Written evidence from the Department for Work and Pensions (CMS0024)

Child Poverty

Approximately how many children in the UK live in separated families? What proportion of these children are living in poverty?

What are the impacts on children and parents living in poverty in separated families? Are any groups particularly affected?

How effective is the CMS at supporting children in poverty who live apart from one of their parents? 

The Department strongly believes that both parents have a financial responsibility for their children so that they can get the best start in life. Approximately 3.6 million children are currently living in separated families (for the financial year ending 2021)[1].

We estimate around 40% of children in absolute low income, before housing costs, live in single parent households.

The percentage of children in absolute low income before housing costs has decreased from 17% in the financial year ending 2020 to 16% in the financial year ending 2021.

Child maintenance payments can play an effective role in helping to lift children out of poverty and can help to enhance the life outcomes of children in separated families. Through both family-based arrangements (FBAs) and Child Maintenance Service (CMS) arrangements, it is estimated that receiving parents in separated families received £2.4 billion annually in child maintenance payments in the three financial years ending 2019 to 2021. As a result, we estimate 100,000 children lived in households which were moved out of absolute low-income each year (on average) from 2018/19 to 2020/21 on a before-housing costs basis[2].

The CMS arranged £1.1 billion in child maintenance payments, in the 12 months up to March 2022. In the quarter ending March 2022, 670,000 children were benefiting from child maintenance payments. 514,000 from direct pay arrangements and 156,000 through the collect and pay service[3].

The Department has not carried out direct analysis to show the impact of poverty on children and parents in separated families, however, research has been done into the broader impacts of worklessness on families. This can be found in Improving Lives: Helping Workless Families[4].

Family-based arrangements

What prevents parents from establishing family-based arrangements? 

Some parents aren’t using CMS or a family-based arrangement – how are they organising financial support for their children?

DWP publishes an annual survey showing the total number of separated families in Great Britain and the proportion of those separated families with child maintenance arrangements. The latest data for the financial year ending 2021 shows that 40% have non-statutory arrangements (FBAs)[5].

An FBA does not necessarily need to involve the exchange of money and can include benefits such as sharing care or covering certain costs like school uniforms – whatever works for the individual family circumstances.

For those who choose to use the statutory scheme, we have low barriers to entry; there is clear signposting to the service through gov.uk; and the application fee is £20.  

Departmental research[6] found several reasons (cited by receiving parents) as to why they involved the CMS rather than making an FBA. The most frequently cited reasons for not having an FBA were that they thought:  

• The paying parent would be more likely to pay if the CMS was involved.   
• The paying parent would not pay with an FBA.  
• They found it hard to talk with the paying parent about money or didn't want any contact with them
• They weren’t sure how much maintenance should be paid.
• They had tried an FBA in the past and it hadn't worked.   

Further research[7] by the department found that 52% of surveyed parents with care who did not have a child maintenance arrangement, did not want an arrangement, while 35% did want an arrangement.  Additionally, the research found that the reasons they did not have an arrangement were: 

• The non-resident parent did not want to provide support. 
• The non-resident parent did not have the means to provide support. 
• They did not have a good relationship with the non-resident parent.  
• They could manage by themselves. 
• They did not want the non-resident parent to have contact or offer support. 

• They lived too far away. 
• Some parents were not aware of their rights and entitlements in relation to child maintenance or the services provided by the CMS. 

A key principle of the CMS is to support parents to collaborate and make private FBAs (family-based arrangements) where possible, as this tends to be in the best interests of children. The statutory scheme is there for there for those parents who want an arrangement but are unable to make an FBA. 

Before parents can make a CMS arrangement, they are required to access ‘Get Help Arranging Child Maintenance’ (GHACM) through GOV.UK. GHACM ensures parents are given information on the different maintenance options available and support to help them put an FBA in place through an online calculator to get an idea on the amount of maintenance that might be suitable.  There is a telephony service for those parents unable to access online services.

