Child Maintenance Service

Debate between Angela Crawley and Philippa Whitford

Thursday 16th November 2017 Commons Chamber

[Angela Crawley (Lanark and Hamilton East) (SNP)]

It is perhaps not surprising that while Brexit dominates most political debate, issues of huge importance sometimes slip through the scrutiny of this place, and I believe that the Child Maintenance Service falls into that category. After several months of working through the formalities of this House, I am delighted finally to have the opportunity to raise my concerns and highlight in the Chamber the real struggles faced by my constituents.

My constituency office has dealt with a huge variety of problems with the Child Maintenance Service, including the tax on survivors of domestic violence—the Minister may be aware of that issue since I have been campaigning on it for some time. I would also like to raise further constituency cases beyond that campaign, and I hope that the Minister will respond to my remarks.

The Child Maintenance Service was established in 2012 to replace the Child Support Agency—an organisation that was arguably worse. The new system was built on the ethos that children fare better when their parents have a positive relationship. However, that is not the case for all former partners, and some of the ill-judged changes made in the transition to the CMS included glaring oversights in the administration of the system. The stubborn refusal of the Government to acknowledge their mistakes has meant that the current system is not always fit for purpose.

The essence of child support is simple. When both parents are not in a relationship, or if they break up, the child should not suffer financially. For some children, the CMS is their means of avoiding poverty. As a result, that organisation forms one of the most important roles of government—the protection of children. It is therefore vital that such a service should be treated with no less complacency than any other Department.

To allow the CMS to fulfil its important duty, some changes should be made. It currently operates three different payment systems, two of which—the family-based scheme, and the direct pay scheme—operate without charge. The collect and pay scheme, however, has a number of charges. The family-based scheme essentially runs without the involvement of the CMS. Parents can sort out financial arrangements without the bureaucracy of Government interference. It is designed for former partners who can maintain an amicable relationship, and it is the most advantageous scheme for all those involved. It is cost-neutral to the Government, beneficial to the child, and ideally involves no ill-feeling between the parents.

The direct pay scheme is where child maintenance is directed to the receiving parent without using the CMS. That happens after a maintenance calculation has been made by the Department. Parents essentially agree between themselves how and when maintenance will be paid, and the onus is on both parents to monitor the payment and highlight any discrepancies within the agreement. The direct pay scheme does not check whether maintenance has been paid, and neither does it offer any enforcement for either parent. Instead, if the scheme does not work, the CMS offers a move to a managed service—the collect and pay service. That scheme is available to those who have failed to receive payment, and if there is a reason why someone may not wish to interact with their ex-partner, or if the parent requests to use that scheme, in many cases the CMS can collect child maintenance payments and pass them on to the parent with day-to-day care of the children.

Paying parents must pay a 20% collection fee on top of their usual child maintenance balance, and receiving parents must pay a 4% per cent collection fee that is deducted from their usual child maintenance amount. There is a £20 application charge for the collect and pay scheme, which is waived should the receiving parent be a survivor of domestic abuse. This scheme is the safest of all. Even in this instance, however, the system can be open to exploitation and abuse. The protections include wage deductions and the removal of any possible contact with an abusive partner. As the Minister will know, one of the biggest barriers to independence for survivors of domestic abuse is financial control, which is why it is welcome that the £20 application fee for the collect and pay scheme is waived for survivors of domestic abuse.

I welcome the waiver, but it leads to the question that if the collect and pay scheme is the most secure mechanism for survivors of domestic abuse to exercise their right to child maintenance, and is free to apply, why is there an ongoing monthly charge for the survivors’ continued safety? The 4% collection charge is removed from the child’s entitlement. This is support that the Government have already determined through their calculations that a child is due, yet they see fit to remove it, taking vital financial support from families and penalising children.

In previous correspondence with the Minister’s Department, I was informed that the charges were to cover administering the cost of the service and to incentivise the use of other schemes within the CMS. Logically, however, that runs counter to the Government’s removal of the £20 charge. The Minister is essentially saying that the initial charges are intended to incentivise the use of other schemes, but the ongoing monthly, and more costly, charges are there to penalise those where this is not possible. I am sure that that is not the intention, but the Government are using the charges to encourage some of the most vulnerable individuals in the country to engage with their abusive ex-partners and to rely on Government bureaucracy or worse. That is unacceptable and it must stop.

