New child maintenance laws may cause “income trap” for single-parent families

New child maintenance laws may cause “income trap” for single-parent families

Charities and campaigners raise concern over changes to child maintenance payments that may leave one-parent families vulnerable and at a “disadvantage”.

As the Child Support Agency (CSA) winds down in readiness for its replacement by the Child Maintenance Service (CMS), government changes to the service have raised concern over the way parents are to receive money to support their children. From August 11th 2014 the CMS will charge fees to collect payments on behalf of a parent, causing revolt from charities and campaigners.

The new CMS Collect & Pay system will charge fees to parents requesting help in collecting maintenance fees from another parent. Charges of 4% will be deducted from the maintenance payment received by the parent with care, and 20% in addition to the child maintenance liability of the non-resident parent.

Stephen Lawson, a member of Resolution’s Child Maintenance Committee, breaks down the figures into real terms: “The new charges mean that for every £100 assessment the paying parent will have to pay £120 but the receiving parent will only receive £96 – the government take a ‘tax’ of £24.” Lawson also stated that he was concerned that the charges would have a “disproportionate impact on vulnerable families”.

Gingerbread’s report Paying the Price is a three-year research study (ending June 2015) into the effects of austerity, public spending cuts and welfare on single parent families. Fiona Weir, Gingerbread’s chief executive is concerned that the new CMS fees would dissuade single parents from accessing much needed child maintenance: “It’s really important that parents don’t let the charges put them off getting a child maintenance arrangement in place. Lots of parents can sort out maintenance between them, but it’s not always possible, and single parents shouldn’t be put off asking for help when they need it.”

There are fewer than 60,000 parents currently within the new CMS system, and the government is urging parents to come to a private agreement for future maintenance payments before opening a new case.

There are 1 million cases currently held by the old CSA service which will be systematically closed over the next three years.