House of Commons - Monitoring the Performance of the Department for Work and Pensions in 2012-13

Monitoring the Performance of the Department for Work and Pensions in 2012-13 - Work and Pensions Committee Contents

6 Child maintenance reforms

89. In February 2011 the Government set out its plans to reform child support and to introduce a new child maintenance scheme.[91] We considered these reforms and published a report on them in June 2011.[92] The new scheme (the "2012 scheme") was fully implemented from 25 November 2013 (having initially been trialled in a 12-month pathfinder). The Minister of State (Steve Webb MP) gave oral evidence to us a few days after full implementation, during which we explored some of our remaining concerns.[93]

The Government's 2011 reform proposals

90. The key features of the Governments plans for reform were:

· encouraging parents to come to their own family-based child maintenance arrangements wherever possible, and improving the support available to help them do this;

· the introduction of a new statutory child maintenance scheme ("the 2012 scheme") to be administered by a new Child Maintenance Service (CMS);

· introduction of charges for using the statutory scheme for both the parent with care (PWC) and the non-resident parent (NRP); and

· existing cases in the 1993 and 2003 schemes, administered by the Child Support Agency (CSA), to be closed.

91. The Government's rationale for the new approach was their view that it is better for children if parents work together to create their own child maintenance arrangements.Furthermore, the Government argued that, if more families organise their child maintenance through family-based arrangements, this would enable the statutory maintenance system to "focus on arrangements for maintenance when collaboration between parents is not possible".[94]

92. Once the 2012 scheme is seen to be working well, the Government intends to start a gradual process of ending liabilities on all existing CSA cases over a three-year period. The Government has said that this process will begin in 2014. All CSA clients can then decide either to make their own family-based arrangements or apply to the new scheme. By the end of the case closure process, all cases will be managed on a single set of calculation rules and on one computer system.[95]

Concerns about the 2011 proposals

93. In our 2011 report, we acknowledged that the existing child maintenance system left many separated parents without adequate child maintenance arrangements, and that many parents with care did not receive payments on a regular basis or received no payments at all. We therefore welcomed the Government's intention to improve the system. However, we also expressed some reservations.

94. We believed that the Government's proposals for collection charges as set out in the 2011 Green Paper were "excessive and unnecessarily complex" and argued that, instead, there should be "a single, modest administrative charge for collecting the maintenance payment". We also recommended that the Government should ensure that its network of support for separating families was operating effectively in all areas before charges for the statutory system were introduced.[96]

95. The Government published a second consultation in January 2012, which set out more detailed proposals, and some changes of approach, including in relation to charges.[97] The Government's response to the consultation was not published until November 2013, just before the new arrangements were implemented.[98]

Outstanding concerns about the Government's final plans

96. The issues we raised with the Minister in November 2013 included:

· How increased support for separated parents to come to voluntary agreements is being delivered;

· Lessons learned from the pathfinder and arrangements for implementing the 2012 scheme;

· The impact of charging on parents; and

· Plans for dealing with historic arrears and those accrued in the new system (following publication in January 2013 of DWP's Arrears and Compliance Strategy for 2012-2017[99]).

CHARGES FOR USING THE STATUTORY SCHEME

97. One of our key concerns remained the implications of introducing charges for both parents to use the 2012 statutory scheme. When the plans for reform were first brought forward, the Government envisaged the following charge structure for using the new statutory scheme:

· an upfront application charge of around £100 for parents not receiving benefits;

· A charge of £50 for parents in receipt of benefits, with £20 being paid upfront and the remainder being paid in instalments when maintenance started flowing;

· A charge of £20-£25 to use the calculation-only service; and

· For parents using the collection service, a 15-20% surcharge on the maintenance obligation of the NRP and a deduction of 7-12% from the maintenance collected for the PWC.[100]

