Charges for using new child maintenance system can be seen as an incentive or a penalty, says Lucy Metcalf
The old, notorious Child Support Agency (CSA) is on the way out, being replaced by the new Child Maintenance Service (CMS.) The system of state-administered child support is complex and seemingly ever-shifting.
The latest change is the introduction, from 11 August, of controversial new charges which will be levied from parents using the CMS.
Child maintenance is the financial support which the parent who is not living with his or her children (called the Non Resident Parent or NRP) pays to the parent with whom the children live (called the Parent with Care or PWC.) It is supposed to be a fair contribution to the day-to-day costs of bringing the children up. 95 per cent of NRPs are fathers.
The Department for Work and Pensions, which administers the CMS, says we now have a “new child maintenance system fit for the 21st century”. Its website makes the bold statement that “the new system is a break from the failures of the past, which saw children miss out on support despite hugely expensive running costs.”
We are told that “parents are encouraged and now fully incentivised to co-operate in the best interests of their own children.” However, “a vastly improved, efficient statutory service remains in place for separated families who choose to continue to rely on the state.”
Separated parents are encouraged to agree arrangements for child support between themselves. Most can, but an estimated 1.1 million families can’t and they need to turn to the CMS to make an assessment of how much child support should be paid.
Sometimes that’s all that is needed, but for some families, payment of the assessed child support is also a problem. When that happens, the CMS can step in and deal with collection and payment of the child support, if necessary by making deductions from the benefits or wages of the NRP (the Collect and Pay service.) Those families are the ones who are continuing “to rely on the state” to sort out their disputes over child support, although it may be stretching it to say they “choose” to do so. Clearly, the most common, if not the only, reason for using Collect and Pay is that the NRP is refusing to pay voluntarily.
A one-off fee of £20 for parents applying for an assessment was introduced earlier this year. It is mainly paid by the PWC and is waived when the PWC is the victim of domestic abuse. That fee alone might be enough to put some people off applying for a calculation to be done, but if it isn’t then how is child support worked out? The CMS has a pretty straightforward formula and the fact that the formula is easy to follow can help parents to reach agreement and make their own arrangements without involving the CMS. However, it can also lead to resentment because the formula is so rigid – for example it takes no account whatsoever of any of the PWC’s earnings, it’s based only on the NRP’s income.
Currently, if a new application is made to the CMS, the NRP is asked to declare his/her income. One improvement to the system is that details of the NRP’s income are now to be picked up and verified automatically from HMRC. The child support is worked out as a percentage of the NRP’s gross income (up to a maximum of £3,000 per week) – 12 per cent for one child, 16 per cent for two children and 19 per cent for three or more on the first £800, then 9, 12 or 15 per cent on the balance. Deductions are then made for various factors, such as the number of nights the children stay with the NRP (shared care) and whether the NRP has any other children.
If the maintenance is paid directly, the CMS won’t be involved further, but if the parents need to use the Collect and Pay service then the new charges will be payable. From now on, the CMS will levy a 20 per cent charge on the NRP and a 4 per cent charge on PWC. The government will keep these charges. So, if child support is assessed at £100 per week, the paying parent will pay £120 and the parent with care will receive £96. The CMS will keep the rest – charging £24 for collecting and passing on the maintenance.
That’s definitely an “incentive” for parents to agree things between themselves and avoid using the CMS, but maybe a better description would be a penalty for not being able to agree? Gingerbread chief executive Fiona Weir said: “The government’s new charges will take money from children. Child maintenance makes a real difference to children’s lives and it is simply wrong for the government to take this money because their other parent has failed to pay when they should.”
• Lucy Metcalf is head of family law at Tods Murray Solicitors. www.todsmurray.com