Select Committee on Work and Pensions Written Evidence

Memorandum submitted by Resolution


  Resolution are particularly concerned about the following aspects of the White Paper:

    —    Shared Care—the lack of clarity in respect of the future provisions.

    —    Enforcement—the implicit assumption that more draconian powers and administrative enforcement will improve the situation.

    —    The approach to the "historic" debt, how it will be managed and the issue of write offs.

    —    The impact of gross income on the future C-MEC caseload.

    —    Lack of Examination of the role of the court.


    —    Resolution is an organisation of 5,000 family lawyers who are committed to promoting a constructive approach to the resolution of family disputes. With each separating couple, comes the responsibility of discussing and negotiating future child maintenance payments, or assisting clients to do so directly (sometimes through alternative dispute resolution processes). As such, Resolution are in the unique position of having substantial practical knowledge about how the child support system works, as they have to deal with the CSA on a daily basis, both in respect of the parent with care (PWC) and non resident parent (NRP).

    —    Kim Fellowes is the Chair of Resolutions CSA Committee and a National Committee member, with considerable expertise in all aspects of child support law, since July 1993, acting for both the PWC and NRP.

    —    Dealing with the individual consultation questions raised in the White Paper:

Are the key principles and areas for detailed work we have identified, the right ones?

  1.  The key principles of promoting greater personal responsibility, choice for parents and the removal of disincentives is supported. The latter is achieved in part by removing the compulsion element[1] and significantly increasing the benefit disregard. However, failing to remove what is known as the "12 month rule", as proposed by Sir David Henshaw, means there is little incentive for non benefit cases to make private agreements. The 12 month rule generally applies in what could be termed as "package orders", for example, in divorcing cases, where other financial orders are made and an agreement relating to child maintenance is also reached. Continuing with the concept that once a Court Order has been made, a party can apply to C-MEC for a calculation after a 12 month period, provides a considerable disincentive to the parties. Why reach an agreement, if after such a short period, it can be overturned? Instability and uncertainty for the family is created which does not facilitate consensual arrangements at all. The problems concerning this and associated issues are detailed in Appendix 1; Resolutions response to Sir David Henshaws Report.

  2.  Transparency must be integral to the future scheme. Failure to provide details of financial disclosure given by the parties until appeal, [2]means that verification of information used, can only be achieved if an appeal is issued.

  3.  In Australia, there is considerable investment in engagement and signposting to relevant services at the outset. Without such a philosophy, the Agency will continue to host the "working out" of other disputes (eg contact or other financial issues) between the parties, making it more likely that enforcement procedures have to be relied upon to secure payment.

Paragraph 3.14 sets out what we hope to achieve through a framework of objectives and principles for the new body; are these three aims appropriate?

  4.  Resolution supports the stated aims. If the aim is to empower parents to reach their own agreements, then parents must be able to reach their own agreements and record those obligations at court. The proposed reforms would prevent this.

Do the principles for moving forward set out in paragraph 3.21 provide the right approach?

  5.  The proposals concerning transition state there should be focus on the poorest families first. Resolution supports the focus on child poverty. However, the effect on the workload that this will create for C-MEC has not been properly considered. Incorporating a significant maintenance disregard will provide a considerable financial incentive for a PWC to transfer to the new scheme. Definition of "poorest families" is likely to be problematic and create additional unnecessary work for the new agency in prioritising which cases should be transferred first. The simpler and arguably fairer way forward, would be to deal with the transition of cases on a date order basis.

Is our approach of combining a simpler assessment formula with an exceptions regime the right one?

  6.  A simple assessment formula is required, together with an exceptions regime in particular circumstances. However, the proposals to change the current fixed percentage formula and net income to gross income is problematic.

  7.  Using gross income from historic tax year information, will cause difficulties. 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 one or two years. Substantial additional resources will therefore be required to deal with the increased workload. This potential problem must not be underestimated.

  8.  The appeals system has actually been totally ignored in the White Paper. This needs to be addressed.

  9.  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. [3]See attached Appendix 2 (not printed). A realistic percentage figure has to be considered, if the aim is to restrict repeated review applications where there is minimal change.

  10.  There is also concern at the proposal to re-introduce annual periodic reviews. This has been tried in the past and failed. The caseload of C-MEC will be considerable in the future, particularly when the "significant benefit disregard" cases are considered. Incorporating annual reviews will only increase this caseload and create impossible targets for C-MEC to achieve.

  11.  The White Paper states the assessment will consider income, qualifying children, and children in the household. There is no reference to the current shared care provisions. Are they to be removed? Resolution is the stakeholder with practical experience of what impact the current allowances have on a family post separation. The provisions 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.

  12.  There cannot be a promotion of parties making their own private arrangements if these shared care provisions remain. They cause financial conflict between the parents, which makes negotiation of private agreements difficult to reach. The adjustment for overnight stays should be abolished. This is a difficult issue for the Government, but has to be addressed. Resolution would welcome a more detailed discussion orally or in writing on this matter, as discussions here are restricted.

  13.  C-MEC will function more successfully if it has removed from it, the most difficult cases. In Resolution's experience, these are the cases in which the administrative agency is ill-equipped to cope. Often, these matters are already being dealt with by the Court system (ie applications for other financial orders). Thus, we see the Agency being over-burdened unnecessarily and a waste of resources through duplication of work. Appendix 1 again details the position in this regard.