98. In its response to its second consultation published in November 2013, the Government finalised charges at an application fee of £20 for all parents and fixed collection fees of 4% for the PWC and 20% for the NRP.[101] Separated parents making their own family-based arrangements will incur no charges. Additionally, only an application fee will be payable where the NRP pays the maintenance directly to the PWC (known as "Maintenance Direct" under the new scheme). The application fee will not apply to parents aged 18 or under, or to parents who declare themselves victims of domestic violence.[102]

99. The Government has estimated that, annually, around 12% of potential applicants to the new scheme will be deterred by the application charge, equating to around 15,000 people. Around 5,000 of these are expected to make family-based arrangements, but the remaining 10,000 are expected to make no arrangement at all.[103]The impact of charging will be reviewed 30 months after implementation of the charging powers.[104]

100. We were not convinced in 2011 that sufficient evidence existed to support the proposition that charging would work as an incentive for parents to create their own family-based child maintenance arrangements. Nor did we believe it was fair for a PWC to face charges where they had taken all reasonable steps to come to a voluntary agreement and where it was the NRP who was resisting this.[105]

101. These concerns remained when we questioned the Minister about the final proposals in November 2013. We also wanted him to explain what criteria would be used to decide that the new statutory system was "working well" enough for charging to be introduced.

102. The Minister emphasised that "the point of the charge is to get the maintenance flowing" and that, even with the 4% fee for the PWC "that is 96p in the pound going to the children." He also argued that the fact that the NRP faced a 20% fee would create an "ongoing incentive" to move to direct payment. [106]

103. In terms of assessing the robustness of the new system before charging is introduced, the Minister explained the value of the 12-month pathfinder. This has resulted in a weekly "excruciatingly detailed note" setting out computer faults and how they had been rectified. The pathfinder had enabled DWP to test the system "to destruction". He confirmed that "we won't start charging until we've been running at full volumes for a period of time and we are confident it is a robust system".[107]

104. The impact on parents of charging for using the new statutory child maintenance scheme needs to be carefully monitored, particularly given that a full evaluation will not take place until 30 months after charging begins. The behavioural impacts, including to what extent charging deters parents from having any maintenance agreement in place at all, are particularly important. We recommend that DWP publish interim updates on the impact of charging on use of the statutory system and on the level of family-based arrangements, in advance of the full evaluation.

CUSTOMER SERVICE STANDARDS

105. The Minister also referred to experimental statistics that had been published in November 2013 on service levels achieved in the pathfinder. These statistics show that, in September 2013, 94% of calls to the CMS were answered within 30 seconds and 97% of maintenance calculations were accurate to within 2% or £1 of the correct calculation.[108]

106. We welcome the Government's use of a pathfinder to introduce the 2012 scheme as a means of ensuring that the new Child Maintenance Service was functioning effectively before it was opened to all applicants. However, replicating and maintaining the service levels achieved in the pathfinder in the national implementation is clearly a challenge. We recommend that DWP monitor this carefully and publish regular updates on standards of service provided to parents.

SUPPORTING PARENTS TO COME TO FAMILY-BASED ARRANGEMENTS

107. The Government has allocated £20 million in this Spending Review period for support services for separated parents to enable them to collaborate to resolve a range of parenting issues, including organising child maintenance arrangements.[109]This includes a web application "Sorting out Separation" launched in November 2012 and a co-ordinated telephone network.[110]

108. DWP has also established an Innovation Fund, which will test new and innovative ideas to help parents collaborate. Initial funding of £6.5 million was allocated in August 2013 to seven voluntary and third sector organisations to give help to around 280,000 families. A second round of funding of £3.4 million followed aimed at parents who have been separated for two years or longer. Funding has also been set aside to evaluate funded projects. The Government does not expect "robust evidence" on the outcomes of the projects until later in 2014 and will publish formal evaluation results after this.[111] The Minister told us:

112

109. The Government's motivation in introducing the new child maintenance scheme is to encourage parents to come to voluntary arrangements. However, many parents will need effective support to enable them to come to arrangements which are workable and acceptable to both parents, and parents will need to know at an early stage where they can go to find this support. We welcome the funding of around £10 million provided for voluntary and third sector organisations as part of the Innovation Fund to test and evaluate interventions that can help parents work together in the best interests of their children. We recommend that, in response to this report, DWP sets out how these projects will be evaluated and what the process will be for extending, funding and publicising the schemes identified as the most effective.

