That the Grand Committee takes note of the Report from the Public Services Committee Reforming the Child Maintenance Service (3rd Report, HL Paper 181, Session 2024–26).
My Lords, I am very pleased to speak to the report from the Public Services Committee, Reforming the Child Maintenance Service. In doing so, I thank everybody whose work has helped us to produce it. First and foremost, I thank those who gave us evidence, either in person in the round tables we had or through written contributions, talking about their own circumstances. It was very difficult, but they did so in an honest and open way, hoping that we would be able to bring about change that would make life for them and the people who use the service more effective than it is now. I also thank our team: Dan Hepworth, our committee clerk, Tom Burke, Claire Coast-Smith and Clayton Gurney. I thank all members of the committee as well. Some of them, like me, have since left the committee, so I offer a very special thanks for their work not only on this report but over the three years for which they served.
This is an important and unusual topic. It is one of a relatively narrow range of areas where we all agree that the state should intervene in family life for the sake of children. That is how important it is. Four million children in our country now live in separated families. Most parents resolve the financial issues around that separation between themselves—parents who can come together in their interests and those of the families and children, to make sure that children do not suffer any more than need be.
However, many, for lots of very understandable reasons, are not able to do that. It is that group who turn to the state and the use of the Child Maintenance Service. The number of cases considered by the CMS over the last decade has grown—and, one suspects, might grow further. The number of cases has gone up sevenfold and the amount of money paid by one parent to the other eightfold over a decade. For the 760,000 children whose parents use the CMS to resolve the financial consequences of a relationship breakdown, it is a vital service. We know the consequences of children growing up in poverty, with the conflict of parents unable to live together and disagreeing about the economic future of the family.
The noble Baroness, Lady Sherlock, summed it up very well in her appearance before our committee. She gave a rather long and convoluted Minister-style description of what the CMS does and then said simply at the end,
“our job is to get money to kids”.
For all the grand words, that is, in essence, what this is about: making sure that, in these circumstances, money gets to kids so that their lives are better.
It does work sometimes. The CMS can claim that it has kept 40,000 children out of absolute poverty, because it was able to resolve the problems as far as those families were concerned. Inevitably, the people who contacted us were those for whom the system had not worked—we know and understand that—but, looking at the evidence and the numbers, it is difficult not to conclude that the system does not work for too many families, parents and children. It is not an easy role for government; it is a last resort. It is for people whose relationship has failed to the extent that they are not able to resolve the difficulties. For the bureaucracy of the state to come into a relationship that is not thriving is difficult, but that is the task of the CMS, and it needs to do it well.
My Lords, it was a pleasure to be on the committee formulating this report. We were led ably by our chair, the noble Baroness, Lady Morris of Yardley, and it was a pleasure to work with the other members of the committee. I should pay tribute to my noble friend Lady Stedman-Scott. She was on the committee but had to come off it because of her Front-Bench role. She had initially encouraged the committee to look into this, and I am glad that we did.
I will not pretend otherwise; I used to be Secretary of State for Work and Pensions. I was there for three years. Aspects of the Child Maintenance Service were a key part, for me, of how we reduce poverty. I think in that I am united, not only with the committee but the Government, in seeing this as a way to try to reduce child poverty.
However, I am concerned that, in the response to very well-thought through recommendations and challenges to the Government, there were a series of missed opportunities. There are missed opportunities by the Government to do exactly what they say they want to do. It is “Mañana, mañana”, when we have not got some of the legislation we need. For example, I understand that, with an administrative liability order, there is probably still a problem with Scotland. But why do the Government not just get on and deal with the appropriate legislation for England and Wales while they tackle the issue in Scotland? There is no difficulty or constraint on trying to do one set of regulations tackling England and Wales and one for Scotland.
The issue about domestic abuse continues, with the commencement of another piece of legislation. I say to noble Lords that I have learned from that in a different way. For every Private Member’s Bill that I have been involved in or advised others on, I have always advised them to put an automatic commencement date in, because these Acts of Parliament were not put into effect. Again, I am concerned by the Government’s response. I recognise the work they are trying to do in tackling violence against women and girls, and the strategy there. But it feels as though they are saying, “This is too difficult” or “No, we can’t really do this”, despite it coming from a government Bill handed to a Back-Bencher in the previous Parliament.
My Lords, I too thank the noble Baroness, Lady Morris of Yardley, for her leadership in what was an important and complex inquiry. I also thank her for what she said just now, which I found a forensic analysis of the operation of the Child Maintenance Service. I thank all the staff for their support to the committee. I thank the noble Baroness, Lady Stedman-Scott, too, for her suggestion—for it was her suggestion—that we should undertake this inquiry when she was a member of the Public Services Committee.
I also thank the noble Baroness, Lady Coffey, for bringing her experience as a Minister to the Select Committee’s work, and for her important suggestions to improve outcomes for children. As she just said, it is about how much money is getting to the child. Getting money to kids who need it is a means to alleviate some child poverty.
I thank the staff of the Child Maintenance Service for the information that they provided and the explanation, from their perspective, of issues that we raised. I particularly thank them for their welcome when we visited the service in Hastings.
My conclusion, in view of the Minister’s response letter that we were sent in March, is that this committee’s work is not complete. I hope that, when we hear from her later, she will reassure us that progress will be made on our recommendations.
I agree with all the conclusions from the noble Baroness, Lady Morris. As she said, it is very difficult to avoid the conclusion that the system does not work well for many people. For some families, the system is a 100% failure, as she said. I was surprised to find how slow and inadequate enforcement is; it is simply not strong enough. As the noble Baroness, Lady Coffey, just reminded us, too many children—220,000—are not getting a single penny. The Government run this service with 3,500 staff; as 220,000 children do not get a single penny, it seems a failure. As the noble Baroness, Lady Morris, also reminded us, there is a big issue with communications—particularly, from my perspective, communications with those trying to use the system.
My Lords, it is a heartrending statistic that 4 million of the UK’s 14 million children live in separated families. That is a higher proportion than in many European countries. The drawbacks of that situation are well known. Children from one-parent families show lower average educational attainment, reduced social mobility and a higher likelihood of becoming young parents themselves. Almost all these patterns are driven by poverty—44% are living in poverty and instability, with reduced social capital—rather than by single parenthood as such. I add in parentheses that I hope this Government do not plan on any legislation that will cause more cohabiting parents to split, for that is what is likely if financial claims by one cohabitant against the other are enabled after three years, as has been suggested, because the parents will separate before those three years are up.
It behoves us to do all we can to make sure that absent parents, usually fathers, pay their fair share of support for the children they have left behind. The figures in the Public Services Committee report show otherwise. Some 31% of liable parents in the collect and pay scheme paid nothing. Some £28.1 million was due in one quarter. Enforcement is slow. The process and the calculations breed distrust between parents, and many of the families involved have suffered domestic abuse.
It is a matter of regret that the Government have rejected some of the committee’s recommendations, especially those at the heart of the system relating to the retention of direct pay and the treatment of victims of domestic abuse. The CMS is a vast service, employing over 5,000 people, and it suffers from what we are used to with national government services: lengthy waits on the phone and poor communication. That is why it seems to me that we have a troubling dissonance between the principle of child maintenance and the reality.
In family law, the interests of children are paramount. This principle permeates our legislation, court determinations and public debate. But, when we look at the practicalities of our system for securing support for those children left behind by one parent, there is little reflection of that principle in reality. The report of the Public Services Committee on reforming the CMS exposes that breach. It describes a system where, despite the paramountcy of the child’s interest, the delivery of support is complex, enforcement is weak and too many children are not getting what they need and deserve.
My Lords, I, too, thank the noble Baroness, Lady Morris of Yardley, her committee and its support team for this report, which covered much ground and recommended far-reaching reforms that stand a good chance of improving outcomes. They address long-running problems with the service and its precursors.
To declare my interests, my parliamentary adviser, Dr Samantha Callan, is the Government’s independent reviewer of the Child Maintenance Service’s response to domestic abuse, which is frequently mentioned in the committee’s report. She is also the director of the Family Hubs Network, which she and I co-founded in 2019 to show government the potential for family hubs to be a game-changer for families. Thanks to this Government, building on what the Conservatives achieved, they are now in every local authority in England. This is relevant because the Select Committee’s report envisaged a clear role for early intervention and support for separating parents that is easily available, community-based and delivered particularly in family hubs. Finally, I also took the Child Support Collection (Domestic Abuse) Act through the Lords.
