Child Maintenance Service: Reform

David Rutley Excerpts

Thursday 19th May 2022 Westminster Hall

[The Parliamentary Under-Secretary of State for Work and Pensions (David Rutley)]

It is an honour, as always, to serve with you in the Chair, Ms Rees. I congratulate the hon. Member for Motherwell and Wishaw (Marion Fellows) on championing this cause and bringing this debate before us today. She is a recognised and well-respected champion on these matters.

Notwithstanding her strong loyalty to Motherwell and to Wishaw, I am sure she will join me in congratulating Rangers Football Club on their achievements this season which, despite the vagaries of the penalty shoot-out, were magnificent.

[Several hon. Members rose—]

[David Rutley]

I give way to the hon. Member for Glasgow South West (Chris Stephens).

[Chris Stephens]

I thank the Minister and, as my constituency takes in Ibrox stadium, I associate myself with his remarks. I inform the House that an early-day motion will be tabled, praising the Rangers team for their achievements in the Europa League this season.

[David Rutley]

I give way to the hon. Member for Motherwell and Wishaw.

[Marion Fellows]

I have never said this in public, but my late husband was a Rangers fan, man and boy, and I could feel his presence when I watched the match last night. It was such a sad ending.

--- Later in debate ---

[David Rutley]

I give way to the hon. Member for Strangford (Jim Shannon).

[Jim Shannon]

I loved the comments made by the hon. Member for Glasgow South West (Chris Stephens) and, in particular, the hon. Member for Motherwell and Wishaw (Marion Fellows). I also associate myself with the Minister’s comments. I have been a Rangers supporter since I was a wee boy. Rangers may not have won last night, but they made this great kingdom of the United Kingdom of Great Britain and Northern Ireland better together. It was a showcase for us all.

[David Rutley]

I agree. Other hon. Members may not quite agree with everything that the hon. Gentleman just said, but I think we can all agree that it was a remarkable achievement.

We can all also agree that this debate is important. Even though my current ministerial brief does not cover this area, it is vitally important. The Child Maintenance Service plays a valuable role in ensuring that children are supported in instances where parents do not live together and where they come to a private arrangement. We know that the vast majority of separated parents quite rightly take their responsibilities extremely seriously, as the hon. Member for Strangford pointed out. Our aim is to help parents to support their children and we are sensitive to the needs of both parties. The CMS is designed to promote collaboration between parents, and it offers a statutory scheme where collaboration is not possible.

The central focus in all of this is that the children are supported. The intent of child maintenance reform is to encourage parents to meet their responsibilities and provide their children with the financial support they need to get a good start in life, and that intent is well supported by the evidence. I will come on to that point in a second.

We are committed to maximising the positive impact of the Child Maintenance Service and ensuring that good arrangements are put in place for children, no matter where they are growing up. As the hon. Member for Strangford pointed out, parents need to honour their responsibilities to their children. We believe the CMS has made substantial improvements in the pre-covid period, notwithstanding that there is further room for progress, and the statistics support that. The compliance rate for parents on the collect and pay service has increased significantly, with the percentage of parents paying something rising by eight percentage points between the quarter ending March 2018 and March 2020. From March 2016 to December 2021, the percentage of CMS cases where no maintenance is being paid fell by about 30%, from 46% in March 2016 to 32% in December 2021.

CMS investigators have the power to deduct directly from earnings and to seize funds owed in child maintenance payments where requests for payments are consistently refused. For example, the CMS has the ability to seize funds held by a third party that they owe to the paying parent. Over 800,000 children are now covered by the Child Maintenance Service arrangements, up from 700,000 in mid-2019. We are making a difference to the support that children have been receiving: since 2019, over £1 billion in child maintenance has been arranged each year through the direct pay service and the collect and pay service. The hon. Member for Wirral South (Alison McGovern) made an important point about poverty. She and I have regular debates on this subject, but it is important to note that around 140,000 fewer children are growing up in poverty as a result of child maintenance payments. That is good progress, but clearly more work needs to be done.

