Negative Impact to new families (and children) by regulations “justified” say DWP

We wrote recently about the interaction between a backbench MP, Heidi Allen, DWP and the Child Maintenance Policy Department (headed by Julia Gault) as it pertained to the recent piece of Secondary Legislation passed relating to Child Maintenance in the UK. You can read that piece here.

We have now become aware of a number of other internal DWP documents that shed further light on the process and influence that Heidi Allen, Gingerbread and Families Need Fathers had on the formation of this piece of legislation. The DWP only released the data following an ICO complaint.

This item of Regulations did three things:

  1. Permitted the government to start writing off the historical arrears created under the 1993 and 2003 CSA systems
  2. Allowed the CMS to start making lump sum deduction and regular deduction Orders from unlimited partnership accounts and joint accounts of individuals
  3. Amended the variation regulations to re-introduce the “Asset grounds” for a variation by imputing an income from non income producing assets above £31,250
  4. Enacting a previously approved legislation to disqualify paying parents from holding a Passport in certain circumstances

We don’t propose to go through every single piece of information as readers can review the documentation at their leisure. We will however highlight a few pieces of information in the documentation which we thought were particularly interesting.

Arrears Write Off

Cost of arrears maintenance

 

Question: How much are the CSA arrears costing government?

Answer: If we are unable to proceed with the writeoff changes we will need to either continue to fund the CSA IT systems inevitably at a cost of around £25 to £30 million per year, or move all cases onto 2012 scheme IT system at a cost of c.£250m.

Cost of arrears collection

 

Question: How much would it cost the government to collect the alleged arrears and how much could they realistically be expected to collect?

To attempt to collect all of the outstanding CSA debt would cost around £1.5bn, and we would only be able to recover between £0.1bn and £0.6bn. The likely low levels of collection are due to out of date information making it hard to trace paying parents, as well as parents simply not having the resources to pay these debts .  (emphasis added)

Are the arrears balances on a per case basis large?

Much of the debt is made up of very small amounts. 3% of CSA historic arrears cases have debt of under £10. 14% have debt under £65.

Joint and unlimited business account deductions

Why haven’t they introduced this earlier?

We wanted to implement deductions from solely held accounts, and allow the basic process to become established before looking to extend it to joint accounts.

Isn’t there a risk to businesses if deductions are made from their accounts?

Safeguards have been put in place to ensure a minimum of £2000 is left in unlimited partnership business accounts to ensure the business has enough cash flow to continue running.

Editor Note: clearly this is a nonsense as the amount that a business would need to keep operating is variable and based on the independent working capital requirements of the business.

What about the effect on new families?

While this additional responsibility may impact negatively on the NRP’s ability to form a new family, we consider this to be justified.

Paragraph 52 of DWP Joint Account deduction Impact assessment

Assets

There is very little information on their thought process about the introduced asset variation. It appears to be a substitute for the previous “lifestyle variation” available under the CSA.

Why haven’t you reintroduced variations to the maintenance calculation on the basis that the nonresident parent’s lifestyle is inconsistent with their declared income?

This was a feature of the Child Support Agency schemes, and proved to be ineffective. It was therefore deliberately excluded from the Child Maintenance Service scheme. In many cases the non-resident parent’s lifestyle was supported by credit or by a new partner.

In circumstances where there is an identifiable income stream, this will already be taken into account under our existing powers.

Where a parent has assets, but is living off capital or has no identifiable income stream then determining a notional income based on those assets provides a more efficient way of calculating income than lifestyle inconsistent.

Passports

Removing passports is an infringement of a person’s human rights?

 

This measure will help target a group of non-residents for whom the existing available sanctions are ineffective in achieving compliance.

It will only be used as a last resort, where all other enforcement actions have been found to be inappropriate or ineffective.

We only anticipate using it in a small number of cases, but we expect it to have a deterrent effect, encouraging compliance in a larger number of cases.

This does not actually answer the question and is tantamount to saying “we know but we’re only going to do it to a few people so that’s ok”

 

Were there any external organisations that the DWP involved in this process?

The 2 organisations that DWP appears to speak to regularly (monthly meetings) are Gingerbread and Families Need Fathers.

