Work and Pensions Committee
Oral evidence: Progress with child maintenance reforms, HC 797
Wednesday 27 November 2013
Ordered by the House of Commons to be published on 27 November 2013
Members present: Dame Anne Begg (Chair); Debbie Abrahams; Graham Evans; Sheila Gilmore; Glenda Jackson; Kwasi Kwarteng; Stephen Lloyd; Nigel Mills; Anne Marie Morris; Teresa Pearce; Dame Angela Watkinson.
Questions 1 - 130
Witnesses: Steve Webb MP, Minister of State, Susan Park, Child Maintenance Group Director, and Ian Wright, Child Maintenance Change Director, Department for Work and Pensions, gave evidence.
Chair: Welcome to this one-off session looking into child maintenance. Minister, you seem to be appearing in front of us rather a lot these days. I do not know whether that is because of your expanded remit, but will you introduce yourself and your colleagues for the record?
Steve Webb: Thank you, Chair. I am Steve Webb, the Minister of State at the Department with responsibility for child maintenance. On my right is Susan Park, the director of the child maintenance group in the Department, and on my left is Ian Wright, the change director for the child maintenance group.
Q1 Chair: This country does not have a particularly happy record when it comes to child support. The 1993 system failed, as did the 2003 system. What makes you think—I am looking for a short, headline answer on this one, because we have lots of questions for you—that this incarnation of child support will be any better than the previous two failed attempts?
Steve Webb: I think the big difference is that this is not just a different set of definitions, a different set of rules; it is a completely different philosophy. Our central proposition is that we want to enable and encourage families to sort things out for themselves wherever possible. Let me put something on the record at the start, because every time we say that, people say to us, “But I know so-and-so—they couldn’t possibly sort it out for themselves.” We are absolutely not saying that everyone can sort it out for themselves. We are flipping it the other way round and saying, “Let’s have a presumption that we try and help people sort things out for themselves.”
Our research shows that half a million families currently using the Child Support Agency have told us that with the right help and support, they probably could have sorted or could sort things out for themselves. So by trying to enable people to do that, we are getting good outcomes for families and children among people who never get into our system, and then we can concentrate on what we perhaps do best, or what we try to do best, which is trying to make sure that where people are not willing to co-operate, we make that happen. That is not a static situation, though: we are constantly trying to move people towards more collaborative ways of working.
The other thing, briefly, is that the streamlining of information-gathering—our link with HMRC—means that instead of having a non-resident parent, or what we call now a paying parent, who does not provide information, we get earnings data and so on straight from HMRC, within a matter of days. We are doing assessments much quicker, and because we are using that data, every year there is an automatic updating. So instead of cases going stale and provision for people being based on very out-of-date information, we are keeping these things updated. What we are not doing, because we are doing it regularly and systematically, is faffing and fiddling around with tiny little changes in circumstances. All of us know about letters saying, for example, “On the 5th of May, this happened, and then so-and-so moved out of the house, and then the wage went up”—and you are 17 changes of circumstances down the track. We won’t be doing that. We will be making changes only where there is a big change; otherwise, there will be an annual update. As a result, much more of our time and effort will go on the cases that need to be dealt with and on doing it much more efficiently.
Q2 Chair: What do you think the time scale is for you to know that it is going okay, or that it is not—it is going the way of previous attempts?
Steve Webb: As you know, we have adopted a pathfinder approach, so we started with families of four children or more last December; we went to families with two or more children in July; and then on Monday of this week we opened it to all new cases. Clearly, it is early days. It was a few hundred a month when we started; in the summer, it was a few thousand cases a month; now it is about 10,000 or so cases a month. It is early days. We can’t say yet, “It’s a success.”
Q3 Chair: This time next year?
Steve Webb: What I was going to say was that we have to be very careful. We have internal stats about what is going on, but they are fairly rough and ready—they are not audited and all that kind of stuff—and we get criticised if we put stats out before we are sure they are absolutely right. We do not even have a case load yet that represents the case load we are dealing with. I certainly think that by this time next year, we will have a much clearer picture of how many people we have been able to support to make a family-based arrangement, how many are coming through, and how many are on Direct Pay, which is better than enforcement. We will have a much clearer picture by then.
Q4 Chair: If you are starting to get that kind of picture, you must know what measures have been put in place to make sure that the funding of the new system is adequate. How are you going to make sure that you have the balance right in terms of chasing the errant parent as opposed to the Options—as opposed to the mandatory Gateway?
Steve Webb: I will ask Ian to say a word about that in a moment, but the basic idea is this. Options, as you say, do a fantastic job. I went up and visited them recently. They are really committed to supporting families at a difficult time and they will be fully resourced by us to deal with all the people who are coming in. That will be the route in, so you do not just, as it were, ring the CSA—that has gone. You will ring us and we will put you through to Options, where you will have a conversation, and we will resource that fully for the calls that come in. Ideally, we help: we signpost people to support services—we are piloting some of our own that we will talk about—and then far fewer people will ever get through to the statutory scheme than in the past.
Q5 Chair: But that is my point: you do not know yet, so how do you know how you are going to break down that funding, and how to measure the effectiveness of your funding in those different areas?
Steve Webb: Obviously, we have modelled these things, and as each week goes by, we will refine that modelling, but we have resourced it for our best estimate of the volumes that we will have. Shall I give Ian a chance to say a word on that?
Ian Wright: There are probably a couple of things that it’s worth my picking up. One of your first questions related particularly to the system. I think one reason for people’s nervousness relates to the implementation of the system to support the 2003 scheme. There were major problems thereafter, and it took us a number of years to recover from that. We have done a number of things differently with the implementation of this system. First, rather than going out to a supplier and asking them to bespoke it—develop a new system just for us—we went out to the marketplace and bought systems that were well tried and tested. We have plugged those together. Where possible, we have built automatic interfaces to various organisations: HMRC, Jobcentre Plus et cetera.
One of the other failings with the previous system was that we tried to migrate data from the old scheme to the new scheme, as it was then. We are doing very little of that, so again we are learning the lessons from the past. Also, we consciously implemented this in a pathfinder way, so that we could make sure the system was working before we ramped up the volumes. Even though we went live with a small number of volumes, this system has been live since December of last year, and from all accounts it has been very quiet in terms of any major issues, which I regard as a success. So there are a number of things from a system perspective—
Chair: I think it is on that point that Nigel wants to ask you a question.
Q6 Nigel Mills: Can you just talk us through how the link to HMRC works? Obviously, we have been discussing that in relation to universal credit, and it is not quite as straightforward as we might have thought. Are you doing roughly the same thing as is being done there?
Steve Webb: Let me just clarify something. We do not need real-time information month by month. When someone makes an application, we need to know from HMRC the latest data on their record at that point—from tax returns, for example. It is not as if, every month, we are checking, checking, checking. We do it once on the application, then we do it on the anniversary, so in general we are not constantly needing to get a feed. Ian, do you want to say something?
Ian Wright: Yes. Effectively, when we get information on the prospective paying parent, we type that into the system and it goes off to HMRC to establish whether there is income data from the previous year for that particular person. If yes, it brings it back and we do a provisional calculation; we then send that out to both parents, to say, “This is the information we have. This is the provisional calculation.” What that typically does is inspire a telephone call back from the potential paying parent. Where the data exist, that is the calculation, and we have a similar methodology for a potential paying parent who is on benefits, which links in with Jobcentre Plus. So for a large proportion of paying parents we are able to generate a provisional calculation, normally within a matter of days.
Q7 Nigel Mills: With the functionality there, when you perhaps have a somewhat non-co-operative prospective paying parent who has said, “I am not working, so you can’t collect any money,” is there a way the system alerts you that the person is now earning again, so that the calculation is retriggered?
Ian Wright: So we also have automatic links to credit reference agencies, where we can see if someone comes into employment, et cetera. There are various automatic links that we can look at to see whether someone’s circumstances have changed—they are automatically linked into the system.
Q8 Nigel Mills: They are automatic, so you do not have to go and update my file manually, to check if I am working again. The system will flag up an alert to say, “Aha, he has now got some earnings. We can go and get some maintenance off him.” Is it that kind of automatic?
Ian Wright: Through the credit reference agency.
Q9 Nigel Mills: But not the HMRC link?
Ian Wright: With HMRC, we have to make a specific call. Typically, what would happen is that, through the credit reference agency, say, we might be alerted that someone’s circumstances had changed, and that would trigger us to have a look and to do another request to HMRC.
Q10 Nigel Mills: But can you not make your systems say, “This is a very non-compliant parent, who really won’t tell us when they have started earning. We will stick a monthly review in the system, which will go to check whether HMRC has any new data”?
Ian Wright: Not at this stage. To be fair, most people would not have new data, unless we use the real-time information that has recently been created. One of the things that we will look to do in the future, on the back of the work that has been done as part of the universal credit implementation, is to see how to use that real-time information in future. Initially, however, we are using the annual data.
Q11 Nigel Mills: So you are not using the monthly PAYE data?
Ian Wright: No.
Susan Park: In terms of how we run the new system, by way of processes and procedures, if we have a seriously non-compliant client, the caseworker will set alerts. It is a sort of brought-forward system, so it sets tasks that will then come back. People then go in and search; they use all sorts of tools, including the Land Registry, and also occasionally ask HMRC to data-wash lots of information that we have—if there are other methods of income, we will get that back. The caseworker will also do other things—it is not automatic, but they will set a system alert.
Q12 Sheila Gilmore: It is interesting that we plunged quite quickly into the systems for getting payment. The Minister opened by saying that he wanted to flip. As an ex-family lawyer, I might be quite cynical about all of that; I know how angry people are when they separate, although it is not necessarily the legal system that makes them angry. Given that, have you got any feel yet for how many people? You have been running for a year, albeit with small numbers, but what sort of proportion of people are making contact and, of those, what kind of proportion are making their own arrangements?
Steve Webb: So, again, I’ll ask Ian to top up with some precise information. First of all, bear in mind that we have a non-typical case load at the moment—families with four children and, since the summer, families with two. So the first thing to say is that we do not have a representative case load.
Secondly, we do not have charging part of the mix yet. Charging will not come in until next year, when we are confident that the system is up and running. So we are not yet doing what we will be doing. What we are doing is what we call a soft Gateway. People contact us and we put them through to Child Maintenance Options, which then has a conversation with them, but we are doing that only for four-child and two-child families.
