Source · Select Committees · Work and Pensions Committee
Recommendation 19
19
Accepted
Require Department to consider income-share model for child maintenance after affordability work.
Recommendation
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) 48 Children in poverty: Child Maintenance Service
Government Response Summary
The government accepts the recommendation to consider an income-share model, stating it has begun a fundamental review of the child maintenance calculation to update research and ensure it reflects today’s social trends, which will include assessing the scope to incorporate both parental incomes. Any necessary changes would require primary legislation and will be explored at the earliest opportunity.
Government Response
Accepted
HM Government
Accepted
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. 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 secondary analysis of survey data to see how the costs of children as a percentage of household income has changed over the past two decades. Any changes to the child maintenance calculation would require primary legislation, so if the review indicates that changes are necessary, this will be explored at the earliest opportunity.