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Mrs. Linda Gilroy (Plymouth, Sutton): There is a Child Support Agency office in Plymouth, employing 1,400 people. Does my hon. Friend agree that simplifying the system will make their jobs infinitely easier because they will be able to concentrate on enforcement?
Mr. Dismore: I am grateful to my hon. Friend for that intervention and I very much agree with her point. My noble Friend Baroness Hollis said in her evidence to the Select Committee that 90 per cent. of the CSA staff's time is currently spent on arithmetic and only 10 per cent. is spent on enforcement. She hoped that that proportion would be reversed under the new scheme. That may be optimistic, but it reveals how much more the CSA officers will be able to concentrate on compliance.
To answer an earlier intervention from the hon. Member for Northavon (Mr. Webb), paragraph 15 of the Select Committee report says that the new formula was welcomed by the independent case examiner, the Children's Society, the National Council for One Parent Families, the parliamentary ombudsman and, as the detailed evidence shows, many other groups. The new formula will enable quicker assessments to be made, resulting in fewer arrears, which have been among the problems of the existing scheme.
We recommended that the Secretary of State should have the power, subject to parliamentary approval, to adjust the formula in the light of experience and that the discretion in the scheme should have clear parameters set down in regulations so that the officials administering it know precisely what they can and cannot do, and claimants and absent parents can more readily know the amounts due.
I welcome the way in which second families will be treated. Children of first and second families will be treated more equally. We believe that the second option outlined in the Green Paper should be adopted, as it is even more fair. The recognition of the non-resident parent's role is also very important. We should ensure that, in shared care cases, the formula reflects the contribution of the non-resident parent, and we should encourage such parents to maintain contact with their children.
The introduction of the child maintenance premium will put right one of the major wrongs in the system. It is expected to encourage parents with care to co-operate with the CSA. Baroness Hollis told us that about 70 per cent. of parents who were required to co-operate with the CSA because they were on benefit were failing to do so in the first instance and that one of the reasons for their reluctance was that, for many, the agency simply represented
I am pleased about the greater emphasis on compliance and enforcement. My hon. Friend the Member for Lincoln (Gillian Merron) mentioned the sanctions, including the fine of up to £1,000 for withholding information and the 25 per cent. surcharge for late payment. The White Paper contains some more imaginative ideas that are welcomed in our report: for example, the withholding of driving licences or passports or, ultimately, the seizure of assets. Those imaginative methods will hit some irresponsible absent parents in a way that will drive the message home effectively.
Mr. Willetts:
The Select Committee has done valuable work and I am listening carefully to the hon. Gentleman. He is talking about tougher criminal penalties, but does not he accept that there is scope for much better civil enforcement before we impose draconian criminal sanctions, especially as the Government proudly claim to be reforming civil proceedings?
Mr. Dismore:
That is a valid point. Baroness Hollis argued cogently that our main task was to ensure compliance, with enforcement coming much further down the line.
We want the CSA to be much more accepted in the community at large. The Select Committee recently went on a study tour to Scandinavia. We asked people in Norway and Finland about enforcement in their countries. They were amazed that it was even an issue in our country. It is taken as read in those countries that absent parents will support their children. That concept has become increasingly alien in this country.
If we can get broad acceptance on compliance, that will be very welcome, but we need imaginative penalties, as well as draconian ones. We recommended that, if there is a dispute about income involving self-employed people, we should work on the previous year's tax returns.
The CSA needs to sharpen up its act and undergo a culture change. Paragraphs 80 to 82 of our report suggest that it should improve its internal processes for verification of income and that its annual report should include an account of its counter-fraud work. The report expresses some concerns. I was especially worried about the relationship between the CSA and private cases in which the public purse is not involved. The change was intended to deal with an ill identified in the old pre-CSA court system, but I question whether that still exists. We heard evidence suggesting that the problem may not exist and that it would be better to impose a duty on the courts to take account of the CSA formula as a starting point in child maintenance cases.
If the state starts to interfere in private cases, which are likely to involve better-off families with more complex financial arrangements, we could get embroiled in private negotiations or court judgments relating only to private assets in which the state has no direct interest. We would end up second-guessing the courts and indirectly providing a further line of appeal outside the process, thus undermining negotiation and the courts. We recommended further research on the effect on children's interests, should private cases be brought within the CSA system.
We also considered resources for the CSA. Between 1995-96 and 1998-99, the CSA's live case load doubled to 750,000, yet its staff and funding remained virtually static. I suspect that that contributed to some of the problems. An increase in the work load of 20 per cent. year on year is expected until 2001. On top of that, there will be the transitional problems of training, installing new information technology and physically changing cases from the old to the new system. We recommended that a distinction should be drawn between resources for the administration of the current scheme and those allocated for developing the new systems, which should be sufficient to reflect the expected increase in work load.
