universal preference for women over men

1. I am the head of the Child Benefit Policy section of the Department for Work and Pensions ("the Department"). My role is to manage the development and maintenance of policy on Child Benefit and Guardian's Allowance, and to give advice to ministers on those matters. I have held that position since September 1999.

2. I am duly authorised to make this statement on behalf of the Defendant (or "the Secretary of State") in opposition to the Claimant's claim. The facts and matters stated herein are either within my own knowledge, in which case they are true; or come to me from the sources expressly or impliedly identified below, in which case they are true to the best of my knowledge, information and belief. I have relied in particular upon colleagues in the sections of the Department dealing with the administration of Child Benefit, Child Support Policy, Income Support Policy and Claims and Payments Policy.

3. There is now produced and shown to me a bundle of copy documents labelled IS 1 to which I shall refer in the course of this statement. Where, in the course of this statement, I give page references for documents, they are, unless otherwise stated, references to pages of Exhibit IS 1.

The facts of the present case

The claim for CHB

4. The Claimant's claim is concerned with the allocation of CHB in respect of his younger son, Gareth Barber, who is the subject of a shared care arrangement with the Claimant's former wife, Mrs Karen Barber. I understand that the Claimant has sole care of his elder son, Lewis Barber, and has been in receipt of CHB in respect of Lewis since 1 November 1999.

5. The application for CHB in respect of both Gareth and Lewis Barber was made shortly after birth by the Claimant, and he received CHB for both children until 7 T„.,n 100'7 when entitlement transferred fn Mrs Barber. Mrs Barberhad made a claim for both children in May 1997, which was, I understand, after she had separated from the Claimant; the claim was not contested by the Claimant. Mrs Barber's award of CHB for Lewis was terminated following a claim by the Claimant for both children in October 1999, although it was decided by the Secretary of State that CHB for Gareth would remain with Mrs Barber. On 14 August 2000, the Claimant made a further application for CHB in respect of Gareth [pp. 1-7].

6. In response, the Department's Child Benefit Centre ("CBC") sent, both to the Claimant and his former wife, forms requesting further information. Form CH121(DC), which is sent out whenever a new claim is made in respect of a child for whom CHB is already in payment, was issued to the Claimant; Form CHI 02 was issued to Mrs Barber notifying her that someone else had claimed CHB for Gareth. At the same time, both parents were sent a second form, Form CH15C(DC), which is a form specific to the situation where there is a possibility of competing claims in respect of the same child. The questions on Form CHI 5C(DC) seek to ascertain the extent to which each duplicate claimant has care of the child in question and the extent to which each claimant makes a financial contribution to the upkeep of the child. Replies were received from both the Claimant and Mrs Barber [pp. 8-14] which, whilst broadly consistent as to the issue of the proportion of time that Gareth spent with each, were directly at odds on the question of their relative expenditure on him. For example, whilst the Claimant felt that Mrs Barber did not spend enough or any money on new clothes and haircuts for Gareth, Mrs Barber's view was that she paid for all of Gareth's clothing, school uniform and out of school activities (£80 per month plus £ 10 per month in childminding fees).

7. Both the Claimant and Mrs Barber fulfilled the criteria for entitlement to CHB, but only one of them could actually be entitled to receive it (s. 144(3) of the Social Security Contributions and Benefits Act 1992 ("SSCBA" or "the 1992 Act")). Since the statutory rules of priority (in paras. 2-4 of Schedule 10 to the 1992 Act) did not resolve the issue, and they were not in agreement as to who should be entitled to receive CHB, it fell to the CBC to decide upon which of them should have priority (under para.5

of Schedule 10). By letter dated 24 October 2000, the CBC informed the Claimant that Mrs Barber remained, as a matter of law, entitled to CHB for three weeks following the receipt of his claim, and that it had been decided that she would remain entitled to CHB in respect of Gareth thereafter [p.15]. The basis for the latter decision was that, since the care of Gareth appeared to be shared equally, the Claimant had failed to demonstrate that he had the greater balance of care of Gareth [p.17]. Accordingly, the status quo would not be disturbed. It was also the case that the Claimant's allegations regarding Mrs Barber's lack of expenditure on Gareth were not confirmed by her and, indeed, that she had contended that her expenditure was greater than that of the Claimant.

8. There was then a telephone conversation between the Claimant and the CBC decision-maker, during which it was suggested that the Claimant's difficulties might be resolved by agreement with Mrs Barber. On 26 October, the decisionmaker wrote to Mrs Barber to ask whether she would agree to each of them receiving CHB for Gareth for six months per year (in which case no formal decision would be required of CBC), but Mrs Barber refused [pp. 18-19 (record of phone call and completed form)]. On 7 November 2000, the Claimant wrote to the CBC, complaining about the 24 October decision, and the suggestion that he could seek to reach agreement with Mrs Barber [pp. 20-21]. In his view, his former wife had a nature "which requires the maximum amount of money to be made using minimum effort" and, whilst she received CHB, child support and Working Families Tax Credit "none of the above is spent caring for [Gareth] or meeting his needs purely her own selfish obsession". He requested that his claim be reconsidered and, in particular, that CHB for Gareth be split equally between them.

9. In a Reconsideration dated 16 November 2000 [p. 22], a supervisor within the Duplicate Claims Technical Section within the CBC noted that it had been decided that the Claimant "had failed to provide enough justification to remove the benefit from Mrs Barber", and concluded that the decision of 24 October 2000 was "correct and should stand". The Reconsideration was stated to be based upon, amongst other provisions, s 144(3) of , and Schedual, 10 <to?>, the 1992 Act. The claimant then sought to appeal the Reconsideration to a Social Security Appeal Tribunal ("SSAT"), although it had been stated in the original decision of 24 October 2000 that there was no right of appeal to the SSAT or the Social Security Commissioners in respect of that part of the decision which entitled Mrs Barber to continue to receive CHB in respect of Gareth for the period after the three week period of grace in para. 1(2) of Schedule 10. An exercise of discretion under Schedule 10 may only be challenged by way of an application for judicial review, and I understand that the Claimant has not sought to challenge either the decision of 24 October 2000, or the Reconsideration dated 16 November 2000, by way of judicial review, either in the past, or within the current proceedings.

