The Divorce (Financial Provision) Bill, a private member’s bill introduced by Baroness Deech in February 2015, had its third reading in the House of Lords on 19 December 2018 and will now move to the House of Commons.
The bill aims to amend the Matrimonial Causes Act 1973 in connection with financial settlements following divorce. Baroness Deech and other prominent legal professionals and organisations have been campaigning for divorce reform for a number of years.
In Scotland there is already a maintenance cap of three years and this has reportedly worked well. Many other European countries adopt the same approach.
What is maintenance and the current legal position?
Spousal maintenance is a regular (usually monthly) payment by a husband or wife to their ex-spouse following divorce or dissolution of a civil partnership. There is no automatic entitlement to receive it, as it is intended to meet needs. Spousal maintenance can be set for a limited number of years (a term order) or until one of the parties dies (a joint lives order).
There is no set formula for working out whether someone should receive maintenance and the amount, and, if so, how long it should be paid. This means that if a separating couple cannot agree the amount or duration of the payments there is a risk of litigation and its consequential legal costs.
Furthermore, some argue that the current system is akin to a “postcode lottery” with some courts making lengthy term or joint lives orders and other courts regarding an earlier cut off as more appropriate.
What are the proposed changes?
The Bill seeks to restrict the court’s powers to award spousal maintenance by providing set criteria for when maintenance can be ordered and by placing a five-year limit on the payment of maintenance, save in exceptional circumstances, bringing an end to the so-called “meal ticket for life" and offering separating couples more certainty (though not necessarily financial security).
One problem with a maintenance cap is the effect on middle income families where one spouse will struggle to meet basic monthly outgoings without longer term support other than child support. It remains the case that in many families with children one parent will give up work or reduce hours to provide child care. This can last for ten years or more, affecting that person’s pension contributions (and hence pension pot) and their future earning capacity. Is it reasonable to cap support at five years when it may take a lot longer than five years for the lower earning spouse to get back to where they would have been in terms of income potential had family sacrifices not been made?
Lawyers watch with interest the progress that is being made towards reform. Certainly reform is needed in many areas (nuptial agreements and no fault divorce are two well publicised areas) but the longer term effect of the courts being bound to apply a maintenance cap is unclear. The significantly wealthy family with the non-earning spouse pursuing the "meal ticket for life" is one thing, but is the same approach right for the middle income family where the lower or non-earning spouse is likely always to be in a weaker income position as a result of decisions made during the marriage.