Text Box: Rounded Rectangle: Important Information about the Banks

We came across this so we decided to print it on our site to show just how your MPs are there to help you or more to the point to knife you in the back.  Notice the pattern... Again it is all about FATHERS not paying, more proof we are under an anti misandry Government Please read:

 

 

 

Second Delegated Legislation Committee
Tuesday 23 June 2009
[Mr. Martyn Jones in the Chair]
Draft Child Support Collection and Enforcement (Deduction Orders) Amendment Regulations 2009
10.30 am
The Parliamentary Under-Secretary of State for Work and Pensions (Helen Goodman): I beg to move,
That the Committee has considered the draft Child Support Collection and Enforcement (Deduction Orders) Amendment Regulations 2009.
It is a pleasure to serve under your chairmanship, Mr. Jones. The regulations will implement some of the powers inserted into the Child Support Act 1991 by the Child Maintenance and Other Payments Act 2008. The powers support the Government’s proposals for tougher enforcement in the White Paper “A new system of child maintenance” of December 2006. The 1991 Act makes provision for the Child Maintenance and Enforcement Commission to use two new administrative tools—regular deduction orders and lump sum deduction orders—to collect child maintenance from an account held by a deposit taker, normally a bank or building society, containing money belonging to a non-resident parent who has arrears.
Some non-resident parents will do everything that they can to avoid meeting their financial obligation to their children. The Government want to ensure that fast, effective action is taken to enforce payment of child maintenance when that happens, and to encourage compliance with ongoing liabilities. We recognise that deduction orders cannot tackle that issue alone,
but the new tools will be used alongside all the other enforcement measures already available to the commission, such as deduction from earnings orders, bailiff action and charging orders.
Deduction orders will allow swift collection and enforcement, because they can be made without the need to go to court. They can be used to collect child maintenance from non-resident parents who might otherwise find it easier to evade their financial responsibilities—for example, the self-employed or people who change jobs frequently. The commission is not able to use a deduction from earnings order to collect child maintenance in those cases. The regulations will implement deduction orders and set out the detail of how they will operate. They have been developed in close consultation with representatives of banks and building societies.
A non-resident parent who has arrears of child maintenance will have every opportunity to make an arrangement to pay those arrears before a deduction order is made. If the non-resident parent fails to do so, the commission will use information that it already has, first to liaise with deposit takers to identify a suitable account on which to make an order. It will then need to decide whether a regular or a lump sum order is likely to
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be most effective, given the individual circumstances. That will depend on a number of factors, including the arrears owed and the type of accounts identified.

