Would you believe that a father who drives an expensive customised car, holidays in Mustique, skis in the Alps and owns a rambling chateau can legally claim that he is too poor to support his 11-year-old son? Let’s imagine that father now, enjoying a rosé sundowner on a terrace with a view of the cypresses of the Midi. Would you believe that he could maintain this position of so-called poverty – again, legally – even after more than a million pounds had passed through his bank account within a year?
No? Well, I have news. The law that governs how much ‘absent’ or ‘non-resident’ parents – meaning those not living with their children – pay in child maintenance makes it entirely possible for such a father, along with plenty more like him, to show minimal income, despite their screamingly obvious wealth, solely in order to pay less to their children (this father contributes £50 a week to his child’s upbringing).
One case currently making its way through the courts is that of a multimillionaire from north London who pays only £7 per week maintenance for his 16-year-old, despite owning £5.2m in property and pension funds. ‘Little short of scandalous’ is how Mr Justice Mostyn, of the Family Division of the High Court, has described it. Mostyn has begged the Government ‘to consider urgently’ the inclusion of assets, dividends and rental income when calculating maintenance. The father in question had claimed that his state pension was his only income. Mostyn concluded that it is ‘an extraordinary state of affairs’ that a parent can live on ‘very substantial’ capital while paying the ‘pitiful minimum sum’ to his child. Scandalous, yes. Extraordinary, yes. But not rare. Rather than being anomalies, fathers who find ways to reduce, avoid or circumvent their child-maintenance liabilities are ‘depressingly common’ says Sandra Davis, head of the family department at law firm Mishcon de Reya.
It’s painfully ironic that the new laws resulted from government efforts to simplify child maintenance after the catastrophic failures of the old system. Few can forget the Child Support Agency (CSA), launched in 1993, rarely out of the press for its inefficiency and its reputation for snooping (it was called a ‘sequel to 1984’ by one MP), and the subject of much criticism for having collected at a cost of £3bn – as Mostyn has noted – just £4bn of £8bn assessed. Subsequent governments, from Tony Blair’s to David Cameron’s, pledged an overhaul, and in 2012 the Child Maintenance Service (CMS) was launched. Like the CSA, which it replaced, the CMS is overseen by the Department of Work and Pensions (DWP) and specifically by the Parliamentary Under Secretary of State for Women, Equalities and Early Years – currently Caroline Dinenage.
Amazingly, the transition between the two agencies is not complete. In September, the DWP revealed that 950,800 CSA cases are still outstanding. The National Audit Office (NAO) recently said that at least £3bn in payments (some dating back 20 years) may never be paid and are considered ‘uncollectable’ by the DWP. Many people still stuck in the CSA logjam have had to start the exhausting process of applying all over again under the CMS.
So in what way was the CMS supposed to be better? Well, first the technology used by the CSA was generally considered ‘not fit for purpose’, and in that respect lawyers believe the new system is an improvement. The government also hoped that using the CMS would save money by encouraging parents to come to their own financial arrangements without external help. Yet another change to the law has meant that certain assets are no longer regarded as relevant to an initial assessment of how much money a parent should provide to support their children. For instance, income from savings and investments – ‘unearned income’ – would no longer be taken into account in a maintenance calculation by the CMS, and neither is ‘overseas income’. Assets that generate no income – property, paintings, cars, yachts, private planes, for example – are not factored into the equation.
This creates more opportunities for rich parents to hide their true wealth. According to Gingerbread, 90 per cent of non-resident parents are fathers. So the vast majority of shirkers are men. And not just men in lower-income brackets who might be attempting to avoid paying maintenance because they can barely afford it, but rich men with the time and resources to shift money around.
Last summer, Gingerbread published an extensive report titled ‘Children Deserve More’ to expose the ease with which parents could wriggle out of payments for the upbringing of children they no longer live with. In one of its case studies, two daughters had grown up without proper maintenance from their rich father. After years of fighting for it, they eventually took the law into their own hands and successfully sued him for their university tuition fees (calculated to cost up to £55,500). The youngest was congratulated on having won a place at Oxford by the judge (but not by her father, who had left the family home when she was eight).
On top of this, a mother can only go to court to appeal the CMS calculation if the father has declared income of more than £156,000 a year (this means, for instance, that he could have as much as £500,000 in cash in a bank earning interest at half a per cent and still get away with paying no maintenance at all). What stood out for Gingerbread was how often the high-earning (and self-employed) fathers exploited the system.
