Welfare Reform and Work Bill

Explanatory Notes

Legal background

Full Employment Reporting Obligation

42 There is no legislation on the Full Employment measure.

Apprenticeships Reporting Obligation

43 Existing legislation on apprenticeships is:

a. the Apprenticeships, Skills, Children and Learning Act 2009 (amended by Schedule 1 to the Deregulation Act 2015).

Troubled Families Programme

44 There is no specific statutory basis for the Troubled Families Programme. Rather, grant funding to local authorities is provided in exercise of the power contained in section 31 of the Local Government Act 2003.

Life chances

45 The relevant legislation is:

a. the Child Poverty Act 2010, as amended by the Welfare Reform Act 2012.

Benefit cap

46 The relevant legislation, as indicated in the policy background section, is :

a. sections 96 and 97 of the Welfare Reform Act 2012, and

b. section 150 of the Social Security Administration Act 1992.

Freeze of certain social security benefits and certain tax credit amounts for four tax years

47 The relevant legislation is:

a. Social Security Administration Act 1992, and

b. Tax Credits Act 2002.

48 Under section 150 of the Social Security Administration Act 1992, the Secretary of State for Work and Pensions is required to review the value of benefits and pensions in light of changes in prices. Where it appears to the Secretary of State that prices have increased relative to the value of those benefits the Secretary of State must make an up-rating order which increases certain benefits by at least the amount by which prices have increased and if the Secretary of State considers it appropriate, having regard to the national economic situation and any other matters the Secretary of State considers relevant, which also increases other benefits by such a percentage as he thinks fit. The Order is subject to Parliamentary approval. The Bill provides that, for the four tax years from 2016-17, each of the relevant sums listed in paragraph 1 of the Schedule will remain the same as it was in 2015-16.

49 The Bill will not become statute until it has completed its Parliamentary stages and has Royal Assent. We expect this to be within the current tax year, but until that time the current legislation applies. This means that the Secretary of State will review the value of benefits and pensions in light of the change in prices in the autumn, and make decisions on up-rating for 2016/17 at that stage in accordance with the legal obligations in force at the time.

50 Responsibility for up-rating child benefit was transferred from the Secretary of State to the Treasury under section 49(3) of the Tax Credits Act 2002. Therefore, the Treasury must review the Child Benefit rates for Great Britain in each tax year under section 150(1) of the Social Security Administration Act 1992 to determine whether or not they have retained their value in relation to the general level of prices in the United Kingdom. Section 150(2) of the that Act provides that HM Treasury has a discretion, where it is considered appropriate, to up-rate the rates of child benefit taking into account the "national economic situation and any other matters" which "are considered relevant". Child benefit covers the whole of the UK.

51 Responsibility for tax credits lies with HM Treasury under sections 8, 9, 10, 11 and 13 of the Tax Credits Act 2002. The Treasury must review the rates in each tax year under section 41 of that Act to determine whether they have retained their value in relation to the general level of prices in the UK. Section 41 also obliges the Treasury to prepare a report of each review and include a statement of what each amount would be if it had fully retained its value, and to publish the report and lay a copy of it before each House of Parliament. Tax credits cover the whole of the United Kingdom.

Changes to the Child Tax Credit

52 Responsibility for Child Tax Credit (CTC) lies with HM Treasury under sections 8, 9, and 65(1) of the Tax Credits Act 2002.

53 Currently, section 8 sets out the entitlement to CTC and describes what a child and qualified young person is. Section 9 sets out the maximum rate of CTC and provides that the prescribed manner of determination of the maximum rate must include provision for

a. an element which is to be included in the case of all persons entitled to CTC (the 'family element')

b. an element in respect of each child or qualifying young person for whom the person or persons entitled to CTC is or are responsible (the 'individual element') .

54 Section 9(5) makes provision for the prescribed manner of determination and provides that the individual element must be increased in the case of a child or qualifying young person who is disabled and further increased in the case of a child or qualifying young person who is severely disabled.

Changes to the child element of Universal credit

55 Relevant legislation for the child element in universal credit is:

a. section 10 of the Welfare Reform Act 2012, and

b. regulations 24 and 36 of The Universal Credit Regulations 2013

Removing the work-related activity component in employment and support allowance and the limited capability for work element in universal credit

56 The existing legislation which makes provision for the work-related activity component in employment and support allowance (ESA) and the limited capability for work element in universal credit (UC) is:

a. for ESA, Part 1 of the Welfare Reform Act 2007; and

b. for UC, Part 1 of the Welfare Reform Act 2012

Conditionality for responsible carers in universal credit

57 The relevant conditionality requirements are set out in the following legislation:

a. Sections 19, 20, 21 and 22 of the Welfare Reform Act 2012; and

b. Regulation 91 of the Universal Credit Regulations 2013

Loans for mortgage interest

58 The relevant legislation for support for mortgage interest is:

a. Income Support – Sections 124 and 135(1) Social Security Contributions and Benefits Act 1992 (SSCB Act);

b. Jobseeker’s Allowance – Sections 1 and 4(3), (3A) and (5) Jobseekers Act 1995, and regulations 83 and 84 of, and schedule 2 to, the Jobseeker’s Allowance Regulations 1996;

c. Employment and Support Allowance – Sections 1 and 4(1), (2) of the Welfare Reform Act 2007;

d. State Pension Credit – Sections 1 and 2(2) and (3) State Pension Credit Act 2002; and

e. Universal credit - sections 8 and 11 of the Welfare Reform Act 2012

Social housing rents

59 The legislation relating to existing housing and rent policy for private registered providers and local authorities, including changes to end housing subsidy and enable self-financing of local housing authorities, is set out in a combination of primary and subordinate legislation. The current provisions are:

a. Housing Act 1985;

b. Local Government and Housing Act 1989;

c. Housing and Regeneration Act 2008;

d. Localism Act 2011;

e. secondary legislation made under the above Acts.

Prepared 16th July 2015