Memorandum submitted by Child Poverty
Action Group
KEY POINT
SUMMARY
CPAG recommends that arrangements are recorded
by C-MEC even if the day-to-day arrangements are handled privately.
To guard against parents with care "settling for less"
and for administrative simplicity we argue registration should
be set at the level of the formula at minimum.
The quality of C-MEC services for those needing
greater intervention need to be regularly and effectively monitored.
We urge the Committee to call on the Government
to provide much more detail for how it would build advice provision
in the voluntary sector without compromising sector independence.
The White Paper proposals to extend the role
of the advice sector are being brought forward concurrently with
moves by the Department for Constitutional Affairs to restrict
access to civil legal aid we argue the Committee should call for
a much more joined up approach to the advice sector.
Since enforcement is likely to be more problematic
once non-compliance is established as a pattern, a key route to
speedy resolution of the problem must be the ability of the Commission
to intervene quickly.
CPAG welcomes both moves to increase the amount
of maintenance reaching children which are both direct anti-poverty
measures and which are also likely to help to incentivise higher
compliance.
We urge the Committee to reject the work disincentive
argument and call for a full disregard of child maintenance.
INTRODUCTION AND
BACKGROUND
1. CPAG welcomes the Work and Pensions Select
Committee's continued interest in the impact of child support
policy and the opportunity to provide evidence to the inquiry.
This note summarises several key issues coming out of the White
Paper. Given the tight turn around in getting evidence to the
Committee, these comments are not exhaustive but CPAG will respond
in greater detail to the White Paper in due course. We also recognise
there are very considerable issues of debt management, implementation
and transfer of the cases (especially those raised in chapter
3) which need (much) greater consideration and on which the White
Paper is vague. CPAG both sent evidence to inform the Henshaw
review of child support[52]
and commented in some detail following its publication. [53]These
documents are attached with this note for further information.
2. The Child Poverty Action Group's interest
in child support policy is in the very high risk of poverty faced
by children affected by it. Of children in lone parent households
latest evidence suggests nearly half (48%) are income poor and
the children of lone parents make up over two fifths of the poor
child population. [54]Much
less is known about children in second families but the indicative
evidence about non-resident parents (who may or may not be responsible
for a second family) suggests this group is also likely to be
poor. [55]
3. There is a much greater role for child
support policy in reducing child poverty, we are pleased to see
the Department for Work and Pensions place this centre stage in
principles and plans to overhaul child support policy. At the
level of principle, commenting at an earlier stage of the reform
process CPAG has argued to help reduce child poverty policy should:
— Deliver adequate and stable maintenance,
even if it is difficult to enforce collection.
— Consider the needs and ability to
pay of second families—reform should not reduce poverty
for one group of children by increasing it among another.
— Minimise conflict between parents—conflict
is acknowledged to be highly damaging for children's wellbeing.
We continue to use these principles as a basis
of judging the likely impact of the proposals on children and
child poverty. Given the welcome focus on child poverty, we are
critical of the ease with which proposals for an "advance
maintenance" system (with an agency paying required maintenance
and being then itself responsible for compliance) were rejected.
Advance payment is the surest best way to protect children from
maintenance not being paid by a parent, and the claimed disincentive
effects on willingness to pay only hold true if enforcement continues
to be as ineffective as it has been to date.
4. The White Paper envisages that the Child
Maintenance and Enforcement Commission (C-MEC) will have charging
powers (para 5.47-5.49), but sets out various principles to guard
against concerns that parents would be put off using the agency
where this is appropriate. Despite these reassurances, little
detail is offered as to practically how these protections would
work with this to be left to future ministerial decision (para
5.49). 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 (para 5.48), we argue that it should not disincentivise
parents from using the apparatus of C-MEC if it is needed to achieve
this outcome.