Mishcon’s Sandra Davis is reluctant to tell me all the ways in which the paying parent hides money because she doesn’t want ‘to tell people all the tricks so they can then go on to do it themselves. It’s a bit like going online to find out how to commit suicide.’ And she’s right. There is a blossoming industry springing up around stratagems to get maintenance reduced. (Enter questions about child support into Google and options like ‘How do I reduce my child-support payments?’ spring up.) Getting to the bottom of this sort of dispute via the courts can be a ‘multi-layered issue’, says Davis. ‘It’s regularly the case,’ she adds, ‘that we have to litigate to ascertain the true wealth of a party’s assets, both onshore and offshore, in whatever structure they may happen to be.’ And it’s usually part of a wider problem, she adds, the question being ‘the extent to which money can be manoeuvred out of the frame to minimise payments. If you have assets that are in complex structures offshore, enforcement is an issue.’ Davis does recall – with an amused snort – the father in ‘a cash business’ who hid banknotes ‘in the tyres of his car and drove it to Switzerland to put the money in an account there’.
A persistent question is this: why would a father not want to pay child support for his offspring? ‘After all these years, I have no idea why someone would not pay for their child when they are in a position to do so,’ says Williams. Another lawyer adds: ‘On spousal support, I have heard people say, “I don’t think [the mother] deserves it” – even when the spousal support helps house, feed and clothe their children.’ Davis too has no explanation for what motivates parents to avoid making payment towards supporting innocent children. She describes it as ‘shabby at best, horrendous at worst’. I ask Williams if there is ever a situation where a father would actually be justified either in reducing child maintenance or not paying it at all, and he can only think of one: where the parent has lost his job or his income has genuinely fallen.
Some paying parents will – incredibly – fake a loss of income to get out of paying maintenance. For example, Angela* was married for over a decade. She had met her husband while they were both at university, and she postponed her career in order to raise their son while her husband flourished in his job. When Angela was three months pregnant with their second child, her husband began an affair. The separation was not amicable, but she did expect her husband to behave well towards their two sons (one has special educational needs) because, as well as enjoying a high salary and substantial bonuses, he came from a privileged family. She knew that he had bank accounts overseas.
Jemima’s* husband made no attempt to contact their three daughters for six months after he left, when the children were aged between eight and 13. When he learned – through a local Families Need Fathers group, ironically enough – that he could reduce his payments by making a joint custody arrangement, he applied for 50 per cent residency (which he didn’t get). Of course, an extra night with their father makes little if any difference to a mother’s overall spend if she is the primary carer. But the CMS does not assess child maintenance on the basis of how much it costs to bring up children.
There are other loopholes too. For instance, Jemima’s husband used his new partner’s daughter (who was receiving support from her own father) as an excuse to ask the CMS to reduce the support he was paying for his own children. The effort to ‘keep going’ is enormous for all women in this situation. The onus is on the parent applying for maintenance to prove that the other parent both has money and is seeking to hide it. Yet such parents have no access to documents, bank statements or pay slips. Many former husbands appeal repeatedly in order to stall the process, which results in the mother having to attend tribunal after tribunal and eventually becoming worn down.
‘It wasn’t a fair system before, but it’s now even more difficult for parents to get a fair assessment,’ says Sumi Rabindrakumar, research officer at Gingerbread. Family lawyers say there is widespread frustration over the Government’s changes to the system, not least because, says Bradley Williams, ‘while we were consulted in relation to this, our views were not heard when we made representations about these changes’.
That said, there is hope. Mr Justice Mostyn’s rallying cry has come on the back of a test case brought by Jenny,* a tenacious mother from north London who has turned her child’s misfortune into a crusade to help others. ‘It is an appalling law and I am pushing to change it,’ she says. ‘The majority of those affected are women. They are torn to shreds by the system. But Mostyn has come to our aid. He’s saying, “Come on girls, come to court and I will stretch Schedule 1 [of the Children Act 1989, which relates to child-support claims and is mostly used by unmarried mothers]. Come and get some maintenance.” He has told the CMS that “if you won’t help them, I will.”’ Mostyn has long championed women and, as a barrister, occasionally waived his £500-an-hour fee to represent mothers fighting for child support (one called him ‘the cavalry’).