This public service comes under attack every day, often for good reasons. However, after Dr Callan went under the bonnet of the CMS, she said in her January 2023 report that she found it to be a “reform-minded” organisation. It has the almost impossible task of helping separated parents, some of whom have never lived together, come to a durable arrangement for financially supporting children they were both responsible for bringing into the world.
We are a country that cares about child poverty. This service can be unreservedly concerned with its alleviation, because all maintenance payments are now disregarded for tax and benefit purposes. That said, we need to communicate more effectively to all parents, not just those who are separating, that it is parents who have the primary responsibility to provide for their children, not state agencies. Separated parents also have a responsibility to be single-mindedly child-focused in their dealings with each other, to avoid further harm to their children than that caused by the split itself or by being born to a home where one biological parent has always been non-resident. The Minister acknowledged this to the committee when she outlined the CMS’s role to facilitate payments between separated parents
My Lords, I wish to speak about the Public Services Committee’s report, Reforming the Child Maintenance Service. This was the first Select Committee of which I have been a part since I joined the House. I have to say, in the end, I came away frustrated: frustrated for the children who are living in poverty because this support system is simply failing them; frustrated for both groups of parents, whose genuine concerns on both sides we heard; frustrated at the limited response from the department; and frustrated that, although we have shone a light on this area and made some constructive recommendations, it will clearly remain in the “too hard to fix” pile and little will change at the pace that is needed. However, I thank the noble Baroness, Lady Morris of Yardley, for her excellent chairmanship and leadership throughout this investigation. I also thank noble Lords for their excellent contributions today; we have heard detailed analysis of many of the issues that we explored and grappled with in this complex area.
Child maintenance is not an abstract administrative matter. It is about whether children receive the financial support to which they are entitled. The system must reflect modern-day living and the complexity of today’s family arrangements; it must be up to date. As the noble Baroness, Lady Deech, pointed out, child maintenance is not optional but a moral and legal responsibility.
The committee’s central message is clear: the current system is not working well enough for too many families. Too many parents do not engage with the service at all. Too many arrangements break down. Too many cases enter the system only after problems have already become entrenched and, at times, the experience of using the service is confusing, slow and a hindrance rather than a help.
The committee’s recommendations focus on making the system fairer and more workable by, for example, reviewing how a child’s costs are split between both parents; calling for real-time data-sharing with HMRC so that calculations are based on current income and assets, rather than on something from the distant past; considering the receiving parent’s income and assets; examining whether the current formula may discourage work; and reconsidering changes to direct pay. We made 41 straightforward recommendations that could make a real difference with accurate, timely and simple communications throughout. My noble friend Lord Shipley’s analysis of the telephone service’s poor performance highlights a simple, basic problem with the service that could easily be improved.
My Lords, I first declare an interest, in that I was a member of the Public Services Committee. I loved being on that committee—and you will not hear that about many committees, I can tell you—and found it to be a really stimulating experience, so I applaud the chairmanship of the noble Baroness, Lady Morris of Yardley.
Along with my noble friend Lady Coffey, I had responsibility for the Child Maintenance Service when I was at the DWP, and we worked well together on that. I was horrified, and at times incandescent with rage, at the lengths to which people went to avoid paying their child maintenance. If I had the time, I would keep noble Lords here with some of the stories; they would make your hair curl.
When we are talking about child maintenance, it is easy to make the discussion about parents: who owes whom what, whether they are paying on time or the correct amount and, often, how the split occurred in the first place and who is to blame. These conversations and questions are important but also largely tangential. The person at the centre of this is the child. Being a child with parents who split up is not easy. Research shows that children with split parents are more likely to face lower academic achievement, more behavioural or emotional difficulties, a higher risk of economic disadvantage and a strain on relationships later in life. Children from these backgrounds often have to grow up fast to act as mediators between adults who do not have a stable or amicable relationship with one another, and they often feel adrift. Other children go back to their house, but these children go back to mum’s house or dad’s house, never to a place that they can call their home. Children with parents who have not split amicably can suffer even more, and they often face this alone. Being a child in this situation, which they did not choose, can be lonely, upsetting and confusing, and all too often these children can feel like extras in a drama being played out between their parents.
My Lords, I am grateful to all noble Lords who have spoken and to the Public Services Committee, especially the former chair, my noble friend Lady Morris of Yardley, for her serious work on this. I am also grateful for the detailed and constructive report and express my thanks to the clerks who worked on it and the witnesses who informed it.
The Government share the committee’s focus on two priorities: helping children in separated families to avoid poverty and ensuring that both parents contribute their fair share. As was observed by various noble Lords, children do not choose for their parents to break up, and partners may leave each other, but they do not leave their children. The CMS plays a vital role in improving outcomes for children in separated families.
My noble friend Lady Morris said that I summarised at the end of my appearance—I apologise for what was clearly a long waffle beforehand—that the CMS’s job is
“to get money to kids”.
That is absolutely its job, and it does it: through both family-based arrangements and those made by the CMS, an estimated £2.9 billion is transferred each year to children in separated families, keeping around 120,000 children out of poverty. For clarity, “poverty” here means relative low income after housing costs. As has been pointed out, tackling child poverty is at the heart of this Government’s mission to break down barriers to opportunity. We estimate that the child poverty strategy that has been brought out will lift 550,000 children out of poverty in the final year of this Parliament.
My Lords, in responding briefly to the debate, I would first like to thank everybody who contributed. There is a wealth of knowledge and experience in this Room today. We made the same point about wishing to reform the system and make it better for children and parents. With that kind of background, we should be able to make progress; I hope that we might see some in years to come.
The Minister’s response was as full, open and honest as ever. I can only speak personally but I am always grateful that it is the noble Baroness, Lady Sherlock, who has this job. This is such an important area, and I trust no one more than I trust her to try to get it right; that is the background and the amount of trust that I have in the noble Baroness’s leadership role.
Having said that, this is a really tough issue. As the noble Baroness, Lady Deech, pointed out—the committee also felt this—if you have the money and the wherewithal to go to court and have your system looked at individually, you will not suffer a lot of the things that we have been complaining about today. If you have to use the state-run system, it cannot treat you as an individual; it treats you using a formula. That is the problem that we have.
Given that those are the circumstances, all I will say is that of all the services this system needs to be the best that the state can offer, but I do not think it is. My worry about the Minister’s response is that they need to bite the bullet on this issue and go for big change. That is my gut feeling, having been a chair of this inquiry for a couple of months. I will have to reflect on whether what the Minister said—about having limited changes to the calculation and the formula, limited changes to enforcement and no movement yet on administrative liability orders—amounts to the radical change that needs to happen.
20 of 21 shown
The CMS has only two aims in making sure that money gets to kids: to support children to stay out of poverty and to make sure that parents pay what they should. It is simple; if you get those two things right and make it work, you have solved the problem. It does not work at the moment for too many families, but for each of those families it fails 100%. Some public services can say, “We’re a success. We deliver 90% of our target”, or “We’re a success. We deliver 85% of our target”. But with the CMS, for every family for which it fails to deliver success, that is a 100% failure, and the consequences of that on children and the family are pretty dire.
Our recommendations are all designed to try to help the Government improve this service. I think the DWP wants it to do better; we felt no resistance. No official came to us and said, “Everything is brilliant. We don’t know what you’re talking about”. There is a general agreement that, for too many families, this does not work. As I said, our recommendations are built around our contribution to trying to make that better.
The central pillar of this must be how we decide what a child needs and how much a parent should pay. Unless you get those two things right, nothing else follows. What money does the child need so that they can thrive? What money should the parent pay given their financial circumstances? That is wound up in what the DWP calls the “calculation”. If that is robust, sound and agreed to by everyone, we stand a chance of the CMS being a successful organisation, but if it is not, it is built on false foundations—it is built on sand and will crumble. We did not meet anybody—not the Minister, the officials or the people who are meant to be using the system—who felt that that pillar of how the calculation is made is fit for purpose. It is not fit for purpose.
We are working on legislation that was passed in 2000, so it cannot be fit for purpose, because economic, work and family patterns have changed so much since that date. We are relying on a calculation—an algorithm—that works as life was in 2000. It simply takes as its basis HMRC data from the last year for which tax is available for any individual. We all do tax returns, so we know that it is dealing with data from a tax return that could be two years old. During that time, our economic lives, jobs and employment patterns might have changed—we may have changed jobs, have fewer or more hours, or our work may be insecure. All those things change, but the formula does not change with it; it still goes on what your tax return said, definitely one year ago and potentially even two.