10. In a letter dated 27 July 2001, the Claimant's solicitors noted that the Reconsideration of 16 November 2000 had been appealed to the Social Security Appeal Tribunal but requested that discretion be exercised under reg. 34 of the Social Security (Claims and Payments) Regulations 1987 so as to pay to the Claimant part of the CHB for Gareth [pp. 23-24]. The Claimant's solicitors pointed out that receipt of CHB entitled the recipient to dependent allowances, and conferred "parent with care" status under child support legislation. The CBC replied in a letter dated 7 August 2001, advising that legislation did not permit CHB to be split between two or more parties [pp. 25-26]. Further, reg. 34 would not be used in the manner requested because it was necessary to obtain the agreement of the other party and, in any event, even if part of the CHB payment in respect of Gareth was redirected to the Claimant, entitlement to CHB would not be transferred so as to affect entitlements to dependent benefits.

11. Following the issue of judicial review proceedings to quash the decision under reg. 34 which was contained in the 7 August 2001 letter, the Secretary of State accepted that an exercise of discretion under reg. 34 was not dependent upon Mrs Barber's consent [p. 27] and agreed to reconsider that decision. A further Reconsideration, dated 19 December 2001 proceeded on the basis that reg. 34 "was introduced to enable the Secretary of State to pay benefit to another natural person where it appeared to the Secretary of States that, for one reason or another, the beneficiary could not be entrusted to use the benefit [at issue] in their own or their dependants' best interests." It noted that there was "no conclusive evidence that Mrs Barber is not discharging her obligation towards Gareth by using the Child Benefit paid in respect of him in his interests", that "it is clear that both parents are capable stewards" and that there was no evidence that a direction under reg. 34 was necessary to protect Gareth's interests. Therefore, it was decided not to make a direction under reg. 34. Whilst the Reconsideration dated 19 December 2001, which is the decision now under challenge, referred to s. 144(3) of, and Schedule 10 to, the 1992 Act, there was no reconsideration of the application of those provisions.

The Claimant's liability for child support

12. It appears that the Claimant's principal objection to Mrs Barber receiving CHB in respect of Gareth is that she thereby acquires the status of "person with care" under the child support legislation, leaving him as the "non-resident" or "absent" parent who is prima facie required to pay child support in respect of Gareth. He currently has a liability for child support of £6.76 per week. I shall deal with the facts of the case in relation to child support in paras. 72-7.5 below.

Other benefits

13. Although the Claimant's Claim Form complains of the effect of the Secretary of State's decisions in relation to CHB upon his entitlement to child premia under income support, family credit and housing benefit rules, I understand that he has not, at least in recent times, been in receipt of any of those benefits. Nor is there any immediate likelihood that he will in the future be in receipt of such benefits, since he remains in relatively well-paid employment as a leading firefighter.

Child Benefit: the underlying policy

14 I turn now to the examine tile issues of policy which, in the view of the Secretary of State, are raised by the Claimant's claim that, pursuant to reg. 34, CHB for Gareth ought to be split between himself and Mrs Barber.

15. A Family Allowance equivalent to modern day CHB was one of the original cornerstones of the Welfare State, outlined in the Beveridge Report, and the general points I make below in respect of CHB are equally applicable to Family Allowance in its original form. The objective of CHB, which was introduced by the Child Benefit Act 1975, is to make a contribution towards the costs incurred by every family in bringing up children. CHB is an important part of the acknowledgement by the State of the additional costs which families with children have to bear. Those costs are made up of additional direct costs of providing for the needs of a child but also of the loss of income involved where a parent gives up work or reduces their hours of work in order to undertake child rearing responsibilities.

16. CHB is paid in respect of virtually all children under 16, or up to the 19th birthday for those in full-time, non-advanced education. It is a non-contributory benefit, funded from general taxation (rather than from the National Insurance Fund, as is the case with contributory benefits such as the basic state pension). It is an unusual social security benefit in that it is "universal", being paid, tax free, irrespective of the means of the recipient. Consequently, it has the highest take-up of any non-contributory benefit, and the second highest of any benefit behind the basic state pension, being paid to around 7 million families in respect of nearly 13 million children. Around 800,000 new claims for CHB are made in each year.

17. Whilst there are a very high number of claimants for CHB, the amounts payable are relatively small, as compared with other social security benefits. This is because CHB has never been intended to meet the full costs of bringing up a child, but is intended as a contribution towards those costs. The present rate of CHB (from 10 April 2002) is £15.75 for the first child and £10.55 for any other children (as compared, for example, with £53.95 per week for income support for a claimant who is 25 or over).

Public attitudes towards Child Benefit

18. Primarily as a result of it being a universal benefit, CHB plays an important role in maintaining the public's identity with, and trust in, the social security system. The most authoritative recent survey on attitudes towards CHB -Using Child Benefit in the Family Budget by Jonathan Bradshaw & Carol Stimson (Social Policy Research Unit, 1997) found a consensus of views over more than 20 years of research (see pp. 44-53 [pp. 37-41]):

Child benefit and current policy

19. The present Government has put in place a long term strategy to tackle poverty and social exclusion. One of its commitments has been to halve child poverty by 2010 and eradicate it by 2020. CHB, which provides all families with a reliable income, is viewed by the Government as playing a crucial role in the fulfilment of those pledges. As a result, the Government is committed to the principle of universal Child Benefit as the foundation of its support for children. Accordingly, rates of CHB have increased substantially since 1997. The rate of CHB for the first/eldest child has increased from £11.05 in 1997 to £15.75 from April 2002, a real terms increase of 26%. Since 1997, expenditure on CHB has increased by more than £900 million in real terms. The planned expenditure on Child Benefit for 2001/02 is £8.8 billion.