We are very concerned about computer systems. We had clear assurances from both the chief executive and Baroness Hollis that there was only a small risk that the new system would not be ready by 2001, but we recommended that it should not come on stream until the Government, and indeed the Select Committee, were satisfied that it was fully operational.
There will inevitably be winners and losers under the new scheme as compared with the present one. We must phase in the changes and handle them sensitively. I understood the agency's fear of the big bang approach, bringing both old and new cases on stream together, but we must expect pressure from affected parents to come into the new system perhaps before a proper view can be reached of its effectiveness. We need to show some light at the end of the tunnel for the parents on the existing scheme. Otherwise, we will continue to have grief from them and there will be no confidence in the new arrangements. We recommended that the Government timetable the transfer to allow people to know where they stand.
We identified a problem with the child premium payment. As things stand, that will apply only to new cases. I hope that my right hon. Friend will consider the Select Committee's recommendations, because I am mindful of the potential conflicts that could be created when one lone parent, whose case has been newly assessed, benefits from that extra £10 a week, whereas her next door neighbour has had a long-running battle with the CSA, yet all that grief and strife has brought an assessment that does not benefit her, and she sees nothing of the improvement.
Dr. Vincent Cable (Twickenham):
As we zigzag between two rather different subjects for the debate, I shall say a few words about the Department of Trade and Industry issues and I hope that my hon. Friend the Member for Northavon (Mr. Webb) will catch your eye, Mr. Deputy Speaker, on the social security issues.
There is a certain amount of conceit in Governments--not only the present Government, but Governments in general--about what they can do to stimulate the rate of
economic growth and the efficiency of the economy. All the economic and historical work that I have seen suggests that the underlying growth of the British economy has remained pretty well unchanged since the Napoleonic wars--a trend that largely survived major experiments such as the nationalisation of the commanding heights of the economy, and even Mrs. Thatcher. So one should be suitably modest about what seven trade and industry Bills are likely to achieve.
None the less, there is a consensus about good practice and the kind of things that the Government ought to do to help the economy maximise its potential. One of those is to provide a framework for financial stability, and we give the Government credit for their advances in that area, notably monetary stability, the independence of the Bank of England and low inflation. Those are all positive achievements.
However, there is one major negative--the exchange rate, which tends to get overlooked. British manufacturing industry has lost 10 per cent. of its competitiveness since the Government came into office, and 23 per cent. since the end of 1996. All the tax concessions and regulatory innovations that the Government are considering will not compensate for that massive hit, which originated in uncertainty about our policy towards Europe.
The second major contribution that the Government can make, and are making, is full support for international initiatives to ensure that British exporters can operate in world markets. The Minister referred briefly to the new round of trade negotiations, but I have one reservation--that that enormously important subject will not be debated in the House at all. A scrutiny Committee, European Standing Committee C, will examine the matter on Monday, but that is the only opportunity that Parliament will have to review the matter. However, the sounds coming from the Government are right, and I have no reservations about what they are saying.
The third and most important area, which is the main area of contention, is regulation. It is clear that the Government are in some difficulty there, and the comments in yesterday's Financial Times, which their tone suggests emanated either from No. 10 Downing street or Lord Haskins, reflect some of the frustration:
When we think about what happens in those Departments, it is clear what is meant. The Home Office is an example; one notorious area of over-regulation is known as section 8--a term that initiated with the Conservatives' Asylum and Immigration Act 1996, which is why their shrillness on the subject is a little ill judged.
Under section 8, all employers, whether big or small, are required to operate a sophisticated and detailed system of immigration control involving the scrutiny of up to 50 separate documents to establish the appropriate level of compliance with national insurance, passport and visa regulations.
Despite strong representations from the CBI, the TUC, the Commission for Racial Equality and many other agencies, the Government have ignored their own earlier intentions and persisted with that regulatory overload, which does little to help achieve their social or economic objectives.
As for the Deputy Prime Minister's Department, one area deserves special attention. Part of his large empire is the Health and Safety Executive. If one talks to employers they will quickly suggest the HSE as a prime example of excessive and inappropriate regulation. Clearly, the principles of health and safety regulation are widely shared, and we wish to protect the safety of workers at work. However, the HSE provides a good example of regulation that has gone badly wrong. There is a large bureaucracy that costs £170 million and produces an enormous amount of paperwork, but when it comes to the crunch of enforcing safety regulation on seriously negligent employers, little is done. A shocking report, which has now gone to the Select Committee on the Environment, Transport and Regional Affairs, points out that only 12 per cent. of serious injury cases at work are ever investigated. Even of those, only 10 per cent. lead to prosecution, and the overwhelming bulk are prosecuted in magistrates courts, in which large employers are faced with a maximum fine of £5,000.
