The Government has already introduced tougher Child Maintenance powers to help ensure children receive the financial support they deserve, with 72 per cent of paying parents on the Collect & Pay service paying some maintenance in the quarter ending March 2021 – up from 54 per cent in the quarter ending March 2016.
The child maintenance system is designed to promote collaboration between separated parents to agree their own family-based arrangements wherever possible, without state intervention. Where a family based arrangement is not suitable, the CMS administers a statutory scheme for parents who really need it through the Direct Pay and the Collect & Pay services.
Collect & Pay accounts for 36 per cent of statutory arrangements and is designed for paying parents who are not compliant or unlikely to pay. Paying parents makes payments to the CMS who pass that money on to the receiving parent. I am aware that CMS often has to take enforcement action to help to secure payments in these cases and in such cases, both parents are charged a collection fee for this service – 20 per cent for paying parents, 4 per cent for receiving parents.
The purpose of the £20 application fee, as well as the collection fees that underpin Collect & Pay, is to encourage parents to consider whether they really need to use the scheme. The fee is waived if domestic abuse has occurred in the family and for clients aged under 19. Currently 58 per cent of new applications are exempt from paying the application fee.
The CMS calculation process is simple and efficient; it uses gross income information from HMRC to quickly set up new cases which can be key to securing regular payments. Calculations are reviewed annually, meaning they stay up to date and are not reliant on clients reporting a change of circumstance. The Government is also currently looking at whether to factor other sources of income (for instance from property or savings) into the calculation.
The CMS also has a range of strong enforcement powers that are designed to get money flowing quickly, prevent the build-up of arrears and ensure children get the financial support they deserve.
I know there is a commitment among my ministerial colleagues to making sure that over time everyone pays or receives the right amount of child maintenance and I am proud that in the last 12 months over £900 million was collected for the benefit of children through the CMS.
