Memorandum submitted by Professor Gwynn
Davis (University of Bristol) and Professor Nick Wikeley (University
of Southampton) (CS 26)
PROPOSALS FOR REFORM OF THE CSA
In July 1998, with our colleague Dr Richard
Young (University of Oxford), we published Child Support in Action,[2]
an account of an empirical study of the Child Support Agency.
This note contains the following elements:
— a summary of our research findings;
— a summary of recommendations;
— a brief review of Children's Rights and
Parents' Responsibilities; and
— an outline of some continuing concerns.
SUMMARY OF
KEY FINDINGS
Parental attitudes
1. Many absent parents, whilst accepting
the child maintenance obligation in principle, do not accept that
it should always have first call on their resources. They take
many factors into account, including the availability of Income
Support.
2. For many parents with care, reliance
upon Income Support (rather than upon some combination of employment
and child maintenance from the absent parent) was entirely logical
given:
(a) their need for a stable income;
(b) their own limited earning potential;
(c) the fact that any maintenance they were likely
to receive would make only a modest contribution to the family
finances; and
(d) the implausibility (especially for owner-occupiers)
of meeting their housing costs from their own resources; and
(e) the cost of alternative child care.
3. Most parents with care believed that
the absent parent ought to contribute financially, even if this
had no impact upon their own financial position.
4. Apart from the stirrings of their own
conscience, parents—whether "absent" or "with
care"—lacked any incentive to co-operate with the Agency.
The formula
5. The complexity of the formula rendered
the Agency's calculations impenetrable to most parents.
6. The Agency's communication with parents
was itself routinised and formulaic—and this caused incomprehension
and frustration.
7. Complex as it is, the formula inevitably
fails to reflect the huge variety of family circumstances. It
could, for example, result in what appeared to be perversely low
assessments, especially in relation to self-employed absent parents.
The assessment process
8. In its early years the Agency devoted
its energies to assessment, committing little of its resources
to investigation or to enforcement.
9. The Agency commonly found itself making
assessments on the basis of insufficient evidence. Indeed, this
problem of a lack of evidence manifested itself at all stages
of decision-making. It was a major factor in producing errors
and, as a corollary, in generating reviews and appeals.
Reviews
10. Cases were not routinely kept under
review. This proved an unrealisable objective given the Agency's
caseload.
11. The system for reviewing Agency decisions,
and for considering changed financial circumstances, was rigid
and compartmentalised. The Agency reviewed specific decisions—with
just one decision (often not the latest decision) being subject
to review, rather than the case as a whole. This was bewildering
to parents and inefficient as a means of correcting error.
Enforcement
12. Compared with the resources which were
devoted to assessment, the Agency appeared almost indifferent
to whether the maintenance ordered was in fact being paid. In
most cases it simply did not know. When the Agency was informed
of non-payment, its attempts at enforcement were timorous, protracted,
and largely ineffective.
13. In general the Agency was ill equipped
to cope with parental resistance—and it encountered resistance
to a quite unanticipated extent.
Appeals
14. Child support appeal tribunals lacked
decision-making power. Investigation and decision-making were
separate from one another, so the appeal hearing itself lacked
finality.
15. The impression given was that tribunals
were not in the business of dispute resolution, but instead offered
yet another stage of dispute processing.
16. Appeals were not effective in ensuring
full disclosure of the parents' assets.
General
17. The child support scheme as a whole
proved over-ambitious in several key respects. In particular:
— the Agency had too many cases;
— the formula was far too complex; and
— the schedule of periodic reviews, and
the demand for change of circumstances reviews, proved way beyond
what the Agency could manage effectively.
18. The Agency was overwhelmed by its caseload;
overwhelmed by the difficulties of applying a complex formula;
overwhelmed by the need to keep re-applying this formula to ever-changing
circumstances; and overwhelmed by the refusal of many parents
to co-operate with it in its work.
19. The constant policy and rule changes
which the Agency was required to assimilate in its first few years
themselves had a debilitating effect.
A SUMMARY OF
KEY RECOMMENDATIONS
20. The child support scheme needs to be
greatly simplified. It is inevitable that a formula-based system
will deliver rough justice, but in order to be effective, it needs
to be rougher yet. This applies not only to the initial assessment,
but to every stage of the Agency's operations.
21. In keeping with this, the formula should
be simplified, and it should no longer shadow Income Support rates.
The central principle should be the apportionment of a percentage
of the absent parent's income—this percentage to vary according
to the number of children involved.
22. There should be a maintenance "disregard"
so that the carer who is in receipt of Income Support derives
some benefit from maintenance paid.
23. There should be a far stronger commitment
to monitoring payments, and to enforcement.
24. In general, in devising any new scheme,
the government should be pessimistic in its assumptions concerning
the Agency's ability to implement its policies.
25. Finally, we thought it appropriate to
review the location of child support work. Given that the Agency's
character is very much that of a tax gathering authority, we suggested
that consideration should be given to assigning the responsibility
for child support assessment and collection to the Inland Revenue.
