Reforming the Child Maintenance Service (Public Services Committee Report)

Baroness Morris of Yardley Excerpts

Monday 8th June 2026 Grand Committee

Moved by

[Baroness Morris of Yardley]

That the Grand Committee takes note of the Report from the Public Services Committee Reforming the Child Maintenance Service (3rd Report, HL Paper 181, Session 2024–26).

[Baroness Morris of Yardley (Lab)]

My Lords, I am very pleased to speak to the report from the Public Services Committee, Reforming the Child Maintenance Service. In doing so, I thank everybody whose work has helped us to produce it. First and foremost, I thank those who gave us evidence, either in person in the round tables we had or through written contributions, talking about their own circumstances. It was very difficult, but they did so in an honest and open way, hoping that we would be able to bring about change that would make life for them and the people who use the service more effective than it is now. I also thank our team: Dan Hepworth, our committee clerk, Tom Burke, Claire Coast-Smith and Clayton Gurney. I thank all members of the committee as well. Some of them, like me, have since left the committee, so I offer a very special thanks for their work not only on this report but over the three years for which they served.

This is an important and unusual topic. It is one of a relatively narrow range of areas where we all agree that the state should intervene in family life for the sake of children. That is how important it is. Four million children in our country now live in separated families. Most parents resolve the financial issues around that separation between themselves—parents who can come together in their interests and those of the families and children, to make sure that children do not suffer any more than need be.

However, many, for lots of very understandable reasons, are not able to do that. It is that group who turn to the state and the use of the Child Maintenance Service. The number of cases considered by the CMS over the last decade has grown—and, one suspects, might grow further. The number of cases has gone up sevenfold and the amount of money paid by one parent to the other eightfold over a decade. For the 760,000 children whose parents use the CMS to resolve the financial consequences of a relationship breakdown, it is a vital service. We know the consequences of children growing up in poverty, with the conflict of parents unable to live together and disagreeing about the economic future of the family.

The noble Baroness, Lady Sherlock, summed it up very well in her appearance before our committee. She gave a rather long and convoluted Minister-style description of what the CMS does and then said simply at the end,

“our job is to get money to kids”.

For all the grand words, that is, in essence, what this is about: making sure that, in these circumstances, money gets to kids so that their lives are better.

It does work sometimes. The CMS can claim that it has kept 40,000 children out of absolute poverty, because it was able to resolve the problems as far as those families were concerned. Inevitably, the people who contacted us were those for whom the system had not worked—we know and understand that—but, looking at the evidence and the numbers, it is difficult not to conclude that the system does not work for too many families, parents and children. It is not an easy role for government; it is a last resort. It is for people whose relationship has failed to the extent that they are not able to resolve the difficulties. For the bureaucracy of the state to come into a relationship that is not thriving is difficult, but that is the task of the CMS, and it needs to do it well.

The CMS has only two aims in making sure that money gets to kids: to support children to stay out of poverty and to make sure that parents pay what they should. It is simple; if you get those two things right and make it work, you have solved the problem. It does not work at the moment for too many families, but for each of those families it fails 100%. Some public services can say, “We’re a success. We deliver 90% of our target”, or “We’re a success. We deliver 85% of our target”. But with the CMS, for every family for which it fails to deliver success, that is a 100% failure, and the consequences of that on children and the family are pretty dire.

Our recommendations are all designed to try to help the Government improve this service. I think the DWP wants it to do better; we felt no resistance. No official came to us and said, “Everything is brilliant. We don’t know what you’re talking about”. There is a general agreement that, for too many families, this does not work. As I said, our recommendations are built around our contribution to trying to make that better.

The central pillar of this must be how we decide what a child needs and how much a parent should pay. Unless you get those two things right, nothing else follows. What money does the child need so that they can thrive? What money should the parent pay given their financial circumstances? That is wound up in what the DWP calls the “calculation”. If that is robust, sound and agreed to by everyone, we stand a chance of the CMS being a successful organisation, but if it is not, it is built on false foundations—it is built on sand and will crumble. We did not meet anybody—not the Minister, the officials or the people who are meant to be using the system—who felt that that pillar of how the calculation is made is fit for purpose. It is not fit for purpose.

