Proposed changes

58.     The Act will enable a lump sum payment to be provided for those not eligible under the 1979 Act who:

• Have been exposed to asbestos from a relative (for example, from their overalls);

• Have been exposed to asbestos environmentally (for example, have lived near a factory using asbestos);

• Are self-employed; or

• Can not trace their specific exposure to asbestos but there is nothing to suggest that they were exposed elsewhere other than in the UK.

59.     In effect, the proposed new scheme will mean that all sufferers of mesothelioma, as a result of exposure to asbestos, will be eligible for a payment regardless of their employment status, provided they have not already received a compensation payment through a civil claim or a payment under the 1979 Act or new scheme.

60.     In addition, the Act introduces the ability to recover payments made under the 1979 Act or the new scheme, where a person then goes on to receive compensation in a civil claim.

ACT OVERVIEW

61.     The Act consists of 5 Parts:

Part 1 - The Child Maintenance and Enforcement Commission.

Part 2 - Transfer of child support functions etc to the Commission.

Part 3 - Child support etc.

     Removal of compulsion for benefit claimants

     Maintenance calculations

     Collection and enforcement

     Debt management powers

     Miscellaneous

Part 4 - Lump sum payments: mesothelioma etc.

Part 5 - General

TERRITORIAL EXTENT

62.     Most measures in this Act extend to England and Wales and Scotland, but not to Northern Ireland. Although child support legislation is a transferred matter under the Northern Ireland Act 1998 and Northern Ireland has its own body of social security, there is a long standing policy of parity in this area.

63.     The following measures extend to the United Kingdom:

• paragraphs 4 to 6 of Schedule 6, and section 44 so far as relating to those paragraphs. These measures provide information gateways to:
  • enable the Northern Ireland Department to disclose information held for the purposes relating to social security, child support or employment or training, to the Commission or a person providing services to the Commission; and
  • enable the Commission or a person providing services to the Commission, to disclose information held for the purposes of functions relating to child support, to the Secretary of State, HMRC or the Northern Ireland Department.

64.     Any amendment or repeal made by this Act has the same extent as the enactment to which it relates.

TERRITORIAL APPLICATION: WALES

65.     The Act does not contain any measures which affect the powers of the National Assembly for Wales.

COMMENTARY ON SECTIONS

Part 1: The Child Maintenance and Enforcement Commission

Section 1: The Child Maintenance and Enforcement Commission

66.     Section 1 provides that there will be a new body corporate called the Child Maintenance and Enforcement Commission but referred to as 'the Commission'. The section also introduces Schedule 1 which sets out in more detail how the Commission will be structured.

67.     The Commission will comprise a board consisting of a Chair, a chief executive to be known as the Commissioner for Child Maintenance, executive directors and non-executive directors.

Section 2: Objectives of the Commission

68.     This section sets out the main objective of the Commission which is to maximise the number of effective child maintenance arrangements in place. This main objective is supported by two subsidiary objectives:

• to encourage and support parents to make and keep their own maintenance arrangements; and

• to support the making of applications for child support maintenance under the Child Support Act 1991 and to enforce maintenance arrangements made under that Act where appropriate.

69.     Subsection (3) requires the Commission to aim to pursue and to have regard to its objectives, when exercising a function that is relevant to them.

Section 3: Functions of the Commission: general

70.     This section sets out that the Commission has functions relating to child support transferred to it from the Secretary of State, and any other functions conferred under this Act or other legislation.

71.     Subsection (2) provides the Secretary of State with a regulation-making power to add further functions, should they be required in assisting the Commission to meet its objectives.

72.     Subsection (3) requires the Commission to exercise its functions effectively and efficiently.

Section 4: Promotion of child maintenance

73.     This section places a duty on the Commission to take such steps as it considers appropriate to raise awareness among parents of the importance of taking responsibility for the maintenance of their children and if they live apart, making appropriate maintenance arrangements.

Section 5: Provision of information and guidance

74.     Section 5 places a duty on the Commission to provide relevant information and guidance to help establish effective and appropriate maintenance arrangements for children who live apart from one or both of their parents. The section also enables the Commission to provide information for other purposes in the course of providing such information and guidance which might include, for example, information on other matters relating to parental separation such as housing or employment.

Section 6: Fees

75.     Section 6 gives regulation-making powers to the Secretary of State to enable the Commission to charge fees in connection with the exercise of its functions.

76.     Subsection (2) gives a non-exhaustive list of provisions that may be included in regulations. This includes:

• when a fee may be charged;

• the amount of fee to be charged;

• the information required to determine the amount to be charged;

• who is liable to pay any fee charged;

• when a fee is payable;

• recovery of fees charged; and

• when a fee may be waived, reduced or repaid.

