House of Commons - Work and Pensions

Select Committee on Work and Pensions Written Evidence

Memorandum submitted by Citizens Advice Bureau (CS12)

SUMMARY OF KEY POINTS

Every year since the introduction of the Child Support Agency in 1994, Citizens Advice Bureaux (CABx) throughout England and Wales have received tens of thousands of enquiries from both lone parents with care and non-residents regarding their child support cases. Whilst the number of enquiries has dropped considerably since 1994, the kind of enquiries we see demonstrate real problems with a system that causes deep felt frustration, anxiety and financial difficulties for both parents with care and non-resident parents. The major problems reported by CABx include:

— poor administration including severe delays in processing applications;

— poor communication with clients/customers;

— lack of enforcement;

— problems with deductions from earnings orders; and

— debt and arrears faced by non-resident parents.

We welcomed the Child Support Reforms introduced by the Child Support, Pensions and Social Security Act 2000 as we believed that the new scheme would be simpler to calculate and administer, and that this would result in faster, more accurate decisions and increased compliance. Our priorities are to see more money going to parents with care, and quicker more accurate assessments for non-resident parents.

We are therefore very disappointed by the delay in the introduction of the reforms for all claimants and particularly for the continuing delay for pre-March 2003 cases. The delays mean that the problems associated with the old system continue. Added to these are the frustrations of non-resident parents who struggle to pay up to double the amount that they would have to pay if they were being assessed under the new rules. Lone parents on income support fail to be able to take advantage of the child support premium which would substantially increase the incomes of families on benefit and indeed help to contribute to the reduction of child poverty.

In addition to the frustrations resulting from the delay in migration for most claimants, the operation of both systems is causing extra problems and complications. Claimants have found themselves being passed from one section to another as they get given contradictory messages about which section is dealing with their case and indeed whether they are under the old or new rules. Because of the difficulties with the computer system, some of those assessed under the new rules have experienced problems with payment and to add to the complication old cases that are linked to new cases are pulled through onto the new computer and so have also been affected by the problems with the new system, whilst themselves still waiting to gain from the new rules.

One of the key objectives of the reforms was that the simpler formula for calculation would enable less time to be spent on assessment and more resources to be spent on collection and enforcement. Whilst we understand that early indications are that compliance under the new scheme is substantially higher than that of the old scheme, it is disappointing that the computer problems have delayed the availability of accurate figures on compliance for the first year of operation.

We have expressed our concerns to ministers over the announced job cuts in the Department and how they will impact on the quality of service to customers. Efficiency savings are expected to be able to be made with the increase in computerisation. CAB evidence shows that there is plenty of room for improvements in the quality of customer service and we are concerned therefore that cuts are not made before migration of all cases to the new system has taken place and is working satisfactorily.

INTRODUCTION

Citizens Advice is pleased to submit evidence to the Committee's enquiry into the performance of the Child Support Agency. This submission offers evidence from CAB clients' experience of the Child Support Agency following the partial introduction of the Child Support reforms in March 2003. It will look at both the problems associated with the continued delays to the introduction of the reforms and any problems associated with the two systems running in parallel.

In 1994, following the introduction of the Child Support Agency, Citizens Advice Bureaux throughout England and Wales saw a dramatic increase in enquiries about family issues. In the year 1994-95 the CAB service dealt with almost 80,000 child support enquiries and Citizens Advice received 3000 forms from bureaux expressing their clients' concerns. Since that time enquiry numbers have decreased but the problems that continue to be reported demonstrate the need for a fundamental change to the system. In 2003-04, the latest year for which figures are available, bureaux received 37,000 child support enquiries and sent in around 500 evidence forms. These problems included: poor administration including severe delays in processing applications; poor communication with clients/customers; lack of enforcement; problems with deductions from earnings orders and debt and arrears faced by non-resident parents.

