My background and credentials
I am a mathematician, previously a Senior Lecturer in Applied Mathematics at Royal Holloway University of London, now retired but retaining an honorary position. My interest in child maintenance was prompted in 2011 through the case of a particular individual who could not possibly pay what was asked of him. My investigations revealed serious flaws in the regulations used to calculate the child maintenance liability. These flaws mean that child maintenance liabilities are unaffordable for those on low income. Moreover, the interaction between child maintenance with the welfare system gives a situation in which work does not pay.
My evidence to the 2016/17 Work and Pensions Committee Inquiry into the Child Maintenance Service has been the prompt for significant developments:
Finally, to bring things up-to-date, I also submitted evidence to the recent National Audit Office Inquiry into Child Maintenance. Their Report, published on 1 March 2022, recommended that the Department should
‘assess the affordability and interaction of child maintenance with the welfare system’
It is now widely acknowledged that the Regulations used by the Child Maintenance Service to calculate maintenance liability on the 2012 Scheme are fundamentally flawed. The flaws mean that child maintenance liabilities are unaffordable for those on low pay. In addition, the interaction between child maintenance and welfare provision means that work does not pay for those on Universal Credit. Many of the difficulties associated with the CMS arise from those flawed calculation Regulations.
The problems lie in the structure of the calculation regulations. This is explained and the consequences illustrated. The situation cannot be resolved without primary legislation. Since this will take time, some suggestions are made of actions that could improve the situation in the meantime.
‘Affordability issues limit the Department’s ability to collect payments from parents on low incomes and on benefits.’
‘assess the affordability and interaction of child maintenance with the welfare system …
The NAO cannot comment on policy so it is highly unusual, if not unprecedented, for such statements to be made. This is an indication of the seriousness of the issues. My evidence will focus on the above finding and recommendations in relation to the child maintenance regulations.
However, looking up the Regulations myself, I discovered that there had been no mistake. I won’t recount the young man’s story here, except to mention the Tribunal Judge who said that she understood his situation clearly but that her hands were tied, her job was limited to confirming that the Regulations had been followed. Rather, I remark that that phone call early in 2011 marked the start of a 11-year journey for me, seeking to understand where the problem lay and trying to get something done about it.
I learned that the problem lay in the structure of the Calculation Regulations for the CSA 2003 Scheme and that the same structure has been carried through to the Child Maintenance Service (CMS) 2012 Scheme. This structure means that the Calculation Regulations for the two Schemes are fundamentally flawed. The flaws in the 2012 Scheme mean that child maintenance liabilities are unaffordable for those on low pay. In addition, the interaction between child maintenance and welfare provision means that work does not pay for those on Universal Credit.
I have done my best to draw the Government’s attention to the issues over the years, responding to consultations and inquiries. A notable step forward came in July 2017 with the evidence I had submitted to the Work and Pensions Committee (WPC) Inquiry into the Child Maintenance Service. I understand that its draft report made reference to my evidence but that the necessity (after the calling of a General Election) to publish before the end of the session meant that ‘controversial’ issues were dropped. Nevertheless, in July that year the new Minister asked the Department to investigate my evidence. This had been published along with the WPC Report.
In January 2018, the Department acknowledged at a meeting with Families Need Fathers that ‘there is no dispute that there is an issue’, in particular with the interaction between Universal Credit (UC) and Child Maintenance. The Department said we could share that statement but it would be appreciated if we were to add that it was investigating what could be done. The Department has since built up an understanding of the problems, analysed the scale of the problem and investigated possible ways of the resolving the issues. However, no action has been taken so far. The issues cannot be resolved without primary legislation.
Meanwhile the problems continue – parents continue to be asked for amounts that are impossible to pay, are moved to Collect and Pay and charged an extra 20%, and arrears continue to accumulate. Parents can then be subject to enforcement measures and are charged for these. We are told that the CMS now attempt to assess the parent’s ability to pay in scheduling repayment of arrears and in applying enforcement. However, they cannot assess the parent’s ability to pay the initial child maintenance liability since that is laid down by law.
Stories of some the distressing consequences of the present situation. are included in the NAO Report, although it has excluded those which reveal particularly upsetting personal circumstances.
What is wrong with the Child Maintenance Calculations?
