Family Law

Jim Cunningham Excerpts

Tuesday 11th June 2019 Commons Chamber

[The Parliamentary Under-Secretary of State for Work and Pensions (Will Quince)]

I beg to move,

That the draft Child Support (Miscellaneous Amendments) Regulations 2019, which were laid before this House on 9 May, be approved.

These regulations amend child maintenance legislation to enable the delivery of the child maintenance compliance and arrears strategy.

We all know that, when parents work well together, their children fare better. A reformed child maintenance scheme based on that principle was launched in 2012 and administered by the Child Maintenance Service. This scheme was designed to encourage parents to work together following separation and, where possible, to make a private family-based arrangement for the child. Where parents are not able to do this, the statutory scheme is there as a fall-back option. I am pleased to say that, following staged implementation, the service is working well and largely avoiding the problems that beset the previous statutory child maintenance schemes. As the reformed scheme has been implemented, we have listened to the issues that hon. Members and external stakeholders have raised. This valuable input has informed our new child maintenance compliance and arrears strategy.

Last November, this House approved regulations tackling a number of those issues, closing down loopholes, introducing tough new sanctions for those who evade their responsibilities and dealing with the historic arrears that built up under the Child Support Agency. This second set of regulations supporting the compliance and arrears strategy builds on those made last November. It includes provisions to make deductions from benefit fairer, to address uncollectable debt and to improve information-gathering processes, alongside amendments to the calculation and fees regulations so that they better reflect the intent of the 2012 reforms.

Let me turn first to the changes to powers to make deductions from benefits. All parents have an obligation to support their children regardless of their financial circumstances. Parents on benefits are liable to pay the flat rate of maintenance of £7 per week. If they do not pay voluntarily, we can take deductions directly from their benefit payment, plus a collection fee of £1.40. There are different rules surrounding what may be taken for ongoing maintenance and what may be taken for arrears.

The Child Maintenance Service can currently make weekly deductions of £8.40—a flat rate of maintenance at £7, plus a £1.40 collection fee—towards ongoing maintenance from certain benefits, and £1.20 towards arrears from a smaller number of benefits. In some cases, a total of £9.60 a week can be deducted. I want to make this policy fairer for all parents involved.

The regulations enable deductions towards arrears to be made from the same benefits from which the Child Maintenance Service can deduct ongoing maintenance. They also ensure that the service can deduct a maximum of £8.40 a week in all cases. They will stop deductions towards arrears and ongoing maintenance being taken at the same time, with arrears deductions being taken only after ongoing liability has been satisfied. This removes all current inconsistencies and means that arrears of child maintenance can be cleared at a faster rate.

I am also proposing specific changes to deductions from universal credit. The Child Maintenance Service can already deduct £8.40 towards ongoing maintenance from universal credit, if the paying parent has no income from employment. The new regulations will allow the Child Maintenance Service to do the same where the paying parent has earnings in line with other benefits. This will only apply in cases where the paying parent is liable to pay only the flat rate—that is, based on earnings of £100 a week or less. This change means there will be a more efficient and consistent approach to clients on UC with similar financial circumstances.

Let me turn to the proposals regarding protected trust deeds. A protected trust deed is an arrangement in Scots law between a debtor and their creditors. In Scots law, child maintenance arrears that are covered by the deed cannot be collected once a parent enters into its terms. Although dividends may be received towards arrears while the deed is in operation, once it expires any arrears covered by the deed are legally uncollectable. At present, any child maintenance arrears are still held on child maintenance computer systems, even though they are no longer enforceable. The regulations will extend our write-off powers to cover arrears within the terms of a protected trust deed, once that deed has expired. This change keeps our legislation in line with that in Scotland and provides clarity to parents about the status of these arrears. It also stops the Child Maintenance Service holding information about uncollectable arrears indefinitely at a cost to the taxpayer.

