HC 1727 Published on 22 December 2011

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House of Commons

Work and Pensions Committee

The Government's proposed child maintenance reforms: Government Response to the Committee's Fifth Report of Session 2010–12

Eighth Special Report of Session 2010–12

Ordered by the House of Commons to be printed 19 December 2011

The Work and Pensions Committee

The Work and Pensions Committee is appointed by the House of Commons to examine the expenditure, administration, and policy of the Department for Work and Pensions and its associated public bodies.

Current membership

Dame Anne Begg MP (Labour, Aberdeen South) (Chair) Debbie Abrahams MP (Labour, Oldham East and Saddleworth) Harriett Baldwin MP (Conservative, West Worcestershire) Andrew Bingham MP (Conservative, High Peak) Karen Bradley MP (Conservative, Staffordshire Moorlands) Sheila Gilmore MP (Labour, Edinburgh East) Mr Oliver Heald MP (Conservative, North East Hertfordshire) Glenda Jackson MP (Labour, Hampstead and Kilburn) Brandon Lewis MP (Conservative, Great Yarmouth) Stephen Lloyd MP (Liberal Democrat, Eastbourne) Teresa Pearce MP (Labour, Erith and Thamesmead) The following Members were also members of the Committee during the Parliament: Ms Karen Buck MP (Labour, Westminster North), Alex Cunningham MP (Labour, Stockton North), Margaret Curran MP (Labour, Glasgow East), Richard Graham MP (Conservative, Gloucester), Kate Green MP (Labour, Stretford and Urmston), Sajid Javid MP (Conservative, Bromsgrove) and Shabana Mahmood MP (Labour, Birmingham, Ladywood)

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The Committee is one of the departmental select committees, the powers of which are set out in House of Commons Standing Orders, principally in SO No 152. These are available on the Internet via www.parliament.uk

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The Reports and evidence of the Committee are published by The Stationery Office by Order of the House. All publications of the Committee (including press notices) are on the Internet at www.parliament.uk/workpencom The Reports of the Committee, the formal minutes relating to that report, oral evidence taken and some or all written evidence are available in a printed volume.

Committee staff

The current staff of the Committee are Carol Oxborough (Clerk), Andrew Hudson (Second Clerk), James Abbott (Committee Media Adviser), James Clarke (Inquiry Manager), Emma Sawyer (Senior Committee Assistant), Hannah Beattie (Committee Assistant).

Contacts

All correspondence should be addressed to the Clerk of the Work and Pensions Committee, House of Commons, 7 Millbank, London SW1P 3JA. The telephone number for general enquiries is 020 7219 2839; the Committee's email address is workpencom@parliament.uk

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Eighth Special Report

On 3 July 2011 the Work and Pensions Committee published its Fifth Report of Session 2010–12, The Government’s proposed child maintenance reforms, HC 1047. On 12 December 2011 we received the Government’s Response to the Report. It is reproduced as Appendix 2 to this Special Report. The accompanying letter from the Parliamentary Under Secretary for Work and Pensions, which provides additional information, is set out as Appendix 1.

In the Government Response, the Committee’s conclusions and recommendations are in bold text. The Government’s response is in plain text.

Appendix 1

Letter from Maria Miller MP, Parliamentary Under Secretary for Work and Pensions, 12 December 2011

I am writing to thank the Committee for its report on the Government’s proposed child maintenance reforms which was published on 3 July 2011. Our response to the Committee’s conclusions and recommendations is attached. I would like to re-iterate the letter of 2 November from Secretary of State and apologise for the delay in getting this response to you.

I am pleased to note that the Committee welcomes the Government’s emphasis on family-based arrangements for parents for whom such arrangements are appropriate.

We need to challenge and support families to think about their responsibilities for their children when adult relationships break down, to ensure the welfare of their children comes first. It is unacceptable that in Great Britain today more than 50% of children living in separated families have no effective child maintenance arrangement in place. Every family’s needs are different. No statutory service can take account of the broader needs of children post separation of their parents. Encouraging parents to work together can lead to significantly better results for children. That is why the Government wants to move away from a system where the Child Support Agency is seen as the default option, with many people trapped inside an adversarial statutory service because they have been unable to access sufficient support to help them make their own family-based arrangements.

In order to do this, we are determined to establish better access to the expert network of support available to help parents to make maintenance arrangements in the broader context of tackling the emotional and practical issues they face at separation, and to therefore make it easier for them to make their own family-based arrangements in the best interests of their children. Along with access to support services and the gateway, charging for the statutory scheme will further encourage collaboration where possible. We will continue working with experts in the voluntary and community sector, as well as with the Department for Education, Ministry of Justice, and other government departments to translate this vision into reality.

