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|Child Support, Pensions And Social Security Bill|
These notes refer to the Child Support, Pensions and Social Security Bill
Child Support, Pensions And Social Security Bill
These explanatory notes relate to the Child Support, Pensions and Social Security Bill as brought from the House of Commons on 5th April 2000. They have been prepared by the Department of Social Security in order to assist the reader of the Bill and to help inform debate on it. They do not form part of the Bill and have not been endorsed by Parliament.
The notes need to be read in conjunction with the Bill. They are not, and are not meant to be, a comprehensive description of the Bill. So where a clause or part of a clause does not seem to require any explanation or comment, none is given.
The notes start with a brief overview of the Bill as a whole, outlining the different measures and setting them in context. The notes are then divided into five parts that provide the background to the changes and detailed commentary on the clauses for each of the areas covered by the Bill. Certain overarching issues (for example, the Bill's financial effects) are grouped at the back of the document.
At the end of the notes there is a glossary of some of the terms that are referred to in the notes. These are marked in the text with an asterisk. Social security benefits are referred to by their common names and abbreviations (for example, "Jobseeker's Allowance" or "JSA", rather than by the terms that appear in the legislation (for example, "a jobseeker's allowance").
Unless otherwise indicated, figures are expressed in 1999-2000 price terms.
OVERVIEW OF THE BILL
PART I: CHILD SUPPORT
PART II: PENSIONS
Chapter I: State Pensions
Chapter II: Occupational and Personal Pensions
Chapter III: War Pensions
PART III: SOCIAL SECURITY ADMINISTRATION
Loss of benefit for breach of community order
Housing Benefit and Council Tax Benefit
Child Benefit disregards
Social Security Advisory Committee
PART IV: NATIONAL INSURANCE CONTRIBUTIONS
PART V: MISCELLANEOUS AND SUPPLEMENTAL
FINANCIAL EFFECTS OF THE BILL
PUBLIC SERVICE STAFFING EFFECTS
SUMMARY OF REGULATORY IMPACT ASSESSMENT
EUROPEAN CONVENTION ON HUMAN RIGHTS
Background to the Bill
1. In March 1998, the Government set out its broad welfare reform agenda in the Green Paper entitled New ambitions for our country: A NEW CONTRACT FOR WELFARE (Cm 3805). The central principle espoused in the Green Paper was "work for those who can, and security for those who cannot."
2. Since then, the Government has legislated for a number of reforms in the Welfare Reform and Pensions Act 1999 and has published two main documents of relevance to this Bill, to take forward that broad agenda:
3. In addition, the Government has reviewed the operation of the National Insurance system, the way in which the appeals system for War Pensions operates, enforcement of community punishments, and the powers held by fraud inspectors.
The measures in the Bill
4. The main elements in the Bill are:
PART 1: CHILD SUPPORT
The current system
5. The current system dates from 1993, established by the Child Support Act 1991 (the 1991 Act). In the preceding decade, while the number of children living in lone-parent families increased substantially, the proportion of children receiving maintenance fell - in 1989, 23% of lone parents claiming Income Support* were receiving maintenance, compared to around 50% in 1979. The new child support system was intended to reverse this decline, by providing consistent rules for assessing maintenance liability and a readily accessible means for collecting and enforcing payment that was due.
6. The 1991 Act set out the structure of a maintenance formula for calculating child support liability. This formula, which took into account the income, housing costs and family responsibilities of both parents, replaced the largely discretionary decisions on maintenance taken by the courts. A system was built up around this formula, administered by the new Child Support Agency (CSA) to ensure the correct calculation of the liability, the collection of maintenance, and enforcement if payment was not forthcoming.
7. Further regulations and the Child Support Act 1995 (the 1995 Act) built upon the 1991 Act. In particular, the 1995 Act introduced the Child Maintenance Bonus, intended as an incentive to encourage parents with care* into work and also introduced the departures scheme which allowed for the assessment of child support liability to take account of exceptional circumstances not recognised in the formula-based assessment.
The proposals for reform
8. The Government's plans for reform of the current system are set out in the White Paper A new contract for welfare: CHILDREN'S RIGHTS AND PARENTS' RESPONSIBILITIES (Cm 4349) published on 1st July 1999. Proposals were first published in July 1998 in the consultation document CHILDREN FIRST: a new approach to child support (Cm 3992). Over 1500 written responses were received which have informed the current plans.
9. The White Paper identified a number of problems with the current system.
10. The key changes proposed in the White Paper to address these issues were:
11. Not all of the proposed reforms require primary legislation. For example, the child maintenance premium can be introduced through amendments to the relevant secondary legislation. And, to implement the reforms, substantial changes to the way that the CSA operates will be necessary, including the introduction of new computer systems.
