Premature conversion to the new CSA scheme - A loophole that may thwart government policy
by Barry Pearson
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The new CSA scheme commences on 3rd March 2003 for new cases (and for linked cases).

The government has known for years of some serious risks with the new scheme. One is that the CSA could not manage to convert existing cases to the new scheme from the start. Another is that where there are significant changes of liability between the current and new schemes, the parents may need extra time to adjust their finances.

Therefore, the government has legislated measures intended to mitigate these risks. Existing cases are to be converted at a future date, currently not identified but expected to be during 2004. And where the liability changes significantly, the change will be phased-in over up to 5 years from that conversion date.

This still left a loophole, which would allow a parent with care to close a "current scheme" case and restart it as a "new scheme" case. So legislation attempts to deter such behaviour by only allowing a case to restart under the new scheme after a "relevant period" of 13 weeks. If restarted within that 13-week period, it will restart under the current scheme instead.

In many cases, this is an insufficient deterrent. The attached analysis shows that, in various very different circumstances, even this 13-week closure will often allow the parent with care to gain an advantage within a year, or sometimes even during 2003. Some such parents are known to be attempting this method already, reportedly on the advice of CSA staff.

The loophole is not confined to the period up to the conversion date. After the conversion date, a parent with care can short-circuit the phasing-in period using the same method of stopping the case for 13 weeks then restarting it. This has a smaller impact, and is not analysed further here. But any measure implemented by the government to close the main loophole should target this loophole one too.

(The final irony is that the one class of cases where early conversion would be widely favoured, where the parents with care are on Income Support and so would benefit from the child maintenance premium, are unlikely to be able to use this method because they don't have the option of closing the case! The poorest people can't benefit from this loophole).

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Page last updated: 17 February, 2003 © Copyright Barry Pearson 2003