Below is the text of the speech made by John Hutton, the then Secretary of State for Work and Pensions, to Parliament on 24th July 2006.
Mr Speaker, with permission, I should like to make a Statement on the Government’s plans for the reform of the child support system.
Mr Speaker, parents – whether they live together or not have a moral as well as legal responsibility to support their children. Relationships end. Responsibilities do not.
Government and society has a clear interest in making sure these responsibilities are honoured. This was the foundation on which the 1991 Child Support Act rested. Mr Speaker I believe these are the right foundations on which to build any future system of child support.
But as we know, and despite the best efforts of its staff, the overall performance of the CSA has fallen well short of expectations. When we came to office the agency cost more to run than it collected in maintenance. And it has been taking longer to process claims than the court arrangements it replaced.
The 2000 Act made important changes – simplifying maintenance calculations, allowing parents with care on benefit to keep up to £10 of any maintenance received. Since 1997 the agency has nearly doubled the number of cases receiving maintenance payments.
But problems have persisted. Only a minority of cases handled by the CSA receive any maintenance. There is a backlog of around 300,000 cases. Debts of over £3 billion have built up with limited prospects of recovery. There is a net cost to the taxpayer of around £200 million per year. And levels of customer service, although they have improved recently, have never reached the standards of quality and consistency the public are entitled to expect.
Mr Speaker, the need for radical overhaul is clear.
I do not, however, believe the continuing problems are a failing of the staff of the Agency – but rather the policy framework and the system they are being asked to run.
That’s why, in February, I asked Sir David Henshaw to redesign our system of child support. He has now presented his recommendations to me. Copies are available in the Vote Office and on my Department’s website – together with the Government’s response.
Sir David has recommended an entirely new system for child support which will be simpler to use and administer, tougher on parents who do not face up to their responsibilities, and make a bigger impact on reducing child poverty while delivering value for money for the taxpayer.
There are four main elements to his recommendations.
Firstly, he believes the system should focus on tackling child poverty by ensuring parents with care keep more of the maintenance owed to them. Sir David recommends that lone parents on benefit should be allowed to keep more maintenance, by significantly increasing the extent to which child maintenance is disregarded in income-related benefits.
Secondly, Sir David believes that a new system should promote greater personal responsibility by ensuring that, wherever possible, we should help parents come to their own financial arrangements for the maintenance of their children. This means reconfiguring advice services to improve the quality and accessibility of information and guidance for parents. Sir David also believes that the government should remove the requirement that parents with care on benefits make an application for child maintenance through the CSA even when there is a perfectly satisfactory private arrangement already in place. And as a first step to getting maintenance flowing to children, Sir David recommends that – with up to a fifth of potential child support cases not having their father’s name on their birth certificate – we should consider the joint registration of births.
Mr Speaker, where parents can’t come to an amicable agreement, parents with care need to have confidence that the enforcement arrangements will be effective. So the third element of Sir David’s recommendations is to introduce new tougher enforcement powers – including the withdrawal of passports and exploring the potential to make better use of existing financial penalties.
Fourthly, Sir David has proposed that there should be a clean break with the past. He believes the delivery of child support requires a fresh start with a new organisation. Sir David believes there should be no automatic conversion of cases from the two existing schemes to the new redesigned system. Instead, parents wishing to use the new system would be able to re-apply. He recommends that there should be a separate residuary body to manage down and enforce old debt. And that we consider how best to give the new organisation the power to charge clients for using the new system.
Mr Speaker, Sir David has consulted widely in producing these recommendations and I am grateful to him for his work – and to all those who have contributed to it.
As Sir David’s report shows, tougher enforcement and a substantially higher disregard could increase the number of children receiving maintenance to 1.75 million, compared with just 1.1 million today. This will also lift many more children out of poverty. And a smaller, more focused agency that deals with significantly fewer cases will deliver better value for the taxpayer with administrative costs substantially lower over the long run.
Although there is still a great deal of detail to be worked through, I think it is right that the Government should signal its view of the way ahead.
Mr Speaker, we have decided to accept these principal recommendations.
We will bring forward legislation at the earliest opportunity to remove the requirement that all parents with care claiming benefit are treated as applying for child maintenance.
We agree with Sir David’s recommendation that there should be a higher disregard. But this must ensure a fair deal for taxpayers and avoid sending any signal that families might be better off apart than together. So we intend to significantly increase the level of the current disregard of £10. Details will be confirmed later this year.
Both of these changes will help more families receive more maintenance, and reduce the risk of child poverty. They fully reflect both the rights of children to be properly maintained by their parents and the right of society to ensure that parental responsibilities are properly discharged.
We also agree that the delivery of child support requires a fresh start. We will therefore create a new organisation to replace the CSA. And we will strengthen enforcement powers.
But we will go further. We intend to seek legislation to strengthen the powers available to the Agency to recover maintenance from those who repeatedly fail to pay, including through the imposition of curfews as well as the suspension of passports. We will explore publicising successful prosecutions including the feasibility of naming those so prosecuted. And we will continue the CSA’s current Operational Improvement Plan, which is already improving our capacity to trace people who owe maintenance and which should see the Child Support Agency collecting a further £250 million in unpaid maintenance.
Mr Speaker, there is a great deal of detail in Sir David’s report that should now properly be the subject of fuller consultation and debate. In particular, we want to consult on:
The best way to allow existing claimants to either move to private arrangements or make a claim to the new system. We must ensure that where people currently receive maintenance through the CSA – they continue to do so, if they wish to, under the new system without disrupting the payment of child maintenance;
– how best to deal with the legacy of debt that is left, protecting both the interests of families and the taxpayer;
– the appropriate role for the courts in this new approach;
– how we can improve parental responsibility from birth – including the possibility of compulsory registration for fathers;
– how we can further simplify and improve the current assessment, collection and enforcement processes;
– the details of a new charging regime.
In advance of legislation, I intend to publish a White paper later this year which will set out in greater detail the way forward in all of these areas. In the meantime, I have asked Sir David to report to me on the policy and implementation issues that arise from his first report.
Mr Speaker, during this process of change the staff of the Agency are entitled to expect the full support of my Department. They will have it. In particular, we will do all we can to help and support staff through the transition to the new organisation and in their efforts to ensure that children and families receive the maintenance to which they are entitled.
The original proposals for child support had a wide and broad measure of support. But this consensus over aims was never translated into a consensus over means. We must not repeat the same mistake. That is why I want the new arrangements that must now be established to command the broadest possible measure of agreement.
There is a clear sense, both in this House and outside, that our system of child support needs radical change. It must offer better value for money for the taxpayer. It should enforce the rights of children and the responsibilities of parents more successfully. It must ensure that families and children in particular do not slide into poverty when parents split up.
Mr Speaker, I believe the proposals I have set out today can help us better achieve these vitally important objectives and that is why I commend this statement to the House.