The disregard of child maintenance payments

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The disregard of child maintenance payments - Alan Marsh

Download the PDF of the full paper below.

1) Introduction

This paper makes a case for the total disregard of child maintenance payments against income-tested social security benefits. While the Government has recently announced future increases in the amount of the 'maintenance disregard', this paper argues that there is now no sensible reason for not disregarding maintenance entirely.

Presently, parents-with-care receiving Income Support whose maintenance was calculated under the 'old' pre 2003 rules see the whole amount of their maintenance payments deducted pound-for-pound from their benefit income. Income Support families receiving maintenance under the 'new' rules may keep just £10 a week; the rest is lost in the same way (1). Sir David Henshaw's review of child maintenance (Recovering Child Support: routes to responsibility) looked at these rules and set out arguments for a full disregard that would allow income support families to keep all of any maintenance they received. He settled instead on a recommendation for a 'high threshold' before maintenance would be taken into account.

The Government first agreed in principle to "significantly increase" the amount disregarded (A Fresh Start: child support redesign - the Government's response to Sir David Henshaw). There then followed a long internal debate within Government on the level a significant increase should reach. Arguments were finely balanced: the highest possible disregard would maximise the impact on child poverty but too high a disregard would have an impact on lone parent's incentives to work, it was said. The outcome favoured the retention of some level of withdrawal of Income Support on the ground that too great an out-of-work income will reduce recipients' incentive to enter or remain in paid work. In the end, the amounts chosen for a new threshold were cautious: the PBR report announced that '.....the disregard will rise from £10 to £20 per week from October 2008, and then to £40 per week in April 2010.'(2)

While the increase in the disregard is welcome, this paper will argue that the gains from a total disregard of child support will far outweigh any disadvantages.

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(1) In the case of Housing Benefit and Council Tax Benefit, £15 of any child maintenance payments is ignored and the rest is counted as income.

(2) HM Treasury 2007 Pre-Budget Report and Comprehensive Spending Review, page 254

Dec07-Alan-Marsh-Disregard-Paper (PDF 71KB)

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