Details of the 2012 Scheme are given in the Appendix. Table A3 illustrates the interaction problem. For the model used, a parent paying for three children through the Collect and Pay scheme has £4 less when earning £350 a week than when earning £100.
The problems lie in the structure of the calculation scheme
Both Schemes calculate the child maintenance liability as a percentage of the earnings of the Paying Parent. The practice in such schemes elsewhere is to set a certain level of income that is deemed appropriate for the basic living costs of the parent (a ‘self-support allowance’) and then to calculate the liability from the income above that amount. This is the approach used for National Insurance Contributions and income tax. They are charged on income above certain thresholds which are reviewed annually.
Unfortunately, this is not what is done with the 2003 and 2012 Schemes. Child Maintenance is calculated as a percentage of the whole income. Since this cannot work at very low incomes, the Schemes include two thresholds. Below the first, parents pay only a nominal amount (the flat rate) and above the second they pay the full amount (the basic rate). Between the two thresholds is a ‘catch-up’ region (the reduced rate) – parents pay a larger percentage of each extra £1 earned so that their payments can increase from the nominal sum at the lower threshold to the full amount by the time the upper threshold is reached.
This is where the difficulty lies. It might be helpful to imagine the same approach being used for Income Tax. The current personal allowance is £12,570 per annum and the basic rate of 20% is charged on income above that amount. The current child maintenance approach is equivalent to saying
This clearly nonsense.
The same can be said of the child maintenance regulations. They do not make sense.
The threshold values
The calculation regulations that are used in the CMS 2012 Scheme are fundamentally flawed. They produce maintenance liabilities are unaffordable for those on low pay. In addition, the interaction between child maintenance and welfare provision means that work does not pay for those on Universal Credit.
Many of the problems associated with the CMS arise from these flawed regulations. Calculated liabilities that are unaffordable cannot be paid, arrears develop and enforcement measures are unproductive. Accumulated CMS arrears continue to grow, currently at a rate of £1m a week. Many of these are deemed to be uncollectable. The situation is unsustainable. Meanwhile, Paying Parents are subject to unacceptable pressure, Receiving Parents are upset at not receiving money to which they believe they are entitled and children suffer from the deteriorating relations between their parents.
These issues cannot be resolved without primary legislation. The research, surveys and analysis carried out by the Department since 2017 will have given it a greater understanding of the situation. The Government needs to develop a coherent policy for dealing with separated parents and create a child maintenance system which is appropriate for the circumstances of the separated parents. This will work to the benefit of both parents and children – conflict between parents should be reduced and children should stand a better chance of growing up with the continued support of both parents.
90% of parents start on Direct Pay. However, Paying Parents who do not keep up payments (perhaps because they cannot pay) can be moved to Collect and Pay. They are then charged a collection fee of 20% on top of their maintenance payments. If these were initially unaffordable, this makes it even more so.
See also point 3 below.
The text in the early leaflets on CMS Options provided for parents was excellent. It explained that an arrangement did not have to be financial – the second parent might, for example, care for the children for some of the time. If the arrangement was financial, it did not have to involve regular payments – the second parent might, for example, pay for specific items such as school uniforms or mobile phone bill. Finally, if the arrangement was for regular payments, it was stressed that the amount decided on should be fair, realistic and above all affordable, taking into account the circumstances of the two parents - only then would the arrangement be sustainable. And, of course, the arrangement could and should be amended as circumstances changed.
Much of this good advice appears to have been lost over the years. Parents needed to phone the Options Helpline but, even before they did that, they were directed to the CMS Maintenance Calculator.
I have serious concerns about the on-line service ‘Get Help Arranging Child Maintenance’ which I understand will replace CMS Options from 1 April 2022. This is designed to be neutral and offers only limited information.
It would be helpful if the CMS could find a way to
The Calculation Regulations give amounts that are unaffordable for those on low income. The CSA accepted partial payment in such circumstances, on the premise that it was better for the parent with care to receive something rather than nothing. It would be helpful if the CMS did likewise. They should assess a parent’s ability to pay and accept partial payment where appropriate, rather than move the parent to Collect and Pay, with the extra 20% Collection Fee that entails. As was CSA policy, the CMS should not initiate enforcement/arrears collection in such circumstances.