CHILDREN'S
RIGHTS AND
PARENTS' RESPONSIBILITIES
26. Child support liability is to be based
on a percentage slice of the absent parent's net income, with
the percentage varying according to the number of children involved.
The calculation of "income" is to be simplified and
no account is to be taken of the carer's other resources.
27. The departures scheme will be transmuted
into a scheme for exceptional cases, with CSA officials deciding
on applications for variations from the standard assessment.
28. There is to be a maintenance "disregard"
of £10 per week for Income Support claimants. Maintenance
is to be entirely disregarded when calculating Working Families'
Tax Credit.
29. Inspectors' powers to gather information
will be strengthened. Inspectors will no longer be appointed to
problem cases, but instead will have a general overseeing role.
They will have access to tax information.
30. It is said that the reformed scheme
should provide a service for all parents and children, but in
fact it appears (although the White Paper is far from clear on
the point) that where parents are not receiving State support
they will be free to negotiate child maintenance on whatever terms
they wish—including, presumably, an agreement that there
be no child maintenance as such. This freedom applies also to
families in receipt of Working Families' Tax Credit. It is assumed
that parents who are independent of the State will nonetheless
find it prudent to negotiate "in the shadow" of the
CSA.
31. Responsibility for child support is
to remain with the DSS—and with the Child Support Agency.
SOME CONTINUING
CONCERNS
32. In general we welcome the new proposals
which appear far more pragmatic and realistic than the original
scheme.
33. Considerable emphasis is laid upon the
sanctions to be imposed in the event of non-compliance with the
Agency's demands. Rather less detail is supplied concerning the
means by which information is to be obtained and verified, or
concerning the systems for checking whether payments are actually
being made. These latter components are essential if we are to
have an effective system.
34. The power of Inspectors is to be strengthened,
but it is not clear how effective their oversight will be. For
example, what is to be the size of each Inspector's caseload?
35. Still on this theme of effective administration,
it is not clear how the system for gathering information from
the self-employed will be improved. This is critical if the scheme
as a whole is to have credibility.
36. The element of discretion which it is
proposed be exercised by CSA officials is inherently problematic.
The strength of the scheme lies in the fact that it is formulaic.
Administrative mechanisms do not easily deliver discretion, except
at the margins. It is not clear how the proposed discretionary
element is to be limited and controlled, as it will certainly
need to be.
37. It is not clear how the system of "periodic
case checks" is to operate, nor how the Agency is to assess
any claim that there has been a significant change in the absent
parent's finances. This aspect of the Agency's work is always
going to be problematic, and we have no easy solutions to offer,
but it is important to recognise that an effective review system
is (a) resource-intensive and (b) a vital component of the overall
scheme. The system which we monitored was both overburdened and
inflexible, and it is not entirely clear how this is to be remedied.
38. The White Paper refers (once again)
to courts having "failed". It refers to "unsatisfactory
maintenance arrangements made by . . . an adversarial court system",
before expressing the government's determination not to operate
"a two-tier system". Then, apparently, it concedes the
principle of private negotiation in non-benefit cases. This suggests
a certain incoherence, and in our view misrepresents the strengths
and weaknesses of lawyer-led, private bargaining. In the past,
lawyers, in negotiating a financial settlement, made as much use
as they could of the parties' right to State benefits. That proved
expensive for the Exchequer, and had to be stopped. But the private
law system is well adapted to treating the whole of the family's
finances as a package. It is a negotiation system, and it works
reasonably well provided lawyers' costs are kept within bounds.
There is no reason for the State to seek to take it over, other
than to protect its own resources. After all, the courts regard
children's interests as paramount. To date the Agency's reach
(the reach required of it by government) has exceeded its grasp.
A two-tier system is necessary because, where benefits are being
claimed, parents must pay what they can. Where benefits are not
being claimed, the court confers adequate protection.
39. Private bargaining will draw on whatever
State resources are available. The replacement of Family Credit
by Working Families' Tax Credit (calculated without reference
to child maintenance) need not mean that, in future, some 30 per
cent of the Agency's cases will be "private": some of
these families may well choose not to involve the Agency. What
it will mean is that this additional resource will be taken into
account in private bargaining (so the State will be paying more—which
is the down side). On the other hand the Agency will have fewer
cases (which we take to be a positive feature).
40. Separated parents move in and out of
benefit. It is burdensome for the Agency to have to calculate
maintenance liability afresh on each occasion. That is one reason
why it is hoped that private settlements will "shadow"
Agency rates as far as the child maintenance component is concerned.
It will be in the interest of absent parents to ensure that they
do so. But it is not feasible for this "shadowing" to
be imposed by government, and it has to be accepted—and
taken into account in calculating the overall burden of work carried
by the Agency—that many parents with care will move in and
out of benefit, and that this will call for re-assessment of maintenance
on each occasion.
Gwynn Davis and Nick Wikeley
September 1999
2 Hart Publishing, ISBN 1-901362-70 Back
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