Duncan Gilchrist, Elaine Squires, Simon Hunter and Chris Smith.

Q1 The Chair: Welcome, everyone, to the Public Services Committee. It is our first public hearing of our inquiry into the Child Maintenance Service. I welcome officials from the Department for Work and Pensions today. I will start by asking you to introduce yourselves and say briefly what your role is in this part of the department.

Chris Smith: Thank you. I am happy to be here. I am one of the deputy directors who work in the operations of the business. My job role predominantly is to provide the link between the policy of the service and the smooth running of the operation. I also have a brief that is specifically about the modernisation of CMS, which is my main focus at the moment.

Elaine Squires: Good morning. I am the deputy director for income, family and disadvantage analysis. That includes analysis of child maintenance, both on the policy side and on the operational side.

Simon Hunter: Good morning. I am the director of the Child Maintenance Service. I am responsible for leading the service, setting the strategy, leading out on our change transformation programmes, as Chris mentioned before, and the day-to-day performance that CMS delivers.

Duncan Gilchrist: Good morning. I apologise for my voice this morning. I am deputy director for child maintenance policy. I sit within the main DWP centre, but I work very closely with Simon and Chris on the operational side.

The Chair: Thanks very much. We want to start by trying to get a very clear picture of what the aims of the policy are in the department and how you go about trying to achieve that. I want to start the first question by asking you to outline the support that the Government give to separating and separated families to make child maintenance arrangements. What we are particularly interested in with this inquiry is to look at the ongoing support that the Child Maintenance Service provides in cases where the CMS makes the child maintenance arrangements. I know that sounds like “Describe your whole working life”, but if you could between you perhaps outline the main tenets to that, it would be very useful.

Simon Hunter: I will start on that and I will warm Duncan and Elaine up to reflect on some of the previous surveys and what we know about separated families and perhaps where that leads us to explain some of the things we are looking at to make further inroads into improving outcomes for citizens.

For my part, I want to signal a couple of things that demonstrate the progress we are making. First, as I mentioned before, I am responsible for the modernisation journey that CMS has been on. I am hugely proud of that journey and what we have achieved so far. Throughout the meeting I am sure we will have the opportunity to speak about that and reflect on that in a bit more detail.

What I want to home in on is the differences that we are making in CMS to make it slick and more usable and accessible to those who need it. I want to pull out a quick example of that. In 2022 we introduced our online service, which is “Get help arranging child maintenance”. Essentially, that replaced the telephony service that was managed by a third party, G4S. It is a mandatory step in the process that provides information to families looking to claim child maintenance and it provides the details on the best arrangements that suit their circumstances, highlighting the benefits of non-statutory family-based arrangements where appropriate. What we have done there is we have removed a 25- to 45-minute telephone conversation that used to have to take place, whereby a customer would have to go into quite a lot of personal details about the breakdown of their relationship. They would receive advice on the best next steps. We have replaced that with a self-service online tool that provides the same advice but it does so without the need to discuss private experiences with a stranger. The other big thing about this is that it is available 24 hours a day, seven days a week, so it can be accessed in the claimant’s own time and at their convenience.

Secondly, you will be aware that we removed the £20 application fee last year. That was in February 2024. We knew that this was often cited by receiving parents and broader stakeholders as being a bit of a barrier to making a claim.

While it is quite difficult to quantify the exact impact of those two specific initiatives, it is beyond doubt that both have been material in underpinning the growth that we have seen in our case load. I will hand over to Duncan and Elaine to add a bit more flavour.

Duncan Gilchrist: Shall I talk about where we are overall across government?

The Chair: That would be helpful. Thank you.

Duncan Gilchrist: Then I will hand over to Elaine to give a few numbers to support that.

The first point to make is that it is not the role of the CMS to promote child maintenance. The rationale until quite recently was that the best arrangement for children was for their parents to come to an agreement outwith the CMS and the CMS was a fallback for those who could not do that. The Government have never promoted the CMS itself as a way of arranging child maintenance. That said, we have realised in recent years, since we brought in the plan that parental arrangements were the best way ahead, that parents need more information than is available via GOV.UK.

Historically, during the CSA period, there was a lot of knowledge about child maintenance within the benefit system. During the introduction of UC and the parallel introduction of the CMS 2012 scheme, both organisations necessarily became quite introverted, looking at themselves, sorting out the details of what were quite complicated implementations. To a degree, that link has been lost and what we have been doing in recent years is trying to build that up again so that the UC job coaches, who have contact with an awful lot more people than does the CMS, can promote the fact that child maintenance is something that parents should think about when those parents come to them for benefit.

There is that work going on within DWP. We also are doing work with the Department for Education so that when the Family Hubs network reaches full maturity, there will be availability of child maintenance information through that route. I think that it is fair to say that that is still under development. I would not say at this point that that is a particularly useful route, but it is the one that we hope will become more and more fruitful in coming years.

Finally, we have also become very aware that we and the Ministry of Justice have a joint problem where parents cannot come to agreements and those people cause issues for both the CMS and the family court service. We are trying to work together to make sure that work that goes on in the MoJ to resolve those conflicts and help parents to work together to support their children is transferable to the Child Maintenance Service without us disrupting its arrangements and vice versa.

Elaine Squires: I can add a bit about what we know about separated families with and without arrangements. So 59% of separated families have an arrangement. For the 41% that do not, we did a survey in 2021 just to find out more about those parents. Around half of them said they did not want an arrangement. As to why, some of that was to do with the relationship that they have with the other parent and whether they wanted contact or not. Some said they did not need support or they lived too far away from the parent. There were quite a few reasons why they said they did not.

For those who said that they did want an arrangement but did not have one, we asked them what help they would need to have an arrangement. The things that they were talking about were a service that ensures regular payment, things around better enforcement, parental relationship support, and more understanding and security around the calculation so that they understood it and felt it was fair. Those findings we feed into the policy side and the operational side.