We are working on legislation that was passed in 2000, so it cannot be fit for purpose, because economic, work and family patterns have changed so much since that date. We are relying on a calculation—an algorithm—that works as life was in 2000. It simply takes as its basis HMRC data from the last year for which tax is available for any individual. We all do tax returns, so we know that it is dealing with data from a tax return that could be two years old. During that time, our economic lives, jobs and employment patterns might have changed—we may have changed jobs, have fewer or more hours, or our work may be insecure. All those things change, but the formula does not change with it; it still goes on what your tax return said, definitely one year ago and potentially even two.

It also takes as its second source of data the information that was electronically available in 2008. The year 2000 was 25 years ago—a quarter of a century—and 2008 is not much less time ago. Yet the only data it will deal with is what could be gathered electronically in 2008. If a paying parent gets income from a rental house or anything like that, none of it is taken into consideration because, in 2008, HMRC could not collect that data in an electronic form.

I am reminded of—I made this comparison in my own head—what is asked of families who claim the carer’s allowance. When you claim the carer’s allowance, if your income is not the same for five or six weeks, you are expected to tell the DWP straightaway so that it can immediately adjust the formula so that it does not end up paying more. However, the Child Maintenance Service does not do that. It does not ask for that information. If you give it that information, it cannot cope with it and, if it attempts to cope with it, it takes so long to deliver that the formula just does not work for the families.

The only proviso to try to bring this up to date is the 25% variance, where, if your income varies by 25%, the service is prepared to look at the formula within the year. However, you could lose 20% of your income and still be expected to pay the same amount of maintenance money as before. Equally, your income could go up by 24% but your child will not benefit from that increase until you do your next tax return. So that main pillar on which everything else is built does not work; it needs to be brought up to date.

When we listened to the evidence from the DWP and the Minister, we were very pleased to hear that they took this on board and were carrying out work to make sure that we had an up-to-date, relevant model on which we could build the rest of the system. I must admit, though, that they said it would be done by the end of the calendar year, but it has not been announced as yet. My first question is to seek an assurance from the Minister that, very late though it is, this work is in hand and will be announced soon.

I was grateful for the document that was sent to me last Thursday by the DWP, which concerned a consultation—that word worried me to begin with—on reform of the calculation. I was even more concerned when I read the opening sentence, which talked about the work that was taking place because the DWP was considering revising the formula. I seek an assurance that that phrase—“considering revising the formula”—should not be taken how it reads and that, in actual fact, we are not just considering it but are actually going to do it.

My second point on that is about family patterns. The formula is based on the income of the paying parent and does not take into account the income of the receiving parent. We no longer live a family life where one parent works and one parent cares, but the formula does not really take that into account. In some cases, it has an inbuilt incentive for parents with caring responsibilities not to let their child stay overnight with the paying parent for too many nights out of fear that the calculation will change again and the caring parent will not have enough money to bring up their child. That is the first pillar of the formula at which the committee looked and on which it made recommendations.

Secondly, even if the formula is out of date, it does need to be enforced. The second pillar is built on enforcing the calculation when the person does not pay. Again, the basis of enforcement has to be, “What is the definition of non-compliance? When does the system yank itself up to get going?”. Lots of things can go wrong, but when does the system actually say, “Hang on, this needs enforcing because somebody isn’t paying what they’re meant to pay”? It is as simple as that: what is the trigger for letting that happen? The trigger is that somebody has paid nothing in any given quarter in a calendar year. Think about that: they have paid nothing.

