DWP child maintenance update as it prepares for CMS 'enforcement powers' change

DWP child maintenance update as it prepares for CMS 'enforcement powers' change The Department for Work and Pensions is preparing to rip up the existing system in a bid to make it fairer - but there are questions The Department for Work and Pensions is gearing up to strengthen 'enforcement powers' in a significant overhaul of the Child Maintenance Service (CMS) amid questions over the changes. The DWP is preparing to reform the CMS by scrapping a key element of the current system, which allows separated parents to arrange their own child maintenance payments once the CMS has calculated what is owed. However, some have raised worries about the effect these changes could have on children. The government is vowing to tear up this process, arguing it is fundamentally flawed. Yet the shake-up will mean that some people currently receiving payments will face charges they don't have to pay under the existing set-up. Officials maintain that the current Direct Pay system - where former couples arrange their own payment agreements - leaves many people short-changed and waiting longer for money. This, they claim, forces many into chasing ex-partners for payments, and can cause considerable distress for those who have previously been in abusive relationships. Edward Morello, a Dorset MP, questioned the DWP over the potential consequences of these charges on children whose parents don't currently pay them. DWP figures indicate that many arrangements are currently paid in full and on time, with no history of issues such as domestic abuse - yet these cases will still be subject to CMS charges under the new system, reports Wales Online. The department has now responded to insist the changes are necessary - though it failed to directly address how the reforms will impact children whose receiving parents will start being charged. In its official response, the DWP said the changes would help fund enforcement powers when the system is overhauled. DWP minister Lilian Greenwood said: "Evidence gathered by the Department has highlighted significant shortcomings with Direct Pay. Under Direct Pay, the CMS is unable to routinely monitor whether payments are being made in full or on time, meaning non-compliance can go undetected until a parent reports a problem. "Research tells us that only 60% of receiving parents in Direct Pay reported getting all of the child maintenance they are owed, and only 40% of them reported receiving it always on time. This places the burden on receiving parents to chase payments. The current arrangement can also create opportunities for economic abuse, including situations where maintenance is withheld, paid late or manipulated as a means of exerting control over a former partner. "In many cases, parents may also need to maintain contact with an ex-partner to resolve payment issues, which can be distressing and particularly harmful for victims and survivors of domestic abuse." She continued by discussing how the new CMS system will improve matters. There are currently around 450,000 Direct Pay arrangements in place across the UK. She said: "However, moving to a single service where the CMS monitors and transfers payments will address these longstanding issues. "Our proposals for the new service will be underpinned by a fairer fee structure. Fees offset the investment needed to make the reforms and contribute to the cost of using enforcement powers to re-establish compliance and reduce the burden on the taxpayer. "We considered how best to address the shortcomings of Direct Pay and concluded that a single service model, with CMS oversight of all maintenance payments, would provide greater transparency, improve compliance and better support children to receive regular maintenance." Under Direct Pay arrangements, the CMS doesn't charge parents anything as they organise their own payment arrangements. Yet under the proposed new system, receiving parents in these agreements would need to pay the CMS. However, 350,000 people currently use the alternative system within the CMS framework. These are known as Collect and Pay arrangements, which involve the CMS directly. Under the reforms the DWP plans to introduce, those under Collect and Pay would pay considerably less. The DWP says: "The headline for a compliant paying parent is a cut from a 20 per cent charge to 2 per cent. The trade off is that everyone loses the fee-free Direct Pay route, so parents who currently pay each other directly at no cost would start paying the 2 per cent instead." The reforms arrive amid growing concerns that the current system is failing. The BBC's Panorama programme reported in August on the devastating impact that shortcomings in the existing structure were having on some parents. One mother revealed she had been left £10,000 out of pocket and dependent on food banks, while another admitted to skipping meals. Others described being pushed to 'breaking point' while chasing former partners for payments. However, doubts remain in some quarters over whether the reforms will prove effective. The House of Lords Public Services Committee Report on Reforming the Child Maintenance Service stated it was unconvinced the proposals would succeed. The report highlighted that CMS staffing levels were severely stretched, adding: "While we acknowledge that reforms will improve visibility of non-compliance in CMS arrangements, we are not persuaded that the Government have adequately evidenced that this approach will lead to higher compliance in child maintenance payments." The website Both Parents Matter has said "achieving the objectives of reducing arrears, tackling non-compliance and getting more money to children, cannot be achieved until there is fundamental reform of the calculation system, which too often produces unaffordable calculations. There is a direct link from unaffordability to non-compliance, particularly for those on lower pay." The single parents' website Gingerbread has supported the changes but warned that they must be made with 'extreme care'. It has said: "The CMS is in urgent need of reform. Single-parent families need a clear timeline of when the government is going to bring forward the changes it has promised." The new fees proposed under CMS changes - how they would work Currently, a paying parent using Collect and Pay is subject to an extra charge of 20 per cent on top of their payments to the CMS. Under the proposed new system, this would drop to just two per cent provided payments are made on time. However, it would stay at 20 per cent for paying parents who miss payment deadlines. Under the current Collect and Pay system, the receiving parent is charged four per cent, which would reduce to two per cent under the planned reforms. For instance, a paying parent currently paying £100 a week would see their additional CMS charge drop from £20 to just £2, provided they pay on time. In this case, a receiving parent would receive £98 - a two per cent reduction from £100 - rather than £96 (a four per cent reduction) as is the situation under the current rules. Furthermore, under the proposed changes, parents paying via a deduction from benefits would not be liable for the 20 per cent non-compliance charge, according to the government. For more information about the proposals, visit the childmaintenance.org.uk government web page on the reforms.