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The Government understands parents’ concerns about how changes to the child maintenance system may affect their capacity to financially support their children post separation. The statutory service will continue to be accessible and heavily subsidised by the taxpayer.

Furthermore the Coalition Government will continue to disregard all child maintenance received by parents in receipt of income related benefits which was introduced in April 2010, therefore ensuring that the child maintenance system focuses on parental responsibility rather than revenue recovery.

Rather than reintroduce the disregard charge for services we have decided to adopt an approach which safeguards children, encourages parents to work together and reduces administrative costs for the taxpayer.

As the Government set out in its response to the Green Paper consultation, we believe that it is fair to ask parents to make a small contribution towards the service, whilst ensuring we do not present any barriers for those who need to use it.

That is why we are taking care to set charges at an appropriate level, and why we are committed to working with interested and expert groups to ensure that particularly vulnerable parents are supported appropriately:

• Victims of domestic violence will be fast-tracked through the gateway and not charged for applying to the statutory service.

• It will be easier for low-income families to access the emotional and practical support they may need at separation, including access to help to make their own family-based arrangements, which the Government believes are generally in the best interests of their children.

• Payments of child maintenance will continue to be fully disregarded in the calculation of out of work benefits and remain tax free.

As you know, the exact charging levels are still to be determined. The details will be included in a future set of regulations which will be subject to public consultation and debate in Parliament.

Finally, I would like to emphasise that it is our objective to ensure reform of the child maintenance system will result in more support for separating parents, and allow the new improved statutory maintenance system to concentrate on those that require the service and not spend time and resources working with parents for whom family-based arrangements, with the right support, are more appropriate.

Again, I am grateful to the Committee for its report.

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Appendix 2: Government response

Ensuring regular payments from non-resident parents

[Paragraph 16] A key objective for the Government’s child maintenance policy is to ensure that all parents take responsibility for the wellbeing of their children. We believe that ensuring that parents with care receive agreed payments at the correct level on a consistent basis from the non-resident parent is an important element in this. We recommend that the Government considers the introduction of a requirement that child maintenance payments are deducted directly from a non-resident parent’s salary or bank account, as we consider that this step would increase the number of payments that are delivered accurately and on time. We recognise that this does not appear within the Government’s Green Paper proposals, but we believe it is important for the Government to consider the merits of this option.

Deduction from Earnings Orders (DEO) are imposed in around 10% of the Child Support Agency’s (CSA) current caseload, and account for around 20% of all maintenance collected. The Government is committed to imposing these orders where there is a clear need to do so.

The Government believes however that imposing mandatory deductions from a non-resident parent’s pay where a parent has shown they are capable of managing these payments themselves does not fit with our strategy of promoting responsibility. At the heart of the Government’s recommendations is how we support parents to take responsibility for their children’s wellbeing.

The Government believes imposing these orders where compulsion is not required to secure payment could place an unreasonable burden of additional work on employers and further increase the administrative cost to the taxpayer of operating the statutory child maintenance service which already costs around 40 pence for every £1 collected.

For cases where family-based arrangements are not appropriate or have broken down there will still be access to the statutory scheme which will use all the powers at its disposal to secure regular payment of child maintenance. Mandatory DEOs as with all enforcement mechanisms are more costly to the Child Maintenance and Enforcement Commission (the Commission). Work is currently ongoing to determine the exact costs.

Further, imposing mandatory DEOs would not only increase the burden they impose on businesses that administer them, but would also vastly increase the number of orders that the Commission would be required to administer with increased costs. This would have no impact on compliance where the non-resident parent is self employed, as the non-resident parent has total control over his or her income. Other methods for collecting maintenance, such as deductions from bank accounts, would need to be considered in such cases, although this is likely to be at a higher cost due to the complexities involved with identifying suitable bank accounts upon which to apply any deduction.

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Comparing family-based and statutory arrangements

[Paragraph 26] We welcome the Government’s emphasis on family-based arrangements for parents for whom these arrangements are appropriate. However, we would highlight the conflict of supporting evidence on the effectiveness of family-based arrangements for all families, in particular families on lower incomes or where there is little contact between separated parents. If the proposals are implemented, the Government will need to monitor closely the extent to which family-based arrangements are achievable for, and succeed in meeting the needs of, parents on lower incomes. Evidence shows that ongoing involvement of both parents in children’s lives is better for children across a range of outcomes.1 Research also indicates that one of the several drivers of non-payment of maintenance is attitudes and behaviours surrounding the relationship between ex-partners.2

We want to make it easier for separating families to access the support they need, in order to make arrangements for their children, and address the multiple issues that they face. We know that more than three million children live in separated families, but only around 50% of them receive child maintenance.

