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Child Maintenance and Enforcement Commission: cost reduction

Plans by the Child Maintenance and Enforcement Commission to reduce its spending are high risk, according to the National Audit Office. There is already a £44 million shortfall in the £161 million reduction originally expected by 2014-15. The Commission is reliant on raising  £71 million in fee income from parents as part of its planned savings. These estimates are very uncertain, increasing the risk that additional cuts might be needed late on in the Spending Review that could have an adverse effect on services.

The existing child maintenance schemes were problematic from the start and large backlogs of work built up. Efficiency has improved since 2006 and the cost of administering child maintenance has reduced. There are strong indications that costs remain high. Comparisons with Australia are difficult, but the fact that the Commission spends approximately 56 pence for each £1 it collects for parents, while Australia spent 35 pence raises questions about the relative efficiency of the Commission.

The Commission does not monitor staff productivity adequately and operated with duplicate management, finance and HR functions in 2010-11 because it retained the former Child Support Agency as a separate division. The Commission has 70 offices, a quite different arrangement from the head office and six processing centres originally planned by the Child Support Agency.

The planned cost reductions rely heavily on the introduction of a new child maintenance scheme and associated IT system. Yet IT costs have increased and the Commission risks repeating some of the mistakes made on the earlier child maintenance schemes. The estimates for fee income include assumptions that the NAO cannot substantiate. There is no contingency plan if forecast income for the last year of the Spending Review in 2014-15 proves optimistic.

According to today’s report, the Commission’s plans to reduce costs are high risk and not sufficiently developed to secure the savings needed. The Commission needs to consider alternative options for restructuring and introduce measures to improve productivity.

"Faced with a challenging but achievable target for reducing its spending, the Child Maintenance and Enforcement Commission is relying heavily on the introduction of fees to parents, underpinned by a new IT system. This is a high risk approach with no contingencies if it goes awry.

"I do not believe the Commission can achieve value for money without developing a realistic plan for controlling and reducing its costs and this will involve making genuine efficiencies in how it delivers its services."

Amyas Morse, head of the National Audit Office

Notes for Editors

  • The Child Maintenance and Enforcement Commission was established in 2008 and it inherited major operational difficulties from its predecessor, the Child Support Agency.

  • The Commission is implementing a new child maintenance scheme and associated IT system to replace the existing schemes. The Department for Work and Pensions published a Green Paper in January 2011 which included proposals to introduce application fees and surcharges on any child maintenance payments handled by the Commission.

  • The Department planned to reduce the funding for the Commission from £560 million in 2010-11 to £399 million by March 2015 but has since changed the target to £443 million.

  • Australia’s scheme is the closest comparable scheme to the Commission’s.

  • Press notices and reports are available from the date of publication on the NAO website, which is at https://www.nao.org.uk/. Hard copies can be obtained from The Stationery Office on 0845 702 3474.

  • The Comptroller and Auditor General, Amyas Morse, is the head of the National Audit Office which employs some 880 staff.  He and the NAO are totally independent of Government.  He certifies the accounts of all Government departments and a wide range of other public sector bodies; and he has statutory authority to report to Parliament on the economy, efficiency and effectiveness with which departments and other bodies have used their resources.

PN: 11/12