If the commission decides to make a regular deduction order, the deposit taker will be required to deduct regular amounts of ongoing maintenance and/or arrears from the non-resident parent’s account. The commission will send a copy of the regular deduction order to the deposit taker, specifying details of the account, the amount, the dates on which deductions are to be made and when it will take effect. A copy of the order will also be sent to the non-resident parent. The deposit taker will have a legal duty to make deductions from the account specified in the order, ensuring that it does not take the account into overdraft, and to pay that amount to the commission. The deposit taker may also take an amount of up to £10 towards its administrative costs before making each deduction.
Safeguards will be in place to protect both the non-resident parent and the deposit taker. The amount of each deduction will not exceed 40 per cent. of the net weekly income used in the current maintenance calculation. The regulations set out clearly the circumstances in which either the non-resident parent or the deposit taker can apply for a review of an order
. Examples are where the non-resident parent has no beneficial interest in all or some of the amount specified in the order, and if any of the amount on the order has been paid.
The regulations will allow the commission to make a regular deduction order on an account that is used wholly or in part for business purposes, but only where that account is used by the non-resident parent as a sole trader
. Both the non-resident parent and the deposit taker will have a right of appeal to a county court, or sheriff in Scotland, against the making of the order and against a decision following an application to review the order.
If the commission decides to make a lump sum deduction order, the deposit taker will be required to deduct a lump sum from the non-resident parent’s account in respect of a specified amount of arrears. A number of safeguards are again built into the process. The commission will initially send the deposit taker and the non-resident parent a copy of an interim order, which will specify details of the account and the amount of arrears to be collected by final order. The interim order will also instruct the deposit taker to freeze up to the amount specified on the order.
The non-resident parent and the deposit taker will each have 14 days to make representations to the commission against the proposals in the interim order. At any point throughout the process, they will also be able to apply to the commission for consent to release some or all of the funds. For example, the non-resident parent might do this where the funds are needed to prevent hardship, while the deposit taker might do this where it had the intention of exercising its right of set-off before the order was served.
A robust appeals process will also be in place. Both the non-resident parent and the deposit taker will have a right of appeal to a county court, or sheriff in Scotland, against the making of the order and any decision following an application for consent to release funds. The commission will not make a final order until the 21 days allowed for an appeal have passed, and will only instruct the deposit taker to release funds once the
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outcome of any appeal against the making of the final order is known. The deposit taker will have a legal duty to comply with the requirements of the order and to pay the commission the specified amount. The deposit taker may also take up
to £55 towards its administrative costs before making payment to the commission.
Hon. Members will be aware from the impact assessment, which was published alongside the draft regulations, that the commission plans to start with a small, controlled implementation. We recognise that that approach will not result in a significant increase in the amount of child maintenance collected immediately; it is estimated at around
£2 million in the first year. However, the approach will enable the commission and deposit takers to develop expertise in that new area and minimise the risk of errors. It will also enable the commission to gather information to assess properly the benefits of increasing numbers in the future.
Hon. Members will also be aware that the powers in the 2008 Act allow the regulations to permit both types of deduction order to be made on a joint account.
The regulations before us do not include provisions in respect of joint accounts. We are taking a cautious approach to that step which, in the case of lump sum deduction orders, may involve freezing funds belonging to a third party who owes no child maintenance. The commission needs to think carefully about the additional safeguards which would need to be set in place if we decided to use the powers set out in the 2008 Act, and consider the administrative implications for both it and deposit takers.
Once deduction orders are in operation, the commission will be able to gather information about how best to maximise their effectiveness in the future. The impact assessment states that that policy will be fully evaluated by the commission in
September 2010. As part of that evaluation, it will look specifically at the effect of excluding joint accounts from the scope of deduction orders. If it finds that that is, in fact, reducing their effectiveness, we will introduce further regulations permitting orders to be made on joint accounts.
Hon.
Members will also be aware that the powers in the 2008 Act allow for deduction orders to be made in respect of third parties such as solicitors who are holding funds resulting, for example, from the sale of a property or an inheritance. Up to now, the commission has focused its efforts on working with deposit takers to ensure that deduction orders made on accounts held by them have the best chance of working effectively. We believe that deduction orders on bank and building society accounts have the greatest potential for collecting child maintenance. However, the commission will now assess the scope for further regulations, which will enable it to recover child maintenance arrears from third parties.
Mr. Tom Watson (West Bromwich, East) (Lab): I welcome my hon. Friend to her new position. My sincere apologies to her for intervening, because I know that she is about to finish her speech, but I am a little slow this morning and do not quite understand the detailed language that she is using. To be clear, are we creating a new power to take money out of the
bank accounts of absent fathers who are squirreling money away from their children?
Helen Goodman: My hon. Friend has understood the essence of the measure. The powers were taken in the primary legislation that was passed last year and we are