The Child Support Agency (CSA) and the Child Maintenance Service (CMS)

Is the Child Maintenance Service operating better than the previous Child Support Agency? Are children better supported now than they were then?  

The 2012 reforms marked a significant shift in policy with far more emphasis on encouraging co-operation between parents wherever possible, encouraging separated parents to make their own FBAs[8]. Parental collaboration usually leads to better long-term outcomes for children[9]. There has been a significant increase in the number of separated families able to make these arrangements, from 29% in 2011-12 to 38% in 2019-20[10].  

The reformed statutory scheme administered by the CMS, is targeted at those parents who do not make their own FBAs.  The scheme is designed to be quicker and more efficient, by linking directly with HM Revenue & Customs (HMRC) to provide up-to-date calculations which are reviewed regularly with robust and effective enforcement powers. Whilst a smaller, more efficient statutory scheme was a key ambition of these reforms, the CMS caseload is still increasing - at the end of March 2022 the CMS was managing 588,700 arrangements, a 7% increase since the end of March 2021[11].  

The CMS caseload today is significantly smaller than that of the CSA which was mandatory for benefit claimants. Whilst the CMS manages a smaller number of cases than the CSA did, a much greater proportion of these cases result in maintenance payments reaching children[12][13].

Barriers

What barriers are there for parents when trying to access support from CMS?

Where an arrangement could be appropriate, there are some low barriers to entry: there is clear signposting to the service through gov.uk; and the application fee is low at £20.  

In 2016, 35% of parents surveyed claimed the fee of £20 was difficult to afford and 29% of those without an arrangement said the fee did influence their decision.

Direct Pay and Collect & Pay

How effective are the Direct pay arrangements?

How effective is the Collect & Pay system at collecting and enforcing child maintenance arrangements? 

Child maintenance cases are managed through one of two service types: direct pay and collect and pay. For direct pay, CMS provides a calculation and a payment schedule, but payments are arranged privately between the two parents. The CMS introduced direct pay to give parents the opportunity to focus on collaboration by agreeing their own payment plan and managing the payments themselves but with support from the Service on what the appropriate amount would be.

The importance of full and on-time payments is emphasised in all direct pay cases and an SMS text message is sent to all receiving parents three months after they set up their arrangement to remind them to contact the CMS if their arrangement is not working. Maintenance arranged each quarter through direct pay has risen from £113.1 million in March 2017[14] to £207.1 million in March 2022[15].   

For collect and pay, the CMS collects the maintenance payment from the paying parent and pays it to the receiving parent.

The collect and pay caseload has the more challenging cases where a collaborative arrangement has either failed or not been possible to achieve and therefore these paying parents are considered to be less likely to meet their payment responsibilities.  The caseload also includes many of those parents who are in receipt of benefits on a low income and maintenance is usually deducted directly from their benefit payments, so they could be either unwilling to pay or may not have the means to pay.

The compliance rate of parents on the collect and pay service has increased, rising from 60% who paid some maintenance in the quarter ending March 2018 to 63% in the quarter ending March 2022[16].

Our strategy is to tackle payment breakdowns at earliest opportunity and use preferred Methods of Payment (Deductions of Earnings Orders/Direct Debits) which achieve a higher rate of compliance, whilst agreeing more sustainable ongoing payments. When these are not effective, we use our enforcement powers as appropriate. These include using Enforcement Agents (previously known as bailiffs) to take control of goods, forcing the sale of property, disqualification from driving or commitment to prison. 

The enforcement powers are designed to get money flowing quickly, prevent the build-up of arrears and ensure children get the financial support they deserve. These powers are important to deal with the minority of parents who do not pay and to deter others from trying the same. 

Enforcement action can be a lengthy and costly process. Decisions about enforcement actions are made on a case-by-case basis, considering the welfare of all parties, and what will have the greatest chance of securing money for children.

