My noble Friend the Minister of State (Minister for Lords), Baroness Sherlock OBE, has made the following written statement:
I am pleased to inform the House that yesterday, the Government published their response to the “Child Maintenance: Improving the collection and transfer of payments” consultation. Releasing the response shows the Government’s commitment to reducing the number of children growing up in poverty, which holds back too many children, limiting their future prospects and holding back this country’s potential. This consultation was launched by the previous Government and extended by this Government to give as many people as possible the chance to respond.
The Government are delivering on our plan for change, and are reforming the Child Maintenance Service to help ensure that more children get the money they deserve. This consultation contains proposals that are part of the action we are taking that will lift more children out of poverty and support the Government’s mission to break down barriers to opportunity.
The consultation received over 2,700 public responses, and engagement from 28 stakeholder organisations across the UK. Additionally, we commissioned research with current CMS customers who use the direct pay service to help us quantify the impacts of the reforms and provide in-depth insight.
There will be two clear options for parents following the planned reforms. One is to make a family-based arrangement. We will provide parents with enhanced support to make and maintain these, and we are working to improve our communications to support parents in understanding the options that are available to them. Our ambition is that anyone with a stable and compliant direct pay arrangement should find this option meets their needs.
Of course, family-based arrangements are not appropriate for all separated parents, and where that is the case, or where people prefer to be part of the statutory system, it will still be available. The CMS will operate a single service, based on the current collect-and-pay model, in which it will manage all payments, with an improved ability to identify and act on non-compliance.
As part of these reforms, we will halve the fees for those using the CMS, while maintaining a 20% fee for non-resident parents who refuse to pay up on time and in full. Parents currently in the direct pay system will have the choice of keeping their CMS case, which will be moved to the new, improved service, giving them the peace of mind that maintenance will be paid and any problems will be followed up, in return for a small fee—or have improved support to make and maintain a family-based arrangement.
We plan to progress with these proposals and believe that they will address the fundamental issues with direct pay. This change will prevent parents getting stuck in ineffective arrangements, in which no, reduced or erratic payments go to children. We know from research with direct pay customers that only six in 10 receiving parents in direct pay report getting all the child maintenance that they are owed, and only four in 10 say that they always receive it on time. Removing direct pay will mean we can tackle this hidden non-compliance and get money flowing to children in these cases.
To have the best impact on child poverty, we need to ensure that more children are in effective arrangements, which we envisage these changes helping with. We estimate that this change could result in around 20,000 fewer children in poverty, on the “relative low income after housing costs” measure. To further support children receiving maintenance payments, a commitment was made to position child maintenance deductions higher up the universal credit deductions priority order as part of the fair repayment rate. The repositioning gives greater protection, ensuring that child maintenance is paid in cases where the deductions cap is reached.
The removal of direct pay will also represent a significant improvement to victims and survivors of domestic abuse using the CMS, by reducing contact with the other parent, and reducing the paying parent’s ability to financially control the receiving parent by paying too little or too late, as they currently can under direct pay.
I am committed to ensuring that victims and survivors of domestic abuse get the help and support that they need to use the CMS safely, and have outlined in the consultation response the work that the Department is undertaking to support victims and survivors of domestic abuse to use the service safely.
The reforms announced yesterday are just the first step in our plan to reform the Child Maintenance Service. Alongside action to modernise the service, increase ease of access, streamline enforcement, and better support victims and survivors of domestic abuse, the Government are undertaking a fundamental review of the child maintenance calculation.
I believe that the changes outlined in the Government’s response will help us to achieve a CMS that is fair, trustworthy and more accessible to parents, particularly those who are vulnerable. It will be better able to tackle non-compliance head-on by quickly identifying and tackling missed payments and, most importantly, it will lift more children out of poverty.
The changes to remove direct pay and reform the collection fee structure will require changes to legislation, which will be dependent on parliamentary approval. Subject to securing parliamentary time to make the necessary changes in legislation, we aim to implement them in 2027-28.
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