Home >  Publications > Selected cases — Parliamentary > Selected Cases and Summaries of Completed Investigations - May - September 1998 > C.1306/97

Parliamentary Commissioner for Administration

First Report Session 1998-99

Volume 3 - 1st Report - Session 1998-99

DEPARTMENT OF SOCIAL SECURITY

Case No. C.1306/97

Difficulties in securing child support maintenance

11.1. Mrs J complained to the Parliamentary Commissioner about delays by the Child Support Agency (CSA) of the Department of Social Security (DSS) in assessing and securing payment of child support maintenance (CSM). Mrs J had previously complained to the Independent Case Examiner (ICE)—CSA's complaints adjudicator—and her complaint to the Commissioner reflected her dissatisfaction with the action which had been taken by CSA following the ICE's report.

11.2. The investigation of Mrs J's complaint began in January 1998 once the Commissioner had obtained comments from the Chief Executive of CSA after the referral of the complaint. I have not put into this report every detail investigated by the Commissioner's staff; but I am satisfied that no matter of significance has been overlooked. An annex to this report lists the abbreviations used and their meaning.

Legislative background

11.3. CSA are responsible for the assessment, collection and enforcement of CSM. Under section 31 of the Child Support Act 1991 a child support officer (CSO) may make a deduction from earnings order (DEO) against an absent parent (AP) who is employed (but not self-employed) to secure payment of CSM. A DEO is an instruction to a person's employer to make deductions from that person's earnings. DEO action is normally taken only when it is clear that other methods of collection have failed, or seem likely to fail. Where a DEO is inappropriate (because, for example, the AP is self-employed) CSA may apply to a magistrates' court for a liability order which secures legal recognition of the debt and enables CSA to take further enforcement action through the courts.

11.4. Where a self-employed person works as a subcontractor, payment may be made to him by the main contractor after the deduction of basic rate income tax. The main contractor issues a form (called a SC60) to the subcontractor showing the tax deduction which the contractor has made on his behalf. Such subcontractors remain self-employed, and are personally responsible for paying their self-employed persons' national insurance (NI) contributions. Where appropriate, Inland Revenue or the Contributions Agency of DSS may determine that a subcontractor who meets the criteria for treatment as an employee should be transferred from the SC60 scheme to the Pay As You Earn scheme. In that case the subcontractor ceases to be self-employed.

Back to top

11.5. Under DSS's extra-statutory compensation scheme, a special payment may be considered where a person has suffered an actual financial loss as a result of a clear and unambiguous official error. Claims for distress may also be considered in exceptional circumstances, for example where there is objective evidence that there has been a significant deterioration in a person's physical health as a direct result of an official act or omission. Claims for compensation are considered by CSA's special payments team.

Back to top

Background to Mrs J's complaint

11.6. In May 1997 Mrs J complained to the ICE that CSA had mishandled the application for CSM which she had made in June 1995. Mrs J said that the AP was self-employed. The ICE issued the report of her findings in October 1997. She concluded that CSA had been responsible for a number of errors and delays, in consequence of which the Agency had still not managed to obtain CSM for Mrs J, so that substantial arrears had accrued. In particular, the ICE criticised CSA for a ten-month delay in taking enforcement action, which the ICE believed could have been initiated in November 1996 when the AP had withdrawn an appeal he had put to the Child Support Appeal Tribunal (CSAT). The ICE said she had ascertained that CSA were finally taking steps to serve a liability order on the AP (by which I understood her to mean that they intended to serve on the AP a notice of intention to apply for a liability order, as such an order may only be made by a magistrates' court (paragraph 11.3)). The ICE concluded that she was satisfied that CSA were making a real and determined effort to enforce a liability order against the AP; and as to the potential effect of such an order, the ICE said:

'The Agency wrote and explained to me that once they have obtained a liability order it can be registered at the County Court where it is available for public inspection. People with an order registered against them can find it affects their ability to raise credit. I took this to mean that the real possibility of an order being registered, could provide a sufficient stimulus to provoke payment from an uncooperative AP.'

11.7. As to compensation, the ICE noted that CSA had agreed to pay £10 compensation to Mrs J to make good administrative expenses she had incurred in pursuing her application. (That sum was paid to Mrs J on 19 September 1997.) The ICE asked CSA to consider additionally making a consolatory payment to her in recognition of 'the distress, loss and delay their incompetence had caused'. On 3 November 1997 CSA made a further ex gratia payment of £110 to Mrs J representing a consolatory payment of £100 for the gross inconvenience she had suffered as a result of official delay and error, and a further £10 towards her postage and telephone costs.

Back to top

CSA's response to the complaint

11.8. In her comments to the Commissioner on 23 January 1998, the Chief Executive of CSA said that neither the facts nor the conclusions reached by ICE were disputed. She said that she was very sorry that Mrs J's case had not been handled better, and that she had written to Mrs J apologising for the poor standard of service which she had received.

11.9. The Chief Executive said that CSA had continued their efforts to obtain a liability order and that notice of that intention had been given to the AP in October 1997. Also in October, CSA had made enquiries of a contractor (company U) for whom the AP had carried out work as a self-employed subcontractor for a number of years. She said that 'those enquiries showed that tax and NI contributions were being deducted by [company U] and suggested it would be possible to implement a DEO'. The Chief Executive said that a DEO had accordingly been imposed on 19 November and the first payment under it should have been received by CSA by 19 January 1998. However, no such payment had been forthcoming and CSA's subsequent enquiries had revealed that the AP was in fact self-employed.

11.10. The Chief Executive said that it was unfortunate that the DEO had not been effective because the AP had moved house after the notice to apply a liability order had been served upon him, and despite their continuing enquiries CSA had been unable to establish his whereabouts. She said that every effort would be made to contact him but that, until he had been traced, nothing more could be done to pursue a liability order.