I will ask Ian to comment in a second, but on the point about people being very sore and raw when they separate, we are not belittling that fact at all. We know that and we accept it in many cases. There are two things, however. First, relationships change over time. There may be people who, at the point of separation, just cannot sort it out, but two years, four years or six years down the track they might. At the moment, they are in the CSA for as long as the kids are. We are constantly looking, over time, to say, “Are things calmer now? Are things more settled? Are things more stable? Can we move to a more collaborative arrangement?” We know from research that, not just on child maintenance but on everything else, children do best if we can foster collaboration rather than conflict. That is what we are trying to do at every stage. We entirely accept that the point of separation can be very bitter and angry. If domestic violence or domestic abuse is involved, we clearly do not apply any of the fees or charges.
Ian, do you want to give them a feel for what is going on?
Ian Wright: Susan can talk specifically about Options. On the new 2012 scheme, for example, the early signs are that about a quarter of people are moving on to what we call Direct Pay, which is where we do the calculation but they manage the payments between themselves, as opposed to the statutory scheme managing it for them.
Q13 Chair: Is the statutory scheme the one on which you do everything for them?
Ian Wright: Yes.
Q14 Chair: What proportion ends up on the statutory scheme? They are perhaps the hard nuts to crack, the ones who cannot reach any kind of settlement themselves. What proportion of the case load would that be?
Susan Park: This is forecasting information. We presume that, as published in our impact assessment, roughly 63% of the existing case load would make a new application to the new 2012 scheme. Of the ongoing cohort—people who generally come and apply—we reckon that about 88% of existing cases will continue to apply after charging is introduced. I do not know whether that answers your question.
Q15 Sheila Gilmore: What has actually happened? There will be a drop-off if it works. People will go to the Gateway, presumably, and say “I am separated, and I am not getting any money. What do I do about it?” There must be a feeling—maybe it is too early—of the sort of proportions who go to Child Maintenance Options and get enough advice and help so that they sort it out themselves and do not need to come back. They may not form part of your case load, but they might be part of the initial thinking. And then you’ll have the group for whom that doesn’t work, so they come forward. Some of those are direct payments and some are collections.
Steve Webb: A general observation, if I may, is that I would be very keen to come back when we are in a position to give you much more concrete answers to those questions. We have had two-child families only since the start of August. There are only a few thousand of them. By the time they have phoned, thought about it and maybe come back to us, we just do not have serious enough numbers to give you robust answers. I would love to give you those answers, but it is just a bit early.
Q16 Chair: But you must have planning assumptions to know what to fund and where to put the money.
Steve Webb: Yes.
Q17 Chair: I will move on to our next question, because we might get bogged down on this bit. Some £20 million has been invested in the support available for separated families, but there has been criticism from a number of quarters that that is simply not enough money to do the job. Is it proving to be enough, or do you think you will have to invest more money at that end of the process?
Steve Webb: Let me just clarify what that £20 million is. The money is help and support for separated families, pilot projects, research, telephony networks, websites and all that kind of stuff. Just to give you a feel, because I think you want to talk about this, we have an innovation fund with roughly £10 million of projects. Round 1 is up and running and in the field. Coming back to Sheila’s point, we have projects on, for example, families that have just separated, on teenage lone parents and on particular minority ethnic groups. Coming to your point, Chair, we have some projects that are intensive face-to-face counselling and mediation, and we have some that are 250,000 people on the internet with web chats. We are trying the whole spectrum, and we are benchmarking. Is having two human beings and another person in a room talking to each other for weeks at a time the only way to make those things work, or can you do nearly as good for a millionth of the cost on the internet? We are piloting all this stuff. So we are not saying that it costs £20 million a year to provide help and support for separated families; we are saying that we have this programme designed to look at lots of different ways of supporting people and we will see what works most effectively.
Q18 Chair: What is the time scale for evaluating that?
Steve Webb: The round 1 projects are up and running and we would expect to publish findings next year on those. The round 2 contracts will be let next month, so there is a process going on.
Q19 Chair: What is the difference between round 1 and round 2? If you have not evaluated round 1, how can you bring in round 2?
Steve Webb: Some of it is about client groups who we did not look at in round 1: for example, there is a particular issue about offenders coming out of prison and how you get them effectively to pay child maintenance. Or, as I say, minority ethnic groups in parts of the country. So we are trying to fill gaps, not replicate what we did in round 1.
Susan Park: And also looking at the longer term separated, because we understand that they have different issues.
Q20 Glenda Jackson: What is the trigger that causes families to come to you? Is there one?
Steve Webb: They contact us; we do not contact them. It used to be the case that, for example, if a lone parent claimed income support, DWP would say, “Off to the CSA with you. Get all the maintenance you can,” as part of the benefit system. We do not do that any more. There is no initiative from us. If people separate and they have got children and one of them thinks, “Hang on a minute, I ought to sort out money for the kids—maintenance and so on,” ideally they sort it out for themselves, but many of them will ring the CSA and that is when we put them in touch with Child Maintenance Options and go through the different choices they have.
Q21 Glenda Jackson: Who tells them to contact you?
Steve Webb: I think almost everybody has heard of something called the Child Support Agency, even though it—
Q22 Glenda Jackson: You would be surprised how many have not.
Steve Webb: Yes? All right. We find that awareness is pretty high and, often, there are networks such as Netmums and lots of sites where these things are talked about a lot. We do know that there are families where there is no child maintenance happening and where they have never made any contact with us; we do know that that is the case.
Susan Park: And we also have liaison with colleagues in Jobcentre Plus, so if people apply for benefits and there is a child maintenance interest, they make referrals to us.
Q23 Chair: They do refer.
Steve Webb: It is optional; they do not have to.
Susan Park: It is, but they make referrals.
Q24 Nigel Mills: Can we talk about the new statutory scheme? I think the flat rate has become £7 a week, while we thought that it would be £10 a week. Why was that reduced?
Steve Webb: The £7 is roughly speaking the inflation-adjusted version of the £5 from when it was adjusted, so essentially we have restored the value of the original £5, more or less. What is the right number? I do not think there is a right answer. We are making these deductions from people on potentially fairly basic levels of benefit, so with jobseeker’s allowance at £71-ish a week, that is 10%, which again is broadly the same percentage as when the £5 was brought in. There will be under-25s on lower rates—from memory, that is something like £56—so £10 out of £56 starts to become a very significant figure.
Funnily enough, the feedback we got on the £10 was that even the organisations representing parents with care said, “That looks a bit harsh”. So it is a balance, really and we have essentially preserved the status quo.
Q25 Nigel Mills: We were talking earlier about only getting an annual statement or payment schedule that shows what the maintenance will be and the calculation. Will those statements show an understandable calculation now? I think we have all been through some of these and you need a degree in statistics or something to try to work out how on earth you come to the numbers being paid. Is it now clear and easier to follow?
Steve Webb: It is. I hesitate to say “exciting”, but one exciting feature of the new system is that, once up and running, we will have something called self-service. People will be able to log into their child maintenance account and, just like online banking, see the payments made and those received. I know as a constituency MP that I contact the agency sometimes to send through a statement of account, which is a waste of everybody’s time. So people will be able to do that directly.
The calculation itself is pretty much as straightforward as on the 2003 system: it is a percentage according to the number of children and a deduction for children living with you. Shared care cases are a bit more complicated, but those are essentially the key bits. Some of the fiendish CSA assessments were on what we call the ’93 system, the original system, where, frankly, your inside leg measurement changed it. It was absurdly complicated and we do not do that any more. One of the nice things about the new system will be that we will close the cases on those old systems and move to a much simpler one. And yes, the statements will break down how the calculation was done.
Q26 Nigel Mills: It is intriguing, this online account that you can access. Again, that has been an issue on universal credit, just being able to see what is happening. You cannot go and say: “My income has just changed by five grand a year”. That will not be an option?
Ian Wright: Yes, you can look at payments, see the history and you will be able to see letters. There will be some change of circumstances that you can actually instigate, but none that would affect the calculation or the payment.
Steve Webb: Change of address. Something like that.
Ian Wright: Yes, they would have to come through the actual caseworker for verification.
Steve Webb: And employers will be able to see. So a big employer doing a number of deduction from earnings orders will again be able to log on and see what is going on. So it will be simpler for employers.
Q27 Dame Angela Watkinson: There must be difficulties in assessing the paying parent where they are self-employed and tax liability is calculated a year in arrears. If it is a very small business, the liability could have peaks and troughs. How do you deal with that?
Steve Webb: We don’t do fresh information gathering, so we use what HMRC knows. That is the standard approach. I take the point about arrears and of course tax returns themselves, even for employed earners, are out of date, as it were. What we are trying to do is: just once a year do an assessment, a year later catch up. So even if it is not in real time, if they have a bad year and then a good year, eventually we will calculate maintenance on the good year, but there will be a lag, I accept that. In a way, we do not have a better mechanism of assessing the current real standard of living of a self-employed person, because they haven’t done accounts for where they are now, so we would not be able to prove anything.
Q28 Dame Angela Watkinson: If they have had a good year and are experiencing a bad year, they may then be faced with payments which are unaffordable. I don’t know how you would answer that.
Steve Webb: Yes, I think that’s fair. The only thing that I would say is, if you are self-employed and your children live with you, the amount of money that you have for your children is going up and down according to your income. You do not have the lag point, obviously. So we would expect people to make provision for their own children in the good years.
Q29 Glenda Jackson: This really follows on from Angela’s question. People lie about what they earn. Is there no way that you can validate the accounts put up to you, if that is the process? On the issue of the variability of self-employed earnings, you mentioned their duty to their children. But not infrequently they have now created a second family, so what is the knock-on effect of that?
Steve Webb: We expect HMRC to validate the information that HMRC receives. We do not replicate, duplicate or have a parallel process, and nor should we. However, what we can do if someone appears to have a low current income but has a lot of money, for example in a bank account that we are aware of, we can and do take money from people’s bank accounts. So it doesn’t just have to be an assessment based on current income.
Q30 Glenda Jackson: And capital assets? You can take that as well?
Steve Webb: Yes.
Q31 Nigel Mills: I am intrigued by how some of this works. If a self-employed person for the year to April 2013 submits a tax return in January 2014, say online, do you then go back and assess what they should have been paying for the year that covered that self-employment? If they were paying £50 and it should have been £75, and they now owe all these arrears, do you say: “We will use this to work out what you pay from January 2014 onwards”, which becomes that year’s liability, not the historic one?