The measures in the Bill
12. The provisions in the Bill, which replace the existing formula with a simpler system of rates and clarify the responsibilities of parents, cover in particular:
COMMENTARY ON CLAUSES
Maintenance calculations and interim and default maintenance decisions
Clause 1: Maintenance calculations and terminology
13. A central part of the Government's reform of the child support system is a new way of working out child support liability. In place of the existing formula, which includes a wide range of income and expenses in the assessment, will be a simpler system of rates, based solely on:
14. It is intended that the maintenance calculation should be based on one of three rates: a basic rate, a reduced rate or a flat rate.
15. The new calculation rules allow for apportionment of the liability where there is more than one person with care*. The provisions for apportionment of liability are in Schedule 1, paragraph 6. The rates can be modified in shared care cases, that is, if the non-resident parent has any child for whom he is liable to pay child support living with him for at least one night a week. Provision for shared care is set out in Schedule 1, paragraphs 7 to 9. Maintenance liability can also be varied in exceptional cases - the provisions for varying the liability are in clauses 5 to 7 of this Bill.
16. Sections 4 and 7 of the 1991 Act provide that persons with care, non-resident parents and, in Scotland, qualifying children, can apply for a maintenance calculation. Section 6 of that Act (substituted by clause 3) provides that parents with care who claim Income Support or income-based Jobseeker's Allowance can be treated as having applied for a maintenance calculation. It is the duty of the Secretary of State to reach a decision on any application for which he has jurisdiction.
17. Sections 4(10) and 44 of the 1991 Act provide circumstances in which there is no jurisdiction. These provisions are amended by clauses 2 and 22 of this Bill.
18. Clause 1 provides the basis for the maintenance calculation and the rates that will be used to determine maintenance liability.
19. Subsection (1) substitutes a new section 11 (dealing with the rules for maintenance calculations) in the 1991 Act.
New section 11: Maintenance calculations
20. This section places a duty on the Secretary of State to make a maintenance calculation. It provides, for the purposes of revision, supersession and appeal, that the outcome of the calculation is a decision about whether child support maintenance is payable.
21. New section 11(1) and (2) provide that the Secretary of State shall deal with an application for a maintenance calculation in accordance with the Act and make a decision about whether, and how much, child maintenance is payable, or decide not to make a calculation, or make a decision under section 12.
22. New section 11(3) to (5) allow the Secretary of State to stop acting on an application treated as made under section 6(3) if the parent with care ceases to fall within section 6(1). (Section 6(3) of the 1991 Act is introduced by clause 3 of this Bill. It provides that a parent with care who claims or receives Income Support or income-based Jobseeker's Allowance can be treated as having applied for a maintenance calculation.) However, if the parent with care still wants to apply for a maintenance calculation (in other words she wants it treated as though she has applied under section 4 of the 1991 Act) and there is no court order or pre-1993 written maintenance agreement* in place preventing this, then she has one month to respond to the letter telling her that the Secretary of State intends to stop acting. Where the parent with care is content for the Secretary of State to stop acting on her application, but the non-resident parent has already been contacted, then the non-resident parent must be notified. If the parent with care is herself prevented from applying under section 4 then she must be notified of this. These provisions mirror subsections (1A), (1B) and (1C) of the existing section 11.
23. New section 11(6) provides that the amount of a maintenance calculation shall be fixed by the rates set out in Part I of Schedule 1.
24. New section 11(7) provides for maintenance where a variation has been agreed to. New section 11(8) refers to Part II of Schedule 1.
25. Subsection (2) of clause 1 amends the 1991 Act to replace existing child support terminology, where it appears in the 1991 Act, with the new terminology to be used in the reformed child support scheme.
26. Subsection (3) introduces a new Part I of Schedule 1 to the 1991 Act.
Schedule 1: Calculation of weekly amount of child support maintenance
27. This Schedule replaces Part I of Schedule 1 to the 1991 Act with a new provision that sets out the way that the weekly amount of child support maintenance will be calculated.
Paragraph 1: General rule
28. This paragraph provides the foundation on which child support liability is based.
Sub-paragraph (1) provides for child support liability to be calculated at the basic rate except where rules provide that a reduced rate, flat rate or nil rate liability is appropriate. These terms are explained in paragraphs 2, 3, 4 and 5.
Sub-paragraph (2) provides for the amount payable to the parent with care to be the amount calculated using the appropriate (applicable) rate or, where there is more than one parent with care, a proportion of that amount (see paragraph 6) in either case, reduced as necessary where the non-resident parent shares the care of a qualifying child* (see paragraphs 7 to 9).
Paragraph 2: Basic rate
29. This paragraph provides the rules for determining the basic rate for child support liability.
Sub-paragraph (1) provides for the basic rate to be calculated at a set percentage of the non-resident parent's net income. Where the non-resident parent is liable for maintenance for one qualifying child, the basic rate is 15%. For two children, the basic rate is 20% and for three or more children, the basic rate is 25%.