77.     Subsection (3) provides that the regulations may permit the Commission to charge fees which are not related to the cost of it of carrying out its functions.

78.     Subsection (4) allows the Secretary of State to provide by regulations that the collection and enforcement measures in the Child Support Act 1991 also apply to fees payable.

79.     Subsection (5) provides that the Secretary of State may by regulations make provision for a person affected by a decision of the Commission under regulations made under subsection (1) to have a right of appeal against the decision to an appeal tribunal.

80.     Subsection (6) provides that subsections (3) to (5), (7) and (8) of Section 20 of the Child Support Act 1991 (appeals to appeal tribunals) will also apply to appeals against a decision of the Commission concerning fees.

81.     Subsection (7) requires the Commission to pay into the Consolidated Fund any amount which it receives in fees.

Section 7: Agency arrangements and provision of services

82.     This section enables the Commission to make arrangements with a Government department or prescribed public body (defined as a "relevant authority" in subsection (4)), for the functions of one of them to be exercised on their behalf by the other, or for one to provide administrative, professional or technical services to the other.

83.     Subsection (2) makes clear that this does not include functions in relation to making, confirming or approving secondary legislation.

84.     Subsection (3) enables the Commission to agree the terms and conditions that it considers appropriate for any arrangements under this section.

Section 8: Contracting out

85.     This section enables the Commission to contract out any of its functions to another person or organisation. In doing so, the Commission can authorise the extent to which the function is carried out, and the period of time the contract should last. Contracting out a function does not prevent the Commission from exercising it.

86.     Where a contractor is carrying out a function on behalf of the Commission, subsection (4) ensures that its acts or omissions will be treated as acts or omissions of the Commission and the Commission will be responsible.

87.     Subsection (5) sets out two exceptions to this:

• A contractor's act or omission will not be treated as being an act of the Commission for the purposes of relevant provisions of the contract between the Commission and the contractor itself. This ensures that, for example, if a contractor breaches the contract by failing to do something, or doing something they should not, the contractor remains responsible and the Commission will be able to sue for breach of contract.

• The contractor will remain liable if it commits a criminal act.

88.     Subsection (6) ensures that a person who is authorised to carry out a function on behalf of the Commission has a right to claim damages or compensation for repudiation of the contract if the Commission withdraw their authorisation thereby making it impossible for the contractor to perform.

Section 9: Annual report to the Secretary of State

89.     This section requires the Commission to produce a report for each financial year (to 31 March). The report must:

• deal with the activities of the Commission in the financial year for which it is prepared; and

• include the report prepared by the non-executive functions committee.

90.     Subsection (3) sets out the activities that should be covered in the report as follows:

• the strategic direction of the Commission and how this is being monitored and reviewed;

• the objectives and targets of the Commission, what steps have been taken to meet them and the extent to which they have been met;

• how performance of the Commission has been monitored;

• the extent to which the Commission has relied upon its power to enter into arrangements with government departments and other public bodies; and

• the extent to which the Commission has contracted out its functions.

91.     Subsections (4) and (5) require the Commission to publish the report and send it to the Secretary of State to be laid before Parliament.

Section 10: Directions and guidance

92.     This section provides that the Secretary of State may give written guidance and directions to the Commission regarding the exercise of its functions.

93.     Subsection (2) requires the Commission to have regard to any guidance given, and also to comply with directions.

94.     Subsections (3) and (4) provide that guidance and directions given under this section should be in writing and can be varied or revoked by the Secretary of State.

95.     Subsection (5) requires the Secretary of State to lay before Parliament any directions he gives under subsection (1).

96.     Subsection (6) allows the Secretary of State to exclude from laying in Parliament, any information that he considers tobe against the commercial interests of any person, or any information which may lead to an individual being identified.

Section 11: Review of the status of the Commission

97.     Section 11 sets out that the Secretary of State must review the status of the Commission as a Crown Body, as soon as is reasonably practicable after the end of an initial three year period, and may review any other time after that if he considers it appropriate.

98.     Subsections (4) and (5) require the Secretary of State to prepare a report of any review and lay it before Parliament.

99.     Subsections (6) and (7) enable the Secretary of State to make an order to provide that the Commission ceases to be a Crown body, if it appears that it is appropriate to do so following a review. The order may amend Schedule 1 and provide for the Transfer of Undertakings (Protection of Employment) Regulations 2006 to apply.

Section 12: Supplementary provisions

100.     Section 12 sets out the definition of 'child' for the purposes of Part 1 (the same as for the 1991 Act) and makes provision for the Secretary of State to make regulations about when a child is to be regarded as living apart from a parent or not, to ensure, for example, that a child is not regarded as living apart from a parent simply because they are at boarding school.

