Child Support Agency: still failing to impress

Child Support Agency: still failing to impress

Up until recently, the mathematical operation of the Child Support Agency (CSA) was pretty simple.

The calculation for child support was equal in the case of one child to 15% of the payer’s net income (net income being gross less tax, national insurance and pension payments), 20% for two children and 25% for three children or more.

This initial figure was then reduced by one seventh for every 52 nights that the child would spend with the paying parent. There were other reductions if the paying parent had children living with him/her, or he/she was paying for other children from another relationship.

In December 2012, the new gross income scheme (also known as CS3) was introduced. At first, only new applicants who had four or more children were able to use the scheme. From 29th July 2013, new applicants with two or more children were able to apply. We expect that the new scheme will be rolled out to everyone shortly.

Existing arrangements

In due course, the CSA will tell those paying under the old existing arrangement (there are over 1.1 million) that their case is closing. Those parents will have the choice of entering into a private agreement (‘family-based arrangement’) or making an application under the new CS3 scheme. The CSA will then be charging for these parents to enter the new CS3 scheme. This is rather unfair on those mothers who have been struggling to collect money under the old scheme.

The case closure process will begin in 2014 and is due to end, so they say, in 2018. Ever since the passing of the Child Support Act, those that have run the scheme have given optimistic forecasts which they've never delivered.

If a parent receives a case closure notice and does nothing, then their application for child support will be deemed to have been withdrawn.

The CS3 scheme

The Child Maintenance Service (CMS) will operate the CS3 scheme, but the Child Support Agency will continue to manage the old scheme. CS3 describes itself as a ‘new and improved’ service. Unfortunately, as a cynic, I view this as mere window dressing and expect the same problems that have beset the whole scheme since its introduction to continue.

Another change is that under the new scheme, a parent with a child in full time education will be able to receive maintenance up until the child attains his or her 20th birthday.

Unfortunately, the percentage which is to apply changes with the income. The new rules are as follows:

1. For gross income up to and including £800 per week:

(a) 12% for one child
(b) 16% for two children
(c) 19% for three or more children

2. For gross income of £800 to £3,000 per week:

(a) 9% for one child
(b) 12% for two children
(c) 15% for three or more children

3. If a person’s gross income exceeds £156,000 per annum, then the CSM’s calculation will be limited to a calculation based on the maximum of £3,000 per week. But the applicant may also apply to the court for ‘top up’ maintenance.

The same rules continue to apply for reduction where the child stays overnight with the paying parent (i.e. one seventh for every fifty two nights). But the percentage that’s deducted where there are other children living in the paying parent’s house is as follows:

(a) 11% for one child
(b) 14% for two children
(c) 16% for three or more children

Gross income includes income from all sources, including pensions in payment. But pension contributions will still be deducted to give the final gross income figure (for the purpose of calculation).

Rogue’s charter

There were many instances under the old scheme whereby it was clear that the paying parent was not telling the CSA ‘the whole truth’. It was possible to appeal a CSA decision on grounds that the paying parent had a lifestyle that was inconsistent with his or her declared income. Or for reasons that the paying parent had assets of over £65,000 (which was deemed to produce an income at 8%).

But, to get rid of those troublesome applications (i.e. where people were lying), the new scheme only allows an appeal if the applicant can prove unearned income or diverted income. From now, the extent of the paying parent’s income is determined on the basis of the information provided to HMRC.

Where a paying parent is lying about his/her income, the recipient in truth has no right of appeal.

So, the new scheme is totally watered down and the liar escapes even more easily.

Charges

Although not yet introduced, it’s proposed that there will be an application fee of £20; a 20% collection charge, which the paying parent has to pay on top of the child maintenance payment; and a 4% charge, which the receiving parent has to pay. All this is designed to encourage parents to enter a ‘family-based arrangement’.

What do I think?

In my opinion, the new scheme is cumbersome, complex, expensive and makes it even easier for paying parents to avoid financial responsibility if they choose to do so.

As I’ve said from the very beginning, when the Child Support Act first came into being, the abuse which it strove to address could’ve been resolved so easily by giving appropriate directions to the judges who were hearing matrimonial cases.

The Child Support Agency has cost the country billions in tax payers’ money and, in my view, hasn’t improved the lot of children one iota. The scheme has always been a national disgrace and remains so.

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