Q2 The Chair: To follow that up, I was interested in the new online tool, as you called it, and the relationship you have with other departments in terms of trying to bring government together. It sounded from your description that that was trying to improve awareness and information-giving to people who might want to use the service. Do I have that right? Is there a missing bit that the reason people might not be using the service is because of some other barrier? They knew about it, they knew where it was, they knew where to ask questions, but something stopped them accessing the system and coming to an arrangement? Those are two follow-up questions. Do you have any feedback yet on your new system as to how many people are using it? Are you worried at all about unequal access to online mechanisms such as that? Secondly, when you work with the DfE or the Ministry of Justice, the Family Hubs in particular, is it just information giving or is it something that goes a bit further than that?

Chris Smith: I will start from the perspective of what the service is trying to achieve. It is fair to say that the first place a citizen will go when they are suffering a situation where they find themselves separated is to GOV.UK. That is where we promote the service and offer information; for example, through our calculation tool about how much they would be entitled to were they to claim child maintenance and how much they should expect the other parent to pay in the event that we set up a family-based arrangement. That is the primary thing we do as a service to promote CMS.

From that perspective, what Simon was referring to is our “Get help arranging child maintenance” online offer, which is, “Look, I do not know what is right for me. Is it all right that I go away and make these arrangements with my ex-partner or is it more appropriate that I rely on the statutory scheme?” That is an information-giving service. It provides advice as to what is best. It encourages parents to think very carefully about the outcomes for their children, where working together often provides better outcomes than relying on our statutory scheme.

To give some context about what that does, Simon was talking about the growth in our service. At around about the same time that we introduced that service, 2019 was just coming up. We introduced that service in 2021, in the middle of Covid. Since 2019 we have seen a growth of about 40% of our case load. That probably means nothing to you, other than to say that was about twice the growth that we were expecting during that period. We know from talking to customers who are accessing our services that that was partly due to the fact that people were suffering financial difficulties. They needed to rely on us to help gain that money. It was also because it was easier to claim. To Simon’s point, making a phone call for 40 minutes to a stranger to talk about something that is very personal and emotive is resolved in a situation where they can go online at their leisure, without the prying eyes and ears of their children, to make an application. Certainly, that has been a contributing factor to enabling people to come into our service, but there are those who choose not to.

Elaine or Duncan might want to reflect on how there are other barriers for people to claim child maintenance. I know that Elaine mentioned some of it but, Duncan, do you want to come in?

Duncan Gilchrist: The first thing is that obviously the work that these guys have been doing is great, but I do not think that relying on the CMS online tool as the main collection mechanism for child maintenance will ever maximise the number of child maintenance arrangements that we could make.

On whether there are additional barriers, I think that the questions of information and barriers are linked. When we look at the overall population of people who do not have arrangements, just under half do not have arrangements because they do not think their partner wants to pay. My hypothesis on what that tells us is that people are seeing this as there being a cost to be paid for child maintenance. That is in the relationship that you will have with your former partner. That might mean a whole range of different things for different individuals, all the way from they will no longer want to see the child to there being risks of domestic abuse and so on.

They need to know when they apply for child maintenance that it will deliver for them. We have a barrier there to overcome in the general reputation that child maintenance has. There are lots of myths around the CSA still out there in the general population. When you look at the numbers, the CSA had a very high coverage of the overall population because everyone who was a separated parent and who applied for benefits had to go to the CSA. But it did not really deliver all that much for those people and I think that has left quite a big barrier in people’s minds. The fact that we now have a good service we need to get out there in some way so that they understand that they will get something out of it if they apply for it.

Q3 Lord Bradley: I have a brief question. You mentioned working with the MoJ and you have just mentioned domestic abuse. In the way that you are trying to roll out your service with family centres, are you considering doing the same with the network of women’s centres across the country, which is a very important interface between the Ministry of Justice and child maintenance?

Duncan Gilchrist: I have to be honest. We do not have a detailed plan at this point. We have concepts and we are talking to the MoJ. We are both looking at how we can best get the information, but I would be wrong if I said to you that we have a plan and, yes, we will tap women’s centres.

Lord Bradley: You hope to have a plan?

Duncan Gilchrist: Absolutely. We definitely aim to get the information where it is best placed, regardless of where that is.

Baroness Pidgeon: I wanted to pick up on the point that, Mr Hunter, you were making at the beginning about how proud you were of this modernisation journey you have been on and how the service is slicker and more accessible. However, I am wondering how you are measuring success. When I read the basic figures that since 2012 there is £682.1 million in unpaid maintenance and the NAO predicts that that will go up to £1 billion by 2031, that does not really sound like a successful service to me.

Simon Hunter: There are a number of data points that, as you say, could paint a different picture of the service that is being provided. When I talk about being proud of the service, I look at what we have just referenced there, which is the case growth. We have seen a significant number of customers join the CMS over the last five years. The growth has been about 40%, as we mentioned before.

One of the things I was proud of was the modernisation journey. The question was about how accessible the service is. The service is incredibly accessible through the digital channels. There is a lot of information we could share about how seamless it is to be interacting with the CMS. Historically, as we mentioned before, an application to the CMS was a telephony-based service. Again, historically, everything you needed to do you had to make a phone call to us. It is very digital and that is something that our customers want. We have a big demand there from customers who want to engage with us digitally. That is something we have worked hard at over the last three or four years to provide that digital service to make sure that when customers submit changes, they are done within efficient timelines that customers would expect from us.

I am certainly proud of what we have done in relation to the modernisation journey, how accessible we are, how we are getting slicker, as I mentioned before, in relation to processing change of circumstances, and the enforcement journey, which we will come on to soon. We can talk about how that has got slicker. Every aspect that I look at, while the point you make is a valid point in relation to the unpaid maintenance, we have a lot of steps and measures in place that I think show that we are an improved service.

Chris Smith: Can I add one point on the £682 million? That burns a hole in our consciousness. As a service, we are here to provide services for people who need our support to get money for children. We do not underplay that for every single parent who is not getting that money and relies on it, that is our job to step in and make that happen. I have never worked in a service where the intent of the service is so passionately followed by the people who operate within it, and I give you my commitment that that is 100% true.

