"10 years on Child Maintenance Service “achieving no more” than discredited Child Support Agency it replaced" says Public Accounts committee

• Unpaid child maintenance mounting again with “no long-term strategy” for recovery except further write-offs

Ten years after the “discredited” Child Support Agency was replaced and billions of pounds of unpaid child maintenance debt remaining from CSA schemes written off, the PAC says the Department for Work & Pensions “is achieving no more for children of separated families” through its replacement Child Maintenance Service. Around half of children in separated families - 1.8 million children - continue to receive no support from their non-resident parent, and “enforcement can be too slow to be effective”. “DWP has failed children who should have benefited from maintenance they will likely never receive”.

Unpaid maintenance owed to parents on Collect & Pay has increased by more than £1 million a week to a total of £440 million in October 2021, and the NAO recently concluded that unless DWP writes more off, outstanding arrears will grow to £1 billion by March 2031 and “indefinitely thereafter”. “The scale of unfulfilled obligations once again looms as a major issue” that DWP “has no long-term strategy for tackling”.

DWP’s reforms were based on the assumption that most parents can come to agreement on child maintenance between themselves, but the PAC says the Department “has done little to ensure this is the case, or to address concerns that its approach risks causing a further deterioration in the parents’ relationship or exacerbating abuse and coercive control”.

• DWP has shifted responsibility for detecting child maintenance fraud onto its customers, and will only investigate a parent understating their income if it is reported by a parent receiving child maintenance - something they “can be understandably reluctant to do”.

• “Serious constraints on parents’ ability to pay will inevitably hamper” any new DWP effort to collect maintenance or enforce the collection of arrears - with some Paying Parents facing a “poverty trap where there is little incentive for them to work more”.  

• Fewer customers are satisfied with the CMS and “DWP upholds more complaints for every 1,000 customers on child maintenance than any other area of its business”.

Dame Meg Hillier MP, Chair of the Public Accounts Committee, said: “There are still thousands of children not getting the money they need from non-resident parents. Even if the promise to improve compliance actually materialises, DWP will only buy itself a couple of years before child maintenance arrears reaches £1 billion again. There’s no strategy to bring that down except adding to the billions of owed child support that it’s already written off and won’t collect.

“The PAC would like an explanation how it’s going to fix this now, as we head deeper into a cost-of-living crisis that’s worsening the UK’s already shameful child poverty rates. Now more than ever children need this money.”

PAC report conclusions and recommendations

6. By failing to show leadership in integrating child maintenance with other public services, the Department has failed children who should have benefited from maintenance they will likely never receive. A decade after it introduced its child maintenance reforms, the Department has failed to deliver its main policy objective of maximising the number of children benefiting from child maintenance. A disappointing one in two parents with care (broadly the same proportion as in 2011-2012) still do not receive any support towards day-to-day living costs from non-resident parents. As a result, we estimate that around 1.8 million children of separated families do not benefit from child maintenance. This is in part because the Department’s vision for an integrated, cross-government support system for separating and separated families – upon which the success of its child maintenance policy depended – has not materialised, leaving 44% of separated families (over one million families) without any form of maintenance arrangement. The Department has not taken a lead role in organising the intended cross-government approach, instead attempting to shift responsibility onto other areas of government. We are also concerned that the Department has not fully integrated child maintenance with other areas it controls directly, such as its Reducing Parental Conflict programme, or Universal Credit. For example, the Department has not taken action to address IT restrictions and poorly aligned legislation that mean it cannot take partial deductions of child maintenance from a Universal Credit award.  

Recommendation: The Department should:  

• as part of its Treasury Minute response, outline how it will adopt a more active, visible leadership of child maintenance and separated families policy, and establish clear cross-government governance arrangements to ensure better integration of child maintenance with other public services. As part of this, it should ensure meaningful measurement of progress, including of the ongoing number of effective child maintenance arrangements across society; and  
• within one year, undertake a detailed review of how the child maintenance system interacts with the wider welfare and separated families environment, including whether further action to implement reforms or legislative changes are required. 

7. The Department has displayed insufficient curiosity around the needs of some of the most vulnerable separated families and their children. Take-up of the Department’s CMS scheme is substantially lower than it expected. An estimated 18% of separated families used the CMS scheme in 2019-20, compared to an expected 33%. As a result, there may be around 350,000 parents with caring responsibilities who do not have a child maintenance arrangement but would like one. The Department’s research shows that the lowest-income households are most likely to have no form of child maintenance arrangement. Some 39% of surveyed separated parents who were either not working or were economically inactive had no child maintenance arrangements in place, compared with only 21% of those who were working. Some ethnic groups, including Black parents, also appear less likely to use the statutory scheme but the Department has no plans to look into why this is the case. The Department’s customer satisfaction survey for the scheme excludes non-English speakers, meaning the views and experiences of this group are not represented. We welcome the Department’s commitment to raising awareness of its CMS scheme and other services, but we are disappointed that this had not happened sooner and are not convinced that its current approach focuses enough on why take-up is lower amongst specific groups.  

