Second Reading, House of Commons
Introduction
Citizens Advice welcomes this Bill as an opportunity to provide our views on the Government’s attempt to address the enormous problems facing the UK’s system of child support.
Citizens Advice Bureaux in England and Wales dealt with 31,000 cases involving a child support problem during 2005/06. 19,000 of these concerned non-resident parents and 12,000 parents with care.
KEY POINTS:
- Swift and accurate assessment and payment of child support, with tougher enforcement used where necessary, must be the priority if delays in payment are to be avoided and public confidence in the system bolstered.
- Many families will need face-to-face advice and help if they are to be able to reach voluntary agreements successfully, thereby reducing the Commission’s caseload.
- The advice sector is operating in a difficult climate at present due to the review of Legal Aid and other funding constraints. However, the availability of free and independent advice to parents needing to agree child support arrangements is key in ensuring that the system works effectively.
- A higher maintenance disregard, introduced sooner than outlined in the Bill, would lift thousands of children out of poverty.
A fresh start?
There must be major doubts about whether the Bill’s proposals will in practice resolve the seemingly intransigent problems afflicting child support, which mean that only one in three children who should be benefiting from some child support are actually receiving anything.
Many of the people who seek advice from Citizens Advice Bureaux have been left in vulnerable situations because of the failure of the Child Support Agency over thirteen years to deliver a proper service. In the past year, non-resident parents have found themselves faced with bills for huge amounts of arrears and demands for payment even when they have supplied all the information asked of them and have co-operated with the Agency. Parents with care, and consequently their children, are faced with debt and hardship because maintenance is not being paid, or worse still has not been passed on to them by the Child Support Agency.
There will inevitably be some scepticism that yet another child support scheme will achieve the simplicity and ease of operation intended. We are concerned that the imperative now should be to ensure that child maintenance is quickly assessed for parents using the child support system, and payment arrangements are set up quickly and enforced if necessary, in order to get money flowing to families and children. This is the only way to build public support and confidence in the scheme. Measures in the Bill to use income tax records on which to base assessments, and use of deductions from earnings orders as the main way to pay, should go some way to achieving these ends, but there will be rough justice for many individuals and their families along the way.
The pace of reform is disappointingly slow. Although the CSA will begin to be wound up as soon as legislation can be passed, it is unlikely that the new Commission will be fully up and running until about 2013 leaving a ‘gap in service’ for many parents, including many CAB clients.
Encouraging parents to make their own arrangements
We support the proposal to introduce choice and remove the requirement to cooperate from parents on benefit. We are concerned, though, that many parents on low incomes will not be in a position to agree a sustainable voluntary arrangement, because the separation is not amicable, because the former partner is no longer around, because his actual income is not transparent or agreed, and because promised payments do not materialise. In these cases, which we would expect to be substantial in number, there must be clear arrangements for CMEC to take matters on and assess and enforce payments.
It is understandable that any new system replacing the CSA will want to try to minimise its caseload in order to guarantee its own effectiveness – but this will only prove to be a viable approach if parents are genuinely able and willing to make private arrangements. The availability of good quality advice, including face-to-face advice as well as websites and other information, will be critical if the government’s strategy is to stand any chance of success. Citizens Advice would welcome a clear statement from the Government about how it intends to ensure the right support is provided.
The assessment process
The Government proposes to revise the assessment process to use gross income figures held by HMRC, taking a fixed percentage equivalent to the current formula for number of children, with departures from this only in specified circumstances. The aim appears to be to get to a calculation of maintenance liability more quickly and easily, with fewer opportunities for the non-resident parent to dispute the assessment or to besiege the assessment with a series of changes of circumstance all of which prevent agreement and payment.
The thrust of this approach is welcome, as a large part of the Agency’s problem has been that it cannot begin to enforce a child support assessment if it is in continual dispute. It is welcome that information held for tax purposes will be used as this will provide a basis for assessment for a majority of fathers. However, the possibility that self-employed and other fathers will be able to minimise their taxable income remains serious and will need to be taken into account. It is also unclear how the use of historic tax information will be used (information may well be out of date, and will not necessarily be for the most recent year).