. But the adversarial statutory child maintenance service is too often seen as the default option for parents entrenching conflict rather than encouraging collaboration. That is why we want to support and encourage parents to make collaborative family-based arrangements, where appropriate, which have the best interests of their children at heart.

3 We also know that around half of CSA parents with care and a majority of non-resident parents surveyed felt that they would make a family-based arrangement if they had the right support.4

The Government recognises that some parents face particular barriers to reaching mutually acceptable arrangements. However, the Government believes that co-parenting arrangements should be the starting place for discussions between parents.

The Government is working closely with an expert Steering Group5

1 Mooney, A., Oliver, C. and Smith, M (2009). Impact of Family Breakdown on Children’s Well-Being: Evidence Review,

Department for Children, Schools, and Families, Research Report 113.

comprised of academics and representatives from the voluntary and community sector, who will advise on the design and development of the new support service, and assist in building a robust evidence base about what works in supporting families and the diversity of needs they may have. The Steering Group’s work will include consideration of how best to help lower income families overcome some of the barriers to reaching a family-based arrangement.

2 Wikeley, N., Ireland, E., Bryson, C. and Smith, R. (2008), Relationship separation and child support study, DWP Research Report 503

3 Based on Commission and DWP analysis of CSA administrative data and a number of different survey sources: Labour Force Survey 2010, Families and Children Study 2008, CM Options Surveys 2010 and 2011.

4 Wikeley, N., Ireland, E., Bryson, C. and Smith, R. (2008), Relationship separation and child support study, DWP Research Report 503

5The Steering Group is an advisory group which reports to the Minister for Disabled People and which advises the Minister on the following only; 1) The population of the architecture which is being designed for a new family support service 2) The forms of service which are most effective for the diverse nature of separating and separated families, 3) The long term vision (2020) for a Family Support Service and the milestones needed to achieve that vision. It is comprised of academics and experts from the voluntary and community sector.

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For those parents who cannot make their own family-based arrangement, despite taking reasonable steps, an accessible and much improved statutory scheme will remain available. Victims of domestic violence will be fast-tracked onto the statutory service, and will not be charged an application fee.

We recognise that for some parents the perceived lack of enforcement associated with family-based arrangements may be a barrier to collaboration. In the future, if a family-based arrangement did break down, parents would still have the option to immediately enter the statutory scheme and to pay by Maintenance Direct if they wished, giving both parents the opportunity to avoid the ongoing charges associated with the full collection service.

The report mentions conflicting evidence on the efficacy of family-based arrangements, referring to evidence from the National Centre for Social Research which suggested that only 4% of people in the statutory scheme would make private arrangements. However the figure cited by the Committee in fact relates to the number of parents with care who would move to Maintenance Direct. Over half of CSA parents with care said that with help from a trained impartial adviser, they could make their own family-based arrangement.6

As regards monitoring how parents make maintenance arrangements in the future, the Department for Work and Pensions (the Department) and the Commission are currently reviewing research and measurement requirements in light of the policy changes proposed in the Green Paper. In addition to the detailed administrative data we hold and will continue to collect about child maintenance arrangements via the statutory service, the Department has also added a detailed set of questions about child maintenance to the large-scale Economic Social and Research Council-led survey Understanding Society. In reviewing our research and measurement needs in light of the Green Paper proposals, the Department will continue to explore further ways of understanding in more detail the impacts that these reforms will have.

[Paragraph 31] While we support the Government’s emphasis on advice, support and mediation services, we note that mediation can often carry a cost that could be significant for lower income families. We welcome the Minister’s assurance that the Government is considering how mediation can be used more effectively for families, and request an update on progress as part of the Government’s response to this report. We also ask the Government to consider ways in which mediation can be provided in an affordable way to lower-income families. This could include making legal aid available to lower income families seeking mediation in relation to child maintenance, in the same way as for other matters of dispute in family cases.

The Government’s proposals will make it easier for parents to access support to enable more low-income families to make their own maintenance arrangements. Mediation is only one approach that we are exploring; it can be very expensive to administer and may not be the most appropriate support for all families. Families require differing support depending on their circumstances, and that is why we are already working with the 6 Wikeley, N., Ireland, E., Bryson, C. and Smith, R. (2008). Relationship separation and child support study. DWP

Research Report 503

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voluntary and community sector in order to understand what forms of support are most effective in helping parents work collaboratively to establish enduring co-parenting arrangements. The Government is using a Steering Group of academics and experts from the voluntary and community sector to lead on co-ordinating family support services across the country which are most effective at helping parents to stay involved in the lives of their children.

