"Children First" & Sharing of Care: Problems with the proposed formula, and a revised proposal
by Barry Pearson
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Example 3: Encouragement to commit benefit fraud

Consider how an out-of-work PWC "P" and a medium-to-high earning NRP "N" can conspire to defraud the taxpayer using the anomaly in the formula.

N earns (say) £465, and so pays £93 maintenance for two children if there is no sharing of care. P is out-of-work, and probably gets little or no Income Support (depending on P's age and the children's ages).

Green paper:

If, instead, they switch roles, with P perhaps retaining PWC status for 4 nights care for one child in order to remain on Income Support, and becoming the NRP for the other child, then N's maintenance liability drops to £40, while P's Income Support rises perhaps between £30 and £40, plus passported benefits (depending on details).

The taxpayer is about £40 worse off, while the parents can share this between them privately and both be better off. (Such undeclared income is benefit fraud).

Revised proposal:

The revised proposal doesn't cure the problem, but makes it less likely.

N, who now claims PWC status for one of the children, would still pay for the nights that P claims to care for that child. This might be £30. So the liability of N has dropped from £93 to £70, not to £40, and the taxpayer is relieved by a corresponding amount.

The fraud could still have its full effect if P now claimed not to care for the child at all. But this is less likely - it might count against that parent in any dispute later. So trying to "play the system" requires much harder choices, and is easier to detect.

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Page last updated: 3 November, 2002 © Copyright Barry Pearson 1998