Orginally published - 10 April 2000

New research, by economists at the University of Warwick & the Institute of Fiscal Studies, predicts that both children and the tax payer could lose out if the Government's latest reforms of Child Support are not supported by a significant increase in the amount of Child Support liability paid by non-resident fathers.

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.

However the new research by Professor Ian Walker and Yu Zhu at the University of Warwick, and Gillian Paul at IFS provides the first estimates of the likely impact of the proposed reforms. The researchers note that the Government hopes that compliance levels will reach around 80% rather than the current 45%. The researchers doubt that such an increase in compliance is likely under the measures proposed, they also make the following predictions on the impact of the reforms:

• Average Child Support liabilities will fall and average actual payments decline from 36 pounds sterling to 26 pounds sterling if compliance does not improve. If compliance rises to the government's target of 80 per cent, the average payment will rise to 41 pounds sterling
• The reforms will cost the taxpayer 800 million pounds sterling a year if compliance is unchanged, but are roughly revenue neutral if compliance rises to the target 80 per cent.
• The overall poverty rate for children living with separated parents will fall even if compliance just slightly improves. If compliance rises to 80per cent, likelihood of poverty declines from 33.4 per cent to 30.1 per cent for children living with their mothers. However it will rise for those children living with non-resident fathers in second families from 20.6 per cent to 25.6 per cent - but overall children will benefit as there are three times as many children in first families as their are in second families.
• An increase in the proportion of mothers caring for children and choosing to work - particularly part-time

Note for Editors: The research used data from the Family Resources Survey & the British Household Panel Survey. The research was funded by the Nuffield Foundation.

link to full research paper in PDF format

For further details please contact:

Professor Ian Walker
University of Warwick
Tel: 024 76 523054
Email: i.walker@warwick.ac.uk



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