She went on to talk about how the new system for the CMS will improve the situation. There are around 450,000 Direct Pay arrangements currently in place in the UK. She said: “However, moving to a single service where the CMS monitors and transfers payments will address these longstanding issues.
“Our proposals for the new service will be underpinned by a fairer fee structure. Fees offset the investment needed to make the reforms and contribute to the cost of using enforcement powers to re-establish compliance and reduce the burden on the taxpayer.
“We considered how best to address the shortcomings of Direct Pay and concluded that a single service model, with CMS oversight of all maintenance payments, would provide greater transparency, improve compliance and better support children to receive regular maintenance.”
Under the Direct Pay arragements, the CMS does not charge parents anything as they make their own arrangements on payments. Yet under the new planned system, receiving parents in these deals would have to pay the CMS.
However, there are 350,000 people using the other system in place in the CMS landscape. These are called Collect and Pay arrangements that see the CMS directly involved.
Under the reforms the DWP wants to bring in, people under Collect and Pay would pay far less.
The DWP says: "The headline for a compliant paying parent is a cut from a 20 per cent charge to 2 per cent. The trade off is that everyone loses the fee-free Direct Pay route, so parents who currently pay each other directly at no cost would start paying the 2 per cent instead."
The changes come amid concern in some quarters that the existing system is not working. The BBC show Panorama reported in August on the impact failures in the existing set-up were having on some parents.
One mum said she had been left £10,000 out of pocket and relying on food banks, while another said she had to skip meals. Others said they were close to 'breaking point' at having to chase ex-partners for payments.
Yet there are questions over whether the changes will work. The House of Lords Public Services Committee Report on Reforming the Child Maintenance Service said it was not convinced the reforms would work.
It said staffing at the CMS was too overstretched. It said: "While we acknowledge that reforms will improve visibility of non-compliance in CMS arrangements, we are not persuaded that the Government have adequately evidenced that this approach will lead to higher compliance in child maintenance payments."
The new fees proposed under CMS changes - how they would work
Currently, a paying parent using Collect and Pay is subject to an additional charge of 20 per cent on top of their payments to the CMS.
Under the proposed new system, this would fall to just two per cent provided payments are made on time. However, it would remain at 20 per cent for paying parents who fail to meet payment deadlines.
Under the existing Collect and Pay system, the receiving parent is charged four per cent, which would decrease to two per cent under the planned reforms. For example, a paying parent currently paying £100 a week would see their additional CMS charge fall from £20 to just £2, as long as they pay on time.
In this instance, a receiving parent would receive £98 - a two per cent reduction from £100 - rather than £96 (a four per cent reduction) as is the case under the current rules.
Additionally, under the proposed changes, parents paying via a deduction from benefits would not be liable for the 20 per cent non-compliance charge, according to the government. For further details about the proposals, visit the childmaintenance.org.uk government website.
