Commentary on provisions of Bill
Clause 1: Full employment: reporting obligation
69 The clause will place a new duty on the Secretary of State to produce an annual report on the progress towards full employment during this Parliament. It will hold Government to account on its commitments towards full employment. The first annual report will set out the interpretation of full employment, which will allow Government to take time to consider the measures which best reflect the labour market.
70 Subsection (2) provides that this section is repealed on the date of the first dissolution of Parliament after this section comes into force.
Clause 2: Apprenticeships reporting obligation
71 The Government has set a target for three million apprenticeships to be started in England during this Parliament. This clause would require the Secretary of State to report on progress made towards that target. The clause specifies five reporting periods to cover the entire period beginning with 1 May 2015 and ending with 31 March 2020. Information must be published within nine months of the end of each reporting period.
72 The Secretary of State must lay a report in Parliament for each reporting period. The reports will include or reference statistical information about the progress made in the reporting period towards meeting the target, together with any other information about apprenticeships that the Secretary of State considers appropriate. This might include information about policies introduced to support the growth of apprenticeships.
73 As the target relates specifically to this Parliament, the clause contains a provision for automatic repeal a year after the final reporting period, allowing time for the final report to be published.
74 "Apprenticeship" is defined in the clause as an approved English apprenticeship and certain other statutory apprenticeships. An approved English apprenticeship is an arrangement which takes place under an approved English apprenticeship agreement between employer and apprentice or is an alternative English apprenticeship. The approved English apprenticeship agreement is a combination of paid employment and training towards achievement of a recognised standard. The other statutory apprenticeships relate to apprenticeship frameworks which have not yet been withdrawn by the Secretary of State and are saved by article 13 of and the Schedule to the Deregulation Act 2015 (Commencement No. 1 and Transitional and Saving Provisions) Order 2015 (S.I. 2015/994).
Clause 3: Support for troubled families: reporting obligation
75 This clause requires the Secretary of State to prepare a report on progress made by families who receive support as part of the Troubled Families Programme. This report will be based on information from the programme's national evaluation and the payment by results achieved by local authorities.
76 Currently, to be eligible for support as part of the programme, families must have at least two of the six problems laid out in the programme's Financial Framework and have been prioritised for inclusion by the local authority on the basis that they are families who are likely to benefit from an integrated, whole family approach; and are the families who result in the highest costs to the public purse. Local authorities will typically work in partnership with a range of local public service providers, including those in the voluntary and community sector, to offer the necessary services to their local troubled families. This support aims to achieve significant and sustained progress across each family, compared with all the family members' problems at the point of engagement with the programme; and to move adults in these families off benefits and into continuous employment.
77 The progress report is to be prepared by the Secretary of State before the end of each financial year and laid before Parliament.
78 The operating terms of the Troubled Families Programme may change over the lifetime of the programme. To accommodate this, the Secretary of State is required to issue a notice specifying the measures which the Secretary of State will report against before the start of each financial year. This notice will be provided to local authorities to facilitate the required data collection.
Clause 4: Workless households and educational attainment reporting obligations
79 This clause places a duty on the Government to report annually against measures of worklessness and educational attainment in England. The detail of these measures and related definitions will be taken directly from relevant official statistics so far as practicable, as defined by section 6(1) of the Statistics and Registration Service Act 2007.
80 The clause requires the Secretary of State to lay a report before Parliament annually setting out data on the measures of worklessness and education.
81 The clause requires the worklessness measures to be based, so far as practicable, on data published in relevant official statistics, such as the Office for National Statistics release currently titled "Working and Workless households". The report will identify the proportion of children living in workless households (i.e. where no adult is in employment), and the proportion of children in long-term workless households (i.e. where no adult has been in employment for at least the last 12 months)
82 The clause also requires the educational attainment measures to be based, so far as practicable, on data published in relevant official statistics, such as the Key Stage 4 attainment data published by the Department for Education, in the Statistical First Release currently titled "GCSE and equivalent attainment by pupil characteristics".
Clause 5: Social Mobility Commission
83 This clause sets out how the Social Mobility and Child Poverty Commission will be reformed to be called the Social Mobility Commission and how some of its functions will change.
84 The Commission will have a duty to promote social mobility in England and will provide an independent scrutiny and advocacy role on social mobility in England.