The 4% tax on survivors of domestic abuse has rightly caused major concern with support groups and charities, including Women’s Aid, the White Ribbon Campaign, Gingerbread, Engender and One Parent Families Scotland. Those organisations all signed a letter in March this year, alongside Members from every party in this House with the exception of Government Members, calling for the abolition of the tax. Since then, the Government have lost their majority and this could carry the majority of the House. I therefore implore the Minister to do the right thing by vulnerable parents and send a message that the Child Maintenance Service should be a place of safety and security where individuals can exercise their right to child maintenance without fear of recurring abuse. I have been campaigning for this change for some time and have heard many weak excuses from the Department for its inaction. If the Minister in his reply plans to give me some of the same lines I have heard in the past, let me assure him that I have heard them all before. Let me try to counter them in advance and save him some time.

The Government have consistently advised me that the direct pay scheme is a safe scheme and that the collect and pay scheme is the best way to ensure that both parties are protected. The Prime Minister has told me that users can utilise anonymous sort codes and therefore hide their location and that, if a payment is not made, the domestic abuse survivor can move on to the collect and pay service. Let me tell the Minister why that answer is at best careless and at worst negligent. Giving abusers access to communication with their former partners through bank transfers, and the ability to leave messages while doing so, continues the cycle of abuse. Allowing abusers to pay late without fear of enforcement also continues the cycle of abuse. The system is open to exploitation and abuse, and I hope the Minister will take that into consideration.

Finally, while the collect and pay service offers the protection required, the charges come into play if a domestic abuse survivor is moved on to it. I am sure that that is not the intention. There is no way, even by the Government’s logic, that a survivor of domestic abuse can escape the tax applied by the Government without subjecting themselves to the possibility of continued abuse. Surely the Minister would agree that that is a flaw in the system? It must be reviewed and addressed accordingly.

Another argument proposed by the Conservative party is that the tax is so small that it does not matter. I would question whether it is the place of the Government to define what matters and what constitutes small or large. Is it the place of the Government to define what is materially impactful when vulnerable families rely on the service? In response to a letter, the former Minister highlighted the fact that the 4% charge was “minuscule” and, in her interpretation, was not materially impactful. That is not a position I would expect of a Minister. I would expect the Minister to listen and adopt the views of Opposition Members as well as Government Members.

I believe that the Minister’s response is contemptible at best, and I seek a better response from the Department. I want to raise two points. First, if it is not materially impactful, why apply it at all? Secondly, it might not have a huge effect on the Government’s budget, but for families living on the breadline, every penny counts. In advance of next week’s Budget, I ask the Government to consider who needs the 4% of child maintenance more—a family who will feel its material impact or the Treasury, which will not? I hope he will feed that back to the Chancellor along with my determination that the tax be scrapped.

The Government consider it a success that more people are using the systems outside the intervention of the CMS, but with one third of those applying for children maintenance citing domestic abuse as the reason, I wonder how many individuals are being put at risk to avoid these punitive charges. The CMS should be protecting, not punishing, those who have fled domestic abuse. It is time that the tax was scrapped. I have spoken at length about the domestic abuse survivors tax—an issue I have campaigned on and which needs attention—but it is just one aspect of the service that is not working, yet, as much of my constituency casework shows, it could very easily be addressed.

I wish to highlight a few further issues with the CMS, and I hope that the Minister will be able to respond. Several issues with its administration have clearly had an impact on my constituents. One of them had been in an abusive relationship but managed to cut off all contact while receiving maintenance for their child. However, the Department sent her a letter meant for her ex-partner, which caused her great concern, as she was worried that he would get mail meant for her and find out her new location. It is unacceptable that a simple administrative error could strike such fear and alarm into an individual and that any Department, no matter how easily administrative errors might occur, could allow someone to feel endangered in that way.

