Select committee inquiry
Child Maintenance 2012 Scheme: Early Progress
Closed
What the inquiry looked at
“The Department for Work and Pensions has introduced the first phase of the Child Maintenance 2012 scheme. It is designed to introduce charging and encourage voluntary family based arrangements for the payment of maintenance. Implementation is expected to cost £950 million. It is implementing the 2012 Scheme in two phases the first of which is to build an IT system. There are signals that the scheme’s overall objectives might be at risk if the number of people intending to use family-based arrangements does not improve over current levels. The DWP is now operating three schemes and estimates that 800,000 of legacy cases will need to be closed between July 2014 and May 2018. The Department has adopted a pathfinder approach and limited qualifying applications to 4 or more children initially. In November 2013, the scheme was open to all new applications. This inquiry examines the early progress of the 2012 scheme by assessing Phase 1 implementation, with a focus on programme management, operational performance and the management of risks in Phase 2. Relevant information National Audit Office Report: Child Maintenance 2012 Scheme: early progress”
The committee's words, from the inquiry page on parliament.uk ↗.
What it found
In the committee's words, from the summary of 17th Report - Child maintenance 2012 scheme: early progress ↗
We welcome the progress the Department for Work & Pensions (the Department) has made in simplifying the way it administers child maintenance, through the introduction of the first phase of the child maintenance 2012 scheme. The Department implemented the scheme carefully in stages, and there is no evidence of the backlogs or IT failings with which previous child maintenance schemes have struggled. However, there remain risks ahead, from the introduction of charging for statutory services, and from closing legacy cases and moving them to the 2012 scheme. Responses to charging are uncertain and the Department will need to monitor whether, in practice, parents take up family-based arrangements as planned, rather than rely on state intervention through the Department’s scheme.
The 2.5 million separated families in the UK have several options for arranging child support. Around 1.1 million rely on statutory government-run schemes that assess, collect and make payments. Other families set up their own (family-based) arrangements or use the court system. Around 600,000 families have no arrangements at all. In December 2012, the Department introduced the first phase of the child maintenance 2012 scheme. This replaces two previous schemes for child maintenance which had struggled with IT problems, leading to poor customer service and incomplete information about outstanding debt. The 2012 scheme is designed to maximise the number of children benefiting from child maintenance arrangements and reduce government spending on administering child support. It introduced new rules for calculating payments, a new IT system for managing cases, and charges for using and enforcing the scheme. Newly separated parents access information through an online and telephone ‘gateway’, which explains the benefits of the choices available, and provides guidance on how to set up family-based arrangements.
The first phase of the 2012 scheme introduced new systems and processes, and simplified the way maintenance is assessed. The second phase, which was due to start in June 2014, involves the introduction of charges for parents using the statutory service (a £20 application fee, a 20% collection fee for paying parents, and a 4% fee deducted from maintenance paid to receiving parents), and the staged closure of legacy cases until 2018.
What the government said
The government responded on 13 January 2015.
Read the government's response ↗ Read the report ↗ Report an error
How the inquiry ran
Each dot is a dated item listed on this page, from the inquiry's opening on 23 June 2014 to its close on 26 March 2015.
- Oral evidence 9 Jul 2014
- Report 10 Oct 2014
- Government response 13 Jan 2015
What it recommended 0 recommendations · 15 conclusions
1The good practice evident in the way the Department designed and introduced the first phase...
Concluded (the committee's words)
The good practice evident in the way the Department designed and introduced the first phase of the 2012 scheme reflected lessons learned from previous programmes. The key factors behind the successful introduction of the scheme included: identifying what had gone wrong with the previous schemes; maintaining a stable and experienced leadership team that brought together both policy and operational expertise to the project; and implementing the scheme progressively, by moving forward only when the Department was confident it could introduce each stage, rather than trying to meet pre-announced deadlines. The Department decided on a pathfinder approach for implementing the first phase of the scheme to identify problems early. It started with a small number of cases, and increased the volume only once it was content that the system was operating as intended. The 2012 scheme is simpler and more efficient to administer than the previous schemes, for example, by automating the process of collecting data on parents’ income from HM Revenue & Customs (HMRC) systems. Recommendation: The Department should evaluate the introduction of Phase 1, in particular the roll-out and pathfinder approach, to identify good practice to apply when planning future programmes and share this more widely in the public sector.
2The Department has had stable senior leadership of the 2012 scheme.
Concluded (the committee's words)
The Department has had stable senior leadership of the 2012 scheme. The programme director, senior responsible officer and executive team in charge of child maintenance have all worked on child maintenance for several years. The scheme’s leadership brought together operational and policy people into programme planning. The Department noted that decisions about roll-out required some judgment, as not all aspects of a programme could be tested in advance. We are pleased to see that these judgments were being made by a stable and experienced team. Recommendation: The Department should ensure that major programmes have resilient and stable leadership teams in place from the development stage, who have the insight to make critical judgements about programmes.
