Child Maintenance Service

Baroness Eaton Excerpts

Thursday 24th June 2021 Grand Committee

[Baroness Eaton (Con) [V]]

My Lords, I join the other speakers in thanking my noble friend Lord Farmer for initiating this important debate.

The fact that £1 billion is secured by this service for the benefit of children, lifting 120,000 children out of poverty every year with child support payments, is hugely welcome. The statistics show that 756,000 children are covered by Child Maintenance Service arrangements. I am especially pleased to learn of the success of the CMS investigators who, through the courts, pursue fathers who try to avoid supporting their children when they are financially well able to do so.

Some recent reforms to the service are most welcome, including the “apply online” service that is available every day throughout the year. It is encouraging that the service is consulting until August on additional proposals to modernise and improve the service, and that it is continuing to keep child maintenance policy and operational delivery under review.

That large numbers of children are supported by the service is good news but it is also a sad reflection on the number of relationship breakdowns that have occurred, putting children in this position. It is important that we recognise the very valuable work being done through the Government’s Reducing Parental Conflict programme. If help can be given at the start of relationship breakdown, the conflict can often be reduced. Too often the Child Maintenance Service has to deal with two people who hate each other, which makes complex circumstances more difficult when arranging child maintenance payments.

Additionally, it is good to see the support being given by the Government to the family hubs, so ably mentioned by my noble friend Lord Farmer. The support that families can receive from the family hubs is hugely beneficial. They are sometimes described as the place that starts the repair. The general public often hear a narrative of uncaring non-resident parents refusing to meet their obligations to help to provide for their children. I know that in many cases the reality for parents on low incomes is very different.

I ask my noble friend the Minister to look at what appears to be a flaw in the regulations. I am a great supporter of universal credit, which makes work pay, but the interaction with child maintenance appears to undermine UC. This point has been referred to in two reports by the Centre for Social Justice, in 2014 and 2018, and by the Social Security Advisory Committee in 2019. The problems arise from the basic structure of the scheme. The basic rate of child maintenance is a percentage of the income of the non-resident parent. No self-support allowance—a deduction from income to allow for essential living—is included; the liability is a percentage of the whole income.

The schemes in 2003 and 2012 were set up without reference to the system of welfare support. The interaction between welfare support and child maintenance is problematic. The child maintenance scheme has two thresholds. Below the first threshold, parents pay only a nominal amount—a flat rate—and, above the second threshold, they pay the full basic rate amount. In between, there is a catch-up region where parents have to pay a larger percentage of each pound earned—the reduced rate—so that the full basic amount is paid by the time the second threshold is reached. The parents paying the reduced rate can be worse off for every £1 earned, and parents paying the basic rate are only a few pence better off for every £1 earned. In effect, those parents get no financial benefit for being in work. The better option for them is to be unemployed.

It is also interesting to note that the values of the two thresholds were decided in 1998 and have not been changed in the 23 intervening years. In 1998, it was decided that a non-residential parent should not pay more than a nominal amount of earnings—less than £100 a week—and not pay the full amount until earning more than £200 a week. These thresholds no longer make sense in terms of affordability, but changing them will not resolve the issues of the 2003 and 2012 arrangements.

A great deal of very positive work is being achieved by the Child Maintenance Service, but I urge my noble friend the Minister to look at these flawed regulations.