5. In terms of income assessment for maintenance
liability, the White Paper proposes a number of changes intended
to ease this assessment. CPAG welcomes the proposals to improve
the links with HM Customs and Revenue for the use of tax data,
and we understand the trade off being made between workability
and sensitivity to income changes in proposals to use largely
fixed term awards and the last available tax details if income
has not changed by more than 25%. Nevertheless we are concerned
that a fixed system risks disadvantaging either the non-resident
parent (NRP—and any child living in a second family) if
the NRP's income goes down, or the children living with the parent
with care if the NRP's income goes up. We accept the income variation
of 25% does build in a safety net here, but we urge close monitoring
of the impact that fixed awards have on both "first"
and "second" families.
THE USE
OF PRIVATE
ARRANGEMENTS
6. CPAG is in favour of parents having an
informed and effective choice of how to best handle financial
arrangements after relationship breakdown. We understand the counterproductive
effect which forcing families through the agency can have but
at the same time the extended use of private arrangements carries
with it several risks:
— Though as the White Paper argues
(para 2.5) many parents are able (and want) to set up their own
arrangements, some parents with care need the security of an agency
able to intervene if things go wrong. The move towards private
arrangements may therefore shift the power balance against parents
with care (predominantly women) in favour of non-resident parents
(predominantly men). This both suggests the continuing importance
of some agency function (which Government accepts), but also of
the need for recording arrangements made between parents. Piloting
registration is suggested in para 2.28 and this could have both
a symbolic effect of laying out terms and the practical benefit
of enabling speedy resolution of disputes since it would be clear
what initial terms had been agreed. CPAG recommends that arrangements
are recorded by C-MEC even if the day-to-day arrangements are
handled privately. To guard against parents with care "settling
for less" and for administrative simplicity we argue registration
should be set at the level of the formula at minimum.
— Experience suggests the minority
of families requiring much higher levels of intervention from
C-MEC may themselves be most likely to be poor. Since services
to poor people have tended to become poor services, without "middle
class" pressure to drive standards up, the quality of C-MEC
services for those needing greater intervention need to be regularly
and effectively monitored.
— That the success of moves towards
extended uses of private arrangements rely heavily on a greater
supply of child support advice from the voluntary sector which
will not materialise without greater effort and investment. This
is discussed below.
ADVICE PROVISION
7. The implication of the White Paper is
of a much greater need for advice. Both the paper itself (para
2.25) and CPAG's experience suggests that the availability of
advice is patchy with existing welfare rights services often not
having the resources to focus sufficiently on child support and
relationship/parenting advice services not focusing on financial
matters.
8. Alongside the resourcing difficulties
which prohibit many advice agencies from giving sufficient or
adequate advice on child support (since this requires detailed
understanding of child support law) advocacy agencies are used
to assisting claimants deal with bureaucratic process, they are
not set up to advocate on behalf of one party's rights against
another—put more simply if one partner has already visited
the Citizens Advice Bureau, where does the other go?
9. The White Paper acknowledges the need
to build the voluntary sector as part of a shared approach, and
this requires greater thought and resourcing to assist this to
happen. At the same time as new calls are being made on the voluntary
sector (not only in child support but through Pathways to Work
and tax credits), civil legal aid is under significant threat
following the review of Legal Aid threatening precisely the provision
called upon to help make the new plans work.
10. Building effective advice will be crucial
to delivering the White Paper proposals yet there is little indication
of how this would be achieved. We urge the Committee to call on
the Government to provide much more detail for how it would build
advice provision in the voluntary sector without compromising
sector independence. Secondly since the White Paper proposals
to extend the role of the advice sector are being brought forward
concurrently with moves by the Department for Constitutional Affairs
to restrict access to civil legal aid we argue the Committee should
call for a much more joined up approach to the advice sector.
ENFORCEMENT
11. CPAG agrees that a failure to effectively
enforce maintenance agreements has allowed some non-resident parents
evade responsibility, endangering the position of their children,
and resulting in a culture of non-compliance. We agree that the
new system needs to get enforcement right from the outset. Effective
action needs to be taken early to tackle non-payment before a
pattern establishes itself. We are supportive of moves to strengthen
the ability of C-MEC to speedily and effectively (but fairly)
enforce.
12. The White Paper devotes a specific chapter
to enforcement. CPAG recognises the symbolic importance of C-MEC
having the powers, and also of its ability to quickly use these.
