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Earl Russell: In a cursory way.

Baroness Hollis of Heigham: How could the noble Earl invite me to do something in a cursory way?

Earl Russell: The noble Baroness mentioned the time of night.

Baroness Hollis of Heigham: Every academic listening to the noble Earl should reject such a phrase.

The clause substitutes a new Section 12 which allows liability to be set at a default or interim rate where it is not possible to make a decision on full liability. In the existing scheme a punitive interim maintenance assessment is imposed where full information cannot be obtained or the non-resident parent fails to co-operate with the CSA. However, these assessments do not work. The interim maintenance assessments are very high--averaging about £90 a week--and the vast majority of non-resident parents, almost 90 per cent, do not pay a penny. That is largely because by the time the agency imposes such a punitive interim maintenance assessment--hereafter known as an IMA--large arrears have already built up and enforcement becomes difficult. If there is a cliff to climb, people do not climb it, particularly when the non-resident parent is self-employed. There is no incentive on the non-resident parent to pay the interim assessment because when, finally, the information is supplied, liability reverts to the full maintenance assessment, which is nearly always lower.

In the new scheme we will be making decisions about maintenance in a matter of days. Where a non-resident parent refuses to provide information about his income we will be able to get it either direct from his employer or, in self-employed cases, via the Inland Revenue. Parents who refuse to provide information will also face fines of up to £1,000. However, there may be some circumstances where a final decision on liability cannot be reached straightaway; for example, where someone has recently started self-employment--he has stopped being employed and has become self-employed--and it is not straightforward to estimate what his current income is and therefore what his liability is, or where a variation application remains outstanding. To ensure that some simple

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maintenance is, nevertheless, paid in these cases we are introducing a simple system of default rates to get maintenance flowing. We want to avoid debts building up and we want people to pay as soon as possible.

Clause 4 provides for default rates of liability to be used where there is not enough information to calculate a rate of maintenance liability. We intend that default rates of maintenance will be put in place quickly and that they will be set according to whether there are one, two or three or more children to be maintained. We envisage rates of £30, £40 and £50 for those children, which reflects the average net income of the non-resident parent. In other words, they are not punitive. They are simply an averaging--a default payment which someone will pay until the final determination has been made. This will prevent large amounts of arrears building up and, because default rates will be put in place quickly, they will be easier to enforce.

An interim maintenance decision will be put in place where an application for a variation was made at the outset but has not been determined at the point where the information is available to the Secretary of State to make a Schedule 1 calculation. The powers in this clause will be used to get maintenance flowing where all of the information needed to calculate final liability cannot be obtained quickly. The clause helps to ensure that payments will come regularly.

Regulations will be used to set out the procedures to be followed in making decisions about the imposition and amount of the default rate. Procedural rules are more suitable for secondary legislation and the default rate, which is intended to reflect average child support liabilities, will need to be updated from time to time to reflect changes in earnings. I am pleased to say that the Delegated Powers and Deregulation Committee, when it considered this legislation, found it necessary to comment on only a few delegated powers. It did not comment on the delegated power in Clause 4.

Amendment No. 43 would compromise our ability to deliver a flexible and responsive scheme which allows maintenance to flow. The scheme is not punitive but is based on the average earnings or the average income of non-resident parents and gets the maintenance flowing early. In the light of that explanation, I hope that the noble Earl will feel able to withdraw the amendment.

Lord Higgins: Before the Minister sits down, it may be more convenient to raise this point at this stage. Is it the case that if a person overpays, that person does not receive the money back?

10.45 p.m.

Baroness Hollis of Heigham: If it is a default payment, yes. We do not envisage that happening very often. The kind of situation where we envisage a default payment occurring--an interim maintenance payment occurring--is where someone has, for example, been stringing the department along for quite a long period of time. The normal situation is that a

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maintenance assessment is sent out to someone within four to six weeks. Therefore, questions of default payments should not arise. Where we suspect they are likely to arise is where there is, for example, a collusive employer: it may be a small family business, a garage, for example, in which the son is working with the father and they are stringing the system along.

We want the default powers to be available if at the end of the day someone is, to put it colloquially, messing the agency around and we want the money to flow. The provision is not punitive in the sense that the figure is an average amount which we believe he should have been paying all along. If he pays properly, he will move on to his real assessment, which may be higher or lower. If his real assessment is higher, he will be expected to pay the rest; if it is lower, he will not be given a refund, so to speak, because he should not have got into a default situation. Had he come clean with the agency, an interim maintenance assessment based on his estimated income would have been in place. I suspect that the noble Lord is anticipating some other amendments which may arise later. With that information, perhaps he may feel able not to move them.

Earl Russell: My Lords, if the Minister will forgive my intervening, who is the judge of whether the person is stringing the system along?

Baroness Hollis of Heigham: To produce a maintenance assessment, the agency basically needs only three pieces of information: the name of the non-resident partner's employer, his net earnings and the number of children he has. That information should be able to be produced by means of a telephone call in a matter of hours. There may be occasions when a person is, for example, away on holiday, but in the normal course of events that information should be available to the agency within a couple of days. The agency should, in turn, be able to set the estimate of the maintenance he should pay within a matter of a few days and that money should be flowing in four to six weeks.

If the process is drawn out--if he fails to produce information about his earnings and the like or the employer says that he cannot give certain information--at that point we may need the backstop of default powers. I do not conceive of their being used very often. Given the simplicity of the system and the alternative of using a fine and adding £8,000, that may be a more appropriate way of proceeding. But the default powers are there if after an appropriate period of time we have failed to obtain the information to make the maintenance assessment and to get the money flowing.

This provision replaces the interim maintenance assessment. The previous administration recognised the need for a punitive interim maintenance assessment. Our proposal is not punitive. It is based simply on average payments. But we need a backstop in case someone strings the agency along and elongates

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a process which can be completed in a 10-minute telephone conversation. We need that power for the sake of the children.

Earl Russell: Has the Minister, in a way that is not in the least cursory, told me that the Secretary of State is judge and party in his own cause?

Baroness Hollis of Heigham: Obviously, if this is regarded as unreasonable the person will have the right to go to a tribunal and to contest the matter. At the end of the day, the information required to determine an assessment is something that I suspect every person in this Chamber could produce simply by direct answer to a question and without referral to any other document.

We are not talking about the complicated arrangements that currently exist whereby it would be reasonable for the non-resident parent to have to consult records to see whether he has kept them and so forth. There can be no excuses for delay, apart from circumstances where, for example, someone is changing his occupation or seeking a variation on the grounds of high contact costs and the like--whereupon the assessment will then be an interim maintenance assessment which is not a default assessment but based, by discussion and negotiation, on the best assessment of the person's income. The default power is there where someone is failing to respond in a reasonable way and is stringing the agency along. We are setting down a working assumption of what he should pay. If he does like it, the answer is to get a move on.


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