Recommendation 14

HM Government Accepted

The Department continues to monitor the wider separated families population, the proportions with statutory and non-statutory arrangements and the amount of child maintenance transferred. Work is ongoing through various initiatives to increase awareness of the CMS. We are also training staff in jobcentres and Universal Credit to signpost parents where a child maintenance arrangement might be suitable to Get Help Arranging Child Maintenance (GHACM) if they do not have one in place. The GHACM service is open to all, and any parent who needs support to reach an arrangement with their former partner can get in contact. We will also consider further research to support any future policy reforms. Children in poverty: Child Maintenance Service: Government Response 11 Calculation review Recommendations 15–19 15. Government policy is to encourage work, returning to work and in-work progression as far as possible to help reduce poverty, however multiple reports have raised concern both about the affordability of maintenance payments and distorted the work incentives caused by the current maintenance levels. This poses a risk to work incentive objectives of Universal Credit. (Paragraph 76) 16. The unaffordability of maintenance for some parents is causing severe hardship and distress. It also forms a barrier to compliance. Updating maintenance levels and thresholds should therefore be seen as a priority. We recommend the Government completes its analysis of the affordability of maintenance payments and make proposals as an urgent priority no later than six months after our Report has been published. (Paragraph 77) 17. As part of its work on affordability, the Department should also seek to rebalance legislation so that changes, such as uprating maintenance thresholds, can be made more readily, for example through secondary legislation. (Paragraph 78) 18. The Department’s work on maintenance calculations should prioritise the interests and welfare of the impacted children. In particular the potential implications of changes to maintenance levels on the number of children in poverty must be carefully considered and the implications for other policies (such as state support for parents with children) should be considered alongside changes to maintenance calculations. (Paragraph 79) 19. We have heard that the current child maintenance system incentivises parental conflict under a “winner takes all system” and there appear to be strong arguments in favour of reform away from such a system. However, reform towards an alternative model, such as an income share model, would require careful consideration and preparation. Once the urgent work on maintenance affordability is finished, the Department should consider a model which incorporates both parents’ income. We suggest that the key criteria the Government use to evaluate any such proposal should include the potential effect on compliance, the scope for any proposals to tackle incentives to parental conflict and potential impact on child poverty. In its response to this Report, the Government should set out when such work will begin. (Paragraph 85) Response The child maintenance liability is designed to be fair for both parents whilst ensuring the paying parent contributes a reasonable amount of their income to support their children that they no longer live with. It represents an amount of money which is broadly commensurate with the amount a paying parent would spend on their children if they were still living with them, irrespective of the receiving parent’s income or assets. The calculation can take into account other factors such as other children the paying parent is responsible for, and costs associated with maintaining contact with their children. 12 Children in poverty: Child Maintenance Service: Government Response The government recognises the current pressures on the cost of living and that many paying parents are struggling financially. During the oral evidence hearing we indicated our intentions to conduct a fundamental review of the child maintenance calculation. This will include an assessment of the scope to include both parental incomes in a maintenance calculation as well as looking at banding and the shared care policy. The child maintenance rates are set out in primary legislation and as the Committee has noted, this makes it more difficult to adapt them in response to changes in living costs or to reflect societal changes. Consideration will be given to moving these into secondary legislation to allow them to be updated more readily. The CMS calculation is currently underpinned by research from the 1990s, and we accept that it is the right time to look at it again. We have begun the process to update this research and ensure we have a calculation reflecting today’s social trends but is also future proofed to handle further changes. We are reviewing the evidence on calculating the additional costs associated with children. We are also undertaking seconda