Steve Webb: If someone makes an application and the paying parent is self-employed, we go to HMRC and say: “What is the latest tax return that you’ve got for that individual?” whoever it is, employed or self-employed. We use that number, whatever it is. What we cannot do, if self-employed person X is running a business and the current parent says: “They’re doing really well”, is go in and say: “Show us your books”. We can’t do that. We have to rely on audited accounts and HMRC to check them, which is their job not ours. That will result in some mismatches. There will be times when their current standard of living is not what we are assessing them on, but I do not think there is any other way we can do it.
Q32 Nigel Mills: So you will not go back and say: “For the last year you should have been paying more”? You would only change that for the go-forward year?
Steve Webb: If we became aware that things had changed by 25%--that is the big threshold we use. Take an employee, for simplicity, who declared £10,000 a year and we now know was earning £13,000, that is a big enough change for us to trigger a reassessment. But that is not going to happen for the self-employed very often, because they will not have filed accounts that we can use.
Q33 Nigel Mills: That’s where we are going to, actually. Will that change of assessment apply from when the income went up or from when you become aware that the income had gone up? If you find it six months after it happens, do you go back and say “You should have been paying more for the last six months”?
Ian Wright: In the normal course of events it would be done annually; unless someone tells us anything different, it will be done annually. If, for example, a paying parent comes to us and says “My salary, one way or another, is 25% different” then we would redo the calculation at that point.
Nigel Mills: Okay, at that point—
Ian Wright: When they tell us.
Stephen Lloyd: You always find out, so to speak, from HMRC?
Ian Wright: Yes.
Q34 Nigel Mills: If you find out from the annual check that someone’s pay went up by 50% halfway through the year—
Ian Wright: We would redo the calculation on the basis of that latest information, so effectively we would recover that money through the year ahead.
Q35 Nigel Mills: So you do go back? For employed people you go back to when the income changed?
Ian Wright: No, it is when you do the annual review. At the point of the annual review, we have made a calculation based on the information that HMRC have provided us with. A year on from that we go back and say “Now what’s the latest information?” and we base the calculation on that. The idea is that while you are effectively in arrears, you are then recalculating based on the revised number.
Steve Webb: But we don’t claw back.
Ian Wright: We don’t claw back unless you are told.
Q36 Nigel Mills: If my ex-partner doubles her pay, doesn’t tell me and no one finds out until the annual statement, that is six months extra money that I should have been having but that is gone and I cannot have it.
Ian Wright: The calculation for the following year takes that into account. So say they earned £10,000 and the calculation was based on that, but then their salary doubled to £20,000. When we then go back and look for the latest information, we will do the year’s worth of calculations based on that £20,000. So while it is in arrears, you do catch up.
Q37 Nigel Mills: So for the six months where no one knew that this pay had gone up, does the maintenance that is owed go up or not?
Ian Wright: No, because you do not know about it so you effectively catch it up in the following year when you get the information.
Steve Webb: Just to help, they do have a responsibility to tell us. They should tell us if there is a substantial increase in their income, and as soon as we knew, we would change it in year. If that does not happen, then at the end of the year we just do it prospectively thereafter.
Q38 Graham Evans: In HMRC, if you PAYE it is live, isn’t it? Would this help the situation for people who are paying PAYE?
Steve Webb: It could do.
Q39 Graham Evans: You do have a live situation. The energy companies look at our energy costs over the last year and then increase our direct debits and then it goes down. That is a separate thing, but essentially they send their men round to check the meter twice a year, so if you had the technology to look at those who are on PAYE once or twice a year you could update.
Steve Webb: We are looking at the potential for doing that.
Ian Wright: In the future, with the tax sort of moving to where they are providing information on a monthly basis, that is something we will look at.
Q40 Graham Evans: That will slot nicely into the mechanisms that you are doing now?
Ian Wright: Systems are never as straightforward as that, but the principle is the same. We would have to look in the future because it is obviously a lot more work to assess every month.
Q41 Glenda Jackson: Forgive me, but I have not had an answer to my question about where another family has been created and the impact of that.
Steve Webb: I apologise.
Glenda Jackson: With the assessment of the payments dependent upon increases or decreases in the non-resident parents’ income, who decides that? Who sets that if there is no agreement? Is that the agency?
Steve Webb: So if someone comes to us and says, “We couldn’t sort things out for ourselves, we want you to do the sums,” then we do the sums.
Glenda Jackson: Based on what?
Steve Webb: If there are no dependent children in the paying parents’ household, it is just the standard percentages which are currently 15%, 20%, 25%. They will change under the new system, because they are percentages of gross income not net income, but it is the same sort of idea. But if the paying parent then has one or more dependent children, we reduce what they have to pay by a percentage because they have other mouths to feed. That is a set percentage, so there is no discretion or judgment. It is just a percentage, just a figure.
Q42 Stephen Lloyd: That is the same formula that we have been using for the last number of years, just with a few tweaks.
Steve Webb: More or less, yes.
Q43 Nigel Mills: I just want to get it clear in my head. I have a duty to tell you if my income goes up by more than 25%. But if I don’t, I basically get away with it until the annual check comes round, and you don’t try to get the money I should have been paying if I’d told you. Is that right?
Ian Wright: We recover it through the calculation for the year ahead, as opposed to—
Steve Webb: You keep using the word “recover”. We don’t, do we? In other words, if I cover up and never say, then I just get away with it. I never have to actually—
Q44 Chair: I was confused. I thought I had it with Nigel, and then I got confused. If someone doesn’t tell you for nine months of the year that their income has doubled, you don’t catch up with them until the annual review and you don’t make them pay for those nine months when they didn’t tell you. It’s only going forward that you make them pay.
Steve Webb: Yes.
Q45 Nigel Mills: The word “recover” might have caused the confusion. Perhaps we will move swiftly away from that topic. There has been a lot of concern about the cost to the taxpayer of administering the Child Support Agency, or whatever we are calling it now. Are you actually confident that this system will be better value for the taxpayer?
Steve Webb: Yes. I’d like to return to the point that we know that over half of the more than one million families currently in the system have said to us, “To be honest, we don’t really need to be in this system. With a bit of help and support, we could have sorted this out for ourselves.” If we can get rid of all the families who with the right support don’t need to be in the system, the taxpayer doesn’t have to pay. Even a bog-standard case still costs us money in correspondence and phone calls and all the rest of it. If we can get all those families who could have sorted things out for themselves to do so, that will save the taxpayer a significant amount of money and be better for the children. That is the first thing.
The second point is that the computer links, particularly with HMRC, mean that the whole process will be much more streamlined. As Ian says, we already know that a typical child maintenance assessment can take 12 weeks at the moment. We are now doing it in a matter of days through these links. Because we won’t be spending endless amounts of time faffing with lots of minor changes, tweaks, fiddles and reassessments, which can then be challenged and appealed and all the rest of it, we are spending our money on the thing we need to do. That’s why I think it will be much better for children and for the taxpayer.
Q46 Nigel Mills: Do you think there will be many cases that need to be manually calculated, or can the computer now handle pretty much every scenario?
Steve Webb: I think I am right in saying that we have zero manual cases on the 2012 system at the moment. We have been running for a year, and on Monday we will publish figures for the thousands of cases we have going. At the moment we haven’t had to do a single one manually. Will we ever? Probably. In Bolton at the moment we have over 100,000 manual cases, which are just a nightmare. We are desperate to avoid that happening again.
Q47 Chair: We were very critical of the old system, where every £1 that went to the child cost the taxpayer 50p. What will that ratio be in the new system?
Steve Webb: The current figures for running the system are about a third, so roughly a third of the amount achieved in maintenance is running costs. So it has gone down a little bit.
Q48 Chair: It is still pretty high, isn’t it?
Steve Webb: Yes. In a sense that is disproportionately from the heavy-duty enforcement cases. One of the points of the new system is that if we are on a heavy-duty enforcement case, the person who we call the paying parent—who in this case is not paying—is facing a 20% mark-up on their maintenance and has to pay towards the enforcement action that we take. So there will be a much heavier incentive for that person to say, “Look, I don’t want all this extra cost and I don’t want to have to pay for the enforcement”.
Q49 Chair: You are saying that there will be fewer of them?
Steve Webb: Yes.
Q50 Chair: The other thing that occurred to me was the £7 flat rate. You quite rightly said that lots of people who are paying that will be on benefits. Our other inquiry has been hearing about the increase in the number of people on jobseeker’s allowance who are being sanctioned. I think the figure was an increase of 11%. The sanctioning period is also going to get longer. What happens if somebody’s JSA is sanctioned for a month? Does that mean that they build up arrears which they then have to clear when the sanction ends?
Susan Park: We take it on the basis of income. If there is no income, we cannot take it. It is absolutely on the basis of income.
Chair: I just had a vision of you chasing lots and lots of people who have virtually no money.
Q51 Glenda Jackson: And what is the situation if the resident parent has four children—I am being anecdotal about my constituency—and there are three different fathers? How does that work? Obviously, there have to be separate applications.
Steve Webb: The amount of child maintenance due is based on the number of children in the parent with care’s family. That is where the figure comes from. It is then split between the different paying parents.
Q52 Glenda Jackson: Is that an equivalent split? They always argue that it shouldn’t be equivalent. Or is it always based on their incomes?
Susan Park: It is always based on income, and it is split between the parents with care.
Q53 Glenda Jackson: But it follows the individual child.
Susan Park: It does, and the individual non-resident parent.
Steve Webb: It is the other way round. Sorry, I confused you there. A non-resident parent who fathers—for want of a better word—more than one child has a maintenance liability, which is a percentage of their own income. That is then farmed out to the different families.
Glenda Jackson: Yes, I see.
Q54 Anne Marie Morris: You have already talked about the pathfinder approach in your opening comments, but what criteria did you use to decide you would open the scheme up?
Ian Wright: Before each rise in volumes we set minimum criteria, which were agreed with our operational colleagues. We looked at what things needed to be true before we were happy for the volumes to rise.
Q55 Anne Marie Morris: And what were those things?
Ian Wright: So things like ensuring that there was a certain set of management information, that the system had been stable for a period of time, that they could cope with the applications that were coming in, that there were no major errors with the system and that we had enough people trained.
Q56 Anne Marie Morris: The answer you have given me is all about systems and processes. What about whether this was the right outcome, given the experience—I think you were also looking at touch points—of the pilot people you looked at, and whether the soft criteria of the scheme, rather than the nuts and bolts of the process, worked for them?
