Andy Burnham's DWP shake-up brings new change to impact thousands of families

The DWP has released an update on 'major' reforms planned for the Child Maintenance Service (CMS). The department claims the overhaul will establish a 'fairer' system that will put an end to 'significant shortcomings' within the current set-up; however, it would mean fresh charges for numerous parents. The department is looking to abolish Direct Pay. This is the arrangement that permits separated parents to organise child maintenance payments between themselves after the CMS has calculated the sum. The system was introduced in 2012, but the government maintains it is not functioning effectively and is unsafe for many parents. Currently, government data reveals that 55% of all CMS arrangements utilise Direct Pay, with 43% opting for the alternative Collect and Pay system, which sees the CMS act as an intermediary to handle payments. Recent official statistics show there were 450,000 Direct Pay arrangements in place. A newly proposed system would introduce charges for those parents who currently pay nothing to the CMS. However, the planned modifications to the roughly 350,000 Collect and Pay arrangements would see many people using this service pay considerably less, reports Wales Online . The DWP acknowledges that the new system would result in additional charges for many parents. It states: "The headline for a compliant paying parent is a cut from a 20 per cent charge to 2 per cent. The trade off is that everyone loses the fee-free Direct Pay route, so parents who currently pay each other directly at no cost would start paying the 2 per cent instead." The aim of Direct Pay was to motivate parents to collaborate and lessen their dependence on the CMS. Yet DWP research published last year found just 60 per cent of receiving parents got all of the maintenance they were owed. And only 40 per cent of receiving parents said they always got their money on time. Despite these concerns, the government stated that many people were not flagging problems to the CMS. More than a third of receiving parents, the research found, did not report a late or missed payment. The DWP also revealed that 71 per cent of receiving parents and 51 per cent of paying parents in Direct Pay said they had suffered domestic abuse from the other parent. The government has announced that it wants to scrap Direct Pay, possibly by 2027 - although it stresses that for now the existing rules remain in place. Should Direct Pay be abolished, officials want to replace it with a single service where the CMS collects the money from the paying parent and passes it to the receiving parent. The single parents' website Gingerbread has backed the reform, describing it as a 'major shake-up'. However, it warned the change must be made 'with extreme care', adding: "The CMS is in urgent need of reform. Single-parent families need a clear timeline of when the government is going to bring forward the changes it has promised." The issue has been thrust into the spotlight after Edward Morello, Lib Dem MP for West Dorset, questioned "what the rationale is for the proposed abolition of Direct Pay arrangements within the Child Maintenance Service?" He also questioned "what alternative approaches to reforming Direct Pay have been considered, and how the department will ensure that children do not lose out financially as a result of any changes?" The questions arrive amid growing criticism from within the sector. The website Both Parents Matter argues the government ought to retain the Direct Pay system, describing the government's current proposals as "deeply flawed". Last Tuesday, Lilian Greenwood, Parliamentary Under-Secretary (Department for Work and Pensions), issued a response outlining why the government's changes are expected to press ahead. She stated: "Evidence gathered by the Department has highlighted significant shortcomings with Direct Pay. Under Direct Pay, the CMS is unable to routinely monitor whether payments are being made in full or on time, meaning non-compliance can go undetected until a parent reports a problem. Research tells us that only 60% of receiving parents in Direct Pay reported getting all of the child maintenance they are owed, and only 40% of them reported receiving it always on time. "This places the burden on receiving parents to chase payments. The current arrangement can also create opportunities for economic abuse, including situations where maintenance is withheld, paid late or manipulated as a means of exerting control over a former partner. In many cases, parents may also need to maintain contact with an ex-partner to resolve payment issues, which can be distressing and particularly harmful for victims and survivors of domestic abuse. "However, moving to a single service where the CMS monitors and transfers payments will address these longstanding issues. Our proposals for the new service will be underpinned by a fairer fee structure. Fees offset the investment needed to make the reforms and contribute to the cost of using enforcement powers to re-establish compliance and reduce the burden on the taxpayer. "We considered how best to address the shortcomings of Direct Pay and concluded that a single service model, with CMS oversight of all maintenance payments, would provide greater transparency, improve compliance and better support children to receive regular maintenance." Last year's House of Lords Public Services Committee Report on Reforming the Child Maintenance Service cast doubt over the proposals, stating: "We are not persuaded by the Government's case for the removal of the Direct Pay service. "We are concerned that the removal of the Direct Pay service and transfer of all child maintenance cases to Collect and Pay, without further investment in staffing or CMS resources, will result in an already overstretched CMS delivering poorer results. While we acknowledge that reforms will improve visibility of non-compliance in CMS arrangements, we are not persuaded that the Government have adequately evidenced that this approach will lead to higher compliance in child maintenance payments." That report emerged just weeks after wider questions were raised about the CMS itself. BBC programme Panorama revealed in August that the CMS was pushing many parents to 'breaking point'. It highlighted cases of mothers struggling to obtain payments from former partners, with one left having to rely on food banks after falling £10,000 into arrears. Another mother revealed she had been forced to skip meals.