The Department for Education (DfE) is investing £30 million in relationship support services over the next four years, including their grant funding to voluntary and community sector organisations to support for separating couples. We will be working with the DfE and the devolved administrations in joining up the Government approach. In addition, the Department for Work and Pensions currently spends £5.6 million a year on information and support provided through the Commission by its Child Maintenance Options service. Over 100,000 children are estimated to be benefiting from family-based arrangements following contact between one or both of their parents and the Child Maintenance Options Service.

The Legal Services Commission currently provides publicly funded legal advice and assistance (Under Level 1 Legal Help) and family mediation in relation to disputes concerning child maintenance where clients have limited means and are eligible under the legal aid scheme. The proposals within the Green Paper Strengthening families, promoting parental responsibility: the future of child maintenance chime well with the emerging recommendations from the Family Justice Review. The Government will continue to consider the implementation plans of the Review to make sure that Departments synchronise policies and operational services as far as possible to ensure support for separating and separated parents are suitably co-ordinated.

Proposed charges for statutory child maintenance services

[Paragraph 34] Ensuring that non-resident parents support their children financially is a challenge that the British Government has never successfully met. Successive Governments have tried to reform the system without great success. In 2009–10, the Child Maintenance and Enforcement Commission cost £572 million to run, but only £1,141million in maintenance payments reached children. This equates to 50 pence in administration costs for every £1 collected. Introducing charges to support an inefficient collection service does not strike us as the most cost-effective approach. If charging is to be introduced, we request, in response to this Report, estimates of the amount of money that the Government expects to raise through charging and of the operational cost of administering the charging system. [Paragraph 41] The Government has decided to introduce application charges as an incentive to parents to use the gateway and to come to a voluntary agreement, and as a disincentive to using the statutory service. We are not convinced that the evidence yet exists to support this approach. The Government will therefore need to monitor carefully the impact of application charges to ensure they have the desired effect.

[Paragraph 42] Under the Government’s proposals, the application charge would fall on the parent with care, even when they had tried all reasonable alternative options to

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make a family-based arrangement. We believe that the application charge should fall on the non-resident parent, and not the parent with care, in cases where the parent with care has taken all reasonable steps to reach a voluntary agreement.

The Department’s research (Department for Work and Pensions Relationship Separation and Child Support Study 2008) indicates that the majority of parents who have separated are able to work together.

• Over half of parents with care using the CSA (52%) had been together five years or more.

• The majority of parents with care using the CSA (73%) reported they had been in contact with their ex- partner in the last year and with just less than half (45%) of these having at least weekly contact.

• Two-thirds (66%) of parents with care using the CSA reported that some contact occurs between the non-resident parent and the child/ren. Of those where face-to-face contact was reported, over half of parents with care using the CSA (52%) reported that face-to-face contact occurred once a week or more.

• Around one-third of parents using the CSA stated that they had friendly relationships with their ex-partners, with contact and maintenance not a source of tension and that it was fairly easy to discuss financial matters.

• More than half of parents with care using the CSA and nearly three-quarters of non-resident parents using the CSA felt that they would be likely or very likely to make a family-based arrangement were they to receive help from a trained or impartial adviser.

This suggests that a significant proportion of current CSA clients could reach effective family-based arrangements with some support and the right incentives.

A new, streamlined statutory child maintenance scheme for those who are unable to make an arrangement will be introduced from 2012 to replace the CSA schemes. The Government will only introduce charging after the scheme is working well and provides a better service than at present.

The impact of charges will depend on the level at which they are set and that is why we are considering the issue carefully. The Government will set out in due course the planned charging levels together with further detailed proposals. We will publish an impact assessment, equality impact assessment and draft regulations at the same time. These will then be subject to a further period of consultation and, subsequently, affirmative regulations will be subject to debate in the House of Commons. The impact assessments will set out the financial implications of the proposed charging regime.

The Government believes that an application charge needs to be paid by the parent applying to the new statutory service; in most cases this will be the parent with care to create a point for consideration of whether entry into the statutory scheme is necessary. If we are to create an incentive for the applicant to consider all the available maintenance choices, we should allow for charging parents with care.

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The service is still heavily subsidised and parents with care will ultimately benefit financially from the service we provide. There will be charges for the new service, but this will remain heavily subsidised and significantly cheaper than going through the courts. The average cost of processing an application to the new scheme will be around £220 and it is only right that parents make a contribution towards this and the ongoing cost of collecting child maintenance. Parents on benefits will still have maintenance disregarded so that they keep all of their benefits and all child maintenance. Given the budgeting pressures as a result of the economic crisis, the Government believes this is the best way to achieve a better balance rather than reintroducing disregard which was removed by the previous administration in April 2010. We will also make sure that victims of domestic violence are protected and will not charge them for applying to the statutory scheme.