3The impact that charging to use the statutory service will have on the number of...
Concluded (the committee's words)
The impact that charging to use the statutory service will have on the number of parents willing to adopt family-based arrangements instead is uncertain. A primary aim of the reforms to the child maintenance schemes is to encourage more parents to make family-based arrangements, rather than rely on the statutory scheme. The Department estimated that the 2012 scheme would lead to around 250,000 fewer statutory cases, equivalent to a reduction of a quarter by 2018-19. But it remains to be seen whether the charges for the statutory scheme have been set at the right level to achieve this objective. Gingerbread believes the Department had been unrealistic about the number of parents who would be able to make their own private family-based arrangements that last. According to a survey of callers using the gateway that explained the choices available for child maintenance, the number of parents intending to choose family-based arrangements reduced by more than a third from 5,540 in August 2013 to 3,590 in March 2014. The Department 6 considered this to be a temporary phenomenon associated with making the gateway mandatory and expected the position to change over the next 12 to 15 months. Recommendation: The Department should monitor closely the number of parents that choose family-based arrangements, following the introduction of charging for the statutory scheme, and maintain regular contact with groups supporting families to determine whether changes are needed to improve the support available to parents.
4The first phase of the scheme was over budget and late, but it has produced...
Concluded (the committee's words)
The first phase of the scheme was over budget and late, but it has produced results that are close to the expected performance levels. The Department’s prudent approach to implementing phase one, particularly its decision to undertake extra testing and implement the service gradually in phases, increased the costs of the programme and resulted in some delays. The Department now expects total costs to be £950 million, some £70 million more than it estimated in 2012, and the second phase of the scheme was postponed from July 2013 to June 2014. However, the scheme has produced results that are at, or approaching, expected levels of performance. For example, accuracy of assessment is 95%, compared with a target of 97%. Recommendation: The Department should monitor and manage performance of the scheme, to ensure effective control of operational costs, delivery of planned savings, and achievement of expected levels of accuracy and productivity.
5Delays in setting up the ‘data warehouse’, required to close the legacy cases from the...
Concluded (the committee's words)
Delays in setting up the ‘data warehouse’, required to close the legacy cases from the previous systems, have resulted in increased costs to the Department. The Department is planning to close 800,000 legacy cases at a cost of £370 million, but will not be able to close its more complex cases without its ‘data warehouse’. This is a database to allow cases on legacy schemes to be closed, and to improve management information on all schemes. The ‘data warehouse’ is several months behind schedule and much of its functionality remains undelivered. The Department is still uncertain about when it would be fully operational. The Department has developed contingency solutions to address this, which it stated are straightforward, and which are scheduled to end by June 2016. The Department was confident that the ‘data warehouse’ would be ready by this time, to close the complex cases, but it acknowledged that significant costs would be involved if it had to continue to operate legacy systems beyond this date. Recommendation: The Department should be transparent about the progress of case closure, ensure that it has the necessary systems in place by the time it closes complex cases, and monitor the performance of its contingency arrangements in the meantime. 7 1 Securing the benefits of the programme for consumers
6The Department introduced the 2012 scheme carefully and appeared to be learning from the mistakes...
Concluded (the committee's words)
The Department introduced the 2012 scheme carefully and appeared to be learning from the mistakes of its previous schemes. The Department maintained a stable management team with a senior responsible officer and an executive team with substantial experience in administering child maintenance. The Department told us that it had taken particular note of what had gone wrong with the last two schemes. For example, it had not carried out the high-level design of the new scheme in isolation, but in conjunction with policy and operational people, to translate policy into implementation. The scheme is approaching expected performance levels, for example, it is processing 95% of cases accurately, against a target of 97%. At similar stages of implementation, the previous scheme (2003) missed accuracy targets by 15 percentage points.7
7The Department simplified the administration of child maintenance by using an automated link to HMRC...
Concluded (the committee's words)
The Department simplified the administration of child maintenance by using an automated link to HMRC to collect data on parents’ income. This allowed the Department to assess income more quickly and reliably, although there had been concerns about establishing accurate assessments of the income of the self-employed.8 The Department noted that receiving parents could raise concerns if assessments were too low, and that HMRC could also investigate if there were suspicions of undeclared income.9
8The programme costs of the 2012 scheme increased by £70 million to £950 million because...