The hon. Member for Motherwell and Wishaw rightly raised points about the fee for an application to the Child Maintenance Service, which is set at £20 for all CMS participants. That fee is intended to encourage parents to consider whether they really need a statutory scheme case, but it is not so high that it creates an insurmountable obstacle. Applicants who are victims of domestic abuse or under the age of 19 are exempt from paying the application fee. It is not our intent to create a barrier for vulnerable customers; in fact, around 60% of applicants do not pay that fee. Collection charges, which are 20% for the paying parent and 4% for the parent with care, only apply to the collect and pay service, and are intended to provide both parents with an incentive to collaborate. The collection charge for the receiving parent is deducted only when maintenance is paid, so the receiving parent does not owe money to the Child Maintenance Service if maintenance is not paid. If there were no charge for receiving parents, there would be no incentive for them to use the direct pay service.

The Child Maintenance Service may also review the income of a paying parent if earnings decrease or increase by 25% over a year—a point that was raised by the hon. Member for Motherwell and Wishaw. That 25% threshold ensures that liabilities remain stable so that both parents can budget with certainty, which aims to provide ongoing certainty for the child as well.

[Marion Fellows]

Will the Minister give way?

[David Rutley]

I will, but can I just make one further point, which I think might answer the hon. Lady’s question? Most people’s income does not change to that degree over the course of one year. The threshold also ensures that minor changes in income do not interfere with the efficiency of the system, thereby increasing costs for the taxpayer. I recognise that there is an important issue here, and I assure hon. Members that DWP Ministers will keep that tolerance under very active review.

[Marion Fellows]

I just wanted to thank the Minister for that, because it is a very important point. I know those changes are not frequent, but they can prevent money from going to children, which is the issue that this debate is all about.

[David Rutley]

I underline for the record that that issue is kept under active review.

Within the CMS, arrears are written off in exceptional circumstances only. With regard to CSA arrears, the Department carried out its compliance and arrears strategic review. Over the course of that review, 250,000 receiving parents were written to, explaining the situation. There are fewer than 60,000 cases remaining with CSA debt, and more than 35,000 of those are undergoing collection and enforcement activity. In instances where the receiving parents ask, the CMS undertakes further action to seek to recover the funds. Crucially, this exercise has allowed the CMS to focus its effort on parents who told us they wanted us to try to collect the money that they are owed and the money that will benefit children now.

We are determined to go further and not content to stand still. We are always looking to improve the way we deliver this vital service. The Department continues to keep child maintenance policy and our operational delivery under review. Those who have met Baroness Stedman-Scott will know that she is also a redoubtable champion on these matters and not somebody to be messed with. She is very keen to drive further action forward.

We are also considering how other countries arrange child maintenance. We are gathering examples of good practice and looking at what can be learned from other systems. This includes researching what interventions are used to encourage parents to make their own maintenance arrangements without Government involvement. The CMS has introduced new digital services such as the apply online service that allows parents to make an initial application more easily. That option is available 24/7 and allows greater flexibility for separated parents to use the CMS and manage their child maintenance arrangements in a way that suits them.

That brings me to the standard of service that customers receive when they go to the CMS—a point raised by numerous colleagues today. The CMS is committed to delivering service to the highest standard and has created a more customer-focused culture over the years. In the past, the CMS has experimented with personal caseworkers —a point raised by the hon. Member for Strangford—but it was found that that does not offer the best service. Instead, the CMS organises caseworkers into more tightly formed teams, which allows for knowledge and expertise sharing, so any caseworker can deal with any of their team’s cases. We find that that is the best way forward, but I will gladly pick that point up separately with the hon. Gentleman later.

The hon. Members for Motherwell and Wishaw and for Rutherglen and Hamilton West (Margaret Ferrier) raised the incredibly important issue of domestic abuse survivors. The CMS takes domestic abuse very seriously and has substantially strengthened its procedures to ensure customers can use the CMS safely. The CMS updated its domestic abuse training programme to give clear guidance to caseworkers on how to support victims of domestic abuse. The Department also commissioned an independent review of ways in which the CMS supports survivors of domestic abuse, including those facing and suffering from financial abuse.

