Select Committee on Work and Pensions Second Report

7 Improving compliance

109. The CSA admits that during the first year of the new scheme, it has not been as successful as intended on achieving compliance. Too true.[123] Some non-resident parents (NRPs) are reluctant to pay child support and this is further compounded by the Agency's inaction over collecting maintenance, errors made in calculating arrears and policies which create disincentives to comply with assessments. These issues are examined in detail in this section and strategies for improving compliance are suggested.

110. Evidence received during the inquiry suggests that, since the creation of the CSA, a culture of non-compliance among NRPs has grown. In part this may be due to the courts' unwillingness to enforce Contact Orders, but this is outwith the remit of the Committee. Other factors, within our remit, include the perceived unfairness of the maintenance calculation and the CSA's failure to chase up and enforce maintenance payments. Jodi Berg, the Independent Case Examiner, commented:

    "It is fair to say that complaints referred to me demonstrate that there are a significant number of NRPs who are unhappy with the Agency's involvement and do not readily cooperate with it."[124]

111. However, in evidence it was also suggested that administrative problems can turn an initially willing NRP against the Agency.[125]

Attitudes towards complying with assessments

112. DWP conducted a national survey of CSA clients in 2000, three years before the introduction of the new scheme. It found that improvements in compliance could be brought about by improvements in comprehensibility and fairness. This implies that the simpler new scheme should bring about better compliance levels with more NRPs being willing to pay if they believe that the system is fair and they understand the assessment.[126]

113. A further issue is that the failure of the Agency to progress cases, ensure compliance or take enforcement action where necessary sends the message that the CSA is a toothless tiger. Professor Wikeley from the University of Southampton commented:

    "The experience of the last 10 years rather suggests that non-resident parents know that if they ignore the Agency they can get away with it."[127]

114. The Independent Case Examiner went further, saying:

    "It has been the case that people have felt that it was almost all right to ignore this agency and that if you do that is it not a bad thing at all and you have the choice about whether you want to comply or not and if you do not, and you get away with it, that is also okay. It seems to me that is an odd situation, because whether or not one likes the fact that the Child Support Agency is involved, or agrees in principle with there being a Child Support Agency, the fact is that is the way that Parliament has decided that these matters should be dealt with. In that kind of situation, you have to make it clear to people that there is an expectation of them as well to work with the Agency for the benefit of children. We do not all, for example, like paying tax and some of us might want to avoid that, but we know that we have a legal responsibility."[128]

115. While it is safe to say that the CSA will never be the most popular government agency, steps can be taken to improve people's perceptions of it, not least by improving service standards and ensuring that children receive the maintenance they are entitled to. The introduction of the new scheme presented the CSA with an opportunity to start afresh and encourage compliance by being more transparent and fairer to NRPs. However the new scheme does not seem yet to have impressed NRPs of the CSA's determination to enforce compliance, and so substantial effort needs to be made to prevent the new scheme from stagnating.

The 'whole service' approach

116. Research commissioned by DWP before the new scheme was introduced, found that two-thirds of non-resident parents (NRPs) who had fallen into arrears said that the CSA had contacted them regarding payment. Highlighting the slow pace of compliance activity, half of parents with care (PWCs), when questioned, strongly disagreed with the statement 'The CSA has acted quickly when the NRP has not paid enough maintenance' - only 8% agreed with the statement.

117. The introduction of the new child support scheme necessitated a cultural shift within the Agency in the way in which it deals with cases and the jobs which staff were allocated. Referring to the old scheme, the Independent Case Examiner, said:

118. One intention of the new scheme was for cases to be dealt with by small teams of caseworkers who would progress a case from receipt of application to establishing regular payments.[130] This 'whole service' approach was supposed to result in around 30% of staff time being devoted wholly or primarily to compliance activity.[131] According to the CSA, staff should focus on the importance of compliance from the point of first contact with the client and are encouraged to contact NRPs by telephone, both to promote the most effective methods of paying maintenance and to pursue non-compliance when appropriate.