Entitlement to Child Benefit

20. The principles governing entitlement to CHB are set out in Part IX of the 1992 Act. The basic rule is that CHB is payable to a person who is responsible for a child in any week (s .141). The term "child" and what it means to be responsible for a child are further elucidated in ss. 142-143. Under s. 143, a person is responsible for a child in a week if the child is living with him during that week, or he is contributing to the cost of providing for the child for that week. In the vast majority of cases, both parents of a child could, if they submitted a claim, fulfil the criteria of entitlement to CHB either because both of them live together with the child or, if their relationship has ended, the child resides with both for some of the time, or one parent pays maintenance to the other. However, it is a fundamental feature of the statutory scheme that, at any one time, only one person can be entitled to CHB in respect of a particular child. That feature, which is at the heart of the claim in these proceedings, was present in the scheme for Family Allowance as originally enacted in 1946, and subsequent equivalent legislation, and is currently contained in s. 144(3):

Competing claims to Child Benefit

21. Schedule 10 then contains a series of principles for the resolution of competing claims to CHB. It should be noted, first, that Schedule 10 only comes into operation where two competing claims have been made. As is the case with other social security benefits, a person can only be entitled to receive CH13 if they make a valid claim to receive it (the relevant legislation is s. 5(1)(a) of the Social Security Administration Act 1992 and reg. 4(1) of the 1987 Regulations). Therefore, if only one claim is received in respect of a particular child there is no question of Schedule 10 being applied so as to determine that someone else has a better claim to CHB in respect of that child.

22. The first four paragraphs of Schedule 10 contain rules of priority between persons entitled to CHB. The first rule, in para. 1, is that a person already in receipt of CHB in respect of a particular child automatically has priority for a three week period. As I have stated above, the decision dated 24 October 2000 on the Claimant's competing claim was in part to the effect that Mrs Barber enjoyed priority under para. 1 for the three weeks following the receipt of the claim. According to the Notes on Clauses prepared for the Child Benefit Bill 1975, that interval was intended to allow time for conflicting claims to be investigated and a decision reached. If it proves necessary to transfer the award, the interval also gives time to arrange for the beneficiary to return his order book before the new claimant's award begins. cashing any order for a week. A person who is responsible for a child by virtue of the child living with him has priority over someone who is responsible by virtue of making a financial contribution towards the child's upkeep (para. 2) and the parent of a child has priority over someone who is not a parent (para. 4(1)). I examine in more detail below the rules contained in paras. 3 and 4(2) of Schedule 2.

23. Where none of the rules of priority in paras. 2-4 of Schedule 10 apply, para. 5 firstly makes it clear that it is open to competing claimants to elect between themselves which of them shall be entitled to receive CHB. In default of

agreement, it falls to a decision-maker at the CBC, acting on behalf of the Secretary of State, to make a discretionary decision as to which of the competing claimants shall be entitled. The information sought on Form CHI 5C(DC) [pp. 42-43], is directed at ascertaining the responsibilities that each of the competing claimants bears for the child in question.

24 In general, the claiment who appears to bear the greater responsibility will be awarded entitlement, and, if entitlement is to be transferred, the decision-maker must be satisfied that the person not entitled bears a greater responsibility than the other. Greater importance is attached to who the child actually `lives with' (consistent with para 2 of Schedule 10). It is material to take account of financial provision for the child, since CHB is intended as a contribution towards that provision, but this is only an indication of the degree of responsibility borne: one parent may be less able to contribute financially than another, particularly if dependent on income-related benefits. Similarly the questions asked about which address is used for school/doctor, who looks after the child when ill and what are the terms of the residence order (if any) all seek indications which help the decision maker to build up an overall picture of responsibility.

The limited preference for women over men

25. Paragraph 3 of Schedule 10 gives priority to the wife in a situation where competing claims are made by a husband and wife living together (and see also para. 4(2) where unmarried parents are living together). CHB legislation does, to this extent, favour payment to the woman in a household. CHB is, however, gender neutral in that it may be claimed by men as well as women (unlike its predecessor, Family Allowance, which could only be paid to women). I note that in para. 30A of the Amended Claim Form, the Claimant complains that "the fact that Mrs Barber is in receipt of CHB results from the explicit preference for wives over husbands in paragraph 3 of Schedule 10 of the Act". This complaint is misplaced as a matter of fact. The Claimant himself was originally awarded CHB in respect of Gareth. From 2 June 1997, entitlement to CHB in respect of Gareth was transferred to Mrs Barber with the Claimant's consent, and not through application of para. 3 of Schedule 10 (which did not, in any event, apply, because they were no longer living together).

26. I am advised that, for those reasons in essence, the legitimacy of the statutory preference for wives over husbands with whom they live is not at issue in these proceedings and does not fall to be justified by the Secretary of State. However, to the extent that it is necessary to, do so, the Secretary of State would contend that the statutory preference in paras. 3 and 4(2) of Schedule 10 is amply justified by research evidence as to patterns of income and financial control within families. Three features of that evidence are of particular importance. First, the evidence strongly indicates that there is still an inequitable division of financial resources between husbands and wives living together, and that CHB continues to be an important source of independent income for married women and women living with a partner: see chapter 4 of Using Child Benefit in the Family Budget to which I have referred above [pp. 29-33].

27. Second, research shows that where couples live together, women are more likely to be responsible for buying food and clothes etc. for their children, and are more likely to `go without' than men in order to provide for their children when financial resources are limited. The preference for payment of CHB to the female carer within the household can therefore be regarded as an attempt to ensure, so far as possible, that CHB is spent as it is intended to be spent, for the benefit of children. A recent study - Purse or Wallet? by Jackie Goode, Claire Callender & Ruth Lister (Policy Studies Institute, 1998) - drew the following amongst other conclusions (see Executive Summary and p. 36 [pp. 44-50]):

Both men and women saw responsibility for ensuring that children's material needs were met as the women's domain.

Men and women spontaneously identified a need, in relation to some families reliant on benefit, to protect the interests of children against men's personal spending, and saw payment of benefit to women as serving this end.

It was often the case that women took the main responsibility for vigilant restraint over both their own and their partners' spending in order to prioritise the children's needs first and foremost. Women's accounts of `going without' were remarkably consistent with findings from earlier research (eg Middleton et al, 1997). They were much more explicit than the men about going without themselves in order to put their children first.

