Questioned by the Social Security select committee, Peter Lilley, Secretary of State for Social Security, admitted that about 20 per cent of absent parents were being left with less than 70 per cent of their net income after maintenance.
During an earlier hearing on the CSA, the committee heard from Alistair Burt, the social security minister, that the formula 'definitely' left absent parents with between 70 and 85 per cent of their income. But written evidence from Ros Hepplewhite, chief executive of the CSA, said some absent parents were being left with less than 60 per cent.
Conducting a second inquiry into the deeply unpopular CSA, Frank Field, chairman of the select committee, said: 'There are some people who have no prospect of increasing their net income and it feels like a block of concrete weighing on them. We are now collecting evidence of people giving up work as a result.'
Bernard Jenkin, Tory MP for North Colchester, said: 'This is in effect a tax levied on certain people's income. Surely you must recognise this creates a severe disincentive to stay in your job.'
Mr Jenkin related the case of a man in his constituency, a diabetic, who had high dietary costs, high travel-to-work costs and high levels of indebtedness from his first marriage, none of which were taken into account by the formula. If the formula was not changed to take these sort of expenses into account, the agency would be brought into disrepute.
Earlier Mr Lilley said fundamental changes to the structure of the formula, such as introducing discretion, would require primary legislation and he did not think this could be done until 1996.
He said other changes could be introduced and he was ruling nothing out until after the select committee published its report and recommended changes. He did not think the complexity of the formula was the problem. People resented paying more maintenance. He had to balance the needs of absent parents and parents with care of the children.
Jimmy Wray, Labour MP for Glasgow Provan, said he had received thousands of letters complaining that the agency's demands were unfair. 'This is the most hated piece of legislation since the poll tax,' he said.
Mr Lilley said Australia's system was unpopular even six years after it was introduced. 'It is never going to be pain-free; it is never going to be uncontroversial. We have to make sure it is as fair and reasonable as possible.'
Challenged over the revelation in the CSA's annual report that the agency had secured just pounds 15m in capital receipts for the Treasury compared with the pounds 312m estimated, Mr Lilley said it was not so much the lack of hard data as the lack of money that disturbed him.
Asked whether the CSA was driving parents with care off income support and into poverty, because they did not wish the agency to chase the father, Mr Lilley said tens of thousands of people had 'signed off' and a 'goodly proportion' of them were probably fiddling the benefits system.
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