The number of single parents left without child maintenance payments has doubled across the UK.
According to fresh figures released by the National Audit Office (NAO) today, reforms to government child maintenance services have delivered improvements and reduced costs, but the number of families in the UK with successful child maintenance arrangements has not increased.
In 2012, the government reformed child maintenance to encourage separated families to create private family-based arrangements, and to decrease the use of the government’s statutory services.
Following these reforms, the Department for Work & Pensions (DWP) retains responsibility for child maintenance policy, which it sees as confined primarily to the operation of the Child Maintenance Service (CMS).
CMS offers Direct Pay – where a fee is charged for the calculation of child maintenance payments,2 but parents arrange the transfer of funds between themselves – and Collect & Pay, where the DWP charges more to calculate the payments, collect the money and transfer the money to the receiving parents.
Since 2012, the number of parents reaching a family-based child maintenance arrangement has increased as intended, but there has been no clear change in the overall number of effective child maintenance arrangements, and there has been an increase in the number of parents with no child maintenance arrangement in place at all.
Half of separated families have a child maintenance arrangement where at least some maintenance is received. This is broadly unchanged since 2011-12.
Around a third of separated families have an arrangement that is satisfied in full.
The estimated proportion of separated families without any child maintenance arrangement increased from 25 per cent in 2011-12 to 44 per cent in 2019-20.
The 2012 child maintenance reforms depended on a wider cross-government set of policy agendas on separated families, set out in a 2011 Green Paper. The DWP told the NAO that this broader set of cross-government actions are yet to emerge as envisioned.
The DWP has reduced the cost to the taxpayer of administering child maintenance in line with its smaller caseload, and because it now charges families to use the CMS. It cost the taxpayer £322 million to run CMS in 2020-21. The gross cost to the taxpayer has reduced by £242 million in real terms since 2011-12 and its net costs by a further £40 million from now charging parents to use Collect & Pay.
The DWP has reduced errors in assessing child maintenance due, from 2.17 per cent of the monetary value of assessed payments in 2015-16, to a record low of 0.65 per cent in 2020-21.
The DWP has also improved enforcement activity through activities such as Deductions from Earnings orders, but it can still take years before child maintenance arrears are paid if the paying parent does not comply. Meanwhile maintenance arrears can build up, so on average parents owed £2,200 before civil enforcement action was taken and £2,600 afterwards.
The NAO highlight that affordability considerations limit the DWP’s ability to collect payments from parents on low incomes and on benefits. Low-income paying parents are more likely to build up arrears than the higher paid: 46 per cent of paying parents using the CMS do not earn enough to pay income tax (£12,570 in 2021-22), but these parents represented 62 per cent of those with arrears as at March 2021.
Child maintenance calculation rules also do not align with the DWP’s broader aims on employment and in-work progression and can mean some paying parents being no better off if they got a job.
The NAO recommends that the DWP should increase its understanding of why fewer than expected people are using the Child Maintenance Service; assess the affordability and interaction of child maintenance with the welfare system; improve the effectiveness of Direct Pay and Collect & Pay arrangements as it digitalises its systems, and review its write-off strategy for unpaid maintenance payments. Achieving these improvements may require the DWP to go back to Parliament to update legislation.
Gareth Davies, the head of the NAO, commented: “Government has succeeded in its goal of reducing both its involvement in child maintenance and the cost to the taxpayer, but its reforms have not increased the number of effective maintenance arrangements across society. Many separated parents are still left without the maintenance payments they are due.
“Welfare and child maintenance rules need to align much better to support government’s wider objectives of addressing poverty and helping people into work.”
A DWP spokesperson told the Daily Mirror newspaper earlier today that: “The CMS puts children first – in the last 12 months a record £1 billion was collected and arranged through the service.
“Child maintenance payments help lift around 120,000 children out of poverty each year.
“More than a third of separated parents make their own arrangements without any government support which is better for families and the taxpayer, allowing CMS to focus on supporting parents where that arrangement wouldn’t work or those who won’t pay.”