Recommendation: The Department should: 

• within one year, develop a clear action plan to assess, tackle and monitor the ‘take-up gap’ between the number of separated parents that would benefit from using its statutory CMS scheme (and other relevant support services) and those that actually use them; and 
• to support this, undertake more inclusive research to understand its customers and users of its service. It should ensure people who do not communicate in English are included in its research and establish why under-represented groups, such as some minority ethnic groups, seem less likely to use the CMS scheme. 

8. The Department’s system of child maintenance is not designed to protect those subject to domestic abuse or coercive control.The Department designed the current child maintenance system to emphasise collaboration between parents, with the CMS available as a voluntary safety net that separated parents can choose to use if they decide to. For survivors of domestic abuse, the CMS may be the safest and only way to secure maintenance from their ex-partner. Around three in five parents that apply to CMS report that they or their child had experienced domestic abuse. The Department points to the training and controls it has put in place to protect such parents subject to domestic abuse and coercive control. However, we are deeply concerned by submissions from stakeholders relating to how the CMS fails to provide these parents with appropriate support or consideration for their circumstances, and how the system exacerbates conflict between parents and financial coercion by requiring intervention from the receiving parent before CMS can take action in a case. This leaves the system open to being ‘played’ by parents wishing to exert coercive control over the other parent, including using the child maintenance system to continue to abuse their former partners, for example by withholding payments or access to children. The Department does not investigate why people stop using its services and whether there are any issues of financial or other coercion in such cases. It also knows little about separated parents without any form of arrangement, and therefore, whether some victims of domestic abuse of coercive control are prevented from using the service.  

Recommendation: The Department should, as part of its Treasury Minute response, outline how it will identify cases which potentially involve domestic abuse or coercive control and adapt its services and communications in response.  

It should build into its transformation plans: clearer routes for parents to flag and communicate domestic abuse and coercive abuse; better integration with wider support services for victims of domestic abuse and coercive control; early identification and intervention for Direct Pay arrangements that are not working; and routine follow-up for cases that close or move from Collect & Pay onto Direct Pay. 

9. The Department has not taken responsibility for detecting child maintenance fraud, instead shifting this responsibility onto its customers. The Department asserts that it does not treat tackling child maintenance fraud, where children often suffer as the end user, with any less enthusiasm than it does tackling fraud against the taxpayer. However, its approach does not appear to reflect this sentiment. It has not assessed the risk or actual level of fraud and error within child maintenance in the way that would be required if it was public expenditure, and its approach to fraud detection relies almost entirely on receiving parents challenging the value of maintenance assessments. This last point means that if a paying parent is notified that they are under investigation for allegedly understating their income there is a risk that they will know or suspect that their ex-partner has reported them. It would therefore be understandable that many receiving parents would be reluctant to come forward with such reports, particularly if it is not clear what the outcome will be. The Department says that, in 91% of cases, it can rely legally on historical earned-income data from HMRC and its own benefits data to assess people’s earned income and benefit status, and also plans to update legislation to include unearned income information held by HMRC in the initial calculation. Nonetheless, the Department accepts that child maintenance is still vulnerable to certain types of customer fraud and error, such as misdeclaration of personal circumstances that affect the award but are not related to income, or the 9% of cases where it cannot rely on historic tax or benefit records. Whilst we welcome a proportionate, iterative approach to tackling fraud and error, the Department’s current approach risks seriously underestimating its susceptibility to fraud and ignoring the various good reasons why parents may not raise concerns about fraud. 

Recommendation: The Department should take responsibility for managing the overall level of fraud and error in statutory child maintenance payments. It should: 

• Assess the risk of fraud and error within child maintenance on an ongoing basis; 
• Strengthen its controls proportionately in response to issues identified in its assessment of the risk of fraud and error; 
• Make better use of available data to strengthen existing controls, for example from departments outside of HMRC; and 
• Publish, as part of its annual report on accounts for the Child Maintenance scheme, an annual fraud and error estimate, and target rate, to enable Parliament and the public to monitor its performance. 

10. The Department is too willing to blame low levels of customer satisfaction on CMS customers being difficult to please, despite its own systemic customer service failings.  It is disheartening that customer satisfaction is no better now than it was under the failed CSA and that less than half (46%) of customers report they are satisfied with the service they receive. Given that the CMS scheme was set-up to replace an agency whose customer service was generally considered to be diabolical, it is unacceptable that the Department has not put in place a robust method for objectively assessing whether it is providing a reasonable level of service. In explaining low levels of customer satisfaction, the Department emphasises the challenging nature of its caseload and areas where it has improved its performance, such as payment accuracy. However, CMG receives by far the most complaints, and the most upheld complaints per 1,000 customers (1.15), of any of the Department’s business areas, suggesting fundamental issues with the way it handles customers’ concerns. Despite the large number of complaints upheld, the Department is less likely to uphold complaints relating to child maintenance (around one in three are upheld) than it does for other service areas. It told us this is because of the nature of CMG’s caseload. However, child maintenance accounts for a disproportionately high share of all rejected complaints subsequently investigated and upheld (or partially upheld) by the Department’s Independent Case Examiner, suggesting that the Department may be incorrectly rejecting some complaints. 