The power to disqualify parents from obtaining or holding a passport or driving licence, or committing a paying parent to prison, is used as a last resort where all other actions have failed.  Use of such powers may have an impact on a parent’s future ability to pay, therefore are only used where the parent is deemed to have the ability to pay but is refusing to do so.

From the quarter ending September 2019 and to the quarter ending March 2022, there have been 2,393 applications to the courts in England, Wales and Scotland with the following outcomes: 

•      575 suspended prison sentences  
•      4 suspended passport confiscation  
•      16 suspended disqualifications from driving 
•      12 immediate prison sentences  
•      3 immediate passport confiscations  
•      1 immediate disqualification from driving.  

Many applications to the court are still being progressed and have not yet reached an outcome for reasons such as the parent not turning up to the court proceedings, warrants being issued, or courts being adjourned.

These powers are designed to act as a deterrent and encourage parents to pay their liability before a sanction is enforced. In many cases, once an application to the courts has been made, paying parents have either paid their liability or agreed to a repayment plan.

Maintenance Assessments

How can the CMS ensure self-employed parents are contributing fairly to child-raising costs? 

Child maintenance liabilities are intended to be affordable for paying parents whilst ensuring they contribute significant amount of their income to support their children. It represents an amount of money that is broadly commensurate with the amount a paying parent would spend on the child if they were still living with them. The very lowest earners pay a flat rate of £7 per week, and those with no income pay nothing. Those that can afford to make a bigger contribution do so at a rate that reflects what they earn. 

Calculations are based on gross historic income data sourced directly from HMRC for the last available full tax year.  Whilst there are specific arrangements for those on the lowest incomes (<£200 a week), in general a maintenance liability is established by taking a percentage of this income, ranging between 12% and 19%, depending on the level of income and the number of children to be supported. That amount is reduced for time the paying parent spends caring for the child(ren) in the case, and also takes account of any other children the paying parent supports financially in their household.

To ensure the calculation is fair, certain costs can be taken into account such as travel and accommodation costs for a paying parent to maintain contact with the children.

If a parent disagrees with a calculation decision made by the CMS, they can ask for a mandatory reconsideration and beyond that, appeal to HM Courts and Tribunal Service.  

For self-employed paying parents, the income used to calculate child maintenance payments is usually the gross taxable profit of the parent’s business, for the latest tax-year for which HMRC hold a complete record. The taxable profits of a business represent the amount from which a business owner can support themselves and meet their outgoings.  

A small minority of paying parents may have a maintenance liability that is lower than their financial resources, however, we have measures in place to minimise this potential risk. The CMS has improved the variations process, which enables certain additional sources of income, not included in the standard maintenance calculation, to be considered.  This will make it harder for individuals with complex income sources to avoid their responsibilities to their children.

These types of cases can also be looked at by the Financial Investigation Unit, a specialist team who can check the accuracy of the information the CMS is given by the paying parent.   

Service Delivery

How quickly does the CMS respond to queries and requests from parents? Is there any data on this?

The CMS is committed to delivering service to the highest standard and have created a customer-focused culture, which has been recognised with Customer Service Excellence accreditation, which is an external and independent validation of achievement which the CMS has achieved for the last two years.

Several metrics are published regarding how quickly the CMS responds to parents. The Department’s statistics[17] show that on average 76% of changes of circumstances are actioned within 28 days and around 87% of applications in 2021 were cleared within 12 weeks (up to the quarter ending December 21). To improve the efficiency of call handling, the CMS changed the way calls are routed from parents. Calls are now directed to the most appropriate person to deal with the call rather than the first person available; 79% of calls were answered by CMS in the quarter ending March 2022[18].

The Department also monitors its efficiency when dealing with complaints. The CMS aims to respond to customers with a resolution in 15 working days and close a complaint within 30 working days. In September 2021 where the CMS had closed a complaint or made a resolution plan, it did so within 15 working days in 98% of cases[19].

Interactions with the Wider Social Security System

How does CMS interact with the wider social security system, including Universal Credit? 