119. To help with the progress of the new approach, the 2004-05 CSA Business Plan identifies providing staff with opportunities to undertake the new caseworker jobs as a focus for the coming year. In addition, to help caseworkers, the CSA has developed a stand alone computer system to permit caseworkers to monitor and pursue the first payment following completion of the maintenance calculation.[132]

120. The Independent Case Examiner commented that, in theory, the 'whole service' approach is the right way to achieve long-term compliance as it builds up the right sorts of relationships from the beginning of the claim process. In practice, however, the telephony system actually allocates new tasks to work streams rather than teams of caseworkers resulting in no central point of contact.[133] The Agency also admits that the whole service approach is not as successful as intended as far as compliance is concerned.[134] The CSA's Chief Executive said:

    "Is it working at the moment? The short answer is, not as effectively as we wished, partly, at least, because the confidence of our case workers in the IT and telephony support to underpin those difficult telephone conversations was much diminished by the well documented problems over the last 18 months…that activity is now much improved."[135]

Chart 1: The Australian Client Service Delivery Model

121. Some aspects of the whole service approach are based on the Australian system. During the Committee's visit to Australia, we heard about the Client Service Delivery Model used by their Child Support Agency which aims to maximise compliance and promotes increased parental independence and self-reliance.[136] The model focuses resources on working with new clients to establish the assessment and ensure payments are made regularly and on time. More than four-fifths of CSA staff and resources are allocated to this part of the process, with less than one-fifth being assigned to debt management services (see chart 1). Collection and enforcement runs across all staff streams and debt collection is the responsibility of all staff. This contributes to a successful CSA that achieves compliance rates in the region of 88%, with 95% of child support liabilities since 1988 being collected.

122. When asked about the success of the Australian model, the CSA Chief Executive, Doug Smith, commented that the intention of the UK's new scheme was to keep a case with New Client Teams until the first payment was achieved and then move it on. He admitted:

    "In retrospect, learning from Australia, it would probably be better to…hold a case at the front end of the operation for a period of months, and we have that logged as a potential future improvement."[137]

123. He went on to praise the Australian approach of risk-scoring in the early stages of a case. This involves identifying cases thought to be potentially risky in terms of getting the required information for a claim, achieving compliance and other risk elements, and treating them appropriately.[138]

124. We recommend that the CSA urgently adopts the "whole service" approach to case management and compliance across all departments of the Agency as was intended in the first place.

Supporting parents

125. The whole service approach should work to the benefit of both parents at all stages of a claim. In oral evidence, Adrienne Burgess from Fathers Direct said that the UK needs leadership on a cross-departmental strategy for separated families.[139] Evidence received during the inquiry suggests that CSA needs to foster better relations with both parents to improve upon its performance and to ensure a smooth flow of maintenance. In particular, Fathers Direct argued that child support obligations should be "presented as an opportunity rather than as a responsibility" as child support payments help to lift children out of poverty; increase the likelihood of contact between fathers and children; and correlates with educational achievement and increasing later life chances.[140]

126. Fathers Direct praises the Australian CSA's holistic approach to child support which encompasses a Direct Telephone Support Service which connects parents to relevant services; a series of booklets aimed at separated fathers on issues such as money management and parent/child relationships; working with fathers through relationship-support organisations; and developing services working with unemployed newly-separated parents.[141] During the visit to Australia, the Committee heard about this wide range of services available to parents and was also particularly interested in the planned development of Family Relationship Centres across Australia. These are intended to provide a range of easily accessible services for parents and children at all stages of family life, including family breakdown, including mediation and advice on child support, divorce, family finances and so on. The aim is for Family Relationship Centres, rather than lawyers, to be the first point of call for those separating or divorcing, to encourage more amicable relations between separating couples.[142]

127. In comparison, the UK CSA has a low-profile 'signposting' service where staff guide clients to specialist services, mainly delivered through the voluntary sector. Wider support for families and children is the responsibility of other Government Departments, primarily the Department for Education and Skills and the Department for Constitutional Affairs, and falls outside of the remit of this inquiry. Nonetheless, it is fair to say that there is no UK comparison with the Family Relationship Centres that are being rolled out in Australia. Fathers Direct argue that it is crucial to catch both parents through early interventions when relationships begin to break down - not after.[143] This helps to foster better relations between parents; smooth out problematic and contentious issues such as child contact, financial issues and child support; which in turn increases the likelihood of NRP compliance with maintenance assessments.