CHILD SUPPORT ADMINISTRATION

Old System

In 2000 Citizens Advice issued a briefing in support of the introduction of the new, simpler formula by the Child Support, Pensions and Social Security Bill. We welcomed the new formula:

Our support was based on the belief that the new scheme would be simpler to calculate and administer, and that this would result in faster, more accurate decisions and increased compliance. This would mean money getting to lone parents with children more quickly, with fewer opportunities for delay.

Unfortunately problems with the new computer systems led to the delay in the implementation of the reforms from October 2002 to March 2003 for new cases and still no date is set for the transfer of old cases. As at February 2004 79,800 calculations had been made on the new system under the new rules. 51,900 of these were benefit claimants and 27,900 were private applications. In just under a third of these cases (25,600) at least one regular payment had been made by the non-resident parent. 763,700 cases were still being assessed on the old system under the old rules and 144,000 cases assessed under the old rules are on the new computer system.[60]

Poor administration comprising of delays in assessments, errors and poor advice and poor quality of communication with customers has always been one of the biggest problems reported by CABx. These problems continue to be reported by bureaux. This experience is borne out in the latest report of the Auditor General on the Child Support Agency's Client Funds Account 2002-03. Taking a representative sample of the £584 million receipts from non-resident parents they found that 28% of all receipts were for the wrong amount mainly due to errors in the underlying maintenance assessments. They also found that 80% of full maintenance assessments contained errors. The accounts were qualified for this reason.[61]

The following cases illustrate the problems of poor administration experienced by clients and the need for the reforms, which aim to make the system easier to administer well. They illustrate why we are disappointed that the child support reforms have not yet been fully implemented and that there are no signs of its full introduction in the immediate future.

A client of a bureau in the North had been on long-term incapacity benefit for several years. In early 2003 he received a letter from the CSA informing him that his child support assessment had ceased almost two years before. However in Spring 2004 he received another letter advising that they had reinstated his child maintenance assessment and that he owed over £20,000. The letter gave no detail as to why it was reinstated or what period the arrears related to.

Failure to respond to reports of changes in circumstances can leave non-resident parents struggling financially.

A bureau in the East of England reported that their client had two children from a previous partner and twins with his current partner. He had lost the job on which his assessment had been made and had informed the CSA of this and several other changes of circumstances. He'd had no change in his assessment however, and was continually pressed for payment based on the original assessment. A deduction from earnings order was made for £600 which would leave him in debt. He had written, emailed, phoned and visited the CSA and was always told that the information will be passed to his caseworker. His caseworker has never responded to the changes or made any contact with him.

Both clients and bureaux have found that the quality of the administration can mean that resolving queries can be extremely difficult and time-consuming.

A bureau in Norfolk reported that errors made by the CSA were jeopardising their client's attempts to get a mortgage. Arrears built up because of an error made by the CSA and as a result he had been paying almost £50 more every month than his assessment. He needed to know his exact position with regard to payments as he was applying for a mortgage.

At the end of April his caseworker advised that his arrears should have been paid off a month before and promised to call to confirm this. When he had not heard anything a month later, he visited the bureau for assistance. The bureau called but were advised to call back in 20 minutes when someone would be able to help them. However, despite the number being the special number reserved for CAB advisers they couldn't get through.

The next day the bureau called again but the adviser was unable to help and attempted to put them through to the caseworker. She was not available so they were advised to call back the next day. As this was not possible, they called the following week and were put through to a debt management officer. He was unable to help however as the system could not recognise his NI number or his CSA reference number.

NEW SYSTEM

The Independent Case Examiner (ICE) recently reported that in the year following the introduction of the reforms for new cases, they received more than 50% more complaints than in the previous year. More than a quarter of these (28%) were related to issues associated with the CSR or the new CSA computer system.[62] Old cases that are linked to new cases are pulled through onto the new computer and so are affected by the problems with the new computer system whilst themselves still waiting to gain from the new rules directly. There were 144,000 of these cases at the end of February 2004.[63]

We understand that linked cases are pulled across to the new system without any warning. CABx have reported how this has led to the loss of non-resident parents' personal details, which has resulted in problems receiving their payments. It is essential that transition is improved and that there is no resulting loss in compliance.

