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National Audit Office reveals significant arrears in Child Maintenance System

The Child Maintenance System ('the CMS'), which falls within the remit of the Department for Work and Pensions, has recently been audited by the National Audit Office to consider whether it achieves value for money for the taxpayer. The National Audit Office's report revealed serious failures in the collection of payments to support separated parents in caring for their children.

The Child Maintenance System is used by 18% of separated families to assist in their financial arrangements. There are two processes offered by the CMS - 'Direct Pay' and 'Collect and Pay'. 'Direct Pay' is a system by which the CMS calculates the maintenance due but the parents are responsible for transferring the money between themselves. The 'Collect and Pay' system not only calculates the maintenance due but goes one step further and arranges the transfer of the money between the parents. A fee of 20% is charged to the paying parent for this service and the receiving parent is charged 4% of the amount collected.

In the UK, around 270,000 children are covered by Collect and Pay arrangements. However, the audit report revealed that £440 million is owed to separated parents who use the 'Collect and Pay' system as of October 2021.

Gareth Davies, head of the National Audit Office said:

"Many separated parents are still left without the maintenance payments they are due. Welfare and child maintenance rules need to align much better to support government's wider objectives of addressing poverty and helping people into work."

Victoria Benson, Chief Executive of Gingerbread, a national charity for single parent families said:

"While we certainly welcome the NAO's report, it clearly shows that the Child Maintenance Service isn't working for single parents. The report highlights systemic failings that mean children are going without – we already know too many single parent families are living in  poverty. Perhaps most telling is the simple acceptance of the fact that, short of writing debts off, there is no way for Government to avoid maintenance arrears rising to £1bn by 2031. This clearly shows that there are fundamental flaws in the CMS that need to be tackled.

"Worryingly, the report reveals the number of families with no child maintenance arrangement in place has almost doubled since the CMS was established, and this is affecting children in some of the poorest families and those experiencing higher levels of  conflict. This raises a red flag that the CMS is failing to reach many of those families it   should be protecting the most.

"It's clear that urgent changes need to be made to ensure the child maintenance system is fit for purpose and works for those who need to use it. Without reform more single parent families will experience poverty and more children will be exposed to ongoing disadvantage. Single parents and their children should be supported to thrive because of  their family make up – not in spite of it."

For the National Audit Office report, click here.

Julia Queen, Barrister, Coram Chambers

05.03.2022