News story

6th August 2002

£2 Billion Blackhole Proves that Child Support Agency Should be Scrapped

Steve Webb MP, Liberal Democrat Shadow Work and Pensions Secretary, today released figures which show that the amount of uncollected child maintenance written off by the Child Support Agency (CSA) stands at just under £2 billion. Of a further £ half billion, the Government considers nearly one quarter to be ‘possibly uncollectable’.

To coincide with the figures, Steve Webb has launched a new report, "Child Support Reform - Liberal Democrat Proposals" calling for the abolition of the CSA and an increased role for the Inland Revenue.

Steve Webb said:

“The continued failure of the Child Support Agency means that hundreds of thousands of children are not getting the financial support that is theirs by right. It is mind-boggling that uncollected maintenance payments of £2 billion can be simply written off.

“It is time for the Government to admit that the CSA has been a fiasco from the start and to scrap it. Instead, the Inland Revenue should have a greater role in assessing and enforcing maintenance payments.

“The Government’s simplistic formula based approach will create rough justice for many families. We believe the child support system must take account of the fact that each family is different.

“Reform is urgently needed. The CSA has recovered little money, obtained few results and has no future.”

ENDS


Notes to editors

1.The Liberal Democrats new report "Child Support Reform - Liberal Democrat Proposals" is unveiled today (Tuesday 6th August) and calls for the abolition of the CSA and an increased role for the Inland Revenue.

2. The figures included above are a new analysis of the new CSA annual report 2001/02 (Annual statement of accounts for the year ended 31/03/02, pp 73-75):

http://www.csa.gov.uk/an_rep02/CSAAccounts.pdf

· As at 31/03/02:

Ø £1,915.31 million was deemed “probably uncollectable” [made up from outstanding full maintenance assessments worth £197.89 million in 2001/02 and a further £739.33 million for previous years in addition to outstanding interim maintenance assessments worth £25.04 million in 2001/02 and a further £953.05 million relating to previous years].

Ø In addition, £611.21 million total debt [made up of from outstanding full maintenance assessments worth £509.38 million in addition to interim maintenance assessments worth a further 101.83 million ].

Ø Of the outstanding £611.21 million total debt, £147.66 million is deemed ‘possibly uncollectable’.

Ø £1,915.31million + 611.21million = 2,526.52 million (over 2.5 billion). The £1,915.31million has been written and exlcuded from the total debt figure. Of the remaining £611.21 million (over half a billion) £147.66 million is deemed ‘possibly uncollectable’.

· Definitions

Ø Full maintenance assessments are used when both the parent with care and the non-resident parent provide the Agency with all the information requested.

Ø Interim maintenance assessments are used where the Agency is unable to obtain sufficient information to make a full maintenance assessment.

Ø Probably uncollectable – Amount outstanding which the debt analysis exercise revealed is likely to be very difficult to collect due, for example, to the lack of contact with, or the personal circumstances of, the non-resident parent. In many of these cases the Agency has suspended recovery action until such time as the individual’s circumstances change.

The probably uncollectable amounts have been written down in year [they are written off and do not appear in the total debt figures]

Ø Possibly uncollectable – Amount outstanding which the debt analysis exercise revealed some uncertainty over whether it will be collected. The amounts are considered doubtful where, for example, payments have been infrequent or it has not been possible to establish an arrears agreement or impose a deduction of earnings order


3. The CSA was set up in 1993 with the aim of ensuring that parents honour their responsibility to maintain their own children whenever they can afford to do so. However, despite numerous changes and reforms, it has failed in all its stated objectives. For example:

· In 2002, after nearly ten years of the CSA, less than 1 in 3 parents with care on Income Support are receiving any maintenance from non-resident parents;

· In 1990, under the old courts system, the typical maintenance award was £20 per week. A decade later, it is still £20 per week, despite a considerable rise in the cost of bringing up children.