Child Maintenance Service: Reform

Jim Shannon Excerpts

Thursday 19th May 2022 Westminster Hall

[Jim Shannon (Strangford) (DUP)]

May I apologise to you, Ms Rees, for being a few minutes late to the Chamber? I was in the Pass Office. It has moved, which I did not know, and there was a queue, so I apologise for not being here for the whole introduction to the debate.

This subject is very close to my heart and one that I am very pleased to speak on. I spoke, in the form of interventions, in the Adjournment debate on this issue the other night, and the hon. Member for Motherwell and Wishaw (Marion Fellows) was also there. I thank the House of Commons Library for its notes and advice. It always gives us lots of good information.

I think I should start by saying that I understand that the figures show that an estimated one in three separated families in the United Kingdom of Great Britain and Northern Ireland have a child maintenance arrangement that is paid in full. That is good news, and something to say before we start. As elected representatives, we will always be the ones people come to with their problems. People do not come to us all the time—as you know, Ms Rees, and I know—to say, “That’s a great job. Well done.” They come to tell us their complaints, so unfortunately, Minister, although I am not being negative, I want to say some things about where the fall-downs are.

The NAO report stated that the aim of increasing the number of effective maintenance arrangements overall was based on a wider, cross-Government set of policies on separated families. However, that broader set of cross-Government actions have yet to emerge as the chances that we hoped to see. In most of the cases that people bring to me, it is often the man who controls the money and that is where the problems lie. It is a fact of life that relationships break up. I am always sorry that it happens, and I do not like to see it, but sometimes it does happen, for various reasons. We are not here to condemn or identify why that is, but relationships do break down.

The DWP research does not explain why take up of the CMS is lower than expected. The CMS has improved its maintenance calculations and was designed to limit fraud and error, but the DWP has not estimated how many calculations are incorrect due to fraud and error. When an MP is presented with the case as the elected representative, it is very hard, especially when there is a lady sitting across the desk who is in absolute floods of tears and does not know what to do next. There are probably two or three children who are outside in the office, or maybe with their mummy. We can see the pressure on that lady in the office at that time.

CMS debt money is not collected, and outstanding arrears will continue to grow indefinitely. They are forecast to reach an eye-watering £1 billion. I find that quite hard to understand. Perhaps the Minister can tell us what is being done to collect the arrears. I know the Minister is a man who understands the issue very well, and always responds to MPs in a way that gives us some hope for the future. We are looking for that same consideration today, and I want to make some constructive comments.

I want to give some examples of real difficulties from my office. As I mentioned in the Adjournment debate on Tuesday night, the inconsistency of not being able to get the same person at the end of the phone to speak to about a constituent’s case is infuriating. I know that during covid people were ill and that meant changes every day, but even before covid, it was difficult to speak to the same one person about a constituent’s case. Then, when I got put on to somebody else, what happened? It all started again—the process just started with each new person. The timescale it took for things to happen was infuriating. Perhaps the Minister can give us some indication of what is happening in that regard.

There are also the pressures of the job. In Belfast, even before covid-19, many staff were moving on. I hope the Minister can give us some reassurance on what can be done or needs to be done to retain staff. Can the Minister give us some figures for the internal movements in civil service jobs? I do not expect him to have all the answers today. The DWP is under the control of Westminster, so will the Minister give us figures for movement on child maintenance within the DWP Belfast office in particular?

I have had mothers come to see me at the end of their tether with children under their care and without the wage and income that they once had. I have witnessed blatant attempts to not make child maintenance payments. In almost every case—99.9% of cases—it is the man, although sometimes it may be the lady who has the bigger income. In all those cases, it was husbands who had closed their businesses, transferred moneys and removed moneys from bank accounts prior to those accounts being checked, and who had handed valuable properties to parents or new partners. I know that marriages and relationships break down, but that anyone should try to walk away or abandon their children is outrageous.

I am aware of people who are property millionaires on paper and had large bank accounts, yet the hesitancy of the CMS to pursue them effectively was truly frustrating. They returned financial accounts showing a profit of less than £15,000 per year, when they are driving a car worth more than 30 grand and are sitting in properties that show their income is higher than that. If someone is withdrawing moneys from the bank account before a relationship break-up, there is a case to answer.

Why is it so important? Ladies are squeezed financially. They cannot pay their mortgage when they are left with all the bills. They cannot pay the electric. In some cases, they cannot even buy food for the house. They are desperate.

My constituents have given me lots of examples. In my office, as I am sure is the case in everybody’s office here, we quite regularly get such cases. We find it frustratingly difficult to negotiate through their process with constituents. I want to raise some points to the Minister. First, is it possible to put urgency into the request from us, as elected representatives, to the CMS? There is real urgency to get things done quickly and to, importantly, have a process at the end of it. Secondly, can we assign one officer or staff member to look after each case? I am ever mindful that officers might be off sick, but there should be someone who knows the case, so that we do not have four, five or six people. Thirdly, checking the bank accounts before the breakup would give an indication, I suspect, of where the process is.

We should listen to the wife in those cases, the lady who knows. She knows where the dead bodies are buried. She knows where her husband’s moneys are. She knows what property he owns. She knows about the bank accounts. She knows. We should be looking towards that evidential base. It is not right that husbands can abscond or ignore CMS letters. The legal authority to investigate must be central to the obligations. I know that the Minister has great understanding and that he wants to assist. I ask him to hear the four requests and others have made. I appreciate the evidential base that they have, but I do feel that the DWP can do better and must do better.

I am probably old fashioned. I am a traditional person, and I believe in the sanctity of marriage and commitment. That is just me. A man must remember his obligation to his wife and children. We need the law of the land tightened, thereby ensuring impartial treatment for men and women. There is much to do, Minister—much to achieve and change. I value the Minister’s help and commitment to trying to make changes that ensure we have a system that really works for the lady. I think that is the way it should be.

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[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.

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[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.