Susan Park: So you are absolutely right. The pathfinder approach was to micro-manage each individual case. We started by taking only about 150 applications so we could follow those people through the system as they applied to ensure that at every touch point they were getting the service as we designed it. The other thing that is different about the new service is that we have a customer directorate, which is the voice of the customers. Normally, in traditional civil servant-speak, policy people would sit in a darkened room and come up with lots of lovely policy ideas, and they would probably never take a view about how it works for the client. We did it differently because we had read our history books and we saw what had gone wrong.
Our customer directorate has been working with us to survey the clients as they have walked through. We are absolutely seeing it from the perspective of what it feels like as a customer of the new system. In addition, you could not operate it without the IT system working effectively. You are absolutely right that we have done it from both perspectives.
Q57 Anne Marie Morris: Give me examples of the sort of things that the customer experienced, which came through, and you said, “Ah, we need to fix that bit of the system because it doesn’t work.” Can you give me some examples of things you changed to make them work better from the customer’s perspective?
Susan Park: A good example is procedures. Very quickly, when we get feedback from a customer about a piece of information that we think is not the same as something they have heard on the phone, we will quickly go into our procedures and, because it is real-time, fix it. That is something that the caseworker can see immediately. For example, we were struggling to get people who were taking new applications to ask all the right questions that we included to make it a better experience. Our information was telling us that they were missing some questions, so we updated our procedures and made it one of the checks that we do right at the front end to make sure that we are now asking all of those questions. We were missing stuff at the beginning.
Q58 Anne Marie Morris: That all sounds great, but it also sounds quite labour intensive. Are you confident that, once the scheme begins to increase in scale, you are going to be able to do this in quite such a careful, thoughtful, consistent way?
Susan Park: That is of course why we took that approach and started with just 150. As we have changed things, we are sure that it is right. As our clients flow through from new applications into application maintenance and then on to some other part, we are absolutely clear that the processes, procedures and client interface are working. That is what has enabled us to switch up the volumes.
Q59 Anne Marie Morris: I suspect that all of us are finding an increasing number of individuals coming through our doors with regard to matrimonial issues more generally, partly because of the change in legal aid. I appreciate that that change does not impact children and domestic violence, but more people are coming through the doors none the less. The people who are going to be interfacing with you are often going to be CAB or—dare I say—many of us around this table. In the old days, I suspect that it would have been the lawyers who would have been advising and it would have then come to you, so you have a different group of people. How user-friendly and seamless is it going to be to enable non-professionals to work with these individuals or to enable individuals, with no legal understanding or knowledge, to do it for themselves, which I think is what you ideally want? In some cases, they may have heard of the CSA, but they would not know how to find it. If there is a new body, “What is it called?” and “Where is it?” would be the questions. It is about information and access.
Susan Park: Again, it is one of the things that we learned from reading the history books. We have actually engaged with all the organisations that you just mentioned and have been doing so for a very long time, including getting them to look at the detail of what is written in the letters that go to our clients in this scheme. They have been working hand in glove with us. We recently sat down with a group of 20 such organisations from the community and charitable sectors and some academics as well, and we looked at the other elements of this process. The Minister started at the beginning by saying that this is not all about the statutory scheme. We are trying to do other things to co-ordinate better the services that currently exist, so that they work better together. The organisations are also working very closely with us on that. Specifically and practically, we actually trained some of these people. For the CAB, for example, we provide them with training documents and go in and update their procedures and guidance. We have a whole engagement programme, which is exactly what we are doing right now.
Steve Webb: And we will be doing that for your offices, particularly as we start the process of—
Q60 Glenda Jackson: Can we get copies?
Steve Webb: Yes. We are not moving 1 million people from an old system to a new system. We are essentially closing 1 million cases and trying to encourage and help people to do what they can and then they may come back to us. That would be a three-year process. Of course, all of us will inevitably get people coming in, so we will be doing regional training for caseworkers and all that kind of stuff.
Q61 Anne Marie Morris: You painted a lovely picture earlier about how the IT system is working swimmingly. There was no transition of data, so we did not have the usual data transfer problems. You bought a system, rather than trying to build it from scratch. HMRC was giving you all the information you needed. It sounds like nirvana. My experience from my casework as an MP is that life is never quite nirvana-like. There must have been some glitches and problems. One thing that really frustrates many constituents is the time that it takes to deal with glitches and problems. You must have had such problems, so how are you going to deal with things when they do go wrong? If it has not, I will be amazed. It will.
Steve Webb: Let me give you an example. In a sense, because we have done the pathfinder, where things have gone wrong, which they have, we have been able to put them right while dealing with handfuls of cases without the whole system falling down. We sometimes take payments by debit card, and we had a problem with our computer talking to the debit card companies’ computers and we were not able to take debit card payments in the normal way, so we just had a manual system until we fixed it properly. The point of the pathfinder is that when we go live, as we have done, we fix that bit. Every week over these 12 months, Ian and his colleagues have produced an excruciatingly detailed note of everything that went wrong with the computer this week, how they fixed it and when they planned to sort it out. That is the point of the pathfinder. Yes, things will go wrong again, but because we’ve tested it to destruction over 12 months, we are as confident as we can be that we have a robust system. We won’t start charging until we’ve been running at full volumes for a period of time and we are confident it is a robust system.
Q62 Anne Marie Morris: In this transition—I appreciate it’s a new system, so in a sense you don’t see it as a transition, but for the end user it is a transition—there is going to be a huge number of letters and phone calls from us and from CAB. How are you going to cope with that?
Steve Webb: First, by doing it in stages. We plan to segment roughly a million families and take groups of people together. The first set of people we’re going to take across—this won’t be until into next year when we are confident the system is up and running—will be what we call the nil assessed. These are the people who, at the moment, are assessed as not being liable to pay child maintenance. You might think, what are they doing on the system? I forget the exact figure, but we have taken across tens of thousands of people in that category.
The good news is that some of them, if we had used up-to-date income information, should be paying child maintenance. For example, you are a student, you father a child, and you have zero income and a zero assessment. There is no conversation. Six years later you’re in a well paid job, you ought to be paying child maintenance, but we’ve never caught up. What will happen is that we’ll move all the zeros across first, so nobody’s maintenance will be interrupted, because there ain’t no maintenance flowing, and we’ll say to all those families, “We’re closing down now, here are your options, here is how you can sort things out for yourselves.” In some cases they will talk to each other and sort things out; in some cases they’ll talk to us, but because we’re segmenting them, the conversations that you and we have will all be about that sort of case, and we’ll deal with all the issues for that sort of case, before we move on to the next sort of case.
Yes, there will be a volume, but we are doing it over three years so we’re spreading it out. We’re segmenting and trying to do the easiest cases first so that we’re learning as we go. We have very complicated plans for the end of the process where we are moving across people who are on enforcement, deduction from earnings, and all the rest of it. We have quite imaginative ways of trying to minimise the disruption there, but that will be some years down the track.
Q63 Anne Marie Morris: Service levels. Clearly you had them as part of your pathfinder. How have you adjusted them and how do they work, given that you have just mentioned they are more complicated at the end? What are the service levels measures going to be?
Ian Wright: At the moment, it’s very early days because we have been running on a pathfinder finding issues, and so on. We set a whole set of service levels when we did the design of the system and we are currently going through the process of reviewing them now.
Steve Webb: So the figures we published on Monday include figures for accuracy. In September 2013 we were 97% accurate to within 0.5%. We have the percentage of calls answered: 97% answered, 94% within 30 seconds. Since we started last December, we have had 15 complaints. That gives you a sense of the kind of information we are providing.
Q64 Anne Marie Morris: Do you think you will have to change those service level measures as the thing grows and more complex issues come through the door?
Steve Webb: I still think things like being accurate, responding to phone calls, not having complaints—those are bread and butter things that we should just be doing.
Q65 Anne Marie Morris: Are there any helpful statements that we can give to our constituents in terms of how fast they can expect these issues to be turned around and dealt with? Historically, as you know, the CSA has had the reputation for being the worst possible department to deal with: you are lucky if you get something in six months.
Steve Webb: To be honest, by the time a constituent comes to see us the chances are that something has gone wrong. This is a slightly anecdotal reflection, but my sense is that our perception of all public services as MPs is coloured by the fact that it is all the horrible cases that go wrong that come to see us. The CSA deals with a million families and only a tiny number ever go and see their MP, but when they do, it’s a real mess. A lot of families get a decent service from the Child Support Agency; we just never hear about it because they never tell us. But I entirely accept there will be difficult cases. I don’t think we should say to our constituents, “All this should be done within 13 days” or whatever. We will have those sorts of targets, but by the time they get to us, it’s a different issue.
Q66 Glenda Jackson: On the issue of the new pathfinder system, how many historical cases are included in that or are they all new? To go back to the point you made with regard to the zero claimant, you gave an example of a student—six years on, they are earning money. But we all have cases where the individual is known, but for a considerable period has never paid anything. Are they all included in that zero—
Steve Webb: No, they are not. To take the second question first, it is what we call the nil assessed—the people who are assessed at the current moment, under the current rules, as not having a liability—who move across.
Can you ask your first question again?
Q67 Glenda Jackson: Will the historical cases be included in this system, or will they be paper and pencil?
Steve Webb: Nom only if they are linked. So if, for example, a four-child family makes a claim and it turns out that another person on our old system in the same family has the same connection, we bring them all over together. That is the only case where we are bringing over old cases—what we call linked cases. You could not have a non-resident parent assessed for one set of children on this system and another set of children on that system, so we have to bring—those are the only ones we are bringing across at the moment.
Q68 Anne Marie Morris: Can we move to delays and the cost implications? We have touched on this briefly and we all know that phase two has been delayed. The Chairman has already suggested that there are cost implications and you have already said it will all be fine. How have you looked at and broken down the cost implications, to be able to conclude that you will still be within budget?
Q69 Steve Webb: The plan to do it on a pathfinder basis has been in the works for a long time. We were in the field a year ago, doing this, so this is not a sudden, recent decision. The December 2012 start date was two months later than scheduled—that was it. The July start date for the families with two children was bang on time. The November one we have just done was a month late, there or thereabouts. So, in fact, the pathfinder has more or less happened to time.
