will deal with them all by way of letter.
Kevin Brennan
I asked some questions about the voluntary PROOF scheme that was introduced in 2005. Can the Minister say anything about that, or will she confirm for the record that she intends to write to the Committee about it?
Anna Soubry
I am so sorry, Mr McCabe. I should have made it clear that all Members who have asked me questions will get proper letters. I always say that the usual rules apply: if I cannot answer it, I will provide an answer by way of letter. That letter will specifically look at the questions that the hon. Gentleman has raised about that scheme, such as whether it can be made compulsory, whether we should do more to promote it, and so on and so forth. That may be another way to deal with these problems.
The important thing is that the regulations have got the balance right. The cost sounds like a lot of money, but when it is spread across the 3.6 million companies registered with Companies House, it is a drop in the ocean. The regulations are the right way to go about things. Yes, there will be more of a duty on companies, but it is very minor. It is about striking the right balance so that we do not place too much of a burden on companies, but we do redress this wrong. There can be few things as annoying as discovering that someone has used one’s address. If bailiffs turn up, that is the ultimate distress and a gross annoyance.
I am pleased that the regulations are not contentious. I apologise for not having all the answers, but we will sort that out by way of letter. On that basis, I commend the regulations to the Committee.
Question put and agreed to.
DRAFT REGISTRAR OF COMPANIES AND APPLICATIONS FOR STRIKING OFF (AMENDMENT) REGULATIONS 2016
Resolved,
That the Committee has considered the draft Registrar of Companies and Applications for Striking Off (Amendment) Regulations 2016.—(Anna Soubry.)