Select Committee on Work and Pensions Fourth Report

3  The new assessment process

Gross income assessments

108. The two child support assessment schemes currently in operation both work on the basis of net income, which is used as it most closely relates to the income that non-resident parents have to live on. It means gross income less tax, National Insurance and private pension contributions (although the detail of the last deduction differs between the schemes). Sir David Henshaw noted in his report that the calculation of net income is time consuming as it involves numerous pieces of information which can change regularly.[113] The White Paper therefore proposes the use of gross income information that will come directly from HM Revenue and Customs (HMRC).[114]

109. However, Sir David Henshaw noted that any shift from net to gross income would have to be accompanied by a change to the percentages used to calculate maintenance.[115] Specifically addressing this point, the White Paper states that:

"Because gross income is higher than net income, we will reduce the percentage rates of income that are payable for each qualifying child in cases where the gross weekly income of a non-resident parent exceeds £200 per week. It is anticipated that, where there are one, two or three or more qualifying children, instead of rates of 15, 20 and 25% respectively, the rates will be 10, 15 and 20%. Appropriate adjustments will be made to the reduced-rate regime for those non-resident parents whose income is between £100 and £200 a week."[116]

Reductions will also be made for 'second families'. The parent with care's income is not considered in the formula.

110. Concern was expressed by Professor Stephen McKay regarding the basis on which these new percentages were calculated, and in particular whether they were based on the full cost of raising a child as is the case in Australia and some States in the USA:[117]

"The White Paper does not mention how the level of proposed maintenance was calculated, and if it is intended to reflect the costs of raising children or some other criterion […] This contrasts markedly with the recent reform process in Australia, where issues of fairness in meeting the costs of children were paramount. This led to key changes - such as taking account of the higher costs of teenage children, and including both non-resident parent and parent with care income."[118]

111. Notably, the basis for the 15/20/25 rates was discussed in the Social Security Committee's inquiry into the 1999 Child Support White Paper. The Committee's report noted that the percentages were based on the perceived cost of a child. When giving evidence, Baroness Hollis told the Committee that "the proposed percentage rates were not out of line with the proportions of income which [non-resident parents] are required to pay in other jurisdictions."[119]

112. Evidence provided by Stephen Geraghty, confirmed that the new proportions were "broadly comparable" with the proportions for assessments based on net income (and therefore, by inference, the perceived cost of a child).[120] However, further concerns were expressed in some of the written evidence received that the new proportions had the potential both to increase the burden on the non-resident parent,[121] and also reduce the levels of maintenance received by the parent with care in some cases.[122]

113. Supplementary written evidence from the Secretary of State suggested the overall effect on non-resident parents child maintenance payments from the move to gross income would be as follows:

"Initial analysis shows that of those non-resident parents with a new scheme calculation who are currently on benefit or where HMRC income data is available, half should be paying more and half should be paying less under the new assessment process compared to their current assessment. Over 60% will have a change in their liability of less than £10 per week."

9% of non-resident parents have an increase in their liability of £20 per week or more - the majority of these people earn in excess of £450 per week."[123]

114. We request further statistical information on the likely actual impact of the move from net to gross income on different categories of parents.


115. Professor Stephen McKay commented on the fact that the assessment process under the new scheme for cases since 3 March 2003 does not take account of the parent with care's income (in contrast to the Australian system and that used in three-quarters of US states[124]). He added that:

"70% of the public think you should look at both people's incomes. The Australian formula, for example, spoke very clearly to the idea if this family was intact how much money would they be spending on their children? They are no longer intact; they would still expect to spend a certain amount on their children, let us apportion that fairly to them on the basis of their incomes. As I say, under the current system the formula is mostly designed for parents on benefit who have no income so it is very clearly just using the non-resident parent income, but since most intact families have two earners it speaks to fairness to be looking at both their incomes. Certainly, the people I spoke to were very much of the idea that both parents are financially responsible, therefore they should both be included in this."[125]