Sub-paragraph (2) provides for the non-resident parent's net income to be reduced by 15%, 20% or 25% before the provisions of sub-paragraph (1) are applied, where he has one, two or three or more children living with him (relevant other children).
Paragraph 3: Reduced rate
30. This paragraph provides the rules for determining which non-resident parents will have a liability calculated at the reduced rate.
Sub-paragraph (1) provides that a reduced rate is payable where the non-resident parent's net income is less than £200 but more than £100, unless the non-resident parent is liable for the nil rate or flat rate of liability.
Sub-paragraph (2) provides for the reduced rate (or its method of calculation) to be prescribed in regulations. The intention is that regulations will provide for percentages to be applied to net income so that liability increases in proportion to the amount by which net income exceeds £100.
Paragraph 4: Flat rate
31. This paragraph provides the rules for determining which non-resident parents will have a flat rate liability.
Sub-paragraph (1) provides for the flat rate to apply where the non-resident parent has net weekly income of £100 or less; or he is in receipt of a prescribed social security benefit, pension or allowance, or he or his partner (if any) is in receipt of prescribed benefits. The flat rate is not payable in a case where a non-resident parent has a nil liability (see paragraph 5).
Sub-paragraph (2) provides for the flat rate to be payable at a different amount where the non-resident parent has one or more partners who are also liable to pay child support, and either the non-resident parent or his partner is in receipt of a prescribed benefit (intended to be Income Support or income-based Jobseeker's Allowance). For example, in a case where both members of a couple in receipt of Income Support are non-resident parents, it is intended to provide for the non-resident parent's liability to be one half of the flat rate amount.
Sub-paragraph (3) provides for the prescribed social security benefits, pensions and allowances in sub-paragraph (1)(b) to include those paid to non-resident parents under the law of countries other than those in the United Kingdom, for example a state retirement pension paid to an EU national.
Paragraph 5: Nil rate
32. This paragraph provides that the non-resident parent will be liable for a nil rate where he has a net income of below £5 or is of a prescribed description. It is intended to prescribe full time students in advanced education and prisoners among the categories for this purpose.
Paragraph 6: Apportionment
33. The provisions of this paragraph deal with cases where there is more than one person with care and more than one qualifying child in respect of the same non-resident parent. In these circumstances, the maintenance liability of the non-resident parent will be apportioned between the persons with care. The non-resident parent's liability is divided by the number of qualifying children and then shared between the parents with care in proportion to the number of qualifying children in each family.
Paragraph 7: Shared care - basic and reduced rate
34. The provisions of this paragraph set out the rules for adjusting maintenance liability where the non-resident parent shares the care of a qualifying child (see paragraph 15) and the maintenance liability is calculated at the basic or reduced rate.
Sub-paragraph (1) restricts a reduction in liability for shared care under this paragraph to maintenance payable at the basic or reduced rate. Paragraph 8 (see below) provides for the effect of shared care on a flat-rate liability.
Sub-paragraphs (2) to (4) provide that where the non-resident parent has overnight care of the child for at least 52 nights in total during a prescribed 12 month period, the amount payable to the parent with care of that child will be decreased by one-seventh for care on 52 to 103 nights, two-sevenths for care on 104 to 155 nights, three-sevenths for care on 156 to 174 nights and one-half for care on 175 or more nights. Where a period of 12 months is not available, paragraph 9 allows the Secretary of State to make regulations giving him flexibility to use a period other than 12 months.
Sub-paragraph (5) provides that where the parent with care is caring for more than one qualifying child of the same non-resident parent then the reduction will be the sum of the relevant fractions divided by the number of such qualifying children. For example, where the non-resident parent shares the care of two children, one for an average of one night a week, and the other for an average of two nights a week, his liability is reduced by 3/14ths.
Sub-paragraph (6) provides for the maintenance liability to be reduced by a further £7 for each qualifying child for whom care is equally shared.
Sub-paragraph (7) restricts the amount by which the provisions of this paragraph can reduce liability so that the non-resident parent cannot have a liability of less than £5. Where there is more than one person with care and more than one qualifying child in respect of the same non-resident parent, this sum will be apportioned between the persons with care in accordance with the provisions of paragraph 6.
Paragraph 8: Shared care - flat rate
35. The provisions of this paragraph apply where the non-resident parent has a flat rate liability because he is in receipt of a prescribed social security benefit, pension or allowance or he or his partner are in receipt of prescribed benefits or he or his partner receive prescribed benefits and both are non-resident parents.
Sub-paragraph (2) provides that where a non-resident parent shares the care of a qualifying child for at least 52 nights in total during a prescribed 12 month period, his liability to the parent with care of that child will be nil. However, his liability to any other parent with care to whom he is liable to pay maintenance will remain.
|© Parliamentary copyright 2000||Prepared: 6 April 2000|