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Our initial response to key points in the White Paper 'A new system of child maintenance'
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19/12/06 The Government has finally announced its plans for reform of the child support system with a White Paper 'A new system of child maintenance' - see www.dwp.gov.uk/childmaintenance.
The good news is that the CSA will be abolished (probably in 2007-08) and replaced by a 'Child Maintenance and Enforcement Commission' (C-MEC). The bad news is that it will take until 2013 before the new system is fully established.
Below we outline our initial reaction to the main proposals. The Government has announced a three-month consultation period, and OPF will be commenting in more detail in due course.
A new focus on parents making their own arrangements
A £10 'maintenance disregard' for all lone parents on benefit - with more to come in 2010-11
Joint registration of births
Tougher enforcement
Dealing with long-standing debt
The new Agency: C-MEC
A new assessment
OPF seminar
Government consultation
A new focus on parents making their own arrangements
The Government argues that all parents should be given the choice to make their own child maintenance arrangements without the involvement of the Agency. It therefore intends to abolish the current rule which says that lone parents must apply to the CSA if they claim Income Support or Jobseeker's Allowance. This will happen from 2008.
The new focus will be on encouraging parents to agree their own arrangements, with the help of new information and guidance services. The Government wants to consult on a package of services to support parents to make such agreements. These might include a national helpline for separating families, a register of private maintenance agreements, and a website. Parents seeking to use C-MEC would first be expected to use the information and guidance services. One 'encouragement' to non-resident parents to reach acceptable private arrangements, will be the imposition of charges on the payer if C-MEC is used.
OPF fully supports the proposal that parents should have the choice whether to use the new Agency or not. But there are a significant number of lone parents who will not be able to agree maintenance arrangements which are adequate and reliable, or who find that their private agreements break down. In these cases they need to know that they can count on Government help, for example to trace the non-resident parent; to find out his/her true income; to make payment arrangements that stick; and to chase arrears. It is important that lone parents know they have the back-up of the new C-MEC and are not left to 'go it alone'.
At present, the advice and information available to families on relationship breakdown is fragmented and inadequate. If the Government expects couples to make satisfactory arrangements for child maintenance on their own, it must put adequate resources into independent advice services and mediation services to help them to do so.
A £10 'maintenance disregard' for all lone parents on benefit - with more to come in 2010-11
From the end of 2008, the Government intends to extend the rule which allows lone parents on Income Support to keep up to £10 of any maintenance paid, so that parents whose child support award dates from the old pre-2003 scheme are covered. It is estimated that 40,000 parents and 55,000 children could benefit from this change. The Government also promises that from 2010-11 it will "significantly increase" this £10 figure for all parents on benefit, so that much more of the maintenance paid by the non-resident parent actually reaches the children.
Whilst very much welcoming the belated extension of the £10 'disregard' on child maintenance to old scheme cases, OPF is disappointed that the Government has decided to delay giving children in the poorest families a larger share of any maintenance paid until 2010-11. Even the White Paper accepts that: "reclaiming most of the money for the State, rather than passing it through to children, still means that neither parent has a strong enough incentive to co-operate [in arranging maintenance]. This undermines the extent to which child maintenance can contribute to the eradication of child poverty." Given that the Government has a target to halve child poverty by 2010, we believe a 'disregard' substantially in excess of £10 should be introduced far earlier. This would be a well targeted way of helping the Government to meet its target to halve child poverty by 2010, lifting a total of up to 90,000 children out of poverty.
Joint registration of births
The Government intends to change the law in England, Wales and Northern Ireland so that, for unmarried as well as married parents, both parents' names will be required on the birth certificate. This is intended to give both parents a clear sense of responsibility for the welfare of their children. There will be safeguards to protect the welfare of children and vulnerable women.
OPF argues that this measure is not necessary for child support purposes where use of the new Agency is voluntary, and will create enforcement difficulties for Registrars if the mother is unwilling to name the father. What punishment would be meted on unmarried mothers in this situation, and who will judge the issue of child welfare or vulnerability? We consider it would be far better to promote voluntary joint registration of births as part of a more general strategy of positive engagement with unmarried fathers about their responsibilities towards their children.
Tougher enforcement
The Government says it wants to consider new measures to ensure a "strong and effective enforcement regime" is in place. These include: - using wage deductions as a routine way of collecting maintenance;
- using the tax system to track non-resident parents who change jobs;
- requiring banks, building societies and pension providers to pay maintenance owed direct from a non-resident parent's bank account;
- using credit reference agencies both to gather information on a non-resident parent and to notify them of the non-resident parent's child support liabilities and payment record;
- recording an administrative 'Enforcement Order' concerning a child support debt alongside all county court registered debts;
- by-passing the courts (subject to safeguards), so that enforcement action, such as use of bailiffs, a charging order, or seizure of a driving licence can be done at an earlier stage;
- taking new powers to require surrender of a passport;
- giving powers to Magistrates' courts to impose curfews on non-resident parents via electronic tagging;
- greater publicity for successful prosecutions and sanctions, with the names of the non-resident parents who have been penalised appearing on a website.
OPF very much welcomes the determined thought being given to how to pursue more rigorously non-resident parents who seek to evade paying for their children. But until now, debt collection and enforcement has had a low priority within the CSA. Measures such as 'naming and shaming' or taking away passports are eye-catching but apply to only a few cases; OPF wants to see an organisational transformation so that all non-payers are targeted at an early stage and any arrears systematically pursued.
