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Earl Russell moved Amendment No. 33:


Before Clause 18, insert the following new clause:

("Short title, commencement and extent, etc.: amendment of section 58 of 1991 Act

. In section 58 of the 1991 Act, in subsection 2, at end insert—
"subject to the provisions of subsection 4A below, after subsection 4, insert—
(4A) At or before 6th July 1996, the Secretary of State shall lay before Parliament a Report on the net saving or loss to the taxpayer resulting from the implementation of this Act." ").

The noble Earl said: My Lords, the amendment asks for a report on the net gain or loss to the taxpayer as a result of implementing the 1991 Act. The Minister has been holding forth a great deal—most recently on the previous amendment—about the benefit to the taxpayer from implementing the principles of the Act, but that is rather begging the question, because it is a very wide open question as to whether the taxpayer does in fact benefit at all from the 1991 Act.

I am sorry for putting the amendment down late. The Minister knows, I think, what finally provoked me into doing it. It was a press report in the Independent of 29th June which claimed that the agency had benefited the taxpayer by £1.5 billion since 1991. I rang up the Minister's office because I wanted to see the figures upon which the DSS, which was the stated source, had based that. It appears that that press release never went through the DSS press office. If the Minister has discovered where it came from, I would be glad to know, because if the author of that report had any figures which I do not know, I am perfectly willing to listen to them.

I do not assert that my calculations on this are necessarily accurate. That is why I am calling for a report: so that there can be an independent, impartial attempt to assess what in fact are the gains and losses.

Savings to the taxpayer may come in two possible forms. They can come from maintenance collected or from benefits saved. It is difficult to be certain of maintenance collected or assessed for the reason I was touching on just now: that the Audit Commission found the CSA's accuracy rate was about 50 per cent. In fact the agency and the Audit Commission had a good deal of discussion about what was collected. Their figures are approximate. But they seem to be fairly close to each other, and we can take them to have a rough approximation to accuracy.

The Audit Commission found that the agency had collected £74 million in the financial year 1994-95. Of that, it had paid out £26.7 million to the parents with care and £47.8 million to the Secretary of State. By contrast, maintenance uncollected stood at £525.5 million, of which £87 million was owing to the parent with care and £438 million to the Secretary of State.

Unlike the Government, the Audit Commission does not see wilful refusal as a sufficient explanation of that shortfall. It finds that the total outstanding debt contains

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a growing core, not yet quantified, which is not likely to be collected. That is the agency's own evidence to the Audit Commission.

The Audit Commission found that 29 per cent. of those arrears arise during the period between when the absent parent is sent the maintenance inquiry form and the making of an assessment or an interim assessment. That is precisely the period which produces massive assessments of arrears which tend to break the back of the camels upon which they are loaded. The Audit Commission finds also that a number of the interim assessments cannot be collected because they have been given incorrect effective dates and are not legally enforceable. So that backlog of arrears is not necessarily likely to be cleared very fast.

The Audit Commission also found:


    "The backlog of very old cases is likely to contain disproportionate numbers where the maintenance yield will be low even when assessments are completed".

It does not hold out much hope of improvement in a level of return which, as it runs at present, is unlikely to cover the CSA's operating costs. We get a superficially slightly more encouraging picture from a Written Answer at col. 164 of 7th March in another place. That shows a level of maintenance collected of £135 million. However, when it is broken down it emerges that £108.61 million is collected under arrangements made by the old liable relative unit. It is pre-1991 maintenance still coming in.

As the noble Baroness, Lady Faithfull, pointed out on Second Reading, it has a much better record than the CSA. According to Miss Chant's Answer to Donald Dewar on 7th March, the CSA claims to have collected only £44.48 million. That is rather less than the Audit Commission credits to it. The difference is not perhaps profound but it illustrates the difficulty of arriving at accurate figures on the subject. That is one of the reasons why I am calling for a report.

Is the picture any better when we look at benefit savings rather than maintenance collected? At first sight, as regards the 7th March Written Answer, the picture looks rather better. In that Written Answer, Miss Chant claims a figure of £186.83 million for benefit savings. But that too evaporates when it is broken down. Only £20.43 million of that is savings as a result of the collection of maintenance. The remaining £165.95 million is listed as non-maintenance cessations following action by the agency.

That is a very carefully chosen Whitehall form of words indeed. In other words, in plain English, the women have simply gone off benefit. Before we give any credit to the agency for their going off benefit—or discredit, as the case may be—it would be nice to know why they have gone off benefit.

The Minister is estopped from claiming that that figure is an achievement of the CSA because in Committee he admitted that he had not the first idea why they had gone off benefit. In his own words:


    "it would be a huge task to keep details of everyone who left benefit and what happened to them".—[Official Report, 20/6/95, col. 191.]

That is fair enough, but, if he says that, he cannot insist that that £165 million should be counted as a saving

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achieved by the agency. Some part of it may be. It may be a large part or it may be a small part, but at present, so far as I can discover, we simply do not know. If we are to assess the consequence of the Act to the taxpayers, we need to know.

The Minister referred to a lot of coming and going on benefit. In saying that, he touched on the nub of the problem. Before the CSA came in, each month an average of 24,000 single mothers went off benefit for the normal reasons; because they got a job, they got married and so forth. Have all those ordinary "goings off" benefit, which occurred frequently before the Act, been listed as though they were achievements of the CSA or does, as I suspect, no one know the answer? If we do not know the answer, it behoves the Minister to show a good deal less confidence than hitherto in claiming that the Act has been for the benefit of taxpayers.

