The times they are a-changin'?

I recently wrote on my family law blog  about a rather pertinent tale from a 1916 edition of the Bucks Advertiser and Aylesbury News*.  It referred to a letter which had been written by a young man Leonard Kempster, to his beau, Gladys, stating 'I have absolutely made up my mind that I will always be true to you'.  She took the young man at his word, but he did not follow through, preferring to 'remain in single blessedness', which resulted in an unwed mother, and a child with unmarried parents.  Mr Kempster was ordered to pay five shillings per week by the bench at Stony Stratford towards the upkeep of his child until the age of fourteen years, and £35 for his breach of promise.

Almost one hundred years later, the state continues to endeavour to ensure that children are adequately supported financially by parents, although these days it is to the age of 20 rather than 14. The current government has a 'child maintenance arrears and enforcement strategy' as part of their policy of improving payment of child maintenance.  This policy, which has been named Preparing for the future, tackling the past included the production of a consultation paper this time last year, Supported separated families; securing children's futures, which is definitely worth a read.  This clarifies the government's vision on where the issue of child maintenance is going.

Cutting costs

We are all aware of the government’s push for budget saving, and never more so than in the area of state enforced child maintenance.  The Child Support Agency is going to be phased out over the next three years, and the Child Maintenance Service (CMS) is being phased in.  This exercise is not simply  a case of re-branding: the government hopes that the changes it is making will reduce the cost of the operation from the £428 million it took to run in 2011/12 to £174 million by 2018/19.  Such a dramatic reduction in running cost is not going to come without an impact on the consumer.

Calculations

As we already know, the amount of child maintenance that is going to be paid by the parent who is not the main carer of the child is determined in one of three ways:

  • an agreement between the parents ('a family based arrangement')
  • an approved court order; or
  • an assessment by the  statutory body.

The rules for the new CMS are now applied to any new applicant with two or more relevant children.  Those rules provide that if the paying parent's gross income is between £10,400 and £41,600 per annum they will pay:

  • 12% of that gross income for one child
  • 16% for two; and
  • 19% for three or more children

This is called the 'basic rate'.

Income earned between £41,600 and £156,000 per annum will then be assessed at a 'basic plus' rate, that is at a slightly lower percentage of:

  • 9% for one child
  • 12% for two; and
  • 15% for three or more children

The CMS will also take into account the number of nights the children stay with the paying parent, and whether any other children are paid for.

Changes

Why is the system switching to gross figures? The belief is that it will streamline the system, enabling the CMS to take top line figures directly from HMRC.

The rhetoric is clear that the government will expect users to approach the CMS as a last resort in a system 'designed to target the most difficult cases'.  Consequently, there will be steps put in place to discourage the 'easier' cases from using the statutory system and thereby reduce the number of users.  Initially there were discussions that there would be a £100 application fee, to discourage applications, but to ensure access to all this has now been reduced to £20. To encourage parents to administer their own payments, there will be a 20% surcharge for payers, and 4% deduction on recipients if they use the CMS to administer the transfer of funds. Again this 4% figure has been reduced from an initial figure of 7% over concerns about access to the system. Victims of domestic violence or abuse will be exempt from the application fee, to enable them to benefit from the arms length arrangement that the CMS will provide.

Formulas

The Law Commission are currently working on a paper, analysing the concept of 'needs' and 'non-matrimonial property' in financial settlements on divorce, due to be published this autumn following earlier consultations.  There have been some discussions that we should consider moving towards a more formulaic matrimonial property system, at least in terms of spousal maintenance, to provide more certainty for clients from the outset of their case.  The Law Commission has warned in their executive summary document dated September 2012 that their conclusions will provide that further work would need to be done in this area, including extensive piloting, before any move could be made  in this direction.  The reason for this? We are told that it is to ensure that the 'interests of children are not sacrificed to the convenience of adults'.

So if there are concerns that a formulaic approach in spousal  maintenance may compromise the interests of children, do the  changes to the statutory child maintenance system elicit similar concerns? The headline goal of these changes is to encourage parents to talk together and reach their own agreement as to how much child maintenance should be paid, increasing the number of family based arrangements.  By providing an accessible system, via the Child Maintenance Options website, it is hoped that increased information will enfranchise parents and enable them to resolve their own disputes.   Ultimately, this is a positive step, provided that the parents with care in those harder to resolve cases continue to have access to the statutory backing that they need.  Whether Mr Kempster and Gladys would have been able to reach a family base arrangement must remain unknown.

*From Memories of Milton Keynes by Marion Hill, published by Tempus

Katie Rainscourt is a solicitor at Hawkins Family Law. The above blog post is reproduced in part from her family law blog

Twitter: @KRainscourt

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