It also takes as its second source of data the information that was electronically available in 2008. The year 2000 was 25 years ago—a quarter of a century—and 2008 is not much less time ago. Yet the only data it will deal with is what could be gathered electronically in 2008. If a paying parent gets income from a rental house or anything like that, none of it is taken into consideration because, in 2008, HMRC could not collect that data in an electronic form.
I am reminded of—I made this comparison in my own head—what is asked of families who claim the carer’s allowance. When you claim the carer’s allowance, if your income is not the same for five or six weeks, you are expected to tell the DWP straightaway so that it can immediately adjust the formula so that it does not end up paying more. However, the Child Maintenance Service does not do that. It does not ask for that information. If you give it that information, it cannot cope with it and, if it attempts to cope with it, it takes so long to deliver that the formula just does not work for the families.
The only proviso to try to bring this up to date is the 25% variance, where, if your income varies by 25%, the service is prepared to look at the formula within the year. However, you could lose 20% of your income and still be expected to pay the same amount of maintenance money as before. Equally, your income could go up by 24% but your child will not benefit from that increase until you do your next tax return. So that main pillar on which everything else is built does not work; it needs to be brought up to date.
When we listened to the evidence from the DWP and the Minister, we were very pleased to hear that they took this on board and were carrying out work to make sure that we had an up-to-date, relevant model on which we could build the rest of the system. I must admit, though, that they said it would be done by the end of the calendar year, but it has not been announced as yet. My first question is to seek an assurance from the Minister that, very late though it is, this work is in hand and will be announced soon.
I was grateful for the document that was sent to me last Thursday by the DWP, which concerned a consultation—that word worried me to begin with—on reform of the calculation. I was even more concerned when I read the opening sentence, which talked about the work that was taking place because the DWP was considering revising the formula. I seek an assurance that that phrase—“considering revising the formula”—should not be taken how it reads and that, in actual fact, we are not just considering it but are actually going to do it.
My second point on that is about family patterns. The formula is based on the income of the paying parent and does not take into account the income of the receiving parent. We no longer live a family life where one parent works and one parent cares, but the formula does not really take that into account. In some cases, it has an inbuilt incentive for parents with caring responsibilities not to let their child stay overnight with the paying parent for too many nights out of fear that the calculation will change again and the caring parent will not have enough money to bring up their child. That is the first pillar of the formula at which the committee looked and on which it made recommendations.
Secondly, even if the formula is out of date, it does need to be enforced. The second pillar is built on enforcing the calculation when the person does not pay. Again, the basis of enforcement has to be, “What is the definition of non-compliance? When does the system yank itself up to get going?”. Lots of things can go wrong, but when does the system actually say, “Hang on, this needs enforcing because somebody isn’t paying what they’re meant to pay”? It is as simple as that: what is the trigger for letting that happen? The trigger is that somebody has paid nothing in any given quarter in a calendar year. Think about that: they have paid nothing.
What happens as far as that is concerned is that you can pay something in the quarter, but not a lot, and the enforcement mechanism does not kick in. Some 46% of compliant parents pay over 90%. Some 23% pay less. But, in that first figure, only 46% of compliant parents paid something within a quarter. Less than half of compliant parents pay over 90%: not 100%, but over 90%. That means that you can pay very little and you do not fall into the category where enforcement measures will be put in place. If you do fall into the category where enforcement measures take place, it takes so long to use the system that receiving parents rarely feel that justice has been done. Some 2% of cases go to court, and that is not because 98% of enforcement cases get dealt with successfully and do not need to go to court. It is because the length of time that takes and the bureaucracy surrounding it militate against it happening.
There is another question I want to make sure the Minister answers in her response. We were given an undertaking that administrative liability orders, which have been on the books for a long time, would be in place by the end of the last calendar year but, to the best of my knowledge, we are still waiting for that to happen. We should be clear about what that means. The department can go to court to collect a given amount of arrears but if, by the time the case has got to court, the arrears are higher, the department does not get permission to claim the higher amount; it gets permission to claim only what it went to court for in the first place. That just does not make sense.
Our third pillar on this was communication. Communication with this group of people is vital. The portal that the DWP has set up works well. A lot of people said that they found it helpful because they could access it 24 hours a day and it worked for them. That was not true for everyone, but it worked for a lot of people. But lots of people still use the phone or want face-to-face contact, and it was that group for whom the communications system just did not work.
We should think of the pillars needed to offer the firm foundations for a child maintenance system that does the job. That would be an effective way of calculating what money needs to transfer from the parent who pays to the parent who cares. The second pillar would be a quick and robust way of enforcing things when that does not happen, and the third would be good and proper shared communication between the department and those people who use the service. On all those things, the system does not work as effectively as it needs to.
The people who use this service are very vulnerable. If they are not vulnerable people, they are people at a vulnerable time of their life. Many of the comments we heard were stronger from people who suffered domestic abuse or were in other kinds of relationships that were tough to begin with, without the system not working for them. Of course, the people who did not give us evidence and did not write to us, and whom we did not listen to, were the children. They do not have a voice because it is not their job to have a voice. But it really behoves us to remember that they are at the core of this. They are the reason we need a better child maintenance service than we have at the moment. I beg to move.
Elsewhere in the responses we have seen that DWP civil servants are actively trained on domestic abuse and therefore can address it in a particular way, or, as I will come to shortly, removing every claim to collect and pay will solve this problem. We have not seen any legislation for that yet. I do not know whether the Government intend to bring that forward in this parliamentary Session. It certainly was not in the King’s Speech, but we know that it can happen regardless. It is worth tackling now, as indeed are some of the other measures, where the opportunity is there to act rather than wait, with—dare I say—the perfect being the enemy of the good, particularly when it comes to the children to whom my noble friends referred.
Going back to some of the issues that we have, one thing surprised me. When I was Secretary of State, I asked for a focus on people who are not working and to make them a priority for targeting by work coaches—to help these young people get into work. The reason that matters is that if you are on benefits, in essence, you will either pay nothing or you will pay £7 per week, deducted from your benefits. That is all. With collect and pay, 38% of the people on it end up with a deduction from benefits. You would like to think we would even get £7 per week through that, yet we know that the number of children catered for through direct pay is about 60%. About 40% are through collect and pay. Yet 220,000 children get zilch—not a single penny—through the collect and pay approach. That is based on the figures for the end of 2024, because that is what was available when we were formulating the report. I have not been able to do the same analysis to that extent. I appreciate that when I tabled a Question to the Government, it was considered too much to do that bit of analysis. I accept that some of these things will come out in statistics in due course.
Still, let us think about that: 220,000 children did not get a single penny. I am just reinforcing what my noble friend Lady Morris of Yardley was saying—I call her “my noble friend”, because we were friends on the committee, being cross-party in that regard—that that is what we are dealing with. I suggest to the Minister that she should reflect on that and go back and look at prioritising employment support. We know that unemployment is going up. If this is a way of helping young children to get on in life, it is imperative that we help those who are not working at the moment to get into work, if for nothing else than for their children.
There was another missed opportunity with the research that the Government were due to publish last Monday. They were going to release the information that they had and then it came out on Friday. I have only had a chance to skim-read the 117-page document, but I was surprised by the questions that were asked. There is nothing surprising about the tensions between two parents. It was no surprise to me or, I expect, to members of the committee or indeed other noble Lords that the wealthiest people are the ones who seem to resent handing over quite a lot of their money. Meanwhile, those on the lowest incomes would have been quite happy to see more but did not necessarily expect people to be able to pay more because they knew the circumstances of the father—it is usually the father, I think 86% of the time—or mother of their child.
I was surprised that we did not get into other bits of research about changing the formula or the calculation. Indeed, I was disappointed by the rejection of the court approach of trying to work out a formula. The key thing about our recommendation about the court approach was that everything is put on the table. The big arguments that happen between parents are about the other person lying: “They’re hiding stuff”, “They’re hiding money”, “I know he’s got these things”, or even, “I know he’s increased his pension contributions deliberately to reduce his income so he doesn’t have to hand over money”. It is normally about the argument between the parents, while the child is the one who suffers.