128. The Committee recommends closer coordination - drawing on information available concerning the Australian system of Family Relationship Centres - of services provided across all central government departments and agencies including the Department of Constitutional Affairs, Department for Education and Skills to help provide preventative and family support systems at an early stage of prospective family breakdown.

Maintenance Direct

129. Around two-thirds of new scheme applications are benefit cases, with one third being 'private' cases, that is, the PWC is not claiming benefits and may be in paid work and possibly claiming Working Tax Credit.[144] Around 7% of these private cases opt to make their own private payment arrangements once the maintenance assessment has been made.[145] This option has always been available, but, the CSA has now piloted 'Maintenance Direct' to publicise direct payments and to increase the number of private cases using it. The scheme was piloted in Bristol in early 2004 with full roll out in October 2004. A target has been set to treble the numbers using Maintenance Direct over the next year.[146] Maintenance Direct aims to foster good relations between parents, enable payments to flow more quickly, increase compliance and the money saved will be redirected to enforcement cases. Both parents have the option to pull out of Maintenance Direct if they are unhappy with it and the Agency will again become involved in the collection process. In evidence, the CSA's Chief Executive told the Committee that the pilot scheme has proved effective in steering clients towards direct payment and so improving compliance rates.[147]

130. Maintenance Direct is based on the system of 'private collect' cases in Australia. There, 52% of cases are now private collect, rather than using the Agency's collection service and 70% of new cases opt for the service.[148] The difference in Australia is that benefit cases are able to opt for private collect, unlike in the UK. In addition, Australian CSA staff are able to suggest to clients that they begin private collect if their case has progressed smoothly with regular payments and amicable relations between parents.

131. During the Committee's visit to Australia, we were very interested in their experience of private collect. We learnt that staff closely monitor private collect cases in the first nine months to ensure the arrangements are working. Private collect is much cheaper to administer - approximately one-fifth of the cost of Agency collect cases - which means that additional finances can be injected into frontline services and case management. 100% compliance on private collect cases is assumed as PWCs can request that the Agency step back in if payments are defaulted upon. Yet concern was expressed to the Committee that intimidation might take place between the parents; and that the compliance level for private collect cases was essentially unknown.

132. The Committee has real reservations on the CSA's new initiative of Maintenance Direct. We recognise that the service provides more choice for clients who are not on benefits and that any savings made will be invested in improving non-compliant cases. In light of the CSA's poor performance, we would need to be convinced that the Agency will step in quickly in cases where the system is not working and the maintenance is not being paid. The Committee recommends that the CSA urgently evaluates the performance of the Maintenance Direct pilot and publishes the results. We also recommend that the roll-out is closely monitored to ensure that case compliance is maintained and the Agency takes over collection as soon as they are aware of problems occurring.

Maintenance disregard

133. The old child support scheme had no disregard of child support payments for parents with care (PWCs) on Income Support. This meant that non-resident parents (NRPs) had little incentive to pay child support to PWCs on Income Support because anything they paid went straight to the Treasury. Also PWCs had little incentive for cooperating with the CSA. PWCs on the old scheme are, since April 1997, entitled to the Child Maintenance Bonus which allows them to claim up to £1000 when the PWC starts a job if the NRP has been paying more than £5 per week in child support while the PWC was on Income Support.

134. Under the new scheme, a Child Maintenance Premium was introduced to enable PWCs to keep the first £10 per week of any child support paid while they were claiming Income Support. As with the old scheme, all child support paid to parents on Working Tax Credit is disregarded. It was hoped that this disregard would encourage compliance from both parents, as well as boosting the incomes of PWCs. It was also felt that the disregard was more transparent and simpler than the Child Maintenance Bonus under the old scheme.

