Child support reform

There has been widespread discontent with the way in which UK reforms to the Child Support system in 1993 have worked. The Child Support Agency has been subject to much public criticism for its failure to ensure that non-resident fathers pay their Child Support liabilities to mothers caring for children. With the aims both of increasing compliance and of encouraging lone mothers back into work, the recent White Paper on Child Support Reform proposes a radical simplification of the Child Support formula and allows mothers receiving either Income Support or Working Families' Tax Credit to keep a larger proportion of any support paid from the non-resident father.

New research by authors at the IFS and the University of Warwick provides the first estimates of the likely impact of the proposed reforms. Using data from two household surveys, the Family Resources Survey and the British Household Panel Survey, the main predictions are:

• Average Child Support liabilities will fall and average actual payments decline from ó6 to ò6 if there is no change in compliance. But if compliance rises to the government's target of 80%, the average payment will rise to ô1.
• Even if compliance remains unchanged, mothers caring for their children will not see a major fall in their average net income because of the "cushioning" effect of the benefit system. If compliance rises to anywhere above 60%, they will experience a rise in income on average.
• The overall poverty rate for children living with separated parents will fall if compliance improves at all. If compliance rises to 80%, the likelihood of poverty declines from 33.4% to 30.1% for children living with their mothers, but rises for children living with non-resident fathers in second families from 20.6% to 25.6%.
• The proportion of mothers caring for children and choosing to work, particularly part-time, will increase.
• The reforms will cost the taxpayer ø00 million a year if compliance is unchanged, but are roughly revenue neutral if compliance rises to the target 80%.

Ends

Notes to Editors

1. The article, 'Child Support Reform: Some Analysis of the 1999 White Paper' is published in Fiscal Studies, Volume 21, No. 1, available for ñ0 from IFS, 7 Ridgmount Street, London WC1E 7AE, 020 7291 4800, @email.
2. Current Fiscal Studies articles are available online to institutional subscribers from Ingenta. They can be purchased online for ñ3 each.