I understand that the CMS do now attempt to assess the parent’s ability to pay in scheduling repayment of arrears and in applying enforcement. However, they cannot assess the parent’s ability to pay the initial child maintenance liability since that is laid down by law.
Many parents struggle to pay the assessed child maintenance and a drop in income can make full payment impossible. Parents can only request a reassessment if their income changes by at least 25%. A change of the order of 10 – 12% would be much more reasonable. The CSA used 5%.
The matter came into prominence with the Covid-19 furlough scheme which gave a 20% reduction in income. The DWP investigated changing the threshold to 20%, perhaps as a temporary measure, because of this but no action was taken. Even 20% would have been too high and a reduction should be permanent.
The above suggestions could reduce some of the damage caused by the current situation concerning child maintenance and welfare provision for separated parents. However, they will not resolve the underlying issues.
Government needs to develop a coherent policy for dealing with separated parents and create a child maintenance system which is appropriate for the circumstances of the separated parents.
The Child Maintenance Service 2012 Scheme has the same structure as the Child Support Agency 2003 Scheme but uses the gross income of the Paying Parent rather than the net income. Some Paying Parents are on Direct Pay. Those using Collect and Pay are charged a 20% Collection Fee.
Gross weekly income
Child Maintenance for 1,2 or 3+ children
£7 - £100
£100 - £200
£7 + 17, 25 or 31% of income above £100
12, 16 or 19% of income
Basic rate plus
As basic rate then 9, 12 or 15% of income above £800
Note: The thresholds for flat rate and reduced rate payments were assigned the values of £100 and £200 for what became the 2003 Scheme in 1998. They have not been updated since.
Table A2: Payments on 2012 Scheme for Parents on Collect and Pay
Gross weekly income
Child Maintenance plus 20% Collection Fee
£7 - £100
£100 - £200
£8.40 + 20.4, 30.0 or 37.2% of income above £100
14.4, 19.2 or 22.8% of income
Basic rate plus
As basic rate then 10.8, 14.4 or 18% of income above £800
Parents on low income will be entitled to support from Universal Credit (UC) and Council Tax Support (CTS). UC currently has a taper rate of 55%, reduced from 63% in December 2021. CTS is decided locally with 20% being a typical/recommended taper rate. As earnings increase, the decrease in benefits combined with the increase in child maintenance mean that the paying parent gains little, if anything, from the extra pay. Indeed, they may find that they are left with less money than before. Table A3 gives an illustration of this.
Table A3: The interaction of child maintenance with the welfare system
Net Income after benefits and taxes
Income after CM paid for 1 child
Income after CM paid for 2 children
Income after CM paid for 3 or more children
£225 – DP
£223 – C+P
£225 – DP
£223 – C+P
£225 – DP
£223 – C+P
£236 – DP
£232 – C+P
£228 – DP
£222 – C+P
£222 – DP
£215 – C+P
£244 – DP
£238 – C+P
£235 – DP
£227 – C+P
£227 – DP
£218 – C+P
£251 – DP
£244 – C+P
£239 – DP
£229 – C+P
£230 – DP
£219 – C+P
£257 – DP
£249 – C+P
£243 – DP
£232 – C+P
£232 – DP
£219 – C+P
For weekly earnings between £100 and £200 parents pay the reduced rate. We see parents paying for three or more children are ‘worse off’ when earning £200 than when they earned £100. For weekly earnings above £200 these parents pay the basic rate. Their remaining income after paying child maintenance now increases but only by a few pence for every extra £1 earned. By the time that Universal Credit runs out at £350 weekly income, a parent paying Child Maintenance for three children on Direct Pay (DP) would have only about £7 more than when earning £100. If the parent is on Collect and Pay (C+P) they would have about £4 LESS than when earning £100.
 Meeting between DWP and Families Need Fathers - these meetings continue on a regular basis
 Ibid, page 18, recommendation b
 Ibid, paragraph 23, page 13
 Ibid, page 18, recommendation b
 There are many other flaws as well, but it is the structure that is the fundamental one.
 Meeting between DWP and FNF - these meetings continue on a regular basis
 Meetings between DWP and FNF
 The 2012 Scheme has a third threshold for higher earners.
 The CSA 2003 Scheme contained the same flaws.
 FNF/DWP meetings