What happens as far as that is concerned is that you can pay something in the quarter, but not a lot, and the enforcement mechanism does not kick in. Some 46% of compliant parents pay over 90%. Some 23% pay less. But, in that first figure, only 46% of compliant parents paid something within a quarter. Less than half of compliant parents pay over 90%: not 100%, but over 90%. That means that you can pay very little and you do not fall into the category where enforcement measures will be put in place. If you do fall into the category where enforcement measures take place, it takes so long to use the system that receiving parents rarely feel that justice has been done. Some 2% of cases go to court, and that is not because 98% of enforcement cases get dealt with successfully and do not need to go to court. It is because the length of time that takes and the bureaucracy surrounding it militate against it happening.

There is another question I want to make sure the Minister answers in her response. We were given an undertaking that administrative liability orders, which have been on the books for a long time, would be in place by the end of the last calendar year but, to the best of my knowledge, we are still waiting for that to happen. We should be clear about what that means. The department can go to court to collect a given amount of arrears but if, by the time the case has got to court, the arrears are higher, the department does not get permission to claim the higher amount; it gets permission to claim only what it went to court for in the first place. That just does not make sense.

Our third pillar on this was communication. Communication with this group of people is vital. The portal that the DWP has set up works well. A lot of people said that they found it helpful because they could access it 24 hours a day and it worked for them. That was not true for everyone, but it worked for a lot of people. But lots of people still use the phone or want face-to-face contact, and it was that group for whom the communications system just did not work.

We should think of the pillars needed to offer the firm foundations for a child maintenance system that does the job. That would be an effective way of calculating what money needs to transfer from the parent who pays to the parent who cares. The second pillar would be a quick and robust way of enforcing things when that does not happen, and the third would be good and proper shared communication between the department and those people who use the service. On all those things, the system does not work as effectively as it needs to.

The people who use this service are very vulnerable. If they are not vulnerable people, they are people at a vulnerable time of their life. Many of the comments we heard were stronger from people who suffered domestic abuse or were in other kinds of relationships that were tough to begin with, without the system not working for them. Of course, the people who did not give us evidence and did not write to us, and whom we did not listen to, were the children. They do not have a voice because it is not their job to have a voice. But it really behoves us to remember that they are at the core of this. They are the reason we need a better child maintenance service than we have at the moment. I beg to move.

--- Later in debate ---

[Baroness Morris of Yardley (Lab)]

My Lords, in responding briefly to the debate, I would first like to thank everybody who contributed. There is a wealth of knowledge and experience in this Room today. We made the same point about wishing to reform the system and make it better for children and parents. With that kind of background, we should be able to make progress; I hope that we might see some in years to come.

The Minister’s response was as full, open and honest as ever. I can only speak personally but I am always grateful that it is the noble Baroness, Lady Sherlock, who has this job. This is such an important area, and I trust no one more than I trust her to try to get it right; that is the background and the amount of trust that I have in the noble Baroness’s leadership role.

Having said that, this is a really tough issue. As the noble Baroness, Lady Deech, pointed out—the committee also felt this—if you have the money and the wherewithal to go to court and have your system looked at individually, you will not suffer a lot of the things that we have been complaining about today. If you have to use the state-run system, it cannot treat you as an individual; it treats you using a formula. That is the problem that we have.

Given that those are the circumstances, all I will say is that of all the services this system needs to be the best that the state can offer, but I do not think it is. My worry about the Minister’s response is that they need to bite the bullet on this issue and go for big change. That is my gut feeling, having been a chair of this inquiry for a couple of months. I will have to reflect on whether what the Minister said—about having limited changes to the calculation and the formula, limited changes to enforcement and no movement yet on administrative liability orders—amounts to the radical change that needs to happen.

I say this from my own experience as a Minister: you can never have radical change without hurting someone. If you are going to hang around till you have an answer where no one is a loser, you will never change anything. My one word of warning is that my judgment, and I think that of the committee, is that radical change is needed. It will not be done without pain to someone, but that will be less pain than we have in the system at the moment. Having said that, I am very grateful. I wish the Minister and her team well and hope that, collectively, we can pursue this in another forum.

Motion agreed.