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Billions of pounds of child maintenance arrears 'uncollectable'

28/03/17

National Audit Office report emphasises DWP IT failures in long term shortcomings

Around £3 billion in arrears from the Department for Work and Pensions' (DWP) child maintenance schemes will never be recouped, following IT failures that led to incomplete information and backlogs, it has emerged.

NAO child maintenance image of parents and child

National Audit Office (NAO) investigation found that the arrears amount to three-quarters of the total outstanding amount created by the failure of the 1993 and 2003 child maintenance schemes, which provided financial support towards the everyday living costs for children whose parents have separated.

Child maintenance is a regular payment by the parent who does not care day-to-day for the child to the parent who does. Some 1.5 million separated families currently claim it.

The investigation report says that, as of March 2016, the total arrears are £3.98 billion, of which £3.08 billion is deemed 'uncollectable' by the NAO. DWP assesses arrears as uncollectable when there has been no recent contact with the non-resident parent and no payment against arrears in the previous six months. 

According to the NAO investigation report, “the 1993 and 2003 schemes struggled with IT problems leading to poor customer service, backlogs and incomplete information about amounts due”.  This resulted in some parents receiving too little for their children while others face hardship because of paying too much.

The Child Support Agency (CSA) - the DWP arm that previosuly administered the payments - launched a computer and telephony system in April 2003 at a cost of £456 million which "failed to work satisfactorily" according to a House of Commons Work and Pensions Committee report, resulting in problems transferring cases onto the new system, among others.

The 2012 Child Maintenance Scheme (CMS) replaced the CSA schemes set up in 1993 and 2003, which "failed families because it was overly complex and did not encourage collaboration or provide value for taxpayers’ money," according to the department. 

Confidence boost?

A DWP spokesperson told UKAuthority: “With the older CSA schemes that are being closed, we know it wasn’t working and it’s why we introduced the 2012 scheme, CMS, which is more cost effective and more accurate in terms of working out payments. We know from our testing that the accuracy of calculation is much higher. When we test accuracy for CMS, it’s around 98%; under the 1993 scheme it was 63%.

“For a single parent opening a child maintenance claim, they’ll always be put onto the 2012 scheme, which is separate from the old system, so they should have a good level of confidence. In nine out of 10 cases, payments expected to be made are being made,” the spokesperson said.

However, the report says it is taking the DWP longer than expected to close 1993 and 2003 scheme cases. By September 2016 it had closed 33% of cases with continuing payments although it had expected to close 50%.

It also says that only around a fifth of parents with cases closed by April 2016 had applied to the new scheme when their 1993 and 2003 scheme cases were closed after having estimated that 63% of parents would apply.

The DWP uses a variety of enforcement actions to collect arrears, including direct orders from individual’s income or orders to seize money from bank accounts. The report says that, of the total arrears, £527 million is "potentially collectable" and £366 million "likely to be collected".

The DWP plans to publish a strategy on how it will recoup the arrears later this year.

 

Image: NAO website

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