For some context that we will come to when we talk about enforcement and necessarily the difficulty of enforcing payments, people who come to our Collect and Pay service come there because they have stopped paying. It is our job to get them to start paying. We have pretty decent success with all that. Let us remember that these are people who have decided that they do not want to pay.

The £682 million—to put it into context because it is a big number—over the course of the scheme that started in 2012 represents less than 8% of everything that we have been responsible for arranging. In that context, it is a small portion of the overall amount, but in every single pound of that £682 million there is a parent somewhere who did not get some money that was owed to them.

One of the underpinning fundaments of this scheme is that we do not write off debts. That debt still exists. It is still owed to the other parent and we will go back on all debt. Since the beginning of the scheme, when somebody has the ability to pay it, we will look to get that money paid. There will always be growth, but I wanted to put into context that that is a small portion of everything that we have transmitted to children over the course of the scheme.

Baroness Pidgeon: Perhaps we could get details of your performance metrics for all aspects of the service so we can understand how you are targeting these. Thank you.

Chris Smith: On that, I know you will have the opportunity to come to see some of our services. There is absolutely nothing to hide there—come and have a look and we will give you all that information.

Lord Mott: This is a follow-up on the final point from Baroness Pidgeon. Is it also possible with that data to have, if you have it, reasons why people do not pay? It is quite easy to say, “We have x number of people not paying”. There are obviously both sides of this conversation and sometimes it can be that people lose their jobs, their circumstances change, and that is why the payment is not taking place. On the back of the request for data, it would be good to have that, too, if you have it.

Chris Smith: We do not specifically record the reason for non-payment because it is so varied and complex. I am grateful to you for making that point because it is a thing that we feel about the scheme, that there is this assessment that somebody who does not pay is a bad person. During the course of anyone’s life, people lose jobs, they have traumatic situations that make it very difficult for them to pay. Part of our journey is to make sure that we offer those individuals the support they need so that they are able to provide for their children.

The Chair: We might pick that up again in question 3.

Q4 Lord Shipley: I want to ask one question but I want to ask it now in context from what I have heard. I heard Mr Gilchrist use the words “barriers in the system”. How does the Child Maintenance Service determine an appropriate rate of child maintenance to pay? When you reply to that, could you put it into the context of the 24-hour self-service online system? I have not understood what then happens at the point at which a person has completed the self-assessment and self-service online. I live in Newcastle upon Tyne. If I were in that situation, could I walk in somewhere and see somebody to talk to about it, or is this entirely automated, and in particular the online system? Could I have a discussion? Is there a means of asking questions and getting an instant reply?

Duncan Gilchrist: No is the answer to that. The way this will work is that essentially the online application system is for the parent who decides they want there to be a maintenance arrangement. It is almost always the receiving parent; that is, the parent who has the children. At that point, we will contact the paying parent and tell them there has been a maintenance application. We will pull down their gross income data from HMRC for the previous tax year. Then we apply a formula to that money that says if you have one child, you pay 12% of your income; if you have two children, it is 16% of your income; if you have three children, it is 19% of your income. There are variations at the top and bottom ends of that to account for differences in the tax system and the fact that people on very low incomes would struggle with those amounts of money. Essentially, once that figure comes out, that is the liability they owe.

I probably have to acknowledge that we have not looked at that calculation for a number of years. It was introduced in 2008 and we have not really changed it since. We are conscious of that, so Elaine and her team have been doing some work on how much we should be paying based on the cost of a child. However, that work has yet to bear fruit.

Chris Smith: I will come in with one quick point of clarity. Duncan is right that our online application is our primary method of people applying for it; 98% of people use our online application service. We do offer a telephony service for those people who cannot. In the event that somebody chooses—we do not discriminate in that sense—not to use our online service, they will have access to speak to somebody over the phone. The traditional way of applying was 100% over the phone, so there is still the opportunity to do that.

The one thing we do not have, which is your point, is unfortunately the opportunity for somebody to walk into a jobcentre and speak to an agent from the Child Maintenance Service. To back up Duncan’s sentiment, I will add that the majority of people choose to use our online service and they signal that as a preference in the way that they access the support that we are able to offer them.

Lord Shipley: How do you know that? How do you know that they choose to access online?

Chris Smith: Because we ask them. If a customer tells us that they do not want to, by giving us a telephone call, we mark on their account that this is somebody who wants to deal with us over the telephone. Of course, we will help and coach them to use some of our online services, but we make it an element of choice. If someone chooses not to, they will get their service over the telephone.

Lord Shipley: Can I ask one more supplementary to this? Some kinds of income are not included and some assets are not included. I do not understand why certain types of income and assets are not included in the calculation. That is the first point. Secondly, who is responsible for evidencing additional or hidden income that might affect, in your view, the calculation?

Duncan Gilchrist: On the first of those, the true answer is the income that is included currently is the income that was available electronically to enable an automated calculation to be made in 2008. In 2008, the CSA was struggling. It could not keep up with its case load. We needed to bring in a scheme that would have an automated calculation, which the CSA did not have, and that is the calculation that we still have. As I said, that calculation is due for an overhaul and we are working on that at the moment. However, the things that are not in it are not in it because they were not available electronically from HMRC at that time.

The way people get access to that money is through what we call our variations regime. This is where you are getting to what evidence they have to bring forward in order to access the variations regime. We have to have some reason to believe that there is extra money because, of course, the variations regime requires Simon and Chris to put people on to investigation and that, by definition, is a rationed resource. I should be very clear, and maybe this is the point you are hoping to get at, we do not require parents to do any of their own investigating.

