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Child
maintenance premium
One of the most
welcome aspects of the new child support scheme is the introduction
of the ‘child maintenance premium.’ (This is not contained in the
Bill as it can be introduced by amending secondary legislation.)
Currently, parents with care on income support/income-based jobseekers
allowance (JSA) lose £1 of benefit for every £1of maintenance received.
Under the new scheme, they will keep up to £10 a week of any maintenance
before benefit is reduced.
400,000 families
will gain financially from this. CPAG therefore welcomes its introduction
as an important step in tackling child poverty.
Staggered
introduction of the child maintenance premium
The new scheme
is expected to be launched in late 2001. The first new cases will
be taken on at this stage. Existing Child Support Agency cases will
be taken on at some later date, as yet unspecified. The child maintenance
premium will apply to those parents assessed under the new scheme.
Initially, therefore, existing cases will continue to have income
support/income-based jobseekers allowance reduced for every pound
of maintenance received.
Some 400,000
parents with care will have to wait until their
cases are
transferred into the new system to benefit from the child maintenance
premium. CPAG would welcome clarification on the date at which existing
cases will be transferred to the new scheme.
The Social
Security Select Committee was concerned that ‘having apparently
similar cases being dealt with for a prolonged period may give rise
to a sense of unfairness which may substantially undermine the credibility
of the reformed child support scheme.’ As the Select Committee recommended
‘all parents with care in receipt of income support or income-based
jobseekers allowance should be permitted to benefit from the child
maintenance premium from the date of commencement of the proposed
reforms in 2001.’ CPAG agrees.
In response
to the Select Committee, the Government stated that it was not possible
to introduce the premium at the same time for all parents with care
because:
- It will not
be possible to deliver effectively and reliably without a new
computer system;
- Many non-resident
parents are exempt under current rules and one third who are liable
for payments do not make them. ‘In these circumstances, the child
maintenance premium would offer no advantage to the children concerned.’
CPAG urges the
Government to make efforts to overcome any technological difficulties.
We would like to see as many children gain as early as possible.
It will be very
difficult to explain to parents with care why their benefit is reduced
for every £1 of maintenance received while other parents, in apparently
the same position, keep £10.
The computer
system
CPAG is not
clear of the nature of the technological difficulty. Around three
quarters of parents with care receive maintenance direct from the
non-resident parent. These parents already report the amount of
maintenance they receive to the Benefits Agency. We can see no reason
why the Benefits Agency could not then apply the appropriate disregard
to the maintenance received (as they would in the case for other
forms of income such as earnings).
Where a parent
with care is using the Child Support Agency (CSA) collection service
income support and maintenance can be paid together. This can mean
it is unclear to the parent with care how much of the payment is
maintenance. In these cases, CPAG suggests that the CSA be required
to notify the Benefits Agency of the amount of maintenance payment.
The Benefits Agency could then increase the income support payment
by the appropriate amount. The CSA could confirm the level of payment
being made on, say, a quarterly basis. If necessary, an adjustment
could then be made to the income support for the next quarter.
Child maintenance
premium – level of child maintenance premium
As stated above,
CPAG welcomes the introduction of the £10 ‘child maintenance premium’
as an important step in tackling child poverty.
However, we
recommend raising the amount of the premium to £15 to have
an even greater impact on child poverty. Income support currently
falls £20 short of the ‘low cost but acceptable’, budget for a family
with two children under 11. Increasing the premium to £15 would
take them close to being able to reach the low cost but acceptable
budget.
A premium of
£15 would cost £140 million a year, compared to £100 million for
the £10 premium.
As a minimum,
the premium should be regularly uprated so that it does not lose
its value over time. In response to the Select Committee’s recommendation
that the premium be up-rated in line with inflation, the Government
said that this would introduce complexity. For example, this year
it would increase by 11 pence or 16 pence depending on the method
used. The Government considers it more sensible to have disregards
in whole pounds. CPAG welcomes the Government’s commitment to
‘review the value of the premium from time to time’. We would welcome
clarification on when it plans to do the first review and the intervals
at which the question would be revisited.