135. Unfortunately three things have combined to undermine these objectives. First, because of problems implementing the new scheme, PWCs have been stuck on the old scheme and have not been able to benefit from the premium. The exception being that the rules do allow PWCs to close their Income Support claim and reapply thirteen weeks later under the new scheme, although Citizens Advice note only few examples of this.[149] Second, of those assessed under the new scheme not all PWCs on Income Support received their Child Maintenance Premium. By September 2004, only 33,173 PWCs on Income Support and on the new scheme had received a first Child Maintenance Premium payment.[150] Third, it appears that PWCs on Income Support tend to have NRPs who are also likely to be poor. The data is not very clear but very few are assessed to pay more than £10. Many are themselves on Income Support or other benefits and therefore only pay the minimum £5, sometimes less. Even then the payment may be reduced (or nil) because of other non-resident children with a call on their payments, other resident children, the NRP being abroad, in prison or other institution or as a result of shared care. Of cases under the old scheme, 49% of NRPs have a £0 maintenance assessment, 9% have an assessment of £0.01 to £9.99 and 42% have an assessment of £10 or more.[151]

136. The Secretary of State said that he was looking at ways to get the Child Maintenance Premium to people stuck on the old system. However he suggested that there were some "statutory problems" and the administrative task involved would distract from getting the new system working properly. There was also the problem that PWCs on the old system were accumulating rights to the Child Maintenance Bonus when they move back to work and this is not available under the new scheme.[152]

137. The Committee recommends that if a strategy on case migration from the old to the new system has not been set by 24 March 2005, the Government should tackle the "statutory problems" and introduce the £10 Child Maintenance Premium for old scheme cases. The answer to the Child Maintenance Bonus back to work payment is to pay it to new cases in addition to the disregard - after all DWP is testing enhanced payments to lone parents going back to work via the £40 Return to Work Premium, which has now been extended to cover 40% of lone parents.

138. It is not clear from the evidence we have received why so many PWCs are not receiving their Child Maintenance Premium. It may be due to the computer problems - certainly there have been errors in the system in transferring information from Income Support records to the CSA. It may be administrative failings either by the CSA or Income Support. It may be confusion - Citizens Advice reported a lack of understanding within the Agency about payment of the Child Maintenance Premium and ignorance among their clients on what it was and whether they were receiving it.[153] In correspondence with the Committee, the Secretary of State admitted that there may also be delays in Child Maintenance Premium payments due to the time taken in sending a request to Jobcentre Plus to deduct the £5 minimum payment where a NRP is on benefit.[154] A clearer picture may emerge when and if the Agency begins to receive better management statistics from their systems.

139. The Committee recommends that an urgent investigation should be undertaken into the reasons for the lower than expected numbers of Child Support Premiums being paid under the new system.

140. The final issue that we considered on the Child Maintenance Premium was whether it was adequate. Clearly £10 is better than nothing but it is not much of an incentive for NRPs and not much of a boost to the incomes of PWCs on Income Support - certainly not enough to lift any of them out of poverty. In the Australian scheme all payments made by NRPs are passed through to PWCs and during the Committee's visit it was perceived that this contributed to compliance levels. In addition, research suggests that receiving child support is positively associated with lone parents moving into work.[155] In the UK, PWCs claiming Working Tax Credit are entitled to keep all of the maintenance received (and are not obliged to use the CSA, unlike PWCs on Income Support). Compliance levels do vary according to the benefit status of the PWC. On the old scheme, those on Working Tax Credit were much more likely to be receiving maintenance than those on Income Support (81% compared with 69% respectively).[156]

141. Is there a case for raising the Child Maintenance Premium and/or disregarding child support payments altogether? We do not know and neither does the DWP. Given that 58% of NRPs on the old scheme are assessed to pay £10 per week or less, there may well be large administrative savings in a complete disregard.

142. We recommend that the DWP undertakes a cost/benefit analysis of raising the Child Maintenance Premium and completely disregarding child support payments.

Guaranteed maintenance

143. One feature that distinguishes the British child support scheme from many of the schemes in other European countries is that it is not guaranteed. If the NRP does not pay child support then the PWC does not receive child support. In the countries that have guaranteed schemes, if the NRP does not pay, pays irregularly or pays less than the correct amount, the government or municipality pays at least a minimum child support and takes responsibility for collecting the money from the NRP.[157]

144. In 1999, the Social Security Committee concluded that a system of guaranteed maintenance would remove the incentive to comply with the CSA.[158] It should also be noted that nearly half of NRPs on the old scheme have a £0 maintenance assessment as they are on Income Support, Jobseeker's Allowance or Pension Credit.

