Watchdog dismisses CSA funds as waste of money

A £1.1bn programme to improve the performance of the failing Child Support Agency has so far been a waste of money, the National Audit Office reveals today.

Some £539m has been spent on upgrading its computer system since Tony Blair promised immediate improvements in 2003, but the service to sort out maintenance payments to millions of separated parents and their children is as bad as ever.

A further £600m is due to be ploughed into the agency up to 2010 - including an emergency £120m package announced this year by John Hutton, the work and pensions secretary, which the auditors hope may finally provide a better service. But by then the agency may well be scrapped, depending on the findings of a report next month by Sir David Henshaw, former chief executive of Liverpool council.

The NAO report - using updated figures - says £3.5m of maintenance payments remain uncollected, one in four new cases since 2003 have not been cleared, there is a backlog of 330,000 cases, and there are a further 923,000 cases where lone parents on benefit could gain £520 a year needing to be reviewed.

The cost of the agency's collection of maintenance is so high that every £1 it pays out costs 70p to collect.

Paul Cannon, one of the report's authors, said yesterday: "I have been in the government audit service for 39 years. This is the most hard-hitting report I have been involved in."

Edward Leigh, Tory chairman of the Commons public accounts committee, said: "The reform of the Child Support Agency in 2003 has been a complete failure. It ranks among the worst public administration scandals in modern times. And, all over the country, single parents and their children are suffering as a result.

"Ignoring ample warnings, the Department for Work and Pensions, the CSA and IT contractor EDS introduced a large, complex IT system at the same time as restructuring the agency. The new system was brought in and, as night follows day, stumbled and now has enormous operational difficulties."

Frank Field, a former social security minister and MP for Birkenhead, yesterday published proposals calling for a radical reform of the agency. He wants Revenue and Customs to take over the CSA function of deducting payments from taxpayers, and Jobcentre Plus to deduct automatically a £5-a-week maintenance payment from claimants. He also wants a simpler system of assessing maintenance, to be levied like income tax, and for new CSA commissioners - similar to tax commissioners - to be appointed to deal with appeals.

The work and pensions minister, Lord Hunt, welcomed the report. "It has confirmed the views of ministers that we were right to take a fundamental look at both the policy and delivery of child support to ensure the money we spend delivers for children and their parents," he said.

"Staff within the agency have been working extremely hard under difficult circumstances, but I am confident that with their ongoing hard work we will get more money to more children in the UK."

The NAO's report is the second within days to attack the agency's record. The independent case examiner, Jodi Berg, who handles 3,000 complaints a year from parents, said: "One hand does not know what the other is doing."