Question to the Department for Work and Pensions:

To ask the Secretary of State for Work and Pensions, what assessment she has made of the potential impact of (a) the removal of the Direct Pay option and (b) other changes to the Child Maintenance service on the affordability of the system for both parents.

The proposed reforms to remove Direct Pay could result in around 20,000 fewer children in poverty. The reforms will help ensure children receive the financial support they are entitled to by addressing issues with hidden non-compliance within Direct Pay. We know from Direct Pay Research that only 60% of receiving parents reported getting all their money, and only 40% report always getting it on time. Under these reforms, the CMS will manage payments between parents, enabling them to respond quicker where payments breakdown.

As part of these changes, we also plan to modify the fee structure making them more affordable for parents already in the current Collect and Pay service. Our published liability data shows that paying parents in the Collect and Pay service tend on average to be on lower incomes that those in Direct Pay. Fees will reduce from 4% to 2% for receiving parents, and from 20% to 2% for compliant paying parents. Non-compliant paying parents will continue to pay a fee of 20%.

The Government is also conducting a review of the child maintenance calculation to make sure it is fit for purpose, balancing affordability concerns for both parents with the best outcomes for children and ensuring the calculation is reflective of the costs of raising children today.

Any changes made to the child maintenance calculation resulting from this review will be subject to extensive public consultation, which we plan to publish late this year, and if made, will require amendments to legislation so would be subject to Parliamentary scrutiny.