Contracting Out (Functions Relating to Child Support) Order 2006

My Lords, the House and, more importantly, thousands of children and their parents with care, will be grateful that after nine years in power, the Government are at last doing something constructive about the Child Support Agency. We should remember that the CSA was set up in 1993 with all-party support, mainly because the courts, where child maintenance payments were decided, were slow, uncertain and led to low and inconsistent settlements. Under the CSA’s parent Act, the Child Support Act 1991, the agency took on responsibility for calculating child maintenance, using a standard formula to ensure consistency. Our stance on this has not changed and we remain convinced that the formula approach is the right one. In addition, however, the agency’s role was, and still is, to locate absent parents, identify their income, and secure the payment of maintenance. Although the agency is unpopular with clients—a fact admitted by the Minister in the past, and hardly surprising where absent parents who want to escape their responsibility to their children are concerned—the fact remains that it is the responsibility of both parents to pay for the maintenance of their children as far as they can. The taxpayer should become involved only where parents do not have the financial means to support them. That is fine in theory. In practice it is not the parents who, once found, accept their responsibilities and then pay the formula-assessed sums to the parent with care who concern us, it is those absent parents who just will not pay, who move around making it difficult to locate them or who may be in work one month and out of it the next—or, indeed, all three. It is clear, too, that thousands of parents split up and move apart, often by many miles, or even out of the country, among them two cases about which I have recently written to the Minster. It is hardly surprising, then, that in September last year 333,000 agency cases had not been cleared, and some parents with care inevitably face poverty as a result. It is probably not surprising, either, that irrecoverable debt now tops £1 billion. What I find surprising is that the agency is still chasing 100,000 fathers who will not pay maintenance. In passing, is it true that for every £1 spent on bureaucracy, less than £2 goes to the parent with care? Whether or not that is so, it is clear that the agency is snowed under and cannot cope. Indeed, it has been clear for many years. What I find impossible to understand is how a Minister who has been in post for barely a year can produce a way, partial though it is, out of the problem when his predecessor failed to do anything very constructive for eight previous years. It is true that the formula was simplified, and that is a plus. However, the CSA has had to run the old formula and the new one side by side, resulting in yet more chaos. Not only is £1 billion worth of debt irrecoverable, another £2 billion remains uncollected, as reported at col. 1554W of Commons Hansard of 19 January this year. The CSA statistical summary of January 2006 shows that only 61 per cent of maintenance due under the new scheme had been paid as of December 2005, compared with 72 per cent under the old scheme, so no improvement there. The Minister was good enough to refer to my next point. In 2004–05 the agency received 63,678 complaints compared to 49,215 in the previous year—an increase of almost 30 per cent. I observe that Mr Stephen Geraghty, in a departmental press release, regarded that as ““disappointing””. It is certainly that and there is no improvement there either. Now I come to the Minister’s solution, which I encapsulate as, ““If the agency can’t do it, give the worst problems to a body that ought to be able to””. In response to the statement on the CSA in February this year, I suggested that contracting out some of the agency’s functions might be an answer, and I am glad to see that the Minister has pondered on that suggestion and produced the order we are now debating. At least some clerical case management, debt collection and additional trace activity are to be pursued by the private sector, and I understand from the Explanatory Notes—and, indeed, from what the Minister has just said—that pre-contract negotiations are already in being. However, I hear from the Credit Services Association that these are with the department not the agency. Why not? I need to be much more convinced that case management should ever be contracted out, not least because of your Lordships’ Merits of Statutory Instruments Committee’s comments on this order. Much as I approve of the principle of contracting out, I can see the force of its arguments, especially on the need for a single point of contact for parents. The latter must be able to speak to someone who has all the details of their case in front of them, even with contracting out: parents will want to contact the CSA rather than the contractor. It is not satisfactory for them to be referred to somebody else. Even better would be a named official whom parents could ask for every time they had a problem. Contracting out in this area will work only if we could have confidence in the agency’s computer. From what the Minister has just said, he obviously cannot give us such confidence at the moment. Computers come with the ability to share information easily. I note that the committee prised out an expanded paragraph 7 of the Explanatory Memorandum on this point, and I am grateful to the department for providing it. The bullet points made in it show that prosecutions can, and I hope will, be made if data supplied by the agency is improperly used, not least because of the contractual obligations that will be imposed on the relevant firms. The charity One Parent Families has made the point that in some cases contracted-out functions may not prove satisfactory, as has happened in the past with housing benefit. In that case, some local authorities had to spend large sums of local taxpayers’ money to break contracts and bring housing benefit back in-house. That would be avoided if break points were inserted into the final contracts. I would expect six months to be too short even after, say, an initial 18-month period. However, is the Minister giving break points serious consideration? Even if the contracts are successful, they will need to be handed back to the agency at some stage. If they work, and I hope they do, does the noble Lord agree that they should be seen as a temporary solution and not go on ad infinitum? We have not heard the last of changes to the CSA’s operations. The mechanics of assessing the absent parent’s income and then extracting it will have to change, and my party stands ready to help when the time is right. We await Sir David Henshaw’s report with interest and we hope it is imminent, though with the myriad other things that he is doing at the moment, not least in the north-west, perhaps we cannot be so sure about that. To sum up, this is a bold step for even new and somewhat tarnished Labour to attempt but, with the caveats that I have mentioned, I wish the Minister well in implementing it.