116. However, Mavis Maclean countered this by contrasting the conceptual directions of the UK and Australian systems:

"The example you have given, of the Australians moving in the direction of making their formula more complicated while we are moving in the direction of making ours more simple, just points out very clearly that this is an extremely difficult area and, however you do it, it is difficult and there are going to be problems. In Australia they have been suffering a lot of criticism for the lack of sensitivity in their formula, and that is why they are becoming more sensitive; our criticism is about the over-complexity of our formula, so we are becoming more simple."[126]

117. The Committee recommends that legislation should continue to provide for the Secretary of State to have the power to make regulations, subject to parliamentary approval, to adjust the standard percentage rates in the new formula; and in addition that the rates should be reviewed every five years. The Committee recognises that taking account of the income of the parent with care would introduce unwanted complexity into a child support system that is trying to be simpler.


118. One of the key questions surrounding the proposed move to gross income is how this will impact on the self-employed. Self-employed non-resident parents currently make up 7% of the CSA's overall caseload.[127] Resolution noted that there was likely to be a significant impact on the C-MEC workload from self-employed non-resident parents contesting their new assessments:

"The self-employed, who traditionally have been the most difficult for the Agency to deal with, are likely to substantially increase the reviews and appeals workload, as they will argue the information used is wholly out of date, sometimes by 1 or 2 years. Substantial additional resources will therefore be required to deal with the increased workload. This potential problem must not be underestimated."[128]

119. Citizens Advice expressed concern that self-employed non-resident parents would still be able to minimise their taxable income.[129] A particular issue surrounds whether gross income means income before or after the deduction of capital allowances. A capital allowance is a tax allowance self-employed workers can claim on the purchase of 'plant and machinery', or equipment used in their business. It can also be claimed on the purchase of agricultural or industrial buildings and on the cost of converting space above shops or other commercial premises for renting out as flats.[130]

120. A recent ruling by the House of Lords[131] posed this exact question in relation to the calculation of child maintenance. The case (commonly known as the Smith case) involved the proper interpretation of the expression "total taxable profits" in paragraph 2A of Schedule 1 to the Child Support (Maintenance Assessments and Special Cases) Regulations 1992 (SI 1992/1815) (as amended by SI 1999/977).

121. The House of Lords, by a 3-2 majority, reversed the decision of the Court of Appeal[132] and restored the decision of the Child Support Commissioner.[133] The result was that, for child support purposes, the non-resident parent was not entitled to any such deduction in respect of capital allowances.

122. Stephen Geraghty stated that it was the Government's intention to define, within legislation, gross income in this context as total income less capital allowances; this being in contrast to the House of Lords ruling:

"At the moment we have the House of Lords' very recent ruling in the Smith case which said that we could not take capital allowances from his income in working out how much child support he should pay. We need to respond to that with or without this system. It applies to net income too. Once that legal process is worked through, we will come up with drafting which gets back to the policy intention, which is that capital allowances should have been taken into account, they should have been deducted, before we have had the income."[134]

123. The primary argument for such a decision appears to be that excluding capital allowances from the maintenance calculation will avoid endless work for C-MEC in appeals from self-employed non-resident parents.[135] Additionally, including capital allowances would also lead to the potentially anomalous situation whereby HMRC are taxing a self-employed individual on a gross income figure that is completely different from the figure on the basis of which their child maintenance is paid.[136] However, it will also mean that the onus will be on the parent with care to challenge any low assessments through a variation application (as noted by Stephen Geraghty during oral evidence).[137] But as Kim Fellowes from Resolution pointed out, within the existing system the parent with care does not get easy access to financial information on which income figures are based.[138]

124. We agree with the Government's intention to reverse the decision in the Smith case and define gross income as being total income after the deduction of capital allowances. However, we note this will leave the issue open of how the parent with care can obtain sufficient information to challenge low assessments, and ask the Government to set out how it will address this problem.