28. Third, there is compelling statistical evidence that women rather than men are more likely to have reduced access to the labour market (and thus the ability to accrue a pension) because of child caring responsibilities. As I shall explain in more detail below, receipt of CHB during a tax year entitles the recipient to Home Responsibilities Protection ("HRP"), whereby that year is deducted from the number of qualifying years needed for a basic state pension. In that way, the recipient is not prejudiced by inability, due to childcare responsibilities, to work and/or make National Insurance Contributions towards the basic state pension. The link between CHB and HRP has particular significance for women who are far more likely than men to give up work in order to care for children. A recent study published by the Women's Unit within the Cabinet Office, entitled Women's Income over the Lifetime, made the following, amongst other, findings:

The executive summery of the Woman’s Unit study is exhibited at pp. 51-58.

29. For those reasons, and bearing in mind that, in the first place, it is open to couples to choose which of them claims CHB, the Secretary of State considers that it is legitimate for Schedule 10 to the 1992 Act to operate a limited preference in favour of women.

The administration of Child Benefit

30. The very high numbers of claims for CHB and the relatively small amounts of money paid out per claim require that the costs of administering each CHB claim is kept to an absolute minimum. Whilst the Secretary of State is of course concerned to minimise expenditure on the administration of all social security claims, the consequences of increased costs per claim are all the more serious in the case of CHB given the high take-up figures and the amounts which are at stake. The imperative of minimising costs in turn places great emphasis upon the need to maintain the simplicity of the administrative process governing CHB claims. The twin objectives of maintaining simplicity, and minimising costs, are, in the Secretary of State's view, reflected throughout that administrative process.

Applying for Child Benefit

31. Application forms for CHB are distributed in hospitals in so-called "bounty packs" to mothers of new born babies and are available in offices of the Department. At pp. 59-92, there is a copy of the April 2002 edition of the claim form for CHB and the information booklet which accompanies it. The Secretary of State's aim is to seek the minimum amount of information from each claimant, and to require the minimum amount of evidence to be provided. The only documentary evidence which need be supplied is an original birth or adoption certificate for each child in respect of whom CHB is claimed. Provision is even made for that documentation to be supplied at a later stage without affecting the date from which CHB is paid. In this way, the time taken to process CHB claims, and therefore the cost of processing, is minimised. It is also well-known that the take up rate for a benefit tends to diminish the more onerous are the demands which are placed upon claimants for the benefit, so the simplicity of the claim form can be expected to further the aim of encouraging families to claim CHB.

The processing of Child Benefit claims

32. Child Benefit is administered by the CBC, which is located in Washington, Tyne and Wear. There are approximately 2300 staff working in CBC who, as I have already mentioned, are responsible for administering CHB to around 7 million families in respect of around 13 million children, with the rate of new claims running at around 800,000 per year. The CBC still uses the original computer system which was first installed in 1975. The latest available figure for the total cost of administering CHB (which, as a result of changes in methodology, is 1997/98 a figures) is approximately £133 million. The current annual running cost of the CBC is approximately £40 million. The overall cost breaks down to a cost of approximately 35 pence per claimant family per week and represents around 1.9% of the total benefit expenditure on CHB (the second lowest proportion for any benefit after the basic state pension).

33. The majority of claims received in CBC are processed within two to three days. When a claim is received in the post room of CBC, it is date-stamped and, usually on the same day, passed to the Claims Receipts Section. Prior to being processed, each claim is cross-referenced to the Department's Personal Details Computer System (PDCS) to establish if the claimant is in receipt of income support or Jobseeker's Allowance (since, if they are, payment of CHB may affect the payment rates of those benefits). The following day, claims are distributed to staff for processing. The processing of a CHB claim then proceeds as follows:

A straightforward claim with multiple children takes approximately 10 to 15 minutes of administrators' time to process.

34. Where a claim is non-straightforward, in that it requires further information, rather than payment being requisitioned overnight following the entry of a claim into the computer system, a copy of the claim account is issued for action by the Claims Assessment Team. This team issues the first line enquiries needed to gather the additional information required to establish entitlement conditions, and the claim is filed for one month to await reply.

35. Competing claims in respect of the same child are "non-straightforward" and, indeed, may cause significant further complications. For CHB purposes a "competing claim" is any claim made in respect of children who are already included on another customer's CHB account. These claims reflect a variety of circumstances, for example:

36. Between April 2000 and March 2001, CBC received 54,812 duplicate/competing claims which generated more than 302,000 pieces of correspondence and approximately 500 telephone calls per week to the Duplicate Claims Section. Besides the additional complications required in the initial determination of competing claims, such claims are particularly likely to result in appeals and requests for reconsideration. 257 requests for reconsideration of determinations on competing claims were made in the year to March 2001, as well as 150 appeals. The numbers have increased by something in the region of 10% in the year to March 2002.

37. If the parties are not in agreement as to who should be entitled to receive CHB, and both in fact claim it, the CBC, on behalf of the Secretary of State must reach a decision on entitlement, applying the rules set out in Schedule 10 of the 1992 Act. In most cases, the outcome is dictated by the rules of priority contained in paras. 2-4 of Schedule 10. In approximately 3000 cases per year, a discretionary decision on entitlement must be made under para. 5 of Schedule 10. Before a decision can be taken, further enquiries must be made of the parties (Form CH15C(DC) [pp. 42-43]. This process can take anything from two weeks to six months depending upon the nature of the case and the extent of the conflict between claimants. As the present case illustrates, duplicate claims are very often made following the breakdown of a relationship and, in that situation, there can be significant disparities in the accounts given, and much acrimony between the parties.

