7 Transferring CSA cases to a new
collection system |
CMEC performance and operating
66. In 2010, our predecessors considered the performance
of CMEC and the extent to which the three-year operational performance
plan (announced in 2006) had addressed ongoing problems associated
with IT systems and the effective collection of payments.
We were therefore interested to explore the organisation's progress
as part of this inquiry. The current Commissioner, Noel Shanahan,
provided the following figures to demonstrate the organisation's
progress in recent years.
- 972,000 children are benefiting
now, compared with 800,000 three years ago;
- £1.15 billion is collected in child
maintenance now, compared with £1 billion three years
- Liabilities are being paid in just under 80%
of cases, compared with 66% three years ago.
67. The former CMEC Commissioner, Stephen Geraghty,
described the recent performance of the CSA as "very strong"
and suggested that the remaining problems dated back to between
1993 and 2005 when the arrears built up.
However, information on the CSA website indicates that a significant
number of non-resident parents are still failing to make payments
to the CSA where maintenance is due; the number of non-resident
parents in the CSA system who do not pay increased from 140,900
in March 2005 to 142,300 in March 2011.
Accumulation of arrears
68. The CSA continues to report £3.8 billion
of arrears in child maintenance payments. Mr Geraghty told us
that only around £1 billion is potentially collectable; the
rest could not be collected for a number of reasons, including:
the cases were over 10 years old; the individuals concerned had
died; and parents with care no longer wanted the money. 
69. Noel Shanahan told us that the £3.8 billion
figure could not be considered accurate because it had been inflated
"by over 200%" through the use some years ago of "interim
maintenance arrangements" established by the CSA. In these
cases, the CSA over-estimated payments due, and used these estimates
as a lever against non-resident parents who were reluctant to
pay. Noel Shanahan
indicated that question-marks around the validity and accuracy
of the £3.8 billion in arrears explained why the National
Audit Office was unable to give a full sign off to CMEC's Client
Funds Accounts for 2008-09 and 2009-10.
Dame Janet Paraskeva, the CMEC Chair, told us that it had no
powers to write off the £2.8 billion in arrears that cannot
be collected, but that there needed to be a "clean break
from that old legacy" when the new scheme is launched.
70. We are concerned
that CMEC is reporting around £2.8 billion in historic arrears
that it is never likely to collect and believe that it is unhelpful
for this amount to sit on CMEC's accounts indefinitely. The Government
should clarify whether this amount can be written off the CMEC
accounts or abandoned when the new system is established. If so,
CMEC must provide a clear public explanation as to why this amount
cannot be collected.
71. Stephen Geraghty said that 90% of employed non-resident
parents comply with CSA payments, compared with 80% of those on
benefits and 70% of the self-employed. He provided the following
information on the use of CMEC's enforcement powers:
- CMEC has set up around 600
orders to deduct funds directly from bank accounts. This is often
used where compliance is an issue with non-resident parents who
- Last year CMEC set up around 56,000 orders to
deduct money from non-resident parents' earnings.
- Last year 1000 people received prison sentences
for non-payment, and 35 actually went to prison. The remaining
sentences were suspended.
- CMEC has started commencement of the power to
seize 800 houses, and have taken 12 so far.
72. Stephen Geraghty pointed out that several enforcement
powers in the Child Maintenance and Other Payments Act 2008 remain
uncommenced: curfew orders, passport disqualification and driving
licence disqualification without having to go to court.
Noel Shanahan confirmed
that CMEC would find it helpful to have the power to remove an
individual's passport or driving licence, but that this power
would mostly act as a deterrent and would only be used in very
73. We recommend
that CMEC be provided with the full range of enforcement powers
listed in the 2008 Act, including those which are currently uncommenced.
Cost implications for CMEC
74. The Government plans to launch the new statutory
collection service in 2012 for new customers and to close the
Child Support Agency to new applications over a two-year period.
Parents who currently use the CSA will have the choice of either
agreeing their own maintenance arrangements or accessing the new
75. The Government has not provided details of the
cost savings estimated to be delivered through charging and the
reduction in caseload and stated that this would depend on the
final strategy agreed by Ministers.
However, Noel Shanahan indicated that CMEC's aim was to achieve
at least a 30% reduction in costs, in common with other parts
of Government. CMEC's
most recent annual report indicates that its net operating costs
were £572 million for 2009-10.
The Minister told us that the Government was investing £30
million in England in parenting support (through the Department
for Education) and that she would prefer money to be spent on
this rather than a statutory child maintenance service.
While this may be true of England, it is not clear whether a similar
investment is being made in the devolved administrations.