25% income change and the annual income variation review

125. The White Paper proposes to use latest available tax-year information from HMRC as the basis for calculating a fixed-term award of one year for child maintenance liability, unless current income differs by at least 25%; this will then be updated each year.[139] In the White Paper the Government states that:

"…we believe that historic tax income information is close enough to the current financial position of most non-resident parents at the time to be an acceptable and sufficiently robust basis for assessment. We recognise, however, that we will need to introduce appropriate safeguards for circumstances where, at the time that a liability is being worked out, current income differs from the relevant tax year by more than a certain amount."[140]

126. The rationale for fixed term awards appears to be the fact that, with the current system, a small change in income can lead to a change in maintenance award. Consequently, fixed awards will be beneficial both in terms of stability for parents, and for administrative ease.[141] In oral evidence, Stephen Geraghty stated:

"It [the 25% figure] was set against the number of reworks that we would have to do in the course of the programme and also the actual amount of maintenance which on average it would affect […] We are trying to get it to the level where we are not spending all our effort recalculating maintenance rather than enforcing collection […] It means that people who have lost their job or in a totally different income position are covered but people who are doing less overtime or it is more hours because it is summer and so on and we do not have to redo the assessment."[142]

127. Evidence from One Parent Families highlighted the potential administrative burden that an annual income variation review would place on C-MEC when they receive all non-resident parents' gross income information from HMRC at the same time:

"Another question is the extent to which C-MEC would have to go through an annual assessment review exercise at the same point each year, when HMRC tax-year data becomes available. Again, this would pose serious administrative challenges."[143]

128. We received evidence from CPAG that parents with care who are used to awards increasing regularly upwards would be disadvantaged if this only occurred once a year.[144] CPAG expressed concern that, depending on the direction of the change in income, fixed awards could significantly disadvantage either the parent with care or the non-resident parent (and second families). It therefore emphasised the need for "close monitoring of the impact that fixed awards have on both 'first' and 'second' families."[145]

129. Resolution expressed concern that the 25% figure was too high:

"To state that last year's income will be used, unless a person can show that their income has changed by 25%, is extremely worrying. This percentage figure is far too high and will create substantial financial hardship to a considerable number of families […] a realistic percentage figure has to be considered, if the aim is to restrict repeated review applications where there is minimal change."[146]

130. In the appendix to its submission, Resolution provided an example of a non-resident parent's gross income changing downwards by 24% from £20,000 to £15,200.[147] As a proportion of the non-resident parent's net income maintenance payments would change from 29.2% to 42.4% under this scenario; this would clearly have significant effects on the non-resident parent. While the submission does not provide a specific example, the converse would also be true, and an increase in the non-resident parent's gross income by 24% would mean a significant delay before that increase benefited the children.

131. Janet Allbeson from One Parent Families pointed out that there were a number of issues surrounding the 25% income change which were not addressed by the White Paper:

"[It] is not only income changes that will affect the assessment. What happens if there is a new child living with a non-resident parent, or if a child changes household? There is also scope for manipulation. The White Paper does suggest that where someone leaves a job that will cause adjustment. You can see a situation where someone leaves a job and then goes back into work, having got the lower assessment. We do not know whether there will be a duty to report a change of circumstances which is advantageous - at the moment there is not".[148]

132. The key issue here, in our view, is where the line is drawn between balancing operational efficiency and responsiveness to individual hardship. In Australia, for example, a non-resident parent can apply for a change in maintenance payments if their income falls by at least 15%. The Secretary of State commented that:

"We think probably on the modelling which could be done this would mean maybe a quarter or a third of cases might involve some reassessment during the year whereas at the moment the figure is very significant. We are trying to be fair and strike a sensible balance but it is one of those aspects of the new system, I think, that we will obviously have to monitor very closely as we go forward."[149]

133. The written response to the Committee from the Secretary of State shows the proportion of employed non-resident parents who would be eligible for an adjustment based on varying changes in gross income:

Figure 6:
Threshold (size of income change) Proportion of employed NRPs eligible for adjustment because income is lower than previous year Proportion of employed NRPs eligible for adjustment because income is higher than previous year
10%16% 33%
15%12% 24%
20%10% 19%
25%9% 15%

DWP written submission. Note NRPs who have had a benefit spell or have a recorded income of zero in either of the tax years in question are excluded from this analysis.

