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Lord Higgins: As I said, I should like to consider that point. I am saying that, from my personal experience, it is certainly a relevant consideration. Of course, the argument the other way concerns the complications that the noble Baroness is constantly arguing against. I do not think that because of the second and third order effects, one should not take into account the first order effect. That is what this amendment is about.

I turn now to what is perhaps the most difficult point to put in politically correct terms. It concerns the point referred to by the noble Baroness who raised the question of the contribution made by the parent with care. I certainly think that one can take that into account. We are not saying that the contributions she makes--whether in kind or in money--should not be taken into account. On the contrary, we think that is so. Amendment No. 26 seeks to deal with that particular point. It states, in particular, that however great her income may be, the contribution of the absent parent should not fall below 50 per cent of what is the formula. We are seeking to adjust that. I gather that a similar system is operated in Australia.

My final point before I sit down--I have spoken far too long--concerns the issue of earned and unearned income. I take the Minister's point that we are not

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proposing at the moment to take into account the unearned income of either the parent with care or the absent parent. Of course, there has always been a long-running debate about whether one should call it "unearned" income. I prefer to use the expression "investment" income. I presume that in the context of this amendment we are talking about investment income.

The noble Baroness raised the possibility that perhaps what is not being taken into account is not investment income but income that is unearned and not announced by one of the partners to the agreement. However, there is a strong argument for either accepting the amendment and taking into account both kinds of investment income; or, even if one did not accept the amendment, taking into account the investment income of the absent parent. I do not understand why that is not happening at the moment.

Baroness Hollis of Heigham: Statistics show that it is not worth it. The only situation in which people are required to come to the CSA is where she is on benefit and, for the most part, he may be on benefit or he may be in work. Other cases are private cases, and those involved in them can make whatever arrangements they wish. Essentially, they would only come to the CSA as a fall-back if there was a dispute. Therefore, if she is on benefit, by definition she cannot have income of more than £3,000, otherwise it would bite into her benefit.

Equally, if she is on benefit and one looks at her income, it would be a very rare situation indeed where she would be partnered by someone who had such a vast income that--given the variation thresholds--his investment income would make a significant difference to the amount to be assessed. If he did have such investment income, one would expect in any such break-up that some of it would have gone over to her as part of the settlement, at which point of course she would no longer be getting benefit anyway and would not be a CSA client.

Lord Higgins: I was rather making the point that one should take into account the investment income of the absent parent, if indeed he has some. I do not understand why that is not so. But that is a relatively narrow point.

We have had a fascinating debate. I am interested in all the views expressed--not least those from the Liberal Democrat Benches. No doubt we shall return to the matter when we come to consider it on Report. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

The Deputy Chairman of Committees (Lord Strabolgi): Before calling Amendment No. 13, I should inform the Committee that, if it is agreed to, I cannot call Amendment No. 14.

[Amendment No. 13 not moved.]

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[Amendment No. 14 not moved.]

The Deputy Chairman of Committees: I should inform the Committee that, if Amendment No. 15 is agreed to, I cannot call Amendment No. 16.

Lord Higgins moved Amendment No. 15:

    Page 89, line 20, leave out sub-paragraph (2) and insert--

("(2) Where the non-resident parent also has one or more relevant other children--
(a) the total number of children cared for shall be calculated in accordance with paragraph (b);
(b) the number referred to in paragraph (a) shall be calculated by adding together the number of qualifying children and the number of relevant other children;
(c) there shall be calculated in accordance with paragraph (d) a sum for deemed child care liabilities;
(d) the amount referred to in paragraph (c) shall be calculated by application of the rates in sub-paragraph (1) to the total number of children cared for;
(e) the basic rate shall be deemed child care liability divided by the number of qualifying children.").

The noble Lord said: Amendment No. 15 is concerned with the total number of children involved in any case. In the foreword to the Green Paper the Prime Minister stated that the system must support families and children. He went on to say that it should be fair to children who will get maintenance they had the right to expect, providing not just financial benefit but tangible proof that they are cared for. We can certainly go along with that proposal. However, in their White Paper the Government said that they would go ahead without discriminating against various categories. That is not what the Government are proposing.

In the Green Paper and in the White Paper two alternatives were offered. Page 10 of the White Paper states that either one would deduct a proportion of the non-resident parent's net income for each of their children in a second family and apply the second rates to the balance or, alternatively, would calculate child support for all the non-resident parent's children in both families and share out the resulting amount according to the total number of children in each family. The amendment seeks to implement the second of those alternatives, avoiding the situation, which the Select Committee was anxious to avoid, of first and second-class children in the second family--those who could count for child maintenance and those who could not. I believe that this issue is worth debating. I beg to move.

Earl Russell: We on these Benches view this amendment with a good deal of sympathy. Under the old legislation the treatment of stepchildren was one of its great failures. I shall not in a hurry forget correspondence from several families in second marriages who were, with some agony, contemplating the prospect that they might have to break up if the legislation was not changed. I shall not forget either the noble Lord, Lord Mackay of Ardbrecknish, playing "the boy stood on the burning deck" when I raised a case where the stepfather was dead and therefore the absent parent was being made to

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maintain the household including him. All the noble Lord could say was that the responsibility for maintaining stepchildren is that of their natural fathers. He was not able to change it for circumstances because the legislation did not allow him to. I have rarely been more sorry for a Minister trying to reply to me.

The basic principle that we must bring to this issue is that all children in a household should count equally. The amendment is a serious attempt to achieve that principle. I like what I have seen about it. I shall listen to the Minister's reply to it but with a presumption that the amendment is heading in the right direction. I am grateful to the noble Lord, Lord Higgins, for tabling it and for moving it.

