Welfare Reform Bill

My Lords, I shall speak also to government Amendments 62BM and 62CA. In doing so, I wish to put these amendments in the context of the reforms they relate to. The Government are committed to supporting lone parents. We spend over £6.5 billion on income-related benefits for some of the poorest lone parents alone. Significant financial support is also offered through the tax credit system and child benefit. Our reforms to child maintenance build on this support that the Government already provide directly to lone parents. Our key aim when reforming child maintenance is to ensure that both parents take responsibility. That includes taking responsibility for paying maintenance and for making the right choices about maintenance. This should be seen in the context of our wider ambition to make it the norm that parents work together in the interests of their children, especially when they no longer live together. Every family is different and the child maintenance system in Great Britain should reflect this. The truth is that the statutory scheme cannot be so detailed and individualised as to be able to deal with every possible circumstance. For too long, parents have been implicitly or explicitly told that the Child Support Agency is the default option. That approach has entrenched conflict and led to an overreliance on the Government providing enforcement action. The CSA-based system has failed, with the statutory schemes costing around £450 million each year. That could be seen against funding for relationship support for separating parents of £30 million over four years. Furthermore, taxpayers support costs of up to £25,000 for some typical CSA cases and up to £40,000 where we need to take substantial enforcement action. That is money spent by the state chasing maintenance from one parent to give to another. This has led to a system where, overall, it costs about 40p to move £1 between parents. The system must change because it is not working properly for parents or children. It does not represent value for money for the taxpayer. The reformed system of child maintenance will be based on the principle that collaboration between parents is best for children. We firmly believe that collaborative child maintenance agreements are longer lasting and parents are more likely to be happy with them. Furthermore, we know wider collaboration between parents is clearly associated with better outcomes for children. I hope that noble Lords will also acknowledge that we cannot be overly simplistic as to where fault lies when it comes to problems establishing maintenance arrangements. In reality, one-third of parents in the CSA identified that they had a friendly relationship with their ex-partners and said there was frequent contact by non-resident parents with their children. Furthermore, these parents reported that their maintenance arrangements were not really a source of tension. The CSA said that it was fairly easy for these parents to discuss financial matters. Our reforms also reflect the fact that over 50 per cent of parents using the CSA told us that, with the right support, they were likely to be able to make a collaborative agreement. Groups working with parents also tell us this. Karen Woodall, director of the Centre for Separated Families, said that, "““the campaign around the proposed changes to the child maintenance system has been largely based on outdated stereotypes around parental behaviour. By offering support to both parents and to the wider family, we believe that the changes will bring about much better outcomes for children””." However, it is surely not the state’s role to intervene and arbitrate in personal relationships between two adults. Instead we wish to support parents to make an informed decision. That was always the intention of the gateway we provide for under Clause 134. It has become apparent that Clause 134 as drafted, referring to reasonable steps, has been interpreted more stringently than we intended. We do not wish to require parents to take multiple steps determined by us before being able to make an application. That would risk establishing a new quasi-judicial function. It would require us to decide whether a parent had taken reasonable steps and is an impediment to making a collaborative agreement. This would be akin to the complex and intrusive bureaucracy that dogged the early days of the CSA. That is the antithesis of our approach and why we have brought forward Amendments 62BL and 62BM. I hope this clarifies our intentions. The amendments make clear that our role is to inform the parent approaching us and invite them to consider whether they can make a collaborative arrangement outside the state scheme. This will normally take place when the parent telephones to discuss their options. Where parents wish to pursue it, we will direct them towards wider sources of support. To further make sure support is available for parents, we have announced today £20 million of additional funding. This will be spent working with voluntary and community groups on streamlining existing support and looking at what additional help is needed. This amounts to doubling government spending on relationship support in 2012-13. I hope that, on that basis, noble Lords will be prepared to support Amendments 62BL and 62BM. Organisations as diverse as the Centre for Separated Families, Families Need Fathers and Relate have all welcomed this announcement. Sarah Caulkin, interim chief executive of Relate, has said that her organisation hopes that, "““this funding will not only allow parents to access support before problems become serious, but also enable as many parents as possible to make their own arrangements to become effective co-parents, which in turn will benefit the whole family””." I can confirm to the House that this is indeed the Government’s ambition. These reforms to support parents in collaborating are coupled with reforms to the state-run CSA system. Perhaps I should make it clear that under our reforms the system will still continue to be heavily state-subsidised. However, we want the state-run system to be smaller, enabling us to free up these resources to help separating families who really need that help. We absolutely recognise that some parents will need to continue to use the state-run service, and we need to do better for them as well. Our starting point for reform is the review by Sir David Henshaw, which was commissioned by the last Government in 2006. The key reform is based around a new scheme recommended by Sir David to replace the Child Support Agency scheme. At the heart of the new scheme will be tough enforcement and collection measures when parents fail to pay maintenance. The Government have developed new processes for identifying those who might not pay and addressing non-payment when it first occurs. The new scheme will also ensure that non-resident parents cannot escape their true responsibilities by refusing to provide us with details on their income. Instead, we will generally access this information from HMRC, which will enable a smoother and faster flow of maintenance to parents with care. The Government are also committed to ensuring that the most vulnerable parents continue to benefit fully from child maintenance. To this end, we are ensuring that child maintenance payments remain tax-free. In addition, we will guarantee that parents keep all the maintenance, even when they are on universal credit. When money is in payment, child maintenance averages around £32 per week, tax-free, under the CSA. This is a significant financial benefit to the most vulnerable mothers. Sir David Henshaw also recommended that, "““charging is introduced for users of the administrative system””." He went on to say that charging would, "““contribute to the objectives of the new system by incentivising private arrangements which can be more successful””." We agree with Sir David’s findings. The then Secretary of State—now the noble Lord, Lord Hutton—told the Work and Pensions Select Committee at the time of the report that he thought that, "““in general and in principle””," charging should form part and parcel of the commission’s approach. Subsequently, the then Government took a wide-ranging power to charge as part of the Child Maintenance and Other Payments Act 2008. It is Amendment 62C to that Act from my noble and learned friend Lord Mackay that we will deal with in the next debate. Let me not prejudge that debate, but I shall say something on the principle of charging before flagging an amendment that we propose to make to our powers. As I said earlier, the Government cannot fairly and should not try to apportion blame between parents. Therefore we firmly believe that, to reform the system and maximise the number of effective child maintenance arrangements, we need to have an affordable but clear financial incentive on both parents to collaborate. With such high numbers of parents who use the CSA saying that it is likely they could collaborate, an affordable financial incentive for both parents is a necessity. The application charge and collection charges proposed by the Government meet these criteria. However, noble Lords will remember that when an application is made and maintenance payments are subsequently made directly, no collection charges are applied. This is the option to pay that is often called often called maintenance direct and is dealt with under Clause 135. The Government are convinced this approach to charging is the right one and wish to formalise a requirement for us to review based on an evaluation. This would be achieved through Amendment 62CA. We will review charging within 30 months of its introduction. Thirty months will allow a proper sample to be evaluated, including the impacts of collection charges. Within that timescale we will lay a report on the review and the Government’s conclusions on charging before Parliament. I ask noble Lords to support this amendment and the commitment to review. Child maintenance needs major reform. Fifty per cent of children of separated families have no maintenance arrangement in place at all. We will provide improved statutory child maintenance for those who really need it, and we will of course continue to support lone parents directly through benefits and tax credits. However, we need a fundamental change so that wherever possible parents think twice, take responsibility and do not depend on the state. I beg to move.