£3 billion of child maintenance arrears are ‘uncollectable’
The National Audit Office has published the findings of its investigation into the Department for Work and Pensions’ closure of its 1993 and 2003 child maintenance schemes.
The 2012 child maintenance scheme was introduced, along with a new agency The Child Maintenance Service (CMS), to resolve problems with the earlier schemes and encourage private arrangements. Since November 2013 all new applications have been made to the CMS. In 2014 parents who had cases under the 1993 and 2003 scheme were told these cases would be closed and that they would have to either apply to the new scheme or make their own family-based arrangements.
As part of their findings, some parents told the NAO that closing long-standing 1993 and 2003 scheme cases can be disruptive and lead to confusion about the amount owed. The NAO’s key findings are:
- Around three-quarters of the £4 billion child maintenance arrears balance is uncollectable. The DWP assesses arrears as uncollectable when there has been no recent contact with the paying parent and no payment against arrears in the last six months.
- DWP has a legal power to write off arrears in limited circumstances. As part of the case closure process it sends a letter to parents advising them they can make a fresh start by writing off arrears owed to them. As a result, £12 million in arrears was written off in 2015-2016.
- Parents do not always understand how and why the DWP has calculated arrears when it closes 1993 and 2003 scheme cases. Some paying parents are dissatisfied with how the DWP calculates arrears. They also felt they were not told early enough that arrears had built up and they were not given enough information on how the arrears had built up or how they could repay these arrears.
- When a parent owes arrears the DWP can deduct up to 40% of their salary after tax, using a deduction from earnings order. Since 2012 the number of orders issued by the DWP dropped by 69% between 2012-13 and 2015-16.
- The Department does not tell paying parents that it will consider lowering repayments if they cause financial hardship. DWP told the NAO that it has a number of safeguards in place to review the affordability of maintenance payments and caseworkers can also use a debt negotiation tool to agree lower repayments where appropriate. DWP also told the NAO that it does not tell people who have arrears about this option unless asked, in order to encourage payment of arrears.
If anyone is experiencing difficulties in agreeing child maintenance with their ex-partner or is unsure what their rights are in respect of their children, Barker Gotelee’s family department is on hand to help.
Amanda Erskine is a solicitor in the Family department at Barker Gotelee Solicitors.