Lord Northbourne: I have enormous respect for the noble Earl, Lord Russell, but I feel that I have to raise a contrary issue in the context of this amendment. It troubles me that what the amendment says is that it is okay for the father to walk away from his responsibilities to his first children and to take on another family even if he cannot afford it. That surely flies in the face of any attempt we might be making as a society to say that fathers are responsible for the children they bring into the world.

Earl Russell: The point made by the noble Lord, Lord Northbourne, is one that I have discussed many times over, especially with the noble Viscount, Lord Astor, when he was Minister. The point he makes has merit on a moral plane, but people have been doing this since the beginning of recorded history. I could give the noble Lord cases from the seventh century, but I do not think that we need bother now. The point is that the children of such unions do exist. The children of such unions have stomachs. They need to be maintained. I do not believe that visiting the sins of the fathers on the children should be a principle which guides action of the state in its legislative capacity. Once one accepts that, however correct is the noble Lord's point on a moral plane, I do not think it should have priority in guiding legislation. Nevertheless, I understand the basis of the noble Lord's concern.

7.15 p.m.

Baroness Hollis of Heigham: Amendment No. 15 seeks to change the way that child support liability is calculated in cases where the non-resident parent has children living with him in a second family. As the noble Lord, Lord Higgins, said, the amendment provides for the non-resident parent's liability to children in his first family to be a proportionate share of his liability for all the children in his first and second families.

That would mean, for example, that where there is liability for one child, with another child in the second family, maintenance would be assessed as 20 per cent of net income with one half--10 per cent--being paid to the parent with care. That differs from our proposals which provide for allowances for children in the second family--of 15, 20 or 25 per cent--to be deducted from the non-resident parent's net income

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before his liability for maintenance for his first family is calculated. Under the system that we are proposing, where there is liability for one child, with another child in the second family, the non-resident parent would have 15 per cent of his net income deducted for the child in the second family and the maintenance liability would be estimated therefore as 15 per cent of 85 per cent for the first child in the first family as opposed to 10 per cent of 100 per cent, which is the system proposed by the noble Lord. Those are the differences. The noble Lord proposes 10 per cent for each child. Our system docks 15 per cent of the income and then 15 of the 85 per cent that remains goes to the first child. Those are the two systems. Not surprisingly, the responses came back on a gender basis.

We considered the matter very seriously. Some countries go for one system and some countries go for another. We decided to prioritise the first family because 10 per cent of 100 per cent is less than 15 per cent of 85--it is about 12.5 per cent. In the second family we were taking into account all children. We concluded that there should be no first and second class children and that an allowance should be made in the new system for all children who live with the non-resident parent, including any stepchildren. We also decided that any maintenance which the non-resident parent or his partner might be receiving for their children would be totally ignored. Given, therefore, that we were doing so much more for children in the second family, which I think is right and decent, it seemed also only right that we should give a slight tilt to the first family so that it was not substantially disadvantaged.

An example may help. A father has net earnings of £250 a week. He breaks up with his partner. He is liable for maintenance for one child in the first family and the parent with care receives £37 a week as maintenance. That is the 15 per cent on his £250. He then moves in with a woman with three children whom she has brought from a previous relationship or two--none of them his. Under our system, he would now pay £28 a week compared with the original £37. He would be paying £9 a week less by virtue of the responsibilities for the stepchildren. She would have seen her income as the parent with care drop from £37 to £28 because he had moved in with someone who already had children.

Under the amendment, one would add up the three, add the one, make four, and she would receive only £16 a week. So under the terms of the amendment the parent with care would see her maintenance fall from £37 a week to support the child, on an income of £250, to £16 simply because he had moved in with someone who had several children. If he moved out two years later, still with no children of his own, her income would rise again to £37 a week.

That amount of drop-down, over which she has no control and which depends on what he is doing, what relationships he has moved into, and what children his new partner may have brought into the relationship, leaves her income too fragile to his actions. That is why we have gone for the arrangement in the Bill, with a

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slight tilt to the first family. It means that if he, having left that first family, as the noble Lord, Lord Northbourne, said, takes on responsibilities for a second family, he does so knowing what his overriding responsibilities for that first family are. It is still decent. We are still recognising, as is not done under the current system, a greater weight for the children in the second family, but we are not suggesting, for example, in the case I gave that the woman's income could possibly be halved because he has temporarily (or possibly permanently) moved in with a woman with several other children.

If we were to follow the terms of the amendment, in all fairness we should have to exclude any deductions in the second family for stepchildren or children that were biologically not his. Otherwise, it would not be fair: the maintenance that the parent in the first family would receive would be dependent entirely on whom he had moved in with and what children she had. I do not believe that that would be right. I believe it is better to treat all children in the second family alike, whether the biological children or the stepchildren of that family. But that means that, in order to protect the first family from too sudden a drop in income, we need to tilt the calculation to the first family, as our proposals do.

I suggest that this is a package. Either Members of the Committee accept our proposals, which tilt to the first family but allow an offset for all children, including stepchildren, in the second family, or we can do as the noble Lord suggests in his amendments and treat the first children in the first family in exactly the same way as the children in the second family; but then, in all decency, the stepchildren would have to be excluded. I believe that the implications of having "first-class" and "second-class" children in the second family taken into account for assessment purposes would be wrong.

Having made extra provision for stepchildren, we thought it only right to protect the children in the first family by giving that extra tilt. I hope that with that explanation the noble Lord will feel able to withdraw his amendment.

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