145. In the light of the poor performance of the CSA in enforcing child support there might be a case for guaranteeing child support here. In written evidence One Parent Families proposed that the Government should adopt an 'advanced maintenance' scheme of this type.[159] They argued this would ensure that PWCs received money each week; the financial certainty would make return to work a more viable proposition; and the living standards of children would be better protected. The scheme they proposed would be to take liability under the present scheme and the PWC would be able to apply for advance payment of the full liability if it was less than £10 per week per child or 75% of the weekly amount due. Payments would continue as long as the PWC wanted them.

146. One Parent Families acknowledged that 'advanced maintenance' would not cover NRPs who lived abroad and for a considerable proportion the gains would be small. However it was still worth it in providing a little extra for children. They thought that it might create a much stronger incentive for the Child Support Agency to operate a vigorous enforcement and debt recovery strategy if they were the financial loser from non-payment rather than the PWC.

147. The Committee asked the Secretary of State to comment on these ideas and in correspondence he raised the following objections to guaranteeing child support:

  • It would undermine the principle that child support is the responsibility of parents.
  • It might worsen compliance -NRPs may feel that any effort they might make was unnecessary or that their payments merely went to the Treasury.
  • It would effectively be a lone parent premium in Income Support.
  • It might cost an extra gross amount of £1 billion per annum or, even with improved compliance, £500 million net.
  • It would encourage more private cases to use the CSA and thus make the annual costs substantially larger.[160]

148. The first of these points overlooks the fact that the state, through the CSA, has determined that NRPs should pay child support for their children and has taken powers to enforce that obligation if they do not. In short the state has taken on a responsibility to deliver child support to PWCs, a responsibility on which they are failing to deliver.

149. A guaranteed scheme may or may not influence compliance but in the end it is the CSA's responsibility to enforce compliance and to collect arrears. The same argument applies to the extra gross and net costs. It is not clear how these are being calculated but if these are the sums that PWCs are going without as a result of assessed but unpaid child support then this a measure of the failure of the CSA, not a justification for doing nothing.

150. The argument about it being a lone parent premium is indeed true for those PWCs on Income Support, and it would have the effect of reducing the gap between the scale rates paid for couple families and lone parent families on Income Support. However, such a premium existed until 1998 and there are good arguments in terms of relative need to justify it. It would also go some way to closing the gap between the poverty threshold and Income Support and thus contribute to meeting the government's child poverty objectives.

151. An argument against guaranteed maintenance that neither One Parent Families nor the Secretary of State mention is that in increasing out-of-work incomes it might reduce incentives for moving into paid work, especially if the guarantee only operates for Income Support cases, as it appears is suggested in the One Parent Families proposal. This is perhaps the reason for their proposing to limit the guarantee to 75% of the assessed child support over £10 per child. All child support is now disregarded for PWCs on Working Tax Credit and so at the moment, the more child support received the greater the financial incentive for working. For this reason it would be important for any guarantee to extend to non Income Support cases where one or other party has asked the CSA to become involved.

152. The Committee recommends that more research be done by the DWP on guaranteed child support. This work could include further exploration of the costs and benefits, incentive and poverty reduction effects of a child support guarantee and comparative research on how other countries operate their guaranteed schemes. However the Committee does not recommend the adoption of such a guarantee at this stage on the grounds that it would add to and complicate the work of the CSA at a time when it is already failing to deliver on its existing obligations. Getting those right should have priority.

Deduction from earnings orders

153. If a non-resident parent (NRP) fails to comply with a maintenance assessment or is in arrears, the main compliance tool available to CSA staff is a deduction from earnings order (DEO). A DEO instructs the NRP's employer to deduct the maintenance from earnings and pay them to the CSA. Evidently, DEOs can only be used if the NRP is employed, rather than self-employed where other options are available (see chapter 8). The NRP must provide the employer's details within seven days and the employer must comply with the DEO within seven days of receiving it. A failure to do so is punishable by a fine of up to £500. Around 16% of Agency cases using the CSA collection service are paid through a DEO.[161] During the Committee's visit to Dudley, we were told that DEOs have a compliance rate of around 87% and are therefore a potentially effective way for the Agency to secure compliance.[162]

154. Application of a DEO is an administrative process that CSA staff can initiate without a liability order being sought through the courts. In that respect, DEOs should be a compliance tool that Agency staff can swiftly apply where necessary. In practice, the Agency is reluctant to use DEOs and views them as a last resort before further enforcement action is taken through the courts.[163] PWCs complain that the CSA is slow to make DEOs[164] - this is also evidenced in the correspondence that the Committee receives from CSA clients.