Child Benefit and Home Responsibilities Protection

38. I have referred above to the link between receipt of CHB and Home Responsibilities Protection ("HRP"). HRP, the rules governing which are contained in the Social Security Pensions (Home Responsibilities) Regulations 1994 (SI 1994/704), was originally introduced in 1978 to assist people, especially women, who were precluded from work for periods by caring responsibilities, to maintain their entitlement to the basic state pension. HRP reduces the number of qualifying years needed for a full basic pension (although it cannot reduce that number below 20). HRP is available for complete tax years throughout which a person has been awarded CHB for a child under 16, and is also available to people unable to work as a result of caring for a sick or disabled person. From April 2002, each HRP year that CHB is paid for a child under age six, will also build up entitlement towards a State Second Pension. The period of a full tax year was chosen as an indication that access to the labour market has been impeded for a significant period of time rather than just a few weeks or months.

39. Therefore, for the purposes of HRP, receipt of CHB is used as a simple indication that the recipient's access to the labour market, and therefore their ability to contribute towards a pension, is hampered as a result of child rearing responsibilities. It is so used in the knowledge that where there is any conflict between the parents of a child as to who should receive CHB, that conflict will have been resolved:

Child Benefit as a passport to other benefit entitlements

40. There are a variety of other benefits which are payable, or are subject to increase, on the basis of receipt of CHB (examples of which are given in the statement of Mr Haley-Halinski on behalf of the Claimant):

41. I understand that the Claimant is not in receipt of any of the above benefits, and that there is no immediate likelihood of his making a claim for them, since he is in relatively well-paid, full-time employment as a leading firefighter. I am advised that, accordingly, the various rules linking enhanced benefit entitlement to receipt of CHB do not fall to be justified in these proceedings. I wish to add merely that, as is the case with HRP, receipt of CHB is treated as, in effect, a shorthand for the recipient having the care of a child. It is so treated in the knowledge that any issue as to entitlement will have been resolved in favour of the party who is most likely to have greater caring responsibilities for the child in question. The alternative to reliance upon the CHB rules, and upon the prior decisions of the CBC, would be for the decision-maker in the relevant part of the Department (or, in the case of housing benefit, local authorities) to seek afresh to determine whether the claimant is responsible for a child. The present system has the significant advantage of avoiding duplication of decisionmaking, saving time and effort, and therefore expenditure on administration.

Regulation 34 of the 1987 Regulations

42. The Reconsideration dated 19 December 2001, which is under challenge in these proceedings, was issued not following an exercise of discretion under para. 5 of Schedule, 10, but pursuant to the Claimant's request through his solicitors that entitlement to CHB be split as between himself and Mrs Barber using powers contained in reg. 34 of the 1987 Regulations. Regulation 34 provides for the Secretary of State to exercise discretion to divert part or all of the payment of a benefit if it appears "necessary to protect the interests of the beneficiary, or any child or dependent in respect of whom benefit is payable". It is not specific to CHB but is a power which may be exercised in relation to any social security benefit.

43. As is apparent from the Reconsideration itself, the Secretary of State regards reg. 34 as being available for exercise in the situation where the person entitled to the benefit in question may be incapable of handling money and cannot be trusted to use the benefit in question in their own or their dependants' best interests. Further, the Secretary of State has taken the view that removing the power of an individual to handle the benefits to which they are entitled is a very serious step which must be justified by clear and compelling proof of misuse of benefits. Regulation 34 has consistently been applied in this way since 1987 when the present Regulations were enacted, and before that under differently worded provisions.

44. The request made by the Claimant was misplaced for the further reason that the partial or total diversion of benefit to a third party does not have the effect of transferring entitlement to receive that benefit. The third party receives the benefits "on behalf of” the person entitled. There is nothing in the various rules governing entitlement to social security benefits to the effect that the exercise of discretion under reg. 34 can confer an entitlement upon an individual where the usual conditions for entitlement are not satisfied. Nor, looking at matters from the point of view of the original claimant, is there any exception to entitlement where a direction under reg. 34 has been made. Therefore, the Secretary of State has taken the view that the diversion of benefit to a third party does not enable the person receiving the diverted payment to have `gateway' access to family premiums and child allowances paid with other benefits, or for it to affect a decision on who is the "person with care" for Child Support purposes. The benefit remains the possession of the person originally entitled, albeit that payment of it may have been diverted to the third party. Therefore, even if part of the CHB to which Mrs Barber was entitled had been diverted to the Claimant, it would not have conferred upon him the status of a person entitled to receive CHB; nor would it have affected the Child Support assessment. Regulation 34 has never been used as a means of splitting entitlement to CHB or any other benefit as between competing claimants.

45. I should add that, even if the Secretary of State's construction of reg. 34 is, as alleged by the Claimant, unduly narrow, such that reg. 34 could be relied upon to split of benefit entitlement, either as a matter of law or in practice, the Secretary of State would not wish to rely upon it to divide CHB in order to reflect parents' shared caring responsibilities. Regulation 34 is a discretionary provision, and because of the potentially damaging implications of dividing CHB, which I explain in paras. 46-58 below, the Secretary of State would be inclined not to invoke it in these circumstances.

The consequences of splitting entitlement to CHB

46. Section 141(3) of the 1992 Act embodies two long-established principles which run throughout the social security system - that a child is to be treated as the responsibility of one person only, and that entitlement to benefit is sole and not shared. A departure from those principles so as to recognise that entitlement to CHB could be split between carers, either as a matter of law, or in practice, would, in the Secretary of State's view, have a number of damaging consequences.

Increase in number of competing claims

47. I have noted above that competing claims place a significant extra burden upon the administration of CHB as compared with claims which are not competing in respect of the same child. At present, an estimated 10% of the competing claims received by CBC involve shared care arrangements (equating to around 0.6% of all CHB claims received each year).

48. If the rules were to change so that entitlement to CHB could be split between parents/carers, it is very likely that an immediate consequence would be a sharp increase in the number of competing claims arising out of shared care arrangements. If the Claimant's case is well-founded as a matter of principle, it would follow that arrangements will have to be made for CBC to split entitlement not only in cases analogous to the present, but in any case where a partial entitlement could be made out. The care arrangements at issue in this case - a 50/50 split of caring responsibilities - are comparatively rare, and most of the additional claims would be from parents who have less than 50% of the care of the child (in particular those who have a child at weekends only, in which case entitlement may have to be split in the proportions five or six sevenths to one or two-sevenths). Since CHB is a contribution towards the costs of bringing up a child, and entitlement may be established by expenditure on a child as an alternative to physical care of a child, competing claims can also be expected where there is no shared residence but the other parent has regular contact, and even where the non-resident parent has little if any contact but merely makes a significant contribution towards the upkeep of the child.