The Government has carefully considered the affordability of application charges for those in and out of work. An out of work parent with care, with two children, receives benefits of around £200 after housing costs. The same parent working full-time, at the median female wage of £440 per week, could expect to have a net income of around £310 per week after housing costs. Moreover, the average amount of maintenance assessment for parents with care on benefits is around £25 per week at the moment. A parent with care using the statutory scheme will also see a notable return from the investment in setting up an arrangement. The average yearly maintenance award is £1,800 and an average case can be expected to last nine years. This equates to over £16,000 of child maintenance (analysis of CSA administrative data).

In drawing up its proposals the Government accepts that the majority of applicants will continue to be parents with care. To balance this the proposals also create new and significant incentives for non-resident parents to fully meet their responsibilities. Within the new statutory scheme, the non-resident parent will have a choice to pay maintenance directly to the parent with care (Maintenance Direct) and neither parent will then pay ongoing collection charges. Where payment is not made in full and on time by this method, the non-resident parent will effectively be choosing to move into the collection service and have payments collected and transferred by the Commission. Once in the collection service ongoing charges will be payable by both parents, with charges payable by the non-resident parents being significantly higher than those for parents with care (charges of between 15% and 20% for non-resident parents on top of maintenance owed were proposed in the Green Paper). Where enforcement action is needed to ensure payment is made, further charges will be payable by non-resident parents to reflect this additional cost.

The Government plans to further consult on its charging levels and debate these regulations in Parliament.

[Paragraph 45] The Government’s proposed collection charges for using the statutory service include both a surcharge on the non-resident parent and a deduction from the payment to the parent with care. We believe that this is excessive and unnecessarily complex and should be replaced by a single, modest administration charge for collection.

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As part of the Government’s approach to encourage parents to work together in the best interests of their children, we want to change the culture which has led to an over-reliance on the state system.

The Government believes that the levels of charging must be balanced to create the right incentives for parents as well offering value for money for taxpayers. The proposals build on Sir David Henshaw’s review7

The Government believes that having clearly highlighted, separate collection charges for both parents creates the right balance of incentives and contributions to the cost of administering cases.

and primary legislation brought in by the previous Government to allow charges for parents to use the statutory child maintenance service.

The Government believes that the introduction of charging, together with the other reforms to the child maintenance system, will create a point at which parents have to consider collaboration and that this will enable them to move away from costly, adversarial, state-imposed solutions towards mutually agreed family-based arrangements which we believe will deliver better outcomes for children.

[Paragraph 46] As with application charges, we believe that parents with care who have taken all reasonable steps to come to a voluntary agreement should not have to pay collection charges. In these cases, the collection charge should be borne by the non-resident parent.

On collection charges, the Government believes that excluding parents with care from contributing towards these costs would create an imbalance which would undermine the premise of both parents contributing to the cost of administering a collection case that the Government needed to administer. In the Green Paper the Government did however propose significantly higher collection charges for non-resident parents compared to parents with care, but both parents need to be charged. The higher charges proposed for non-resident parents create an incentive wherever possible for non-resident parents to collaborate with the parent with care through a family-based arrangement, or to pay by Maintenance Direct within the statutory scheme, thus avoiding collection charges for both parents. Higher collection charges also incentivise greater compliance as, under the proposals, a parent with care can notify us following non-payment of Maintenance Direct. This will be deemed to be a choice by the non-resident parent to meet his maintenance liability through the collection service and so incur collection charges and potentially additional enforcement charges. All of these incentives will encourage the non-resident parent towards behaviours that will create a stable flow of maintenance to the parent with care.

[Paragraph 47] The CMEC collection service costs 50 pence for every £1 collected. We do not consider that this represents a cost-effective use of taxpayers’ money. While we believe that the enforcement side of CMEC’s operation should remain with the agency, we strongly urge the Government to find a more efficient way of administering the collection service, drawing on international experience and including exploring the possible use of the private sector.

7 Sir David Henshaw (2006) , Recovering child support: routes to responsibility

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The Government agrees that the current statutory service does not represent a cost-effective use of taxpayers’ money and that too many clients have poor experiences of the system—that is why we are reforming it and introducing a new statutory service

The CSA schemes continue to be hampered by the inefficiencies in the current IT systems and these inefficiencies are set to get worse as the number of costly off-system (clerical) case rises. The statutory schemes operated by the Commission cost around 40 pence for every £1 collected (although the overall amount spent by the Commission in 2010/11 was £513 million, £60 million of this was connected with investment in the new statutory child maintenance scheme and delivery of Child Maintenance Options). This is why the Government remains committed to investing in the new statutory scheme which will replace it over time.

