On 24 June 2021, Lord Farmer (Conservative) is due to ask the Government “what plans they have to reform the Child Maintenance Service”. This article examines how the service works, recent data for the service and what the Government has recently said about reforming the service.
What is child maintenance?
The Department for Work and Pensions refers to child maintenance as:
financial (and non-financial support if both parents agree) for children that the parent without the main day-to-day care of a child provides to the other parent.
An agreement to provide financial support for a child’s everyday living costs is known as a “maintenance arrangement”. This arrangement can be made by separated parents themselves without any external involvement and is known as a “family-based arrangement”. In circumstances where separated parents cannot agree to a family-based arrangement, parents must first contact the Child Maintenance Options service. This is a free service that provides impartial information and support to help separated parents make decisions about their child maintenance arrangements. Should a parent decide to apply to the Child Maintenance Service (CMS), the Options service will provide them with a reference number and explain the application process.
What is the Child Maintenance Service?
The CMS was introduced in December 2012 by the Government alongside reforms to the child maintenance system, replacing the Child Support Agency. The CMS supports separated parents or those tasked with the day-to-day care of a child, such as a grandparent, who cannot arrange child maintenance themselves. This could be as a result of an applicant:
- not being able to agree maintenance with the other parent;
- having had a private maintenance arrangement that has broken down; or
- having experienced domestic abuse.
The service extends to England, Scotland and Wales. A separate service is in operation in Northern Ireland.
A person can only apply to the CMS if:
- they are habitually resident in the UK, which means that both parents and the child must be living in the UK;
- their child is under 16 years of age or under 20 and is in approved education; and
- no parent already receives maintenance for the child through the service.
The application cost for the CMS is £20. However, applicants under 19 years old or who have experienced domestic abuse or violence are exempt from paying it.
Under the service, there are two ways in which parents can arrange child maintenance:
- Direct Pay: whereby the CMS calculates the amount of maintenance to be paid and parents arrange the payments between themselves; and
- Collect and Pay: whereby the CMS collects and manages the payment between the parents. This arrangement incurs a collection fee for both the paying parent (20 percent) and the receiving parent (4 percent). According to the Department for Work and Pensions, these fees are to “encourage parents to work together and make family-based arrangements where possible”.
The CMS uses gross weekly income (income before deductions for taxes and after contributions to pension schemes) to calculate child maintenance. Based on the gross weekly income of the paying parent, one of five rates will be applied. These are as follows:
- Default: the default rate is applied when the gross weekly income of a paying parent is unknown or has not been provided. The weekly amount of maintenance paid under this rate is: £38 for one child; £51 for 2 children; and £61 for 3 or more children.
- Nil: when a paying parent’s gross weekly income is below £7, no child maintenance is paid.
- Flat: the flat rate is applied for paying parents with either a gross weekly income of between £7 and £100, or who are in receipt of benefits. Under the flat rate, the weekly amount of maintenance is £7.
- Reduced: this rate is for a paying parent who earns a gross weekly income of between £100.01 to £199.99. The weekly amount of maintenance for this rate is calculated using a formula.
- Basic: the basic rate is applied when a paying parent earns a gross weekly income between £200 and £3,000. Similar to the reduced rate, the weekly amount of maintenance paid under this rate is calculated using a formula.
Before calculating maintenance, the CMS will also take into account the number of children the paying parent has to pay maintenance for and whether a paying parent’s child stays overnight with them.
Child maintenance is reviewed annually, but parents are advised to contact the CMS should their circumstances change (for example, changes to income or family circumstances).
Should a parent refuse to pay child maintenance, the CMS has a range of enforcement actions. These are as follows:
- money is recovered from the paying parent’s earnings through their employer, who will be instructed by the service to deduct money from their salary;
- money is deducted from the paying parent’s bank or building society account; or
- a paying parent can be taken to court over unpaid maintenance.
How many people use the Child Maintenance Service?
- 492,400 children covered through Direct Pay arrangements;
- 259,100 children covered through the Collect and Pay arrangement; and
- 5,000 children not yet assigned to a service.
The Department reports that in the quarter ending December 2020, the compliance rates of paying parents using the Collect and Pay arrangement of the CMS were as follows:
- 41,300 (28 percent) parents did not pay anything towards their child maintenance; and
- 107,100 (72 percent) parents paid something towards their child maintenance, of whom:
- 73,800 (50 percent) parents paid over 90 percent of their child maintenance; and
- 33,300 (22 percent) parents paid up to 90 percent of their child maintenance.
What has the Government said about changing the service?
In 2019, the Social Security Advisory Committee—an independent advisory body of the Department for Work and Pensions—published a report examining separated parents and the social security system. In its report, the committee considered the experiences of separated parents using the CMS and raised several concerns with the formula used to calculate child maintenance. This included:
- the formula not reflecting the “true cost” of raising a child. For example, not taking into account the regional variation in childcare costs or that costs vary dependent on the age of the child;
- the formula not reflecting the household earnings of the receiving parent. For example, a paying parent on a low income may struggle with maintenance costs, whereas a receiving parent may have re-partnered with someone on a higher income; and
- the reduction in payments for overnight stays with the paying parent creating “perverse incentives” for the receiving parent. This is because maintenance payments are reduced if the paying parent has their children stay overnight, but not enough to cover the fixed costs of looking after the children. Fixed costs include needing a spare room for children to sleep in.
Concluding, the committee called on the Government to examine ways of improving the child maintenance formula.
In July 2020, Baroness Stedman-Scott, the Parliamentary Under-Secretary at the Department for Work and Pensions, responded to the committee. Addressing the committee’s recommendation, Baroness Stedman-Scott said that the views expressed in the report would be used to “inform future policy development”. She also stated that any further policy development would need to consider the potential impacts on both the paying and receiving parents, and the impact on wider issues, such as child poverty.
In June 2021, Lord Farmer asked the Government in a written question whether it had plans to reform the CMS. Responding, Baroness Stedman-Scott said that the Government kept child maintenance policy and its operational delivery “under review”. In addition, she stated that the Government had introduced new digital services for the CMS, which were available 24 hours a day and “allow[ed] greater flexibility” for separated parents to contact the service. This included the ‘Apply Online Service’, which had “reduced average application times from 45 to 15 minutes”. Baroness Stedman-Scott also noted that operational reforms such as the changes to digital services had helped “improve outcomes for children” by enabling parents to set up and manage child maintenance arrangements “in ways that suit their own circumstances”.
Further, the National Audit Office (NAO) is currently running a consultation to examine whether the child maintenance system is “delivering value for money for children, separated parents and the taxpayer”. As part of its remit, the NAO will explore: whether the CMS is achieving its objectives; and whether the Department for Work and Pensions “manages its resources effectively to deliver a high-quality service” through the CMS. The consultation is scheduled to close on 31 July 2021, with the NAO aiming to publish its report by the end of 2021.
- House of Commons Library, Child Maintenance: Fees, Enforcement and Arrears, 12 May 2021
- House of Commons Library, Child Maintenance: Calculations, Variations and Income (UK), 25 March 2021
Cover image by Benjamin Manley on Unsplash.