Chris Smith: Duncan has explained it well. The broad population who apply for child maintenance, when they come into our scheme 90% of the calculations are made from very simple earnings information that is available on HMRC. Either they are on a benefit or they have Pay As You Earn earnings that are available to us that derives that calculation. That is broadly 90% of everything that comes into our scheme. That leaves 10% where people earn in a different way; for example, they are company directors and they have income that is not traditional in the sense of the way the scheme was introduced back in 2012. It is those customers who Duncan is talking about.

The broad number is very simple, with interactions with HMRC, but where that does not happen we have to have some information that says this individual is earning in a different way. Let us be clear about it. Most parents have at some stage lived together—or survived together—and they will know that their ex-partner is a company director or they are working self-employed or that they have cryptocurrency or they have some other means of funding their income. As long as that person is declaring that information to HMRC, we then have a mandate to get it from HMRC.

Another portion of our case load is also pretty much tied down, based on the information that the Government already hold. I suspect, and I will not go on about this because it feels like I am hogging the floor, that we will have a conversation a bit later about how we investigate people who perform in a more nefarious way to divert income from us. However, broadly, if it is available in HMRC and someone tells us that there is some extra income there, we will get it from HMRC and we will make it a part of the calculation.

The Chair: Lord Carter, perhaps you could set a good example by doing what none of the rest of us did, which is declaring your interests as you speak. I will try to catch up next time I speak.

Q5 Lord Carter of Coles: Thank you, Chair, for reminding me. I have no interests to declare on this.

Good morning and thank you for your time. My question is about what happens when people do not pay. We have touched on this in various supplementaries we have had already. There are three bits. How do you explain the difference between the number of paying parents who have not made the full contribution? Coming back to an earlier point, do you have that segmented by why they do not pay? Is there a database that you can go into and get the reasons—sickness, unemployment, the usual things like that?

Then touching on the unpaid, the backlog, the £682 million rising to £1 billion, what steps are you taking? Do you age that in any way? Do you have an aged debtor list of it? Does it say, “This has been outstanding for 10 years or 20 years”? I suppose the logical question is: is there a moment that it ever gets written off? It will just accrete and accrete and everybody will be embarrassed and you will never get it. Can we face up to that?

The third question is about additional powers. We have had earlier evidence where people have told us that enforcement is a very difficult area. It is partners wishing to protect relationships with their children and things like that, so we are not coming at this like a bull in a china shop. We would like to know about these additional powers. Perhaps you can tell us things that have been effective and what your hopes are for these additional powers going forward. Simon, perhaps you could curate your team for us.

Simon Hunter: Yes. Chris, do you want to come in on enforcement? What we would like to do is give a bit of context to the enforcement journey. As you said, it is quite a complicated journey to curate, so we will try to quickly simplify that for you as best as we possibly can just to give that context.

Chris Smith: I will try to take you through some stages. If you do not follow it, when you come and see us we will have a conversation and unpack this a bit more.

It is always important that we put enforcement into context. I have always said that while it is very complicated, we do not underplay the fact that £10 not collected for a receiving parent and us not collecting it for a couple of weeks is a big thing. When I talk to you about the success we have in enforcement, I always have to offer that context. We know that it does not work for everybody and if somebody is not getting their money, it is a challenge for us. We take that personally and a challenge to us as a service to make it happen.

Enforcement happens when somebody moves into Collect and Pay. That is the portion of our scheme where we can start to monitor payments. We receive payments into our service and we pay them to the other parent. People start their journey in Collect and Pay because somebody has not paid. Everybody starts in that cohort of our customer base having already failed to be compliant. What I will try to do now is build up how we address that.

Around 65% of everything that comes into Collect and Pay we can enforce the ongoing maintenance payments by collecting money mandatorily from their employer or from a deduction from benefit. That is the only element where we can enforce the ongoing maintenance. If they have an employer, we will ask them to deduct it from their salary. If they are on benefit, we will ask for deductions from their benefit and we will transmit that money to the other parent.

That leaves around 35% of our case load where people earn in a different way and we are not able to access that money. To the point Lord Mott made, not everybody in that 35% who does not pay is bad. This is not a “bad dads” agenda. This is people who have challenging situations in being able to afford the basic things they need in their life. The first aspect of our enforcement journey is to reach out to those individuals to say, “Why have you stopped paying? Can we help you get back on track? Have you lost your employment? Can we adjust your payments so that we can get that payment back on track?” That is what we have as a huge proportion of the population in our CMS case load that we are dealing with day to day.

We know that that is not the case with everybody. There will regularly be individuals who deliberately avoid contact with us, who are deliberately avoiding their responsibility to pay. Again, to put that into context, with a case load of 750,000 customers who we are dealing with, we estimate that around 40,000 at any one time we are targeting with some enforcement activity. It is not the same 40,000; people come into that cohort and they leave that cohort. But it is around 40,000 customers we are targeting.

We have some responsibilities to manage our enforcement journey very securely and sensibly because we have some pretty strong powers and we do not want to do it with impunity. For the first stage of the enforcement journey we have the power to go into somebody’s bank account and deduct the child maintenance arrears that they owe. From a context perspective, we are currently collecting around £1 million every month by accessing people’s bank accounts and taking money to pay for that child maintenance. The vast majority of that 40,000 we are contacting, we are getting them back on track, or we are deducting money from their bank accounts and enforcing payment in that way.

When everybody talks about enforcement, what they really mean is when you get them to court and when you start doing things to make those people pay. The case has to reach a certain threshold before we can enforce, and that threshold is very easily described: we have tried to get it from their employer and have not been able to; we have tried to get the money from their bank account and we have not been able to; and the debt that they owe the other parent is in excess of £500. That is the borderline for us taking stronger enforcement action. From a context perspective, between 1,000 and 1,500 cases reach that threshold monthly. About 1,000 to 1,500 cases reach the threshold for us to start reaching out to magistrates’ courts to register that liability in court.

