Source · Select Committees · Work and Pensions Committee
Recommendation 5
5
Acknowledged
Paragraph: 38
Assess risk of fraud and error within child maintenance and publish annual estimates.
Conclusion
Evidence to us has raised particular concern about the fraudulent practices employed by some paying parents to reduce maintenance calculations but the Department has not made an estimate of the level of undetected customer fraud and error within the system. We repeat the Public Accounts Committee’s recommendation that the Department should assess the risk of fraud and error within child maintenance and publish, as part of its annual report and accounts for the child maintenance scheme, a fraud and error estimate and reduction target rates.
Government Response Summary
The government outlined its existing controls to combat fraud, including a dedicated Financial Investigation Unit and reliance on HMRC data for most income. It stated it is planning to include unearned income in initial calculations using HMRC data and has consulted on this, but did not commit to assessing or publishing an overall fraud and error estimate or reduction targets as recommended.
Paragraph Reference:
38
Government Response
Acknowledged
HM Government
Acknowledged
The Department legally relies on data from HM Revenue & Customs (HMRC) and its own benefits data to assess 91% of Paying Parents earned income and benefit status, which are key parts of the maintenance calculation. This makes it difficult for most parents to misstate their income. Nonetheless, either parent could misstate their personal circumstances. The department continues to build on its already proportionate and cost-effective controls, such as: • a dedicated Financial Investigation Unit • use of verified income from HMRC and benefit systems as outlined in legislation and a principal part of service design. • use of child benefit systems to verify qualifying child(ren) • procedures and policy to request additional verification • a robust mandatory consideration and appeals process. Receiving Parents can also ask the Department to consider the Paying Parents more complex earnings, such as unearned income, which are more vulnerable to fraud and error. Currently unearned income, for example savings and investment income, dividend income and property income, is only included in the child maintenance calculation on request of a variation, requiring caseworker intervention to source the income from HMRC. The Department has improved our processes around variations, to make it harder for wealthier individuals with complex income sources to avoid their responsibilities by minimising the amount of child maintenance they pay. Cases involving complex income or suspected fraudulent behaviour can be looked into by the Financial Investigation Unit (FIU). This is a specialist team which can request information from financial institutions to check the accuracy of information the CMS is given. When an investigation finds evidence of fraud, the FIU will seek to prosecute or forward to HMRC for fraud action. Children in poverty: Child Maintenance Service: Government Response 5 The Department is planning to include any unearned income in the initial calculation using the same interface and legislative controls as all other types of income sourced from HMRC, thus increasing the proportion of cases where HMRC data safeguards against parents misstating their income. The CMS published a public consultation on unearned income on 18 June 2021 which received predominantly positive views from respondents.