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Social Fund Allocations 2005–06

The Parliamentary Under-Secretary of State for Work and Pensions (Chris Pond): I am pleased to announce that the gross discretionary Social Fund budget for 2005–06 will be £719 million. This includes a further increase in net treasury funding of £10 million compared with last year and means that net funding is now £40 million higher than 2002–03. It is the final one of three
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annual increases from a £90 million boost for the discretionary Social Fund announced in the autumn 2002 pre-budget report.

After careful consideration, I have decided to allocate all the extra net funding to community care grant needs. I have therefore increased the community care grant (CCG) budget by £10 million. This is a further significant increase that will help the most vulnerable. It has been distributed so that every district benefits by an increase in their CCG budget and districts move closer to meeting the same proportion of demand nationally.

My current priorities are for the grants budget. The net loans budget, however, received a significant investment of £10 million in the first year (2003–04) and this, plus higher loan recoveries have promoted steady growth in the gross loans budget. The gross loans budget for 2005–06 will be £580 million, which represents an increase of £20 million over the April 2004 allocation. To maintain fairness within the scheme, the gross loans budget will continue to be allocated to districts to support consistency of outcome for applicants wherever they live.

£1 million will be retained centrally as a contingency reserve. For example to provide additional help to districts facing unexpected and unplanned expenditure.

Details of individual district budget allocations have been placed in the Library.

The discretionary social fund budget is cash limited. Budgets are allocated to districts on 1 April each year.

The gross discretionary SF budget allocated for 2005–06 is £719 million made up of:
New money (AME)£178.2m
Forecast loan recovery£540.8m
This was allocated as follows:
Contingency reserve£1m

If the forecast for loan recoveries proves to be an underestimate, any additional recoveries can be allocated to districts during the year.

The contingency reserve is held centrally and allocations made from it re-imburse districts for expenditure resulting from a local accident or disaster (eg, flooding)

Since April 1997, the gross discretionary social fund budget has increased by £251.5 million from £467.5 million to £719 million, an increase of over 53 per cent.

Since April 1997, the community care grant budget has increased by £41 million from £97 million to £138 million, an increase of just over 42 per cent.

New Child Support Scheme

The Secretary of State for Work and Pensions (Alan Johnson): The new arrangements for child support came into operation for new cases and some linked old scheme cases from 3 March 2003. Despite recent progress, some significant problems remain with the new computer and telephony systems. These continue to slow progress on business recovery. The Department continues to retain substantial payments from EDS. The payment each year is determined by the contract and is linked to
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service levels and to the degree of functionality delivered. Between 27 January 2003 and 16 January 2005, the agency retained £13.3 million of payments otherwise due to EDS.

This report forms part of the Department's response to the Work and Pensions Select Committee report into the performance of the Child Support Agency. It therefore includes information up to the end of February 2005 (my last progress report covered the quarter ending September 2004). During this period the agency's performance has continued to improve. More families continue to benefit from the new scheme—a further 16,600 families have received child maintenance premium. The quarter ending December 2004 produced the highest quarterly total since the new arrangements were introduced and this upward trend is continuing. It brings the total number of beneficiaries to almost 50,000. Similarly, the number of first payments of maintenance received through the agency's collection service during the quarter ending December was the highest achieved so far.

The number of cases cleared during the period from October to February (both calculations and closures) was over 72,000, bringing the overall total of clearances to around 310,000. The position fell back somewhat in the run up to Christmas. However, this was not unexpected and the underlying position is recovering as we move through the next quarter. During both October and November, the monthly volume of clearances grew faster than at any other point in the year.

Based on regular monthly sampling the current level of accuracy (to the nearest penny) is estimated at around 78 per cent. against a target of 90 per cent. This is lower than the preceding quarter. The agency is taking urgent action to correct this trend but it is now clear that the end of year target is unlikely to be achieved. Regular monthly sampling will continue to be used to monitor accuracy levels and determine the end of year position. As a result of improvements with the agency's management information systems, case compliance performance will now be reported on a rolling last quarter basis. Previously published estimates of case compliance in the new scheme have been measured on a monthly basis. This is not consistent with either the definition used to measure old scheme compliance, or the basis on which the new scheme target was set. Both relied on a rolling last quarter measure. Reporting
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performance using a rolling last quarter basis provides a more accurate reflection of performance and gives a direct comparison between old and new scheme performance.

This change in reporting has resulted in an uplift in case compliance performance by around eight percentage points. At the end of February case compliance stood at 65 per cent. against a target of 78 per cent. Cash compliance at end of February stood at 58 per cent. against a target of 75 per cent. Focus on improving compliance continues, with activities targeted on core operational service teams together with the creation of the agency's enforcement directorate. Early indications show that for cases newly calculated in September and October 2004, case compliance in February 2005 has stabilised at around 75 per cent.

