Children in poverty: Child Maintenance Service – Report Summary

Summary

This Report is the third and final in a series of inquiries into child poverty. In this Report we focus on the role of the Child Maintenance Service in tackling child poverty. Our first Report was Children in Poverty: Measurements and targets, and our second was Children in Poverty: No recourse to public funds. Child maintenance can play a vital role in lifting certain children out of poverty and our inquiry sought to analyse the effectiveness of the Child Maintenance Service. We held four evidence sessions and, at an event in Manchester, held roundtable discussions with both receiving and paying parents. During our Report we refer to people who receive child maintenance as “receiving parents” and those who pay child maintenance as “paying parents”. Such parents are also referred to as “non-resident parents” and “parents with care” (or “resident parents”) respectively. Many of the points raised in our inquiry echo points raised in a recent Committee of Public Accounts report on the CMS.

The Perspective of receiving parents

Receiving parents and organisations speaking on their behalf were critical of what they perceived as ineffective enforcement on the part of the Child Maintenance Service, particularly the pace of enforcement activity. We conclude that enforcement remains a priority area for improvement and ask the Department to set out what steps it is taking to improve the effectiveness and speed of current enforcement measures, to ensure children benefit from the maintenance due.

Another concern from receiving parents was fraud. A National Audit Office (NAO) report found that the Department had not made an estimate of the level of undetected customer fraud and error in the Child Maintenance Service. We support calls from the NAO and the Public Accounts Committee that the Department should make an estimate of such levels.

The subject of the response of the CMS to cases involving domestic abuse featured highly in our inquiry and we are grateful for Dr Samantha Callan’s detailed and independent review of the CMS. Particular concern was raised about the risks around Direct Pay, and during our roundtable discussions with receiving parents, they recounted how delays in maintenance payments were used as a financial coercive technique.

One of the objectives of the Department’s 2012 child maintenance reforms was to increase the number of effective child maintenance arrangements. However, the number of families without an arrangement appears to have increased from 25% to 40% and there is some evidence that there are significant numbers of non-resident parents and parents with care who would like to have arrangements. We recommend the Government undertake more research on this take-up gap and take proactive steps to reach out to such parents and help them to make effective arrangements.

Perspective of paying parents

A chief concern from paying parents, which has been reported elsewhere, is the affordability of assessments, with many arguing the current maintenance landscape pushes them into, or further into, poverty, with particular ire expressed for the outdated thresholds for child maintenance. We heard examples of serious distress experienced by paying parents due to the unaffordability of payments and how this had contributed to some paying parents taking their own lives. Not only are there issues around affordability but there are also problems concerning work incentives, with some paying parents looking for work facing effective marginal tax rates of up to 100%. This defeats the policy objectives of Universal Credit that work should always pay. We recommend the Government analyse and bring forward proposals on affordability as a matter of pressing priority.

One of the causes of outdated maintenance thresholds was the fact that “the CMS is steeped in primary legislation”. As part of the Government’s work on affordability, it should seek to rebalance the legislation so that changes, such as uprating, can be made more readily.

Some of the arrears being pursued by the Child Maintenance Service were inherited from the Child Support Agency. A number of parents criticised the accuracy of assessments and complained of being pursued for arrears that could not be properly evidenced. The accuracy of assessments was a particular problem under the Child Support Agency. The NAO has said that it now believes child maintenance calculations to be 99% accurate but the National Audit Office continues to give adverse opinions on the client accounts for those arrears from the Child Support Agency and we do not think the Department should pursue debts which it is not able to evidence. We recommend the Department pursue alternative ways to dispense with such arrears, in which both parents can have confidence in the sums being sought.

Matters relevant to both receiving and paying parents

The CMS charges collection fees for families under Collect and Pay. Under Collect and Pay, the CMS collects maintenance from the paying parent (charged 20% of the maintenance collected) and gives to the receiving parent (who forgoes 4% of the collected money). Such fees are particularly pernicious for parents on low-incomes and we recommend the Government should introduce a system of means-testing Collect and Pay fees.

These fees are in place to incentivise parents to move to the Direct Pay system, where parents transfer the money privately. However, Direct Pay is not appropriate for all child maintenance cases, particularly cases involving domestic abuse, in which the risks are substantial. However, Collect and Pay fees remain regardless, even when such an incentive is inappropriate. We recommend the Government introduce a waiver for Collect and Pay fees for parents who have suffered domestic abuse, be they paying or receiving parents.

The customer service of the CMS was also criticised, particularly how exhausting it was having to explain their case to multiple different caseworkers when they contacted the CMS. The CMS is planning to introduce named caseworkers for customers in domestic abuse situations and to roll this out more generally to all customers. We welcome this move as it has the potential to improve customer service outcomes significantly. At present however, both paying and receiving parents reported great frustration with the customer service they received from the Child Maintenance Service.

In summary, our inquiry has found a number of problems with the Child Maintenance Service that need to be addressed. Receiving parents continue to report great frustration at ineffective and slow enforcement. Paying parents have described distress and being pushed into poverty by the unaffordability of child maintenance payments. This harms the effectiveness of a system with an important role to play in tackling child poverty in separated families.