There is therefore a disparity between very lax and casual enforcement by a regulatory agency and the enormous amount of red tape generated. That is the rather deep issue that the Government must address, and it goes to the heart of the Departments promoting deregulation.
The House has often discussed the problems presented for knowledge workers by IR35. One of the most striking features of that story is that when the Inland Revenue commissioned its own regulatory impact assessment, the study produced powerful negative evidence. It also showed that the Government would lose much revenue as well as recouping revenue. Yet Treasury Ministers took no action to reflect what their own regulatory impact assessment had told them.
I have been trying to pursue recently in parliamentary questions how the Minister for the Cabinet Office proposed to tackle the agenda. A week ago I asked whether she could think of one example of a regulatory impact assessment that had led to a regulation being withdrawn. She could not. Yet, so far as I know, the Government have so far introduced 2,800 new regulations.
There are various ways of tackling the problem, and they have been suggested from both sides of the House. I know that the hon. Member for Buckingham (Mr. Bercow) has been active in that respect, and has suggested the fade-out concept. Other action could be taken too, and I hope that the Government will think about it.
For example, one of the most positive features of the Financial Services and Markets Bill is that it requires the Financial Services Authority, before introducing a new regulation, to demonstrate that the benefits will outweigh the costs. That is a simple requirement, but I do not see why the practice should not be generalised throughout government.
I have dealt with the regulatory issue at some length, because it frames the context in which we have to consider major deregulation issues, such as e-commerce legislation. I must say at the outset that the Minister for Small Business and E-Commerce, creditably, has listened to representations, so that the items that many of us are concerned about, such as mandatory escrow and the obligatory licensing of encryption, seem to have disappeared from the Electronic Communications Bill. It will be published this morning, however, and we must wait to see the detail.
There are certainly two residual concerns, which we shall raise on the Floor of the House when we discuss the Bill. One of them has already been raised by the hon. Member for Esher and Walton (Mr. Taylor). It is the very important point of whether the removal of such features from DTI legislation will simply be nullified by their re-introduction, under a new heading, in Home Office security legislation.
The other point, which is more pertinent to the DTI, is whether the substantial reserve powers that will be granted--they are very extensive for secondary legislation, including, for example, a requirement for a register of approved providers--will stimulate e-commerce rather than produce heavy-handed regulation. We must confront such questions when the proposed legislation is before Parliament.
There is another important e-commerce issue on which the Government have got themselves into great difficulty, which is causing industry serious worry and needs to be resolved long before we tackle the legislation.
Although the DTI and No. 10 Downing street are pursuing a genuinely supportive and consistent policy on e-commerce, the Lord Chancellor appears to have his own, independent line. Indeed, he appears to disagree with the rest of the Government and has allowed to be incorporated into a European directive that is crucial to the development of e-commerce and which originally incorporated the home-country principle for trade--a rather technical issue, but important in commercial law--qualifications that could seriously disadvantage British industry.
In pursuing the issue, I asked a named-day question two weeks before the end of the previous Session. I inquired whether the Lord Chancellor could confirm that he agreed with the Minister for Small Business and E-Commerce. Despite the fact that the day had been named and the Lord Chancellor had abundant opportunity to reply, no answer was given. I checked with the Table Office, which seemed unclear about how to deal with a Minister who refuses to answer the question. The matter is serious. I put it to the Government again that the Lord Chancellor, by incompetence, arrogance or for some other reason, appears to be causing the rest of the Government serious difficulties. I hope that the matter will be addressed properly and promptly.
The regulation of the utilities and changes to the Post Office are the other major family of concerns that will be addressed in the new Session. It is a little difficult at this stage to see what the Government intend to achieve through utilities regulation. We have had only the very broadest of outlines. Three basic concerns need to be addressed--one, consumer interest, which is being given primacy, has already been heralded.
One of the other two issues is that of executive pay. Of course, it would be absurd for the Government to return to the old days of trying to prescribe specific levels of payment for senior executives in the utilities or in any other part of industry. However, there are genuine concerns. The enterprises involved are often not risk-taking ones. People are receiving very generous and, economically, totally inappropriate remuneration for operating in monopolies.
"no cash and lots of hassle."
19 Nov 1999 : Column 272
We believe that the child maintenance premium will increase the income of the parent with care and assure the non-resident parent that his money is contributing to the children's family income rather than simply reducing the cost of income support to the taxpayer.
"Tony Blair has been forced to rebuke John Prescott, Deputy Prime Minister, and Jack Straw, Home Secretary, for failing to co-operate fully"
with an initiative addressing the issue of Government regulation.
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