49. Figures published by the Lord Chancellor's Department show that that the numbers of residence and contact orders made by the courts are increasing year by year, and were 26,000 and 46,000 respectively in 2000. The numbers of court orders gives some indication of the potential pool of separated couples who might seek split entitlement to CHB although, of course, only a proportion of separations require the involvement of the courts. Another indicator, can be found in DWP Research Report 152 "National Survey of Child Support Agency Clients" (2001) (pp93-95) which suggests that around 10 per cent of "parents with care" who have claimed Child Support make use of an ex-partner for childcare purposes at least during the school holidays. That would equate to the children of approximately 150,000 loan parents, a further pool of potential sources of claims to split entitlement.

50. Clearly, if it were possible to split entitlement to CHB there is great potential for an increase in competing claims where the parents of a child have separated. The notential exists ngt only for claims, frnm n~wlv SPnarpted nnrentsjur also t0:

51. It is also likely that, once the obstacles to split entitlement to CHB have been removed, claims for split payments will arise from parents who are not separated, but who would prefer `split' payments for other reasons, for example, so that each may qualify for HRP.

Additional difficulties in determining competing claims

52. The increased complexity and cast associated at present with the determination of competing claims arises in the context of there being a relatively broad and simple question at issue: which competing claimant bears the greater responsibility overall for the child. The decision-making process would become considerably more complicated if the question were instead to be "what quantified proportion of care does each competing claimant provide?", with the onus upon the decision-maker to decide whether the proportion was 80/20 or 65/35 etc. (assuming, that is, that there were only two parties with responsibility for the child). More detailed information would have to be sought from competing claimants in order to enable a decision on the precise proportions. Administratively, it might be most convenient to apportion "care" in terms of the average number of nights spent by the child with each carer in a week. However, that approach would take no account of other significant factors, for example, the different levels of expenditure each parent might incur in respect of the child, or the constraints are placed on such expenditure because of differing financial circumstances between parents of the same child. Questions such as whether one carer incurs expenditure which is disproportionate to the number of days of care per week provided could arise.

Additional costs of determining competing claims

53. Were split entitlement to be permitted, the expected increase in the number of competing claims, and the additional difficulties which would arise in relation to each such claim, are likely to combine so as to increase considerably the costs of decision-making within the CHB system. As I have explained above, the unique characteristics of CHB - a universal benefit, paid to a huge number (more than 7 million) claimants but in relatively small amounts - require particular emphasis to be placed upon minimising the costs of its administration. The resources allocated by successive Governments to CHB have thus far been used in such a way as to minimise administrative costs, and the simplicity of the present rules of entitlement to CHB have played an important role in achieving the former objective - keeping the cost of administering CHB down to only 1.9% of CHB expenditure. More complex rules of entitlement which are responsive to a greater degree to shared care arrangements will inevitably increase the costs of decision making and require a greater proportion of resources to be directed to this type of case.

54. It should also be borne in mind that where a claim to split entitlement is received from a parent who is responsible for only a small proportion of care for a child (say one day a week, or 15%), the outcome of a relatively complicated decision-making process would be that only a very small amount of money per week would be payable to the claimant (£2.25 per week for a first child, £1.50 per week for a second or subsequent child).

Additional costs of administering split payments

55. One of the means by the which the costs of administering CHB have been kept to a minimum has been the continued use of its original computer system, installed at the inception of CHB in 1975. The computer system continues to handle successfully its very large caseload, but it lacks the sophistication and flexibility of more modern systems and cannot accommodate complexities. In particular, the CHB computer system is unable to process payments of CHB in non-standard amounts (which would be the consequence of allowing for split entitlement to CHB). The system was modified in 1991 to accept a higher rate of payment for the first child, but this was a complicated process; modification to accept a range of proportions of present entitlements would require would require more extensive and more complex programme changes to the "Payment Area" which is the most delicate part of the system, as well as full-scale testing to ensure that changes have no adverse effect on other system functions.

56. An immediate consequence of splitting entitlement to CHB is likely to be a significant increase in the number of payment accounts which needed to be opened on the system. CHB case-load has remained static over many years, and a significant increase in the number of CHB accounts will raise an issue regarding the capacity of the current system. There is also the fact that each account costs approximately £18 per year to maintain, so an increase in the number of accounts inevitably increases the costs of CHB administration.

57. It is, in short, by no means certain that the current computer system could cope with a system of split entitlement to CHB. CBC has estimated that a new computer system which is capable of handling the complexity and increased capacity necessitated by split entitlement to CHB would cost in the region of £50 million and could require at least 2 to 3 years to commission, construct, install and test.

58. The computer system in its present form rejects non-standard rates of CHB for security reasons as they represent potentially incorrect payments. Therefore, any split payment would have to be actioned clerically (that is, manually). Additionally, for each individual account the automated process would have to be suppressed, and an "issues adjustment code" input with consequent security checking. The procedure would be complex, and CBC has estimated the increased administrative cost of these split payments as up to £15.00 per week, depending on the method of payment used, as compared to the current account maintenance cost of approximately 35p per family per week. The potential additional costs are, on any view, significant in relation to the weekly rates of benefit paid, particularly since a split entitlement may result in the payment of only a small fraction of the current rates.

Regular transfer of entitlement

59. As noted above, the Secretary of State does not accept that any issue arises in these proceedings in relation to the exercise of discretion under para. 5 of Schedule 10 (since the Claimant has not challenged the decision dated 24 October 2000 or the Reconsideration dated 16 November 2000 which embody the exercise of that discretion in the Claimant's case). Furthermore, it has never been suggested by the Claimant that the Secretary of State ought to exercise his discretion under Schedule 10 in such a way that entitlement to CHB is regularly transferred between himself and Mrs Barber. Nevertheless, I am aware that it may be suggested that the regular transfer of entitlement to CHB in order to reflect shared care arrangements is a feasible alternative to entitlement being split, and for reasons of completeness, I wish to record the Secretary of State's views on that issue.