[Dr Philippa Whitford (Central Ayrshire) (SNP)]

I rise to mention the case of lady in my constituency who approached the CSA back in 2005 and was assessed as only getting £18 a week. Eventually in 2013, after multiple letters and failures, it recognised that it should have been £68 a week. By that time, though, there were nearly £20,000 of arrears. That woman has been left in debt, and until recently we were told that the arrears would be cleared over the coming 15 years. By then, she would have been left servicing debt for 27 years. We have managed to get it sorted, but the idea that someone could write back to a woman who has raised children for 12 years on her own and say, “Don’t worry. In 15 years, it’ll be cleared,” shows a lack of comprehension of the real world.

[Angela Crawley]

I wholeheartedly agree with my hon. Friend that such errors, so glaring and so obvious, should be addressed by the Government.

The service levels offered to my constituents are often inconsistent, and CMS rules are often not followed by departmental staff. For example, requests to use the collect and pay service are often discouraged by advisers. I have previously raised the case of a constituent whose ex-partner was falling behind on payments and had requested to be put on the collect and pay scheme. She was told by a CMS adviser that this was not possible because the shortfall in payments was less than 10%. My constituent had not heard of this rule and, on asking where this was written in the legislation, was told to look it up herself.

I could not find it written down anywhere either, and on questioning the Department, I was informed that it was not policy. Will the Minister tell me if there are targets for staff to keep people off collect and pay? I sincerely hope that there are not. If not, why are excuses being made not to use the scheme? In calculating the amount owed by the paying parent, income details are taken from HMRC, but they are not always taken from the most recent tax year. In fact, HMRC can use historic income data from any year in the past six for which it considers it has complete details.

While this might work for most people, as was outlined in correspondence with the Department, it fails those who are self-employed or who tend to work on a contractual basis. For those people, income figures can vary dramatically year on year, so the calculation often does not reflect real incomes. The CMS system of annual reviews does not work for contractors, particularly when the annual review takes place before the end of the tax year. That simply causes more issues, with CMS payments being calculated on the basis of inaccurate income figures. There is currently no facility for a mid-year adjustment, and I ask for that aspect of the policy to be reviewed.

An additional failure in the system of calculation is that, should a contractor submit payslips to try to prove current income, the amount shown on them is extrapolated to produce an estimated annual income. The contracts are often, by nature, short-term, and a few months of high income may be followed by months of no work. This is what happened to my constituent George Gillan, from Carluke. As the Minister knows, I have written to one of his colleagues about it.

George worked offshore on a contractual basis, with a high income during the months when he was working, which were followed by periods when he could live on those earnings when out of work. At present, the CMS is calculating his payments on the basis of income from the tax year ending April 2015. George tried to submit evidence of a change in his circumstances by sending 12 weeks of payslips, but that was extrapolated across the whole year. The total estimated income did not breach the 25% threshold for a new calculation, so it could not be changed.

That left my constituent owing payments that he simply could not afford to make. His annual review takes place in February, and because a mid-year adjustment could not be offered, he cannot afford to take short-term contracts, as he will be expected to make payments based on his higher income from 2015. He has not worked since December 2016, because he is fearful that he will be penalised on that contractual basis. If mid-year adjustments were possible—I hope the Minister will consider them—things would be much easier for those who are self-employed or work on a contractual basis. I hope the Minister will agree that that would be an easy accommodation to make. There is a fundamental flaw in the current procedure for identifying accurate income details, especially those of contractual workers.

I am sure that I have given the Minister more than enough material to respond to, but Members and the public will know there are many issues I have not been able to cover today. Let me recap. I am asking the Minister to make the system fairer for survivors of domestic abuse by scrapping the 4% tax for those who use the collect and pay service. I am asking him to address the administrative problems that plague the CMS. I am asking him to ensure that its service is managed to a high standard and that policies are clear and correctly interpreted by staff. I am asking him to ensure that the CMS works for contractual workers by allowing accurate income details to be taken and allowing for mid-year adjustments. I realise that it is difficult for policy changes to be made, but I hope that the Minister will give serious consideration to some of the injustices that my constituents and people across the country have experienced in their dealings with the CMS.

I am grateful for the opportunity to speak. It took me rather a long time to secure the debate. I urge the Minister to take my pleas on board and to seek to improve the system to protect and support families, which is what the Child Maintenance Service should be doing.