Case Study 1
The non-resident parent (NRP) earns £200 per week (net). The parent with care (PWC) earns £200 per week (or more). The PWC receives £14.40 Child Benefit.
The PWC has their daughter for 4 nights per week, while the NRP has her for the other 3 nights.
There is a significant cost in looking after a child at all (fixed costs), and the cost per night after that is less significant. Therefore, each parent is assumed to spend £17 for the first night of care and an extra £8 for each subsequent night. So they spend a total of £74 per week on their daughter.
The PWC spends £9.60 of £200 income on the child per week. The NRP spends £50 of £200 income on the child. This is £20 more than he would pay in Child Support if he never saw the child. The reasons are:
- The PWC does not support the child while she is the "absent parent" (Friday to Sunday).
- The PWC continues to receive the Child Benefit even while she is the "absent parent" (Friday to Sunday).
The PWC spends £8 more than the NRP directly on the child. (This ignores the benefit anomalies). Child Support ought to be about £4 per week, to make the expenditure of each parent equal. The White Paper overcompensates at £17 per week, in spite of the fact that Child Benefit has already biased things towards the PWC.
With the Fair Shares formula, the NRP would be liable for a little over £17, while the PWC would be liable for a little under £13, and the net result of £4 or so is the proper amount in these circumstances.
This is an HTML transcription of an article written in September 1999, hence the benefits rates, the references to the White Paper, etc.