Child Maintenance

CM06

Written Evidence submitted by Gingerbread

Summary of Gingerbread’s submission

· The government’s child maintenance strategy is likely to lead to poorer outcomes for many tens of thousands of children whose parents have failed to achieve the model collaborative agreement post separation that the government wants. A better strategy for child maintenance is needed that ensures that all children in separated families are effectively financially maintained by both parents.

· The government’s vision for vastly improved services to help parents develop private maintenance arrangements appears ill-developed when set against the harsh realities of cuts in central and local government budgets and the large numbers of parents who currently use the CSA who will be expected to make private agreements in future.

· Gingerbread is critical of the fact that the ‘gateway’ proposals are expressly intended to reduce applications to the statutory maintenance service, rather than establish what would be the most effective means of securing maintenance for a child. There are therefore legitimate concerns about the lengths a parent with care will have to go to prove a private agreement is not possible or appropriate. The proposed restrictions on use of the Commission’s collection service is likely to lead to greater personal and financial insecurity of parents with care.

· For low-income families in particular, child maintenance can make a huge difference to the quality of children’s lives. The government’s charging proposals will cause many low-income parents with care and those receiving only modest amounts of child maintenance to give up on the statutory scheme altogether – even though they may face insurmountable problems in persuading a reluctant non-resident parent to meet his/her responsibilities voluntarily. In circumstances where every penny of maintenance counts, the loss of up to 12 per cent of every payment as a collection charge will further impoverish already disadvantaged children.

· Questions remain as to the actual amount of money that will be raised by charging parents compared to the running costs of the future statutory scheme. Ultimately, e argue it is not a saving for the taxpayer if children living in separated families lose out on much needed financial support, and non-resident parents find it easier to evade their responsibilities.

· With the detailed rules of the future statutory scheme, the behavioural implications of the government’s proposals, and plans for managing the transfer of existing CSA yet to be finalised, much remains uncertain regarding the future administration of child maintenance and its effectiveness.

Introduction

1. Gingerbread is the national charity working for and with single parent families. It has been a longstanding goal of the organisation to help achieve an effective child maintenance system in this country so that the financial disadvantage faced by children growing up in separated households is mitigated. Gingerbread was a founding member of the ‘Kids in the Middle’ coalition along with Relate, the Fatherhood Institute and Families Need Fathers and we are committed to seeking to improve the support given to separating and post-separated parents and children to deal with the fall-out from relationship breakdown and focus both parents on the future well-being of their children and on their mutual obligations, as parents, to contribute to their children’s welfare.

2. Gingerbread has responded to the Government’s consultation on its proposals for the future of child maintenance and we have forwarded to the Committee a copy of our submission. Where appropriate, we have cross-referred to our Green Paper response. We welcome the Committee’s inquiry and its broader look at the future of child maintenance, in the light of the government’s proposed reforms.

Are the reforms likely to achieve better outcomes for children?

3. The Strengthening Families consultation starts from the central premise that there are better outcomes for children where there is continuing engagement with the child from both parents. As an overall strategy to strengthen family relationships, the government is right to seek to encourage more collaborative parenting. But in choosing to build its child maintenance strategy around a model of cooperative parental behaviour post-separation, whilst erecting procedural hurdles and financial penalties for parents in need of the statutory maintenance service because their circumstances fall short of this ideal, ironically the child maintenance strategy is likely to lead to worse outcomes for many tens of thousands of children. Children, particularly in low income households, are likely to end up poorer where their parents have failed to achieve the model collaborative agreement the government want. For some, it will be because the parent with their day-to-day care, faced with deliberate deterrents, has given up on the statutory scheme altogether. For others, it will be because payments of already modest amounts of maintenance are reduced due to government charges.

4. It should be fundamental to any government strategy for child maintenance that all children have a right to be financially maintained by both parents, just as they have a right to a meaningful relationship with both parent and to be cared for. The strategy should be focused on ensuring that parents’ responsibility to financially support their children is met – by whatever is the most effective means, in a particular case, to ensure that maintenance is paid on a sustainable and enduring basis. In many cases, a voluntary agreement will be the most effective arrangement. But in setting out to make it more difficult and expensive for parents to use the statutory scheme, the government will be failing a large number of children who need the statutory service if they are to receive financial support from the non-resident parent.

5. Ironically, by deliberately impeding parent with care access to the statutory scheme, the incentives on a non-resident parent to make a mutually satisfactory private agreement are likely to be reduced. Arguably it is precisely because a parent with care can easily access an effective state child maintenance service that non-resident parents are more likely to agree good private arrangements in its shadow.

