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Economic Justice

Direct Pay: Innovation or Failure?

Gingerbread has today launched a new report: ‘Direct Pay: Innovation or Failure?’

Direct Pay – where parents manage payments directly between each other – is a central pillar of the new statutory child maintenance system, designed to minimise state involvement in arrangements to encourage collaborative parental relationships and reduce spending.

Once a parent applies to the new Child Maintenance Service (CMS), and pays their application fee, they receive a calculation. Then their case can go down one of two paths: the first is ‘Direct Pay’, where parents manage payments between themselves; the second is ‘Collect and Pay’, for cases where maintenance goes unpaid and the CMS must step in to collect and manage payments.

This interface between these two paths is a fundamental part of the reformed system. Collect and Pay charges are intended to encourage Direct Pay compliance– the principle being that a paying parent can only avoid Collect and Pay charges if maintenance is paid in full and on time, and they remain in the Direct Pay service where there are no ongoing fees.

But despite its central role in the new Child Maintenance Service (CMS), there is very little information on effectiveness of Direct Pay. The DWP does not track whether payments are made, meaning it cannot report on compliance in nearly seven in ten (66 per cent) of its cases.

This research builds on these concerns and early worries raised by Gingerbread to help fill an evidence gap on a major part of the new maintenance system, using a series of in-depth interviews with single parents.