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New child maintenance system now in force

Date:1 JUL 2014
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Journals Manager + Online Editor

The new child maintenance system came into force yesterday, 30 June 2014. It is hoped that it will help more families to work together, while maintaining a heavily subsidised service for those who really need it.

The phased closure of the Child Support Agency (CSA) now begins, as it gradually closes its cases over the next 3 years. These parents will now have the choice to make their own maintenance arrangements between themselves or use the new Child Maintenance Service.

Yesterday also saw the introduction of new fees for families which choose to use the Child Maintenance Service, as well as new enforcement charges for parents who try to evade their responsibilities – those who, for example, have to be pursued through the courts or have maintenance deducted from their earnings.

Work and Pensions Minister Steve Webb said:

'Reform of the old broken system was absolutely necessary and today marks a key milestone in the government’s essential reform of the child maintenance system in Great Britain.

The old CSA was just not fit for purpose – it spent £503 million in 1 year to transfer £1.1 billion of maintenance and left more than 50% of children living in separated families with no effective financial arrangement in place at all.

The new system is helping more couples to work together to ensure the best outcomes for their children. We know that children do better when parents work together, even after separation, and I am very encouraged that the new child maintenance system is already making this a reality for thousands of families.'

There will be a one-off £20 application fee to use the Child Maintenance Service and enforcement charges of up to £300 for absent parents who have to be pursued.

There will be no ongoing fees for families which use the Direct Pay service to set up direct payments between the parents.

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Families unable or unwilling to come to a Direct Pay arrangement will have the option to ask the Child Maintenance Service to collect money from one parent and pay to the other – but there will be an ongoing fee for this service, which will be introduced in August.

The aim of the ongoing charges for parents who want the state to collect and pay maintenance on their behalf is to encourage parents to work together to make their own arrangements, freeing up the Child Maintenance Service to concentrate on the most challenging cases and get the money flowing where it hasn’t in the past.

Speaking of the new new child maintenance system, Gingerbread Chief Executive Fiona Weir, said:

'While it’s great if parents can make their own arrangements for child maintenance, we know that this can prove difficult for many. We fear that the new charges and the government’s blinkered focus on private arrangements could deter many single parents from getting the help they need to sort out child maintenance and that children will lose out.

Most single parent families are struggling financially at the moment and the £20 application fee to use the new Child Maintenance Service will be very difficult in practice for some to afford. It is simply wrong in principle for the government to deduct money intended for children if the new service has to step in and collect from a parent who has failed to pay.

We know that when there is a good child maintenance arrangement in place, whether private or through the government service, it makes a huge difference to children’s lives. We urge any single parent unable to sort out child maintenance for themselves, not to be deterred by the charges from using the CMS to ensure their children get the financial support they need.'

30 June also marks the start of a 4 year process of closing down all CSA cases, with the first letters going out to the first batch of cases affected. 

From 11 August, parents already using the CMS will face collection charges if they continue to use the ‘Collect and Pay’ service (where the CMS collects maintenance from the paying parent) rather than opting for a ‘Direct Pay’ arrangement (where the paying parent pays the parents with care directly). The collection charges are an additional 20 per cent for the paying parent, while four per cent is deducted from the child’s maintenance before it reaches the parent with care. All paying parents in the CMS can opt for a ‘Direct Pay’ arrangement (thus avoiding charges for both parents) provided they stick to paying their liabilities. In future, the ‘Collect and Pay’ service will only be available if the paying parent has a poor payment record and the parent with care of the child requests it.

According to Gingerbread:

  • The Department for Work and Pensions (DWP) expects to make £890 million from charges in next nine years (between now and 2022/23).
  • Overall, the DWP estimates that charging will reduce the number of people using the statutory scheme by around a quarter of a million between now and 2018/19. 
  • The DWP’s estimates are that around 17 per cent (145,000) CSA clients who were assessed as entitled to child maintenance under the CSA will not apply to the CMS once their case is closed as a result of the £20 fee. Of these, around 100,000 will not make alternative arrangements.
  • They also estimate that there will be around 15,000 fewer applications annually from new applicants as a result of the £20 fee – 10,000 of whom will not make other arrangements.