I thought that the beauty of the court approach was that basically people have to put their assets on the table. You would like to think that there could be much more use of, as my noble friend referred to, a lot more of the HMRC data that we have today. Indeed, I hope that we will start to be able to use some of the powers that are there to try to understand where people are simply doing whatever they can because their—let us put it this way—loathing of the other parent is causing detriment. In that regard, my understanding is that the Government are not going to change the formula at all, although they may well move the variation where, if your income changes by more than 25%, the calculation is redone and will reduce that to 15%. Okay, that is fine, but it is another missed opportunity for comprehensive research and to look afresh at some of the key issues that cause division.
That brings me to the whole policy that the Government are continuing to press on with. We have not seen the legislation but it is about switching off direct pay. This is where the Government basically help with the calculation of what should be exchanged between two parents, as opposed to collect and pay, where money comes into DWP and then gets handed out with a difference in charge. I am sure that the Minister has looked at the recent survey of separated parents, which shows that a pretty high proportion of parents had arrangements—probably higher than shown in the statistics or in other assessments that the Government have done, particularly in the analysis of what the benefit would be from reducing the number of children in poverty as a consequence of these changes, which, frankly, is very low, given the big hurrah that has accompanied this.
It is worth looking at that in more detail, recognising that there are higher figures for what gets paid over than the Government may think from some of their other surveys. We should also recognise, in other research that the Government have published very recently, how the majority of parents believe that having this formula, or the approach of being able to use the Child Maintenance Service, is important to get some kind of enforcement without the need for all the other things that we are referring to, whether that is removing passports or going to prison, both of which happen exceptionally rarely.
One of the reasons given by the Government for moving away from direct pay is that it was a failure of direct pay that the numbers on direct pay have gone up, and the whole point of direct pay was that at some point people would come off the need for it. That does not seem very logical to me. In the results at the end of December 2019, there were about half a million families in this arrangement overall, both CP and DP, and there are about 780,000 in the latest statistics. It shows there is a clear appetite for wanting to use this process in order to try to make sure there is a clear way to get money to a child. I found it odd that, while the Government accept the recommendation that we should advertise this more, the very fact that parents use it was seen as a policy failure, because they were on direct pay and had not decided on a different sort of arrangement that did not involve the Child Maintenance Service.
I feel strongly about this, and I know the Minister knows that, because it comes down to money—it comes down to how much money is going to the child. We continue to see in the amount of debt that is left over that a considerably higher percentage of what was due to be collected is happening through the collect and pay service. We are seeing the compliance rates much higher on direct pay, even on the survey that was done a few years ago, where 60% was full compliance—full compliance, not over 90% of the 46%, but full compliance—through direct pay. I remember my argument with the officials at the time, and my noble friends were in the room. I am pointing to my noble friend Lady Shawcross-Wolfson, who was a non-executive director of DWP at the time, and my noble friend Lady Stedman-Scott. My argument was, where we had something like 300,000 children who are getting all the money that they are supposed to have, why would you kill off that process just to get them into a system where somebody has to hand over money to the Government to then pass it back?
I come to my final point, because I appreciate that the Minister and I will not necessarily agree on that, but I hope that she looks at this again genuinely for the sake of the children. In terms of some of the other recommendations, I think that it would be useful to see more on the family hubs. It was good to see from the MoJ that the use of the £500 mediation voucher has significantly increased. That is encouraging because, ultimately, we want to try to reduce conflict. In terms of thinking through some of the digital communication, I was slightly surprised that there did not seem to be a simple way to have a more proactive IT system. I am conscious that changing IT is always challenging. I was thinking in particular of paragraph 32 in the list of recommendations and conclusions.
Ahead of any legislation, I hope that the Government will accept the recommendation to publish an evaluation of the impact of moving all cases on to collect and pay. I am afraid that I just do not accept the comment that it will not cost any more money. It is physically impossible to see how that could be the case, or illogical, from my perspective. As I say, there will be missed opportunities for many children in this country. I know that that is not the outcome that the Government are seeking, but I hope that the Minister looks again at some of the recommendations from our committee and really makes a difference to the opportunities for children who, quite frankly, are some of the most deprived in our country.
The inquiry sat for several months and reported in October last year. About half way through, I recall beginning to think about who was actually in charge of the Child Maintenance Service—the Minister, the department more broadly or the Child Maintenance Service itself. Indeed, I have now begun to wonder whether decisions are now being made elsewhere in Whitehall and not by the Minister and her department at all. I think this matters, but I cannot interpret what I have just said because the Minister’s letter of 6 March accepts that changes are needed but gives no indication of what the Government are going to do or when they are going to do it.
Primary legislation will be needed to remove direct pay and transfer those cases to collect and pay. That is the Government’s intention, but I cannot see—as the noble Baroness, Lady Coffey, just pointed out—how such a transfer can be achieved at no cost, but that is what we have been told. I think the case has been made that direct pay should be retained for those who prefer it. Apparently, administrative liability orders will be legislated for as soon as possible. Of course they should, but that was true months ago. What is the plan for when the orders will be legislated for? The Minister may make a set of announcements when she speaks later.
As we took evidence, I grew more concerned by the performance of telephony services. We said in paragraph 24 of our conclusions and recommendations:
“It is unacceptable that parents still face an average 18-minute waiting time to speak to the CMS on the phone, with tens of thousands of callers waiting over an hour and over 500,000 calls being abandoned in the last year alone”.
I am reaching the conclusion that the CMS wants to run a digital service and reduce telephony, even though telephony enables a problem to be ironed out immediately through synchronous discussion. I hope the Minister will reassure us that the telephony systems will be improved, because they can be more efficient.
I also concluded that the service is very slow to change in both reaching decisions and then implementing them. The consultation on the child maintenance calculation, about which we heard further earlier this afternoon, needs to be very clear as to what its objective is. We also need a much stronger definition of non-compliance in collect and pay, as the noble Baroness, Lady Morris of Yardley, said.
I found the Minister’s response on key performance indicators, in her letter at the beginning of March, disappointing. The response to question 7, which asked why the DWP would not publish the number or proportion of calls facing excessive wait times despite holding the data, said that all developments to official statistics are progressed through the statistical work programme. When are performance indicators official statistics? If the information on key performance indicators is there, it should be made publicly available. They exist but they are, I regret to say, hidden from public gaze; I do not understand why that should be.
When Select Committees take evidence, one of the most valuable things they can do is listen to the recipients of a service. It is not enough to listen only to those providing the service. We held two engagement events, one with receiving parents and another with paying parents. Let me read out the key words in our report on bias:
“Almost all receiving parents believed the system was biased towards paying parents, allowing them to reduce their payments or evade altogether due to the lack, and timeliness, of enforcement and the loopholes in calculations”.
However, when I listened to paying parents, they said the opposite. As the report states:
“Almost all parents believed that the Child Maintenance system, its processes and the underlying legislation was biased against the paying parent, and in favour of the receiving parent”.
There are two ways of looking at those two different facts. One is to say, “If both the receiving and paying parents are unhappy, that probably means the Government have got it just about right”. However, the opposite is what I believe to be true: both the receiving and paying parents are right, and what they are talking about is their own personal experience of the operation of the service.
I hope that the Minister has read the summary notes in our report on our engagement events with both paying and receiving parents—I am sure she has—because I found them very instructive. One thing that was asked for was a shared narrative. Receiving parents were fed up with having to re-explain the circumstances of their case each time they rang up because a different person was receiving their call. That person would then get some information on a screen, but it would not be available to the person who had made the call. One thing I hope the Government will look at is creating a shared narrative on a screen that both participants in a call can read. I understand the difficulties around this being private information held by the Child Maintenance Service but, equally, it is very important that the receiving parent who wishes to raise an issue can be confident that the information they are talking about is available to the person with whom they are speaking.
In conclusion, it is true that in many cases the Child Maintenance Service works well, in particular in straightforward cases. Reforming the calculation formula has become a very urgent matter, and so has speeding up enforcement. I have the highest regard for the CMS’s 3,500 highly committed staff. They are in the front line of reducing child poverty, and over 1 million children depend on the system working to keep them out of poverty. Yet 100,000 children miss out on maintenance payments every quarter, and around one-third of separated families have no child maintenance arrangement at all. So I conclude that this is work in progress. I just wish that action to effect change could be speedier.
Child maintenance is not discretionary. It is a moral and legal obligation. Parents are under a continuing legal duty to maintain their children. Under the CMS, maintenance is due to children usually only until they are 16, or 20 if they are still in certain types of education, oddly excluding university education. Again, I add in parentheses that the Financial Provision Bill I have introduced in this House on several occasions would make maintenance mandatory to age 21 as the default position. The duty of parents to support is regardless of whether they were married, and the CMS is the infrastructure for where court or family payments are not working.
