Is the child maintenance system working for parents?

Now that the summer holidays have begun, many separated parents will be facing high childcare costs.

And at the same time, they’ll be dealing with inconsistent or missing child maintenance payments. 

Now, a new inquiry by the Work and Pensions Committee is looking into whether the Child Maintenance Service (CMS) is doing enough to support families.

“The start of the summer holidays comes with the extra costs of childcare, naturally bringing family finances into sharp focus,” said Debbie Abrahams, chair of the committee.

“Ensuring the service is working effectively is essential, as it would help alleviate some of the stress not just caused at this time of year.”

What is the Child Maintenance Service?

The CMS is the government body that helps separated parents arrange child maintenance - regular payments from one parent to the other to help with the day-to-day costs of raising a child. 

It’s meant to ensure children are financially supported when parents split up, but the system isn’t working as well as it should.

According to the committee:

• over one million children are in the CMS system
• 760,000 cases are handled directly by CMS, often when parents can’t agree on payments themselves
• nearly two in five receiving parents say the other parent isn’t complying with payments
• in 31% of Collect and Pay cases, no payments were made at all between January and March this year - affecting around 70,000 families

What is the inquiry looking at?

The Work and Pensions Committee wants to understand why the system is falling short and what can be done to fix it. The inquiry will examine:

• how to improve payment compliance rates
• whether payment levels are being calculated fairly
• how the CMS deals with both paying and receiving parents
• the impact of upcoming changes to how payments are handled

What changes have the government proposed?

One of the government’s proposals is to phase out Direct Pay - the current default method where CMS sets the payment amount but doesn’t enforce it. 

Instead, cases will move to Collect and Pay, where CMS handles the money directly and can take enforcement action if needed.

Under the new plans, more parents will start out on Collect and Pay, especially where there’s risk of abuse or a history of non-payment. 

Under the new system, parents who pay on time and receive payments will be charged 2% of their child maintenance to use the service (starting in 2027–28).

Parents who don’t comply with their payment plans will be charged 20%.

“Millions of children and parents are served by the Child Maintenance Service,” said Ms Abrahams.

“However, there are concerns over how it calculates payments, how it handles people who have sometimes been through long ordeals, and over its enforcement. 

“Increasingly, we’re hearing as MPs from people about how unhappy they are with how they have been treated by the service. 

“This applies to both paying and receiving parents.” 

When will these changes happen?

Although many changes are already being carried out, some measures such as scrapping Direct Pay will need new laws.

That means it could take two to three years before all the planned improvements are in place.