Written evidence from Reader in Social Policy Christine Skinner (CHM0073)

Executive Summary

The Committee has asked for evidence on the problems faced by both separated parents. This submission provides new evidence on non-resident fathers as the payers of child maintenance and focuses on their income poverty raising questions about compliance.

We report early findings from our preliminary analysis of the Family Resources Survey (FRS) (2013-14) on the child maintenance payments made by non-resident fathers only (non-resident mothers are excluded). This work in progress is conducted by the authors identified above[1]

We provide this analysis to supplement the evidence available to the Committee to help them take a holistic view of the impact of child support policies: that is to consider the circumstances of payer-fathers as well as receiver-mothers. The current evidence base on the economic circumstances of payer-fathers is extremely limited. We know hardly anything about how child maintenance affects paying fathers’ poverty, what their housing arrangements are and how that impacts on poverty or how both factors might affect compliance.

Our results show:

• Richer paying fathers paid more in real terms, but the paying fathers categorised as in poverty paid a higher proportion of their income in child maintenance (10%) compared to richer fathers (8%).
• A considerable proportion of fathers who paid child maintenance are poor even before they pay, 14 per cent were.
• The proportion of payers in poverty rose to 18 per cent after maintenance was paid.
• The poverty rates we found among non-resident fathers are possibly a gross underestimate, because all the analysis was based incomes before housing costs.
• Little is known about the housing circumstances of non-resident fathers, the majority of whom are renters. Housing circumstances are likely to be strongly related to compliance issues.

Policy implications:

It is worth noting that child maintenance policy reinforces the private obligations of individual parents to individual children. However, in trying to understand compliance and the role poverty and housing factors might play, we really need to consider the aggregate effects of child maintenance exchanges at the household level. However, this is tricky because whilst we tend to think of separated parents as a ‘relational unit’ (because they have a child in common), they are in research terms two separate populations. The household populations of paying parents (mainly fathers) are at least partially distinct from the household populations of receiving parents (mainly mothers). They are not matched pairs of parents, and although some in the data sets will be matched, the extent of the match is unknown. This has important policy implications, because if we want to understand the effect child maintenance payments might have on poverty and on compliance, we need to consider poverty in terms of the total population of separated parents – i.e. among the two populations of payers and receivers. This is no easy task as there is a paucity of survey data on separated families generally. Policy makers are without an informed evidence base and policy actions may end up simply transferring poverty from one group to another or redistributing it across both groups.

Introduction

Para 1:  This submission provides some new evidence on the poverty rates of non-resident fathers who pay child maintenance and the impact paying has on their poverty status. The key questions are:

1. What are the characteristics of non-resident fathers and who pays child maintenance?
2. What is the poverty status of non-resident fathers and how do child maintenance payments vary by their poverty status?
3. What affect does paying child maintenance have on the fathers’ poverty?

Background

Para 2: Child maintenance policy reinforces individual responsibilities, and whilst this is important, policy challenges emerge when the focus is widened out beyond the individual to consider the overall effects of child maintenance payments on payers and receivers. When that occurs, the issue is no longer about individual responsibilities per se, but the aggregate effect of child maintenance payments as it impacts on two possibly discrete populations – receiving mothers and paying fathers.

Para 3: If poverty and compliance are important policy considerations, then policy makers need to understand child maintenance exchanges from the perspective of both households. Child maintenance exchanges are unidirectional in the UK, from payers (fathers) to receivers (mothers) and they occur irrespective of the relative incomes of both parents’ households. Thus, fathers in low income households can pay child maintenance to mothers in higher income households and vice versa. A policy focussed on enforcing individual payer responsibilities renders invisible the household level effect of payments. Feasibly, all policy might achieve is to move, or disperse, poverty across the different households of separated parents. For example moving the father’s household into poverty but not necessarily lifting the receiver mothers’ household out of poverty. However, households do not exist in a vacuum, the members are subject to gendered labour markets and gendered pay gaps. Equalising responsibility of child maintenance across households through an ‘income shares’ child maintenance model, where both parents are assessed to pay maintenance, will not eradicate gender inequalities and may make poverty worse.

