We will begin the case closure process when we are confident the 2012 scheme is working well. Our current planning assumption is that the case closure process will begin next year.

Where arrears of child maintenance are linked to an ongoing child maintenance case on the 2012 scheme, we will move arrears in those cases to the 2012 scheme computer system and pursue them as appropriate.

In cases where the arrears are not linked to an ongoing 2012 case, and a parent with care requests that we collect the arrears, we will transfer them to the 2012 system and pursue collection as resources allow.

It is estimated that there are approximately 500,000 cases with arrears but no ongoing child maintenance liability. This estimate is subject to change and review.

Notes:

1. Information sourced from final impact assessment—child maintenance reforms: case closure, charging, supporting family-based arrangements available at:

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/259694/cm-case-closure-and-charges-regs-ia-final.pdf

It is estimated that in the region of 900,000 existing cases will close, as published in the case closure and charging impact assessment, paragraph 86 available at:

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/259694/cm-case-closure-and-charges-regs-ia-final.pdf

The breakdown of these cases are estimated to be approximately as follows:

a. Segment 1: Nil assessed cases—circa 160,000

b. Segment 2: Nil compliant cases—circa 140,000

c. Segment 3: Cases handled off system—circa 40,000

d. Segment 4: Remaining system cases—circa 420,000

e. Segment 5: Cases with ongoing enforcement action—circa 130,000

Child Support Agency (CSA) cases falling into “Segment 2” of the proposed case closure order, as outlined in the Government's response to the consultation “Supporting separated families; securing children's futures”, published on 5 November, will have a liability to pay maintenance, but no payments are being made and there is no current enforcement action.

It is likely that, in these cases, all appropriate enforcement actions have been utilised but we have been unable to obtain compliance, or we lack sufficient information about the non-resident parent's employment status or assets to attempt enforcement. The CSA does keep such cases under periodic review, and monitors data from HM Revenue and Customs and credit reference agencies in order to flag up any cases where enforcement action may become possible. It is however inevitable that a

number of these cases will remain outstanding with no suitable enforcement action being identifiable, and will therefore form the second segment at case closure.

“Nil compliance” in these cases will match the definition provided in the CSA Quarterly Summary of Statistics, i.e. where payments are expected but none have been received within the previous quarter.

Non-resident parents may owe arrears to parents with care in existing Child Support Agency cases, regardless of whether they apply to the 2012 scheme. We do not intend to write those arrears off, unless the parent with care specifically requests that we should do so.

As our arrears strategy, published in January 2013, makes clear, we will give priority to collecting on cases where there is an ongoing maintenance liability. Where a parent with care does not apply to the 2012 scheme, but does want their arrears collected, we will transfer the arrears to the new computer system and will collect them as resources allow.

Where non-resident parents make clear their intentions riot to pay child maintenance as part of the application process to the 2012 scheme, the Child Maintenance Service will take immediate enforcement action.

Where this is not the case, non-resident parents will be given the opportunity to pay the parent with care directly. As the previous Child Support Agency cases would have been nil compliant, there is no ongoing regular payment pattern which risks disruption by pursuing this approach; and should any such direct pay arrangement be successful both parties will avoid paying the proposed collection charges.

The Child Maintenance Service will, of course, take action to enforce payments where non-resident parents fail to comply with the direct pay arrangements.

There are currently three statutory maintenance schemes: the 1993 and 2003 scheme delivered by the Child Support Agency and the 2012 scheme delivered by the Child Maintenance Service.

We propose to introduce charging and begin the case closure process when the 2012 scheme is seen to be working well. The current planning assumption is that charging will be introduced and case closure will begin in 2014. We expect the case closure process will take around three years to complete.

Application fee income has been calculated by multiplying the estimated volume of 2012 scheme applications by the £20 application fee. Collection fees have been calculated by multiplying the estimated collection service caseload by an average assessment amount and applying a 24% fee (20% for paying parents and 4% for receiving parents). Enforcement fees have been calculated by applying the following rates (available at page 13 of the impact assessment) to the estimated volume of enforcement actions:

Deduction from earnings order/request: £50

Regular deduction order: £50

Lump sum deduction order: £200

Liability order: £300.