Part 2 - Transfer of child support functions etc. to the Commission

Section 13: Transfer of child support functions

101.     This section transfers most of the functions under the Child Support Act 1991 from the Secretary of State to the Commission, including functions relating to, for example, calculation, collection and enforcement. The exceptions to this (the functions that will either remain solely with the Secretary of State, or be exercisable both by the Secretary of State and the Commission) are listed at subsection (2). These are:

• Functions under section 23A, 24 and 25 of the 1991 Act which enable the Secretary of State to appeal to the Child Support Commissioner. It is appropriate for the Secretary of State to retain the right to appeal as he is responsible for child support legislation. This is why Schedule 2 to this Act ensures that this function is both given to the Commission and retained by the Secretary of State.

• Functions under section 46 of the 1991 Act, under which the Secretary of State may apply a reduced benefit decision to those parents with care in receipt of a prescribed benefit who choose to opt out of the statutory scheme without good cause. The Secretary of State is to retain this function because it relates to decisions on the amount of benefit a person is to receive. This function will be repealed soon after the introduction of the Commission.

• The function under section 50(7)(c) of the 1991 Act which enables the Secretary of State to authorise a 'responsible person' for the purposes of disclosure of information. This is necessary to enable the disclosure of information between the Secretary of State and the Commission. Schedule 6 to this Act ensures that this function is exercisable by both the Commission and the Secretary of State.

• Functions under section 58 of the 1991 Act which provides a power for the Secretary of State to commence the provisions of the 1991 Act and to make consequential amendments.

• The function under paragraph 2A of Schedule 4 to the 1991 Act which enables the Secretary of State for Scotland to provide travel expenses for a person attending proceedings before a Child Support Commissioner in Scotland. As this function refers to the Secretary of State for Scotland it will not be transferred to the Commission.

• Power for the Secretary of State to make regulations under any other provision of the Child Support Act 1991.

102.     Subsection (3) transfers any functions conferred on the Secretary of State by those provisions of secondary legislation listed in Schedule 2 apart from those related to reduced benefit decisions under section 46 of the Child Support Act 1991.

103.     Subsection (4) introduces Schedule 3 which makes consequential amendments and transitional provision and savings.

Section 14: Transfer of property, rights and liabilities

104.     This section enables the Secretary of State to make one or more schemes to transfer property, rights and liabilities which he is entitled or subject, in connection with the transferred functions, or under arrangements entered into in preparation for the coming into force of the Commission's functions under Part 1 of this Act.

105.     Subsection (2) sets out that a scheme under subsection (1), (a transfer scheme) may:

• provide for the transfer of property, rights and liabilities that it would not otherwise be possible to transfer, for example, a contract which does not contain a clause allowing it to be assigned;

• create for the Secretary of State interests in or rights over property transferred by virtue of the scheme. For example, it enables any property that may transfer to the Commission to continue to be used by the Secretary of State;

• create for the Commission, interests in or rights over property retained by the Secretary of State. Such a scheme could enable the Commission to make use of a property that the Secretary of State may own;

• create rights and liabilities between the Secretary of State and the Commission, for example, if a contract were transferred to the Commission, the scheme could allow for the Commission to be indemnified by the Secretary of State in respect of previous breaches; and

• make such supplementary, incidental, consequential or transitional provision or savings as the Secretary of State considers appropriate.

106.     Subsection (3) provides that a transfer scheme shall come into force in accordance with the terms provided by the transfer scheme itself.

107.     Subsection (4) provides that a certificate given by the Secretary of State will provide evidence that any property, rights or liabilities have been transferred

108.     Subsection (5) defines 'transferred functions' as those functions transferred under section 13.

Part 3 - Child Support etc.

Removal of compulsion for benefit claimants

Section 15: Repeal of sections 6 and 46

109.     Section 15 repeals sections 6 and 46 of the Child Support Act 1991.

110.     Section 6 of the Child Support Act 1991 provides that parents with care who make a claim for, or are in receipt of, prescribed benefits, may be treated as making an application for child support maintenance. Paragraph (a) of section 15 removes this power.

111.     Section 46 of the Child Support Act 1991 gives power to the Secretary of State to reduce the amount of benefit parents with care receive where they are treated as having applied for a maintenance calculation under section 6 of the Child Support Act 1991, and they choose to opt out of the scheme without good cause for doing so. Paragraph (b) of section 15 removes this power, which will become redundant when section 6 is repealed.

Maintenance calculations

Section 16: Changes to the calculation of maintenance

112.     This section introduces Schedule 4 which amends legislation regarding how maintenance calculations are performed. Changes to how maintenance is calculated include:

• A move from using net to using gross weekly income to determine maintenance liability. Information required to calculate maintenance will be taken directly from HMRC instead of the non-resident parent.

