6 Compliance targets and debt levels
95. The compliance targets are particularly important
as they measure the success of the CSA in actually getting money
flowing to the children who need it and thus contribute to the
PSA target outlined in chapter 3. Poor compliance levels have
been an ongoing feature of the old child support scheme and it
was intended that compliance would be improved under the new scheme.
One Parent Families went as far as commenting that the new child
support scheme "will stand or fall by whether the new simpler
formula actually results in more NRPs paying all rather than some,
or none, of what they owe.[108]
96. There are two compliance targets. Case compliance
measures the number of cases using the Agency's collection service
where the non-resident parent (NRP) makes a payment to the parent
with care (PWC) (note that this may not necessarily be the full
amount due), against the number of all cases using the Agency's
collection service. Cash compliance measures the percentage
actually paid by NRPs against the assessed maintenance.
Old scheme compliance
97. Old scheme case compliance is an internal target
only for 2003-04. Against a target of 75% of case compliance,
75.4% was achieved and against a target of 68% cash compliance,
73.8% was achieved.[109]
Compared with new scheme cases this is an achievement for the
Agency. However, case compliance levels on the old scheme peaked
at 75.7% in 2002-03[110]
and the quarterly compliance rate has fallen from 76.3% in May
2003 to 74.4% in August 2004 (see table 5).[111]
Table 5:
Quarterly compliance rates for live and fully assessed cases on
the old scheme
Month
| Full compliance
| Partial compliance
| Total compliance
| Nil compliance
|
February 2003 | 49.9
| 26 |
75.9
| 24.2 |
May 2003 | 54.2
| 22.1 |
76.3
| 23.7 |
August 2003 | 55.2
| 20.4 |
75.6
| 24.3 |
November 2003 | 54.4
| 20.9 |
75.3
| 24.6 |
February 2004 | 54.9
| 19.7 |
74.6
| 25.5 |
May 2004 | 50.8
| 23.6 |
74.4
| 25.6 |
August 2004 | 53.3
| 21 |
74.4
| 25.6 |
Source: CSA Quarterly Summary of Statistics, Aug
2004
98. The majority of CSA cases still fall under the
old scheme.
The Committee recommends that, before 24 March 2005, the CSA sets
target levels of compliance on old scheme cases.
New scheme compliance
99. The Ministerial compliance targets for the new
scheme were missed by a substantial margin (see table 2 in chapter
3). Only 50% of new scheme cases were compliant, against a target
of 78%. The reported cash compliance figure was even worse: only
43% of child maintenance was collected against a target of 75%.
Again, the IT system presents problems as, according to the CSA's
Annual Report, the annual cash compliance figure is still not
available, therefore the figure presented is taken from the monthly
figure available in March 2004.[112]
In terms of the actual number of cases classified as compliant,
of the 140,612 new scheme cases that have received a maintenance
calculation only 61,187 NRPs (43.7%) have made at least one maintenance
payment.[113]
100. To add to these appallingly low compliance figures,
it is still not known what proportion of these cases were fully
compliant. Under the old scheme, the quarterly statistics released
by the Agency show the breakdown of compliance figures between
nil compliance, full compliance and partial compliance. The latest
figures show that a 74% compliance rate breaks down as 53% fully
compliant and 21% partially compliant (see table 5).[114]
These statistics are still not available under the new scheme
due to the IT problems. Their availability would help to fully
illuminate the compliance situation on the new scheme.
101. We recommend
that up-to-date cash and case compliance statistics for the new
CSA system are made available to Parliament before 24 March 2005
102. In oral evidence, the CSA's Chief Executive
said that the new scheme compliance figures are so low primarily
because, until summer 2004, the focus of Agency attention had
been on dealing with applications and gaining calculations. Since
then the focus had started to shift onto compliance and rates
are increasing each month.[115]
This can be seen in the quarterly progress reports from the Department
which show that the proportion of cases where at least one payment
has been made has increased as a proportion of maintenance calculations
made. For example, in January to March 2004, 45% of cases that
reached calculation made a maintenance payment. This increased
to 58% in April to June and 64% in July to September. The Chief
Executive also told the Committee that the number of cases that
establish sustainable payment arrangements through standing orders
and direct debits, rather than cash or cheque, is also increasing
and will increase future compliance levels. As already stated,
only 13% of applications have yet gained calculations, notwithstanding
that the Chief Executive asserted that concentration on those
has diminished the Agency's concentration on compliance. We are
concerned that references to moving the emphasis away from calculations
is premature, yet the issue of compliance is critical.
103. Chapter 7 examines how new scheme compliance
rates can be increased.
Outstanding debt levels
104. The CSA's Annual Report and Accounts 2003-04
report outstanding debt of £720.16 million at 31 March 2004.
However, £947.7m further debt, classified as "probably
uncollectable from previous years", is not included in this
£720.16m of CSA outstanding debt. Of the £720.16m "total"
£140.22 million is from new scheme cases and nearly £49m
of new scheme debt is already categorised as 'possibly uncollectable'
(see table 7). Given that these figures were calculated only one
year into the new scheme this is an astonishing state of affairs.