It is from that point that we then start turning up the dial with the use of our powers. For context, 1,500 cases go into that liability order space. Around about £8 million was collected last year just at the threat of going to the magistrates’ court. If they go through the magistrates’ court, the next stage of our enforcement action is that we will send the bailiffs round. The bailiff process we estimate brings in around about £1 million every quarter. If we fail at the bailiff, we then have the mandate to take more extreme powers and action to force somebody to pay. You will all be aware of this, but it is the ability to send somebody to prison, to take their passport or to take their driving licence.

We often get criticism about not using our powers as often or as regularly as we need to, but let us put it into context. We have to go through that journey first, but when we get to that stage we find that over the last year or so we have collected around £5 million from people who are facing enforcement action. The brutal hard edge of that enforcement journey is that in the 12 months up to the end of September we took more than 300 parents to court in front of a judge with the threat of going to prison unless they pay their child maintenance case. Two parents decided not to pay and they were committed to prison. Just over 300 received a suspended sentence. That equates to six customers every week going to the courts at the threat of being incarcerated and losing their liberty. That is the journey that we go through, with really strong powers.

Lord Carter of Coles: Can you give us a yield curve then? What generates what return?

Chris Smith: One of my colleagues sitting in the back there will be thrilled to send you the waterfall of the course of actions.

Lord Carter of Coles: Because that waterfall, as it were, is—

Chris Smith: We would love to take you through that so you can see exactly what happens.

Simon Hunter: Can I also come in quickly? One of the things that is important to us is that we are looking at how we prevent cases getting into the enforcement space in the first place. Again, we are pleased with some of the tools that we are starting to leverage in the Child Maintenance Service. An example of that is that we are using predictive analytics. We have been trialling something for the last three years to get to a level of accuracy that enables us to use this tooling. It highlights those cases that have the greatest risk of potentially breaking down. What that enables us to do as a service is to be on the front foot and be proactive. Some of our early results in that space have been very positive. If we get one of these cases that comes up, we can take the appropriate action, whether that be to send a customer an SMS to remind them that a payment is due or to make an outbound call just to check in and see what their circumstances are. Again, it is using that technology to stop those cases in the first place going into enforcement, which we think is an important part of the journey.

Q6 Lord Carter of Coles: Additional powers is my last question. Is there anything you want to say about it? Do you have additional powers coming or would you like additional powers?

Duncan Gilchrist: I do not think that at the moment we need additional powers. As Chris has outlined, the number of people who we can get in front of the magistrate and with the threat of a prison sentence who do not at that point pay up is very small. The issue is how we can feed more cases through the pipeline to get them to that point. We are working with the MoJ on those things and the work that Simon is doing on digitising things will make it better.

You also asked about arrears and write-off. The fundamental underpinning principle in the system is that we do not write off because it is not our money. That money is being collected by HMG but it is owed to those receiving parents. When the CSA was closed down, after a number of years we had a write-off scheme for that debt. That involved us going through a final cycle of collection and, if we could not then collect, writing off. By and large, we have always taken the view that there is a perverse incentive if we introduce write-off, which is people will then just duck and dive until there is an opportunity to write off. Baroness Pidgeon was asking about the level of arrears. That level will reach £1 billion because when you do not write off anything, it just goes on going up and up. That is not really, I do not think, the metric that people should be looking at. The metric is the rate of increase. The slower the rate of increase, the better we are doing.

Lord Carter of Coles: Do you write off on the death of the—

Duncan Gilchrist: Yes, we do.

Lord Carter of Coles: You know that at least?

Duncan Gilchrist: Sorry, when I say write off on death, we do have powers to collect from an estate. Only once it becomes entirely uncollectable do we write off.

Baroness Cass: I have no interests to declare in relation to this inquiry. I will ask a logistics question. When you cannot recover from somebody’s bank account, is that because they are engaging in casual work or cash in hand? If that is the case, how are you able to be clear about whether they have the money in order to pay?

Chris Smith: There are probably two answers to that question. It is important to point out that of the population who owe the other parent money that we are dealing with, 60% of them are on or below the lower earnings threshold. We are not talking about people who have lots of money in the first place, which makes it doubly challenging to collect it when people build up debt. People are living to their means in many respects.

I am sure we will come on to financial investigations in a moment, but certainly we do have some parents who will deliberately keep their money in bank accounts that we have no access to because they are not associated with them. We do have the power to look into personal bank accounts, joint bank accounts and business accounts that hold the paying parent’s name on them. We have reasonable powers to collect, but it does not stop somebody putting it in another family member’s bank account.

Lord Mott: I have no interests to declare on this. Instead of sending in the bailiff, do you have the power to send in a financial adviser to help people work out how they manage their money? Sometimes it could be a fairly simple issue of not being able to manage their money as opposed to having a bailiff smashing down their door.

Simon Hunter: That is not something that we have deployed as an opportunity. Certainly, it makes reasonable sense as a suggestion. It is interesting because in the wider DWP there is a visiting service, and it is probably a partner that we could leverage in that. If someone in the example that you gave would benefit from having someone coming in and helping with that, it is certainly something that as a service we could look at and try to provide. Yes, we welcome that comment. Thank you.

Chris Smith: There is also an interesting point about enforcement and the speed of enforcement. The longer we take to get somebody to court, the longer somebody’s head is buried in the sand and the bigger the debt becomes. Therefore, it becomes proportionately harder to collect. If we were to say there was anything that we need help with in that sense, it is to accelerate that journey, notwithstanding that there is an important part at the beginning of a non-compliant journey to make sure that we give all the support that we can. The sooner we can get to that and we can say, “Here is how we can spread that debt over a period of time”, the easier it is for somebody to become complaint. It is a fair point.

Lord Blencathra: I have no interests to declare, either. I have a supplementary for Chris Smith. You talked about the people who prefer to go to prison rather than pay. In your experience, is that because they cannot afford to pay or is it just that they are so bloody-minded and hate the ex-wife and prefer to go to prison than give her any money?

Chris Smith: I am not going to allow you to put words in my mouth, but it is probably more the latter. I say that because we have a significant responsibility to make sure that somebody has the ability to pay before we take them to prison. In fact, we are required to prove that that person has the means to pay that debt off over a 12-month period. It is probably the latter. It is sad in the event that we get to that stage that somebody is still not providing for their children.

