The Rt Hon Margaret Hodge MP, Chair of the Committee of Public Accounts, today said:
"The Commission has made real progress in recent years but the challenges it faces in supporting separated families and securing maintenance payments for children are serious.
In 2012, some half of all children in the UK from separated families are being brought up in poverty.
It is essential that parents with responsibilities for care receive the full child maintenance owed to them to support their children.
I am concerned that the Commission's cost reduction plans seem to rely heavily on charging parents to use its services. The Commission must ensure that the introduction of fees does not end up making child poverty worse.
Many parents are frustrated at the lack of support they are receiving, too often not being paid the right amount of money or any at all. It beggars belief that outstanding payments total some £3.7 billion but only £1 billion of that is considered collectible and less than half of that can be collected cost-effectively.
The Commission has to reduce its costs by £117 million by 2014-15, and is already £16 million short. It is introducing a new IT system to try to save money but the system is already late.
To meet the current timetable, the critical testing will need to be done at the same time as the system is being delivered, a recipe for failure in the case of many previous government IT projects. Every month of delay will cost the Commission £3 million – money it can ill afford to waste."
Margaret Hodge was speaking as the Committee published its 83rd Report of this Session which, on the basis of evidence from the Department for Work and Pensions and the Child Maintenance and Enforcement Commission, examined the Commission's cost reduction plans.
The role of the Child Maintenance and Enforcement Commission (the Commission) is to support separated families and secure maintenance payments for children affected by separation. Around half of all children in the UK from separated families are being brought up in poverty. In 2010-11 the Commission collected and transferred £1.1 billion to parents caring for more than 880,000 children.
We are encouraged that the new management at the Commission say they recognise the problems they face and have started to address them. Nevertheless significant, all too familiar and recurring challenges remain: parents are frustrated with the standard of support received from the Commission, and too often fail to get any or the right amount of maintenance from non-residential parents; maintenance payments totalling some £3.7 billion are outstanding, but the Commission estimates that only £1 billion of this is collectable; and costs remain high.
These continuing problems are difficult to tackle, yet the Commission faces further significant challenges in introducing its new child maintenance scheme. In particular, it will need to respond to substantial cost reductions and successfully implement a new system of charging fees to parents who choose to use the Commission’s services. . The Commission needs to deliver acceptable standards of service at a reasonable cost. The new child maintenance scheme should improve efficiency, but further changes are needed to streamline existing processes. Better management information is also required to identify areas for further cost reductions.
The Commission has to deliver cost reductions of £117 million by 2014-15 and its plans are currently £16 million short of this target. Its cost reduction plans depend in part on a new IT system which is already late. To meet the current timetable critical testing will have to be undertaken in parallel with development work, mirroring poor practices that have contributed to the failure of a number of government IT projects. Each month of delay will increase the Commission's costs by at least £3 million and may delay planned income from fees. Unless the Commission delivers further efficiencies it will not have the contingency needed to delay implementing the system until it works.
The Commission's cost reduction plans are high risk in that they rely heavily on the introduction of fees on parents rather than achieving genuine savings. Forecasting how parents will react to fees is difficult. Whilst ensuring parents accept proper responsibility for the cost of care for their children is important, it would be unfortunate if an unintended consequence of this initiative was more child poverty with extra costs to the taxpayer. Parents lack confidence in the system, and the Commission needs to demonstrate that it has a service which is worth paying fees for.