134. We recommend that more research should be carried out into the appropriate level of income variation to balance operational efficiency and responsiveness to individual hardship. There should be a legal duty placed upon those non-resident parents who are involved in C-MEC cases to report to C-MEC any change in income greater than or equal to the set proportion. The Department should closely monitor how effective C-MEC is in dealing with these cases promptly.


135. The proposal to use the previous year's tax data direct from HMRC (updated annually) results from Sir David Henshaw's recommendation that there should be much closer links between the body responsible for child maintenance and HMRC.[150]

136. During oral evidence the Committee sought information on whether these two bodies will be sufficiently compatible to ensure an efficient transfer of information. Dr Paul Dornan from CPAG commented:

"One of the justifications for why they are talking up using gross income [is] to improve that link [between HMRC and C-MEC]. I think it has clearly been a significant problem in the process thus far. We have expressed concerns in relation certainly to the tax credit experience, but in terms of the pressure that that clearly indicates that HMRC was under and therefore its capacity to do other things. I think expecting a lot from it is difficult. If that link is not made to work, then you get back into the problem of assessing income from which we are trying to get away. Making that link work speedily is very important."[151]

137. However, in contrast to the tax credit system, the fixed-term awards that will be part of the new assessment process will mean no retrospective readjustment will occur to take account of actual income received in the previous year. As John Wheatley from Citizens Advice stated:

"What the Government is trying to do with child support is move to a system of fixed awards. In that respect, it is different from the current tax credit system, which is not fixed. You can adjust for changes in the circumstance."[152]

138. Citizens Advice also highlighted the fact that, in places, the White Paper talks of using the previous year's income to assess child maintenance but elsewhere states that it will be based on "… historical information from the latest tax year for which HM Revenue & Customs has full details."[153] While it would be reasonable to assume that this will generally be one year out of date (i.e. previous tax year information), it became apparent during oral evidence that there are circumstances where assessments may be based on gross income data that is two years old:

"Chairman: So 5 April 2007, end of the tax year. What is the relevant year for maintenance?

Mr Geraghty: That is again not something which we have a firm view on. It could be the anniversary or it could be a date around the P14 date which is where the Revenue get all the written employer returns in, which is in January. Whether we want to have everybody reviewed at the same on the anniversary of when we did the assessment I think is a leading option.

Chairman: But for some people it could be two years old.

Mr Geraghty: Approaching, but over the life of the case, which is an average, I think, of about 11 years, the figures will be right."[154]

139. The success of the new assessment system will depend, in considerable part, on the operational system for the transfer of information between HMRC and C-MEC. We ask the Government to make it clear how the process of data sharing will work in practice and to report the evidence from any pilots that have taken place in testing the systems to exchange information.


140. Concern was expressed by One Parent Families regarding the opportunity for non-resident parents to misreport their gross income:

"Disputes will continue to arise. For example, where the parent with care disputes the non-resident parent's contention that his current income is significantly lower than the historic tax-year figure, or she disputes that the HMRC figure is accurate (for example, because the non-resident parent is working in a family business and there is collusion in presenting a low earnings figure). It must be recognised that income concealment and manipulation by non-resident parents are a real issue, whereby some non-resident parents seek to minimise their liabilities for child maintenance."[155]