There is a striking contrast between the flimsy support for child maintenance and the vast legal structure of payments to divorced spouses, something lawyers are heavily focused on. Payments to divorced wives occupy large amounts of court time and chalk up disproportionately expensive costs going to the lawyers who represent them. Spousal maintenance is based on need, compensation and the ending of a partnership. It involves significant calculation and disclosure of all assets and income. Amazingly, however, assets and property, unearned income and overseas income are not taken into account in calculating child maintenance. On paper, children’s claims are paramount, while spouses’ claims are contingent. But children’s maintenance is compulsory and spousal maintenance is conditional in law. The way the system works shows something very different in the order of priorities.
The Public Services Committee’s report shows that non-payment of child maintenance is widespread. Much has been said about that by speakers already. If custody is shared, there is a reduction in the amount paid to the person who, in common sense, is the caring parent. Claims for more custody may serve to reduce the amount that the largely absent father pays. Even when attempts are made to enforce the payment, compliance is only partial. Too many children are left in poverty, which this Government want to end. So often we have heard that this Government are lifting children out of poverty. Are they? I would go so far as to call the system a national disgrace, in part because taxpayers are left to fill the gap that absent fathers have left.
This has come about because child maintenance is often, unusually, not a matter for the courts. Even in divorce cases, the amount paid to children is often an afterthought, tacked on to the end of a judgment which is all about the needs of the ex-wife and the ex-husband’s ability to pay. For others not in the court system, as we know, the CMS operates. But the courts focus on individual cases, while the CMS has to deal with hundreds of thousands of cases, so the CMS relies on formulaic processes and standard arrangements. One can see that AI will take over this process one day, and it might well be a much better outcome.
In the direct pay system, the payer and payee are left to deal with each other once a calculation has been made, so there is little evidence as to whether it is really working. Enforcement is slow and reportedly not vigorous enough. This is such a contrast to the way divorced wives are treated. For them, there is individual scrutiny. The entirety of the couple’s finances is set out. If payment is not made, one can go back to court. There is professional representation on both sides. I am not saying that all children’s support orders can be handled like that, because there are, sadly, so many. But it is a bad contrast of the two systems. Divorce maintenance can be an expensive protracted struggle, and it too is having to face up to new emphasis on domestic abuse. But divorce gets the level of judicial scrutiny, comprehensive treatment and enforceability that children do not get. A single parent might be better advised to claim maintenance through Schedule 1 to the Children Act 1989, which applies to them in court.
The committee’s report would improve matters for children. It is a matter of regret that the Government have disagreed with some of its central proposals, and I hope we will hear why. The Government have agreed to stronger enforcement tools and faster appeals. They have agreed to improved staff training, especially relating to domestic abuse cases, and to improve communications. The Government have accepted that the calculation of maintenance should be reviewed, but there is no detail. This needs improved income assessment and stronger investigation of the ability to pay. In contrast to the committee’s report, the Government want to move to a single system of collect and pay, replacing direct pay. This may protect payees whose relationship is troubled, but it may at the same time increase hostility and disturb arrangements that were working.
Before 1991, child maintenance was largely a matter for the magistrates’ courts. After all these years of a state child maintenance service in different guises, one wonders whether it was right to remove it from the supervision of the courts. Has the pendulum swung too far to an administrative, impersonal system at the expense of trust, openness and enforceability? Perhaps more oversight by magistrates would help. In the meantime, we are letting down children, and the consequences of this will carry on down the generations. Studies have shown that the effects of poverty on a child continue through their life and pass on, in turn, to their own children.
I ask the Minister: will the Government get on and reform those limited parts of the system that they have agreed to reform? They have said that they want to end child poverty. Here is an opportunity for them which they must seize immediately; there can be no reason why they should not. I conclude by thanking the noble Baroness, Lady Morris, for the wonderful work that she and the rest of the committee have done on this neglected, complicated but vital system.
“without causing any further harm”.
That harm must be mitigated, not least by the CMS working quickly and efficiently.
However, we need to acknowledge that the seeming intractability of problems facing this public service stems from our culture of hyperindividualism and family breakdown. Undoubtedly, some relationships must end, but we now take for granted the very high numbers of UK children not living with both their parents—around 44%, according to the IFS. It also highlights the fragility and complexity of so many UK families compared with other countries. Any reforms should learn lessons from abroad, but the character and prevalence of fractured families here set us apart, and what works elsewhere may falter here. I am not counselling despair or hand-wringing: quite the opposite. This policy area is another where the Government must grasp the nettle and be willing to make tough choices, and it is not true that the past 14 years were squandered in this regard.
The coalition implemented the Henshaw review commissioned by the previous Labour Government and legislated in a very tough environment to deliver the 2012 system. It has proven to be far from perfect but, fast-forwarding to 2023, the Conservatives also began to implement the Callan review, including by introducing two small but important Private Members’ Bills that would have improved enforcement and the service received by customers reporting domestic abuse.
However, the Select Committee’s report highlights that the secondary legislation required to bring these into force has not been forthcoming. I am particularly troubled by parents trying to obtain child maintenance when abuse from ex-partners is ongoing. Under Direct Pay, a paying parent cannot be stopped from putting money into their ex-partner’s bank account under the reference “for prostitution services”—if they put money in at all. Receiving parents can perpetrate emotional and psychological abuse by falsely telling the CMS that payments have not been made, so their ex becomes unjustly entangled in protracted and highly distressing enforcement proceedings. DWP research found that 71% of receiving parents and 51% of paying parents in Direct Pay report domestic abuse from the other parent. The CMS itself said that Direct Pay is
“not fit for purpose for victims of domestic abuse”,
given that it is
“difficult to pick out victims … comprehensively and reliably”.
So abuse is rife within the CMS customer base—not just male on female and not just paying parent on receiving parent. It is often insidious, subtle and very difficult to prove, so I have some sympathy with this Government’s plans to abolish Direct Pay altogether. However, I await the Minister’s later response to the Select Committee’s robust challenge concerning the likely efficacy of this reform and its supporting data.
I am also concerned that the legislation will simply never be brought forward because, while the organisation may be reform minded, nothing will happen unless the Government are of the same stamp. CMS reform is a can that has been kicked down the legislative road on many occasions, despite the severely outdated primary legislation that underpins many of its key operations.
The Select Committee report also mentions “lack of transparency” in calculations, about which we have heard a lot today. It helps explain why so many parents—paying and receiving—are deeply unhappy with the CMS service. A DWP survey of customers in contact with the CMS found that overall customer satisfaction was 39%, with only 47% of receiving parents and 31% of paying parents saying that they were satisfied. The committee cited important affordability and fairness issues being repeatedly raised in many reviews stretching back to 2014, and referred extensively to the planned calculation review. However, I understand that a letter to stakeholders from the Minister at the end of last week said that this planned public consultation on rates, thresholds and calculations will not now go ahead. The Minister cited a single study programme of quantitative and qualitative research with paying and receiving parents that was considered to undermine irredeemably the case for any further consultation, let alone reform.
I believe that this Government are in danger of putting too much weight and responsibility on study respondents, albeit those with so-called “lived experience”, to avoid making difficult reforms. These parents’ views are of course important, but they must be balanced against the considerable body of other evidence, including that provided by the Social Security Advisory Committee in 2019, which demonstrates considerable unfairness and anachronism in the system.
The Select Committee said:
“It is unacceptable that successive governments have failed to update the child maintenance calculation ... This has ultimately led to children receiving less money. Similarly, it is disappointing that no Government has sought to update the legislative framework set down in 1991 and amended in 2000”.
If this Government exonerate themselves from addressing these concerns, the CMS will be yet another area of public service the public has no confidence in. The Select Committee found the proportion of families using the CMS was lower than in 2012, and the proportion of families with no arrangement was higher. If they are abandoning their plans to review calculations, and the Direct Pay reforms are years away, what will the Government do to increase public confidence in the CMS? Also, while the proportion of families in family-based arrangements has risen from 29% in 2012 to 43% in 2024, how will they encourage more, and more durable, family-based arrangements so it is needed by even fewer parents?
Both receiving and paying parents say that support for separated parents to help them maintain family-based arrangements is “unhelpful” and “inadequate”. Many receiving parents are unaware of its existence. The committee concluded that far more support for separated parents was needed, and the Domestic Abuse Commissioner proposed better integration of the CMS with family hubs. Again, support for families early in what is typically a very difficult and confusing separation and child maintenance journey would likely reduce conflict; 30% of parents from one study said that could encourage good working arrangements.