The CSA stopped making direct deductions from the wages of a client in the North of England due to problems transferring his details to the new computer system. He continued to pay in cash until the problem could be resolved. The CSA had not only lost his bank details but also his address and telephone number and in the end resorted to sending a letter to his work address.

The following CAB cases show clients facing payment problems as payment are blocked.

A bureau in Norfolk reported a lone mother who had received no child support payments for two months. The client had made a number of calls to the child support centre in Belfast. She was told that the payment would have to be put through manually and that this would take two weeks. When two weeks had passed and still no payment she called again, but was told the same thing. The client had debts that were getting increasingly hard to control. The CSA told the bureau that the problem resulted from the move to the new system. As the computer would not accept the client's details she would have to be paid manually. They advised that they would do it the same day and the client should receive the money within a week.

Several bureaux reported the CSA receiving payments from the non-resident parent but not passing them on to the parent with care. Feedback from the CSA indicates that this problem was due to problems with the computer system and as in the above case, manual payments could have been issued in these circumstances.

A CAB in the Midlands reported a client who had been receiving payments from her ex-partner via the CSA. When she moved from income support and into work these payments continued to be taken from her partners account and paid to the CSA, but none of them reached her. After 16 lengthy phonecalls she received three giros from them but was still short of over £700 that her ex partner had paid. The bureau were told by the CSA that the client was due more manual payments but didn't know when as there was a backlog of payments to be made.

Recently, a bureau in Wales reported that although the CSA could confirm that the non-resident parent was making regular payments to the CSA, these were not being passed on to the parent with care and this proved particularly difficult to resolve. In early 2004 they agreed to make a payment of over £1,000 followed by regular payments but this had not happened three months later.

During this period the client had contacted the CSA without receiving a successful outcome. When the bureau called they were given other numbers to call. The third person they spoke to told them that he could not contact anyone who would be able to deal with the case and they were left on hold for 45 minutes waiting to hear that. Eventually the CSA agreed to call the client the following Monday.

A number of bureaux have reported clients failing to receive their child support payments directly when they have moved from benefit and into work. The CSA recognises that receipt of regular maintenance is a significant factor in helping lone parents move from benefits into work.[64] It is then vital that the Child Support Agency's administrative problems do not prevent a smooth transition for parents with care.

A client of a bureau in the North of England reported that she should have been in receipt of nearly £200 a month from the CSA. She had been in receipt of income support but when she moved into work and receipt of tax credits six months earlier, payments failed to be paid to her directly. Her ex-husband had continued making regular payments to the CSA.

The following case describes the problems a client experienced in accessing the CSA and it appears to highlight problems in particular with the telephony system.

In June 2004, a bureau in the North East reported how their client had documented every call they had made to the CSA over the previous nine months. She had also written several letters. Every time she called she was put through to someone who didn't appear to have access to the relevant information about her case on the computer. When she referred to previous calls she had made to them they didn't appear to have any record of them. She felt that they were reticent to arrange a face-to-face interview with her to help resolve the problems that had been ongoing. The situation was causing her considerable stress and she was receiving treatment for it from her doctor.

INEQUITY OF RUNNING TWO SYSTEMS IN PARALLEL

The delays to the full implementation has given rise to the situation whereby by customers in very similar circumstances can have very different child support assessments. The following cases show non-resident parents assessed under the old system who would pay considerably less under the new rules.

A bureau in Suffolk reported that their client had a new baby and his wife was on maternity pay. He was paying around £90 per week to his ex-partner under the old rules, but if his case were under the new rules he would be paying less than £50 per week. He felt that this disadvantaged his new son.

A bureau in Cheshire reported that their client's payments amounted to around 30% of his net income, whereas if he was paying under the new rules the maximum payments would be 15% of his net income. He felt that the system was very unfair.

A client who visited a bureau in Somerset had a similar problem. He was paying just under £400 per month under the old rules and a move to the new rules would see his payments reduce by almost £100 a month. He was experiencing considerable financial problems as a result of these high CSA payments.