155. A further problem with DEOs is that payments may not be maintained in the event of the NRP changing jobs. Indeed, it is claimed that some NRPs purposely move their place of employment to avoid paying their maintenance through a DEO. A suggestion raised in a letter to one of the Committee Members from a constituent suggests that one way of keeping track of NRPs who should be paying maintenance through a DEO could be to put a marker on P45s so that employers are informed that the individual should be making payments to the CSA. The Committee recommends that the Department investigates the feasibility of marking all DEOs in payment on P45 Forms provided to new employers; and to make existing DEOs automatically transferable to new employers.

156. NRPs themselves can request a DEO at the beginning of a claim process, although the CSA prefers payments to be made through direct debits.[165] It was pointed out by Professor Nick Wikeley that child support legislation in the UK assumes that DEOs are principally an enforcement mechanism rather than a collection tool. Yet in Australia and the USA, deducting child support payments through the payroll is a standard collection method that is frequently used.[166] The Committee heard that in Australia, of the 48% of CSA cases that use the CSA collection service rather than being 'private collect', two in five voluntarily use the payment method of 'employer withholding.'[167] Professor Wikeley also informed the Committee that income withholding in the USA has helped to increase compliance, with collection rates doubling since 1996.[168] The downside of DEOs is the administrative burden caused to employers and privacy concerns for NRPs, particularly those working in small companies.

157. The Committee recommends that Deduction of Earnings Orders should in future be a standard method of payment for all CSA liabilities due from employed non-resident parents who default on more than 2 payments in any rolling 12 month period.

123   Ev 68 Back

124   Ev 53 Back

125   Ev 114 Back

126   Wikeley, N et al (2001) National Survey of Child Support Agency Clients, DWP Research Report No 152, Leeds: CDS Back

127   Q 76 Back

128   Q 28 Back

129   Q 25 Back

130   CSA Annual Report and Accounts 2002-03, p10 Back

131   Ev 67 Back

132   Ev 68 Back

133   Ev 61 Back

134   Q 259 Back

135   Q 259 Back

136   Ev 127 Back

137   Q 261 Back

138   Q 261 Back

139   Q 136-137 Back

140   Ev 62 Back

141   Ev 65 Back

142   Ev 125 Back

143   Ev 62, Q 138 Back

144   Calculated from CSA Quarterly Summary of Statistics, August 2004 Back

145   CSA Open Door: for client representatives, Summer 2004 Back

146   CSA Open Door: for client representatives, Summer 2004 and Q 259 Back

147   Q 259 Back

148   Ev 127 Back

149   Ev 101 Back

150   Ministerial Statement, 28 October 2004. Back

151   CSA Quarterly Summary of Statistics, August 2004 Back

152   Q 262 Back

153   Ev 103 Back

154   Ev 132 Back

155   Barnes et al (2004) Families and Children in Britain: Findings from the 2002 Families and Children Survey and Kasperova et al (2003) Families and Children Survey 2001: work and childcareBack

156   CSA Quarterly Summary Statistics, August 2004 Back

157   See for example Corden, A. (1999) Making Child Maintenance Regimes Work; Bradshaw, J. and Finch, N. (2002) A comparison of child benefit packages in 22 countries, DWP Research Report no 174. The latter study found that Austria, Denmark, Finland, Germany, Israel, Luxembourg, Norway and Sweden have at least some guaranteed elements in their child support schemes. Back

158   Social Security Committee, The 1996 Child Support White Paper, HC 798, 3 November 1999 Back

159   Ev 54 Back

160   Ev 131 Back

161   CSA Quarterly Summary of Statistics, August 2004 Back

162   Ev 122 Back

163   CSA Standards Committee Annual Report 2004 Back

164   CPAG (2004) Child Support Handbook, London: CPAG Back

165   CPAG (2004) Child Support Handbook, London: CPAG Back

166   Ev 80 Back

167   Australian Child Support Agency (2004) Child Support Scheme: Facts and Figures 2002-03, Attorney General's Department Back

168   Ev 80 Back

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