This House of Commons Library Briefing provides information in response to some key questions relating to childcare during the coronavirus outbreak
Documents to download
Child Maintenance: Fees, enforcement and arrears (2 MB, PDF)
The briefing focuses on the use of enforcement measures in CMS cases (the “2012 scheme”), though they may also be applied to arrears arising from arrangements organised under the 1993 and 2003 schemes with the Child Support Agency (CSA).
Because new enforcement action was suspended by the CMS during the coronavirus outbreak, caution should be taken when comparing data for the quarter ending June 2020 with earlier periods.
The Child Maintenance Service has said that it is moving towards “a full service” and stated that they “will take action if child maintenance is not paid”. They have advised the parent with care to “keep a record of any payments you receive and any missed payments. If any payments are missed or not made in full, we may begin collection activity to recover any unpaid child maintenance”.
In September 2020, the DWP said it was working with its partners, such as bailiffs and courts, to reinstate arrangements to support enforcement activity. As of 2 December 2020, the CMS Direct page says “if any payments are missed, we will review your case and may begin collection activity to recover any unpaid child maintenance”. The CMS in Northern Ireland may not be able pursue arrears during the Coronavirus period and calculations of liability may be delayed.
Individuals must pay a £20 fee for applying to the CMS to calculate child maintenance. The fee is not charged if a person is aged 18 years or under, or is a victim of domestic abuse or violence and has reported this to “an appropriate person”.
For those under “Direct Pay”, where the CMS calculates the rate and payments are made between parents, there are no additional collection fees.
For those using “Collect and Pay”, where the CMS collects and passes on payments, the Non-Resident Parent must pay an extra 20% of the maintenance due and the Parent with Care receives 96% of the child maintenance allowance paid by the Non-Resident Parent.
In 2018/19, the CMS collected £33.34 million in fees from Paying Parents and Recieving Parents on the Collect and Pay Scheme.
The single-parent’s charity, Gingerbread, published Direct Pay child maintenance: Innovation or failure? in March 2019. This examined the interplay between the Direct Pay and Collect and Pay systems. The report criticised the fee system operating under the 2012 CMS scheme, arguing that it had failed to “engender co-operation” between parents, which was one of its intentions when introduced. It argued that the CMS should monitor Direct Pay Arrangements and abolish Collect and Pay fees.
Do Paying Parents comply with child maintenance arrangements?
At the end of June 2020, there were 518,753 child maintenance arrangements under the 2012 CMS scheme, and 486,800 Paying Parents (a parent may be liable to pay more than one arrangement).
Collect and Pay
Excluding those arrangements not yet assigned to a scheme, 185,238 were on Collect and Pay (36%) in June 2020. The proportion of arrangements assigned to Collect and Pay was 30% in March 2017 and has risen gradually since then.
Please note that the compliance rate for the quarter ending June 2020 is not directly comparable to previous quarters. The rate for June 2020 has been inflated as a result of the coronavirus pandemic, and the decision to pause all deductions from Universal Credit from 10 April to 9 May and for the UK Government to pay all child maintenance liabilities for parents paying via deductions from Universal Credit. More information can be found in section 2.1 of this briefing.
The below chart shows that around 67-68% of parents on Collect and Pay have contributed a form of payment in each quarter since December 2018 (not including the data for June 2020). This is an increase from around 55-56% in the period March 2015 to September 2016.
Source: DWP, Child Maintenance Service statistics: Data to June 2020 (Experimental), Great Britain, September 2020, Table 8.
On compliance with Direct Pay arrangements, a survey report published by the DWP in 2016 found that of all receiving parents who had a Direct Pay calculation, 49% had an “effective arrangement” after three months. This rose to 53% after 13 months. An effective arrangement was defined as “payments were being made on time, in full and the Receiving Parent perceived the arrangement to be working well” (Source: DWP, Survey of Child Maintenance Service Direct Pay clients, 2016, p67).
