Doubt cast on child maintenance reform savings

19 Jun 14
The Department for Work and Pensions has successfully introduced its new scheme for child maintenance payments, but its savings target could be at risk if the number of parents intending to reach agreements without government involvement does not increase, auditors said.

By Richard Johnstone | 20 June 2014 

The Department for Work and Pensions has successfully introduced its new scheme for child maintenance payments, but its savings target could be at risk if the number of parents intending to reach agreements without government involvement does not increase, auditors said.

The new scheme is intended to maximise the number of children benefiting from child maintenance arrangements and reduce government spending on administration by encouraging parents to make their own arrangements.

The Department for Work and Pensions expects to save £220m a year through reducing the number of applications to the statutory scheme and through charging parents for the services it provides.

Ministers plan to either close or move 800,000 existing maintenance arrangements to the new scheme by 2018 and predicts there will be 250,000fewer statutory cases, the Child maintenance 2012 scheme: early progress report says.

Following the changes, newly separated parents are provided with information through an ‘options service’ – an online and telephone service intended to encourage people to set up their own arrangements wherever possible. Parents can still apply for assessment and enforced collection of money, but this will incur charges.

However, auditors warned that accurately predicting parents’ reactions to the reforms was difficult. If the department’s assumptions on the fall in the number of statutory cases was wrong, then the savings target will be at risk.

The report highlighted that the number of clients intending to choose family-based arrangements has actually fallen from 5,540 last August to 3,590 in March, but this may change when the DWP begins charging for enforcing child maintenance agreements from June.

Auditor general Amyas Morse said the department had significantly simplified the way it administers child maintenance and is approaching expected levels of performance. However, the indications that fewer parents are intending to choose family-based arrangements were concerning, he added.

‘I am pleased to see that the department is proceeding cautiously and aiming to learn from experience. Significant tasks still lie ahead for the department. ‘However, delivering value for money from the 2012 scheme will depend on winding up the remaining legacy cases from previous schemes and successfully implementing technology improvements.’

Responding to the report, a DWP spokesman said: 'The old Child Support Agency often took responsibility away from parents, encouraging conflict and hostility at huge expense to the taxpayer.  More than 50% of children living in separated families had no effective financial arrangement in place at all.

'Our reforms mean that many parents are already coming to their own arrangements - 39% of parents using the new are already opting not to rely on the state to collect and pay maintenance on their behalf. Instead, they are using Direct Pay, a service which enables payments to be made directly from one parent to another.'

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