There are occasions when child maintenance agents need to access premises to gather information, using powers of entry—whether to trace a parent, to recover child maintenance arrears or to ensure that the child maintenance calculation is as accurate as possible. We do this in a limited number of cases and when other measures to collect this information have failed. In line with the Protection of Freedoms Act 2012, we propose an additional safeguard to protect the public from unnecessary intrusion. The regulations require an inspector to apply for a judicial warrant where they are refused or expect to be refused access to premises, or where they cannot contact the occupier. Although the Child Maintenance Service cannot use its powers of entry to access a wholly private dwelling, this change would reassure the public that independent judicial consideration has been given to any request for inspection. I expect only about 20 judicial warrants to be sought per year, and the occupiers of these premises will have all the usual rights of appeal via magistrates courts in England and Wales, or sheriff courts in Scotland.

I am also proposing changes to the manner in which the Child Maintenance Service requests information from certain organisations. Mortgage lenders and occupational pension providers can be a valuable source of information where there is a need to trace a parent, to calculate a maintenance liability or to decide on the best enforcement power to use. To collect this information currently, the Child Maintenance Service has to arrange for one of our inspectors to visit. Repeat visits are often needed when the information is not readily available, and that can be costly and time-consuming. The regulations add mortgage lenders and occupational pension providers to the list of persons who are legally required to provide the service with information; that information is provided in writing, on request.

When calculating child maintenance, the Child Maintenance Service aims to produce a fair reflection of what the paying parent can afford. This is usually based on the taxable income figure provided by Her Majesty’s Revenue and Customs. The income figure given to the Child Maintenance Service by HMRC is currently provided after any deductions for pension contributions, but before non-taxable allowable expenses are disregarded. Parents need to notify the service to get those non-taxable expenses disregarded from their income figure. I propose a change in the legislation to make it clear in law that the income figure used to calculate maintenance must be used after allowable expenses have been disregarded.

The regulations also include a small technical change to collection fees, which were introduced in 2014 and were aimed at encouraging collaboration. They accrue alongside ongoing maintenance and, as with maintenance liability, accumulate when left unpaid. Collection of these outstanding fees can be enforced as though they were unpaid child maintenance. The regulatory changes that I am proposing clarify this policy intent and will provide the courts with a clear direction on fees when a liability order is sought.

[Mr Jim Cunningham (Coventry South) (Lab)]

Who decides on the level of fee—the court or the Department?

[Will Quince]

The fees and charges—20% for the paying parent and 4% for the receiving parent—are set by the Child Maintenance Service.

The regulations build on the success of the child maintenance reforms, further developing collection measures and information-gathering powers, helping to make child maintenance fairer for all parents and ensuring that we fully deliver on the commitments in the compliance and arrears strategy. I commend the regulations to the House.

[Mike Amesbury (Weaver Vale) (Lab)]

May I first welcome the Minister to his place?

These regulations are a series of changes and clarifications designed to make it easier to collect arrears and maintenance payments under the child maintenance scheme. The Opposition do not want to obstruct the measures, and we will support them today. We agree with the Minister that it is extremely important for parents to fulfil their obligations towards paying for the cost of bringing up their children. If parents fail to fulfil this obligation and fall into arrears, it is right that Government Departments step in to pursue them—and, as a last resort, through the social security payments system. In supporting this change, we are mindful that having £8.40 a week deducted from benefits for child maintenance arrears can be extremely difficult for somebody on a low income, which may be as low as £73.10 a week if they are claiming jobseeker’s allowance.

We are also too aware of the Government’s rather chaotic approach to our welfare and social security system, and the unacceptable levels of debt, poverty and growing food bank use that are largely driven by the universal credit reforms. However, this must be weighed against fairness towards the care-giver, who has to bear the additional costs of food, clothing, school expenses, childcare and other day-to-day costs of bringing up children. Child maintenance payments can be vital to families—especially those on low incomes—and to protecting children from poverty. According to the single parent charity Gingerbread, child maintenance alone lifts a fifth of low-income single parents out of poverty.

It is important to remember the context in which separated families are living. Lone parents are particularly vulnerable to poverty. According to the Joseph Rowntree Foundation, one in four lone parents is in persistent poverty—twice as many as any other group—and the inadequacy of the current social security system arguably makes child maintenance an even more vital source of income for struggling lone parents. Austerity cuts have driven lone parents further towards the brink, with the two-child limit and the benefit cap pushing three quarters of children in lone parent households further into poverty. The value of child benefit and child tax credit has not increased since 2015 due to the benefits freeze, making it harder to cover the costs associated with bringing up and looking after children. Meanwhile, the cost of childcare grows, according to the Child Poverty Action Group. The full cost of bringing up a child for a single parent has increased by 18% since 2012. Using social security as a vehicle for cuts is a political choice—and the choice has consequences, with over 4.1 million children now living in poverty.

