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The Rt Hon Margaret Hodge MP, Chair of the Committee of Public Accounts responds on child maintenance reductions by saying: ‘It is extremely worrying that the CMEC plans for cost reduction rely so heavily on charging single parents for use of its service. CMEC intends to introduce an upfront application fee and take a slice of money collected from non-resident parents. Over a million separated families rely on this money to support their children and it is very worrying that the Department is looking to parents to pay rather than efficiency savings in the way the organization is run.
'The plans to introduce fees rely heavily on introducing a new IT system. CMEC has a very poor track record of introducing IT and estimated development costs increased by 85 per cent during 2011. The report highlights that CMEC is at risk of repeating many of the mistakes made with its previous IT system.
'CMEC needs to look much closer at its own operations and find efficiencies. CMEC has improved its efficiencies since 2006, but costs remain far too high. The cost of administering a case is higher than the cost of administering one under a comparable scheme in Australia. If customers are to contribute towards the costs of CMEC, they must have confidence that the organization is run efficiently. This is not currently the case and costs are higher than necessary. Until recently old Child Support Agency management, finance and HR functions operated separately to those of CMEC. CMEC also has two head offices, one of which has been underused and the other which is expensive to run. The appointment of a new Chief Executive is positive and the organization should now get on with the job of delivering efficiency savings and better value for money.'
Plans by the Child Maintenance and Enforcement Commission to reduce its spending are high risk, according to the National Audit Office commenting on the NAO report ‘Child Maintenance and Enforcement Commission: Cost Reduction.’
They say there is already a £44 million shortfall in the £161 million reduction originally expected by 2014-15 and that the Commission is reliant on raising £71 million in fee income from parents as part of its planned savings. These estimates are however very uncertain and increase the risk that additional cuts might be needed late on in the Spending Review that could have an adverse effect on services.
The existing child maintenance schemes were considered problematic from the start and large backlogs of work built up. Efficiency has improved since 2006 and the cost of administering child maintenance has reduced. There are strong indications that costs remain high.
The National Audit Office believes the planned cost reductions rely heavily on the introduction of a new child maintenance scheme and associated IT system. They are concerned that as IT costs have increased and the Commission risks repeating some of the mistakes made on the earlier child maintenance schemes. The estimates for fee income include assumptions that the NAO cannot substantiate. There is no contingency plan if forecast income for the last year of the Spending Review in 2014-15 proves optimistic.
The NAO say that according to the report, the Commission’s plans to reduce costs are high risk and not sufficiently developed to secure the savings needed. The NAO say that the Commission needs to consider alternative options for restructuring and introduce measures to improve productivity.
Amyas Morse, head of the National Audit Office, said: ‘Faced with a challenging but achievable target for reducing its spending, the Child Maintenance and Enforcement Commission is relying heavily on the introduction of fees to parents, underpinned by a new IT system. This is a high risk approach with no contingencies if it goes awry.
‘I do not believe the Commission can achieve value for money without developing a realistic plan for controlling and reducing its costs and this will involve making genuine efficiencies in how it delivers its services.’