£3bn in child maintenance arrears are uncollectable, says NAO

28 Mar 17

Around £3bn in child maintenance arrears are uncollectable, a National Audit Office investigation has found.

The watchdog today published the findings of a probe in the Department for Work & Pensions’ closure of its 1993 and 2003 child maintenance scheme, which existed under the now defunct Child Support Agency.

The CSA had struggled with weak IT systems leading to poor customer service, backlogs and information gaps.

In 2012, a new scheme was introduced to resolve these problems and encourage private arrangements.

In 2014, all parents with active cases in the earlier scheme were told their cases would close and they would have to apply to the new scheme or make their own family arrangements.

An NAO investigation into this process revealed that the DWP estimates around £4bn in child maintenance payments are outstanding.

Around three-quarters (£3bn) of this amount is likely to be uncollectable as there had been no recent contact with the non-resident parent and no payment for the last six months.

The DWP has no plan on how to collect these outstanding amounts, the auditors said.

However, the DWP told Public Finance the label “uncollectable arrears” is given to a wide range of cases, including where the debt has been suspended or the parent has died or left the country.

A spokeswoman said the department can and does collect arrears in this category by using its enforcement powers to recover money. It cited the example of a non-resident parent who regularly left the country but from whom £47,000 was recovered through the use of enforcement powers.

Elsewhere in its report, the NAO highlighted that non-resident parents often do not understand how arrears have been calculated and noted that the department was often slow to inform and explain.

Non-resident parents were often unaware that they can apply to have their payments lowered if they are experiencing financial hardship.

“The department told us that it does not tell people who have arrears about this option unless asked in order to encourage payment of arrears,” the NAO said. The watchdog found that the DWP is taking longer than expected to close 1993 and 2003 scheme cases.

“By September 2016 the department had closed 33% of active cases – those with continuing payments, against an expectation of 50%,” it stated.

“The number of cases where the department needs to finalise arrears before closure had grown to 163,000 by September 2016.”

The DWP spokeswoman said: “The old system wasn’t good enough which is why the Child Support Agency has been replaced and today nearly 90% of parents are paying the maintenance they owe.

“We are taking enforcement action in a higher proportion of historic cases than in the past and will be publishing a strategy for addressing arrears in due course.”

  • Vivienne Russell

    Vivienne Russell is managing editor of Public Finance magazine and publicfinance.co.uk

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