The old and new schemes also differ in the percentage of the non-resident parent's net income that can be taken to pay current maintenance and arrears. Claimants under the old scheme can be asked to pay up to 33% of their net income and up to 40% if an agreement has been broken. Claimants under the new scheme however will only be asked to pay up to 5% of their net income on top of their current assessment. The following case demonstrates the financial strain that the old scheme rules can place people under.

A bureau in the Midlands reported a client who had literacy problems. He been paying £70 a week to clear CSA arrears but after he had taken a week of unpaid leave, the CSA took £110 to "catch up" with these payments, and told the client they could do this indefinitely. The amount taken was 47% of his weekly wage—yet the limit permissible for the recovery of arrears when an agreed repayment is not made is 40%. Under the new rules his payments would have been much more manageable.

Whilst most non-resident parents are keen to move to the new system, others, usually those with high housing costs, are less eager as the change will result in an increase in their assessment. Whilst non-resident parents cannot opt to move to the new scheme, lone parents can opt to close their claim and make a new claim after thirteen weeks. Their new claim will be assessed under the new rules. A couple of bureaux have reported such scenarios.

After having a nil assessment for many years a client of a Midlands bureau suddenly found that he had been reassessed under the new scheme and had payments to make. This completely took him by surprise and he had no idea that his case had been closed and reopened under the new rules. He had apparently completed an income form a few weeks earlier but did not realise that this was for a new assessment.

The client of a Suffolk bureau felt that her husband was using the old system to delay paying child maintenance. He had for many years been a student and only paid £5 a week, but when he started earning his assessment was increased to £170 per month. She recently received a letter informing her that due to his change of circumstances, payments would be reduced to nil. She was told this was because he had recently obtained a large mortgage his protected income had increased. They asked the CSA about conversion date as she would be due almost £60 a week under the new rules. As no advice could be offered it seemed best for this client to consider closing her case and reapplying thirteen weeks later.

CONFUSION WHEN CONTACTING THE CSA

The parallel operation of the two systems has made contacting the CSA more complex for their customers. There are six regional CSA contact centres with two helpline numbers; one for cases under the old scheme and one for cases under the new scheme. There is also a national helpline number which callers can use to make general enquiries. Callers will get redirected to the national helpline if their CSA business unit is busy.[65] Because of the long delays clients experience in getting their cases assessed, it is not always clear whether they come under the old or the new rules and therefore which number will be able to deal with their enquiry. The following cases illustrate well the problems CAB clients and advisers experience when trying to resolve a problem by telephone:

A bureau in the Southwest reported a client who was in debt and keen for her child support application to be processed so she could benefit from the new child maintenance premium. Every time she called the CSA she was given a different explanation for the delays in the processing of her claim. The client wasn't sure whether she was being assessed under the old or new rules so the bureau called the old rules number for the South West CSAC. After waiting on hold for five minutes they was told that the client's case was being assessed under the new rules. They called the new rules number and were again put on hold for five minutes before being cut off. The CAB then called the number on a letter the client had received from the CSA, but was told that they could not help as the client's application came under the old rules and they would have to call the original number again. The CSA member of staff was very sympathetic and tried to put them in touch with the complaints department. After four phone calls to different sections of the CSA, nothing had been achieved for the client.

Manchester's client came to see them almost a year after she had submitted her application in early summer 2003. She was suffering hardship as her ex-partner's voluntary payments were not regularly paid. She'd made numerous phones calls and had written two letters of complaint. She had been told contradictory things about whether or not she had a caseworker and whether she was on the old or new system. The CAB advisor phoned and was told that the client did not have a caseworker and her details could not in fact be found on the system. They could not offer any explanation as to why her letters had not been dealt with.

COMMUNICATION WITH CUSTOMERS ABOUT THE REFORMS

Evidence from CABx suggests that communication with claimants about the reforms and the delays to the implementation could be improved. A bureau in Wales reported that their client was frustrated and confused by the changes. He was assessed for Child support under the old system. He knew his assessments would change under the introduction of the new system but felt confused and frustrated by the fact that no-one could tell him when or what the changes would mean to him.