  14.  Variations are key to the future scheme. They must be considered carefully, as it is often the variations that give rise to appeals. If the aim is to provide a streamlined client base, the extent of the variations and their role must be explored further. Resolution can discuss this in greater detail when details of the proposed variations have been stated.

Which of the three approaches outlined in paragraphs 4.25 to 4.27, should be employed to determine child maintenance liabilities?

  15.  Fairness cannot be achieved where the non-qualifying children supported under alternative arrangements are ignored. There should be excluded from the non resident person's income, the sum of money paid pursuant to private arrangement or Court Order. It is accepted there should be consideration of safeguards, to ensure that an unscrupulous non-resident parent could not seek to mislead C-MEC as to the true position, to reduce maintenance liabilities for the "second" family.

Are there other approaches to enforcement we should consider?

  16.  Curfews and the surrender of passports are extreme measures, appropriate in only a few cases, having limited applicability to the general caseload. The existing Agency have the appropriate enforcement powers, but have failed to use them. It is therefore disappointing that reformers assume that more extensive powers will reduce the debt mountain. Resolution believes a variety of responses are required:

  16.1  There must be proper engagement with clients at the outset to reduce the "bloody-minded" factor which can generate non-compliance.

  16.2  There must be earlier identification of obligation to pay so that evaders are identified earlier and before the debt grows.

  16.3  The figures MUST be right. Resolution members' experience has been that reluctance to pay results from perceived error in many cases.

  16.4  There must be better "mid-range" enforcement options (such as fines for late payment).

  16.5  And then finally, the "draconian" enforcement powers may need to be reviewed for their effectiveness. It is hard to do this now, when the existing agency has largely failed to give sufficient attention to the above and is still struggling from the historic debt generated by the earlier complex formula.

  17.  The White Paper is silent as to whether parents should be entitled to enforce their own maintenance arrears. This needs clarification.

  18.  "Naming and shaming", would also only apply to the few and raises human rights issues, as does the reference to providing information to other organisations such as lenders.

  19.  The proposed deductions of earnings order pilot is welcomed, although it must be seen as a processing application, rather than a default mechanism for securing payment.

Is the shift from a predominantly court based enforcement system to an administrative approach, the right way to make enforcement more effective?

  20.  Looking at historic debt,[4] statistics state that in 65% of cases, the figures were inaccurate in the liability order application. C-MEC should not be given administrative enforcement powers when these problems exist.

  21.  Charging orders put at risk people's homes and Parliament should not sanction an enforcement regime that offers no safety net to address errors.

Are we right to give more focus to chasing collectable debt?

  22.  Clarification is sought as to how the interim maintenance assessments are to be revalued. If the income information has never been given, how does C-MEC intend to revalue this debt without this being available? Negotiated settlements should be central to recovering historic debt, but the power to accept any settlement should not be the decision of C-MEC, but the PWC, to whom the debt is owed (benefit cases excepted).

  23.  With regard to the proposal to factor historic debt, how will this be applied? Will the decision be made in those cases where the arrears are the highest, or where enforcement is deemed to be most difficult? Resolution is particularly concerned that debts may be factored where the underlying calculation is incorrect.

  24.  There is no reference to the substantial part of the debt which is legally unrecoverable (debt more than six years old). What are the proposals? A considerable number of maladministration claims are looming and whilst unpalatable to some, is an issue which cannot continue to be ignored.

Is our approach in seeking write off powers the right one?

  25.  The White Paper fails to state the "very limited circumstances" where it believes it would be appropriate to write off debt. Thus, full comment is premature until the position has been made clear. If write offs are to apply where the debt is more than six years old, due to the inaction of the CSA, numerous compensation claims will arise. This needs to be addressed.




  1.  Father on £20,000 gross employment income with no other sources.

  2.  Personal allowance is the only deduction in arriving at his tax liability.

  3.  Pays contracted in rates of National Insurance.

  4.  Two children, so maintenance at 15% of gross income.

  5.  Tax year to 5 April 2007 figures used.

Position on £20,000 gross is as follows:
Gross employment income 20,000
less: personal allowance-5,035-
Taxable income14,965-
Tax at 10% on first £2,150215
Tax on balance at 22%2,819-
Total tax3,034
National Insurance contributions1,646- (11% on everything over £5,035)
Total tax and NIC4,680-
Income net of tax and NIC10,285-
CSA payments at 15% of gross3,000-
CSA payments as % of net29.2%
Under current scheme, pays 20% = £2,057 (as opposed to £3,000)

If pay changes by 24%:
Gross employment income15,200
less: personal allowance-5,035-
Taxable income10,165-
Tax at 10% on first £2,150215
Tax on balance at 22%1,763-
Total tax1,978
National Insurance contributions1,118- (11% on everything over £5,035)
Total tax and NIC3,096-
Income net of tax and NIC7,069-
CSA payments at 15% of £20,0003,000-
CSA payments as % of net42.4%

Section 6 Child Support Act 1991. Back

2   Regulation 8 Child Support (Information, Evidence and Disclosure) Regulations 1992. Back

3   Example of person on £20,000 gross, with a change to his income by 24% (just less than 25% threshold). Back

4   National Audit Office Report 2006. Back

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