The Rt Hon Margaret Hodge MP, Chair of the Committee of Public Accounts, today said:
"The Department for Work and Pensions has made good progress in simplifying the way it administers child maintenance.
However, there is a worrying uncertainty around the impact that the introduction of charges for statutory child maintenance services will have.
The Department’s primary aim is to encourage more parents to make family-based arrangements rather than rely on the statutory scheme. It has an ambitious expectation of reducing the number of statutory cases by 250,000 – one quarter – by 2018-19.
It is unclear, though, whether charges have been set at the right level to achieve this objective.
In evidence to us Gingerbread told us it believes the Department had been unrealistic about the number of parents who would be able to reach their own private arrangements that last.
According to a survey of callers who were informed of the choices available for child maintenance, the number of parents intending to choose family-based arrangements reduced by more than a third from 5,540 in August 2013 to 3,590 in March 2014.
Research suggests that for parents on low incomes the £20 application fee would be a significant barrier to applying to the statutory service.
There is a risk that some parents end up reaching no arrangement at all, to the detriment of the children involved. The Department must monitor closely the number of parents that choose family-based arrangements following the introduction of charging for the statutory scheme.
It must also maintain regular contact with groups supporting families to determine whether changes are needed to improve the support available to parents.
The Department does not have a good record of implementing reform programmes and it should learn from the good practice evident in the introduction of this scheme – particularly the importance of implementing reforms carefully in stages under stable leadership.
There is no evidence of the backlogs or IT failings with which previous child maintenance schemes have struggled. The prudent approach did, however, result in increased costs of the programme and some delays.
Risks remain regarding closing legacy cases and moving them to the new scheme. Delays in setting it up the ‘data warehouse’ required to close the legacy cases from the previous systems, have resulted in increased costs to the Department. It must ensure that it has the necessary systems in place by the time it closes complex cases.
We will watch the progress carefully to see whether the Department can secure the full benefits of the scheme for separated families."
Margaret Hodge was speaking as the Committee published its 17th Report of this Session which, on the basis of evidence from Caroline Davey, Director of Policy, Advice and Communications, Gingerbread; James Pirrie, Resolution Child Support Committee; Robert Devereux, Permanent Secretary, Department for Work and Pensions; Ian Wright, Change Director for Child Maintenance Group, DWP and Susan Park, Senior Responsible Officer, Child Maintenance Scheme, DWP, examined the early progress of the child maintenance 2012 scheme.
We welcome the progress the Department for Work and Pensions (the Department) has made in simplifying the way it administers child maintenance, through the introduction of the first phase of the child maintenance 2012 scheme. The Department implemented the scheme carefully in stages, and there is no evidence of the backlogs or IT failings with which previous child maintenance schemes have struggled. However, there remain risks ahead, from the introduction of charging for statutory services, and from closing legacy cases and moving them to the 2012 scheme. Responses to charging are uncertain and the Department will need to monitor whether, in practice, parents take up family-based arrangements as planned, rather than rely on state intervention through the Department’s scheme.
1.1 million rely on government schemes
The 2.5 million separated families in the UK have several options for arranging child support. Around 1.1 million rely on statutory government-run schemes that assess, collect and make payments. Other families set up their own (family-based) arrangements or use the court system. Around 600,000 families have no arrangements at all. In December 2012, the Department introduced the first phase of the child maintenance 2012 scheme. This replaces two previous schemes for child maintenance which had struggled with IT problems, leading to poor customer service and incomplete information about outstanding debt. The 2012 scheme is designed to maximise the number of children benefiting from child maintenance arrangements and reduce government spending on administering child support. It introduced new rules for calculating payments, a new IT system for managing cases, and charges for using and enforcing the scheme. Newly separated parents access information through an online and telephone ‘gateway’, which explains the benefits of the choices available, and provides guidance on how to set up family-based arrangements.
The first phase of the 2012 scheme introduced new systems and processes, and simplified the way maintenance is assessed. The second phase, which was due to start in June 2014, involves the introduction of charges for parents using the statutory service (a £20 application fee, a 20% collection fee for paying parents, and a 4% fee deducted from maintenance paid to receiving parents), and the staged closure of legacy cases until 2018.