Lord Blencathra: Does the debt still continue even though they do their time in prison? The time in prison does not remove the debt?

Chris Smith: Yes, absolutely. Even if they have not paid, the debt remains. This is not punitive. We are trying to get people to pay for their children. If they do not pay for their children, the debt is not wiped off. It remains.

Lord Blencathra: I do not mind it being punitive.

Q7 Lord Laming: I confirm I have no interests to declare on this subject. As we sit here today, getting on for 4 million children are living in separated households. In the best of worlds, we hope that those parents reach an amicable agreement on how they will handle all the issues around finance, about custody and about access and the like. Sad to say, this is often a very fraught time in family breakup and, therefore, it is perhaps not surprising that getting on for 50% of children are living in households that are separated.

Our understanding is that the number of families living with no child maintenance agreement has increased significantly in recent times. Could you confirm that and tell us what you are doing about it?

Simon Hunter: Thank you for acknowledging that point in the first place. I want to recognise before I pass over to Duncan that you are absolutely right. They typically come to the CMS because there is not an amicable relationship there. Again, the difficult job that we have as the service and that our caseworkers have is they deal with the emotion on both sides. I am glad that you pointed that out. Duncan, do you want to go into that?

Duncan Gilchrist: There has been an increase in separated families with no arrangement if we compare back to the end of the CSA in the early 2010s. We should not be surprised by that. The CSA numbers were built up through the fact that everyone who applied for benefit as a separated parent was steered into the Child Maintenance Service.

I talked about the costs that people have to pay to apply for child maintenance. I would not advocate linking child maintenance and the benefit service, but it was the case at the time that if someone was referred, it was not their fault. It was the Government doing that and, therefore, it just happened. There was no element of trade off for them. There has been a decline and we should not be surprised by that. It was always going to happen.

I think the question you may be trying to get at is: what is the right level of separated families with agreements and what are we doing to get to it? It is hard to know what that right level is. We have tried to get coverage figures from overseas. Those are very hard to come by. We are at about 60% at the moment. Certainly, we should aspire to get above that. During the CSA period we were at 75%. That is probably approaching a maximum because you will find a substantial number of parents will go through almost anything to avoid ever having any relationship with their former partner.

The first and most important thing we need to do to get there is to try to get more information out about child maintenance. As I said before, there are a lot of myths out there that prevent people applying, especially in a world where they feel there might be a cost to be paid in their former relationship in doing so.

The second thing we need to do is continue to improve the Child Maintenance Service. Simon and Chris have talked about the work that is going on operationally. We have also recently had a consultation that has talked about the future of our Direct Pay service, where we are conscious there are some problems and the fact that that might play some part in putting people off. We have also been looking at what changes need to be made to the calculation to make it properly affordable for those paying parents. A programme of work is under way but I would not claim at the moment that we are making progress as yet.

Lord Laming: Thank you. That is very helpful indeed. We are conscious that a growing number of children live in separated families for reasons that you already touched upon. We note that on your child maintenance website, you state: “You must have a child maintenance arrangement if your child is under 16 (or under 20 if they are in approved education or training)”. The number of children who are not living with a maintenance arrangement is increasing. What steps are you taking to address this issue when your website is saying that these children must live in a family where there is some security in the finance?

Duncan Gilchrist: I will hand over to Elaine in a minute because this is a numbers question, but it is worth saying that the number of families without arrangements is not currently increasing. It increased significantly in the period after the CSA in the late 2010s. Since about 2020 we have gone from about 44% of separated families with no arrangement to only 40% with no arrangement.

The question is how much further we need to go. As I have said, we are currently working on that. The two key bits are information so that people are led to and supported to apply and then a scheme that delivers for them when they do apply.

Lord Laming: Is it your wish to reduce the number of children living in families with an approved arrangement? Is it your wish to get that number down or do you recognise that even more children should live in families where there is a guaranteed income?

Duncan Gilchrist: Absolutely. At the moment the current Government are evolving their policy in this area, but they are putting together a child poverty strategy. We know that child maintenance has a major impact on child poverty and we are absolutely part of those discussions. When that strategy emerges, assuming child maintenance is part of it, we will lay out how exactly we will increase those numbers further.

Elaine Squires: Going back to your question about whether there is a level we should get to, we know that around half of the 40% who do not have an arrangement want one and half do not. You would imagine that for the half who do not it, it tends to be things around too much conflict, domestic abuse, not wanting anything to do with the other parent. But half of those do want an arrangement. Some of the things that we have already talked about for improving the service are some of the things that they have said they need to get that arrangement—such as clearer calculation, and Duncan has mentioned that we are reviewing the calculation.

In the conflict space, which you also mentioned, DWP has, for example, the reducing parental conflict programme, which, although it is not aimed specifically at separated parents, because it can be parents who are still together, is aimed at having a better relationship, whether separated or together, to improve child outcomes. That has been shown to have a good effect. All local authorities have some kind of programme now where they can work with parents to improve conflict, either together or separated, and that sometimes is one barrier to having a child maintenance arrangement.

Lord Laming: That was helpful, Elaine. Thank you. You mentioned the number of separated parents who do not want an agreement. Of course, there must be concern that some of that is caused by the threat of abuse from their partner. Is there a way to identify the threat of abuse and take that into consideration when allowing no agreement to take place?

Simon Hunter: Chris, do you want to come in on this?

Chris Smith: It is a difficult one because probably you are asking about how we could identify those people who choose not to come to our service, because of the threat of abuse, to make it easier. That plays to the same question that Duncan was trying to answer. We do not actively promote the service or target individuals to come to us. That probably answers that part of the question.

However, when families do reach out to us and they have become a victim or have been a victim of domestic abuse, I want to reassure everybody that the processes that we ask people to go through are as sensitive and as safe as we can possibly make them. The caseworkers that we have in the service are regularly trained on how to identify and handle customers who have been victims of domestic abuse.

