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The Child Support Reforms introduced in 2003 were a final but, in the event, unsuccessful attempt to deliver the policy behind the creation of the Child Support Agency in 1993. With hindsight the Child Support Agency was never structured in a way that would enable the policy to be delivered cost-effectively. While the Reforms have benefited a number of the poorest parents and children, overall, they have not secured good value for money and have failed to deliver much-needed improvements in customer service and administrative efficiency, a report by the National Audit Office has found. 

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Reflecting the inherent difficulties in delivering the original policy, the Secretary of State for Work and Pensions has commissioned a fundamental redesign of the child support system by Sir David Henshaw, which is expected to recommend options for longer-term policy and delivery arrangements.

So far, the Reforms have cost £539 million for a scheme that has performed no better than its predecessor, although there are recent signs of improvement. A Child Support Agency operational improvement plan, involving new investment of up to £120 million, has been launched to clear the backlog of cases, deal with operational problems and to enforce payment from parents who do not meet their responsibilities.

The Department for Work and Pensions and the Agency have learned lessons from the difficulties they encountered and are taking action to prevent similar problems in future. The Agency is building a team of high calibre professionals to help deliver quality IT systems in future, adopting a more cautious and realistic approach to planning, building a stronger working relationship with its IT contractor, EDS, introducing improved governance arrangements and recognising the need to simplify their processes in developing IT projects.

Where it works well the Agency manages to secure regular contributions from non-resident parents and transfer this to the parent with care or the Secretary of State, where the parent with care is in receipt of benefits. By the end of 2006, the Agency estimates that it will have collected over £5 billion in maintenance payments since it was formed in 1993 and currently administers 1.5 million live cases. However, the inability to implement the Reforms effectively has had a significant impact on the quality of service provided by the Agency. Three years after their introduction, 61 per cent of the Agency’s caseload is still dealt with under the old rules and there is currently no date for the conversion of the 923,000 old rules cases. Although many parents with care on income support have benefited from the reforms, some parents with care on Income Support may be losing up £520 a year in Child Maintenance Premium payable under the new scheme.

By March 2006, one in four applications received since March 2003 were still waiting to be cleared and there is a backlog of around 267,000 new scheme cases and a further 66,000 old scheme cases. On average new scheme cases are taking 34 weeks to clear. Including the costs of implementing the Reforms, it cost the Agency 70 pence to collect each £1 in 2004-2005. Largely this reflects a policy design, which requires substantial administrative input to collect and transfer relatively small amounts of maintenance. During 2005-2006, however, 81 per cent of the last decisions made in the new scheme cases checked by the Agency were found to be correct, up from 75 per cent the year before.

There have been well-publicised problems with the design, delivery and operation by EDS of the new IT system that have contributed significantly to the Agency’s difficulties. Nine months after the system went live an independent review found that its stability and performance needed significant improvement. A substantial amount of work has been undertaken since to resolve defects but many technical problems still exist and some 600 manual workarounds are needed.

At present there is an estimated £3.5 billion of outstanding maintenance to be collected, although 60 per cent of this is considered to be uncollectible. Almost one in three non-resident parents do not pay any maintenance where the Agency has assessed money is due. The Agency has not made full use of the range of enforcement powers it has available to recover debt, but is starting to do more to get these payments. In 2005-06 it secured almost 10,000 liability orders from the courts to support their enforcement efforts. There are also currently 19,000 cases with enforcement teams for action, out of a total of 127,000 cases where the non–resident parent has paid nothing despite requests from the Agency.

It is now clear that the reform programme was over-ambitious and introducing such a complex IT system was at the upper end of what was achievable. To develop a new IT system at the same time as making fundamental changes to the Agency’s business structure added to the risks of the project, particularly given that the Agency was already underachieving and overstretched when the reforms were announced in 1999.

"The Child Support reforms were a final but, in the event, unsuccessful attempt to deliver the policy behind the creation of Child Support Agency in 1993. While they have benefited a number of the poorest parents and children, overall they have not achieved value for money and have not achieved what they were designed to do.

"These problems will have caused genuine hardship and distress to many parents and their children. From design to delivery and operation, the programme to reform the Agency has been beset with problems which the Department for Work and Pensions, the Agency and its IT supplier EDS, have struggled to deal with.

"The Agency’s new Operational Improvement Plan is a significant step towards addressing these difficulties and is showing signs of improving the Agency’s performance, but, given the scale of the problems, there will be no quick fix."

Sir John Bourn, the head of the National Audit Office


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