Family formula for chaos: As a new boss takes over the CSA, Rosie Waterhouse asks where it went wrong

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The Independent Online
EVEN after two hours' intensive tuition the 11 members of the House of Commons Social Security Select Committee were struggling to grasp the formula which the Child Support Agency uses to assess the amount of maintenance absent parents should pay towards the upkeep of their children.

In just two minutes they understood the formula used in Australia.

The problem with the UK formula, according to Frank Field, Labour chairman of the committee which is conducting its second inquiry into the deeply unpopular agency, was that the minute you tried to apply it to individual circumstances, it became incomprehensible.

The first stage is to assess the Maintenance Requirement (MR), which is taken as the minimum necessary for the maintenance of the child or children. The MR equals the aggregate amount (AG) allowed for child and carer less Child Benefit (CB). The formula for this stage is therefore:

MR equals AG minus CB

Secondly you have a formula for calculating the Assessable Income of the person with care (C) which equals net income (M) less Exempt Income (F) which includes for example housing costs (for which another formula is required), so:

C equals M minus F

Then there is a formula for calculating the Assessable Income of the Absent Parent (A) which equals Net Income (N) less Exempt Income (E), so:

A equals N minus E

Then you have the Maintenance Assessment (MA), which is supposed to estimate how much the absent parent can afford to pay.

Finally you have to calculate whether the payer is left with an income below the income support allowances ( pounds 44) plus pounds 30, after his Maintenance Assessment.

Most people will pay the Basic Element (BE); high earners will have to pay an Additional Element (AE). So:

AE equals (1 minus G) times A times R - where R equals 0.25

Or: AE equals Z times Q times A over A plus C

By this stage Frank Field and his colleagues were hopelessly lost. And so are parents who are supposed to work out their income after giving and receiving child maintenance.

The complex formula,which is now almost universally condemned as unfair to all parties, is at the root of the chaos caused by the Child Support Act since the agency began operations in April 1993.

According to the National Association of Citizens Advice Bureaux, which monitored the Child Support Bill through the various committee stages in Parliament, all-party support was achieved largely because nobody would admit they could not understand the formula. All sides agreed that parents should be responsible for upkeep of children, but few understood what the formula would mean in practice.

Alistair Burt, the social security minister who has most often had to defend the CSA, insisted that the formula 'definitely' left absent parents with between 70 and 85 per cent of their net income after maintenance. But in July Peter Lilley, Secretary of State for Social Security, admitted that about one in five were being left with less than 70 per cent and some with less than 60.

Opposition bordered on revolt as absent parents who were already paying maintenance faced hugely increased demands. But snarl-ups in the system meant the money was not reaching the parents with care of the children - the mother, in nine cases out of ten. Only the Treasury, which devised the formula, appeared to be benefiting. Of the pounds 418m benefit savings made in the first year, only pounds 15m came from absent parents who had not paid before.

Families complained of hardship; several even blamed the CSA for the suicide of desperate fathers who were unable to pay. Anti-CSA demonstrations were staged and CSA staff became targets for hate mail and threats. Last Friday, in the face of this unremitting opposition, Ros Hepplewhite, the agency's chief executive, resigned. Her successor is Ann Chant, a career civil servant.

The most common complaints are that despite the complicated formula, expenses such as travel and seeing children are not taken into account, nor are previously agreed 'clean break settlements' under which a property or capital settlement was made in lieu of maintenance.

In Australia, which introduced a Child Support Agency in 1988, the maintenance formula is beautifully simple. It takes into account the incomes of both parents, minus certain expenses or 'exempt income' multiplied by a percentage depending on number of children.

The Australian system allows clean-break settlements to stand and there is a right to a court review if the absent parent believes the assessment is too high. Even though the Australian system is far from popular, only about 2 per cent of assessments a year result in requests for review and only 1 per cent go forward for appeal.

Despite the departure of Mrs Hepplewhite, opposition to the CSA will not disappear. According to David Holder, co- founder of the Campaign for Fair Maintenance which co- ordinates thousands of members around the country, letter- writing and demonstrations will continue until there are reforms to introduce a fair system.

(Photograph omitted)

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