The Government agrees with the Committee that the enforcement operation should continue to be delivered in-house. Previous experience with the debt collection agencies showed that their standard service offering, geared as it is towards collecting commercial debt, did not fit well with the requirements of collecting arrears of child maintenance. The Commission has particular requirements, for example, in maintaining compliance against an ongoing obligation to pay rather than simply paying an already incurred debt. The Commission’s experiences with the debt collection agencies suggest the capability to meet our requirements is hard to procure in the existing market, although we continue to explore possibilities for supplementing our limited enforcement capacity, and are working with commercial partners in a number of specialist areas.

The Government recently appointed an independent and expert advisory panel on child maintenance arrears with a remit of establishing how best to tackle the arrears that have built up over the last 18 years. The basis of their report will help inform a wider strategy on arrears management.

Establishment of a gateway to access statutory services

[Paragraph 53] We note that the responsibility to navigate the gateway would fall entirely on the parent with care, and recommend that the non-resident parent should also be required to engage with the gateway operator. We believe that communications around the proposed changes need to be targeted effectively at both parents with care and non-resident parents, and recommend that the Government set out clearly the responsibilities of non-resident parents to engage in child maintenance arrangements.

The Government agrees that, for too long, non-resident parents have been seen as passive or reluctant participants in the child maintenance system, and in the process of agreeing post-separation arrangements. The Government wants to change this by encouraging non-resident parents to become active and willing participants in the child maintenance system, with a stake in ensuring that they do what is best for their children. Through the Steering Group of academics and voluntary and community sector experts, the Government is developing plans for a more co-ordinated network of family support services which places children’s interests and a family-oriented approach at its heart and supports both parents to actively consider how best to reach agreement following separation. This includes building on the work already started by the Government and the Commission with fathers’

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and non-resident parent groups to understand how best to engage fathers in the application process and on an ongoing basis.

As such, the Government fully agrees with the Committee’s recommendations on communicating the proposed changes to both parties and emphasising the responsibility of non-resident parents whatever their circumstances.

The requirement to take reasonable steps to consider different maintenance options, as provided for in the Welfare Reform Bill, rests on the prospective applicant to the statutory scheme. This is aligned to the person who chooses to make contact potentially to discuss an application to the statutory scheme. As previously set out, the Government's intention is to give pause for consideration rather than create a bureaucratic barrier to applicants that state they definitively need to use the scheme. Taking legislation allows the Government to ensure that the person making contact to discuss an application can be asked during that conversation to make this consideration.

The Government believes that the proposed charges for use of the statutory scheme, and communication of those charges, will ensure that both parents have an incentive to consider whether a collaborative arrangement may be in their and the child's best interests. The Government believe this creates a balance in incentives. This is preferable to using a legal duty to attempt to get the non-applicant to contact us arbitrarily which would be hard to enforce and create complexity in the system. We fully agree with the Committee's recommendations on communicating charges to both parents and emphasising the responsibility of non-resident parents whatever their circumstances.

[Paragraph 56] We welcome the Government’s proposal that vulnerable parents will be fast-tracked through the gateway without being required to demonstrate that they have attempted to reach a family-based arrangement through advice and support services. We request that the Government explains, in response to this Report, how it intends to ensure that parents who have been subject to domestic abuse are properly identified and fast-tracked as appropriate to the statutory maintenance service.

The Government’s response to the Green Paper reaffirmed its commitment to fast-track the most vulnerable, namely victims of domestic violence, through the “gateway” access test to the new statutory service. However it should be recognised that vulnerable parents may also benefit from other types of family support available, particularly those relating to non-maintenance issues. This provides an ideal opportunity to help ensure that this particularly vulnerable group is aware of and able to access the support they and their children may need.

The fast-track process will be light touch, taking place when a parent contacts the service. Those declaring at this initial contact stage that they are victims of domestic violence will be fast tracked. To qualify for the exemption from the application charge, clients may be asked to provide appropriate evidence to support their claim.

The Government is currently developing detailed proposals for identifying victims of domestic violence and criteria for those eligible for the waiver of the application charge. The Government will subsequently publish draft regulations which will be subject to further public consultation and debate in Parliament.

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Ministers and officials have been meeting stakeholder groups and listening to the views expressed during the consultation period about how we should develop our proposals for victims of domestic violence. This will help shape the Government’s finalised policy.

Additionally the Department has established a Steering Group of academics and voluntary and community sector experts, as described earlier. This group’s work will include assisting with design, testing and evaluation of interventions to support parents in working together to come to a family-based arrangement. It is expected that this will form a critical part of the evidence base about what support works for different families.

The Scottish Government has taken a different approach to domestic violence and the Department is working with them to ensure this approach is taken into account as proposals are being developed.

