Fairness for families, children and taxpayers as new child maintenance system is launched
30 Jun 2014 02:41 PM
A new child maintenance system will support more
families to work together and maintain a subsidised service for those who
really need it.
A
new child maintenance system comes into force today (30 June 2014) –
supporting more families to work together, while maintaining a heavily
subsidised service for those who really need it.
The
phased closure of the Child Support Agency (CSA) now begins, as it gradually
closes its cases over the next 3 years. These parents will now have the choice
to make their own maintenance arrangements between themselves or use the new
Child Maintenance Service.
Today also sees the introduction of new fees for
families which choose to use the Child Maintenance Service, as well as tough
new enforcement charges for the small minority of absent parents who try to
evade their responsibilities – those who, for example, have to be pursued
through the courts or have maintenance deducted from their
earnings.
Work and Pensions Minister Steve Webb
said:
Reform of the old broken system was absolutely necessary
and today marks a key milestone in the government’s essential reform of
the child maintenance system in Great Britain.
The
old CSA was just not fit for purpose – it spent £503
million in 1 year to transfer £1.1 billion of maintenance and left more
than 50% of children living in separated families with no effective financial
arrangement in place at all.
The
new system is helping more couples to work together to ensure the best outcomes
for their children. We know that children do better when parents work together,
even after separation, and I am very encouraged that the new child maintenance
system is already making this a reality for thousands of
families.
There will be a one-off £20 application fee to use
the Child Maintenance Service and enforcement charges of up to £300 for
absent parents who have to be pursued.
There will be no ongoing fees for families which use the
Direct Pay service to set up direct payments between the parents. New figures
released by theDWP show that, already, 39% of parents within the Child
Maintenance Service are using this system, rather than relying on the state to
collect and pay maintenance on their behalf.
Families unable or unwilling to come to a Direct Pay
arrangement will have the option to ask the Child Maintenance Service to
collect money from 1 parent and pay to the other – but there will be an
ongoing fee for this service, which will be introduced in
August.
The
aim of the ongoing charges for parents who want the state to collect and pay
maintenance on their behalf is to encourage parents to work together to make
their own arrangements, freeing up the Child Maintenance Service to concentrate
on the most challenging cases and get the money flowing where it hasn’t
in the past.
Mother-of-3 Brenda Stirling, from Broxburn in West
Lothian, is amongst the first parents to have been brought into the new system.
She and her partner split up 10 years ago.
The
hairdresser, who runs her own business, previously wasn’t receiving child
maintenance payments, but since she and her former partner started using the
Direct Pay service, she now receives maintenance on a regular
basis.
Ms
Stirling said the Direct Pay service was strengthening and improving their
relationship as parents to their children, adding:
We
have always talked but there has been a lack of trust between us. This system
is good for us and I am using it to build the trust again with my oldest
child’s father.
Written Ministerial Statement
A
Written Ministerial Statement is tabled in Parliament today.
The
application fee to use the Child Maintenance Service is a one-off charge of
£20. Enforcement fees for absent parents who evade payment range from
£50 to £300. There will be no ongoing fees for parents who
co-operate and set up their arrangements using Direct Pay. Ongoing fees for
using the Collect & Pay service will be introduced in
August.
Read the new statistics on the
Child Maintenance Service
With Direct Pay the Child Maintenance Service works out
an amount for parents to pay and provides guidance on setting up regular
payments and payment is arranged between the parents. It will then only
intervene if necessary to enforce missed payments.
The
alternative is Collect & Pay, whereby the Child Maintenance Service
calculates, collects and pays maintenance on behalf of the parents. Fees for
using Collect & Pay will be introduced later this summer. The paying parent
will pay a 20% surcharge of the maintenance assessed and the receiving parent
will pay 4% of the amounts received.
Government research has shown that around half of
receiving parents in theCSA could make family based arrangements with the
right level of support. With a reduced caseload, the Child Maintenance Service
will be able to concentrate on the most difficult cases, and it means that
those parents who feel unable or unwilling to work together will benefit from a
modernised and efficient system to help get the money flowing.
The
old child maintenance system
The
old system often took responsibility away from parents, encouraging conflict
and hostility at huge expense to the taxpayer.
More than 50% of children living in separated families
had no effective financial arrangement in place at all.
The CSA – managed by an arm’s
length body – spent around £503 million in 2009/10 to transfer only
£1.1 billion of maintenance.
Under the coalition government, the CSA spent
£420 million in 2011/12 to transfer some £1.2 billion of
maintenance. However, even with this saving, a continuing spend of over 35
pence to gain every £1 does not represent value for
money.
The
IT system was totally inadequate and notoriously riddled with defects. Cases
were regularly disappearing off the system.
The
number of expensively-managed clerical cases hit 100,000 and the IT system was
costing £74 million a year in operating costs alone.
The
new system
The
government is determined to sort out the mess and ensure today’s children
get a better service than their predecessors.
In
2012, we abolished the arm’s length body to give ministers more direct
control, responsibility and accountability.
The
reforms are a 2-pronged approach with:
- more support for separated families to reach an
amicable, family-based arrangement – in addition to the support provided
through Child Maintenance Options we are investing £14 million in support
for separated parents to make this happen
- a
new Child Maintenance Service (if parents are not able to reach an agreement),
which will collect money on behalf of parents, but there will be a
charge
The
introduction of charging is designed to act as an incentive for parents to
collaborate, encouraging them to think again before automatically putting in an
application to the Child Maintenance Service and also fairness for the taxpayer
who is currently picking up the bill for the service.
Parents who need to use the statutory service can avoid
paying an on-going collection charge entirely by using the Direct Pay service,
which only requires an upfront application fee of £20 and still steps in
to enforce payments if they stop.
We
will not apply the £20 application fee to victims of domestic violence
and abuse or to applicants aged 18 or under.
The
collect and pay service continues to be heavily subsidised by the taxpayer
despite the charges.
We
have worked with financial services providers to make sure everyone can use
Direct Pay safely, securely and with anonymity if they need to, which includes
victims of domestic violence and abuse.
We
know that children do better when both parents are positively involved in their
children’s lives and, in addition to our continuing investment in Child
Maintenance Options, we are investing up to £14 million in support for
separated parents to help make this happen. This includes money to fund
counselling and specialist mediation work projects across the country as we
look to see what works best in helping parents to collaborate.
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