The sharp rise in the cost of living is a worry for many households. Inflation in the economy is causing the price of goods and services to rocket in a way that the country has not experienced for a long time. Increases in wages however have lagged behind inflation and that means many people are left with less in their pocket every month.
HOW IS INFLATION MEASURED?
The CPI (Consumer Price Index) and the RPI (Retail Price Index) are the industry standards that measure inflation i.e., changes in the cost of living. The CPI monitors changes in the costs of goods and services consumed by an average household, for example, food, drinks, bedding, clothes, etc. The RPI monitors and measures changes in average housing costs eg rent, mortgage payments, etc. as well as changes to goods and services.
These indices inform us of how the cost of living is changing. For many years the UK has enjoyed very low or at times negative inflation. However, economic factors can come together to push the cost of living upwards. The war in Ukraine is reported to be an event that has contributed towards rising living costs because of the impact on manufacturing in Ukraine and their ability to supply goods and services to the world. The supply of energy from Russia is another factor because of the fallout from the war with Ukraine.
INFLATION AND MAINTENANCE ORDERS
Maintenance orders are orders made by the court for one spouse to pay another spouse a monthly amount of money for their ex-partner and/or for the benefit of their children in circumstances where an ex-spouse doesn’t earn enough income to support themselves. These days most maintenance orders are for a fixed period and the monthly amount is also fixed in the order.
When maintenance orders are made to last for a longer period, it is usual to factor into an order a provision that after the first year, payments are automatically increased in line with inflation. An automatic variation saves everyone time coming back to court every year to agree any changes to the maintenance payments. This is called index linking maintenance to inflation.
WHAT’S THE PROBLEM?
The problem for paying spouses is that their income may not be increasing in line with inflation. However, they have been ordered to increase maintenance in line with it. That means they are less well off in contrast to their ex-spouse who has the benefit of the inflation uplift.
WHAT CAN YOU DO ABOUT IT?
For as long as a maintenance order remains payable it can be varied upwards or downwards. If you can show that your income is seriously lagging behind the rise in the cost of living, you can ask the court to drop payments. If you have access to some savings, you may even want to negotiate paying your ex a lump sum to bring the maintenance order to an end once and for all. This is called capitalising maintenance.
WHAT IF MY MAINTENANCE PAYMENTS AREN’T INDEX LINKED?
The same rules apply as above. Maintenance orders can be varied until their expiry date. Section 31 of the Matrimonial Causes Act 1973 gives the court the power to increase or decrease amounts payable under a spousal maintenance order and also gives the court the power to extend the length of time for which the maintenance is payable unless this has been specifically restricted.
ARE YOU WORRIED?
If you are concerned about meeting payments or your ex-spouse is warning you that he or she may stop or reduce payments and you want some information about what you can do about it, come and see one of our specialist family solicitors.
If you require advice in relation to spousal or child maintenance, we can assist. Please feel free to call our office on 01992 892214 to book in for a reduced rate consultation of £150 inc VAT.