Conclusions and recommendations
The good practice evident in the way the Department designed and introduced the first phase of the 2012 scheme reflected lessons learned from previous programmes. The key factors behind the successful introduction of the scheme included: identifying what had gone wrong with the previous schemes; maintaining a stable and experienced leadership team that brought together both policy and operational expertise to the project; and implementing the scheme progressively, by moving forward only when the Department was confident it could introduce each stage, rather than trying to meet pre-announced deadlines. The Department decided on a pathfinder approach for implementing the first phase of the scheme to identify problems early. It started with a small number of cases, and increased the volume only once it was content that the system was operating as intended. The 2012 scheme is simpler and more efficient to administer than the previous schemes, for example, by automating the process of collecting data on parents’ income from HM Revenue & Customs (HMRC) systems.
Recommendation: The Department should evaluate the introduction of Phase 1, in particular the roll-out and pathfinder approach, to identify good practice to apply when planning future programmes and share this more widely in the public sector.
The Department has had stable senior leadership of the 2012 scheme. The programme director, senior responsible officer and executive team in charge of child maintenance have all worked on child maintenance for several years. The scheme’s leadership brought together operational and policy people into programme planning. The Department noted that decisions about roll-out required some judgment, as not all aspects of a programme could be tested in advance. We are pleased to see that these judgments were being made by a stable and experienced team.
Recommendation: The Department should ensure that major programmes have resilient and stable leadership teams in place from the development stage, who have the insight to make critical judgements about programmes.
The impact that charging to use the statutory service will have on the number of parents willing to adopt family-based arrangements instead is uncertain. A primary aim of the reforms to the child maintenance schemes is to encourage more parents to make family-based arrangements, rather than rely on the statutory scheme. The Department estimated that the 2012 scheme would lead to around 250,000 fewer statutory cases, equivalent to a reduction of a quarter by 2018-19. But it remains to be seen whether the charges for the statutory scheme have been set at the right level to achieve this objective. Gingerbread believes the Department had been unrealistic about the number of parents who would be able to make their own private family-based arrangements that last. According to a survey of callers using the gateway that explained the choices available for child maintenance, the number of parents intending to choose family-based arrangements reduced by more than a third from 5,540 in August 2013 to 3,590 in March 2014. The Department considered this to be a temporary phenomenon associated with making the gateway mandatory and expected the position to change over the next 12 to 15 months.
Recommendation: The Department should monitor closely the number of parents that choose family-based arrangements, following the introduction of charging for the statutory scheme, and maintain regular contact with groups supporting families to determine whether changes are needed to improve the support available to parents.
The first phase of the scheme was over budget and late, but it has produced results that are close to the expected performance levels. The Department’s prudent approach to implementing phase one, particularly its decision to undertake extra testing and implement the service gradually in phases, increased the costs of the programme and resulted in some delays. The Department now expects total costs to be £950 million, some £70 million more than it estimated in 2012, and the second phase of the scheme was postponed from July 2013 to June 2014. However, the scheme has produced results that are at, or approaching, expected levels of performance. For example, accuracy of assessment is 95%, compared with a target of 97%.
Recommendation: The Department should monitor and manage performance of the scheme, to ensure effective control of operational costs, delivery of planned savings, and achievement of expected levels of accuracy and productivity.
Delays in setting up the ‘data warehouse’, required to close the legacy cases from the previous systems, have resulted in increased costs to the Department. The Department is planning to close 800,000 legacy cases at a cost of £370 million, but will not be able to close its more complex cases without its ‘data warehouse’. This is a database to allow cases on legacy schemes to be closed, and to improve management information on all schemes. The ‘data warehouse’ is several months behind schedule and much of its functionality remains undelivered. The Department is still uncertain about when it would be fully operational. The Department has developed contingency solutions to address this, which it stated are straightforward, and which are scheduled to end by June 2016. The Department was confident that the ‘data warehouse’ would be ready by this time, to close the complex cases, but it acknowledged that significant costs would be involved if it had to continue to operate legacy systems beyond this date.
Recommendation: The Department should be transparent about the progress of case closure, ensure that it has the necessary systems in place by the time it closes complex cases, and monitor the performance of its contingency arrangements in the meantime.