Advisory and mediation services

6. We refer the Committee to our Green Paper response, paragraphs 11-46. In summary, we consider not enough is being done to scope and prepare for the large numbers of parent who, in future, are being expected to make successful private maintenance arrangements rather than rely on the statutory service. During a two-year transition period starting in 2013, over a million parents with care who currently use the CSA will be given the choice of either opting into the new, more expensive statutory scheme or attempting to make private arrangements instead, with the help of proposed new support services. Parents tend to turn to the CSA when all other avenues have been exhausted. [1] Due to their circumstances, and the unwillingness of a proportion of non-resident parents to voluntarily meet their financial responsibilities, many will find making a successful private maintenance agreement difficult. [2] The challenge for the government is to ensure that, given the numbers involved and the higher degree of intervention which may be required, that the necessary support is available for such families bearing in mind their modest circumstances.

7. An added issue to be addressed is the extent to which voluntary agreements once made, will continue to endure throughout a child’s growing up. The evidence suggests that voluntary agreements tend to break down over time. [3] Children remain financially dependent on their parents for many years. During that time, their parents may re-partner, have other children, change or lose jobs, move away – all changes which can put a private voluntary arrangement under strain. It will be important that family support services which the government intends to put in place will help sustain private agreements during the whole of a child’s upbringing.

Mediation and other services aimed at getting joint parental agreement

8. The effectiveness of mediation in achieving effective and enduring child maintenance arrangements is far from certain. The Family Justice Review recently noted that "high quality evidence on the effectiveness and cost of mediation seems to be lacking." It also accepted that the evidence for the durability of mediated agreements is currently limited. [4]

9. An obvious limit to the use of mediation as a means to achieve a family-based arrangement is the importance of engagement by both parties. If the non-resident parent will not engage, even though the parent with care is willing, under the government proposals the parent with care and the children will face financial penalties for turning to the statutory system. A second problem is cost. Unless both parents are eligible for legal aid, mediation can be expensive. The Child Maintenance and Enforcement Commission’s Option’s website advises that mediation usually takes between two and six sessions and can cost over £100 per session. This will be out of the reach of most parents on low or modest incomes. Maria Miller has promised that "under the new scheme, parents will be able to access free support to help them come to their own family arrangements." [5] It remains to be seen whether this will include free mediation, at the expense of the taxpayer.

The operation of the gateway

10. The operation of the proposed ‘gateway’ to the statutory scheme is set out in Clause 128 of the Welfare Reform Bill. We are critical of the fact that the Commission’s actions under clause 128 – to encourage the making and keeping of private agreements, and to require applicants to the statutory scheme to first take "reasonable steps" to establish whether a private agreement is possible or appropriate – are to be carried out, not with a view to establishing what is the best means to achieve an effective maintenance arrangement for a child concerned, but with a view to reducing the need for an application to the statutory scheme. This appears to be in conflict with both the duty under Section 2 of the Child Support Act 1991 to have regard to the welfare of a child in the exercise of any discretionary power under the Act, and with the Commission’s main objective as set out in Section 2 of the Child Maintenance and Other Payments Act 2008, which is "to maximise the number of children …for whom effective maintenance arrangement are in place."

11. Given that the purpose of the gateway is expressly to reduce statutory applications, there are legitimate concerns about the lengths parents with care will have to go to, to satisfy the Commission that they have taken ‘reasonable steps.’ As we discuss in our Green Paper response (paragraphs 42-46), little thought appears to have been given to the inequality of bargaining power which can place many parents with care in a in a vulnerable position when it comes to negotiating adequate child maintenance for themselves.

The likely impact on parents of the introduction of charges, particularly poorer or more vulnerable families

12. We discuss in paragraphs 4-8 of our Green Paper response why child maintenance matters to parents with the main day-to-day care of children, and why, even if amounts are small, it can still make a difference to children’s lives. In paragraphs 47-53 of our response we discuss the likely impact on parents of the introduction of charging, particularly on poorer parents. The issue of vulnerable families (and what this means) is discussed in paragraphs 42-46, whilst the specific issue of parents who have experienced domestic violence is discussed in paragraphs 59-63 of our Green Paper response.

The effectiveness of mechanisms for the collection and transfer of maintenance

13. We discuss the proposed new rules for access to the collection service in paragraph 48 of our Green Paper response. There is a strong risk that the new provision will expose parents with care looking after children to greater personal and financial insecurity. When parents with care using the CSA were asked whether they would consider a ‘maintenance direct’ arrangement, 96 per cent of them cited at least one barrier that would make it difficult for them to switch to using it, mostly related to a lack of trust in their ex-partners to pay but also including a concern about direct contact with their ex-partner. [6]

14. It remains to be seen how quickly the Commission will access to use of the collection service where a payment is missed or only paid in part. Late and irregular maintenance payments can cause significant problems for parents with care looking after children, disrupting budgets and making it difficult to plan ahead.