Once we have done all that and we are convinced that is up and running, what we call phase two, which is where we start closing cases, we will do next year. We have working assumptions on that, but we want to be sure it is right. Certainly, for some considerable time, we have been running on the schedule that we said we would. Some years back, we probably envisaged a quicker run on that, but doing it this way will save money, not cost money, in the sense that, if we iron these things out on a small scale, we will not then be trying to shut the whole system down while we fix things.
Do you want to chip in on that, Susan?
Susan Park: Like all investment cases, we look at the return 10 or 12 years down the line. At the moment, the business case really still stacks up. The return is certainly acceptable. That is what every business case looks at.
Q70 Anne Marie Morris: So when you looked at phase two—I appreciate that phase one is pretty much there, but phase two is more of a challenge—I can see that there would be an argument that, longer term, it might, at the end of the day, not cost you more. How have you got to crunch the numbers to be able to see in the short term—2014 and then 2015—what the additional cost will be in those years, even if, in the long run, the outcome will be that you will not go over?
Susan Park: There was a Public Accounts Committee hearing and that was set out. Over the next three years, when we are transitioning—when we are actually closing down the cases and inviting people to make a choice—our costs do increase. In the PAC, it said something like £150 million to £200 million. That is in our budget. That is accounted for. Clearly, there are no guarantees, because we do not have a spending review settlement beyond the next couple of years. But at the moment that is all accounted for and that has all been planned.
Q71 Anne Marie Morris: That is helpful. Thank you.
Can we finally turn to measuring compliance? The NRPs are compliant if at least one payment has been made in the last quarter. I guess the issue is whether that is genuinely compliance. You are assuming that the individual who is, if you like, disbenefiting will come and put their hand up, etc. You have talked a little bit about that. But to me there are two issues. First, does this not give rise to misleading statistics? Although it appears to be compliant, I think that the man in the street would say that that does not really look terribly compliant. Secondly, you are assuming a degree of proactivity, and while, for families with time and without all sorts of problems, that is all wonderful, many families have multiple problems and the time to put their hands up just is not there. They are struggling to deal with some of the day-to-day stuff.
Steve Webb: We have published an arrears strategy, and part of the problem in the past has been that arrears have been allowed to build up without any action being taken by us. If you think about it, if you spend three months doing an assessment and no maintenance is paid in the meantime, you are immediately three months in arrears. If we can sort the assessment out in 10 or 12 days, or whatever, we are on the front foot already. Because we are dealing with a smaller volume of cases where we actually need to get involved, we can monitor those much more actively, rather than having a million just sitting on the books. On arrears and compliance, we publish figures for how many are getting any money and how many are paying everything; we don’t say, “That’s fine. A bit of money once a quarter, that’s all right—job done.” But what we do know is that we have a much better prospect of building on this in the cases where at least some maintenance is flowing. There is a different category of people where absolutely nothing is being paid, so we are absolutely not satisfied if people just pay a bit now and again.
Susan Park: It is one of the reasons why, in the statistical summary that we produce, we started looking at what is owed in a year and what we get in a year. That, to your point, is probably a better indication, and it is actually what other CSAs across the world do. Australia do the same. But I think it fair to say that no CSA organisation anywhere in the world gets 100% of what is owed. Even Australia only collect about 90% of what is owed. I think our latest statistics show that we collect about 87% of what is owed. We were responding to feedback about that.
Q72 Debbie Abrahams: Does that therefore mean that the compliance measure you are currently using is the most appropriate?
Susan Park: I suppose it depends what you are using it for. We always respond to what people want to know and on the whole, it is external observers who want to know what is going on with compliance. For us, as the organisation, it is about trying to get the money for the child, and it is really important to understand how much of the money that is owed we are collecting, which is why I think the annual figure is very good.
Q73 Debbie Abrahams: It is about timeliness as well, though, isn’t it?
Susan Park: You are absolutely right, because if you need money now, it is much more relevant, which is why our arrears strategy is really focused on trying to get money that is owed now much more quickly, so that those who are children now benefit from that money now. A lot of time and effort—and certainly commentary—has been put into asking, “What about the old arrears?” Actually, if we can get on top of the money that is owed now and keep that flowing, we’ll have a much better chance of children benefiting.
Q74 Nigel Mills: While we are on arrears, how do you handle people who are in arrears under one of the two existing schemes? If their case gets closed and they end up in the new scheme, presumably, the arrears will somehow be migrated over and still be collected. How will that work?
Steve Webb: The arrears don’t go away. Even if the case is closed in terms of live child maintenance, the arrears are still there. We have set out in our arrears strategy a sequencing, and it is true to say that where a child is still a child, that is our first priority: to get maintenance flowing and to pick up arrears. But we will still also be going for arrears from closed cases. But if the family cannot sort things out for themselves, they come back to us, we have a new live case and the arrears will come across, so they will be part of the new process.
Q75 Nigel Mills: I think there was some mention of having to validate arrears. Presumably, that is just checking the number—
Steve Webb: You may wish you hadn’t asked that question. Ian, tell us about validating arrears.
Ian Wright: When we go through the process of closing cases, we will look to get the arrears as up to date—right up to date—as possible, and make sure, as far as we can, that both parents agree that those are the arrears before we then move it across to the new scheme and system. So it is just about going through that process and making sure that everything is up to date and we have as accurate a figure as possible before we bring it over.
Q76 Nigel Mills: I am intrigued by the concept of both parents agreeing what the arrears are, given some of my casework.
Ian Wright: Yes, perhaps “agree” is the wrong word. We will obviously share that information with them and give them an opportunity to say whether they think that is right or wrong.
Q77 Glenda Jackson: To follow Nigel’s point about parents not agreeing, you are the port of last resort. Surely you are the people who say, “I don’t care what you say you should pay; this is what you should pay.”
Steve Webb: It is not so much, “How do you feel about that, guys?” It is more, “This is what we think the figure is. This is why we think it is what it is. Have we got any of our facts wrong?”
Q78 Glenda Jackson: That is what I mean. It is not left to—
Steve Webb: No.
Q79 Kwasi Kwarteng: Clearly you are moving to a new system, because you think it will be more effective in getting good outcomes. Was there consideration of the cost of the administration of the new system? Was that a big driver in moving from one to the other? We have not talked about that at all in the past hour.
Steve Webb: In many cases where the Department was trying to save running costs money, the challenge was how to do as good a service for less money. In this case I think we will do a better service for less money. We will stop doing something that ideally we would never have been doing in the first place, which is getting involved in families where they could, with the right help and support, have sorted things out for themselves.
It will cost the taxpayer less to run, because we will be processing far fewer cases, and I think in general we will get better outcomes for children because there will be lots of families we will not deal with any more, who are talking to each other and sorting things out. It will be cheaper overall, because we are dealing with fewer cases. Some of the cases we deal with might be the hard cases, so we have to spend a lot of money.
So I cannot swear to you that the cost per case will go down, because many of the people who go outside the system would have been the easy cases that were not costing us much in the first place. The cost per case may or may not go down, but the cost of running the system will go down, and I think we will get better outcomes for children.
Q80 Kwasi Kwarteng: Can I just ask a follow-on to that? To what extent was that a consideration in moving from one to the other?
Steve Webb: It was. That was the context of the original plan. It was also philosophically the right thing to do.
Q81 Dame Angela Watkinson: I have had cases, and I am sure all colleagues have, of a paying parent falling into arrears and claiming that the level of maintenance is unaffordable and they do not have enough money left to maintain themselves. That can be coupled with a change in circumstances for the mother usually—who has the children living with her—in a new relationship and living very comfortably. Does the change in circumstances of that mother have an effect on your calculations? Or is it simply the statutory duty of the paying parent?
Steve Webb: For example, the income of the new partner is irrelevant to us. There was an attempt when the ’93 system came in to try to capture everything and it was just a nightmare. Imagine the problems we already have with just one paying parent and the changes in their income, and whether they are self-employed and all the rest of it. Now add to that the new partner of the mother. You would spend all of your time doing sums.
Chair: We have a lot of questions on charging as that is obviously new, and Sheila is going to kick them off.
Q82 Sheila Gilmore: You have already said that charging will come in when you think it is working well. Have you any indication of the time scale?
Steve Webb: We have working assumptions but we are trying not to say that it will be on the such and such of this month, and it will be late if not. We are trying to say that we will not switch this thing on until we are confident. It will be next year but I cannot be more specific.
Q83 Sheila Gilmore: Is what you are confident about going to be that the systems are working? Or are you also potentially going to look at how good is the support in place? I think you said that some of the support projects, pilot projects, all seem to be quite small scale. They are quite new and have not done very much yet. There is another lot to start, presumably in the early part of next year. Some organisations have suggested that charging should await the evaluation of those projects.
Steve Webb: Just to clarify, there is plenty of stuff out there now already. It is not as though we are inventing from day one the idea of help and support for separated families. We have something called the help and support for separated families mark, which is like a kitemark. Organisations that supply that sort of support are signing up to it. We have a web application that gives people the chance to do a whole journey through questions such as, “Are you a Mum? Are you a Dad? Have you got the kids with you?” That helps them to think through their options and is on the internet now.
These pilot projects are in a sense trying to do new and different things. They are not as small scale as you suggest. Some of them are niche but the Relate one we are doing at the moment will help more than a quarter of a million families online. So some of them are designed to be at scale. In a sense help and support for separated families will be a journey. There will not be a day when we say, “It is all fine, we’ve got enough.” We will learn what works. But if we wait until someone says, “Yes, there is enough support out there” we will never start.
Q84 Sheila Gilmore: What are your criteria for evaluating something like the online support? A quarter of a million people may go on to the website and do something with it, but what is your measure of that being successful?
Steve Webb: Bear in mind that we have Child Maintenance Options already in place. There is a phone number for people to ring. A trained, skilled person talks them through their options, signposting them to existing services and some of these new ones. They have already helped well over 100,000 families—150,000 from memory—to set up a family-based arrangement. So a family-based arrangement is not something we have just thought of, it is something we already try to help to do, something we do in scale. We want to do it better. We want to do it for more families, hence the pilots. It is there already; we are just expanding it.
Q85 Sheila Gilmore: How will you know if people are falling by the wayside in all of this? If everybody has to go through a system you will know, but here in a sense you almost want the opposite. The measure is that people don’t go through the system, but how do you know that any money is flowing and that they have not just said, “Oh, this is too much. I give up”?