[Paragraph 58] We believe that the gateway process is a positive development, as mediation and collaboration could resolve a range of problems for separating parents at the earliest possible stage. We await with interest the publication of more information about the operation of the gateway, including details of the organisation or organisations that will deliver this service across the whole of the UK. The Government must take steps to ensure the consistency of quality of the operation of the gateway, whether this is run by a national organisation or a range of local organisations.

The Government welcomes the Committee’s comments on the support service, which will make it easier for separating families to access information and support about the range of options available to them, including making family-based arrangements, and the support they need to address the multiple issues that they may face.

The Government is working closely with a Steering Group of academics and voluntary and community sector experts that will lead on ensuring that support services offered to families are of high quality and make the most effective intervention for the families’ specific needs. The Steering Group is comprised of experts who are best placed to advise the Government on what forms of support are most effective to resolve problems for separating families.

The Department is open minded on who will deliver support services. However it is likely to build on the services currently provided by Child Maintenance Options with the support of the voluntary and community sectors. The Department realises that there may be a need to bolster the provision of some services across the country and has asked the Steering Group, with other government departments, the devolved administrations and the voluntary and community sector, to help examine how capacity can be built within the sector.

The quality of local support services

[Paragraph 65] We support the emphasis that the Government has placed on establishing effective support for families experiencing breakdown. However, it is essential that there is sufficient capacity within local support services to deal with the likely increase in demand caused by the introduction of any charging and the closure of existing CSA cases. We recommend that the establishment of this network of support is

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the first step that the Government completes in delivering the Green Paper proposals, ahead of the introduction of charging for the statutory service. The Government has recognised the potential costs to the third sector in helping to establish the network and in handling an increased caseload. We request that the Government provides more details on how these services would be funded, in response to this Report.

The Government is working closely with a Steering Group of academics and voluntary and community sector experts who will help us to consider the most appropriate delivery model at local and national level, in order to support consistency of provision across local areas, while also evaluating the resources that are already in place to ensure the system as a whole functions to direct parents to the support they need. The Government is also working closely with Scottish Government colleagues to look at implications for family support services in Scotland.

The Government will build upon the high standard of provision that already exists to create more co-ordinated and effective support system for families experiencing breakdown. Defining the long-term vision for co-ordinated, holistic, effective support for separating and separated families will be a key priority of the Steering Group. As yet, there is still limited evidence, particularly in the UK, about which support for separating and separated parents is most effective. We need to understand what the most cost-effective and sustainable approach is to supporting parents to collaborate following separation and the Steering Group will help us assess and build the evidence base in this area.

It is right that we take gradual steps towards a more co-ordinated network of family support services, working with experts to better understand the most effective way to provide support for separating and separated parents and ensure that investment in family support services will generate the best possible outcomes for families and children in the longer-term.

Transferring CSA cases to a new collection system

[Paragraph 70] We are concerned that CMEC is reporting around £2.8 billion in historic arrears that it is never likely to collect and believe that it is unhelpful for this amount to sit on CMEC’s accounts indefinitely. The Government should clarify whether this amount can be written off the CMEC accounts or abandoned when the new system is established. If so, CMEC must provide a clear public explanation as to why this amount cannot be collected.

The collection of child maintenance arrears is a priority for the Government as failure to live up to parental responsibilities and pay child maintenance is not acceptable. The Government wants to collect as much as it possibly can. However, to reiterate the realities of dealing with 18 years worth of accumulated arrears:

Much of it is very old—almost half is associated with the old scheme, pre-2003 and much of it is not genuine, because it reflects assessments that are likely to change (and in most cases reduce) when the parent provides updated financial information of their income.

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Around 45% is not owed to parents with care but to the Government because, in the past, the Government retained certain amounts of maintenance where the parent with care was in receipt of benefits.

In the short term, a line must be drawn under the uncollectible elements of these old arrears. The Government will introduce a plan to control their growth and is considering bringing forward regulations to write arrears off in very limited circumstances where their collection would be inappropriate such as where the non-resident parent has died (and the arrears can no longer be collected from the estate). The Commission will do more to prevent cases going into arrears; will consider how best to increase the use of powers like deduction orders and order for sale; and will continue modelling to work out what can or cannot be collected. Further to this the Government is considering the introduction of new powers to allow parents to negotiate a settlement which is mutually agreeable.

The Government will carry out a public consultation prior to enacting any powers enabling the Commission to write off arrears or allow parents to reach a negotiated settlement.

The introduction of the new scheme should provide the long term solution to the problem, because its system of charges, client service and increased automation will incentivise parents not to allow arrears to accrue in the first place.

[Paragraph 73] We recommend that CMEC be provided with the full range of enforcement powers listed in the 2008 Act, including those which are currently uncommenced.