Currently, the CMS does not operate within the family hubs network. The Government’s January 2026 response to the Select Committee report said that where support for separating parents seeking advice on the CMS was not available through a family hub, staff should signpost to other relevant services in the area. Could the Minister give us some examples of the support this is referring to? Apart from programmes such as Reducing Parental Conflict, I am not aware of any new services that have been funded or have sprung up in this area. The Callan review suggested, for example, that courses mandated by family courts for warring couples should be accessible to parents before they get that far.
The Select Committee also recommended siting mediation in family hubs as that can greatly help parents reach durable family-based arrangements. But access to mediation in and through family hubs will not happen just by saying it should. What cross-government work are the DWP, MoJ and DfE doing so that families get this and other help with child maintenance that has simply not existed in the past? How will family hubs enable the child maintenance system to work with other organisations? The April 2026 guidance for family hubs shows many signs of a better government-wide approach, so I am hopeful that the Minister will have good news to share, and I will gladly work with her, through the family hubs network, to make it a reality.
I will end where I began, with the reality that the CMS is grappling primarily with problems not with money but with relationships. The recent DWP research on child maintenance calculations says that
“relational, as well as financial factors are key in understanding non-compliance. For example, there may be a complex two-way relationship between conflict and non-compliance”.
Preventing high levels of non-compliance has never been successfully achieved by any iteration of the UK child maintenance agency. We need to take a different approach, with a much greater emphasis on helping parents avoid entrenched conflict and relationship breakdown in the first place.
Australia and the Nordic countries have family relationship centres all over the country with these specific aims. Australia is looking at our family hubs to learn how to integrate relational support with debt, housing and other services including, crucially, those delivered by the voluntary sector. Are this Government willing to learn from them how we can systematically and comprehensively support families in their relationships before, during and after separation?
Too often, policy in this area is presented as though there was a simple choice between supporting the receiving parent and protecting the paying parent. However, having taken part in round tables with both sets of parents, it is clear to me that, in reality, the system must do both. Children need support, but parents also need arrangements that are realistic, enforceable and trusted. A system that ignores affordability is never going to secure compliance. I found both the round tables that were hosted by some of our staff really emotional. We heard real-life examples of where people had even considered taking their own life because of the financial pressures they were under as they tried to put food on the table and provide for their children. It was heartbreaking. No service is in a good position when you see that as a reality.
A key recommendation is our call for better support for families. As we have heard today, we called for an increase in access to mediation for separating parents—only where appropriate and with the right safeguards, of course—which could increase the effectiveness of child maintenance arrangements. We also recommended improving access to early interventions relating to child maintenance, including information and support; and that these should be part of, or delivered through, services such as family hubs, to which the noble Lord, Lord Farmer, referred.
As the noble Baroness, Lady Coffey, highlighted, the Government’s response is a missed opportunity. It appears to accept that some reform is necessary, but little is going to change quickly. In my opinion, that does not fit with this Government’s absolutely right aspiration to keep children out of poverty. Families are living with the consequences of this system every day. As I say, this issue is not abstract. It is about rent. It is about food. It is about school uniforms. It is about basic home life.
As we stated in our report, over 100,000 children are missing out on maintenance payments every quarter. Just under half of children in families in the collect and pay arrangements, where the Government can take enforcement action, receive no maintenance. Something has to change. This cannot stay in the too-difficult pile any longer or be kicked down the road further, to build on the words of the noble Lord, Lord Farmer. I hope the Minister will take on board the strength of concern in our report, and from Members across the House today, and grasp this issue. I know she cares about it, because she was very passionate when she came before the committee. Children and families cannot be left in this situation any longer. I look forward to the Minister’s response.
Child maintenance is therefore more than just a payment between adults; it is a mechanism designed to go some way towards addressing the disadvantages that children from broken homes face early in their lives, one of which is a reduced household income if living with a single parent. Ensuring that the child maintenance system works well is therefore fundamentally important and must be an absolute priority for all of us in this Room today.
Given the importance of getting this right, the committee’s report makes deeply concerning reading. It tells us, as others have said, that around 4 million out of 14 million children in the UK live in separated families. That is millions of children whose security and stability may depend, at least in part, on the Child Maintenance System working properly. The report also raises serious concerns about the way that payments are calculated. The formula is now more than 20 years old and is based largely on the income of the paying parent. The committee finds that the system lacks transparency, does not properly reflect the variety of modern family circumstances and may leave room for income to be underreported.
As I understand it, tax evasion is unlawful. Child maintenance evasion should be treated exactly the same. The Government’s own recently published research on child maintenance calculations reinforces many of the committee’s concerns. It found that parents on both sides of the system frequently regard existing arrangements as unfair and that compliance is influenced not only by affordability but by conflict between parents and wider family relationships. That should remind us that confidence in the system depends not only on effective enforcement but on transparency, fairness and the ability of parents to understand how decisions are reached.
I also note the Government’s proposal to reduce the income tolerance threshold from 25% to 15%, as the noble Baroness, Lady Morris, so ably described, so that changes in parents’ earnings are reflected more quickly in maintenance calculations. In principle, that appears to be a sensible attempt to make the system more responsive to real-world income changes. However, it also underlines the broader point made by the committee that the current framework relies heavily on historical data and assumptions that can quickly drift away from a family’s actual circumstances.
It is worth noting that concerns about the calculation framework are not new. Successive reviews have identified questions around fairness, transparency and affordability, and Governments of different political colours have sought to address them. The challenge now is to ensure that this long-running programme of reform is carried forward rather than allowed to drift.
I come to enforcement. My first ever visit as a Minister was to the Child Maintenance Service in Plymouth. It was a massive place with lots of staff, and I talked to them at length about enforcement. The team at the Child Maintenance Service responsible for enforcement in my time was outstanding. Its members deserved all the credit they could get. They never flinched from dealing with situations: it was just that they had too many situations to deal with. If my friend the Minister can do one thing, it should be to get more people into enforcement to get more money for children. If we spent more—here is a Tory talking about spending more—and we calculated the potential return on investment, we could make life better for these young people.
Ultimately, this all comes back to the child. That is why I particularly welcome the committee’s recommendation that the child should be placed at the centre of the calculation formula, with their welfare and future made the paramount consideration. We should remind ourselves that these children did not cause this situation. They did not choose it and did not ask for it, yet they are the ones most profoundly affected by it.
Other recommendations from the report also seem sensible and would allow the system to deliver for children. Improving enforcement, redefining what counts as non-compliance, and giving parents clear and timely updates would all help ensure that more maintenance payments are actually made. It is simply unacceptable that, under the current system, too many parents are able to avoid making payments owed to their children. The evidence shows that this is most often fathers, who on average earn more than mothers, leaving the mothers to carry the financial burden alone.
The committee also pays special attention to vulnerable parents and those who are at risk of financial and domestic abuse, which is most welcome. When someone becomes the receiving parent, they face serious financial costs and are particularly open to the risk of financial abuse. If someone has suffered a difficult separation from a partner, this is heightened even further. Proposals such as allowing direct access to collect and pay for abuse victims are worth consideration by the Government.
There is one further aspect of the committee’s report that deserves particular attention. While child maintenance is often discussed in financial terms, the evidence presented to the committee reminds us that the underlying challenges are frequently relational as much as economic. My noble friend Lord Farmer outlined this eloquently and in a way that we should all be able to understand. That is why I welcome the committee’s emphasis on early intervention and support for separated parents. Helping parents access advice, mediation and practical support at an earlier stage may not only reduce conflict but increase the likelihood of durable arrangements that work in the best interests of children.
Family hubs, which have grown under this Government, have a great impact and effect. Making them the centre, and a place where child maintenance can be discussed and managed, is a no-brainer. I am sure the Minister will take this away and try to make it happen. I hope she does; if not, we will all be on to her.
Ultimately, if we are serious about improving outcomes for children, we must do more than administer payments efficiently; we must also support parents to manage separation in a way that minimises conflict, fulfils parental responsibilities and places the welfare of children above all else. It is important to recognise that many of the issues identified by the committee have been the subject of reform efforts over a number of years. The introduction of the 2012 system under the coalition Government, subsequent work to strengthen enforcement and more recent measures aimed at improving protections for victims of domestic violence or abuse all reflect a recognition that the status quo was and is not good enough. While those reforms have not resolved every problem, they provide a foundation on which further improvements can and should be built.