We have a clear figure for the gross income raised by the agency; it is £64 million if we accept Miss Chant's figures and £67 million if we accept the Audit Commission's figures; £44 million or £47 million in maintenance collected; and £20 million in benefit saved. Any income generated by the agency above that figure rests only on conjecture. But to obtain the real figure—the net figure for which I have asked—we need to calculate it net of the costs of running the CSA.

The costs of this Bill alone come out at £34 million for 1996-97, if the calculations in the Explanatory and Financial Memorandum are correct. I do not know—and I should like to know—whether the calculations in the memorandum are inclusive or exclusive of the costs of employing 750 additional staff. If inclusive, they will be rather poorly paid.

There are start-up costs of the CSA which the Minister on 25th April said were £146 million. I shall give the Minister the benefit of the doubt on that or any possible doubt that I can find. I am not calculating that into any annual figure because I do not know over how many years it needs to be divided. Moreover, I am not calculating any of the income which might have been collected by the Liable Relative Unit if it had continued. It might well be a great deal more than the agency has brought in but, since there is a doubt, I propose to allow the Minister the benefit of it.

On the other hand, the operating costs of the CSA must be allowed. On the Minister's own figure of 25th April, that was £139 million. Those must be allowed in full. Therefore, counting the costs of this Bill and the Minister's Answer, the costs of running the CSA are running at at least £173 million per year. Therefore, at the most generous figure to the Minister at which I can arrive, the CSA is costing the taxpayer a net loss of £109 million every year. It would be very nice to know whether that figure is anywhere near accurate. If it is, everything that the Minister has said about the interests of the taxpayer should be retorted upon him. I do not believe that the Government know any better than I do whether it is accurate. That is why I am asking for a

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report, because I should like to know whether the CSA is a white elephant or only a very pale grey one. I beg to move.

9.45 p.m.

Lord Mackay of Ardbrecknish: My Lords, the noble Earl has explained that this clause provides that the Secretary of State shall lay before Parliament a report detailing the net savings or loss to the taxpayer resulting from the implementation of the 1991 Child Support Act.

First, perhaps I may deal with the great mystery which the noble Earl managed to make out of the report in the Independent. In fact, the six-line article, which in the jargon of newspapers is called a filler, was not taken from a statement issued by the DSS. In fact, it was information from a freelance journalist who took it from the Permanent Secretary's comment to the Public Accounts Committee. I am quite happy to tell the noble Earl that the summation is correct although the reference to benefit fraud may perhaps not be entirely accurate.

I should say at once that we have no objection whatever to informing Parliament of the financial effects of this or any other legislation which my department has brought before your Lordships' House. Indeed, this rather abbreviated report comes from the Permanent Secretary's comments in public to the Public Accounts Committee. Most important Bills with financial implications are prefaced with a financial memorandum which indicates the expected expenditure consequences of the legislation proposed. The Department of Social Security produces an annual report which indicates the cost of its business. That report is available in the Library.

Further, in relation to child support, the annual report of the Child Support Agency also provides information on the cost of the agency and on benefit savings resulting from its work. Noble Lords can see from the 1995-96 business plan that the agency's benefit savings forecast for this year is £540 million, which was a figure used by the Permanent Secretary to get to the £1.5 billion as reported in the Independent. The financial allocation to the agency in the same year is £183 million. Over the first two full years of operating the provisions of the 1991 Act, the CSA was allocated £294 million in running costs and recorded benefit savings of £897 million.

Of course, those benefit savings come from a number of different directions. However, if the savings are as imaginary as the noble Earl thinks, why does he continue to tell us about all those absent parents throughout the country who appear to be being asked to pay, and are paying very considerable amounts of maintenance? I find that a little unusual. If the agency is not collecting very much money, then the size of the absent-parent problem, if I can call it that, in the country must be a good deal less than the noble Earl suggests.

The figures that I have given are those that we are making perfectly clear in public, both in evidence and in parliamentary Answers. They also appear in the agency's report. Therefore, even on that limited measure, the Act has led to considerably more savings to the taxpayer than expenditure from the public purse.

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Although progress on the wider aims of the legislation—to ensure that maintenance is assessed and collected effectively—has been much slower than we would have hoped, the agency is now showing real improvement in output and productivity.

It is not because of any wish to conceal the figures that I cannot support the amendment; indeed, I have suggested that the figures are freely available elsewhere. It is because to place on the statute book an obligation of that nature (an obligation which, once complied with in 1996 would cease to have any effect) cannot be justified. It would look very odd if, a few years down the line, one were to read in the Child Support Act a provision, made long ago, requiring the Secretary of State to make a report some years previously which no longer had any effect.

I will reflect further and discuss with my right honourable friend the Secretary of State, and with the chief executive of the Child Support Agency, whether those figures should form a permanent part of the agency's annual report. In my view, the laying of such a report before the House would then be wholly redundant as the information would be available elsewhere. Indeed, all agency reports and the department's own report are available. Therefore, while I appreciate what the noble Earl is trying to find out, I do not believe that it needs to be done by the means proposed. The information is available in the various reports I mentioned. I believe that it shows that the agency has succeeded in very difficult conditions to make the savings for the taxpayer that I outlined.


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