The Government agrees in principle with the Committee’s recommendation that the Commission should be provided with further enforcement powers, and will therefore consider when and how the powers already enshrined in previous primary legislation (the Child Maintenance and Other Payments Act 2008 and Welfare Reform Act 2009), which have not yet been introduced, can be brought into effect. The Government believes the statutory service needs to be working effectively before these additional powers are put in place.

These would give the Commission the power to administratively (i.e. without application to court) disqualify a non-resident parent from holding a passport or driving licence. If these powers are commenced at some stage in the future, they will be subject to a 24 month trial period, as required by the 2009 Act, at the end of which Parliament will be asked to confirm its agreement to the powers being retained.

The Government believes, as with the other more serious measures the Commission can take when non-resident parents do not comply with their obligations, that these powers will be very effective deterrents to non-compliance.

[Paragraph 77] The performance of the CSA has improved gradually against a number of indicators but is still falling well short of the expectations of both parents and the Government. We are therefore keen to ensure that the closure of CSA cases and the creation of a new system contributes to a further improvement in processes and that the reforms do not represent a barrier to the overall progress that CMEC is making. This is especially significant given that the introduction of the new system may cost up to £200 million.

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[Paragraph 82] The transition to the new system will require significant resources, including investment in staff and IT systems. The enormous IT problems experienced with the previous child support systems caused huge disruption and distress to parents and this must not be repeated. We request an assurance from the Government that CMEC will have the resources and staff it needs to manage the transition effectively and that the new IT system will not be introduced until it has been demonstrated that it works as it should.

The Government fully acknowledges that the current IT systems operated by the CSA are flawed and that it is not cost-effective to continue investing in the current CSA IT, as the system underpinning the 2003 scheme cannot be fixed. That is why resources have been committed to introducing a new scheme with new IT which will deliver an improved service for clients and value for money for the taxpayer. Unlike in 2003 the Commission is not developing a system from scratch—it will use tried and tested commercially available software packages widely used in the private sector.

In addition, the project has been subject to review and scrutiny by experts both inside and outside of the Department, in line with the Government’s commitment to ensuring that major investment programmes are subject to proper control, and avoiding the failed IT projects of the past.

It is important to get the new system right before it goes live which is why the Government is pleased to see the Commission learning from past experiences and planning extensive test phases with the intention not to introduce the new scheme until it is fully ready.

The Government is committed to ensuring the new scheme is working well before the Commission begins the process of communicating with existing CSA clients prior to closing the first cases off the old CSA systems.

The Commission is also developing detailed plans for the closing down of the existing CSA schemes and the launch of the new scheme. There will be no attempt to close all existing cases and move them to the new scheme all at the same time. Instead, the Commission will carry out a process of closing existing CSA cases in tranches phased over a period of at least two to three years. Parents will have the choice to apply to the new scheme or to consider other options including making a family-based arrangement.

Before CSA cases are closed both parents will be given full details of the options available to them including new support services which can support them in making a decision about their future child maintenance arrangements. They will then be given some time to reflect on the choices available to them. Details of the case closure process will be outlined in regulations on which the Government will be consulting.

However, the Government will not shy away from making difficult decisions in the current tight fiscal climate. The Government and its departments must be innovative and think carefully about utilising the available resources to maximise outcomes.

[Paragraph 83] We welcome the Government’s proposal that the new child maintenance calculation system will draw upon the latest information on non-resident parents’ income from HMRC. Our expectation is that the proposed system would use information on income reported to and accepted by HMRC, rather than

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self-reported income, as the basis for the calculation of the liability of self-employed, as well as employed, parents. It would be helpful if, in response to this Report, the Government clarified the timetable for introducing this mechanism and provided us with more information on how it will work in practice. The Government is confident that using Her Majesty’s Revenue and Customs’ (HMRC) taxable income data for the latest tax year will speed up the calculation process and reduce the scope for uncooperative non-resident parents to manipulate the income information used by the Commission. It will also enable calculations to be refreshed each year with updated HMRC information.

In many cases the information supplied by HMRC will have been provided to them by employers. But in other cases, including the self-employed, the information will have come from individuals’ self-assessment returns which have been accepted by HMRC.

The Government fully recognises the need for parents to have confidence in the income information used to set maintenance. HMRC and the Commission are engaged in discussions about how they can best make use of their powers to investigate and other working methods to enable effective action in cases of possible misreporting of income.

The use of HMRC income information will be reflected in the definition of income which, along with other detailed elements of the future child maintenance scheme, will be set out in regulations. These regulations, which will be affirmative, will be issued for public consultation in the near future.

The Commission will start to use HMRC data when the new scheme begins—we are intending to launch this in 2012, but for new clients only for at least the first six months. For existing clients who opt to apply under the new scheme over the subsequent 2-3 years, HMRC data will usually be used to make the first calculation under that scheme.