National Audit Office report on Child maintenance

Reforms to government's 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, according to the National Audit Office (NAO).

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.¹ Following these reforms, the Department for Work & Pensions (the Department) 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 Department charges more to calculate the payments, collect the money and transfer the money to the receiving parents.³

Since 2012, the number of parents reaching a family-based child maintenance arrangement has increased as intended:

• The Department assumed that take-up of family-based arrangements would rise from 29% in 2011-12 to 35% by 2019. It estimates that by 2019-20 it had risen more than expected to 38%.
• The Department expected a fall in the take up statutory arrangements from 46% in 2011-12 to 33% by 2019. The actual proportion reduced by much more - just 18% of separated families used the CMS in 2019-20.

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% in 2011-12 to 44% 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.⁴ The Department told the NAO that this broader set of cross-government actions are yet to emerge as envisioned.

The Department 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 (40%) in real terms since 2011-12 and its net costs by a further £40 million from now charging parents to use Collect & Pay.

The Department has reduced errors in assessing child maintenance due, from 2.17% of the monetary value of assessed payments in 2015-16, to a record low of 0.65% in 2020-21. It achieved this by automating processes and through a targeted quality-checking regime. CMS is designed in such a way that it limits customer fraud and error, with 91% of cases relying on the paying parents' tax and benefit records, but the Department has not estimated how many parents misstate their income or circumstances.

Direct Pay is meant as a light touch approach compared to Collect & Pay, but many Direct Pay arrangements are not effective or do not last in the long-term. Only 58% of respondents to a Department survey were still on Direct Pay after 13 months; 16% were on or were moving to Collect & Pay, and 19% had left the CMS with no form of maintenance arrangement in place at all. 16% of those still on Direct Pay after 13 months said that they do not receive the full amount and 20% said their payment is not usually on time.

The Department has improved Collect & Pay compliance, but at least half of paying parents on Collect & Pay still do not pay, pay less than they should, or pay late. The proportion of parents paying more than 90% of maintenance due through Collect & Pay increased from under one-third (31%) in March 2016, to slightly under half (49%) in September 2021. However, between July and September 2021, 39% of children under Collect & Pay arrangements did not receive any payments.

The Department has 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.

Affordability considerations limit the Department'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% of paying parents using the CMS do not earn enough to pay income tax (£12,570 in 2021-22), but these parents represented 62% of those with arrears as at March 2021. Child maintenance calculation rules also do not align with the Department'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 Department has reduced the legacy of debt relating to old Child Support Agency arrangements by £2.6 billion since December 2018, largely by writing it off. Unless the Department writes off more debt on the new scheme, outstanding Collect & Pay arrears are forecast to reach £1 billion by March 2031 at current rates.5

The NAO recommends that the Department 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 Department to go back to Parliament to update legislation.

Gareth Davies, head of the NAO said:
 

"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."

-          ENDS    -

Notes for Editors

1. There are an estimated 3.6 million children from 2.4 million families in Great Britain where one of the parents does not live with the child. Child maintenance is an arrangement between the parents (or guardians) of these families that cover how the child's living costs will be paid for. These can be either a private ‘family-based arrangement' between the parents or made through the statutory Child Maintenance Service (CMS) run by the Department for Work & Pensions. Under CMS arrangements, the 'paying parent' (who does not have the main care of their child) contributes towards the child's living costs by paying the 'receiving parent' (the parent or guardian providing the most care). Most parents who pay child maintenance are men and most parents who receive child maintenance are women.
2. The NAO launched this study because it receives more correspondence on child maintenance than any other single issue.
3. The application fee is waived for victims of domestic abuse and those aged under 19.
4. The 2012 child maintenance reforms were predicated on a wider cross-government set of policy agendas on separated families, set out in a 2011 Green Paper ‘Strengthening families, promoting parental responsibility: the future of child maintenance'.
5. The Department has reduced the Child Support Agency debt by £2.6 billion since December 2018, largely by writing it off. The Child Maintenance Service replaced the 1993 and 2003 Child Support Agency schemes which were widely regarded as having failed to manage child maintenance adequately.