60. It is accepted that the provision for agreement between competing claimants in para. 5 of Schedule 10, and the absence of any restrictions upon the number or frequency of claims to CHB, permits competing claimants to bring about a situation whereby entitlement to CHB is periodically transferred between them. However, such agreements are extremely rare - I am aware of only one case in which this has occurred. A principle whereby the Secretary of State was required, in his decisions under para. 5 of Schedule 10, to effect the regular transfer of CHB entitlement in shared care cases, would be a different matter entirely and would, in the Secretary of State's view, be as detrimental to the administration of CHB as a formal recognition of the possibility of split entitlements. The reflection of shared care arrangements by way of regular transfer of entitlement would, like the splitting of entitlement:

61. A system of regular transfer of entitlement would have two further specific disadvantages. First, neither parent would qualify for HRP, which is awarded on a whole year basis for the reasons I have given above. Second, regular transfer would have a detrimental impact upon the entitlement to means-tested benefits where they are relevant. For example, a parent claiming Income Support as lone parent will no longer qualify for it in those weeks in which CHB is transferred to the other claimant. Whilst they could sign up for JSA, as being available for work in the relevant weeks, they would not be entitled to family premium and child allowance which would ordinarily be payable on JSA to a recipient of CHB. Their entitlement to Housing Benefit and Council Tax Benefit would also reduce. The alterations to other benefit entitlements would introduce further significant administrative costs.

Child Benefit practice in other jurisdictions

62. I understand that the practice in this country whereby entitlement to CHB is not split between parents or carers for a child is consistent with practice elsewhere in Europe and the Commonwealth. However, the Department has not, in the time available, been able to collate and, where necessary, translate, sufficient information regarding practice in other countries to be included in this statement. I hope to produce a further statement on this issue in the near future:

The issue of Child Support maintenance

63. As I have noted above, it would appear that the Claimant's principal objection to the system for determining entitlement to CHB is that Mrs Barber's entitlement to receive CHB for Gareth means that he is treated as the "absent parent" who is liable for child support payments in respect of Gareth. I am advised that the Secretary of State will argue that the Claimant's complaints in relation to child support have already been determined against him in other proceedings and cannot arise again in this case. That notwithstanding, it is necessary for me to explain certain basic features of the child support system which have resulted in liability being imposed upon the Claimant in this case, as well as some matter matters of fact which are not apparent from the Claim Form and supporting evidence. In this part of my statement, I have relied upon information given to me by Sandra Coulthard of the Department's Child Support Policy Division.

The child support system

64. The Child Support Act 1991 marked a radical departure in the approach of the state to the problem of ensuring financial support for children following the breakdown of their parents' relationship. It was generally recognised that the pre-existing system, whereby the amount of maintenance payable in respect of children was fixed by the courts, had a number of serious defects: maintenance assessments by courts were frequently too low adequately to provide for childrens' needs, there were notable inconsistencies between the approach of different courts to, the assessment of maintenance liabilities and the system for enforcement of court orders was not sufficiently robust and effective to deal with non-payment of maintenance in -an appropriate time-frame. Research commissioned for the White Paper which preceded the 1991 Act - Children Come First (1990, Cm. 1264) - had indicated that only 30 % of lone mothers and 3% of lone fathers received regular child maintenance and that the average payment was very low. Meanwhile, in those cases where adequate maintenance payments were not forthcoming from absent parents, the burden of supporting the children in question fell upon the social security system, and therefore upon the community as a whole. The new system in the Child Support Act was intended, therefore, to improve the position of children whose parents live apart, whilst at the same time removing from the state some of the burden of supporting lone parents.

65. The 1991 Act addressed the problem of inadequate and inconsistent maintenance assessments by providing for a standard formula by which child support maintenance is to be calculated. It addressed the problems of enforcement through the creation of the Child Support Agency, an administrative body charged with the obligation to assess, collect and enforce child maintenance payments, whilst removing that task from the civil courts.

The CSA has ats disposal a variety of enforcement measures, including the power to recover maintenance payments direct from the employers of absent parents, which have greatly improved the recovery rate for child support maintenance.

Assessing liability for child support

66. It is, clearly, fundamental to any system for the recovery of child support maintenance to identify which of the parents of the child in question ought to pay maintenance, and which will receive it. The 1991 Act (in s. 3) distinguishes between the "absent parent", who may be liable to pay maintenance and the "person with care" who will be entitled to receive any maintenance owed. A "person with care" is essentially a person with whom the child has his home and who usually provides day to day care for the child.

67. Regulations make provision for the case where, as here, a child is cared for by both parents, such that both fall within the prima facie definition of "person with care" (since otherwise, no-one would be liable for child support). Regulation 20 of the Child Support (Maintenance Assessments and Special Cases) Regulations 1992 (SI 1992/1815) provides for one such parent to be treated as an "absent parent" where that parent provides a lesser extent of care than the other parent. If the amount of care provided by each parent is of equal extent, the parent who receives CHB for the child is treated as the "person with care" and the other parent as the "absent parent". Therefore, in borderline cases, the incidence of CHB is used to determine which parent will, prima facie, bear the burden of paying child support for the child in question. I should add that the receipt of CHB is determinative only in exceptional cases: in the great majority of cases, the amount of care provided by both parents is not equal, and the issue of CHB never arises.

68. Following an application by either the person with care or the absent parent, the Child Support Agency will carry out a maintenance assessment using the standard formula to which I have referred (contained in Schedule 1 to the 1991 Act). The first step is to calculate the “maintenance requirement” for the child , the minimum amount which is deemed to be necessary per week for the support of the child. That amount is calculated according to the Income Support payments which would be available for the child, if the parent qualified for Income Support (which vary with the age of the child), less the amount of CHB received in respect of that child. To give an example, the maintenance requirement for Gareth Barber was initially assessed at £83.50.