15. Where a non-resident parent proves an unreliable payer, parents with care will face the unenviable decision of whether to tolerate erratic or partial maintenance payments, or suffer a reduction in maintenance by requesting access to the collection service plus increased antagonism from a non-resident parent, who will then required to pay 20 per cent extra. By making access to the collection service more difficult and expensive for parents with care, the likelihood is that many will hesitate to use it. The result, for many who previously could rely on payments via the CSA, will be lower amounts of child maintenance and less reliable payments. Again, children in lower income families are likely to be the main losers.

Value for money for the taxpayer

16. We discuss the issue of fairness to the taxpayer in paragraphs 54-58 of our response to the Green Paper. The net value for money to the taxpayer arising from the government’s proposals is far from clear. The Committee will know from its predecessor’s 2010 inquiry that considerable savings were already planned, arising from the cheaper running costs of the new statutory service, once fully operational. The government has yet to announce its estimate of:

· the size of the future caseload of the new statutory maintenance service in the light of its proposals and the additional savings which result from this;

· the number of parents who currently use the CSA who are expected to make successful private maintenance agreements in future; [7]

· the amount it expects to raise from charging a) parents with care and b) non-resident parents for use of the statutory maintenance service;

· its latest expected budget for the future statutory maintenance service.

17. In terms of extra costs, the government has yet to give any detailed estimates of :

· the additional costs of investing in effective services which will encourage and support significantly more parents to achieve successful private maintenance agreements;

· the cost of implementing a ‘calculation only’ service; the compulsory gateway and new procedures around access to the collection service;

· the cost of collecting charges from parents with care and non-resident parents, including enforcement action;

· the costs of compressing the transfer of existing CSA cases to the new statutory scheme into two years rather than three, and the numbers of existing cases it expects to transfer over.

18. Ultimately, we argue it is a false economy and not value to the taxpayer if already disadvantaged children living in separated families lose out on much needed financial support and non-resident parents find it easier to evade their responsibilities.

A more efficient administrative child maintenance service?

19. The Child Maintenance and Enforcement Commission faces considerable challenges ahead as it prepares for the launch of the new statutory child maintenance service. Those challenges include:

· A reduced budget on which to manage the increased workload arising from managing three statutory child maintenance schemes simultaneously, pending the transfer of existing CSA cases to the future model;

· Adjustments to the IT systems being developed to take account of the government’s new proposals;

· Understanding the behavioural consequences of the government’s new measures and the impact on use of the future scheme;

· Managing the legacy of historic debt, whilst setting up better systems for arrears collection within the future scheme;

· Ensuring a seamless interface with HMRC so that the benefits of a more efficient approach to identifying non-resident parent income are realised.

20. There are concerns that the date for launch of the future scheme – originally scheduled for 2011- may slip further, with the detailed rules for the future statutory scheme yet to be published, and the government’s final plans for child maintenance reform yet to be announced following the consultation. Until these are clear, it is difficult to see how the IT requirements for the future scheme can be finalised, let alone tested.

Moving CSA cases to the new scheme

21. The government has chosen to reduce the ‘change-over’ period – when existing CSA cases will be transferred to the future scheme – to two years rather than three. It has yet to publish for consultation, its plans and priorities for the transition process. Questions which remain to be answered include:

· What working estimates does the Government have of the number of old and current cases which will transfer to the future scheme?

· Will parents using the CSA have to pay £20-£25 for the ‘calculation only’ service to find out the amount of child maintenance they will be likely to pay or receive under the future scheme?

· Given that in many cases child support assessments/calculations have not been updated for several years, a number of non-resident parents may face a significant increase in their child support liabilities when transferred to the new scheme. What research has been done to identify the scale of the increases non-resident parents might face at the point of transition and how of many NRPs are likely to be affected?

· In other cases, parents with care may suffer a loss of child maintenance at the point of transition, given that the calculation will be based, not on the non-resident parent’s current income, but on the details of his income as it was in the last tax year for which HMRC have records. What research has been done to identify the scale of the reductions in child maintenance parents with care might have at the point of transition, and what estimates exist of the numbers likely to be affected?

· How will cases be treated where there are child maintenance arrears to be collected across different schemes?

· What will happen where a non-resident parent has child maintenance obligations to more than one parent with care, perhaps on different schemes?

Conclusion

22. At a time of strong financial constraints, there is clearly a need to consider the scope for reducing the costs of running the statutory child maintenance system. In our Green Paper response paragraphs 70-74, we put forward a number of ways that the statutory caseload could be reduced without erecting financial barriers at the point of entry to families unable to get maintenance via a private arrangement. We also propose positive incentives to encourage parents – particularly non-resident parents – to cooperate in agreeing child maintenance and put forward fairer principles to govern charging.

April 2011