The review was conducted by Dr Samantha Callan, who consulted a range of domestic abuse stakeholders and leading charities, as well as CMS customers who have, sadly, experienced domestic abuse. The Government will, of course, carefully consider the findings of the review and any recommendations.

Moving on to the issue of unearned income, we are also looking to take new measures to ensure that income gained from sources other than earnings is distributed fairly. The CMS compliance and arrears strategy 2018 introduced powers that allowed notional income from assets such as coins and gold, income derived from capital, and any foreign income to be used in the assessment, but we want to go further. We propose making changes in legislation that enable the child maintenance calculation to include unearned income that is not currently captured—for example, savings and investment income, and dividends.

[Jim Shannon]

I thank the Minister very much for what he has said so far. I think that each and every one of us here today—and, indeed, those who are not here—have the very same issues, particularly that of men trying to hide their incomes. For instance, before a couple separates, money could be moved out of bank accounts and properties could be shoved sideways into the ownership of parents, brothers, sisters or new partners. Does the DWP have the power to investigate such cases in a thorough, almost forensic way? That is really what is needed.

[David Rutley]

I understand the point that the hon. Gentleman makes—with conviction, as always—but until an application is made to the CMS, it has no jurisdiction to investigate finances. It is important that applications are put in place so that that sort of action can move forward.

[Jim Shannon]

Does that mean that there is going to be a review of the system and that it will lead to such action? If it does, that is a giant step forward.

[David Rutley]

That is a point on which the redoubtable Baroness will need to come back to the hon. Gentleman. I will write to him on that point.

[Jim Shannon]

Will the Minister give way one further time?

[David Rutley]

The hon. Gentleman is very persuasive. I will allow him one last intervention, because he is a good man, but then I think we better move on.

[Jim Shannon]

I thank the Minister for giving way, and I thank you as well, Ms Rees, because I would not be able to intervene without your say-so.

I also made a point about the evidential base. The ex-wife has great knowledge of where the money is. I referred to her knowing “where the dead bodies are buried”. She knows everything. Discussions with the wife are really important. Can that also be part of the process that the Baroness is considering?

[David Rutley]

I will ensure that the Baroness hears these views. We have all had cases as parliamentarians that have shown us that there are real challenges. We want to lean into this and tackle the challenges appropriately. I have a couple of concluding remarks, which I hope will give Members some confidence.

We have talked about dividends and unearned income. This addresses the point raised by the hon. Gentleman, to some extent. Including that income will reduce the scope for parents to organise their financial affairs in such a way as to reduce their financial liability for their children, which is the situation that we need to stop. Parents need to honour their responsibilities. I also recognise the current cost of living pressures as a result of rising prices around the world and the impact of the Ukrainian war. We will strive to introduce this change as soon as possible.

On enforcement, between January 2020 and December 2021 we arranged a total of 14,300 deduction orders, which represents about 33% of non-paying collect and pay parents. We also referred 15,000 parents to enforcement agents, which represents about 35% of non-paying collect and pay parents. These enforcement actions are taken before sanctions are considered.

During the same period, where further action was needed the CMS initiated almost 6,000 sanction actions against non-paying parents, which represents about 13% of non-paying collect and pay parents. That led to 249 prison sentences—244 suspended of them and five immediate.

We are always looking for new, innovative and effective ways to encourage paying parents to provide the financial support that their children need. As my right hon. Friend the Secretary of State for Work and Pensions has set out, we are aiming to introduce curfew powers before the end of the year—I understand the point made earlier by the hon. Member for Motherwell and Wishaw—and changes to the measures on unearned income after that, which will increase the range of enforcement measures available. Having listened to today’s contributions, I think that those changes will meet with the approval of the hon. Members in attendance.

I thank hon. Members for their participation in this important debate and I hope they will join me in agreeing that the CMS provides an important service. We will continue to keep under review options with regard to CMS policy and operational reforms. Hon. Members can be assured that we will strive to continue addressing the needs of separated parents and producing better outcomes for children—it is a clear priority.