69. The next step is to assess the contribution towards this figure which will be made by the absent parent. In broad terms, the absent parent will be required to pay 50% of his "assessable income", up to the level of the maintenance requirement. Assessable income for each parent is defined as their "net income" (that is, earnings less income tax, national insurance contributions and, currently, 50% of pension contributions) minus their "exempt income" (that is, income which is deemed necessary to pay for essential items, based on Income Support rates and actual housing costs). Further formulae exist to cater for the situation where the combined assessable income of the parents is significantly in excess of the child's maintenance requirement, and will usually result in a proportion of the excess being added to the child support liability (reg. 6 of the 1992 Maintenance Assessments and Special Cases Regulations).

70. Where, as in the present case, the absent parent provides care for the child, the child support liability of the absent parent will be reduced in proportion to the amount of care actually provided. In the present case, the figure produced by the Claimant's maintenance assessment is reduced by 50% to account for the fact that he provides half of the care for Gareth.

71. The particular grievance of the Claimant appears to be that, in his view, Mrs Barber's new partner has high earnings and that she accordingly has access to a level of income which is much greater than his. Three further points are relevant to this grievance. First, the 1991 Act is premised upon parents being liable for the support of their own children, and, in general, it does not seek to impose any burden upon persons who are not the parents of child. Therefore, the income of a parent's new partner - to which the parent may or may not have access in practice – is not taken directly into consideration in the maintenance assessment. It would of course have been open to Parliament in the Child Support Act to seek to impose child support liability on anyone who happened to live with a child, rather than simply upon the parents of the child, but that is not what was done. Second, the income of a parent's new partner may, however, feature indirectly in the maintenance assessment since the housing costs component of exempt income, may be reduced according to payments made by the partner, or which could reasonably be expected to be made, towards housing costs. Third, it is right to say that the maintenance assessment formula does cater for the situation where the assessable income of the person with care is significantly in excess of that of the absent parent. In essence, the proportion of total maintenance paid by the absent parent will decrease where

The claims for child support in the present case

72. The Claimant was first assessed for child support for both of his children on 7 September 1999. On 25 October 1999, following the contact order of 28 September 1999, whereby the Claimant was awarded joint custody of Gareth, he applied for a review of the assessment on the grounds that Lewis was now living with him. As a result of the application, on 14 January 2000 the Claimant's maintenance assessment was reduced from £46.51 to £35.79 per week in respect of Gareth only, with effect from 29 October 1999. The Claimant then appealed to the Child Support Appeal Tribunal arguing that the decision-maker had unfairly treated Mrs Barber as being in receipt of no income (as a result of her receiving Working Families Tax Credit) and that it was unfair that a parent with equal care of a child should be treated as an absent parent. He argued on the appeal that the legislation which required him to be treated as an absent parent was in breach of the Human Rights Act 1998 ("HRA"; see the Appeal Tribunal's decision at pp. 96-98).

73. In a decision dated 28 November 2000 and issued to the parties on 9 March 2001, the Appeal Tribunal held in respect of the latter that it was not "not merely reasonable but necessary for a scheme such as the Child Support Scheme to make provision for distinguishing between a parent with care and an absent parent, even where there is equality of actual care, and the use of entitlement to child benefit as a yardstick does not appear ... to contradict the Convention in any way". Subject to one error in the method of assessment which did not affect the sum assessed, the Claimant's appeal was dismissed. By a Notice dated 6 April 2001, the Claimant has sought leave, to appeal to the Child Support Commissioners against the ruling of the Appeal Tribunal. He contended in his Notice [pp. 99-102] that the HRA required that he should no longer be classified as an absent parent. His application for leave to appeal remains pending before the Commissioners.

74. Second, I understand that the Claimant's maintenance assessment was recalculated on 15 January 2002, such that, with effect from 15 May 2001, the Claimant's liability to pay maintenance to Mrs Barber in respect of Gareth has been reduced to £6.76 per week, and he received a refund of in respect of previous over-payments.

75. Third, I am also informed by Ms Coulthard that the Claimant has claimed child support as against Mrs Barber for Lewis Barber, in respect of whom he is the person with care and she the non-resident parent. Pursuant to that application, a maintenance assessment was calculated on 19 January 2002, to have effect from 13 September 2001. The outcome was that Mrs Barber was assessed as having nil liability, essentially because her exempt income, which is discounted for the purposes of a maintenance assessment, was in excess of her net income. Her net income was, at that stage, approximately £130 per week, as compared to the Claimant's, which was approximately £320 per week.

The use of Child Benefit to identify the "absent parent"

76. Finally, I return to the issue of the use of receipt of CHB as a method of identifying the absent parent in a particular case. As I have noted above, receipt of CHB is determinative only in exceptional cases, where both parents provide an equal level of care for the child. I would also reiterate that, in the interests of the child, it is necessary that one or other parent be identified as having a prima facie liability for child support maintenance. In the present case, even if reg. 34 had been used in order to direct that some of Mrs Barber's CHB be paid to the Claimant, she would remain, as a matter of law, the person entitled to receive it, and he would remain, in the Secretary of State's view, the absent parent for the purposes of the child support legislation. If receipt of CHB were not used as the determinative criterion, then some other statutory criterion for identifying the absent parent would have to be adopted instead, which may be more or less fair in the exceptional cases.

77. The use of receipt of CHB as an indicator has the advantage, as in the case of social security benefits which are dependent upon receipt of CHB, that it carries the implication of the decision-making process available under para. 5 of Schedule 10 to the 1992 Act. Where entitlement to CHB has been determined in a case where care of a child is shared equally, that determination will have taken into account the issue of relative expenditure upon the needs of a child. Any unfairness caused by the use in exceptional cases of receipt of CHB to identify the absent parent is mitigated to an extent by the account taken within the maintenance assessment of the income of both of the child's parents, and the fact that the assessment can cater for the situation where the income of the person with care is substantially in excess of that of the absent parent. Finally, the Secretary of State does not accept that unfairness in the present case has been caused by identifying the Claimant as Gareth's absent parent. He, after all, has a net income which is considerably greater than that of Mrs Barber.

Signed

IAN SPRAWSON

Date 25/4/2002

contact
fathercare