A bureau in Hampshire's client queried the amount of child support he was paying. He has his child stay two or three nights a week and knows that his assessment would decrease under the new rules. He felt that it was unfair that he had to wait and felt frustrated by the lack of response from the child support agency. He had had problems getting through on the telephone and had written and had no reply to his letters.

ENFORCEMENT

As at 31 March 2003 the cumulative debt on full maintenance assessments was £664 million.[66] Whilst the percentage of cases fully compliant are at the highest level since the introduction of the system at only 54.9% this is still an unacceptably low rate of compliance.[67] The lack of successful enforcement of maintenance assessments has always been a concern for the CSA and many clients visit the bureau having never received payments following an assessment. One of aims of child support reforms was for the simpler assessment formula to enable resources to be moved from assessment to enforcement. It is therefore disappointing that the delay to the implementation of the reforms has meant that the full planned shift of resources has yet to be completed. Whilst we welcome the CSA's recent implementation of an internal enforcement review, it is regrettable that technical difficulties have prohibited the production of any figures on compliance.[68]

Bureaux report both the lack of enforcement action by the CSA to ensure parents with care receive maintenance for their children and at times heavy handed arrears collection from non-resident parents when their arrears have built up through poor administration by the CSA.

A bureau in Leicestershire reported a few cases where clients have suddenly stopped receiving their child maintenance. When they have chased it up the CSA have advised that they no longer have the non-resident partner's address. In one of the cases the parent was living at the same address as he had done for the last five years. He had built up arrears of £4,000 over 10 years and the parent with care felt that the CSA were taking no action to chase payment.

In February a bureau in Gloucestershire reported that their client had not received any child support since the previous June. The CSA advised that they could find the non-resident parent's employer and would take no further action to ensure maintenance is paid. The client was struggling to make ends meet and felt the CSA weren't helping. The child's father hadn't disappeared and still has access to them. After pressure from the CAB they agreed to take further action.

Lack of enforcement can be particularly difficult where maintenance assessments result in parents with care being no longer entitled to income support. Many bureaux report that erratic child support payments frequently leave parents with care below income support level. For example:

A bureau in Essex reported that their client should receive child support of £40 a week plus £15 arrears. This was not paid regularly and some weeks she was left below her income support applicable amount.

Equally, the CSA must ensure collection is fair, as CABx have also reported the hardship faced by non-resident parents who suddenly find the CSA has taken enforcement action against them without fully considering their financial circumstances and without being responsive to changes in circumstances reported.

A bureau in the South West reported that their client had maintenance arrears and had an agreement to pay just over £300 a month, which was collected from his wages. He changed jobs and suddenly found that the CSA had issued court proceedings. He attended court, the CSA were given a court order for over £10,000 against him and bailiffs were instructed to collect payments. The client has no way to pay what was being asked and felt that the assessment was totally unrealistic.

A client of a bureau in the North East had been working in Scotland, earning over £40,000 and paying just under £700 a month for his three children. He then moved to the North East of England on a salary more than 50% lower. He was told by the CSA that his payments would be reassessed as soon as possible. Nine months later however, they had not changed his payments and in fact had added a deduction from earnings order. The huge payments are about 50% of his income and leave him in severe financial hardship. The delay and stress is also putting extra strain on his relationship with his ex-partner.

A bureau in Norfolk reported that their client came to see them in the summer of 2004. He had been paying just under £60 a week but received a letter from the CSA three months previously informing him that his case had been closed as his daughter had left home the previous September. Payments by a Deduction from Earnings Order were still coming out of his wages and these were not being set against his arrears. After struggling to get this resolved himself the bureau called the CSA and were put through to the debt section. They were advised that all the money paid by the client between September and March should have been credited to his arrears but they had not been notified to do this by the accounts section. They promised this would be rectified and the deduction from earnings order cancelled.

