A consultation has been launched by the Department for Work & Pensions for views on how the Child Maintenance Service (CMS) works to ensure that the correct payments are being made by parents.
The law provides that the parent that doesn’t live with a child (all or the majority of the time) must pay child maintenance to the other parent. There is a statutory formula used to calculate the sum due, depending on the paying parent's gross income, the number of children and the number of overnight stays the children have with the paying parent.
In cases where the paying parent receives benefits such as income support or universal credit, with not earned income, child maintenance is calculated at a flat rate of £7 per week.
Where no agreement can be reached about payment, or payments are not made, the CMS can take control, calculate the payment due and deduct this from the paying parent's earnings. There are however costs associated with this for both parents, which ultimately reduces the amount that the receiving parent is paid.
We are seeing an increasing number of separated parents who are choosing an equal shared care arrangement, where the children's time is split equally between their two parents. In these cases, many people agree that there will be no child maintenance payments made. This may not be the case if the CMS carry out an assessment.
Claims outside of the CMS
The CMS scheme applies to paying parents who earn up to £156,000 gross per annum. In cases where the paying parent earns in excess of this amount or lives abroad, or in cases where additional financial support is needed, an application can be made to court for further provision.
Where a child's parents are unmarried and financial circumstances allow, claims can also be made for housing, school fees and other costs under Schedule 1 Children Act 1989 (these are called "Schedule 1 claims"). The court can also make "global maintenance orders" covering spousal and child maintenance (reiterated by Mrs Justice Roberts in the recent case of AB v CD (Jurisdiction Global Maintenance Orders)  EWHC 3164 (Fam), which often happens in cases of financial settlement on divorce where the paying parent is also to pay maintenance to their former spouse.
There has long been dissatisfaction with the CMS scheme, in particular in relation to recovery of non-payment arrears and in cases where paying parents are self-employed and their income may not be immediately obvious from figures presented to the CMS. For example, historic unpaid child maintenance would cost the government £1.5 billion to collect and mostly relates to cases where the children are now adults. With government funds already stretched, it seems unlikely that steps will be taken by the CMS to recover those arrears.
Proposals for reform include:
- removing passports from parents who persistently fail to pay child maintenance;
- changes in calculations to include income from capital, foreign income, notional income from assets and unearned income; and
- taking funds from sole trader and partnership accounts where a parent has failed to pay
The consultation closes at the start of February and the DWP are to publish the results later this year. It will be interesting to see what changes are implemented within the coming months.