Concluded (the committee's words)
The programme costs of the 2012 scheme increased by £70 million to £950 million because of the Department’s conscious decisions to undertake extra testing and implement the service in phases and gradually. The Department told us that it did not expect programme costs to increase further, as it had already incurred most of the capital costs.10 2 Measuring and managing outcomes
9The reforms to child maintenance aim to encourage parents to make family-based arrangements, rather than...
Concluded (the committee's words)
The reforms to child maintenance aim to encourage parents to make family-based arrangements, rather than use the statutory scheme. The Department estimated that there would be 250,000 fewer statutory cases on the 2012 scheme. However, according to a survey of callers using the gateway that explained the choices available for child maintenance, the number of parents intending to choose family-based arrangements reduced by more than a third—from 5,540 in August 2013 to 3,590 in March 2014. Gingerbread told us that the Department had been unrealistic about how many parents would be able to make their own arrangements. Resolution pointed to research which indicated that, over time, more and more parents move into a regulated arrangement.11 6 Q 20 7 Q 23; C&AG’s Report, para 1.20, 2.18 8 Q 15 9 Qq 29-30 10 Qq 42-43; C&AG’s Report, para 1.15-1.16 11 Qq 2, 7; C&AG’s Report, para 1.5, 1.24-1.25 9
10From June 2013, parents could voluntarily call the Options Service to receive information on the...
Concluded (the committee's words)
From June 2013, parents could voluntarily call the Options Service to receive information on the different child maintenance arrangements, including the benefits of making family-based arrangements (known as the ‘soft gateway’). From November 2013, the Department required parents to call the Options Service, to receive information on different child maintenance arrangements, before applying to the statutory scheme (known as the ‘mandatory gateway’).12
11The Department told us that it was not yet concerned that the number of parents...
Concluded (the committee's words)
The Department told us that it was not yet concerned that the number of parents intending to choose family-based arrangements was not increasing. The Department believed that the increasing numbers choosing the statutory scheme were a result of making the gateway mandatory, as this had increased the number of calls, including those who would have automatically come to the state. The Department considered this would be a temporary phenomenon associated with making the gateway mandatory, and it expected the position to change over the next 12 to 15 months.13
12Parents’ response to fees is uncertain and the impact on child poverty is unknown.14 Research...
Concluded (the committee's words)
Parents’ response to fees is uncertain and the impact on child poverty is unknown.14 Research by Gingerbread indicated that the £20 application fee would be a significant barrier to applying to the statutory service, especially for those on the lowest incomes.15 Research by Gingerbread and the National Centre for Social Research indicated that, where single parents on benefits received child maintenance, it lifted one in five of these families out of poverty.16
13By May 2018, the Department aims to operate a single child maintenance scheme and is...
Concluded (the committee's words)
By May 2018, the Department aims to operate a single child maintenance scheme and is planning to close some 800,000 of its legacy cases in a staged approach, starting with simpler cases. The Department is dependent on a ‘data warehouse’ to close its more complex cases. The ‘data warehouse’ is designed to automate case closure and provide timely management information on productivity and efficiency of all schemes.17 The Department expected to achieve the largest cost savings once it is able to turn off the old legacy systems. It recognised that if it were unable to close all the cases on the old legacy systems, it would incur a huge cost of continuing to operate them.18
14Despite it being a significant IT component of the 2012 scheme, and having been commissioned...
Concluded (the committee's words)
Despite it being a significant IT component of the 2012 scheme, and having been commissioned five years ago, the ‘data warehouse’ was still not ready and there was no clear date when it would be.19 The Department has developed contingency solutions to close the first three stages of legacy cases. It considered that these would be straightforward and they are scheduled to end by June 2016. The Department was confident that the ‘data warehouse’ would be ready by this time, to close the complex cases. The Department acknowledged that if the ‘data warehouse’ was not ready for the more difficult cases, then 12 Q 39; C&AG’s Report, para 1.28 13 Qq 40-41 14 Q 18; C&AG’s Report, para 3.3 15 Q 17 16 Q 14 17 C&AG’s Report, para 17, 3.8 18 Q 50 19 C&AG’s Report, para 3.9-3.10 10 this would cause difficulty and costs in continuing to operate the legacy systems for longer.20
15As the Department closes cases it will look at arrears on legacy cases.
Concluded (the committee's words)
As the Department closes cases it will look at arrears on legacy cases. The Department does not automatically write off arrears. It told us that it will speak to parents about writing off arrears, or agreeing what debt is carried onto the 2012 scheme; although it could be three years until all cases are closed.21 20 Qq 47, 50, 52; C&AG’s Report, Figure 18 21 Qq 81-83 11
Evidence
Oral evidence sessions 1
- 9 Jul 2014No witnesses recordedparliament.uk ↗