11.11. On the issue of compensation the Chief Executive told the Commissioner that CSA had decided to award Mrs J further compensation of £350 for stress (taking account of medical evidence she had provided to the Agency). Mrs J had also been asked to provide details of fees which she had been charged for the production of that medical evidence so that CSA could consider reimbursing her for those costs also.

Back to top

Later developments

11.12. On 2 February CSA agreed to make a further ex gratia payment of £90 to Mrs J to reimburse her for the costs of the medical evidence which she had obtained.

11.13 On 17 March a liability order in the sum of £5,797.08 was granted against the AP.

Investigation

11.14. From the evidence I have seen I am satisfied as to the accuracy of the accounts of events provided by the ICE and the Chief Executive. I provide the following amplification of key points relevant to the Commissioner's investigation.

11.15. On 13 October 1997, a CSO from CSA's field office served on the AP in person notice of CSA's intention to apply for a liability order. That notice showed that total CSM arrears at that time stood at £5,797.08. (The arrears dated back to July 1995, from when the AP's liability to pay CSM had been established.) Following a telephone conversation with Mrs J, on 14 October CSA sent an enquiry to company U about the AP. The CSO continued to pursue the possibility of a liability order while waiting for a reply, and by 28 October had prepared the necessary papers. On 5 November company U replied saying that the AP was 'a self-employed subcontractor, used by our Company under the SC60 scheme (paragraph 11.4), whereby any payments made are subject to deduction of 23% for Tax and NI.' On 10 November the CSO recorded that, in view of that advice, a DEO was not appropriate; but the next day the CSO asked CSA's central advice team whether it was possible after all to impose a DEO where the AP was a subcontractor working on a SC60 basis. The officer whose advice was sought was unsure whether a DEO could be imposed in those circumstances and undertook to confirm the position. The next day the central advice team told the CSO that a DEO could be imposed if the AP had been working for his employer for more than 12 weeks. The CSO established that the AP had worked as a subcontractor for company U for at least six years and, on that understanding and on the basis of the advice given by the central advice team, issued a DEO on 19 November (paragraph 11.9).

Back to top

Findings

11.16. CSA handled Mrs J's application for CSM very poorly, and inadequacies in their performance persisted even after the ICE's report had drawn attention to their shortcomings. A key weakness identified by the ICE was CSA's failure to pursue enforcement action once they had finally completed a maintenance assessment. CSA initially responded to that element of the ICE's criticism in an appropriate manner by notifying the AP of their intention to apply for a liability order and proceeding with the necessary preparatory action.

11.17. Matters then went awry, however, after company U had provided CSA with information about the AP. The CSO initially concluded correctly that DEO action remained inappropriate (paragraph 11.15). The CSO then decided however to investigate whether a DEO might after all be applied in the circumstances of this case. The advice the central advice team provided, that a DEO could be imposed if the AP had been working for his employer for more than 12 weeks, was accurate as far as it went in providing a general statement of the position regarding employees who were not self-employed, but failed to address the CSO's specific query about a subcontractor working on a SC60 basis, and misled the CSO into believing that a DEO could be applied in this case, when it could not. Although I have no reason to doubt that the CSO was motivated by a helpful wish to expedite enforcement action and so help Mrs J, the misunderstanding between the CSO and the central advice team unfortunately had the opposite effect. Valuable time was lost in pursuing an inappropriate course, and by the time CSA had become aware of their error the AP had changed his address, so that CSA were unable immediately to resume action to apply for a liability order.

Back to top

11.18. I was concerned that that mistake appeared to reflect a fundamental lack of understanding on the part of CSA staff about the employment status of subcontractors working under the SC60 scheme. Of particular concern was the fact that the central advice team, to whom the CSO had reasonably turned for guidance, had failed to give a clear and positive direction on the question put to them. I therefore asked the Chief Executive whether she shared my concern and, if so, what might be done to raise awareness among her staff of the correct position in such cases. In April 1998 CSA told the Commissioner's staff that fresh guidance on the subject was being prepared as a matter of priority. CSA confirmed that the guidance would clarify that DEO action could only be considered in relation to those subcontractors whose employment status had been reviewed and who had become liable for tax under the Pay As You Earn scheme (paragraph 11.4), and not those working under the SC60 scheme.

11.19. I also concurred with the ICE's view (paragraph 11.6) that it should have been possible for CSA to initiate enforcement action after the AP had withdrawn his appeal in November 1996. Had they done so, it seemed to me there was a good chance that a liability order would have been granted, and consequential enforcement measures successfully pursued, well before now, so that Mrs J would by now have had the use of the arrears and regular CSM to which she is entitled, and of which she has need. Instead, because of their initial procrastination, and their subsequent error in seeking to impose a DEO inappositely, CSA have missed their chance to complete valid enforcement action and so have obtained nothing for Mrs J. I therefore asked the Chief Executive whether she would compensate Mrs J for that. CSA subsequently agreed to award Mrs J £4,686 in compensation for CSM forgone, and a further £340.52 in recognition of the loss of use of that sum. I very much welcome the Agency's decision to award that compensation in addition to the ex gratia payments already made (paragraphs 11.7, 11.11 and 11.12).

Back to top

Conclusion

11.20. CSA handled Mrs J's case poorly even after the ICE's investigation. I regard the apologies of the Chief Executive together with ex gratia payments totalling £5,586.52 as a very suitable outcome to a fully justified complaint.

9 June 1998

Annex

Abbreviations used and their meaning

Back to top

Previous < Contents > Next

Short text of this investigation

Last updated: 26 April 2006