76. Noel Shanahan indicated that it would take "about
three or four years" to introduce the Government's proposals,
and that the transition would involve "in the region of between
£150 million to £200 million in terms of additional
Geraghty believed that reducing the number of parents using the
state system might not significantly reduce costs because the
system would "end up with a smaller but very work-intensive
caseload. Therefore, you will still end up with a lot of the
costs and not so much of the charges."
77. The performance
of the CSA has improved gradually against a number of indicators
but is still falling well short of the expectations of both parents
and the Government. We are therefore keen to ensure that the closure
of CSA cases and the creation of a new system contributes to a
further improvement in processes and that the reforms do not represent
a barrier to the overall progress that CMEC is making. This is
especially significant given that the introduction of the new
system may cost up to £200 million.
78. Our predecessors' 2010 Report also commented
on CMEC's performance, including its ongoing IT problems. Research
by the National Audit Office cited in that Report indicated that,
as of October 2009, the IT system had over 1,000 reported problems,
of which 400 had no known "workaround", which had resulted
in thousands of cases being stuck in the system.
Stephen Geraghty told us that many of the IT problems had
now either been resolved, or had been identified and would be
[In 2003] virtually everything was wrong, including
the fact that it went live with lots of known issues. [...] The
way we have run the system since means it now works. [...] [In
December 2009] we were getting about 3,000 incidents a week.
That is now down to 1,100. Of those 1,100, 450 or so are linked
to 22 problems, which we will now go on to fix.
79. However, the Minister argued that CMEC could
not continue with its existing systems:
There is only so long we can go on with a system
that is running two IT schemes with two different sets of rules,
100,000 cases that both schemes cannot cope with. The thing is,
I think, perhaps more precarious than some of the results that
we are looking at would suggest, because of the hard work of staff.
Dame Janet Paraskeva agreed, and suggested that "it
would not be worth the millions and millions of pounds that you
would have to put in, frankly, to keep those systems going, because
they are so complex in any case". The Minister stated that
"it was actually a strategic decision by the Government not
to invest further in the current schemes, because they really
were past their sellby date and needed replacing".
80. However, the previous Government had already
made a significant investment to resolve the CSA's IT weaknesses.
In 2009, we understand that a £50 million contract was agreed
between CMEC and Tata Consultancy Services to introduce a replacement
IT system for CSA cases. This replacement system is yet to be
introduced. We sought assurances that this £50 million investment
would continue to represent value for money in light of the Green
Paper proposals. Noel Shanahan confirmed that this new system
would meet CMEC's requirements under the Government's proposals
as currently envisaged.
In particular, the Green Paper indicated that the new IT
system would need to create a new link to the HM Revenue and Customs'
tax systems, which would provide information on income that could
be used to calculate child maintenance.
81. Mr Geraghty told us that HM Revenue and Customs
(HMRC) already shares information on income, especially of self-employed
non-resident parents, with the CSA, but said that the CSA would
usually accept the figure provided by the non-resident parent.
He accepted that parents with care may not believe the income
reported by the non-resident parent, and that compliance rates
for self-employed non-resident parents at 70% are lower than for
those on benefits (80%) or in employment (90%).
82. The transition
to the new system will require significant resources, including
investment in staff and IT systems. The enormous IT problems experienced
with the previous child support systems caused huge disruption
and distress to parents and this must not be repeated. We request
an assurance from the Government that CMEC will have the resources
and staff it needs to manage the transition effectively and that
the new IT system will not be introduced until it has been demonstrated
that it works as it should.
83. We welcome
the Government's proposal that the new child maintenance calculation
system will draw upon the latest information on non-resident parents'
income from HMRC. Our expectation is that the proposed system
would use information on income reported to and accepted by HMRC,
rather than self-reported income, as the basis for the calculation
of the liability of self-employed, as well as employed, parents.
It would be helpful if, in response to this Report, the Government
clarified the timetable for introducing this mechanism and provided
us with more information on how it will work in practice.
67 HC 118 Back
Q 145 Back
Q 65 Back
Q 69 Back
Q 150 and Q 152 Back
Q 152 Back
Q 150 Back
Q 85 Back
Q 85 Back
Q 151 Back
DWP, Strengthening families, promoting parental responsibility:
the future of child maintenance, Cm 7990. January 2011 Back
DWP, Strengthening families, promoting parental responsibility:
the future of child maintenance, Impact Assessment, January
Q 162 Back
Child Maintenance and Enforcement Commission, Annual Report
and Accounts 2009/10, HC60 Back
Q 137 Back
Q 158 Back
Q 92 Back
HC 118 Back
Q 78 Back
Q 148 Back
Q 149 Back
Q 159 Back
Qs 86 and 89 Back