Initial CMS response to the build-up of arrears
If arrears have been accumulated under the Collect and Pay system, the Paying Parent is usually sent an arrears notice, and caseworkers may negotiate and put in place a repayment plan. The CMS has said that it aims to recover arrears within two years and expects the Paying Parent to pay up to 40% of their net income to clear them. The CMS may also seek, or accept a proposal of, part-payment in satisfaction of liability for the whole arrears. The written consent of the Person with Care (or child applicant in Scotland) must be obtained before this is accepted.
The CMS does not monitor payments made under Direct Pay. However, the DWP states that where parents do not pay their liability in full and on time, the Person with Care should inform the CMS who will “take swift action to move the case to Collect and Pay to enforce payment and recover any arrears”.
Without a court order, the CMS may collect arrears through:
- A Deduction from Earnings Order: An employer deducts payment for arrears direct from the Paying Parent’s salary.
- A Deduction from Earnings Request: As above, but for the Armed Forces.
- A Deduction Order: Either a lump sum or regular deductions are made from bank accounts.
- Collection of Assets from a deceased paying-parent’s estate.
With a Court-obtained liability order, the CMS may take the a range of enforcement action.
In England and Wales these powers include using bailiffs to take control of goods and applying to the court for an order of sale of an asset, once it is registered by a court. In Scotland, powers include requesting a sheriff to make a charge of payment to require payment after 14 days, or freezing assets to prevent them being sold or transferred.
Fees may be charged when the CMS takes enforcement action against a non-paying parent— current fees can be seen at Gov.UK, Enforcement charges.
In Great Britain, on successful application to the courts, an individual may also be disqualified for driving or from holding a passport.
Persons with Care on Direct Pay must first transfer their case to Collect and Pay for the CMS to bring enforcement action against the Paying Parent.
How often does the CMS use its collection and enforcement powers?
Note, for the reasons stated above, caution should be taken when making comparisons with the June 2020 quarter.
From June 2016 to March 2020, the number of deduction orders in process each quarter increased from a low of 1,200 in the quarter ending June 2016, collecting £0.5m, to a peak of 3,800 in the quarter ending December 2019, collecting £2.7m (Source: Child Maintenance Service statistics: Data to June 2020, GB, September 2020, table 11.1).
Enforcement Agent Referrals in process are when the CMS has referred a Paying Parent’s unpaid child maintenance to an enforcement agent. The referral will remain until unpaid child maintenance and fees that are covered by a liability order have been paid or the Enforcement Agents return the case. Their number has increased from 300 in the quarter ending June 2015, to a peak of 6,700 in the quarter ending June 2019. These only occur in England and Wales (Source: Child Maintenance Service statistics: Data to June 2020, GB, September 2020, table 11.1).
Since the quarter ending September 2019, seven passports have been subject to either suspended or immediate confiscation orders, eight driving licences have been disqualified either immediately or under a suspended order, and 265 prison sentences, either suspended or immediate, have been passed. These figures do not include cases where a sanction has been suspended as a result of the Paying Parent complying with an agreed repayment schedule (Source: DWP, Child Maintenance Service statistics: Data to June 2020, GB, September 2020, table 11.2).
Since the quarter ending June 2017 and March 2020, the CMS has completed an average of 145 investigations into employers who have not implemented a Deduction from Earnings Order (DEO) (excluding the June 2020 quarter). Of these, an average of 65 concluded with a DEO being set up (Source: DWP, Child Maintenance Service statistics: Data to June 2020, GB, September 2020, Table 12).
Section 5 of the Briefing provides more detail on the use of other CMS powers.
Writing off arrears
Since 2018, the UK Government has had the power to write-off arrears that accumulated when a case was administered by the CSA under the legacy 1993 and 2003 child maintenance schemes. This can be done if no payment towards those arrears has been made for three months and other conditions are met. For more information, see the Library paper Child maintenance: The write-off of arrears on Child Support Agency cases.
Documents to download
Child Maintenance: Fees, enforcement and arrears (2 MB, PDF)
This House of Commons Library briefing sets out how the Child Maintenance Service (CMS) calculates the amount of child maintenance payable under the 2012 statutory child maintenance scheme.
This House of Commons Library Briefing provides a short overview of early years funding in England since the introduction of the new national early years funding formula from 2017-18.