I mentioned here briefly last month that the Department for Work and Pensions (‘DWP’) had published its response to its consultation seeking views on a new child maintenance compliance and arrears strategy. The House of Commons Library has just published a briefing paper considering the new measures set out by the DWP in its response, so I thought it would be a good idea to look at those measures in a little more detail.
The new strategy comes under five headings:
1. Where the non-resident parent has complex income or substantial assets
There are two key measures under this heading: the inclusion of unearned income in the initial calculation of child maintenance, and calculating ‘notional’ income from non-income generating assets.
Presently, when an application for child maintenance is first considered by the Child Maintenance Service (‘CMS’), it is only earned income of the non-resident parent (‘NRP’) that is taken into account as a matter of course. The parent with care (‘PWC’) can ask the CMS to consider unearned income by applying for a variation, but only after the initial calculation of child maintenance has been made. Under the new system, the NRP’s unearned as well as earned income will be included in the initial CMS calculation, although it should be noted that the onus will still be on the PWC to inform the CMS of the NRP’s unearned income. Clearly, there is a problem with this – as the briefing says, without access to the NRP’s financial affairs, and where a significant amount of time may have elapsed since their separation, it may not always be straightforward for the PWC to supply this information.
One of the problems with the current, 2012, child maintenance scheme is that, unlike previous iterations of the scheme, it does not include any way for other assets of the NRP to be taken into account. Thus an NRP might have substantial capital, but if he has little income then he will pay very little child maintenance, an issue that was raised by Mr Justice Mostyn last year. The DWP is to address this obvious flaw with the system by introducing a rate of interest of eight per cent to calculate a notional income for assets above a certain threshold. Very welcome.
2. Deductions for ongoing maintenance and arrears from welfare benefits
Again, there are two key measures under this heading: where the NRP is in receipt of Universal Credit and has earnings, allowing a deduction for ongoing maintenance direct from the Universal Credit, and allowing deductions from welfare benefits where arrears have accrued but ongoing child maintenance is no longer paid (at present no further payments can be taken once the child stops being eligible for child maintenance).
I think these are both fairly self-explanatory, and sensible ways to improve payment levels.
3. Deductions from bank accounts
This is allowed at present, but only for those bank accounts solely in the name of the NRP. The new measure will allow deductions from jointly-held private accounts and business accounts, subject to safeguards. Again, this should help improve compliance, and deal with the problem of NRPs shifting funds into accounts from which deductions could not be made, in order to avoid liability.
4. Enhanced enforcement methods – removal of passport
There is not much to say here. Anything that will help to ensure payment of child maintenance must be a good thing, although I doubt that this will be used very often – the DWP estimated that only a handful of cases, around 20 per year, would result in an NRP’s passport being removed, but felt that the publicity surrounding the measure might act as an effective deterrent to encourage the payment of maintenance.
5. A new arrears strategy
Last but not least, the DWP is to write off around £1.9 billion in historic Child Support Agency arrears, on the basis that it is highly unlikely that these arrears will ever be recovered. Whilst this is probably a pragmatic decision from a practical point of view, it is also a damning indictment of the failure of the child support system, and obviously of no comfort whatsoever to the millions of children who suffered as a result of the failure of one of their parents to support them. As the briefing paper mentions, the DWP will include a “statement of severe regret” when they inform PWCs that the debt owed to them will be written off. However, the DWP does not think it appropriate for them to offer compensation to the PWCs, as: “Responsibility for unpaid maintenance sits with paying parents who have failed to meet their responsibilities for their children.” So, no responsibility from a government that came up with such a hopelessly ineffective and inefficient system in the first place.
The Government has said that these changes will be introduced during autumn 2018, except for the changes relating to welfare benefits which will be implemented at an unspecified later date.
You can download the briefing paper here.