Firstly, they say this:

We have had a number of meetings with our main stakeholders Gingerbread and Families Need Fathers which have been positive and have not resulted in them raising any major concerns about the content of the consultation.

But, that’s not quite true as further down (presumably after the author thought the reader would be too bored to continue) they say:

FNF are not so supportive of the compliance proposals in the consultation as these are not felt to encourage and improve shared parenting and active involvement of fathers in raising child. They felt that the consultation along with the narrative used in Parliament by Heidi Allen risks alienating fathers by branding them as “deadbeat”.

FNF claimed that the consultation places itself in the a wider context of a system biased in favour of mothers that alienates and isolates fathers who are reduced to simply paying maintenance and are not integrated in the lives of children. Officials met with FNF to discuss issues raised at the previous meeting.

FNF raised concerns around the affordability of maintenance and the current allowances within the statutory scheme for shared care – this is not related to anything in the consultation. We have work on-going on these issues and have a further meeting planned for 21 February 2018.

And on Gingerbread they say

Gingerbread understood our approach to historic debt built up on the CSA, and the rationale for this. They were also supportive of our proposals to improve the child maintenance assessment and introduce tougher collections measures.

Supporting Documentation

Please download and read the internal documentation for yourself. The various players who’s names you will see again and again are:

Heidi Allen MP – The MP for South Cambridgeshire

Justin Tomlinson – Junior Minister at the DWP responsible for Child Maintenance

Kit Malthouse – Junior Minister at the DWP responsible for Child Maintenance (prior to Justin Tomlinson)

Tom Mccormack – Head of the Child Maintenance Group

Download Links:

PARLIAMENTARY HANDLING STRATEGY DWP PBL PANEL CLEARANCE – Briefing note sent to the Parliamentary Business and Legislation Committee.

Summary of DWP position sent to PBL by DWP

18 Emails between various members of the DWP, Heidi Allen’s office Parliament

Letter to PBL from DWP

Opinion of DWP on Heidi Allen’s Private Members Bill

Impact assessment on joint and business bank account deductions by Julia Gault’s department

  1. robert kane on 7th December 2018 at 6:45 PM

    when are real fathers going to be able to live a life instead of being poor because of mistakes and cms ripping them off



  2. Maria on 18th December 2018 at 4:08 PM

    Me and my partner have not longed moved in together and are expecting our first child, although he is a divorced dad of three.

    They’ve been separated for 3 years, and until last summer he retained residency of his three pre-teen children, until which point mom made another challenge for residency for the umpteenth time (using her free legal aid), but this time he let them go to her – and sold (a small sum) her back the mortgage on the family home so they could all remain there.

    Mom got what she wanted, the kids got to stay in their home, we we were able to start our new life together…. which thanks to CMS, is a decision which we are doubting.

    We relocated 50 miles away from my partners home town and 50 miles away from my home town, we compromised on in the middle so he could get to his kids, and I could get to my family. We like the new city, its an improvement on both of ours, and is an ideal place to raise the new baby.

    My partner managed to find a decent job in his sector that came with a pay increase. I’ve always worked although I’m currently on maternity leave, and because of this we thought we would be financially stable.

    In reality, we were extremely short sighted and blind to the possibility of a CMS claim being made by his ex partner. It’s not something that ever crossed our minds, I suppose because he was always used to being the main carer and we were busy for a couple months with organising the new move and taking in the baby news- its just not something that ever crossed his mind (and it certainly never crossed mine). If his kids need anything, he’d be more than willing to give it to them. Alas, he and his ex aren’t on the best of terms since our relationship developed and rather than discuss it with him or approach my partner about structurally and financially contributing, this was approached via the CMS, despite regular and open dialogue about the kids between parents when required.

    He raised this with her and she just said she wanted to be as awkward and punitive as possible – because of sour grapes.

    My partner is now paying his CMS to his ex each month, which has unfortunately wrecked havoc with the in-comings and outgoings that we initially predicted, leaving us in a state of current and future financial instability.

