The Department for Work and Pensions (DWP) has confirmed plans to change how Child Maintenance Service (CMS) payments are calculated as part of a wider overhaul of the system. The proposed reforms include reducing the threshold at which changes in a parent's income can affect their child maintenance calculation and bringing unearned income into the standard calculation.
DWP Minister Andrew Western confirmed the changes in a written response to Dr Ellie Chowns, who asked what recent progress had been made on reforming the Child Maintenance Service (CMS). Mr Western said the DWP had recently completed a review of the child maintenance calculation and now plans to reduce the income tolerance from 25 per cent to 15 per cent.
Income changes to be reflected more quickly
This should mean significant changes in a parent's income are reflected in the amount of maintenance they are expected to pay more quickly. The DWP also intends to include unearned income within the standard calculation, which the minister said would help ensure liabilities more accurately reflect a parent's financial circumstances and that more money reaches children.
Both changes will require legislation before they can be introduced. Mr Western said the Government is exploring different options to pass the reforms through Parliament and implement them when possible.
Changes to how payments are collected
The UK Government is also planning a significant overhaul of the way the CMS collects maintenance. Currently, parents can use Direct Pay, where payments are made directly between the two parents, or Collect and Pay, where the CMS collects payments from the paying parent and passes them to the receiving parent.
The Government intends to remove Direct Pay and move to a single enhanced Collect and Pay system. The DWP says this would allow the CMS to monitor all payments, identify missed payments more quickly and take faster enforcement action. It estimates the changes could lift around 20,000 children out of poverty, using the relative low-income after housing costs measure. However, this reform also requires legislation and the DWP says it will be implemented when Parliamentary time allows.
Faster action over unpaid child maintenance
Further changes are planned to tackle child maintenance arrears. The UK Government intends to introduce administrative liability orders, replacing the current court-based process. A liability order allows the CMS to take further enforcement action against a parent who has failed to pay child maintenance.
The DWP says removing the existing court process should reduce the time required to secure an order in most cases and allow enforcement action to begin more quickly. Work is continuing with HM Courts and Tribunals Service and the Scottish Government on introducing the new system, with the necessary regulations due to be brought forward "as soon as possible".
The legislative reforms are being developed alongside wider modernisation of the Child Maintenance Service, including changes to online services, case handling and communications with parents. The same batch of Commons written answers also contains several questions about parents suspected of hiding or diverting income. The DWP confirmed that where a parent provides credible evidence that income has been misrepresented, a case can be referred to the CMS Financial Investigation Unit. The unit investigates whether the financial information used to calculate maintenance is correct and can identify grounds for a revised maintenance liability. The DWP said investigation times vary depending on the complexity of individual cases.