Although the rate at which work-on-hand is increasing has slowed down, clearances are still less than intake. An agency business transformation programme is being developed, which will contain short-term tactical initiatives and also places significant emphasis on ensuring medium to long-term sustained recovery.

The agency has made progress in investigating the anomalies in its management information. Some over counting of cases has been identified, which has reduced intake reported since March 2003 by 34,000 cases. Indications are that there is potential for further reductions in intake of around 12,000 cases and an understatement of around 17,000 clearances. Overall this is likely to equate to a downward revision in the work on hand of 63,000 cases. Some of these cases are still within the system and some operational intervention will be required. Work is continuing to identify and examine the full range of issues and apply necessary remedies. The revised data in the tables is the agency's best current estimate.

Summary of Agency Performance to February 2005

The method by which these figures are calculated has been changed to include, in the calculation, those collections of child maintenance made (on behalf of the Secretary of State) in those cases in which the parent with care is on benefit.
1 QualifyingChild2 QualifyingChildren3+QualifyingChildren
Average Weekly Payment 1 £28£41£44

Table 2—Agency Quarterly Performance

Quarter 1Mar—Jun2003Quarter 2Jul—Sep2003Quarter 3Oct—Dec2003Quarter 4Jan—Mar2004Quarter 1Apr—Jun2004Quarter 2Jul—Sep2004Quarter 3Oct—Dec2004Jan—Feb2005Scheme toFeb 2005
Applications received 73,582 78,982 85,306 83,652 83,094 73,53469,39546,718594,263
Double counting of intake 2 - 1,171- 5,313- 6,997- 6,027- 5,211- 3,316- 3,406- 2,395- 33,836
Applications received (adjusted) 2 72,41173,66978,30977,62577,88370,21865,98944,323560,427
Applications cleared 3 of which:12,64838,58349,45351,87645,09740,465 3 39,64532,732310,499
Maintenance Calculations6,67123,85729,67231,22925,65723,526 3 23,81618,866183,294
Closures 4 5,97714,72619,78120,64719,44016,939 3 15,82913,866127,205
First payments made through the Agency4615,16411,47314,01714,97415,09818,1199,99289,298
First Child Maintenance Premium payments made 5 773,3146,1737,4848,0708,05510,3006,32649,799

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Table 3—Agency Monthly Performance

October2004November2004December2004Quarter 3Oct—Dec2004January2005February2005 Jan—Feb2005
Applications received24,65324,86819,87469,39522,53624,18246,718
Double counting of intake 2 1,412 1,108 8863,406 1,153 1,2422,395
Applications received (adjusted) 2 23,24123,76018,98865,98921,38322,94044,323
Applications cleared 3 of which:14,17115,30710,16739,64514,71018,02232,732
Maintenance Calculations8,3178,6486,85123,8168,78310,08318,866
Closures 4 5,8546,6593,31615,8295,9277,939 5 13,866
First payments made through the Agency5,6816,2786,16018,1194,7365,2569,992
First Child Maintenance Premium payments made 6 3,1393,6853,47610,3003,0983,2286,326

Table 4—Agency Compliance Performance

Cash Compliance [3 month rolling average] 7 41%44%49%50%51%52%53%55%55%58%58%
Case Compliance [rolling last quarter basis]55%57%59%61%61%62%62%63%64%65%65%

1. Average weekly child support maintenance payments to parents with care are shown in the table. The method by which these figures are calculated has been changed to include, in the calculation, those collections of child maintenance made (on behalf of the Secretary of State) in those cases in which the parent with care is on benefit. Figures are for February 2005 only and are calculated as the total amount received and allocated divided by the number of cases.
2. Based upon our best information on the extent of the double-counting of applications that has taken place and emerging findings from the management information improvement project. These figures may be subject to change.
3. Figures from quarter four 2003–04 onwards and scheme to date figures include clerical cases (new scheme cases unable to be progressed on the new system). Quarter two 2004–05 figures also incorporate some adjustments to take account of a reconciliation of clerical cases. The clerical case position is as follows:

Scheme to dateJune 2004Scheme to dateSeptember 2004Scheme to dateDecember 2004Scheme to dateFebruary 2005
Applications cleared 1,345 2,130 2,340 3,063
Maintenance Calculations 1,134 1,937 2,069 2,673
Closures 211 193 271 390
4. Closures: Applications close for a variety of reasons. The main reasons are that the parent with care withdraws the application, perhaps due to reconciliation, or having agreed private arrangements with the non-resident parent.
5. Closures for February include 1,000 un-progessable cases that have been deleted from the IT system.
6. Figures for child maintenance premium payments include an estimate of the number of parents who receive the premium by way of a disregard to their income support/income-based jobseekers allowance.
7. Cash compliance is measured on a three-month rolling average basis, as this best illustrates performance. Case compliance is measured on a rolling-last quarter basis (in line with old scheme reporting).
8. A proportion of cases that have a maintenance calculation in place may already be receiving payment directly, but will not be reflected in the figures shown above.