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Lord Higgins: Perhaps the noble Baroness could clarify something before she leaves that specific point. She argued that the balance would still be this way if the marriage had not broken up and if we were talking about an "intact family". But if it were an intact family and the wife earned much more than the husband, surely she would contribute more.
Baroness Hollis of Heigham: Yes. She would contribute more because the whole family would enjoy a higher standard of living in which the child would participate. Perhaps I may have another go at trying to see whether I can get the noble Lord to understand our position.
I should like to suggest four reasons why this is a matter concerning the child's rights. The first is grounds of equity. I have already said that research has estimated that around 30 per cent of a family's income is spent on the children and on extra costs; for example, housing, clothes, and so on. The woman contributes her 15 per cent because she maintains the child, while the man contributes his 15 per cent by paying cash maintenance because, after all, the child is not living with him.
Where the woman has a higher income the child enjoys a higher standard of living. That care may be in the form of cash, it may be her time or it may be in the form of opportunity costs. Perhaps I may give the Committee some examples. Let us say that the woman is on £7,500 a year (£150 a week) and the man is on £10,000. He will contribute £30 a week to the child's support, while she and the child will be on £7,500. They will probably be living in modest, rented accommodation and will have to watch carefully what is spent on food. They will probably have to economise on things like fresh fruit, and so on, and will have to search for the least expensive clothes that can be found. Indeed, they will probably have to think twice as to whether they can afford a holiday, other than one which means staying with friends.
I hope that that is not too much of a caricature of how a lone parent on £150 a week might be living, together with, say, the £30 coming in from the non-resident parent. However, let us assume instead that the man earns £10,000 and the woman earns £20,000 a year. What then would the child enjoy? It is possible that the child would be living in an owner-occupied house with more space and a garden, situated in an area that is more attractive to the child in terms of parks, and so on. The extra money would also be spent
Those advantages would not come from the man's £30 contribution per week; it would come about because the woman was earning £20,000 a year. As a result, the child would be able to enjoy all of those benefits by virtue of the woman's increased income. She would be paying their joint bills and he would be making a constant contribution related to his ability to pay. The difference in the standard of income between the child whose parent is on £150 a week (£7,500 a year) and the child whose parent receives £400 is huge. It arises because the woman is able to offer a higher standard of living than the child would otherwise enjoy. That is her cash contribution towards paying the bills--the mortgage, the school trips, the holiday and the clothes--and it goes over and beyond her time as carer and her opportunity costs. Indeed, without the child, she might be able to earn even more.
I do not understand why noble Lords opposite do not accept the fact that the difference between the standard of living that the child will enjoy where the woman earns £7,500 and the father earns £10,000 and where the mother earns £20,000 and the father earns £10,000 is expended in part and proportionately on the child. This means that the child is supported in a more attractive and certainly more comfortable lifestyle than would otherwise be the case. That is the first point: the child enjoys the standard of living provided by the parent with care. Therefore, because the mother is paying in kind, so to speak, as well as in cash, the child has a right to expect that the father's contribution should not be reduced accordingly.
Secondly, I turn to the grounds of simplicity. At present, if the man has a second family--whether he has one, two or three children in that second family, and whether or not they are his biological children with the new partner or the step-children whom the new partner brought into the relationship--the children in that family are treated in the same way. They are offset against his income before we apportion the 15 per cent for the first family.
If her income--that is, the parent with care--is to be taken into account, I suggest that the income of his new partner should be taken into account in assessing what she can contribute to the stepchildren, as well as to the biological children, in the second family. If her income as well as the man's is to be taken into account for the first family, one must do that for the second family. However, some of those children will not be their joint children; they will be stepchildren. In that case we should consider the income of his partner's ex-partner in contributing to the stepchildren. While we are considering four people's incomes, we might just as well throw in that of the fifth, which is, of course, the
What have we done? We have moved from considering one assessment--the man's--to two assessments--the parents with care--to three assessments--the man's new partner's--to four assessments--the man's new partner's ex-partner--and possibly a fifth assessment--that of the new partner of the parent with care. That comprises five income calculations instead of one. By withholding one piece of information five people could delay the maintenance assessment. Does the Committee in all honesty believe that assessing five people's incomes on a worst case scenario would result in the children receiving more maintenance?
My third point is that on the ground of common sense, that is not worth it. Parents with care generally are poor. Some 96 per cent of parents with care have incomes of under £100 a week. Only 7,000 have incomes of over £10,000 a year. Only 200 in the entire caseload of 1.2 million have incomes of over £25,000 a year. Therefore potentially we could assess five people's incomes in each of the 600,000 or so private cases to calculate the woman's contribution in 200 cases, even though the child already enjoys the higher standard of living that she is providing. The amount that would result from that elaborate la ronde arrangement of maintenance would be small.
For example, a non-resident parent with net earnings of £250 a week and one child pays £38 a week. If the parent with care was one of the 200 I have mentioned--that figure is probably by now 100--with earnings of £28,000 a year, under the penny in the pound formula his maintenance would be reduced from £38 to £33 a week. We would have to consider 600,000 cases and five people's incomes to pick up 200 cases to save him paying a fiver a week. Is that sensible?
Fourthly, apart from the delays in making the assessment, it is also costly. The cost of the IT system--about £10 million a year--would be several times more than the total sum collected. Given that the man's share is net, we would have to do elaborate calculations about whether the woman's was net or gross. I hope that in the light of arguments about equity, simplicity, the standard of living of parents with care who are poor, and the costs and delays, the noble Lord opposite will recognise that this is simply not an amendment that is worth pursuing. I hope that he will concede that point not just on grounds of principle--although there is a principle here about which I feel strongly--but on the ground that such an amendment would produce expensive and complicated outcomes which, because of the delays I have mentioned, would thwart the payment of maintenance to children.
Baroness Carnegy of Lour: The noble Baroness has produced a wonderful argument and she has all the details worked out. However, she completely neglects the fact that unearned income is not taken into account. That could alter the argument. She clearly has not listened to the noble Earl, Lord Russell, who
Earl Russell: I understand where the Minister is coming from. She is coming from a formula-based sense of justice. But to my mind she has illustrated more clearly than I could ever have done myself why a formula-based attempt at justice must always be unjust because it cannot take account of circumstances. The Minister has repeated again her arguments about complexity. If you set out to avoid complexity, you set out to avoid the real world. Many people have tried to do that, no one as far as I know has yet succeeded. All the arguments about complexity that the Minister developed are arguments that bite only on those who believe in doing justice according to a formula. We on these Benches are not among that number. We therefore find the basis of those arguments has no purchase on us.
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