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introducing secondary legislation to specify precisely how that will work and to bring the powers into effect, which, if the Committee agrees, will be in August this year.
We will be looking at the scope for further regulations to enable the commission to recover child maintenance arrears from third parties.
That will involve working with a number of stakeholders, including solicitors and public bodies. In the meantime, the provisions in these regulations will enable the Child Maintenance and Enforcement Commission to start to use its new enforcement powers. That will help to improve the flow of money to children whose parents are reluctant to meet their responsibilities.
Given all the safeguards in place, I am satisfied that the
statutory instrument before us is compatible with the European convention on human rights, and I commend the regulations to the Committee.
10.41 pm
Andrew Selous (South-West Bedfordshire) (Con): It is a pleasure to serve under you this morning, Mr. Jones. I thank the Minister’s officials for the comprehensive explanatory notes and regulatory impact assessment. From our point of view, they are useful for finding out what the regulations do and they inform our debate. It is a vital part of the democratic process that we have enough information to enable us to do our job properly.
As the hon. Member for West Bromwich, East rightly implied, we are taking unto ourselves a draconian power. It is one, however, that Her Majesty’s Opposition support because it is both necessary and right. We want that money to go to the children who should get it in order to reach our child poverty targets and because it is the right thing to do. Nevertheless, as has been said, it is a significant step. For the first time in law, the House has taken upon itself the power to go directly into a citizen’s bank account and remove money in order to give it to that person’s child or children. It is right, therefore, that we spend some time going through the deduction orders and examining the safeguards that are in place.
The Minister dealt with the safeguards and I am satisfied that they are necessary and satisfactory. She pointed out that the non-resident parent will have 14 days to make representations and then a further 21 days to appeal to a county court, or a sheriff in Scotland. Although the deduction orders go down the administrative route in the first instance—in other words, they can be proceeded with without going to a court—every non-resident parent, if they feel they are being unfairly treated, has the right to apply to a court. That is a necessary and vital safeguard, and we would not be happy to back the measure were that not in place.
The background to the orders is that the Child Support Agency has been hampered in its work because the courts are expensive and often slow to do their job. When non-resident parents realise that they do not have a case in resisting the orders, we hope that the majority will go through without it being necessary to go to a court. However, as I said, there is an absolute right for a non-resident parent to make representations to a court if necessary.
I have a number of points to make. I have not arrived at 10 just to get to 10—it has simply come out that way. I will go through them slowly to give her and her officials time to give answers that are as full as possible.
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First, a number of non-resident parents have written to me and I have picked up cases from around the country where non-residents parents say that they have asked the Child Support Agency whether they should be paying child maintenance. They believe, perhaps from a telephone conversation or a misunderstanding, that they have been told they do not have to. Later, they suddenly find that they should have been paying and are told that they have significant arrears. That is when the 40 per cent. deduction—the maximum rate permitted by the regulations—comes into play. That is a huge amount to take out of someone’s income.
My point is a general one, and I do not necessarily expect the Minister to have the facts at her fingertips and to know the agency’s approach; perhaps she might get back to me on it. We need to ensure that non-resident parents who genuinely believe that their need to pay has been suspended, perhaps because of a misunderstanding, are not unfairly treated, particularly if they then have a 40 per cent. deduction from their income.
My second point relates to joint accounts and has been answered. It was not clear whether joint accounts were covered by the regulations and I am pleased that there will be a review of whether they should be. A large number of non-resident parents will set up joint accounts if they can, perhaps with a new partner if they have one, and that will invalidate the ability of the deduction order to do its job. If that becomes apparent early on, will the Minister return to the matter in less than a year’s time to remedy the situation? She said that some non-resident parents will do anything and everything in their power to get out of their proper financial obligations. I worry that that could be an easy loophole for non-resident parents to abuse and will invalidate what the Government are quite properly trying to do.
Thirdly, has the Department considered whether non-resident parents are likely to make significant use of various cash conversion facilities around the country? I have a constituency case where the parent with care is extremely worried that the father of her children is about to convert a large sum of money into cash and it is not going to touch his bank account. There are people who provide that facility, and again that could be a quick and easy loophole to abuse. There is not an easy answer to that, but I would be interested to know whether the Minister’s officials have briefed her on the Department’s estimation of how typical that behaviour is by non-resident parents. Again, she might not have a full response, which would be understandable as it is a general point.
My next point is technical, relating to the fee for regular deductions. The Minister said that a fee of up to £10 could be deducted, which is also the figure that I picked up from the explanatory notes. However, paragraph 12 on page 17 of the regulatory impact assessment says:
“up to £25 for each regular deduction”.
Will she clarify in what circumstances £25 can be deducted?
I note that the Minister who signed off the impact assessment was Lord McKenzie of Luton. Does that mean that he is in charge of CSA policy, or does the hon. Lady have the policy-holding brief for the CSA? Traditionally, the CSA was always allocated to a Minister
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in the Lords. It was thought to be such a hot political potato that it was normally kept at that end of Parliament. I would be grateful if the Minister could clarify that.
