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Related inquiry: Children in poverty: Child Maintenance Service

Efforts to reduce child poverty are being hindered by the Child Maintenance Service (CMS) being slow and ineffective on enforcement for some parents and imposing unaffordable payments on others, MPs warn today.

Inquiry: Children in poverty: Child Maintenance Service

With the poverty rate of young people in the UK’s 2.3 million separated families higher than that of children in couple parent families, the Report from the Work and Pensions Committee concludes that the CMS can play a vital role in lifting children out of poverty, but that reforms are needed.

After taking evidence from parents who make payments through the service and from those who receive payments, the Committee says that improving the speed and effectiveness of enforcement should be a priority, so that children can benefit from the maintenance due.

It recommends that the CMS should step in faster when direct payments between parents are not working. Such cases should be moved from Direct Pay to Collect and Pay, where the service both collects and transfers maintenance from the paying to receiving parent.

To help parents on low incomes, there should be means-testing for Collect and Pay fees. Currently, the CMS charges the paying parent 20% of the maintenance collected and the receiving parent forgoes 4% of the collected money. The Committee recommends these fees should not apply to the lowest income households. Collect and Pay fees for parents who have suffered domestic abuse, be they paying or receiving parents, should also be waived.

For paying parents, the Report recommends a deadline for the Government of six months to complete its analysis of maintenance affordability, and come forward with proposals for updating maintenance levels and thresholds. The Committee cites evidence that the current system is pushing some paying parents into poverty, leaving them without enough to live on and in mental distress.

As part of the inquiry, the Committee held a roundtable event to hear the views of paying and receiving parents. A summary of what the Committee heard can be found in the Annex of the Report.

Rt Hon Sir Stephen Timms MP, Chair of the Work and Pensions Committee, said:

“The accounts we heard of frustrations and distress from parents with experience of both sides of the Child Maintenance Service (CMS) should act as a wake-up call for the service. With many young people in separated homes living in hardship, the CMS can play a vital role in improving lives. Without change, children will be left in poverty without the maintenance they are due.

“Improving enforcement is key. The CMS should also ensure parents experiencing domestic abuse, who would be best served by Collect and Pay, are not penalised by the fees for this payment method.

“The excessive payments being demanded from some parents cause serious distress, and promote non-compliance. The outdated thresholds need to change to make payments more affordable.”

The Report is the third and final in a series examining how best to alleviate child poverty. The Committee has previously published reports on measurements and targets and children with no recourse to public funds (NRPF).

▪ For many parents, receiving child maintenance is vital to avoiding or stymying the effects of hardship but enforcement is currently slow and often ineffective. DWP should set out plans to improve the effectiveness and speed of enforcement.

▪ DWP should move cases to Collect and Pay faster where there is little prospect of a Direct Pay arrangement being successful. DWP should consider triggering a move to Collect and Pay when child maintenance arrears reach half of the current average arrears.

▪ The Committee heard concerns about the fraudulent efforts of some parents to reduce maintenance calculations. The Report repeats the Public Accounts Committee’s recommendation that the Department should assess the risk of fraud and error within child maintenance and publish an estimate and target rate.

▪ Competing priorities for Universal Credit mean DWP has not undertaken work to implement partial deductions for child maintenance. The Government should confirm the timescale for its implementation.

▪ Child maintenance ranks 12th on the priority list for Universal Credit deductions. Deductions for child maintenance should take higher priority than deductions for the payment of debt owed to the Government.

▪ The Committee welcomes the Government’s support for legislation that would allow domestic abuse cases to skip Direct Pay and move straight to Collect and Pay.

▪ While the number of families with private arrangements has increased since the reforms of 2012, the number of families with no arrangement has also increased. This means that there are children who are unnecessarily missing out on maintenance. The Government should set out how it plans to reach and support such families, and investigate why some parents who want maintenance arrangements do not have one.

▪ The Committee heard concerns about the affordability of maintenance payments and the work incentive distortions caused by current arrangements. The unaffordability of maintenance is causing some parents severe hardship and distress, and deters compliance. Updating maintenance levels and thresholds should be a priority.

▪ The current system incentivises parental conflict under a ‘winner takes all system’. The Government should consider a model which takes account of both parents’ income.

▪ The Committee is concerned about the prospect of the Child Maintenance Service pursuing arrears inherited from the Child Support Agency that cannot be properly evidenced. DWP should investigate ways of dispensing with arrears that are poorly evidenced.

▪ The Committee heard evidence that was strongly critical of the effectiveness of Collect and Pay fees. DWP should waive such fees for customers subject to domestic abuse or whose children have suffered abuse.

▪ On customer service, the Committee supports the intention to move towards providing a named caseworker for customers. DWP should also trial different opening hours for the CMS helpline.

call for reform of Child Maintenance Service to help tackle child poverty

findings and recommendations

Matters of interest to both receiving and paying parents