CHILD MAINTENANCE PREMIUM

Under the old rules whilst all most parents in receipt of income support are required to apply for child support they will not receive any of this themselves. This can also be particularly frustrating for non-resident parents who may be making high child support payments that are of no extra benefit to their children. The introduction of the Child Maintenance Premium enables lone parents on income support to keep £10 of the maintenance that is received from the non-resident parent. Currently around 22,000 families had received the child maintenance premium.[69] A figure that seems a fairly small percentage of the 51,900 benefit claimants for whom a CSA assessment had been carried out—but most of these have yet to receive payments on account so this figure will hopefully increase.[70] It is disappointing that the delay to the reforms has delayed the availability of the child maintenance premium. The introduction of the child maintenance payment would lift many families above income support level and have a significant part to play in reducing child poverty.

We argued at the time of the bill that the Child Maintenance Premium should be introduced immediately since it did not require primary legislation and could be introduced through regulations. Instead the introduction was planned for 2002 for new cases and 2003 for existing cases. The delay then, is quite significant and failing to contribution to meeting targets for the reduction of child poverty.

A bureau in the North-West reported that their client had been told by the CSA that because she was on income support she should receive £10 extra child maintenance premium. She was later told that this was in fact incorrect as her case was under the old rules and the only way she could get this would be for her to close her income support claim and reapply 13 weeks later. This was obviously not an option for her as she would have no income to live on in the meantime.

The evidence received from CABx however suggests that the Child Maintenance Premium is not that well known. More evidence is received from bureaux reporting non-resident parents keen to gain from the reduced assessments than lone parents keen to benefit from the child maintenance premium. Even where claimants are entitled to it they have found the communication about it confusing.

A bureau in Surrey reported that their client received a letter from the CSA informing her that Income Support would ensure that she received her client maintenance premium. When the bureau called the CSA however, they were told that this was wrong and that they had been paying it direct into the client's bank account. There was no identifier on the statement however and she had received no information about it so she didn't recognise it or understand what it was.

REDUCTIONS IN STAFFING NUMBERS

We are concerned about the commitment to cut 40,000 jobs in the DWP and the effect that this will have on the quality of customer service. The Child Support Agency plans to reduce its headcount by 2,600 from April 2004 to April 2006.[71] It is expected that these will be possible as a result of increased efficiencies, particularly in IT systems. It has been promised that resources saved from a more efficient child calculation and assessments would be devoted to ensuring compliance through effective enforcement activity. By its own acknowledgement the CSA computer system is far from delivering an effective service and we would urge that no cuts are made in CSA staffing levels until all cases have been migrated onto the new system and working to a satisfactory standard. Following successful migration priority in relation to staffing resources must be given to enforcement activity rather than to cuts.

CONCLUSIONS

The reforms promised much in terms of improvements in the quality and efficiency of the administration leading to faster processing of applications to payment and a higher overall compliance rate. An increase in the compliance rate is essential for helping the Government meet its child poverty targets. For lone parents on income support, the Child Maintenance Premium provides a significant boost to household income. Combined with the help of working tax credit, child support payments can significantly improve lone parents chances of successfully moving into work.

It is essential then therefore that progress is made towards full migration as soon as possible. This gets more urgent as the number of cases on the new system but under the old rules increases. Whilst problems with the computer system prevent this we would urge that there is a greater degree of public accountability and steps towards improving the stability of the system and hence migration is made public.

Improved administration of the system in the interim is essential. Claimants should not expect to be passed around from one section to another whilst their cases details are searched for. With regard to enforcement activity, we would like to see that the CSA's enforcement review have an impact not only on new cases but also on cases on the old system. As well as improving the compliance rates for these cases we would like to see a greater degree of responsiveness to the needs of non-resident parents with very high assessments that leave them and their families in financial difficulty.

Finally, we would urge the Committee to consider recommending that CSA staff resources be focused on full migration followed by enforcement activity as a priority above overall staff cuts.

July 2004