CAB advice
The White Paper which preceded the Bill indicated that there will be a ‘major role’ for the third sector in helping parents to make their own arrangements. Citizens Advice welcomes the passage of the Bill as an opportunity to discuss with government how the CAB service might increase its capacity to advise parents about child support. The climate is currently extremely difficult for independent advice. Funding for both Citizens Advice, the umbrella body for the CAB service, and for local Citizens Advice Bureaux, is faced with increased restrictions. The Carter review of legal aid and the government’s subsequent White paper may, if implemented without change, result in fewer Citizens Advice Bureaux offering advice and information supported by legal aid contracts.
Advice and information
We believe that the CSA should now take greater responsibility for informing people currently in the child support system about their current position and about the effect any changes may have on them. Much of publicity surrounding the publication of Sir David Henshaw’s report, and the Government’s initial response, in July 2006 suggested that the Child Support Agency was being scrapped. This caused some people seeking advice from our bureaux to wonder whether their liability for child support had come to an end, and prompted others to seek advice about how an outstanding application for maintenance would be affected.
Clearer information to all individual users of the CSA should have been provided so that no-one was left in any doubt about how the announcements affected their current position, and how changes in the future might alter it. Large numbers of the enquiries received by Citizens Advice Bureaux are from parents who are paying or receiving money under the child support scheme dating from before 2003, and these people, as well as everyone else, might reasonably expect to be told what the proposed reforms meant to them.
The maintenance disregard
It is disappointing that there is to be a delay of two years before the disregard is extended to people receiving child support under the ‘old rules’ from pre-2003, and that the commitment to introduce a substantially higher disregard will not be introduced until after 2010.
Many thousands of children could be lifted out of poverty, helping to meet a key government target, through the introduction of a partial disregard of maintenance income, as low as £30 or £40. Tax credits already include a complete disregard of child maintenance income. Citizens Advice would welcome a proper review of the costs of introducing a maintenance disregard earlier and at a much higher level than now, which took into consideration the contribution the move would make to eliminating child poverty.
Enforcement and debt management
The Child Support Agency has had quite strong powers to enforce child support awards for some time, but has too frequently been unable or unwilling to use them. It has been too easy for non-resident parents to dispute the accuracy of an assessment and for delays to set in, causing a spiral of poor administration and preventing child support from being collected and paid. The Agency is already, as part of its Operational Improvement Plan, moving to obtain liability orders and using private debt collection agencies and bailiffs to collect child support debts.
Citizens Advice has a number of concerns about the enforcement and debt management sections of the Bill. Our central priority is for the CMEC to increase the amounts of child maintenance in payment, but this should not be at the expense of accuracy and fairness. The current operational improvements at the Child Support Agency include a greater focus on enforcing debt, and have included passing debts on to private debt collection agencies and bailiffs for collection.
This has given rise to problems when substantial arrears are owed – people may agree that they owe the sum, but because they are on a low or modest income simply cannot afford to pay thousands of pounds in one go. Once a debt is passed to bailiffs or debt collection agencies, it can prove very difficult to negotiate payment by instalments. Citizens Advice Bureaux have reported recent cases in which neither the debt collection agency or the CSA were willing to negotiate a reasonable means of payment.
In some recent cases, people dispute entirely that the debt is owed by them and are adamant that a mistake has been made. Similarly once a liability order has been obtained and the debt passed to third parties to collect, this can prove very difficult to challenge.
Recent evidence from Citizens Advice Bureaux shows there are problems with the current debt collection strategy. The Bill proposes to remove many of the existing safeguards, by removing the powers of the courts to question liabilities, and vests these powers solely in CMEC. Safeguards need to be built in to ensure debt management is carried out in line with industry standards and best practice in debt collection, otherwise public confidence in child support will be eroded even further.
In one case from October 06, a woman had been told by the Agency in Feb 06 that the £2,300 owed to her was being passed to the enforcement department. It was not until months later when the client sought advice that it transpired that no action had been taken.
In November 06 a client complained that he had arranged a direct debit to pay child support but the CSA was not collecting any money, and was instead threatening the use of debt collectors.
In September 06 a client contacted a bureau as he had a liability and a court appearance for CSA arrears – this followed over 40 different assessments, and two cheques that had been sent to the client for overpayment of child support.
In July 06 a client received a letter stating arrears over £1500, after two letters saying he owed nothing.
Contact details:
John Wheatley, Senior Social Policy Officer:
John Wheatley
and Bethan Collins, Parliamentary Officer:
Parliamentary
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