SUPPORT FOR PARENTS WITH CARE

Child maintenance premium

  64. The White Paper proposes that parents with care on Income Support (or income-based Jobseeker's Allowance) should be allowed to keep up to £10 a week of maintenance paid.[196] Where maintenance is at least £10 a week, parents with care would become £10 a week better off. Where maintenance payments were less than £10 a week, the full value of the maintenance actually paid would benefit the children directly. Parents with care will be able to choose whether to receive their child support payments direct from the non-resident parent, or together with their Income Support or income-based JSA payments.

65. The introduction of the child maintenance premium of up to £10 a week of child support has been widely welcomed as a "the most important step forward"[197] which would increase the income of the parent with care and give the non-resident parent encouragement that his money was going to the children's family income instead of simply reducing the cost of Income Support to the taxpayer.[198] Dr Gillian Paull of the Institute for Fiscal Studies told us that the £10 premium "does actually seem to have an important effect. For the group of caring mothers on Income Support the net income without the [premium] will be £5 to £7 lower. Also family poverty will be eight percentage points higher and the number of children in poverty will be six percentage points higher without the [premium]."[199]

66. A number of organisations called for the child maintenance premium to be raised to £15 a week in line with Housing Benefit and other benefits.[200] The annual cost of the £10 disregard is estimated to be £100 million, which would rise to £140 million a year if the disregard were set at £15 a week. However, the cost may be affected by behavioural changes.[201]

67. Baroness Hollis has made it quite clear that the proposed reforms are a "package deal" which has been negotiated with the Treasury to be cost neutral.[202] The Government's present intention is that parents with care will begin to benefit from the child maintenance premium only after their case has been brought into the new scheme.[203] Ms Maeve Sherlock of NCOPF argued:

" we think that the £10 disregard on income support should be brought forward so that lone parents are not left waiting for that. The reason for that is not simply to give lone parents more money, but we think that the biggest job that the Agency has, and the Government of course, is to change the culture and attitudes to the CSA. We need to establish that paying maintenance is something good parents do and we need to remove excuses for not doing so which means that we have to rehabilitate the Agency and one of the best ways to do that is to give everybody who has to co-operate with it some benefit out of so doing and that will not happen until the £10 disregard is in place."[204]

68. The new child maintenance premium is expected to encourage parents with care to co-operate with the Child Support Agency. Baroness Hollis told us that some 70 per cent of parents with care who were required to co-operate with the Child Support Agency because they were on benefit were failing to do so in the first instance and that one of the reasons for their reluctance was that, for many, the Agency represented simply "no cash and lots of hassle."[205] In May 1999, 44 per cent of parents with care with a full child support assessment were in receipt of Income Support or income-based Jobseeker's Allowance.[206] The decision to apply the child maintenance premium only to cases assessed under the new formula—which will not be before late 2001—means that these 382,100 parents with care on out-of-work benefits[207] will only benefit once their cases are transferred into the new system at some unspecified future date. Parents with care who claim Working Families Tax Credit from October 1999 will benefit immediately from a full disregard of the child support they receive.

69. We are concerned that having apparently similar cases being dealt with differently for a prolonged period may give rise to a sense of unfairness which may substantially undermine the credibility of the reformed child support scheme. We recommend that all parents with care in receipt of Income Support or income-based Jobseeker's Allowance should be permitted to benefit from the child maintenance premium from the date of commencement of the proposed reforms in 2001.

70. The £10 child maintenance premium has the potential to improve the living standards of tens of thousands of children living in the poorest households but its full effect could be eroded by inflation. When questioned as to whether the value of the £10 premium would be maintained over time, Baroness Hollis told us "that will be a matter for decision by the Secretary of State at the time but certainly we are not closing that option down."[208] We recommend that the forthcoming child support legislation should contain a requirement to up-rate the child maintenance premium annually in line with inflation.

