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Lord Mackay of Ardbrecknish: The noble Earl has explained that the amendment would alter the calculation of that part of the assessment formula known as exempt income.

Exempt income is the amount deducted from a parent's net income in recognition of his or her basic expenses. It includes set amounts for the living costs of the parent and any natural children in the household and an allowance for housing costs. The formula then deducts maintenance from the parent's remaining income at the rate of 50p in the pound until the basic maintenance requirement is met and, in the case of absent parents, a further, lower, percentage if there is any income left over.

The proposed amendment would alter the calculation of exempt income to include council tax, water charges, legally binding debts and obligations (including, for example, fines) and any obligations arising before the Child Support Agency's involvement in the case. Those expenses would be allowed in all cases with no further consideration as to reasonableness or to whether the allowance would be just or equitable in all the circumstances of the case.

Exempt income is specifically designed only to meet the every day expenses which are likely to be incurred by all parents. These are basic living expenses and housing costs. Other expenses can be met in one of two ways. The first is from the income that is left after meeting the maintenance liability. The current legislation ensures that no absent parent will pay more than 30 per cent. of his net income in child support maintenance. Most will pay a good deal less. In the vast majority of cases this leaves sufficient income to meet essential expenses and to make choices about other expenditure.

For the small number of cases where certain special expenses cause genuine difficulty the new departure system will provide the opportunity for the individual circumstances to be examined in detail and, where appropriate, for liability to be adjusted.

With regard to the specific items of expenditure listed in the amendment, council tax is already allowed for in the "protected income" provisions which reduce the maintenance assessment where hardship would otherwise be caused and debts of the relationship or those incurred before the inception of the Child Support Agency can be cited as grounds for departure. The Government would

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not, under any circumstances, agree that it was right to make provisions which would effectively pay someone's fines from the money that should be going to their children. The provisions we have already included in the Bill will deal with cases where the present legislation causes difficulty. With that explanation of how we see the issue, I hope that the noble Earl will withdraw his amendment.

Midnight

Earl Russell: I never thought of the Minister as Robin Hood but he appears to be providing that child maintenance shall involve the most cavalier disregard for the law. It surprises me greatly. The Minister said that no consideration was given to the reasonableness of all the charges, but they are all legally binding charges. We do not go around saying that our legally binding obligations are not reasonable or that we shall not pay them. If we do we tend to get short shrift. In terms of the criteria of the noble and learned Lord, Lord Simon, for the rule of law, I should have thought that the Government ought to be subject to the same provisos. Where they recognise obligations to be legal, they ought to respect them.

The Minister said, "We don't all go around restricting the amount that we pay to our children because we have to pay fines." But if we are foolish enough to incur fines, that is what we all do. If we are assessed to pay a fine, we have to pay it, quite regardless of what the effect on our children will be. We cannot get out of it. So allowing the absent parent to pay the fine, as he is legally bound to, will merely put him in the same position as all the rest of the world. We shall have to come back to this because there is no meeting of minds. Where respect for the law is involved, we need to have that meeting of minds.

Lord Mackay of Ardbrecknish: If I hear the noble Earl aright he makes the proposition that if an absent parent is fined, the first place to which he can or is allowed to look, if the amendment were accepted, is reducing the maintenance he pays to the parent with care. I am sure that that is not what he intends, but if I hear him aright that is what will happen. However, either the absent parent ought not to get himself into a position where he has to pay a fine, or if he has to pay it he should look at other things he might not pay for in order to save the money to pay the fine. There will be other places where the absent parent can seek the money to pay the fine, or save up to pay it, without suggesting that he pays less to child maintenance.

Earl Russell: I am sorry to say that the Minister did not hear me aright, but since it is late at night such things happen. I never said that child maintenance was the first place to which one should look to pay one's fine; I said that if one is ordered by a court to pay a fine, one has to pay it. That means that all one's other expenses have to give way to a legal obligation because one may be sent to prison in some cases if one does not.

The Government's approach here is deficient in respect for the law. I do not withdraw that charge; we need to return to it in other contexts. However, for the time being I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

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Earl Russell moved Amendment No. 57:


Before Clause 18, insert the following new clause:

("Disregard of invalid care allowance

.—(1) Schedule 1 to the 1991 Act shall be amended as follows
(2) After paragraph 5 there shall be inserted—
"5A. Regulations governing the calculation or estimation of the net income, or the disposable income, of an absent parent or a parent with care, shall ensure that any sums paid or payable to or in respect of any person by way of invalid care allowance under section 70 of the Social Security Contributions and Benefits Act 1992 shall be disregarded." ").

The noble Earl said: Amendment No. 57 is, I hope, slightly less provocative. It allows that income which shall be exempt from consideration under the formula shall include invalid care allowance. It may well happen that an absent parent with a second family has one child for whom he receives invalid care allowance. That is a specific earmarked payment for a real need.

It seems to me inequitable and mistaken that the payment should go into the income which is assessed under the formula for charging for child maintenance because that income is attached to one specific need. If it goes elsewhere, that need will be unmet. In terms of parliamentary appropriation, as well as in terms of appropriateness, this is a mistaken and not particularly constructive use of money. This is an amendment which, in terms of respect for the sick, I hope the Minister might consider with slightly more favour than he showed for some of the others. I beg to move.

Baroness Hollis of Heigham: Basically this amendment relates to the cost of sick or disabled children and the ICA that goes with that situation. In responding to the noble Earl's amendment, with which I am very much in sympathy, the Minister could perhaps tell us what is understood by paragraph 2(3) (c) of new Schedule 4B in Schedule 2:


    "costs attributable to a long-term illness or disability of the applicant or of a dependant of the applicant".

This is a basis for a departure.

When I read that I assumed that it was designed to take account of the situation that the noble Earl indicated; in other words, that given that ICA followed such a long-term illness or a disability and was a recognition of the costs of caring for that child, this would indeed effectively be exempt income because it would be grounds for departure. I always understood it to mean that. Perhaps the Minister can confirm my understanding. If it is not the case, then the noble Earl is right: we need to revisit this provision.

Lord Mackay of Ardbrecknish: Perhaps I may address the noble Earl's amendment first. He seeks to ignore invalid care allowance in assessing a parent's income under the maintenance formula.

Benefits such as disability living allowance, which are paid to recognise the special needs of disabled people, are ignored under existing rules. However, invalid care allowance is paid to someone of working age who cares for a severely disabled person. It is essentially an earnings replacement benefit, like unemployment benefit and incapacity benefit, and as such is treated in the same way in the formula as the earnings which it replaces.

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Very few absent parents will receive this benefit. Those who do are unlikely to have the means to pay more than the minimum amount of maintenance, and may not be required to make any payment at all—for example, if they have a dependent child in their own household.

Where a parent with care receives the benefit, she would normally need to claim income support, so would in any case be treated as unable to contribute to child maintenance. The only absent parents likely to benefit from this amendment are those who have their maintenance reduced under the protected income rules. If they have a new partner who receives invalid care allowance the effect of the amendment would be a reduction in their maintenance liability.

I am asked about paragraph 2(3)(c) of new Schedule 4B. This will deal with cases where someone in the parent's family is ill or disabled and has costs in excess of any benefit provision. "Costs" in this regard means such things as transport, heating, and so on. It refers to those kinds of costs and not, as the noble Baroness suggested it might mean, the invalid care allowance. It refers to costs in excess of any benefit provisions that somebody may receive in these circumstances.


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