The CMS benefits from being integrated into the wider DWP delivery network.  This means that we utilise interfaces to quickly identify those parents moving onto and off benefits to ensure that maintenance liabilities remain accurate and affordable and to prevent the accrual of arrears.

This interaction also ensures that parents in receipt of benefits still meet their responsibilities to financially support their children as we are able to deduct £8.40 a week towards ongoing maintenance or arrears from certain prescribed benefits. Legislation prevents us from collecting ongoing maintenance and arrears at the same time, this is a safeguard to prevent deductions from being made over the £8.40 flat rate to avoid hardship.

Child Maintenance is just one of many deductions that impact Universal Credit (UC). We have to balance the need to make CM deductions with the need to make others such as for rent arrears, Council Tax and energy arrears.  There are also practical and legislative reasons why we are unable to make certain deductions, such as part payments and those on UC with earnings.  We continue to consider the best ways to improve the operation of child maintenance payments within UC to maximise the amount of child maintenance paid.

The CMS has improved the way it interacts with the wider social security system and has been taking steps to increase awareness of CMS through the benefits system by encouraging Universal Credit (UC) work coaches to signpost parents to CMS where this is appropriate.  

We are developing data sharing within the department to focus work attainment of unemployed paying parents.

Conflict Resolution

What role does the CMS have in dispute resolution for families?  

More widely, how can DWP best support children with separated parents? 

Since 2018, DWP has funded activities to build evidence and equip Local Authorities to support parents who experience conflict. This includes the innovative Reducing Parental Conflict (RPC) programmes which aims to ensure that parents across England will have access to local support to address levels of parent conflict. We do this to help smooth child support. Through RPC, DWP will commit up to £33m over 2022-25, enabling local areas to further train their workforces to address conflict in families and improve outcomes for children.   

Additionally, DWP has provided a network of around 300 work coaches in UC who act as Supporting Families Employment Advisors (SFEAs) as part of the DLUHC Supporting Families Programme. These SFEAs establish strong relationships with families to support progress towards financial stability and better employment outcomes. 

More broadly, we are working with other government departments such as Department for Education (DfE) who are delivering Family Hubs. We are closely following Ministry of Justice work on piloting mediation and looking at how we could work more closely with them regarding separated families.  

Improving Support to Children

How can DWP improve the CMS to better support children living in poverty? 

One of the most effective ways to help children living in poverty is to increase their household income. The CMS helps to address this by ensuring that child maintenance payments flow to children and their households. If a child maintenance arrangement breaks down, the CMS’s strategy is to tackle this at the earliest opportunity, using enforcement methods that have the greatest chance of reinstating compliance and getting money to children again.   

The CMS can deduct maintenance directly from a paying parent’s bank account, from their earnings or benefits. If these methods fail, other enforcement powers include using Enforcement Agents (previously known as bailiffs) to take control of goods, forcing the sale of property, disqualification from driving or commitment to prison.  

To further improve our support, the CMS is expanding these powers to include curfew orders which will require a non-compliant paying parent to remain at a specified place at specified times. Not only will this add to the existing range of strong CMS enforcement powers, but it will also provide more options to ensure the CMS can use the right lever to obtain compliance.  

The CMS has also made key changes to its offerings to separated parents this year by developing the new service ‘Get Help Arranging Child Maintenance’ (GHACM). GHACM is a digital service, available 24/7, making it more accessible for customers. It provides information about FBAs and using the CMS to help parents decide what type of arrangement is suitable for them and their circumstances.  

GHACM was fully introduced on 1st April 2022 and replaced Child Maintenance Options as the gateway to the CMS. It provides a simple and user-friendly way for parents to determine the best finance arrangement to support their children. This is predominately an online service, making it easier to access; however, a telephony service is also available for vulnerable customers.  

International Comparisons

Are there any international examples of best practice on supporting children and separated families that the Department should learn from? 

The Department has learned from other countries on child maintenance, including how some countries arrange their enforcement measures, if for example having the power to remove passports and driving licences.

October 2022