141. Stephen Lawson highlighted another problem that leads to misreporting within the existing system:

"A non-resident parent who gives false or misleading information is most unlikely to be prosecuted - indeed most of the requests for information from the CSA are either made verbally or without the appropriate warning. This means that a non-resident parent can give whatever untruthful response to questions without any fear of prosecution."[156]

142. Janet Allbeson from One Parent Families also pointed out that:

"When the system changed in 2003 there were a couple of anti-avoidance measures that were dropped. One was being able to treat someone as though they have income which they have not got if they have deliberately deprived themselves of it. Another one was a very similar rule, designed to stop people concealing income, or giving away money, or manipulating their affairs deliberately. Those provisions have been dropped and we would like them reinstated."[157]

143. In some US states, if somebody takes a job at a lower level than the one that they had previously they are assessed at the previous job; in other words the assessment is on their earning capacity rather than what they are actually earning if they deliberately downsize.[158]

144. However, Professor Stephen McKay pointed out that gross income is "less subject to some of the manipulations you can do to get from gross to net."[159]

145. The Committee recommends that there should be a clear, robust process of dealing with well-founded applications for variations and appeals against maintenance calculations where the parent with care believes that the non-resident parent's maintenance assessment is based on incorrect or misleading income data.

Shared care

146. At present, a non-resident parent's child support liability is reduced where the number of overnight stays exceeds a certain threshold. In old scheme cases the threshold is 104 nights a year. This was reduced under the 2000 Act to 52 nights a year, but for new scheme cases only. Under the current scheme, in broad terms, every extra night a week that the child stays with the non-resident parent that parent's child support liability reduces by 1/7. So, calculations may be reduced by 14%, 29% and 43% if care is shared for 1, 2 or 3 nights a week.

147. The White Paper is silent on how these arrangements would be treated under the new system. This could mean one of three things: that the situation will remain the same; that there will be no amendment for overnight stays; or that there will be some adjustment, the nature of which the Government has yet to decide. The Secretary of State when questioned on this issue said "I do not want to pre-empt the outcome of the consultation."[160] However, he also commented:

"I think we should try to approach shared care cases with genuine sympathy and to recognise the role of both parents in bringing up a child, but for us to take the view that they should be automatically excluded from the maintenance assessment process would create a problem."[161]

148. Resolution said that shared care liabilities:

"encourage parents to associate the level of child maintenance with the amount of staying contact a child should have with the other parent. Joint parenting is discouraged, as contact costs money to the deemed parent with care, who effectively is given a financial incentive to restrict contact."[162]

149. Stephen Geraghty, when questioned by the Committee on the problem described above by Resolution, acknowledged that "it is a real issue and we do get cases where it looks as if somebody is either denying or demanding shared care in order to manipulate the amount of payment."[163]

150. The Committee also received evidence relating to how costs were allocated. It was noted by Anne Kazimirski from NatCen that "the way that it has worked in the past where an overnight stay reduces the payment, [is that] some parents with care will say, 'It should not because I actually still feed the child before they go to the non-resident parent'."[164]

151. Michelle Counley from NACSA argued that if:

"the non-resident parent wants to take an active role in sharing the care, he, too, has those costs; he does not need a one-bedroom, bed-sit flat, because if he wants to have his children stay there he needs to have a home that is adequately providing a good, safe environment for that child. It would be unfair to use an analogy to say that because the child only stays overnight there is no cost to him and the parent with care still has the costs, because that is not necessarily so. There are a lot of parents out there where he will have the child three or four days and he will collect from school, provide meals and take to school, but because it is not overnight contact he does not get any recognition for that. There has to be some recognition of shared care."[165]

152. Professor Stephen McKay warned that if the Government ignores the situation of shared care:

"A parent with 51% care could go to C-MEC and would receive the same level of maintenance as a parent with 100% care. These are rare, but not wholly exceptional, cases, and easily seized upon as examples of unfairness by those seeking to challenge the system."[166]