Previous research indicates that non-resident parents dealing with the Agency resented all being stigmatised as being 'dead-beat dads'. There are a variety of circumstances where it is easier for both parents if payment of child maintenance is done through the Agency - for example, where there is a tense relationship and both parties need an intermediary to ensure proper maintenance is paid; where official oversight of payments made reduces the scope for dispute about whether payments have been made; or where the parents don't agree about the non-resident parent's financial circumstances. Too great a focus on the new Agency as dealing only with hard-core serial non-payers risks creating resentment among non-resident parents contacted by C-MEC, and may deter some parents with care seeking help. OPF suggests a 'tailored approach' to non-resident parents by C-MEC, based on their circumstances and past record.
Dealing with long-standing debt
Out of a total debt of £3.5 billion, the Government intends to write off around £50 million of "historic debt" which they can no longer recover. This will include: - unpaid fees and interest which date back to 1993-95;
- cases where the parent with care or non-resident parent has died (and, in the case of a non-resident parent, the debt can not be recovered from his estate);
- cases where the parents are reconciled or the parent with care does not want recovery.
The Government also intends to revalue £1.3 billion's worth of punitive assessments (called Interim Maintenance Assessments) levied between 1993 and 2003. This is because it accepts that the money, because not related to ability to pay, is irrecoverable. The revised value, based on actual liability, will be around £0.5 billion. Thus, £800 million of debt will disappear as a result.
C-MEC will also be given the powers to: - 'do deals' on debts, so that, if the parent with care agrees, a lesser amount than the entire debt can be paid in full and final settlement;
- factor (sell) debts (but if owed to the parent with care, only by agreement);
- recover arrears from the estate of a non-resident parent who has died;
- offset new child maintenance liabilities, where a child moves between parents and there is an existing debt owing.
OPF accepts that there is a certain amount of debt which, however hard the CSA or C-MEC tries, is simply unrecoverable. But the Agency's own figures show there is around £1.4 billion of child support debt which is definitely collectable; yet the Agency has plans to collect only £100 million of this (a mere seven per cent) by 2009. This is disappointing. Moreover, the White Paper says very little about C-MEC's proposed 'residuary function' of resolving historic debt beyond 2009, or the level of resources which will be devoted to this task. At present a generation of children are growing up without the child maintenance they are entitled to because the Agency failed to take debt collection seriously in the past. Although the White Paper promises a 'clean break' from the past, the debt which is owed to those children must not be forgotten. OPF calls for considerably more resources and effort to be devoted to recovering the £1.4 billion of collectable debt.
The new Agency: C-MEC
The Child Maintenance and Enforcement Commission (C-MEC) will start work in 2007/08. At first, it will simply take over existing cases and focus work on debt collection and effective enforcement. In the transition to the new scheme, it will brief parents with existing assessments so they can make one of three choices: (1) to be transferred to the new scheme with a simplified assessment; (2) to make their own arrangements; or (3) continue their existing assessment via a C-MEC organised 'cash transfer service'. The transfer of cases to the new scheme will be a gradual process, between 2010 and 2013. C-MEC is likely to contract out aspects of its business, such as debt collection, to private contractors.
The CSA has a sorry history and its abolition will not be mourned. In reality, however, the CSA will gradually evolve into C-MEC with a smaller number of staff and, it appears, the same computer system. Will the new Commission do better? At present, a three-year plan to radically improve the performance is slowly having an effect. But many challenges lie ahead, not least the transfer of cases to the new scheme, and enabling parents on the existing schemes to make the right choices as to whether to transfer or not.
A new assessment
A new simpler assessment process will be introduced for cases dealt with under the future system, intended to speed up the process and prevent delaying tactics. It will: - use latest available tax-year information from the Revenue to calculate child support, unless current income differs by at least 25 per cent;
- make fixed term awards for a year, updated each year by tax data. In-year adjustments will only be allowed in a limited number of circumstances;
- base assessments on gross not net income, with new rates of 10, 15 or 20 per cent where there are one, two or three or more qualifying children.
- no longer take into account tax credits paid to a non-resident parent as income;
- charge non-resident parents on benefit £7 per week for child maintenance, not £5.
The rules on applying for a variation will continue to apply.
OPF has argued that much closer integration was needed between the Agency and the Revenue so that tax information could be accessed more easily to ascertain non-resident parents' income. The decision to base assessments on available tax year information looks a good one; but careful study will be needed to ascertain how it will work in practice.
OPF seminar
OPF plans to hold a seminar to consider the White Paper in more detail in February 2007. If you would like to come, please send your name to Ellie Backhouse, seminar organiser at One Parent Families. The e-mail address is ellie@oneparentfamilies.org.uk
Government consultation
The closing date for responding to the Government's consultation on the White Paper is 13th March 2007. You can make your response to the Government's proposals by letter, fax or e-mail to:
Child Maintenance Redesign team
Department for Work and Pensions
5th Floor, The Adelphi
1-11 John Adam Street
London WC2N 6HT
By internet: www.dwp.gov.uk/childmaintenance
By e-mail: Adelphi.cs-redesign@dwp.gsi.gov.uk
By phone: 020 7962 8128
By fax: 020 7962 8545
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