The main point I would like to make to answer both of your areas from an operational point of view is that it is a crying shame that families out there could benefit from the support of the Child Maintenance Service but, because of misinformation or poor experiences in the past or any bad press that the incarnations of the scheme have had over the years, have failed to do so. Our job is to say, “As best as we can possibly make it, whatever your circumstances, in a safe and supportive environment, we will try our best to get money to support your children.” I am happy to go more into domestic abuse, but that probably is the point that we want to cover off.

Lord Carter of Coles: Why do you not promote it?

Chris Smith: This is probably more of a question for Duncan, but it is a succession of different incarnations of the services and the Government. It has never been intended that we go out and actively try to drum up trade for this. As Duncan already said, the mandated element in previous schemes has not been the choice of successive Governments.

Lord Carter of Coles: There is a difference between mandation and promotion.

Chris Smith: Indeed, but even promotion itself drives users of the service. It drives cost and all those things.

Duncan Gilchrist: It has been clear right from the start of the scheme. The CSA scheme was not promoted because people were sent there and that was its purpose. When the CMS scheme first launched, it was intended to be a backstop for parents who could not make their own arrangements. It was not promoted because parents were expected to go and do something else first before they arrived there.

As I said, the current Government are reconsidering how we do things going forward and so this area might change.

Lord Blencathra: On that, surely there was some merit in the CSA scheme that people were automatically referred to you. If you have 20% who refuse to use it and they are claiming benefits from the state, surely there is no harm in them being automatically referred to you and you take up the case and pursue it. You are trying to promote it. Promotion is beneficial and it is good. But if they are not going to play, make it compulsory.

Duncan Gilchrist: We tried that under the CSA. The result was a very large case load and a lot of those cases did not generate any money. Whether you could do it again under the current circumstances with a better scheme is an open question, but this Government are not exploring that area at the moment.

Q8 Lord Blencathra: The Government are consulting, as you have just said, on changes to how the CMS works, including possibly removing the Direct Pay system altogether. What is the rationale for those changes and what impact do you expect them to have?

Duncan Gilchrist: We have three main rationales for getting rid of Direct Pay. The first rationale is that surveys indicate that there is quite a lot of non-compliance going on there. We cannot enforce against those cases until they move into the Collect and Pay service. To move into the Collect and Pay service, they have to go through a process involving both parents. There is some hidden non-compliance.

The second point is that the CMS has found that process of them moving across quite administratively burdensome. We have made some changes recently to try to reduce that administrative burden, but it is still significant.

The third thing is that we know that it is not fit for purpose for victims of domestic abuse. We were talking earlier about whether we could we pick out those victims. We have been asked in the past if we could pick out victims of domestic abuse and make sure they are in the Collect and Pay service. We looked at some international experience on this, which suggests that it is difficult to pick out victims of domestic abuse comprehensively and reliably.

Lord Blencathra: I presume you will need police co-operation to identify them in any case. You said earlier that you did not need any new legislation for enforcement purposes, but generally I get the impression you are all trying to do your best but wading through treacle. You have parents who will not co-operate. You are trying to negotiate with the MoJ—bearing in mind that the MoJ thinks it is the most morally superior department in the Government and so you will not get a rapid reply there.

Generally, would you like to see any other legislative changes, not necessarily to enforcement but just to make the system work better? If I was your Minister just now, what would you say? “Minister, these are the new changes we need.”

Duncan Gilchrist: We absolutely do want some things. We have been looking at some changes to enforcement, which will make the passport and driving licence powers more usable. We are considering those and we will bring them forward in due course.

The more important one, though, and probably the most important thing we would like to boost the number of children getting maintenance and improving their outcomes is getting more information out there about how people apply and the merits of the scheme. We are in the long shadow of the CSA still, and that is getting in the way of a lot of people applying for maintenance because they do not think they will get anything.

Lord Blencathra: That does not require legislation.

Duncan Gilchrist: That does not require legislation. That requires us to start getting the message out more effectively and working with others to get the message out more effectively.

Simon Hunter: One thing we talk about frequently and we accept is that we do not always get it right and we work hard to minimise the cases where we do not get it right, but we get a lot of things right. We feel as an organisation that we would like to see more of a balanced narrative out there. Again, we hold our hands up, as I say, when we get things wrong and we look to put that right, but hundreds of thousands of cases use the CMS each and every month and have an absolutely seamless journey. We would like that balanced narrative out there that says “The service is good. Come and use the service and we will do good by you”. We would like to get that perspective if we could. That is a big challenge for us so that we can get that confidence in the service and build that case growth.

Lord Blencathra: What assessment have you made of the costs and benefits of moving all families currently using Direct Pay into your Collect and Pay system? You have touched on this before but what are the costs and benefits, just to summarise for us?

Simon Hunter: Chris, do you want to do that? It is part of modernisation. I know it is CMS reform, but it is also modernisation as well.

Chris Smith: You are requiring me to describe a spreadsheet simply. It costs us to administer Direct Pay. That is the free portion of our service that people use to get information about how much they should pay each other. They then transfer that money via direct debit between each other. Pretty much it is designed so that once a year we tell them that the amount that they should be paying now is X.

However, as we have already discussed, people have complex lives and so it generates an awful lot of traffic about changing circumstances, more children in the household, new relationships. We have to manage and administer that part of the scheme all of the time, notwithstanding the fact about hidden non-compliance in that part of the service, which then sometimes comes out of the woodwork. It becomes a change to service type. It requires us to speak to both parents. Has he paid? Has she paid? Do you have the money? Is it all on time? Then we move it across. It is an administrative burden. It is also challenging for parents who already have challenging relationships to then get introduced into that conversation again. The cost of that is significant.