Although we support the Government’s intention to continue making deductions from paying parents to pay off arrears after they have no maintenance liability, as stated by the Minister, I note that there has been no impact assessment of these regulations. Will he commit to a full impact assessment, and commit to monitoring this policy to guard against any unintended consequences of the change?

[Mr Jim Cunningham]

My hon. Friend makes a point about childcare. I do not know whether he has seen the reports today about the Government paying something like £5 an hour for childcare although the costs are a lot higher than that. That means, in effect, that a lot of families are being excluded from childcare. Does he agree that the Government should do something about that?

[Mike Amesbury]

I certainly do. I thank my hon. Friend for that intervention. This case has been highlighted in the media today by the shadow early years Minister, my hon. Friend the Member for Batley and Spen (Tracy Brabin).

We agree with the regulations’ intention to extend deductions from universal credit to include cases where the paying parents’ household has earnings, but will the Minister provide clarification about the commencement of this policy? The Department for Work and Pensions consultation in December 2017 said:

“Changes to UC deductions would be implemented when UC is fully rolled out.”

However, it appears from the commencement regulation of the draft statutory instrument that the changes in respect of universal credit will take effect before roll-out has been completed. Is the Minister able to clarify that? Given that universal credit has been beset by so many problems and delays so far, will it be able to cope with yet another change to the system?

We welcome the DWP’s intention to reduce outstanding arrears. Indeed, its consultation on this issue said that its changes

“would send a clear message to paying parents that failing to pay for their children is not an option. We will recover the arrears eventually, even if we have to wait until they claim State Pension.”

However, that appears to be slightly at odds with the Department’s actions of December last year when it wrote off billions of pounds in arrears in child maintenance. Will the Minister supply an update on the progress of this arrears write-off and how many receiving parents have made representations asking for their arrears to be collected?

Alarmingly, according to the latest statistics, the level of arrears under the new CMS system appears to be creeping up, just as it did under the old system. Since the CMS began, a total of £259.2 million of child maintenance has been unpaid and should now be paid through the Collect and Pay service. That is 11% of all child maintenance due to have been paid since the service began. Although I do not doubt the commitment of the new Minister to tackling non-compliance and arrears, these figures start to make his words on the issue seem rather hollow. Does he have a performance target on the amount of child maintenance remaining unpaid?

Arrears can be compounded by the failure of enforcement in Direct Pay, where parents manage payments directly with each other. In its report on Direct Pay, published this year, Gingerbread reported complaints from parents that arrangements are prolonged by unclear thresholds of enforcement, and that there is inconsistent follow-up and very poor communication from caseworkers. It is very difficult to track enforcement in Direct Pay. Despite its being a central plank in the child maintenance system, the DWP does not track whether payments are made. As Gingerbread says, this means that the Department cannot report on compliance in 70% per cent of cases. Given its centrality to child maintenance arrangements, does the Minister not think it is now vital to track whether payments are being made under Direct Pay?

Labour Members would not contend with other measures in these regulations, including changes to information gathering—which will make things simpler and save the taxpayer money—powers of entry and the calculation change. However, I will finally raise an issue that is not dealt with in these regulations but is a major concern to separated families. Fees were introduced under the new system to encourage more family-based and Direct Pay arrangements. However, the evidence shows that, far from increasing collaboration between parents and prompting compliance, fees are deterring parents from using the CMS, and where parents do pay, it is a struggle to afford it. The Department for Work and Pensions itself has said that some parents are staying in an ineffective Direct Pay arrangement rather than moving to Collect and Pay. Does the Minister agree that it unfair to charge single parents for using the CMS system when often it is the only option available to them? Will he commit to reviewing the impact of fees on receiving parents who have experienced financial coercion and abuse? I look forward to his response.