Select Committee on Work and Pensions Written Evidence

Memorandum submitted by the Department for Work and Pensions

How many PWCs currently enter the CSA each month through the mandatory section 6 route? Once section 6 is repealed, what are your estimates of the new number of PWCs who will continue to apply to the CSA/C-MEC each month?

  The latest administrative statistics available show that in December 2006, 12,000 applications were received by the Child Support Agency from Jobcentre Plus. In the year to December 2006, there were 250,000 cases cleared which were received from Jobcentre Plus. Around 80,000 of these cases result in a new calculation being set-up. Of these, 70% use the collection service with the remainder having their maintenance assessed as being a nil amount or opting to use maintenance direct.

  Of the cases which are cleared but do not result in a calculation being made, around 80% of cases are closed prior to a calculation being made. Around 10% of cases are closed because of good cause (where the parent with care (PWC) opts out of applying for child maintenance because it may put them, or any children living with them, at risk of harm or undue distress) or a reduced benefit decision is made (where the Jobcentre Plus decision maker is not provided with sufficient information to lead to a good cause decision being made). A further 10% of cases are cleared but result in a change of circumstance—this can be where the parent with care already has a child maintenance interest with the CSA but her circumstances have changed.

  There are significant behavioural uncertainties which make precise estimates of behaviour once section 6 is removed particularly difficult. The impact will depend on a number of factors such as how attractive it will be for future benefit claimants to make a maintenance agreement and how much support and encouragement they will receive to make an agreement (both of which depend on the level of the maintenance disregard and how targeted the information and guidance services provided are). It also depends on how many of this client group can be supported to opt for a private agreement. As Sir David recommends, we are doing detailed modelling work to assess the most likely impact but at this point we do not have a specific estimate.

  In general though we do expect fewer PWCs to use the Child Maintenance Enforcement Commission (C-MEC) as a result of removing the requirement that all PWCs claiming benefits are treated as applying for child maintenance. Although less benefit PWCs are expected to use C-MEC, we expect those who do use it to be more likely to be assessed as having a positive maintenance amount and maintenance be paid. We aim to ensure that those who choose not to use C-MEC are supported to make private arrangements rather than letting such parents drop out of the maintenance system altogether.

What is your estimate of the numbers of existing PWCs with assessments via the Agency who will want to remain with the CSA and transfer to C-MEC, broken down by status as private/benefit cases?

  Sir David Henshaw estimated that in the long-run the caseload for the administrative body would fall from 1.7 million to between 0.8 million and 1.1 million. This analysis is based on a number of publicly available surveys such as the Families and Children Study and the Family Resources Survey, and Child Support Agency administrative data. A number of different approaches were used which provided this range of estimates.

  Sir David recognised in his report that more research will need to be undertaken to provide firm estimates of future caseloads and there are a number of different approaches that can be used. The choices that people make will depend on the way that parents are supported in making their own arrangements or moved to C-MEC. As set out in the White Paper, it will be the responsibility of C-MEC to do this. Until these detailed arrangements are made, it is not possible to provide further estimates.

What is your estimate of the proportion of the total existing caseload opting for voluntary arrangements?

  Currently, analysis of the Families and Children Study shows that around 25% of current eligible parents report themselves as making a private arrangement for child maintenance. The breakdown is shown below:
Breakdown of child maintenance arrangements of eligible parents (per cent)
Child Support Agency (benefit cases and non-benefit cases) 19%
Private arrangements23%
Consent Orders at court4%
Combination of arrangements5%
No arrangements49%

  In the future we will encourage private arrangements for those who currently use the Child Support Agency or do not have an arrangement for child maintenance. As identified in Sir David's report we will be undertaking further research and modelling to understand the likely take-up of private arrangements given the additional information and guidance we will be putting in place.

With the proposed new child support assessment being based on gross income (and ignoring tax credits), what does the modelling show in terms of the amounts overall that NRPs will be paying—what proportion will be paying more/less and by how much (stratified by income bands)?

  Initial analysis shows that of those NRPs 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 NRPs have an increase in their liability of £20 per week or more—the majority of these people earn in excess of £450 per week.

The White Paper proposes a tolerance threshold of 25%. What are your estimates of the numbers of NRPs each year who would be eligible for an adjustment to reflect their incomes being lower than in the previous tax year if the threshold were set at 10%, 15%, 20% and 25% respectively?

  The proportion of employed NRPs who would be eligible for an adjustment since their income is lower than the previous year by the relevant amount is shown in the table below. 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.
ThresholdProportion of employed NRPs eligible for adjustment

  The Agency reported that the total paid in financial redress increased from £2.59 million in 2001-02 to £4.138 m in 2005-06 and that 11,515 payments were made in 2005-06 (Hansard 18 Dec 2006 col 1572-1573W). Please identify:

  (i)   what is the largest amount to date paid to a single individual (whether in one payment or several);

  The largest amount paid to date to a single individual (whether in one payment of several) is £91,000. This was paid in four separate payments over a two and a half year period.

  (ii)   how many payments of financial redress were made in 2005-06 in each of the following bands: £250 or less, £251-500, £501-£1,000, £1,001-£5,000, £5,001-£10,000, over £10,000
£250 or less7,922
over £10,0007

  Note: The 11,515 payments published in Hansard on 18 December is the number of financial redress payments actually paid in the financial year 2005-06 and reported in the Annual Report and Accounts. The analysis above is a breakdown of the number of cases that have been authorised to receive financial redress in 2005-06. The Agency only has detailed information on payments authorised and not those actually paid in a given time period.

  (iii)   do the figures quoted in Hansard 18 Dec 2006 col 1572-1573W include payments in settlement of legal proceedings? If so, how much has been paid to settle such proceedings and how much has been paid in parties' legal costs? If not, what are those figures?

  The amounts published in Hansard on 18 December 2006 include some payments to clients in settlement of legal proceedings. Though the Agency holds information on each individual case, the collated management information currently available does not enable me to provide the requested details.

John Hutton

30 January 2007

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