The report produced by the committee gives the Government some serious food for thought. As a number of noble Lords have observed, lasting reform will require us not only to improve the mechanics of the system but to support families earlier, reduce conflict where possible and help parents make arrangements that put children first. Whether or not children should be properly supported, the fulfilment of parental duties encouraged and vulnerable people recognised are not matters of partisan difference; I know that there is a great deal of sympathy across the House for meaningful change to make sure that these are upheld.
The question for the Government is therefore not whether reform is needed, but whether they will now complete and implement the reforms that have already been identified. Families who depend upon the Child Maintenance Service cannot afford for necessary changes to remain indefinitely under review. I will be listening carefully to the response from the Minister on the concerns that have been raised by everybody who has spoken in this debate and that in the Chamber today.
I thank the committee again for its work—I am sorry that I was not with your Lordships—and for enabling us to have this debate. There is much in the report to command our attention but, my goodness, there is more to do. As the noble Lord, Lord Shipley, said, the work is not complete.
But the committee is right: too many children still do not receive the support that they are due. So this Government have set out ambitions for the CMS to help change this. We want to deliver a fair and trustworthy service that is more accessible to parents, particularly those who are vulnerable, and we want to tackle non-compliance head on by moving to a single, streamlined service, where we can quickly identify and tackle missed payments.
I will try to cover the very range of things I have done in 20 minutes. When I fail, I will write to pick up those questions that I do not manage to answer. Even at the speed I speak, I do not think I will get through them all, but I will try to slow down so that Hansard can pick it up—if not passing dogs.
I say at the start that we all need to be realistic about this. I was struck by the fact that eight of us have spoken, of whom three either are or have been Ministers with responsibility for the Child Maintenance Service, either directly or from a more exalted standpoint. Successive Governments have brought in reforms of different kinds, yet we keep hearing about problems. Our job is to recognise that, when we are dealing with something as challenging as a service that faces parents at probably the worst point in their lives—when their lives have fallen apart and things are incredibly tense—the state needs to step in, as my noble friend Lady Morris said. But we must also recognise that the state cannot solve that problem, so it has to do all it can to encourage and enable parents to support their kids. We will keep pursuing continuous improvement, but I do not want to raise the idea that there is a single silver bullet. If there was, previous Governments would have found it, and the Ministers around this table would certainly have fired it—I have no doubt about that. I will do my best.
Let us talk about the removal of Direct Pay. It absolutely remains our complete and firm intention to legislate to remove Direct Pay, which we estimate could result in around 20,000 fewer children living in poverty. Moving to a single service, where the CMS monitors and transfers payments, will address the long-standing issues highlighted by our research into Direct Pay, including hidden non-compliance and the burden on parents having to chase payments themselves. It will also reduce unwanted contact between parents.
I realise that I have failed completely to persuade the noble Baroness, Lady Coffey, of the case for doing this. I will have a brief go, but I listened carefully to her comments. At the heart of this is the fact that, under the current Direct Pay model, the CMS cannot routinely monitor payments. That means that non-compliance can go undetected unless a parent reports an issue. Our research on this is interesting. It suggests clearly that only 60% of receiving parents report receiving the full amount due and that only 40% get it on time. Direct Pay is not performing brilliantly, and there are problems in Collect and Pay. We now know that Direct Pay is hiding significant amounts of non-compliance, so moving into a single service will enable routine monitoring, allowing earlier identification of missed payments and intervention.
Let us face it: Collect and Pay is made up of previously ineffective Direct Pay cases. Under the previous reforms, you can get into Collect and Pay only if you fail in Direct Pay, so Collect and Pay involves the people who did not manage to make it work in Direct Pay. Collect and Pay shows that, when payment behaviour is visible and enforceable, just over half of parents are fully compliant and a further quarter are partially compliant. Given that those are the difficult cases, that is something we need to hold on to.
Under those reforms, well-functioning Direct Pay cases should carry on. If things are working, there is no reason to assume that they cannot continue in a family-based arrangement, as long as we provide support with the calculation. If they are not working, they come into the main system. That will help compliance, and it will benefit victims and survivors of domestic abuse by removing the need for parents to chase missed payments or engage with each other. We will work closely with domestic abuse organisations to ensure that communications and support are safe, targeted and effective. The reality is that, when Direct Pay is removed, the level of non-compliance we anticipate being revealed could indeed put a bump in the statistics on non-compliant cases. But all that would be doing is surfacing hidden non-compliance in Direct Pay, not creating new levels of non-compliance.
Noble Lords are understandably keen to find out about the timing. As I have said, our firm intention is to remove Direct Pay, but we will have to wait to get primary legislation to do so. I want to make the changes as soon as possible, but the Committee will understand that the Government have a crowded legislative agenda and we have to take our place in that alongside the many other vital reforms that departments are pursuing. We are continuing to develop legislation on a range of matters related to welfare reform and I remain determined to legislate on this and other important matters as soon as parliamentary time allows. In the meantime, we are taking action to make it easier for parents to switch to the Collect and Pay service through our improvements to the change to service type process and being clear in our communication about what support is available for victims and survivors of domestic abuse.
On the additional workload—I have totally failed to persuade the noble Baroness, Lady Coffey, on this, too; my track record is not excellent here, but let me try again—I reassure the Committee that compliant Direct Pay cases require the same amount of work and caseworker resource as compliant cases in Collect and Pay. The main extra cost to DWP as a result of these reforms will be administering previously unidentified non-compliant cases. If the workload goes up, it will get in money from cases that at the moment are simply hidden.
There are also benefits in two other areas. First, some compliant cases will move to family-based arrangements and will not require the CMS to intervene at all. Secondly, the removal of the process of changing them from one to the other accounts for around 1,000 cases a month, and the resources released by ending that burden will be redirected where they are most needed, supporting the increased volume of cases that need support from the CMS.
The noble Lord, Lord Farmer, and others raised domestic abuse. The CMS has substantially strengthened its processes, due in no small part to the work of his supporter, Samantha Callan. I am very grateful for that work, which the department has read and benefited greatly from. We have certainly improved caseworker training and signposting resources, with a dedicated domestic abuse plan for caseworkers to follow in supporting victims. I think the noble Baroness, Lady Coffey, mentioned the Domestic Abuse Act. We know from our research that most victims and survivors of domestic abuse are unlikely to have enough evidence to pass the tests we would have to apply were we to introduce the provisions of that Act. The Act requires the Secretary of State to set out evidence requirements for domestic abuse in regulations. My latest and best advice from officials looking at this in detail is that that evidence would have to be court-based. That is because it would need to be verifiable and, when it is provided, could not be disputed by the other party because it has already been litigated. Someone could try to JR it, but if it has been through the courts that gets more difficult.
For victims and survivors who have enough evidence, we know it can be traumatic for them to relive the abuse by having to produce it and go through it again. We want to avoid that wherever possible. Our priority has to be making the CMS more effective at supporting all victims and survivors engaging directly with the service. However, I want to reassure the Committee that we are not closing the door on this; we will continue to explore evidence-based ways that could allow us to commence the Act in future, should it be needed as part of a broader package.
I turn to the calculation, which my noble friend Lady Morris and many others commented on. We looked carefully at the committee’s recommendations. We recognise that, to secure voluntary compliance, parents need to have faith that the amounts are fair and understand how they are calculated. That is why we conducted a review of the child maintenance calculation, focusing on ensuring that it strikes the right balance between both parents to encourage compliance and secure money for kids.
For the record, I will say what we will and will not be doing on this. Following the review, I am pleased to advise the Committee that we plan to reduce the income tolerance from 25% to 15% so that changes to income are captured more quickly and assessments remain fair to both parents. I hope that makes my noble friend Lady Morris happier. She spoke about things such as rental income; we will include unearned income within the standard calculation, which will ensure that liabilities more accurately reflect parents’ full financial circumstances. Those reforms will help ensure that the system better reflects how families earn and receive income today, helping deliver more consistent support for children.
We looked carefully at the committee’s recommendations on how child maintenance is calculated. While we agree with the spirit of many of them, we will not be adopting them, which I know will be disappointing. For example, we know from the experience of before the child support system was introduced that the family court approach added complexity, created delays and reduced the number of children able to benefit from maintenance. We are determined to avoid that. I take the points made by the noble Baroness, Lady Deech, whose expertise obviously far exceeds mine in this area. However, having looked at the problems created—this was the reason the administrative system was introduced in the first place—we do not feel that that is the way forward.