Guaranteed maintenance

  71. The National Council for One Parent Families would like to see the child support payments guaranteed by the State up to a point below the average level of assessment, as is the case in some other European countries.[209] One Plus suggested that payments of maintenance should be a guaranteed advance payment, with any savings to the social security budget dependent upon the effectiveness of the enforcement system.[210] Professor Jane Millar thought that such a guarantee would contribute towards the Government's anti-poverty goal.[211] Mr Roger Smith of the Children's Society suggested that the guaranteed amount might be £10 a week.[212] Mr John Wheatley told us that the National Association of Citizens Advice Bureaux would consider supporting such a guarantee.[213] Baroness Hollis told us that the cost of providing such a guarantee would be quite high and that, if experience on the Continent was anything to go by, compliance by the non-resident parent might actually fall.[214] We agree with the Government that a State guarantee of maintenance owed by the non-resident parent would remove the incentive to comply with the Child Support Agency.

Working Families Tax Credit

  72. One of the most significant recent developments affecting the CSA has been the replacement of Family Credit by the Working Families Tax Credit (WFTC). As WFTC is expected to be taken up by more people, including parents with care, than Family Credit, the CSA could have expected a substantial increase in its workload, as an application for Family Credit by a parent with care automatically triggered the intervention of the CSA.

73. It has been decided instead that parents with care will not be required to co-operate with the CSA as a condition of claiming WFTC, so the CSA can expect a welcome reduction in the stream of new cases in the run up to the introduction of the new formula. Furthermore, instead of the present rule deducting from Family Credit awards any payment of child maintenance over £15 a week, the parent with care on WFTC will be able to keep all the child maintenance she receives[215] which should be a "very positive incentive."[216] We consider that the removal of automatic CSA involvement in WFTC cases is a welcome and positive development for parents with care in work.

74. There are no proposals in the Child Support White Paper to change the £15 disregard of child maintenance when calculating parent with care entitlement to Housing Benefit.[217] The National Council for One Parent Families told us that lone parents benefiting from the full WFTC disregard (so that any child maintenance received did not affect their tax credit) who were in receipt of both Housing Benefit and Council Tax Benefit would lose 85p in the pound (after the first £15) of the child maintenance they received and so for many parents with care this would "simply wipe out help with rent and council tax altogether."[218]

75. We recommend that the Government should give particular attention to the interaction of child maintenance with receipt of other benefits when considering its proposals for reform of Housing Benefit and also in the development of the children's tax credit. We recommend that the opportunity of the Housing Green Paper should be grasped to introduce a substantial disregard of child maintenance received by parents with care in receipt of Housing Benefit.

197   Q. 141. Back

198   Q. 62, Q. 112, Q. 352, Q. 368, Q. 414, Q. 449; CS 41 Ev p 101 para 4. Back

199   Q. 415. Back

200   NACAB, Ev p 182 paras 6-7, Q. 460-1, CPAG Ev p 45 para 1.10, NCOPF Ev p 34 para 8.1. Back

201   HC Deb 19 October 1998 vol 317 col 696w, Ev p 55. Back

202   Q. 512-513. Back

203   Cm 4349, Chapter Three page 18 para 5. Back

204   Q. 118. See also CPAG, Q. 167, The Children's Society, Q. 378. Back

205   Q. 1. Back

206   Child Support Agency Quarterly Summary of Statistics, May 1999, DSS. Back

207   Child Support Agency Quarterly Summary of Statistics, May 1999, DSS. Back

208   See Q. 9. Back

209   Ev p 35 para 9.1; Q. 112, 113, 114, 131. See the recent study founded by the Joseph Rowntree Foundation carried out by Anne Corden. Making Child Maintenance Regimes Work. London: Family Policy Studies Centre (1999), which compares child maintenance regimes in ten European countries: Austria, Belgium, Denmark, Finland, France, Germany, the Netherlands, Norway, Sweden and the UK. Back

210   Appendix 3 para 83. Back

211   Q. 350. Back

212   Q. 370. Back

213   Q. 462. Back

214   Q. 516. Back

215   Q. 8. Back

216   Q. 10. See also Q. 160, Ev p 181 para 5, Ev p 151 para 20, Ev p 34 para 8.3. Back

217   Q. 24-25. Back

218   Ev p 34 para 8.3. Back