Steve Webb: That is a very important question and one that we are mindful of. As well as doing our own stats about the people who engage with us, we are putting questions into social research surveys like the Understanding Society survey, which is a representative sample of the whole population. We will be monitoring from that where child maintenance is flowing, who has family-based arrangements and so on—people we never deal with at all. If we just shove people outside our system and then people do not pay maintenance, we have failed. We have saved some money, but we have failed. That is not the point of the exercise. I entirely take your point. We will monitor what happens to people who do not come to us.
Q86 Sheila Gilmore: You agreed to reduce the charge for the parent with care from 7% to 4%, which was widely welcomed. How much difference has that made to the estimates of income?
Steve Webb: We consulted on anything from 7% to 12% for the parent with care. We listened very hard to the consultation responses. In a sense the point of the charges is not principally to raise money, but to change behaviour. So, of course, if you have a 4% charge and not an 8% charge you get however much less. It is not huge sums, to be honest, for the parent-with-care charges. The point of them is to get people to stop and think. It will probably cost around £20 to raise £20. That is not the point. The point is to get people to think, “Hang on, I’m paying for something here, could I do it more cheaply myself?” The 4% will make a marginal impact rather than the 7% to 12%. I don’t know the exact figures, but it will be tiny in the scheme of things.
Q87 Sheila Gilmore: Have you got a projection for income?
Steve Webb: Do we have the figures to hand?
Susan Park: They were set out in the Public Accounts Committee Report which we can send to you again. It is also in the impact assessment which has just been published. We would be happy to send you that.
Q88 Debbie Abrahams: I wanted to follow up on Sheila’s question, particularly in terms of the charging that may or may not be applied to, for example, families living with children in poverty. I went through your impact assessment and I could not see any comparative analysis and scenario modelling of what that would be without charge, with charge and without money. I could not see any of that. Has any work been done to estimate the impact of these additional charges on families living in poverty?
Steve Webb: Bear in mind, the point of the charge is to get the maintenance flowing. It is almost like you have drunk a glass of wine and there is this little drop in the bottom and we are focusing on that little drop.
Q89 Debbie Abrahams: That is why I asked about the comparative analysis.
Steve Webb: In a sense what we are saying is that if we can get child maintenance flowing even if it is enforced and charged, that is 96p in the pound going to the children. It is not 100% but it is 96p. But the paying parent faces a 20% whack on that and so has this ongoing incentive to do payment direct. What we are trying to establish is the right incentives. Is that good for child poverty? I would maintain that it is, and we will get lower child poverty because of it, even with charging, because of all the incentives to actually get maintenance paid directly and reliably.
Q90 Debbie Abrahams: Again, I understand the point that you are making, but I am asking whether there are any figures, because I cannot imagine that it will not have an effect. If this is solely about changing the behaviour of the poorest people, whose children are affected, I hope you will consider doing some number crunching and then consider whether that will be a group of families that will be excluded from any punitive charges.
Steve Webb: I do not recognise the word “punitive”. The punitive charge is on—
Q91 Debbie Abrahams: Anything that will push families—it might be a small number—across that threshold.
Steve Webb: I think the opposite is true. I would not be doing it if I thought we were creating more child poverty. Child poverty is higher among lone parents, as you well know, and one of the reasons for that is that maintenance is not flowing. If all this stuff, including the penal charge on the non-resident parent, drives payment behaviour, we are reducing child poverty. This is not about increasing it.
Q92 Debbie Abrahams: As I say, I would welcome the numbers.
Steve Webb: We will monitor this. I should mention the 30-month review. We have undertaken that, 30 months after the start of charging, we will look at how it is working. We will look at the behaviours, at who is paying and who is not, and we will publish that. We are not simply saying, “It’s charging, get lost, go away.” This is new. We recognise it is trying to change behaviours. We will monitor that and we will report back in 30 months.
Q93 Stephen Lloyd: Still on charging, except I would like to go back to what Nigel was talking about 45 minutes ago about the non-resident parent not paying for nine months and starting from the moment they get the money. For the record, if that happens, will there be no sanction against that individual who should have told you that they were over 25% but did not get round to it? You only discover it from HMRC and you are not going to claw back. Surely the Department would want to apply some sort of sanction?
Steve Webb: We do have that power.
Susan Park: Actually, we would want to monitor that. That is part of the behavioural stuff that we would want to look at—how much non-compliance and how much misreporting—and then I think we would make a judgment about whether it is worth taking action.
Q94 Stephen Lloyd: Good, because my own view is that if you do not, it will be found out and people will game the system. Let us put that on the record.
On the charging area, is it correct that, even if the parent with care is willing to incur the collection charge, they would be able to access the service only if the non-resident parent agrees, or if the decision maker—the CMS—deems that the non-resident parent is unlikely to pay?
Steve Webb: Just going through the sequence, the parent with care contacts Child Maintenance Options and we talk them through their options. If they say, “No, I can’t sort this out for myself; I want to use your service”, they pay the £20 fee, unless there is domestic violence or abuse. We will do a calculation to work out how much maintenance would be payable. Ideally, that information is available then, so the parent with care can say to the paying parent, “The child maintenance people have done the sums. It’s £100 a month. You can either pay it to me directly, or we do it the hard way, in which case you don’t just pay me the £100; you pay them £20 on top.” That is the conversation we want to have if we get to that point.
Clearly, if the paying parent says, “No, I’m not interested,” we will go through the statutory scheme, and then there is a 4% charge on the parent with care and a 20% penalty. Our view is that that is not the end of the matter. We do not then walk away and say, “Right, there’s nothing more that can be done with that case.” The whole point about the 20% every month is the reminder, the jog: “Look, we don’t really need to be involved with this. You know what the figures are.”
If enforcement is involved—a deduction from earnings order or something—we will charge the non-resident parent for that as well, so there is this push all the time. What we do not want is people to be simply stuck there as a permanent state. Relationships change. There might be a point where it is very difficult and this is where they end up, but over time things change, so what we are trying to do is constantly prod to get people back out, and we need the charge on both sides, because otherwise the one parent has absolutely no reason, even if things change, to ever go outside the statutory scheme. We want both parents to have an incentive to find a way, wherever possible, to go outside.
Q95 Stephen Lloyd: So there is that default: if I am the parent with care but the non-resident parent does not want to pay and I come to you and say they are being unreasonable—they are refusing to do it through Options or what have you—the default position is that you kick in with the appropriate charges and start to warn them that if they do not pay, it is going to cost them a lot more.
Steve Webb: Yes.
Q96 Stephen Lloyd: So that is the general nudge process. Okay, thank you. The previous report from the Committee recommended that in circumstances in which a parent with care has taken all reasonable steps to collaborate with the non-resident parent to create a family-based arrangement but no such arrangement has proved possible, application and collection charges should fall only on the non-resident parent. That was one of our very specific recommendations.
We were interested to see that that recommendation was not taken up, because that strikes me as being very unfair: if I am trying to do everything but my partner is refusing to do things, although you would load the charges I would get charged as well. That strikes me as being unfair. Why did the DWP decide to go down the road where both parents would be charged, even in the case of those people who are trying to do their best? It seems an anomaly.
Steve Webb: I understand the perceived unfairness. There are two points I would make. First of all, no charges apply in the case of domestic violence or abuse. The £20 is gone. There is still the 4%.
When you made your recommendation we were envisaging a 2:1 ratio between the charges—20% for the paying parent, and then 7% to 12%. We are now on a 5:1 ratio, so the balance has been shifted dramatically: five-sixths of the charges will come from the paying parent. The question would be this: if we got rid of the 4% for cases such as you describe, first of all we would have to identify them—we would have to identify the good guys, as it were, and have a test to see whether the parent with care was doing everything they could reasonably have done. You can imagine the disputes we would have about that: what is enough? What would be the test? It is easy to think that there is a bad guy and a good guy in this, but actually human relationships are obviously much more complicated than that. We as an agency would have to be able to say, “You are completely compliant, and we will waive the 4% because you have done everything you can possibly do.” In some cases it would be obvious but in many cases it would not be, and then we would be having appeals, disputes and all the rest of it.
Our strategy is to say, “Look, 96p in the pound is going to the parent with care.” That is the point: the 96p in the pound. The 4% is just that nudge—it is not 12% or 20%—to show that if things start getting better and maintenance starts flowing reliably we want both parents to have an incentive to move to direct pay, where no charges apply. That is the important point: even if we are overseeing it, if it is direct pay the charges stop.
Q97 Stephen Lloyd: I can see that there has obviously been some adjustment from the DWP on the back of our report so that it is loaded more towards the non-paying parent. I understand how difficult it would be to apportion complete blamelessness to a particular individual, particularly given the systemised process you are going to have. I would just flag the fact that even though there has been a real, positive change in how much more is loaded on to the non-paying parent, there will be a tremendous sense of injustice among those individuals—and we have come across them—who clearly have done everything right but are still not getting anything. Although I understand the logic, the Department needs to understand that there will be that sense of real injustice.
Steve Webb: I will bring Susan in in a second. All I will say is that some of those cases will be cases where no maintenance at all was flowing, and because we are able to focus on the more difficult cases, to take HMRC data and all the rest of it, we will have got maintenance flowing. So what the receiving parent will see is not so much the 4% as the fact that they are getting 96% of a worthwhile amount instead of zero. Some of those people will be moving from zero to that world. Susan?
Susan Park: I was only going to say something similar: we would only take that 4p in the pound if money was flowing.
Chair: Graham, do you want to come in? Big chunks of your question have been asked, so I hope you will be able to work out which bits haven’t been.
Q98 Graham Evans: You mentioned people who regard themselves as victims of domestic violence. How do you know that they are actually victims of domestic violence?
Steve Webb: We have a standard definition across Government, which involves domestic violence or abuse, so things like coercive behaviour would be included. They have to say to us that that has happened. They have to have reported that, before making an application to us, to one of a whole long list—solicitor, social worker—
Q99 Graham Evans: GP?
Steve Webb: Yes, GP is on this. There is a very long list of people. Provided—regrettably—that it is happening, and they have reported that to a broad range of organisations, we will accept that. I will not give numbers, but I think it is fair to say that we do not expect this to be marginal; we expect significant numbers of people to qualify for this exception, sadly.
Q100 Graham Evans: But not the charges for the collection service?
Steve Webb: That is right—the £20—because the charges apply only when money is flowing. In a sense, I see the 96p, which might not have been happening at all in this sort of case.
Q101 Graham Evans: You are not planning to conduct a full evaluation of the charging until 30 months after the implementation, because you do not regard an earlier evaluation as likely to be effective. Do you at least plan to monitor the effects of charging during the first 30 months—for example, after the first 12 months?
