Child Maintenance Service: Payment Recovery from Absent Parents

Albert Owen Excerpts

Wednesday 2nd October 2019 Westminster Hall

[Several hon. Members rose—]

[Albert Owen (in the Chair)]

Before I call Mr Kerr, I remind Members that I will call the Front-Bench spokespersons at 10 past 5. Three Members have indicated in writing that they wish to speak, and I will call Mr Madders and Mr Pollard after Mr Kerr. If you divvy the time up among yourselves, we might be able to get more Members in.

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[Several hon. Members rose—]

[Albert Owen (in the Chair)]

Order. If Members take about three minutes each, we will get everybody in.

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[Justin Tomlinson]

That is a fair point. I am sure the team would be very happy to meet those who are particularly interested in the operations side.

On direct payment, there are cases where we have advised what the financial contribution should be, and the parents set out to try and do that without using us. A number of people have highlighted how that can break down. The problem is then that the debts mount up, and the bigger the debts, the bigger the problem it is to get that fixed. So, we have rightly tried to be more proactive. Not only is there the annual review, but we now text the receiving parents proactively to ask whether there are any issues, and if there are issues, we ask that they should contact us immediately so we can either escalate ultimately to enforcement or move them on to the click-and-pay service. In the last quarter of last year, 9,000 people moved from direct pay to collect and pay. We are nudging that proactive level of support as quickly as possible.

The shadow Minister, the hon. Member for Weaver Vale (Mike Amesbury), talked of 33% not being collected on collect and pay. The 67% was the last published figure, in June 2019, which is up from 62% in the previous year, and the improvement has been long-standing. The amount unpaid in June 2019 was £18.5 million, down from £22 million. That is £18.5 million too much, but we are heading in the right direction, through a combination of better training of our frontline staff, so that they can explain the options and potential punishments to both the receiving parent and the paying parent; better enforcement, which I am coming to; and the regulations that we passed to strengthen our ability to investigate and enforce.

Hon. Members have rightly raised areas where enforcement has not been quick enough. The right hon. Member for East Ham (Stephen Timms) set out the exact reasons that we needed the two separate sets of regulations that were brought in over the last 12 months, which we did after listening to the cases, learning the lessons and seeing what was missing and what stopped us taking the action we all support. That is underlined by the fact that action must be taken much more quickly. The sooner we act, the easier it is to remedy.

We are also now benefiting from the ability to access more real-time information from HMRC and the strengthening of our ability with deduction orders, where we take money directly from people’s salaries. We are also reminding employers. Quite often, employees will say to an employer who is their friend, “My other half is being unreasonable. It would be really helpful if you helped me fudge this.” We are now using legal powers to remind employers that they will be liable and, unsurprisingly, those collections have gone up to 48,000 in the last quarter, collecting about £26 million, compared with the same quarter last year when there were 31,300 collections, collecting £19 million. We are also proactively highlighting success stories in the media, which doesn’t half focus people’s minds.

The most significant change is the introduction of the financial investigations unit. In the past, when lifestyle queries were raised, we relied on HMRC to investigate. HMRC had finite resources; if a premier league footballer was clearly defrauding it of a huge amount of tax, it was very quick to go and look at that, but, for many of the cases highlighted, while it was a significant amount of money to those children, it might not have been enough for HMRC to prioritise it.

The financial investigations unit, which is solely ours, does not look at the value of the money, because the money is as important to every single parent regardless, and it will chase each case. These are highly-trained ex-police officers and tax inspectors with fiscal investigation experience and they focus on doing a deep dive, using evidence, in these sorts of case. We initially recruited 30 in 2017 and it went up to 50 in 2018 and 80 in 2019. They are making a significant difference; about 4,000 cases are being investigated at the moment, and those numbers will increase as we gain evidence. That is a double win, because we will share that evidence with HMRC, which can chase any tax avoidance that has gone through.

The new regulations that we passed to help here include the ability to seize people’s passports. In the past, we went after drivers’ licences, but when people went to court, they would say, not unreasonably, “Well, you can take my driving licence, but I then won’t be able to earn, and I won’t be able to pay any more money.” But the possibility of losing their summer holiday doesn’t half focus the mind. Having sent out more than 1,000 warning letters, there is high engagement at that point.

We now have powers to access joint and business accounts, because that is a clever trick of solely employed people for hiding money. We can also look at assets, so when self-employed people are transferring what would be wages into assets, we can now take a nominal 8% of those assets. It is now easier to access information from pension providers, and we will be doing more joint work with HMRC. I gently remind some colleagues who have been calling for those extra powers to vote for them next time, because some hon. Members voted against. We must put the receiving parents first.

[Albert Owen (in the Chair)]

I am grateful to the Minister, who has been a great deputy here today on behalf of his Department. Before I call Mr Peter Grant to wind up, I thank all hon. Members for their self-discipline and restraint about time, which has allowed us to get in all speakers, as well as a number of interventions.