Disregarding
maintenance received in calculating entitlement to housing benefit/council
tax benefit
Parents with
care on tax credits have all of their maintenance payments disregarded
(compared to £15 on family credit). However, the disregard on housing
benefit and council tax benefit remains at £15. This means that
up to 85% of any maintenance over £15 is lost in extra rent and
council tax the parent has to pay. A parent getting £30 a week,
for example, keeps only £17.25. The value of the more generous tax
credit disregard is therefore eroded.
Maintenance
received should be ignored in full for housing benefit/council tax
benefit purposes. This would bring the policy into line with the
more generous tax credits policy.
We welcome indications
that the Government is considering increasing the maintenance disregard
on housing benefit and council tax benefit. The increase would not
need to be included in the Bill as the change could be made by secondary
legislation.
The estimated
cost of disregarding maintenance in full for housing benefit/council
tax benefit purposes is £30 million a year.
Tribunal
composition
Prior to June
1999, child support appeal tribunals consisted of three members,
at least one of which should be of the same sex as the appellant.
The Social Security
Act 1998 introduced flexibility in tribunal composition with the
effect that child support appeal tribunals now consist of one legally
qualified member (with the addition of a financial expert in cases
involving complex financial questions.)
This change
was introduced despite responses to the preceding Green Paper (Cm
3328). Generally, the respondents considered three person tribunals
superior to decision making by a single person, as the lay ‘wing-members’
contributed common sense and detachment, and ensured decisions resulted
from reflection and debate.
CPAG believes
that all tribunals should consist of three members. If there are
to be less than three members, child support tribunals should consist
of at least a male and a female member, as they frequently have
to deal with issues like the effects of domestic violence, or whether
a parent has a lifestyle inconsistent with their declared income.
Indeed, the White Paper proposed that in claims to vary the assessment,
the ‘expertise and independent judgment of a tribunal will be applied
only where there are ‘very complex issues.’ Our view is that such
decisions are best decided by more than one person.
The Government
has announced a programme of systematic research to evaluate the
impact of the reforms on CSA clients and their families. We would
ask that this research considers the impact of single person tribunals
on parents’ experience of the appeals system.
Suspending
the benefit penalty
Parents with
care on income support/income-based jobseekers allowance are required
to co-operate with the CSA. Those who refuse and do not have ‘good
cause’, receive a ‘benefit penalty’, or reduction in benefit of
£20.56 a week (1999/2000 rates).
CPAG is concerned
at the hardship caused by reducing benefit paid to parents with
care who have good reason for not wishing to co-operate with the
CSA. We were informed of two women from ethnic minority groups who
preferred to accept benefit penalties rather than apply to the CSA
and, as they feared, prejudice the chances of reconciliation with
their ex-partners. Another parent said:
‘They have
now cut our income support and we are trying to live on £59.86 income
support per week. We cannot do this, and I have not in my life felt
quite so desperate and in need of help as I do now...’
We regard it
as unfair to penalise families in such circumstances.
CPAG has long
argued that the benefit penalty should be abolished. In the absence
of this, we support the Social Security Select Committee in their
recommendation that application of the ‘reduced benefit penalty’
should be suspended while the new system is phased-in (a five year
period from 2001 to 2006) to assess whether incentives alone are
successful in achieving higher compliance.
In response
to the Select Committee, the Government recognised that there had
been a substantial increase in the number of parents with care wishing
to co-operate with the CSA. ‘Fewer than one in five parents with
care now applying for income support currently seek an exemption.’
However, the Government considered that ‘parents should understand
that the taxpayer is not primarily responsible for supporting their
children’. Some parents would opt out if the benefit penalty were
removed. It would therefore be unfair to remove the penalty ‘before
it was clear it was no longer needed.’
CPAG, however,
remains concerned that the benefit penalty causes hardship to parents
with care and their children. Levels of co-operation are now high
and, with the introduction of the child maintenance premium and
a simpler, more effective system, can be expected to rise further.
We therefore ask the Government to reconsider and suspend the penalty
while the new system is given time to work.
For more information, please contact Fiona Frobisher,
Parliamentary Officer on 020 7837 7979 x 237 or email ffrobisher@cpag.demon.co.uk
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