    My partner is earning an above average wage, however my maternity pay is still needed to cover the basic bills. Between the tax he pays, including student loan, bills, and now the CMS his entire NET wage is exhausted before he’s spent or saved a penny on anything recreational or none immediate.

    I’ve been a residential care worker for the last 2 years, so my wage (maternity pay) is much much smaller than his.
    (After leaving work in the Welfare to Work sector – which was abhorrent).

    We chose to rent a three bedroom house in the new city, that was for us, the baby and his visiting children – who he has alternate weekends and part holidays.

    However since the CMS claim, it’s looking increasingly unlikely that we can afford the spare bedroom for his children on top of paying the maintenance bill (and added expense of petrol, food and activity money) to maintain this long distance relationship with them. We did not intend this, and had we have known the true cost of being a NRP we might have made some very different choices.

    At the moment, between us we can cover the bills and have just a bit of pocket money left over. However the amount we are left with has already lead us into cancelling Christmas this year. It’s our first xmas together before the new baby arrives in the new year, and he was supposed to have his kids for 5 days, but we just can’t afford it all since paying CMS. This breaks my partners heart, and I know he’s feeling strained under prospect of not being able to provide more for the new baby, or to do the things he would like with his previous children.

    He told his ex that we couldn’t afford to entertain them for 5 whole days over xmas, and she responded by retaliating and telling him that shes taking an additional weekend off him.

    I’m exceptionally frustrated, because I didn’t realise the financial insecurity we would find our selves in, and now our budget is on the breadline with my first (and now probably only) baby expected. I’m trying my best to not let this interfere with our relationship – but it changes everything when I now know that my partner can’t offer me or the baby any financial security – at a time when I am reliant on my partner to “bring in the bread”.

    When my maternity pay runs out (6 months time), we immediately start falling into arrears. We are entitled to minimal support under UC – I assume they assume that I’m seeing the whole of my partners wage, when in reality – a whole chunk of it goes to CM.

    Even though my partner is on an above average wage, the amount that goes to CM is crucial to keeping us afloat. Alas, that’s not accounted for.

    Which leaves me with no other choice but to immediately go back to work to cover the bills, or split up with my partner.

    Going straight back to work with a 6 month old child is not what I’d intended to do, I did want to start studying to qualify and get on a career path (social work ideally). However I either must work or leave my partner, – that or we downsize to a 2 bedroom place freeing up a few hundred in the budget, but that ultimately means that his three children cannot stay alternate weekends and holidays.

    We are between a rock a hard place.

    I’m also quite annoyed at the prospect that I might have to go back into low-paid dead end jobs, around having a baby, to earn just enough to keep us afloat. If i were to work for 20 hours a week we’d have £200 left over for everything none immediate, including; clothes, prescription costs, savings, holidays, social activities, birthdays, events etc etc.

    I’m guessing that will not go far between two adults, 1 full time child and three part time kids to be looked after.

    We’d both be working but exceptionally cash poor and struggling – until I can get fulltime childcare and find a decent full time job.

    Meanwhile, we’re bleeding nearly nearly 800 a month in funding for his previous children (CM payment, the spare room & petrol alone).

    Its unsustainable, and therefore it’s looking increasingly like we will have to split up this second family.

    As a single mother, the benefits system will take care of me and my partner can downsize to a two bed that is more affordable for him and he can have his kids over then.

    It’s unfortunate, but our second family has no financial viability or security.

    It only takes him to be off work sick for a few weeks (or me in the event I’m working) for us to fall into arrears with the CMS, or ultimately other bills. This is will affect his credit record, they will access any joint finances or accounts and most importantly my baby is afforded no protections under the UC interactions with the CM.

    My partner is now just a financial liability (who I love very much) – but being prudent people, it makes sense that I just keep away from sharing finances with him – the ultimate risk is that me and my baby are thrown into poverty.

    He could loose his job or be made redundant, and then we’ll find ourselves suffering the worst of the 80-100% tax rates of the lower earners on UC and paying CM.

    Additionally, my partner who has always been hardworking and responsible, has lost pretty much every security he ever had this world.
    I just cannot get my head around this biased, sexist and punitive system… It’s definitely insidiousness.



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