Steve Webb: We will certainly be gathering information as we go. In 30 months, we will not even have finished closing all the cases. It is a balance. We will still have people on the old system in 30 months. If we said, “We will do all that and get them all embedded in the new system, and then we will do a report,” it would be five years, and you would say that that was outrageous. However, if we do it much sooner, half the cases we will not even have come across. Because of the sequencing, the ones we are moving first are the ones where no maintenance is being paid anyway at the moment. You just would not get any useful information earlier than that.
Q102 Graham Evans: In terms of how successful the outcomes are, you regard this new process as a success. Will you regard the reduction in the number of people using the statutory system, which we hope for, as a success, even though this might mean that parents have no maintenance arrangements at all, rather than them coming to a voluntary arrangement, where they drop out even though there is no arrangement?
Steve Webb: As far as we are concerned, just shoving them out of our back door is not success. Getting people to form family-based arrangements is success, and we will monitor that. As I said, we already know that Child Maintenance Options have helped large numbers of people do that; we already monitor that. We will be doing social survey work to look in the population as a whole for whether child maintenance is being paid, and we can look at the sorts of family situations where it is not to see whether we can learn from that.
Q103 Graham Evans: In terms of stopping people from getting into the system at all and sorting out their own arrangements—a colleague mentioned this before—will there be marriage guidance counsellors specifically aware of this in our constituencies, who, whenever there is unfortunately a breakdown, will talk about this and try to assess whether people could reasonably come to an amicable arrangement?
Steve Webb: Yes; I will ask Susan to come in with some of the work we have done with networks of people—Susan mentioned Citizens Advice and so on—so that they understand what we are changing and what we are trying to achieve. Some of the services are already available online and many people will prefer to do that. I am not promising a sort of nationwide network of face-to-face support for every family that needs it, and I cannot promise that.
Susan Park: So, specifically, Relate, one of the “help and support for separated families” mark holders, did some publicity on it. We have also trained some of the existing caseworkers who answer calls on the helpline to have up front a much more positive discussion—or a discussion—about how to support parents to collaborate. We are doing lots of work with lots of different organisations—for example, training caseworkers and our people—and building our knowledge base. For example, a consortium of those organisations helped us to build the knowledge base that we use in Child Maintenance Options. They also designed and delivered the training that our CMO agents utilise. It is absolutely a two-way process.
Will we have missed people? I am sure we will, but any time that crops up, I hope you tell us and we will pick those people up.
Q104 Glenda Jackson: I am going back to the victims of domestic violence. How are they going to avoid collection charges when the non-resident parent refuses to use a banking system which preserves, not the anonymity, but the address of his—it is almost invariably his—ex-partner?
Steve Webb: So, on that very specific point, for this thing called Direct Pay—where they have come to us, but we are facilitating Direct Pay—we can sort out anonymity. It is a bit like PayPal and that kind of system. We will facilitate anonymous payments. So, although he is paying direct, it will not have to be to a geographical sort code or something like that. We will facilitate that.
Let me give you a straight answer to your original question, that the parent with care cannot avoid the 4% charge if we are having to go through the statutory scheme. It would be dishonest—
Q105 Glenda Jackson: No, no, that was not really my concern. My concern was the possibility of someone who is genuinely afraid that her ex-partner will discover where she and their children are living, and whether he is going to say, “Well, I am not going to pay unless I know where they are.” People do say that; they are as up front as that. What are you going to do about that?
Steve Webb: So we are saying, “If you want to use this Direct Pay thing”—to him in this case—we are saying to him we will sort out Direct Pay. The ex-partner does not want to reveal where they are, so we will provide an anonymous place to pay it to. If he says no, then we say, “20%, mate.”
Q106 Glenda Jackson: So he will essentially be sanctioned by refusing.
If I could just go back to the last answer that Susan was giving us. You are looking at a situation where there is still going to be the same accessibility—for example, for people who have suffered domestic violence—to legal advice. That isn’t the case. We have seen a marked reduction in legal aid. Are you aware of that? Are the voluntary sector taking the load in this? It is not the best of all possible situations.
Susan Park: Yes, we are working very directly with the Ministry of Justice as well. They are partners—
Q107 Glenda Jackson: I am tempted to say oh dear, but I won’t.
Susan Park: In trying to promote the work that they are doing to encourage more mediation as well. So I think everybody we hope should be aware is aware. We are also of course working directly with the organisations that support people who have been subjected to domestic violence and abuse.
Chair: Our final question on this section is from Sheila Gilmore.
Q108 Sheila Gilmore: It is important, I think, to accept that the enforcement fees could lead to the non-resident parent building up more arrears. Is that not going to contribute to further sort of non-payment, because they are just going to get into more and more difficulty?
Steve Webb: It is a balance, isn’t it? If someone is making life difficult for their children, and for us, and costing the taxpayer money, then why shouldn’t they pay? We are not charging them the full cost—it is subsidised—but we are saying, “Look, not only are you not sorting things out for yourself and paying direct as you should be, not only have we then had to spend money enforcing these things, then you should have to pay towards it.” It is a one-off for having to do that piece of enforcement. We all know that there are cases of arrears running into thousands. The fees we are talking about here are fifty quid, 100 quid, those sorts of amounts. I don’t think they will be material on arrears. If you have a determined non-payer, the charges for these things will be fairly marginal, I suspect, but they are just a further sign of, “You should be doing this for yourself. You are costing us money. You should be paying towards it.”
Q109 Sheila Gilmore: So you don’t think it will lead to somebody thinking, “I’m just not going to pay at all then.”?
Steve Webb: Well, they are not paying at all anyway if we are having to use enforcement measures.
Q110 Sheila Gilmore: Well, they weren’t, but they may have started again.
Steve Webb: So the fee is not recurrent. There is a charge for setting up a deduction of earnings or whatever, but once the charge is in place, we don’t keep on. The 20% is recurrent, but the other fee is a one-off fee.
Chair: We have 25 minutes and about another 10 questions, so we will maybe get through. Some of them have been answered in part. Kwazi has some questions on the Gateway.
Kwasi Kwarteng: Sorry, can I go after? I’ll come back.
Chair: I’ll move then on to Nigel. There is a problem with the electronics.
Q111 Nigel Mills: Can I ask you about transitional arrangements between the existing systems and the new system? I had a constituent case where he was quite keen to move on to the new system because he thought his payments would be lower. In effect, the answer was, “Well, sorry, you can’t migrate by choice. At some stage, your case might get migrated, but you can’t opt yourself into the new system.” That is the right answer, is it?
Steve Webb: Yes, so bearing in mind that there are now three systems—the ’93, the 2003 and the 2012—we have had that issue described big time on the ’93 and the 2003, because there was a marked difference in the rules, and so on, so there was a set of people who could see they would pay more or less according to which system they were on. The 2012 system broadly mirrors the 2003 system percentages, so apart from a slight difference on shared care, which I think is potentially significant, the numbers aren’t very different between the ’03 and the 2012 system. I would guess your constituent wanted to get off the ’93 and on to the 2003, probably. There ain’t going to be any of that, because we are shutting the lot of them and starting from scratch.
Q112 Nigel Mills: There is a concern that you may have had a non-resident parent who has been serially non-compliant and you finally get them paying—it is finally working—and effectively you close the case under the existing scheme and have this six-month period, where you hope they are going to be compliant; what will happen if in that six months that just means the payments stop again? How quickly can you respond to sort it out?
Steve Webb: So that sort of case has probably been my biggest concern. All of us as constituency MPs know the cases where we have sweated blood and everyone has worked really hard: finally the money is flowing and here comes Steve Webb and he’s going to shut it down. Nightmare—so what are we going to do about it?
First of all, we are going to move those cases last. So out of those 1 million-odd cases that we close, those will be the last ones, so we will have worked out how to deal with the transition; we will have got all our structures in place. That means that those cases will go on running for a couple more years, probably. Some of them will just flow out, because the kids reach 16, or whatever it is.
What we will then do is have what we call a compliance opportunity—as you mentioned, a six-month-or-so period before the case closes, where, in this sort of case, typically, arrears are involved. One thing we would do is say, “Right, the deduction from earnings order will be for the regular maintenance and then the non-resident parent will have the voluntary payment of arrears.” That might sound a bit odd, but what we are saying there is they have six months or so to prove that, when we let them do something voluntarily, they actually do it reliably month after month: a standing order, a monthly debit card payment, or whatever it is.
Only if they satisfy us that they are now reasonably likely to pay on a regular basis would we then close them down and start the whole thing off from scratch, if the other parent wants them to. If they mess us around in that six-month window, we simply move them straight to a deduction of earnings order in the new system. We can’t just do that directly. We can’t just move them straight across because of the 20% charge. We can’t just say to somebody who is now paying regularly, “We are just going to jack your maintenance up by 20% because we don’t trust you.” We have got to give them that window, but we do the window before we shut the case.
For example, one idea we have had is to ask for post-dated cheques. If somebody owes some money and we are letting them pay voluntarily, we might take a credit card imprint like you do when you hire a car at an airport or something, so that if they then mess us about, not only do we know they are going to mess us about and move them on to the new system straight away; we also take the money, because we have got their credit card details, or whatever. It is not perfect, but we have tried our best to make sure that people who are still going to mess us around go straight across to the new system.
Q113 Kwasi Kwarteng: The soft Gateway that you introduced in 2013: what have you actually learned from that?
Susan Park: One of the important lessons we have learned is, if you have the right conversation with people, you can actually get a different outcome; so a lot of the people who would have automatically defaulted into the state service were actually very willing to have a conversation with somebody who was willing to talk them through what their other options are. That is what we have learned most of all—that if you have a different conversation with people, you can actually influence a different outcome.
Q114 Kwasi Kwarteng: Your presumption in that answer is that the conversation that they are having is making them more inclined to co-operate. Is there any evidence that people are being reticent when you are trying to make them open up?
Susan Park: Actually, it is not my presumption because, in the end, I want the right arrangement for the right set of circumstances, so if it is right that they do end in the statutory scheme for them and their family then that is the right outcome. So, actually, I just want them to understand what their options are, because even though we stopped compulsion whereby people were forced to use the agency in 2008, we still have a lot of noise out there where people offer each other advice and guidance, and, actually, it is often misplaced. So we get lots of people phoning who think that they have to use it. It is intended to be a helpful conversation.