We are aware that a large portion of people use Direct Pay well and that does not cost us. We need to find a way in the new scheme that Duncan is describing that those people can survive and manage their relationships and their arrangements in the simplest, most cost-effective way, without the need to use the statutory scheme. We can construct this so that we support those individuals to go and support themselves, but those people who are having challenging times come into the service where we can control the transfer of money, in a way. We assessed that and it is effectively cost neutral. One balances out the other and we generate better outcomes for citizens.

Q9 Lord Prentis of Leeds: I have no interests to declare. This is a question of clarification. You have been helpful in setting out all of the issues that you are involved in, but I fail to understand the actual income that you take into account when assessing child maintenance. You say you look at HMRC. Do you look at bank accounts? Do you look at gifts that may been given to hide income?

Duncan Gilchrist: There are two systems. The standard calculation is the 12%, 16% or 19% that I talked about, set against someone’s declared gross income for the previous year.

The second system is what we call the variations regime. If your former partner has other additional income than is declared in that basic calculation, you can then come to us. It is proactive and so it requires the receiving parent to tell us about this additional income. They then apply for a variation. A variation, as well as their calculation, takes account of the additional income. We will then go away and investigate the income—and Chris and Simon can talk a bit about exactly how we investigate the income—to establish exactly how much that adds to the original calculation.

Lord Prentis of Leeds: I understand about looking at income, but a great deal of wealth is in assets. That may be property.

Duncan Gilchrist: Sorry, income and assets, yes. As I said, the basic calculation is based on what was available in 2008. There is now quite a lot more data available. We need to ask when we update the calculation whether we can move more of the things that currently people have to actively ask for into the basic calculation. The fundamental criterion for being included in the basic calculation is that it is available online and can be put into an automated calculator, because that is a requirement of being able to process the number of cases that we manage.

Chris Smith: Would it be helpful if I gave you an example to spell that out? To take your example of property, there are two sides to this. If everyone is behaving well and they have rental income, they will declare that rental income to HMRC and they will pay the taxes on it. If somebody tells us that he or she has rental income, it gives us the mandate to ask HMRC to share that information with us. Once they have shared that information, we will include that in the calculation. That is part 1 of that journey.

Part 2 is the stuff that you hear lots of noise about. What about the individual who has rental income but is not declaring that to HMRC? They are siphoning that money elsewhere or they are putting in somebody else’s name or what have you. There is something not quite right. This person is declaring they earn only X pounds a week, yet they are driving around in expensive cars and their income belies their lifestyle. In those circumstances, we employ a professionally trained financial investigation unit that has significant powers to investigate those allegations and, where the money trail exists, ensure that that money is taken into account in a revision of that assessment.

A lot of that is what you hear reported in the press about the CMS. I want to be clear that that is a small portion of our overall case load, although, sadly, it does happen, but we have the powers to do it. As long as we use those powers proportionately, we can find income that people are hiding and assess people’s maintenance liability based on that income.

Q10 The Chair: In terms of the legislation, I want to bring together two questions. We have perhaps missed them. I have no interests to declare, either.

When we are talking about legislation, since the legislation that you are working on was passed, the family arrangements have changed. There is more joint parenting. Children may be staying with one parent and then the other. I am not sure that the present legal framework allows you to take that into account. Could you say a bit about whether the legislation makes it difficult for you there and whether you would like to see a change in legislation?

You have mentioned the other one, but I want to be clear about the answer. You talked about the calculations being set in old legislation. Do you have plans to change the legal basis of the calculations? They are two things that might come out of changed legislation.

Duncan Gilchrist: To take the legislation on the calculation first, it is more than my job is worth to say what the Minister might do, but it is fair to say that we recognise the calculations are aged. We are doing a review and I expect we will follow through on that review in due course.

The Chair: Also the change in family patterns?

Duncan Gilchrist: That comes into the calculation. I have talked about the 12%, 16% and 19%. The calculation has quite a lot more complexity than that. There is shared care. We will reduce the calculation by one-seventh for each night that a child spends with the other parent. If they are up to three nights, that is three-sevenths. If it goes beyond that, it becomes a question of which one is the receiving parent and which one is the paying parent. Generally speaking, you would not have a child maintenance case at that point.

As to whether we should change legislation in that area, shared care is a difficult area. We have talked internationally to colleagues and it is fair to say that no one has what they would call a silver bullet for resolving it because, ultimately, child maintenance on shared care tries to describe, in the financial contributions that we ask for, the situation that takes place on the ground. The real challenge with shared care is working out what that situation is. Parents are very frequently in dispute about it.

Unless we can come up with something significantly better that answers those sorts of questions, probably the current framework will be broadly along the lines of what we continue with for the foreseeable future.

Simon Hunter: I will just add to that point quickly. This is an example when we talk about modernising the service. If you are in that position, you need to inform CMS of a change to shared care. It is a simple process that, again, you can do via the online portal 24/7 and it is an automated process. It is quick and those changes can be actioned literally within days if we get the corroboration of the other parent. It is a slick process and, again, it is an example of where we have made it easy for parents to engage with us.

The Chair: Thanks very much. We will bring it to a close there now. We have kept you far longer than we said we would. We are grateful for all your help and advice. I know you will not mind if we come back to you, perhaps, with questions through our committee team in the weeks to come.

Lord Shipley: Sorry. Can I ask one question about the consultation? I will say I have nothing to declare.

The Chair: Yes. Then we will definitely close.

Lord Shipley: It is six months since the consultation closed. I am not clear when there will be a government response but, clearly, the work of this committee is of relevance to the government response. Can you help us with the timing?

Duncan Gilchrist: We expect it to come out in the spring.

The Chair: I was going to say the answer to that is usually summer or something like that.

Baroness Coffey: Or even a separate summary—maybe a summary of responses ahead of the response?

Duncan Gilchrist: I am not aware of that at the moment, but I will take the point away and discuss.

The Chair: You can tell that we are eager to see the results of that. It has been going on a long time and it will be helpful. We will bring it to a close and thank you very much for your time. We greatly appreciate it and I am sure our overall knowledge has increased greatly. Thank you. I now declare this part of the meeting closed.