However, the detail in Table 5.1 ("Sanctions imposed on non-resident
parents") demonstrates two things, firstly that powers already
exist in many areas and secondly that the extent of the usage
of these powers has been low. In a properly functioning system
with high compliance the use of sanctions should be low however
in the current system with its poor compliance the current Child
Support Agency is not fully using the powers it already has. The
more important question is the extent to which existing powers
are being used rather than the acquisition of new powers for C-MEC
however politically attractive increasing enforcement powers may
be.
13. Since enforcement is likely to be more
problematic once non-compliance is established as a pattern, a
key route to speedy resolution of the problem must be the ability
of the Commission to intervene quickly, before a pattern has been
established. Without the effective registration of private arrangements
(see para 6 above) it is difficult to see that the breakdown of
a private arrangement could be handled other than through a new
application to the Commission to directly handle the case, this
could take time and allow a pattern of non-compliance to set in.
14. Finally much of the language surrounding
enforcement is about getting tough on non-resident parents who
refuse to pay. CPAG agrees parents who could pay but refuse to
do so are placing their children at risk and should face enforcement
penalties. However, most parents—resident or non resident—do
recognise they are responsible for their children and the key
is to construct a structure which enables parents to fulfil their
responsibilities. Tough talk on enforcement risks being counter
productive, losing good will by painting all non-resident parents
as feckless.
THE MAINTENANCE
DISREGARD
15. The White Paper proposes to extend the
scope of the existing disregard (£10 for those new scheme
cases claiming income support) to all cases (by the end of 2008,
benefiting 55,000 children) and to "significantly increase
the amount of maintenance" (para 2.15) parents with care
retain beyond the current £10 level (from 2010-11). CPAG
welcomes both moves to increase the amount of maintenance reaching
children which are both direct anti-poverty measures and which
are also likely to help to incentive higher compliance as non-resident
parents see more money going to their children, not simply reducing
the state's income support spending.
16. Every effort should be made to implement
these maintenance improvements more quickly, the Government has
committed to the eradication of child poverty—accepting
how unacceptable it is that children grow up in poverty—these
measures will help children as soon as they are implemented. Government
is currently off track on its welcome targets to reduce and eradicate
child poverty and policy needs every assistance to get back on
track. We note that the wording of chapter 2 is to extend the
existing disregard "by the end of 2008", it would instil
greater confidence if these deadlines were brought forward. We
urge both improvements to the maintenance disregard be introduced
as quickly as is practically possible.
17. Though the proposal to significantly
increase the existing disregard is welcome, the level is left
unclear. We understand Government has concerns over the work incentive
effects of increasing out of work income and intends further examination
of this issue. We note that both the Henshaw review itself argued
that the work incentives effect in practice is small, [56]whilst
the child poverty reduction effect is large. Since parents with
care are more likely to be in work if maintenance is stable, and
maintenance is itself more likely to be stable if non-resident
parents see it reaching their children, there is a strong argument
to increase the disregard precisely to facilitate moves into work,
especially if combined with other changes in the benefits system
to improve in-work income as suggested by both the Henshaw and
Harker[57]
reviews. We urge the Committee to reject the work disincentive
argument and call for a full disregard of child maintenance.
9 January 2007
52 Letter to Sir David Henshaw, 28 April 2006, available
at
http://www.cpag.org.uk/info/briefings_policy/CPAG_Child_Support_Agency_letter_%20for_Henshaw_Review.pdf Back
53
Letter to the Child Support Redesign team, 18 September 2006,
available at
http://www.cpag.org.uk/info/briefings_policy/CPAG_response_to_Government_consultation_on_Henshaw_review
_of_child_support.pdf Back
54
Data is after housing costs, from National Statistics, Households
Below Average Income An analysis of the income distribution 1994-5-2004-05,
Department for Work and Pensions, 2006. Back
55
See note 1. Back
56
Henshaw, D, July 2006, Recovering Child Support, routes to responsibility,
The Stationery Office, Cm 6894 para 26-30. Back
57
Harker, L, November 2006, Delivering on Child Poverty: what would
it take? A report fort the Department for Work and Pensions. The
Stationary Office, Cm 6951. Back
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