• Changes to the percentages used to calculate basic rate maintenance.

• Treating certain existing child support maintenance obligations which fall outside of the statutory scheme, as though they were within the scheme, for the purposes of calculating liability.

• An increase in flat rate maintenance from £5 to £7 per week.

Section 17: Power to regulate supersession

113.     This section replaces subsections 17(2) and 17(3) of the Child Support Act 1991. Section 17 allows a maintenance decision to be superseded by a new decision, where, for example, there has been a change of circumstances.

114.     These changes provide a regulation-making power to Secretary of State in relation to the supersession of decisions.

115.     New subsection (3) sets out that regulations may include:

• Provision about the cases and circumstances in which a decision may be superseded, which may include a restriction on superseding a decision as a result of certain changes of circumstance. This change enables the introduction of fixed term annual awards, where a change in circumstance will only be actioned during the year if there has been a large change in income, or where the change is fundamental to the maintenance calculation. This will also enable regulations to contain provisions which set out the circumstances in which earlier changes of circumstances (which had not led to a supersession) can be taken into account.

• Procedural aspects of supersessions.

Section 18: Determination of applications for a variation

116.     Section 18 inserts two new subsections (2A) and (2B) into section 28D of the Child Support Act 1991, which concerns the varying of a maintenance calculation.

117.     New subsections (2A) and (2B) require the Commission, on receipt of an application from a person with care (or, in Scotland, a child of 12 or over) to vary a maintenance calculation, to consider any information or evidence that is available to it or take steps to obtain further information or evidence, if it appears that further information would affect a decision to vary a maintenance calculation.

Section 19: Transfer of cases to new rules

118.     This section introduces Schedule 5 which makes provision for the movement of existing cases onto the new calculation rules. The Commission may require the parties in existing cases to choose whether to remain in the statutory scheme under the new calculation rules or to leave the scheme as far as future liability is concerned.

Collection and enforcement

Section 20: Use of deduction from earnings orders as basic method of payment

119.     Section 20 concerns section 29 of the Child Support Act 1991, which sets out provisions for the collection of child support maintenance. Subsection (3)(b) of section 29 provides the Secretary of State with the power to make regulations as to the method by which payments of child support maintenance should be made.

120.     This section inserts new subsections (4) and (5) into section 29 of the Child Support Act 1991 to make it clear that such regulations can include deduction from earnings orders as an initial method of collection. The intention is to pilot the use of deduction from earnings orders as a primary method of collection for employed non-resident parents.

121.     New subsection (4) requires that any regulations which allow deduction from earnings orders to be used as an initial method of collection also include provision that this method should not be used where there is good reason not to do so. The regulations must also include a right of appeal to a magistrates' court (or, in Scotland, to the sheriff) against a decision that there is no good reason not to use a deduction from earnings order to collect maintenance.

122.     New subsection (5) prevents the magistrates' court (or, in Scotland, the sheriff), on an appeal made under regulations under subsection (4), from questioning the maintenance calculation by reference to which the deduction from earnings order was made.

123.     New subsection (6) provides that regulations may include provision with respect to the period within which an appeal must be made and the powers of the magistrates' court (or, in Scotland, the sheriff) in relation to such an appeal.

124.     New subsection (7) enables regulations to set out what matters should be considered (or not considered) in determining whether there is a good reason not to use a deduction from earnings order as an initial method to collect maintenance. For example, the regulations could provide that there would be a good reason not to use a deduction from earnings order if doing so could compromise the employment status of a non-resident parent, or raise privacy issues. It also enables regulations to prescribe circumstances in which a good reason not to use a deduction from earnings order does, or does not, exist.

Section 21: Deduction from earnings orders: the liable person's earnings

125.     This section replaces subsection (8) of section 31 of the Child Support Act 1991, and inserts a new subsection (9). The intent of the change is to define what will be considered as 'earnings' for the purpose of deduction from earnings orders.

126.     Section 31 of the Child Support Act 1991 concerns deduction from earnings orders, and the existing subsection (8) provides that 'earnings' has such meaning as may be prescribed.

127.     The definition in the new subsection (8) will include the following as earnings:

• wages or salary;

• payments by way of pensions including any annuity payable for the purpose of providing a pension;

• periodical payments which are compensation for loss of employment or reduced remuneration; and

• statutory sick pay.

128.     The impact of this change is that all pension payments, whether as a result of a private or occupational pension scheme, will be included as earnings for the purposes of deduction from earnings orders.

129.     The new subsection (9) sets out that for the purposes of sections 31 and 32 of the Child Support Act 1991, any person paying a sum covered by new subsection (8) to a liable person should be treated as their 'employer'.