House of Commons - Work and Pensions

Select Committee on Work and Pensions Second Report

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