Para 4: We do not know much about the impact of child maintenance exchanges for the entire population of separated parents. We do know that lone mothers face a high risk of poverty, and that child maintenance payments are a valuable resource that can lift them out of poverty (Skinner and Main, 2012, Bryson et al 2013). But we know very little about the economic circumstance of non-resident fathers in the general population. There is some evidence (Dermott, 2016) that compared to fathers with resident only children, they do have higher levels of poverty and deprivation, however, it remains unknown what effect paying maintenance has on their household incomes (or living standards). This analysis provides some new information.

FRS and measures of child maintenance payments

Para 5: Previous studies on child maintenance show that for a variety reasons, men report paying higher amounts of child maintenance than women report receiving.  We are not suggesting that this disparity is a deliberate attempt by either party to deceive, rather to point out that the data is based on different sample populations and not paired samples of mothers and fathers of the same children. Therefore, different amounts are reported by different populations and there is no ‘true’ single figure hidden somewhere.

Para 6: In this analysis of the FRS, we use only the fathers’ self-reported accounts of how many separate child maintenance payments they made and for how much. We have added together the amounts paid per father (summing up to a maximum of four payments collected in the survey) to give a total weekly amount of child maintenance. The analysis is subject to the limitations known to be inherent in the FRS, and to lack of information about whether fathers share the care of their children (reducing their child maintenance obligations). However, the FRS is one of the few surveys that collects data from non-resident fathers. Understanding Society is another, it is a longitudinal panel survey of over 40,000 households in the UK in wave 1 (2009-2011) (Boreham et al 2012) that collects information from each adult member individually, and therefore can provide data on non-resident fathers.

What are the characteristics of non-resident fathers in the FRS?

Para 7: The majority (75%) are employed full-time, but 19 per cent are unemployed. Just less than half (45%) work in small organisations or lower status occupations, and 37 per cent work managerial/professional occupations. The majority are renters (51%), do not live with children (68%) and are single (52% - though 3% are lone fathers living with children). The average amount of child maintenance paid is £57.17 per week (the median is £46.03). The majority of arrangements are voluntary (57%) and the average amount is £50 per week, although just under a third (30%) have a CSA arrangement and pay less, £34.52 per week on average.

Table 1: Characteristics of separated fathers in the Family Resources Survey

* A Benefit unit = a single adult or a couple living together as married and any dependent children. An adult father living with adult parents in the same household would count as two BU.

How much total child maintenance do fathers report paying by poverty group?

Para 8: The interesting question is how many fathers are classed as being in poverty and how much child maintenance is paid by those in poverty? The analysis throughout is based on incomes before housing costs and therefore underestimates the number in poverty. We do not know the extent of the underestimation, because whilst 48 per cent were single, of those 26 per cent were living with other adults (some of whom were parents-relatives who may not have charged housing costs). Also, the analysis is conducted only on those fathers who reported paying something (75 per cent of the sample). Those who reported paying no child maintenance are excluded as there would be no effect to measure.

Para 9: We present an analysis of three groups of paying fathers by poverty status. We use the ‘benefit unit’ categorisation to work out their equivalised household income levels because it is a more accurate measure for this population of fathers, many of whom, whilst single, do not live alone. See Appendix A for more information.

• Group one in poverty: fathers are classed in poverty where net equivalised household income before housing costs[2] (calculated from their own benefit unit) is below £272 per week in 2013/14 prices (DWP, 2015).

• Group two above poverty but below median: fathers have net equivalised household income before housing costs[3] (calculated from their benefit unit) lying somewhere between 60% of the median and the median value – i.e. between £272 and £453 per week in 2013/14 prices.
• Group three above median income: fathers have net equivalised household income before housing costs[4] (calculated from their benefit unit) above the median value of £453 per week in 2013/14 prices.

Para 10: Overall, Chart 1 shows 14 per cent of fathers are in group one and in poverty, 26 per cent are in group two and 60 per cent in group three. So using a before housing costs measure, only a minority are classed as being in poverty. Chart 1 shows that fathers in poverty, still pay a median amount of £18.41 child maintenance per week. This compares to the richest group who pay a median amount of £59.84 per week. Among those who reported paying something, one would expect richer fathers to pay more and we found that to be the case. However, it is interesting to examine whether these are comparable amounts when considered as a proportion of income.