153. He also argued:

"I think when the Government talks about this, it tends to down-play the amount of shared care that there is, because it bases it upon current clients of the CSA, and the number of current clients of the CSA who have to put up significant overnight stays is quite small, whereas if you were to generalise this to the wider population, then there is more sharing of care among the rest of the population than there is for the CSA group. I think there is good evidence that, where people do have some kind of shared care, they are more likely to pay child support, they are more likely to take an interest, so there is a kind of incentive argument for having some kind of production."[167]

154. One Parent Families pointed out:

"The present system also creates administrative complexity, with assessments having to be altered and re-altered, depending on the contact arrangements which take place."[168]

155. Stephen Geraghty agreed that: "If we could get to a longer agreement rather than keeping a diary for each week and recalculating, that would make it much easier for us to administer."[169]

156. One Parent Families suggested:

"in future, a high threshold should be set for altering assessments where there is shared care. A reasonable amount of shared care - at least two nights per week - should be assumed in the basic assessment."[170]


157. Although not confronting the general issue of shared care Sir David Henshaw did comment on the situation where care is roughly equally shared. He recommended that:

"Given that cases of equal, or near equal, shared care involve both parents taking financial responsibility for their children, I believe that these cases should be exempt from third-party involvement, with no provisions within the child support formula for transferring funds between parents."[171]

158. However, One Parent Families stated that they:

"do not accept the proposal that where a child lives equally with both parents there should be no child maintenance. Where there is considerable inequality of income, the parent with care may still need financial support to help with […] costs both direct and indirect to ensure a reasonably consistent living standard for the child. 'Care' is not necessarily equivalent to the provision of financial support."[172]

159. A new comparative research project on child support policies funded by DWP has just been completed. The report will be published in March 2007 and it included evidence on child support policy from 14 countries: Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Netherlands, New Zealand, Norway, Sweden, the UK and the USA.

160. The results showed that without exception all countries would take account of the contact time children spent with the non-resident parent. In the event of shared care (defined as when the child spent roughly equal amounts of time living with each parent), the obligation to pay would be reduced to nil in the majority of countries (10) and could be annulled completely in some countries irrespective of disparities in the parents' incomes. Data on the prevalence of shared care arrangements was however inconsistent and partial, with these caveats the levels reported across countries varied between about 7-15%.[173]

161. This argument relates to the founding aims of child support. Mavis Maclean told the Committee that the original formula was the work of Irwin Garfinkel in Wisconsin, USA and that it was based on the belief "that parents have a duty to share their resources with their children, in the same way after separation as they shared with them while the household was intact."[174] If this is the case then it could be argued that the child is sharing in the living standards of both parents by living equally between both households.

162. The Committee recommends that the statutory child support system moves away from the current system of overnight liabilities which causes day counting and diary keeping by parents and constant readjustments. In the Committee's view the ideal solution is that there should be an initial agreement between the parents and C-MEC on the approximate amount of time the children spend between the two households. This should govern the assessment for the remainder of the year and not be adjusted unless there are major contact changes. For arrangements with close to 50:50 shared care the Government should consider the case put by Sir David Henshaw for having no child support liability at all between parents.

Informal payments

163. The White Paper states that:

"Parents may also agree between themselves that ongoing maintenance or arrears may sometimes be paid 'in kind' rather than as a direct payment to the parent with care. This may occur, for example, if a non-resident parent agrees to pay an urgent utility bill on behalf of the parent with care. We also propose to introduce legislation that would enable such payments to be taken into account against the maintenance liability."[175]

164. Concerns regarding the workability of any informal payment system were outlined in much of the oral evidence the Committee received. Mavis Maclean expressed the view that any system of taking into account informal payments would be extremely difficult to regulate formally:

"In an ideal world people would sort those things out for themselves; they are not matters for regulation or law or state control, they are personal, individual and cannot be regulated in my view. How can the state enquire into that level of detail, and not only detail but variability? Informal arrangements are characterised by being very variable and impossible to regulate."[176]

