Summary of the changes in the reformed system

Another good summary of the reformed scheme is that of Durham Legal Services: "The New Child Support, Pensions & Social Security Act 2000".

Here is my visual summary of how a non-resident parent's income maps onto the child support liability.

Tweaks

Although billed as a "root and branch reform", in fact the reformed scheme is really simply a lot of tweaks to the current scheme.

It is difficult to spot anything that is in any way radical. Even the new formula is "just another formula" - it takes a subset of the information already used and does some sums on it. The philosophy is different, but on the whole it is just a way of getting nonresident parents to pay, on average, about £30 per week. And that has been roughly the amount over the last decade.

Administrative ease

Looking back, it is clear that early on the government decided on a strategy of administrative ease, and then treated comments (and later, debate in Parliament) accordingly. It compromised a little, but kept the variables to 4:
- NRP net income
- Number of qualifying children
- Number of relevant children ("2nd family children")
- Number of nights-per-year of NRP care

The objectives intended to be achieved by administrative ease are sensible and justifiable:
- Faster response, initially & later (vastly less evidence to collect)
- Lower arrears (less time to accumulate them)
- Greater accuracy (less to go wrong)
- Greater predictability for clients (published tables & perhaps on-line calculator)
- Fewer interactions with the CSA (eg. fewer circumstances to change, fewer queries)
- Greater compliance (more compliance resource, fewer ways of delaying things)

Some potential objectives were sacrificed:
- Tuning to circumstances (apart from net income, all variables are directly child-related)
- Proper shared-care formula (it is now bizarre)
- "Fairness" - but there is no consensus about fairness, so it could never be achieved anyway

Probably if it had been clearer just how strongly the government intended to stick to its strategy of administrative ease, a better (though still not perfect) formula would have resulted. Lobby groups might have submitted compromise proposals which they could demonstrate would not compromise administration. There probably wasn't actually a strategy to keep the formula simple, only to keep administration simple.

The formula

The formula is actually quite complicated, and could usefully have been even more complicated. Apart from the above 4 variables, there are the following constants (20 or so in the legislation) which are taken into account:
- Percentage net income reduction for 1 relevant child: 15%
- Percentage net income reduction for 2 relevant children: 20%
- Percentage net income reduction for 3 or more relevant children: 25%
- Percentage of net income liability for 1 qualifying child: 15%
- Percentage of net income liability for 2 qualifying children: 20%
- Percentage of net income liability for 3 or more qualifying children: 25%
- 1st net income threshold (below which nil rate applies): £5 pw
- 2nd net income threshold (up to which flat rate applies): £100 pw
- 3rd net income threshold (beyond which the basic rate, the above percentages, apply): £200 pw
- 4th net income threshold (the cap): £2000 pw
- Flat rate (up to 2nd threshold): £5 pw
- Minimum liability (unless below 1st net income threshold): £5 pw
- 1st reduction of liability for NRP caring: 1/7th
- 2nd reduction of liability for NRP caring: 2/7th
- 3rd reduction of liability for NRP caring: 3/7th
- 4th reduction for NRP caring (from 4th nights-per-year threshold): 1/2
- 1st nights-per-year threshold (below which full liability applies): 52
- 2nd nights-per-year threshold (below which liability is reduced by 1/7th): 104
- 3rd nights-per-year threshold (below which liability is reduced by 2/7th): 156
- 4th nights-per-year threshold (below which liability is reduced by 3/7th): 175
- Per child reduction from the 4th nights-per-year threshold: £7 pw
- (There may be more!)

Other constants which are not in the primary CSA legislation, for example taken the White Paper:
- Net income change before recalculation considered: 5%
- 1st net income threshold for phasing-in: £100 pw
- 2nd net income threshold for phasing-in: £400 pw
- Phasing-in amount at & below 1st threshold: £2.50 pw py
- Phasing-in amount between 1st & 2nd threshold: £5 pw py
- Phasing-in amount at & beyond 2nd threshold: £10 pw py
- Disregard for Income Support & JSA: £10 pw

The individual changes

In spite of the above, the new scheme isn't the radical change that the government says it is. It hasn't been rethought as a Child Support system for the 21st century. It is simply a LOT of tweaks to the existing scheme, each of which satisfies some objective. Many of these objectives are sensible and justified, while some appear to be more to do with defusing objections.

Examples of tweaks, other than the new formula, include:
- "Nonresident Parent" instead of "Absent Parent"
- "Variation" instead of "departure"
- "Calculation" instead of "assessment"
- £10 disregard for Income Support & JSA (not actually in the CS legislation)
- Shared care formula starts at 52 instead of 104 nights per year
- Child Maintenance Bonus eliminated (effectively replaced by the disregard)
- Default maintenance decisions instead of IMAs, etc
- Variations will be restricted to direct child-factors (not actually in the CS legislation)
- Payment penalties includes driving ban unless special factors apply
- Payment penalty fines for arrears in some cases
- Changes to imprisonment rules (Scotland only?)
- Criminal offense (with fine) for lying or not supplying information
- Presumed parentage in extra circumstances until overturned (aligned with Scotland)
- Changes to the rules for parentage testing companies
- Better allocation of inspectors who can enter non-residential premises
- Relevant children ("2nd family children") include step children
- Net income excludes all spend on pensions, also excludes savings interest received
- Voluntary payment scheme before first calculation (with over-payment catered for)
- Non-UK-resident parents employed by UK companies / government / MOD can be within scope
- Provision for pilot schemes
- Phasing-in of new calculation for migrated cases over perhaps 5 years
- Simple rule where the NRP has multiple PWCs
- Some extra abilities for court-settled cases to go to the CSA
- Recalculation tolerance based on change of net income not change in liability

If all of the above were in place from 1993, probably the CSA would have been vastly less contentious, although without the experience so far people would now be trying to complicate it! If (big if!) they can make the migration of existing cases, it is possible they could make the new scheme work.