Chart 1:  Median weekly amounts of Child Maintenance (CM) by poverty status pre making CM payments *

* Net equivalised income of father’s benefit unit is used to construct the poverty groups and it includes any child maintenance money they owe prior to making those payments.

What proportion of non-resident fathers’ income is paid in child maintenance?

Para 11: Chart 2 shows there is far less variation across the groups and the poorest fathers are paying relatively more of their income in child maintenance in proportional terms. Those in poverty pay 10 per cent of their net income in child maintenance compared to 8 per cent among the richer group of fathers. What does this mean therefore for fathers’ poverty?

Chart 2: CM expressed as a median percentage of equivalised net household income BHC by poverty status

What is the impact of reported child maintenance payments on fathers’ poverty status?

Para 12: Chart 3 gives an indication of the effect child maintenance has on fathers’ poverty status – that is among those fathers who reported paying something. It assesses movements across the three groups and the proportion that move into poverty after paying maintenance. The results show that in total, 14 per cent were in poverty prior to paying child maintenance (row one) and this increased to 18 per cent after paying (column one). The movement across the three groups is also presented: of those who were in group two, 15.5 per cent moved into group one and were in poverty after paying child maintenance. For the richest fathers in group three, only 0.3 per cent moved into the poverty group, but 10.6 per cent had their incomes reduced increasing their risk of poverty.

Chart 3: Impact of CM payments on non-resident father’s poverty status (income BHC*)

*Net income is based on equivalised net income before housing costs

Conclusion

Para 13: The results highlight the level of child maintenance payments provided by poor paying fathers and that overall 18 per cent were in poverty after payment. This is an underestimate because we use a before housing cost measure. Charging fees to use statutory CMS child maintenance is therefore likely to increase the poverty risk. Our analysis is limited as we have yet to examine the poverty status of fathers who have not paid maintenance. We also do not know enough about the housing circumstances of non-resident fathers and how that might affect both poverty and compliance rates.

September 2016

References

Boreham, R. , Boldysevaite, D. & Killpack, C. (2012) UKHLS: Wave 1 Technical Report.  Available at http://doc.ukdataservice.ac.uk/doc/6614/mrdoc/pdf/6614_wave1_technical_report.pdf (accessed 29/09/2016)

Bryson, C., Skipp, A., Albeson, J., Poole, E., Ireland, E., and Marsh V. (2013) Kid’s aren’t free: the child maintenance arrangements of single parents on benefits in 2012, London: Gingerbread, Natcen, The Nuffield foundation and Bryson Purdon Social Research. 

Skinner, C. And Main, G. 'The Contribution of Child Maintenance Payments to The Income Packages of Lone Mothers' in Journal of Poverty and Social Exclusion Vol. 21, No 1. 2013, 47-60.

Dermott, E. (2016) ‘Non-resident fathers in the UK: living standards and social support’ in Journal of Poverty and Social Exclusion Vol. 24, No 2. 2016, 113-25.

DWP (2015) National statistics: Households below average income: 1994/95-2013/14 – Supporting data tables (table 2.2db). Available at https://www.gov.uk/government/statistics/households-below-average-income-19941995-to-20132014 (assessed 27/09/2016)

Appendix A.

Technical notes

Income poverty is measured using a standard household income measure –where equivalised net household income is below 60 per cent of the national median. Normally, the household income variable in the FRS data set is used to for this purpose. But it does not make sense to use this variable to assess income poverty for the population of non-resident fathers because:

• Just under half of are single (48%) – but do not necessarily live alone
• Of those who are single, 26% live with other adults – either related adults (for example their parents) or with unrelated adults in multiple person households.

This means that if the standard FRS household income variable was used to calculate the fathers’ poverty rate, the analysis would be based on a flawed assumption - that fathers have access to the incomes of other independent adults with whom they live. Clearly, adult non-resident fathers have no rights to share the income of their parents or any other (un)related adults they may live with. Therefore, we use net income for the benefit unit measure for all paying fathers; this allows us to more accurately capture the income situation of the fathers, especially those who live with other (un)related adults that were not partners/spouses. Furthermore, the child maintenance formula does not calculate maintenance amounts on the basis of household income, but on the individual gross income of the father as the paying parent. Further details of the methods of analysis can be gained from the authors on request.