Table 6:
Analysis of collectability of balances outstanding on the CSCS
Analysis of debt
| | 31 March 2004
|
Collectable
| Value of debt
%of debt
| £279.88m
48.3%
|
Possibly uncollectible
| Value of debt
%of debt
| £271.88m
46.8%
|
Deferred debt
| Value of debt
%of debt
| £28.18m
4.9%
|
Total debt
| | £579.94m
|
Source: CSA Annual Report and Accounts 2003-04
Table
7: Analysis of collectability of balances outstanding on the
CS2
Analysis of debt
| | 31 March 2004
|
Collectable maintenance calculations[116]
| Value of debt
%of debt
| £35.16m
100%
|
Collectable debt
| Value of debt
%of debt
| £50.36m
47.9%
|
Possibly uncollectible
| Value of debt
%of debt
| £48.92m
46.6%
|
Deferred debt
| Value of debt
%of debt
| £5.78m
5.5%
|
Total debt
| | £140.22m
|
Source: CSA Annual Report and Accounts 2003-04
105. Against this incredible amount of outstanding
debt the CSA admits that the Agency is failing to reduce its debt
load which has increased 8.4% in only one year from £664
million in 2003 to £720 million in 2004.[117]
The Agency previously informed the Committee that only a small
proportion of collectable debt is referred to specialist enforcement
teams - around £37.5 million. The remainder is either chased
by personal caseworkers, is subject to debt repayment arrangements
or is "lying fallow."[118]
Staff working with NRPs to clear their debt should calculate the
level of an acceptable regular payment to clear the arrears. The
CSA Standards Committee examined cases where staff established
arrears schedules with NRPs and found that in a staggering, and
unacceptable 97.5% of cases monitored, staff failed to follow
the Payments Arrangements Guide issued to decision makers and
did not document the decision taken. The majority of NRPs were
paying a nominal amount of the arrears owed - only 7.5% of cases
were paying the enforceable amount of arrears and none had set
a review date to examine the arrears schedule. Astonishingly,
the average time it would take for the arrears to be paid was
11.8 years.[119] This
is an appalling state of affairs and demonstrates the failure
of staff to follow the guidance provided. In correspondence, the
Secretary of State informed the Committee that the problems in
the area of debt management were down to high staff turnover and
the focus of staff training being on the implementation of child
support reform.[120]
106. The CSA's Business Plan for 2004-05 contains
a performance target to develop and introduce a debt reduction
target by October 2004. This is yet another CSA target missed:
no formal debt reduction target has been published. In evidence,
the CSA Chief Executive informed the Committee that a draft target
has now been put to Ministers and will be shared with the Committee
in due course.[121]
More recently, however, the DWP Autumn Performance Report states
that the debt reduction target has been discontinued. It blames
the CSA's IT problems and the consequent lack of management information
for its inability to "set a meaningful debt reduction target."[122]
107. Compared with the relative inertia in debt collection
in the UK, the Committee learned of innovative work undertaken
in Australia to tackle child support debt. The Australian CSA
has been operating an Intensive Debt Collection (IDC) project
since July 2003 which aims to tackle hard debt and reduce the
level down to the July 2002 level. They conducted a wide-ranging
study to inform the IDC project and the Government provided A$31
million over four years to collect an additional A$131 million
and reduce Family Tax Benefit by A$40 million. IDC involves named
staff working closely with NRPs to check the accuracy of the arrears,
negotiate an affordable payment arrangement of their arrears and
to offer money advice services to those requiring it. IDC teams
have visible targets and there is a strong focus on collection
rather than adjusting the calculation. Staff undertake relevant
training and are advised to telephone the clients with little
prior case research. The approach taken is described as 'I'll
help you if you help me.' An incentive for customers to comply
with the IDC initiative is that the staff have the authority to
waive late payment penalties if the non-resident parent agrees
a repayment plan. Customers targetted through IDC tend not to
fall back into arrears. In the first year of the project, collections
were increased by A$24.6 million and IDC was rolled out across
the whole Agency in December 2004.
108. The Committee is concerned that debt reduction
has not been prioritised by the CSA in the UK. Outstanding debt
is rising, little has been done to tackle it and the promised
debt reduction target has been abandoned, seemingly because it
would be too hard to achieve.
The Committee strongly suggests
that the Department examine the Australian Intensive Debt Collection
initiative to see what lessons can be learned and that a higher
standard of staff training is established, with improved monitoring
and guidance, to improve upon the poor level of service on debt
collection. We
strongly recommend that a debt reduction target and a strategy
to reduce debt be published by 24 March 2005, without fail.
108 Ev 60 Back
109
Ev 72 Back
110
CSA Annual Report and Accounts 2003-04, p24 Back
111
CSA Quarterly Summary of Statistics, Aug 2004 Back
112
CSA Annual Report and Accounts 2003-04 Back
113
Ministerial Statement, 28 Oct 2004 Back
114
CSA Quarterly Summary of Statistics, August 2004 Back
115
Q 253 Back
116
Maintenance calculations under the new scheme are deemed to be
fully collectable Back
117
Ev 69 Back
118
Work and Pensions Committee, Child Support Agency, Minutes
of Evidence, 2 July 2003, HC 912 and Ev 5 Back
119
CSA (2004) Standards Committee 2003/04 Annual Report Back
120
Ev 131 Back
121
Qq 255-257 Back
122
DWP Autumn Performance Report 2003-04 Back
|