My next point relates to the analysis of the order, which will happen after a year; I think that the impact assessment says that that will be in September 2010. How will that information be shared? Will there be a written statement to the House? Also, how quickly does the Minister envisage that any necessary action will be taken? It has taken quite a long time to prepare the regulations. They were first thought of back in 2006 and will not come into force until August, which is already nearly three years in total. If we have not got them quite right and if there are potential loopholes, some of which I have mentioned, we do not want matters to drag on. We need to be effective in what we are doing. Therefore, the analysis that will take place in September 2010, along with the question of how it is acted on and shared with the House, is very important.
The minimum amount, which I do not think the Minister referred to, is set out in proposed new regulation 25D on page 4 of the regulations. Like the hon. Member for West Bromwich, East, I, too, may be a little slow this morning, but I cannot work out to what the “minimum amount” relates. I am not sure whether it is a minimum amount to be left in an account or a minimum amount to be taken in certain circumstances. I would be grateful if the Minister could clarify that.
My next point—I think that it may be the eighth—is about the basis on which the Department will select the cases for the lump sum and regular deduction orders. The Minister has told us that, in effect, we are considering a pilot. It will not be applied to every child support case across the country. Where there is a bank account, and where there are liabilities that are not satisfied, the Department will proceed—perhaps properly—in a cautious way, with a small number of staff working on 140 or so cases a month. How and on what basis will they be picked? Will they be picked out of a hat? Will they be particularly difficult cases, or will they be chosen in response to the greatest degree of lobbying by MPs, in order to get MPs off the Department’s back? What is the basis of that selection? It would be good to know that.
I come to my final point. I apologise again if I did not quite hear what the Minister said. However, she mentioned solicitors’ accounts when someone has sold a house. If a solicitor, an accountant or another professional person has a client account in which there is money, will the orders apply to it? I would be grateful for clarification on that issue too.
I apologise for making a reasonably large number of points. However, as I said, it is an important debate. We are taking unto ourselves a very significant power and we owe it to our constituents and to non-resident parents up and down the country to whom the order will apply to receive answers.
10.53 am
Paul Rowen (Rochdale) (LD): May I also begin by welcoming the Minister to her place? I also welcome, in general, the introduction of these regulations. Those of us who were involved in the passage of the Child Maintenance and Other Payments Act 2008 knew that to enable non-resident parents to pay their dues fully
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was an important part of the process. I certainly support the introduction of the order, with the appropriate safeguards. Like the hon. Member for South-West Bedfordshire, I just have a few questions that I would like the Minister to answer.
There is the issue of costs—£25 or £55. As we speak at the moment, in the House of Lords the banks are arguing—hopefully not very successfully—against the decision that the Office of Fair Trading should be able to deal with bank costs for people who become overdrawn. On what basis were the sums of £25 and £55 arrived at? It seems quite high for a monthly deduction. I appreciate that, for a non-resident parent who has been reluctant to engage, there will be initial costs to the deposits holder. However, once an agreement has been reached and the order signed, with modern computers, £25 seems an excessive amount for processing what is deemed to be about £1,300 a year for each non-resident parent. I should be grateful if the Minister clarified that.
I also want to ask about the number of people and the costs involved for the Department. Like the hon. Gentleman, I think that the impact assessment is very helpful; it is very clear about what the Department wants to do. In the summary of cash benefits, it is stated that 500 cases will be considered each month, of whom, say, 350 would have bank accounts, and 70 per cent. of those would be considered each month, leading to the 140 cases each month where the orders are applied.
That seems fine, but the costs of implementing that show that the equivalent of 11 full-time staff would be involved in that process. That seems very high, given that the cost of that would be £444,000 and the actual amount collected would be only £2.18 million. I appreciate that, in the past, the costs of the CSA have been much higher than that, but nevertheless, with modern technology and the co-operation of the banks, we should not need 11 full-time members of staff.
Like the hon. Gentleman, I am interested in the cases of people who have joint bank accounts and those who are not sole traders. What is the position of someone who is in business with a new partner? Again, that could be used as a means for not co-operating with the agency in collecting the money. During the Bill’s passage, we raised scenarios of people who were able to use their business and their business costs as a means of hiding their true income, so that they did not have to pay. It is not clear just how the Department will deal with this. I think there will be only a small number of cases—typically people who are self-employed—where, as the hon. Gentleman said, the use of cash, rather than money flowing through an account, is used to avoid successful claims. These are some of the more difficult cases, and it is usually the resident parent who is owed vast sums of money, which affects their children’s future. I should like to know a little bit more about what the Minister and the Department are planning to do to deal with those difficult cases.
Thirdly, a point that was also made by the hon. Gentleman, where we are dealing with money held by other people, I should have thought that we could move fairly quickly. If a house has been sold as part of a divorce, we ought to be able quickly to get an agreement that the money owed will be transferred over.
My final point concerns the date. Will the Minister explain why, when the Department usually works on two payment dates in either April or October, she has
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chosen August, given that it is part of the holiday period? What will the likely impact of that be in terms of getting the system up and running? If it is going to work, we need to make sure that the systems are fully in place.
10.59 am

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