165. Both the National Association for Child Support Action and One Parent Families commented that ideally informal payments would be incorporated into a child maintenance system, but there would need to be restrictions on what could be considered and a clear advice and monitoring system (that incorporated proof of payment).[177]

166. In Australia, informal payments which account for up to 30% of any ongoing liability may be included. The types of payments that can be credited in this way are prescribed by regulation, so only certain types of informal payments are recognised. They are:

  • Amounts payable for uniforms and books prescribed by a school or preschool for that child.
  • Fees for essential medical and dental services for that child.
  • The payee's share of amounts payable for rent or a security bond for the payee's home.
  • The payee's share of amounts payable for utilities, rates or body corporate charges for the payee's home.
  • The payee's share of repayments on a loan that financed the payee's home.
  • Costs to the payee of obtaining and running a motor vehicle, including repairs and standing costs.
  • Child care costs for the child who is the subject of the enforceable maintenance liability fees charged by a school or preschool for that child.[178]

167. If one of the principles of these reforms is to make the process of child maintenance assessments simpler, then the inclusion, through legislation, of provision covering informal payments seems directly contradictory. The only place that informal payments would have an obvious place in the new system would be where parents make private arrangements outside of C-MEC. Therefore, the Committee recommends that informal payments should not be included in any C-MEC maintenance calculations. However, if, as the Government has stated, they are to be taken into account then there should be clear advice on procedural matters and an unambiguous list, prescribed in legislation, defining what counts as an informal payment.


168. In the White Paper and in its response to Sir David Henshaw's report, the Government stated that it would explore options to charge for the use of C-MEC's services as a means of encouraging compliance and in order to "offset, at least in part, the costs to the taxpayer of parents using the administrative service while, at the same, incentivising parents to make their own child support arrangements."[179] Notably, the response emphasised that any charging structure should not penalise the parent with care, instead placing any burden on the non-resident parent.[180]

169. In contrast, Sir David Henshaw suggested that charging the parent with care as well as the non-resident parent would dissuade them from using C-MEC as a tactic to put pressure on the non-resident parent, as he perceived was the case with the CSA.[181] The White Paper confirmed that any future charging structure would be directed at the non-resident parent and would be based on three clear principles:

"First, that the charging structure should incentivise non-resident parents to meet their responsibilities. Second, that the clear burden of charging should fall on the non-resident parent and not the parent with care. Third, that cost recovery for C-MEC should never be prioritised above payment of outstanding debt for the parent with care."[182]

170. Sir David Henshaw noted that other countries use a charging scheme - in the USA, for example, parents with care not on benefits can be charged an annual fee of $25.[183] The Henshaw Report also highlighted the fact that charging has, in the past, been a feature of the UK system; up until 1995 an initial assessment fee of £44 was charged."[184]

171. Concern was expressed to us over these proposals. CPAG stated:

"Despite these reassurances [the three principles above], little detail is offered as to practically how these protections would work with this to be left to future ministerial decision […] We would welcome much more detail for how it is expected charging protections/or exemptions would operate. Alongside the Government's principle that charging should not prevent parents seeking maintenance […] we argue that it should not disincentivise parents from using the apparatus of C-MEC if it is needed to achieve this outcome."[185]

172. Professor Stephen McKay, pointed out that, based on his research, any charging regime was likely to be unpopular, and that solely focusing on the non-resident parent "as a kind of knee-jerk […] is not helpful."[186] Similarly, Janet Allbeson of One Parent Families expressed concern about the introduction of charging, suggesting:

"let us put charging on hold; let us see how the system beds down; let us see who is using the new system and why they are using it and then think about charging and how that fits into it. It is too early, and can just antagonise people and create unnecessary tension and aggravation."[187]

173. During oral evidence, while the Secretary of State did say that he was "convinced that in general and in principle [charging] should form part and parcel of [C-MEC's] approach",[188] he was cautious about when and how a charging system would be implemented:

"We have said in principle we think charging can have a role to play but it will be the job of the Commission and the Commissioner to come up with detailed and specific proposals in relation to how they want to take that policy forward […] They might want to pilot it in certain areas, they might want to test it out, and we have not crossed that particular bridge yet."[189]

174. The Committee recommends that the Department does not introduce a charging scheme for applications to C-MEC.

113   Henshaw Report Back

114   White Paper, para 4.15 Back

115   Henshaw Report,.paras 113-114 Back

116   White Paper, para 4.16 Back

117   Ev 109 Back

118   Ev 104 Back

119   Social Security Committee, Tenth Report of Session 1998-99, The 1999 Child Support White Paper, HC 798, para 16 Back

120   Q 177 Back

121   Notably from NACSA and Child Support Action LTD. Back

122   Ev 106 Back

123   Ev 121 Back

124   Q 34 Back

125   Q 34 Back

126   Q 33 Back

127   DWP, CSA Quarterly Summary Statistics: December 2006, Table 27 Back

128   Ev 61 Back

129   Ev 112 Back

130   For details see, "Capital Allowances: the basics" Back

131   Smith v Secretary of State for Work and Pensions [2006] UKHL 35 Back

132   [2004] EWCA Civ 1318; [2005] 1 FLR 606 Back

133   in decision CCS/2858/2002 Back

134   Q 175 Back

135   See, for example, Q 101 Back

136   Resolution provided the following example (Q 101): "… if you have somebody who has a total gross self-employed income of £25,000 but they have various capital allowances that are taken into account by the Inland Revenue of, say, £15,000, they are going to be taxed on a net income of £10,000. That is the same as the self-employed person. The difficulty you are going to have is that if the capital allowances are not deducted, then the person who is receiving £10,000 gross income and is being taxed by the Inland Revenue on that, would effectively end up having to pay 25% of that income figure for one child. If the CSA are using the figure of £25,000 but the Inland Revenue are using £10,000, then the correlation of the actual child maintenance that they will have to pay will be far in excess of what a normal self-employed person will have to pay, purely because of the capital allowances not being deducted". Back

137   Q 174 Back

138   Qq 94, 96 Back

139   White Paper, para 4.13 Back

140   White Paper, p 27 Back

141   See for example Ev 112 Back

142   Qq 241, 243 Back

143   Ev 77 Back

144   Ev 97 Back

145   Ev 97 Back

146   Ev 61 Back

147   Ev 63 Back

148   Q 127 Back

149   Q 243 Back

150   Henshaw Report para 126 Back

151   Q 104 Back

152   Q 104 Back

153   White Paper, para 4.16 Back

154   Qq 239-40 Back

155   Ev 78 Back

156   Ev 64 Back

157   Q 128 Back

158   Q 128 Back

159   Q 31 Back

160   Q 178 Back

161   Q 178 Back

162   Ev 60 Back

163   Q 182 Back

164   Q 46 Back

165   Q 135 Back

166   Ev 105 Back

167   Q 46 Back

168   Ev 80 Back

169   Q 182 Back

170   Ev 80 Back

171   Henshaw Report, para 117 Back

172   Ev 80 Back

173   DWP Research Report: Child Support Policy: An International Perspective (Forthcoming March 2007)  Back

174   Q 2 Back

175   White Paper, para 5.46 Back

176   Q 35 Back

177   Qq 131-33 Back

178   Australian CSA website: Back

179   White Paper p 81 Back

180   Government's Response to the Henshaw Report, para 51 Back

181   Henshaw Report, paras 131-36 Back

182   White Paper, para 5.48 Back

183   Henshaw Report, para 132 Back

184   Henshaw Report, para 132 Back

185   Ev 97 Back

186   Q 20 Back

187   Q 124 Back

188   Q 166 Back

189   Q 166 Back

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