I will say that there are ways in which the court can do things. Parents are not obliged to use the CMS. They can, if they both choose, make their own arrangements or seek an order through the courts if they agree. Once a court order for child maintenance is in place, after 12 months someone can choose to come to the CMS. The courts also play a role where receiving parents want top-up above the threshold for the Commons, but we think that, fundamentally, for the bulk of parents an administrative system is the way forward.
We looked at whether more significant changes to the calculation, including changes to the rates and thresholds, would deliver the improvements in fairness and compliance that we wanted. As part of this, we undertook extensive research with users of the service, which has now been published, to understand how parents’ behaviours may be impacted by potential changes. Having carefully considered that research and other evidence through the review, it is clear that the case for proceeding with such large-scale change is currently not sufficiently strong. We will therefore not be moving to reform rates and thresholds at this time.
We are confident that the current approach, which uses HMRC income information to assess liabilities, provides stability and certainty for parents, subject to the changes that I have mentioned about the sensitivity threshold and types of unearned income. It gives us the flexibility to reflect a parent’s current income in the calculation where appropriate, which we can verify using real-time information for PAYE-paying parents. Alongside that, the variation process plays a crucial role; it allows parents to ask us to consider income or expenses falling outside the standard calculation, so that works better.
I am conscious of time, but I shall say another word on that. The judgment was in the end that the sharp end of the calculation is essentially a zero-sum game. If the amount of money due for one parent goes up, that received by the other parent goes down. That means that any reform affects the whole case load in extraordinarily different ways, and makes it very difficult to target any changes that would reliably ease affordability for the right parents without substantially reducing liability for many parents who are only just managing to support their children at existing levels.
The evidence that we have found does not demonstrate that the reform of rates of thresholds would deliver a meaningful improvement in the amount of maintenance paid. For example, we looked at making a change in the form of a hypothetical increase to the flat rate. Both receiving and paying parents felt that the change would have limited impact: receiving parents genuinely viewed modest increases as not enough to make a meaningful difference; paying parents felt that even a small increase would add to financial strain and be difficult to manage. In the end, we felt that this was not the time to do it. Changing liabilities during a period of continued cost of living pressures could inadvertently risk destabilising existing arrangements and result in lower compliance. I recognise that that is a disappointment to the Committee, but I wanted to be clear about opposition on that.
I turn to another favourite subject, implementing administrative liability orders. Work is still under way to implement ALOs. As the Committee knows, while child maintenance is reserved, enforcement in Scotland has to be carried out through the Scottish judicial system, which is devolved. We are working very closely with His Majesty’s Courts and Tribunals Service and the Scottish Government to get ALOs operating across Great Britain, and we will introduce the necessary legislation as soon as possible.
Just to be clear, it is the Scottish judicial system through which we would have to implement this, but there are complexities there. It turns out that uncoupling the liability order from the rather complex Scottish judicial process while retaining the ability to exercise the full range of enforcement measures through Scottish courts has proven significantly more challenging than I assume was envisaged when work began on commencing the powers in the 2023 Act by the noble Baroness, Lady Coffey. My department is working closely with the Office of the Advocate General and other key powers in the Scottish judicial system to find a solution that works that for everyone. I have personally spoken with the Advocate-General to make sure that we have her full support.
In response to the noble Baroness, Lady Coffey, I looked at commencing the powers in different parts of the UK at different times but, as it turns out, that simply creates different legal problems and operational challenges, as well as meaning that not everyone benefits. Nobody wants this to be implemented quickly more than I do; as soon as it possibly can be, it will be.
I want to clarify one thing on enforcement. The idea that there is no enforcement if you pay anything at all is simply not true. Stats are collected on those who pay anything to show compliance. There are technical reasons for not using stats showing 100% compliance or not, which I think we explained to the committee at times—but essentially I can write and explain that in detail, if it is helpful. There are technical reasons why parents who are in fact paying what we tell them may not show as paying 100% compliance, which both my predecessors as Ministers will understand. I should be happy to write if it was helpful to pursue that.
Also on enforcement, I am absolutely with the noble Baroness, Lady Stedman-Scott: I, too, have been shocked by the extent to which some people will go to avoid paying for their children. Having said that, I want to say that most parents want to do the right thing: they want to pay for their children and pay up, and our job is to help them to do it—but where they do not, it is right to go after them. Like the noble Baroness, I have been so impressed by the colleagues that I have met. I have visited child maintenance offices and our enforcement colleagues are doing everything that they can: they are brilliant, and I am grateful to the noble Baroness for saying that. The CMS has lots of fantastic staff and brilliant leadership, determined to keep driving for improvement, and it is really nice to hear that said, because otherwise they hear all the criticisms, as if we do not know the really good work that they do and how hard they work. There is not much more that I can say on that in the short term.
Let me try to rattle through things in my remaining four minutes. The noble Lord, Lord Farmer, and the noble Baronesses, Lady Pidgeon and Lady Stedman-Scott, asked some excellent questions about supporting parents. Noble Lords may be interested to know that we are looking at a range of new tools and guidance to support separated families, to help them make informed financial decisions and to help them choose the best option for them. These include enhancing the online calculator, by aligning it more closely with the statutory application to strengthen confidence in the estimates, and providing better ongoing support for family-based arrangements. When the reforms to abolish Direct Pay go ahead, parents will be given information to help them judge the suitability of a family-based operation, as well as on how to go ahead with the CMS if that is the way that they want to go. We are also working across government with the Ministry of Justice to look at how it is developing digital tools for post-separation contact and to make sure that it can align with what the CMS is doing, in order to support parents in making safe and sustainable family-based arrangements.
The noble Baroness, Lady Pidgeon, and the noble Lord, Lord Farmer, mentioned family hubs. The family hub presence should offer universal materials and information about how to book on to services for separated families, including signposting parents to the Child Maintenance Service. The hubs are deliberately designed to be a gateway to the full range of support that families need, so every hub will connect families to debt advice, welfare support, housing support and support with the cost of living. Child maintenance officials are working really closely with DfE colleagues to identify all the opportunities to share information about the CMS through the family hubs, so that they can do that. This is a really great opportunity. Obviously, because it is for everybody, we hope that it will also reach those parents; we are really working on that.
The noble Lord, Lord Farmer, also asked what we are doing to increase confidence in the CMS. There are two things here. First, despite what we have heard here today, we need to be clear that, although there are hard cases that test the service, overall, the service is much better than it used to be and most people’s cases run reasonably smoothly. People are still applying in large numbers. In fact, there has been an increase: as of last December, we are at almost 800,000 cases, up from 640,000 just three years earlier. So large numbers of people are coming and using the service and, within that, compliance has been going up.
We are not complacent, but I do work really hard to reach out. I run surgeries for MPs. We engage with stakeholder organisations. We go out there and talk. We are doing a lot. The CMS’s modernisation programme is also doing a lot to communicate with parents and to make it easier for them to find information. It is running targeted social media campaigns, including signposting people to tools and trying to move things along. We need to get the word out there: “The CMS is there for you, and it works”.
I may have to write on the mediation voucher but, again, I am really pleased with how it is going; I am grateful to the noble Lord for acknowledging that. The scheme is working well and has been heavily promoted.
I have only 15 seconds left. The noble Baroness, Lady Coffey, mentioned back-to-work employment. The Government are committed to supporting people into work; I will not go through all of that, but we are doing a huge amount there. However, survey evidence and CMS calculations suggest that the majority of paying parents are in work, so our job is to support them in this.
I am running out of time; I have only 10 seconds left. Let me simply say how grateful I am to the committee for its work and how determined I am to make this service work. The noble Baroness, Lady Morris, started by saying that I care about this issue; I am grateful to the noble Baroness, Lady Pidgeon, for acknowledging that. I absolutely do care, and I know that my whole department and the leadership of the CMS do too. We are determined to make this service the best it possibly can be; children and parents need it, and we will make it work.
I say this from my own experience as a Minister: you can never have radical change without hurting someone. If you are going to hang around till you have an answer where no one is a loser, you will never change anything. My one word of warning is that my judgment, and I think that of the committee, is that radical change is needed. It will not be done without pain to someone, but that will be less pain than we have in the system at the moment. Having said that, I am very grateful. I wish the Minister and her team well and hope that, collectively, we can pursue this in another forum.