Recommendation: The Department should use its digital transformation to develop performance indicators that enable it to fully understand why customer satisfaction is so low, and target improvement where data suggests there may be an underlying service issue, for example: where high numbers of complaints are upheld. 

The Department should also, within one year, review Child Maintenance cases where the Independent Case Examiner has upheld a complaint and report to us its analysis of the key themes and lessons to be learned from this, and how it plans to act on them.  

11. The Department is too slow to take effective enforcement action, leaving children without maintenance for too long and allowing child maintenance arrears to grow. The Department designed its CMS scheme to encourage parents to use Direct Pay first, and the supporting legislation forces some receiving parents onto Direct Pay even when they assert correctly that their ex-partner will not pay. It is therefore no surprise that around half of new Direct Pay arrangements are either not sustained or are not effective, allowing unpaid maintenance debts to build to an average of £1,100 before the parents eventually move onto Collect & Pay. The Department accepts that it needs to go further to identify non-paying Direct Pay cases more quickly. The Department has improved compliance rates on Collect & Pay but around half of paying parents still paid less maintenance than was due in the quarter ending September 2021. Where paying parents continue to be non-compliant, the Department is slow to advance cases onto civil enforcement action. The Department told us it wants to speed up its enforcement processes but is restricted in how it can pursue unpaid maintenance, as many of the enforcement steps are defined by legislation and require action by external bodies, such as the courts. As a result, it can take years before payments are made to receiving parents whilst arrears continue to build. In addition, some paying parents simply cannot afford maintenance payments, meaning enforcement is unlikely to result in any more maintenance actually being paid. The amount of money owed by paying parents is forecast to reach £1 billion by March 2031, and, without legislative change is at risk of growing indefinitely. 

Recommendation: The Department should, within one year: 

• conduct operational and user research to better understand how customers progress through its collection and enforcement process, to identify any operational or legislative barriers to reducing the overall time to getting payments; and 
• in consultation with stakeholders, develop a strategy to tackle rising unpaid maintenance debt on its 2012 scheme, drawing on lessons learned from its experience of reducing CSA arrears, considering key barriers to compliance, such as affordability, and whether a write-off of uncollectable debt would be appropriate. 

12. The Department’s ability to collect child maintenance is limited by the affordability of payments and the system risks creating a poverty trap for some Paying Parents. More than two-thirds of Paying Parents on Collect & Pay and over a quarter of those on Direct Pay say the payments are not affordable. Low income Paying Parents (those that do not earn enough to pay income tax) make up 46% of Paying Parents and 62% of those with unpaid arrears. The rate at which these arrears can be recovered from those with the lowest incomes is limited, particularly where the Paying Parent is on benefits and has other debts. The amount Paying Parents pay is based on a taper that is higher for those on higher incomes and a flat rate of £7 a week for those with the lowest income. However, the income thresholds at which those rates increase have not been changed since they were set out in legislation in 1998, and inflation means that higher rates apply to those with lower incomes than originally intended. We heard from non-resident parents who told us they had experienced distress and hardship after being asked for maintenance payments they considered to be unfair, or inaccurately-calculated. Serious constraints on parents’ ability to pay the maintenance will inevitably hamper the effectiveness of any effort, however well-administered, to collect maintenance or enforce the collection of arrears. But some Paying Parents face a poverty trap where there is little incentive for them to work more. Some parents can face ‘taper rates’ of benefits, child maintenance and council tax reductions equivalent to an effective marginal tax rate up to 100% as their earnings increase.  

Recommendation: As part of its Treasury Minute response, the Department should set out its plans to review the affordability of Child Maintenance Payments and the appropriateness of the current award calculations, including the earning thresholds. 

13. The Department has repeatedly failed to achieve savings targets for the child maintenance scheme over the past decade and again risks overpromising on the benefits of its current transformation programme. The Department has reduced the cost to the taxpayer of administering child maintenance by £172 million from £494 million in 2011-12, to £322 million in 2020-21, in line with its smaller caseload and new income from charging. However, the Department has failed to deliver on its promised efficiency savings. The amount of money it needs to administer child maintenance remains £88 million higher than the £234 million promised by the Department in its 2013 Business Case. In addition, the cost to administer the return of £1 of maintenance payments has increased from 35p in 2011-12 to 36p in 2020-21. The Department has high hopes for its £30 million digital transformation programme and aims to further reduce annual costs by £128 million (40%) to £194 million for 2024-25 whilst improving both compliance and customer service. However, given the Department’s track record, we are not optimistic about the prospects for this latest programme.   

Recommendation: As part of its Treasury Minute response, the Department should set out new cost-effectiveness and wider value for money targets against which it can be held to account./