The other thing that we are trying to do is make it about not just child maintenance. If there are other issues, because families face many other issues when they separate, we want to be supportive in directing them either to a reasonable point of advice or to an expert domain. We are trying to help them with not just child maintenance.
Q115 Kwasi Kwarteng: Isn’t there a risk that people might be deterred from using the statutory service?
Susan Park: I can’t say that that is not an absolute risk, but we would hope that, in the conversation, as one of their options is to use a statutory scheme, they are asked, “Is that what you would like to do?” Then there is a warm hand-on to the statutory scheme, so that people are not stopped from making applications to the statutory scheme.
Steve Webb: Just to add to that, if I may, I went and listened in on some Child Maintenance Options phone calls and they are very even-handed. I am not sure if I am supposed to say this, but, hypothetically, if someone at the other end of the line were to be asked, “Do you think I ought to sort out a family-based arrangement?” the person on our end of the line does not say, “Whoopee! Yes, that’s fantastic. I know it’s best for you,” because we do not know their family. We think it is in general; but on an individual case, we do not know. So we do not heavy them—we do not lean on them—but we do expose them to the different options that they might not have thought about.
Chair: We now have several questions on arrears. I know that we touched on that already. Dame Angela has the questions.
Q116 Dame Angela Watkinson: This is a question about your aim to act within 72 hours of a missed payment. Do you have any evidence that that is achievable?
Susan Park: This is about how the 2012 scheme operates. We are still in the very early days—do not forget that we have only just started to take all applications. Of the cohort that started a year ago, not all of them will have got to a missed payment, but, as I said, we are tracking each case at the moment to see what happens. So if the system indicates that there is no payment, the system shoves up an alert and then the caseworker takes action. That is an automated process that does not exist in the existing CSA systems. Is it working? The system is alerting us, so yes.
Q117 Dame Angela Watkinson: If there are no funds with the paying parent, is it just registered as an arrear?
Susan Park: So we do lots of things to establish whether there are funds. One thing, as I think either Ian or the Minister said, is that we have a direct interface into the credit reference agents, so we can see what activity there is. We also have access to bank accounts, so, again, if we have evidence of money being held in a bank account, we can go to that.
Our arrears strategy set out some of the trials we are looking at. We have worked with some organisations to look at taking clients who are willing to go through this a process that shows their income and their outgoings and having a reasoned conversation on the basis of that factual information. So we are constantly working at: is there money there and, if there is, can we get it? If there is not money there—or assets or homes or whatever—are there other ways that we can take these people on a journey to be compliant?
Q118 Dame Angela Watkinson: Okay. Thank you. You are also exploring the option of bringing in divorce powers laid out in the 2008 Act providing for the Child Maintenance Service to disclose payment information to credit reference agencies. Under what circumstances would you disclose such information?
Steve Webb: So, if we were to do that, we would have a consultation and get feedback, so it is not a decision. I am quite sympathetic to the basic idea, which would be if somebody is not paying their maintenance who ought to be, and they realise that missing their maintenance is an adverse credit event that we would tell credit reference agencies about and therefore in the future they might not be able to get a mortgage, a car loan or whatever, it might be another lever we could use to encourage payment. We are trying not to do everything at once. We are focusing on delivering the 2012 system, but this looks to us like a potentially fruitful enforcement mechanism, so we are certainly looking at it seriously.
Q119 Chair: There has been a lot of concern about the prioritisation of the collection of the different arrears groups, because, obviously, the strategy document makes clear that you are going to try to stop new arrears building up. However, the people who have been most ill-served by the old system are somehow going to be at the end of the line or the bottom of the heap depending on the analogy you want to use. Why have you adopted that approach?
Steve Webb: Everybody can’t be a priority. In a sense, everybody ought to get their child maintenance arrears and we are not ignoring anybody. That is the first thing to say. We clearly want to get this money, but if you have an option between stopping arrears starting then, in my view, that absolutely has to be the first thing we do. I liken it to the wall on the estate that has the first piece of graffiti, and if we do not deal with it, suddenly, it is everywhere. If we establish the right patterns of behaviour at the start, that is obviously the first priority; to tackle it at source.
The second question is: are there, for want of a better phrase, children with mouths to feed now? It seems to us that these are pretty brutal choices that we have to make. Yes, if we had lots of resources we could do everything all at once and everyone is a priority, but we don’t, so the next priority is children who have live maintenance entitlements to make sure that the people are still children. Where the children are grown up but there is still an outstanding maintenance liability, we are still going to go for those arrears; but inevitably, that is more about the past than about current living standards.
Q120 Chair: So in operational terms, if you have been giving that low priority, what does it mean—that there is not really going to be any money spent on it and these folk can kiss goodbye to getting any money?
Steve Webb: No, but it would be dishonest of me to say that organisations don’t prioritise things. Absolutely the first port of call when we come in in the morning is: have payments been missed? Are we about to start arrears that should not be there? Let’s get on top of those. Next question is: are there children who are not going to get fed today because the maintenance is not flowing? Let’s get on to those. To the extent that we have the resources to then pursue that third group, we will do that, but I cannot say that everybody is a priority.
Susan Park: No, and we did set out that we are trying to do some trials to test different ways—so, with some arrears-only cases, simple things like changing a communication, a letter, how we actually ask for information. We are trialling that. We are doing some trials to inform what else might we do in this particularly difficult area.
Q121 Chair: And are you going to be honest with people to actually let them know that they are now low priority?
Susan Park: Yes, and again that is one of the trials. The Australians do just that. They look at whether they have enough information and whether they have got any assets and they actually make it clear, both in the way they report the arrears and in the way that they inform both the mother and father. That is exactly one of the trials that we are looking at. Can we take a group of people, where we think we have done everything possible—including data washing the information through HMRC, going to the Land Registry and looking at banks—and we have come to the end and we have got zero. So taking those cases and a cohort of them, and then having an honest conversation with both parents but mainly the parent with care in this set of circumstances—unless anything changes, unless we get any new information—we have come to the end of the road and there is nothing more that we can do.
The difference that we have over the Australian system is that we keep washing that information through HMRC and Land Registry information. So we do not leave it completely alone; we actually continually data wash it. If anything pops up then we have a different conversation.
Q122 Chair: But a lot of these people might be self-employed—we have already discussed how difficult that is. There is a generation of non-resident parents who are the worst for compliance and have got away with it for years. I suspect it is the parents with care who come to all of our constituency offices, frustrated that all these years have gone by and they have not got any money from their ex-partner. Are you saying, through the approach you are taking, that in reality that generation are not going to be tracked down?
Steve Webb: No. It is very important that we do not send out the wrong message here. We are not letting people off the hook—the arrears stay there and should be paid. That is point 1. Point 2 is that we are not contrasting with a world where currently we are doing vast amounts of incredibly vigorous arrears gathering for these people, because if we were, they would not be the people you are talking about. It is not like we are going to move from vigour to apathy. We are saying that these are some of the very hardest cases. The kids have now grown up, so it is historic debt.
I would like to mention that we now have legal powers for a partial settlement of the full arrears. Another option that we are starting to look at is to say, “Look, Ian and his colleagues have agreed that it is £10,000, and given that we have had no joy getting any of that, is there a possibility that they could just settle for x thousand?” The parent with care says, “Well, it is not everything I am owed, but it puts that chapter behind me. I can get on with my life, and I’ve got some money.” We are then not wasting money chasing people who are not going to pay. That is a new strategy that we can look at.
Q123 Teresa Pearce: I was going to ask about the Australian model, but you have sort of mentioned it. Do you have a figure for how much of the existing arrears you expect to have collected by 2018?
Susan Park: I can give you what we currently collect. We currently collect about £100 million of arrears every year.
Q124 Teresa Pearce: Do you know what percentage of outstanding arrears that would be? Because that might be good or bad—I don’t know.
Susan Park: So that is for parents with care. Of that £3.8 billion, more than £1 billion is owed to the Secretary of State; it is not owed to parents with care. Another proportion of it is owed in arrears-only cases—as the Minister was saying, where the children have grown up. About £1.5 billion is actually owed where children are still in existence in those circumstances.
Q125 Teresa Pearce: How will charges apply in arrears-only cases?
Steve Webb: They won’t.
Susan Park: They won’t. We do not apply charges to anything that is accrued on the CSA schemes. Charges will apply only to 2012.
Teresa Pearce: Only to the new scheme.
Susan Park: Yes.
Q126 Teresa Pearce: Okay. One final question about when people have to approach the Department. Much of it will be online, which is good, but for people who have to phone, there appears to be an 0800 number, which is quite expensive for mobiles. Will you consider a different number that is as cheap for mobiles as it is for landlines?
Steve Webb: So the Department is looking at moving 0845 numbers to 0345 numbers. There are cases where the Department struck deals with the mobile phone operators to make 0800 numbers free on mobiles, but that is generally for things such as applying for benefits and that kind of stuff. We do not have an equivalent free service, but we are looking at whether we can do it cheaper.
Susan Park: Child Maintenance Options is free.
Steve Webb: But not from a mobile phone.
Susan Park: I beg your pardon.
Q127 Teresa Pearce: In a constituency like mine, more people have mobiles than landlines. It is a constant bugbear with doctors’ surgeries and the DWP. These people do not have any maintenance and then have to pay extra.
Steve Webb: We will phone people back though.
Teresa Pearce: Okay. Bear it in mind.
Q128 Chair: It is an ongoing complaint that the Committee has raised: why is the DWP, of all the other agencies, not going over to the 0300 numbers, or whatever the cheap one is? You are still using the 084 numbers and that is costing a fortune for people who have the least money. That is something you may like to take up departmentally.
Steve Webb: We have already said that we are looking at that—the permanent secretary has already indicated that.
Q129 Chair: Can I just ask about the historic debt sitting on your books? That was skewering a lot of the figures at one time. Has any of it been written off because you are never going to get it back, the children have grown up and left home and you have never tracked down the parent?
Steve Webb: Virtually none. We now have legal powers to write it off. If the so-called paying parent is dead or something like that, we can write off odd bits and pieces, although there is no general write-off going on.
Q130 Chair: So how much is that sitting at?
Steve Webb: That is the £3.8 billion.
Susan Park: It is still at £3.8 billion.
Chair: That is all our questions asked and answered, so I thank you very much for coming along this morning. We really do appreciate it. It is a complex subject for us to get our heads around, let alone for the parents involved in the system. Thank you for coming.
Oral evidence: Progress with child maintenance reforms, HC 797 5