From the people who got it wrong last time, another fine mess

As the Child Maintenance and Other Payments Bill reaches the report and third reading stage in the Commons on 3 December 2007 and shortly thereafter proceeds through the Lords, it is hoped there will perhaps be some rather more detailed scrutiny of the Bill than that which has taken place to date. This article examines the key areas ripe for debate and raises questions about the areas most likely to cause problems in the future, if they are not resolved at this time.

The emphasis in the new legislation is to encourage and support parents to make their own maintenance arrangements. It has been indicated that the voluntary sector will play a major role in providing the necessary information and guidance to parents to enable them to reach agreement. However, at a time when voluntary organisations are finding it increasingly difficult to manage their budget, it is difficult to see how they will be in a position to provide the significant, informed advice and support that will be required without additional financial assistance. It is unclear at this point if or how it is to be provided.

Benefit claimants will no longer be forced to use C-MEC (as it will be known). From April 2010, the government will significantly increase the amount of maintenance that a parent with-care on benefits can retain before their benefits are affected to £40 each week. These policy reforms are welcome, but the decision to delay the introduction of the higher maintenance disregard for a number of years is a lost opportunity to reduce child poverty. Looking at one of the government’s stated objectives of reducing child poverty by 50 per cent by 2010, this is a rather surprising delay for which no real explanation has been provided.

HM Revenue & Customs (HMRC) are to play a large part in the new organisation, as C-MEC will rely upon their income data to calculate child maintenance liabilities. However, with a number of different IT systems within HMRC, it is unclear how the relevant data will be accessed and transferred. It is questionable how efficient HMRC will be in providing C-MEC with full details of a person’s income where there is a combination of earnings from both employment and self-employment.

Sir David Henshaw was given the mammoth task of redesigning the CSA in the summer of 2006. It is therefore disappointing that one of his main recommendations has been ignored. In particular, he recommended that the ‘twelve month rule’ should be abolished. This rules prevents a parent from applying to the CSA for a maintenance calculation for the first twelve months that a court order (or minutes of agreement) is in place. After this period of time, either parent can apply to the CSA, thus terminating the previous order.

As stated by Sir David, this rule creates instability and uncertainty for the family. Any incentive between parents to make an agreement after separation is removed and the rule acts as a deterrent, as the ‘shelf life’ of any agreement can only be guaranteed for a period of twelve months. The House of Commons work and pensions committee (fourth report of session 2006-2007) also stated the rule had its weaknesses. As such, the government’s dismissal of this important recommendation is even more difficult to understand.

Sir David Henshaw also suggested a clean break with the past, stating ‘a specific dedicated body should chase down old debts and close cases’. These recommendations have been ignored and between 2011 and 2013, the existing CSA case load will ‘simply’ be transferred from the two current schemes to C-MEC. Little detail has been given as to how this transition will be managed. The migration of existing cases will be one of the most substantial challenges facing the Commission. The scale of this task should not be underestimated, particularly as the transfer of cases from the original scheme to the scheme introduced in 2003 has been unsuccessful. Can we be satisfied that the current computer systems, with all its inherent problems is capable of recalculating child maintenance liabilities of the existing 1.4 million case load?

The formula provides for a reduction in child maintenance if the non-resident parent has overnight contact one or more nights each week. This is known as the shared care allowance. This places the parents in immediate financial conflict with each other, with the parent with-care possibly attempting to minimise overnight contact to maximise payment and the non-resident parent seeking to maximise contact to minimise child support liabilities. In a society which promotes parents working together after separation, it is difficult to see how providing such financial incentives to parents will secure ‘co-parenting’ into the future.

Compliance by the non-resident parent with the agency has always been difficult. Introducing a provision which states that an income change of at least 25 per cent has to be reached before any review can be carried out, is likely to prove extremely unpopular and alienate the very client base it needs to engage with, to make the system work in the future.

Transparency was stated as one of the four new principles for the reform of the child maintenance system, ‘providing a reliable and responsive service understood and accepted by parents’. In considering this objective, it is disappointing to note the opportunity has not been taken to ensure that in the future the income information of the non-resident parent is provided to the parent with-care.

Instead, we have a system where the parent with-care has to rely upon the child support organisation to obtain all necessary information. When the calculation is carried out, the parent with-care is deprived of the opportunity to check that the information given is correct or complete. This merely provides opportunity to the non-resident parent to seek to misrepresent their circumstances, as the scrutiny by the one person that would possibly know their financial circumstances is excluded.

The introduction of tougher enforcement measures, such as the removal of a party’s passport, curfews and ‘freezing’ orders are stated to be key in ensuring that in the future, a recalcitrant non-resident parent will be unable to avoid their responsibilities. Swift and effective enforcement measures are required.

However, the balancing exercise requires some protection for the non-resident parent. The commission will have powers to ‘freeze’ a party’s bank account to secure lump-sum payments towards arrears. It is envisaged that interim orders will be made without any notice being given to the non-resident parent. The rationale is obvious (to prevent the parent from moving the money) but it is of concern that there is to be no right of appeal against such orders. It is firmly believed the proposed powers will place C-MEC in breach of an individual’s human rights.

It is the parent with-care who requires the money to provide for the child. A prime opportunity has not been grasped by the government to engage the parent with-care in the enforcement process.

It would seem to be a contradiction to state that the person who has the financial interest in receiving the monies is the one person who is prevented from being involved in the enforcement process when payment is not made. It is often the parent with-care who has the necessary understanding of the non-resident parent’s financial circumstances.

It is usually the lack of such knowledge that leads to a delay of appropriate (or any) enforcement action being taken. The parent with-care is even prevented from taking their own enforcement action, should the CSA/C-MEC fail to do so. Again, in considering the government’s stated objective of reducing and ending child poverty, it is disappointing that these opportunities have not been taken.

Inevitably, some of the existing historic debt of £3.3bn will not be recovered in the future, even if the more stringent enforcement powers are used. What of the parent with-care who has suffered a financial loss? Following a case in the court of appeal in May 2007, in which it was confirmed that the agency do not owe a duty of care to parents, will the government accept any responsibility for its past mistakes and provide compensation to those parents who placed their trust in the CSA?

As the issues mentioned demonstrate, C-MEC has a number of hurdles to overcome if it is to be successful in the future. If these matters are not addressed, the mistakes of the past will continue to haunt the very families the organisation has been designed to assist and protect.

Kim Fellowes is Director Dickinson Dees LLP, Chair - Resolution National Child Support Committee.