The estimated £2,221 million revenue is calculated across the transition period of 2012-13 to 2028/29. Table A4 on page 36 of the impact assessment—‘Child maintenance reforms: CSA case closure, introducing CMS fees, supporting family-based arrangements’, dated 31 March 2013, measures the difference between Policy Option 1 (do nothing baseline which introduces the 2012 scheme without case closure and charging) and Policy Option 3 (proposed full reforms). Paragraphs 33 and 80 of the document explain this, stating that Policy Option 1 is the baseline against which the costs and benefits of the proposed reforms will be measured and that without case closure the transitional period would be 17 years (2012-13 to 2028-29).

Notes:

The impact assessment—‘Child maintenance reforms: CSA case closure, introducing CMS fees, supporting family-based arrangements’—is available at:

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/259694/cm-case-closure-and-charges-regs-ia-final.pdf

The First-tier Tribunal—Social Security and Child Support (SSCS), administered by HM Courts & Tribunals Service (HMCTS), hears appeals against Department for Work and Pensions' (DWP) decisions on a range of benefits and credits including child support.

Video conferencing equipment is available in all main SSCS hearing venues. When a party to a child support appeal contacts the tribunal to advise they are unable to attend a hearing in person, arrangements will be made for them to attend at a venue convenient to them which has video conferencing facilities to allow them to participate in the proceedings.

The vision for the future of child maintenance is to rebalance the Child Maintenance system in line with priorities around families and personal responsibility. We seek to maximise the number of effective child maintenance arrangements in place, whether made privately between parents or through the statutory scheme.

There are currently three statutory maintenance schemes in operation; the 1993, 2003 and the 2012 scheme which opened as a pathfinder in December 2012. From 25 November 2013, the 2012 scheme opened to all new applications. This marked an end to

applications being accepted on the 2003 scheme. Once the 2012 scheme is seen to be working well, we will begin the process of closing cases on the 1993 and 2003 schemes. Clients can then choose whether to make a family based arrangement or make an application to the 2012 scheme. Child Maintenance Options will provide a mandatory gateway service to the 2012 scheme, to ensure clients are fully informed of the choices available to them.

We estimate around 900,000 existing client cases will be closed, with around 600,000 new applications being made to the 2012 scheme.

The Impact Assessment for case closure and the introduction of charging sets out the costs and benefits of introducing those specific measures on the Department for Work and Pensions (DWP), as well as on other government Departments and on third parties such as parents and employers.

Ten year operational cost savings for DWP total £413m reflecting the impact on applications, case maintenance and the introduction of annual reviews from 2013/14 to 2022/23. Fee revenues over this time are estimated at £1,199m making a total of £1,612m.

The impact assessment can be seen at https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/259694/cm-case-closure-and-charges-regs-ia-final.pdf. Figures are taken from annex 4a.

Table A4 in the Annex of the CSA Case Closure, Introducing CMS Fees, Supporting Family Based Arrangements Impact Assessment gives an estimate of the total income by year raised through the application fee, parent with care fee, non resident parent fee and the enforcement fee.

This Impact Assessment, published on 22 November 2013, is available at https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/259694/cm-case-closure-and-charges-regs-ia-final.pdf

A breakdown of this income by type of fee is detailed in the table below.

Under the provisions of schedule 1 of the Children Act 1989 it is possible to apply to the court for an order for maintenance of a child. Any order would not normally extend beyond the child's eighteenth birthday unless there are special needs (such as disability) or if the child is in education or training.

The definition of education or training in paragraph 2 (a) of schedule 1 to the 1989 Act is “receiving instruction at an educational establishment or undergoing training for a trade, profession or vocation, whether or not while in gainful employment”.

The Government believes this definition is sufficiently wide and necessary to cover the needs of children who are in full-time education or training for whom applications are made to court for maintenance. Court forms and court leaflets provide some assistance in making applications.

A significant amount of work has been undertaken since 2010-11 to reduce the costs of operating the child maintenance systems:

cost per £1 of child maintenance collected and arranged has fallen from 39 pence in 2010-11 to around 35 pence in 2011-12.

The statutory cost of each child benefiting has fallen from £488 in 2010-11 to £425 in 2011-12.

The net cost of administering child support on a comparable basis has fallen from £527 million in 2010-11 to £485 million in 2011-12.

These figures are available in the Child Maintenance and Enforcement Commission Annual Report and Accounts 2011-12, which can be found via the following link:

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/221408/cmec-report-and-accounts-11-12.pdf

The Child Maintenance Service was opened to all new applicants on 25 November 2013 following a pathfinder that began in December 2012. This controlled implementation approach is expected to support our long-term cost reduction plans by providing assurance that the system is operating effectively.

To date, no additional costs to the Department have been incurred since the start of the pathfinder.