Government U-turn on child maintenance avoidance is “welcome but not enough”
Posted 12 July 2018
The government’s new child maintenance strategy shows it is listening to the concerns raised by Gingerbread and single parents, but still leaves question marks as to whether the Child Maintenance Service (CMS) is fit for purpose.
Today’s Department for Work and Pensions’ (DWP) compliance and arrears strategy announces measures to limit child maintenance avoidance and tackle non-payment – directly responding to many of Gingerbread’s recommendations.
The strategy outlines:
- Ways to tackle child maintenance avoidance, including reintroducing the ‘assets variation’, making it easier to include paying parents’ unearned taxable income and increasing staff numbers in its Financial Investigation Unit
- New powers to tackle unpaid maintenance, including new ways to deduct maintenance from income and a new power to remove passports from parents who fail to pay what they owe
- The DWP’s approach to deal with, and write off, outstanding arrears that have accrued under the old Child Support Agency (CSA) – now replaced by the CMS.
Responding to the strategy, Sumi Rabindrakumar, Research Officer at Gingerbread said:
“For too long, the CMS has stuck rigidly to a ‘one size fits all’ approach that failed to recognise more complex finances, leaving loopholes that allow parents to avoid paying what they can afford and mean many children go without the maintenance they deserve. The U-turn announced today shows the concerns raised by the many parents who campaigned with Gingerbread are finally being heard.
“Disappointingly, when it comes to unpaid maintenance, there still seems little that is strategic in the DWP’s plans. Today’s announcement sets out some tough new powers, but we know these are unlikely to be used. The government also fails to outline how it will ensure prompt enforcement through its more commonly used existing powers. In the meantime, the government continues to add insult to injury by charging parents to use the CMS’s collection service when their child’s other parent doesn’t comply.
“Buried in the consultation , the DWP confirms it expects to write off nearly £2 billion in CSA arrears owed to parents. Apart from the injustice this represents for parents, it is a sober reminder that the DWP must up its game to avoid history repeating itself in the CMS – particularly when arrears are already rising in the new service.
“The DWP’s new strategy for compliance and arrears management was an opportunity to show how it intends to learn from the huge failings under the CSA. There are welcome steps forward, but not enough – offering no real fresh start for parents already struggling to get the maintenance owed to their children.”
 Gingerbread’s response to the DWP’s consultation.
 Child maintenance avoidance describes when a paying parent minimises their declared income, which is used to calculate maintenance owed, thereby paying far less than they can afford.
 Parents can challenge their child maintenance calculation by applying for a ‘variation’ on specific grounds. Previous reforms removed two grounds for a variation – having assets worth over £65,000 from which paying parents weren’t drawing an income, and having a lifestyle inconsistent with their declared income. To date, unearned income can be taken into account when calculating how much maintenance to pay, but only after a variation on this ground has been granted (ie not as part of the standard calculation).
 CSA arrears will start to be written off only once liability ends – ie there are no ongoing payments due.
 The government estimates that a new passport removal power would be used around once a year with the current CMS caseload. DWP (2017) Child maintenance: a new compliance and arrears strategy – methodology paper.
 The coalition government introduced charges to deter the use of the CMS ‘Collect and Pay’ service (where the statutory service steps in to collect maintenance, using enforcement action) and encourage compliance. If a case is in Collect and Pay, receiving parents get 4 per cent deducted from any maintenance collected and paying parents must pay an additional 20 per cent on top of their maintenance payment.
 DWP (2018) Child Maintenance Service: Aug 2013 to Dec 2017 (experimental).