ARREARS

110. In January 2013, DWP published its Child Maintenance Arrears and Compliance Strategy 2012-2017 outlining its plans to prevent new child maintenance arrears from arising and for dealing with the outstanding arrears that have accrued since 1993.[113]

111. The Minister told us that "part of the problem in the past has been that arrears have been allowed to build up without any action being taken by us".[114] Steps to prevent arrears accruing in the new system include:

· better customer service to encourage greater compliance;

· faster action on arrears: the Child Maintenance Service will aim to act within 72 hours of a missed payment, and assistance will be provided to help parents struggling to meet their financial obligations to continue to pay maintenance;

· enforcement action: including deducting money directly from the NRP's earnings and action through the courts when necessary. The Government is also planning to introduce powers to charge NRPs when enforcement actions are deemed to be necessary, to provide an additional compliance incentive.[115]

112. Historic arrears have been prioritised for collection as follows:

· Highest priority: collection of arrears in cases where money is already flowing, whether this is in cases with current liability or arrears only cases, and in cases where money is not flowing but there is a child who can benefit from the payment.

· Lower priority: collection of arrears in cases where no child can benefit. The Government says that these arrears will still be targeted for collection, "taking into account the resource available to the service, cost of collecting the money compared to the sum owed, and the indebted parents' ability to pay."

· Lowest priority: the debt owed to the Secretary of State, although these arrears will still be classified as owed and action will be taken to enforce recovery wherever possible, for example when arrears owed to parents are already being collected in the same case.[116]

113. We put it to the Minister that some PWCs may rightly feel aggrieved that the maintenance they were owed, which had possibly built up over many years and caused real financial hardship for them and their children, had been given a lower priority for collection in DWP's arrears strategy. He emphasised that:

117

114. DWP's strategy for dealing with child maintenance arrears—both historic arrears and those in the new 2012 scheme—needs to be shown to be practicable. It is not yet clear whether the steps introduced to prevent new arrears arising are feasible; nor what the prioritisation of historic arrears for collection means in reality for those parents with care who are owed money. DWP needs to ensure that the decisions it takes regarding the collection of arrears are transparent and communicated clearly and promptly to all parents affected by the new arrangements.

91 DWP, Strengthening families; promoting parent responsibility: the future of child maintenance, Cm 7990, January 2011 Back

92 Work and Pensions Committee, Fifth Report of Session 2010-2012, The Government's proposed child maintenance reforms, HC 1047, Summary. The Committee also held a follow-up oral evidence session in April 2012: Oral evidence taken on 25 April 2012 on the Draft Order on the transfer of functions of the Child Maintenance and Enforcement Commission, HC 1948 (2010-12) Back

93 Oral evidence taken on 27 November 2013, HC 797 Back

94 DWP, Strengthening families; promoting parent responsibility: the future of child maintenance, Cm 7990, January 2011, Executive Summary Back

95 DWP, Supporting separated families; securing children's futures, Cm 8399, January 2012, Chapter 5 Back

96 Work and Pensions Committee, Fifth Report of Session 2010-2012, The Government's proposed child maintenance reforms, HC 1047, Summary. Back

97 DWP, Supporting separated families; securing children's futures, Cm 8399, January 2012 Back

98 DWP, Government response to the consultation on Supporting separated families; securing children's futures, Cm 8742, November 2013 Back

99 DWP, Preparing for the future, tackling the past, Child Maintenance-Arrears and Compliance Strategy, January 2013 Back

100 DWP, Strengthening families, promoting parental responsibility: the future of child maintenance, Cm 7990, January 2011, Chapter 2, para 28 Back

101 HC Deb, 20 May 2012,col 58WS Back

102 DWP, Government response to the consultation on Supporting separated families; securing children's futures, Cm 8742, November 2013, p 15 Back