85 It will have a duty to report its views on progress in improving social mobility in the UK and publish this report annually.
86 The Commission will continue to report on the measures taken by the relevant Northern Ireland department in relation to its strategy to ensure that as far as possible children in Northern Ireland do not experience socio-economic disadvantage.
87 It will no longer have a duty to report on the measures taken by Scottish Ministers in relation to their strategy to ensure that as far as possible children in Scotland do not experience socio-economic disadvantage. Nor will it continue to report on the measures taken by Welsh Ministers in accordance with the Welsh strategy.
88 A Minister of the Crown may direct the Commission to carry out any other activity relating to improving social mobility in England and Northern Ireland.
89 The members of the Commission are to be:
a. A chair appointed by a Minister of the Crown;
b. after the appointed day for Northern Ireland, a member appointed by the relevant Northern Ireland department;
c. any other members appointed by a Minister of the Crown.
d. a Minister of the Crown may appoint one of the members as the deputy chair.
90 A Minister of the Crown may, if the Commission so requests, carry out or commission research for the purpose of the carrying out of the Commissions functions.
Clause 6: Other amendments to Child Poverty Act 2010
91 This clause amends the Child Poverty Act 2010 to remove the measures, targets, duties and most other provisions, including:
a. the statutory targets and measures (sections 1-7, 15, 17 and schedule 2);
b. the Social Mobility and Child Poverty Commission (sections 8 to 8C);
c. the duties placed on the Secretary of State to consult on, review, lay and publish a triennial child poverty strategy (sections 9 and 10);
d. the duty placed on Scottish Ministers to consult on, review, lay and publish a triennial child poverty strategy (section 11 and section 13 as it relates to Scottish Ministers and the Scottish strategy);
e. the duties placed on local authorities (sections 19 to 25).
92 This clause makes additional amendments to section 12 of the Child Poverty Act in order to remove references to the targets (which are repealed by this Bill) and to maintain as now the period during which the relevant Northern Ireland department is required to produce its strategy.
93 The clause replaces references to "the target year" with specific dates as a consequence of targets being removed by this Bill.
94 The clause retains definitions of child, parent and parental responsibility in respect of the ongoing duties of the relevant Northern Ireland department to publish its strategy.
95 The clause updates the ‘general interpretation’ section of the Child Poverty Act to explain relevant terms.
Clause 7: Benefit cap
96 The clause amends section 96 of the Welfare Reform Act 2012 which provides for the amount of welfare benefits to which a claimant or a couple can be entitled to be capped by reference to a relevant amount in a prescribed manner.
97 Subsection (2) amends subsection (5) of section 96 of the Welfare Reform Act 2012 and inserts new subsections (5A) and (5B). Subsection (5) allows for regulations to determine the benefit cap's "relevant amount", which will be the weekly level of the cap that will be applied for housing benefit and monthly level that will be applied for universal credit. This determination is to be made by reference to the annual limit of entitlement for a single person or a couple and lone parent.
98 New subsection (5A) provides that the annual limit for the benefit cap should be £20,000 or £13,400 except in Greater London where it is set at £23,000 or £15,410.
99 New subsection (5B) gives the Secretary of State a new power to make regulations that specify which limit applies to couples or single people of a prescribed description. The Secretary of State intends to use this power to prescribe that the lower amounts will apply to single people and the higher amounts will apply to couples and lone parents. The Secretary of State is also granted the powers to allow him to make regulations that define when a person is or is not resident in Greater London and that provide that the monthly or weekly figures derived from the annual limit can be rounded where appropriate.
100 Subsection (3) omits the existing section 96(6) to (8) of the Welfare Reform Act which require the setting of the "relevant amount" (the level of the cap) with reference to estimated average earnings.
101 Subsection (4) amends section (10) of section 96 of the Welfare Reform Act 2012, and defines "welfare benefits" for the purposes of the benefit cap. The definition is the same as those currently included in both the Benefit Cap (Housing Benefit) Regulations 2012 and the Universal Credit Regulations 2013, which define "welfare benefits" as:
a. Bereavement Allowance
b. Carer’s Allowance
c. Child Benefit
d. Child Tax Credit
e. Employment and Support Allowance
f. Guardian’s Allowance
g. Housing Benefit
h. Incapacity Benefit
i. Income Support
j. Jobseeker’s Allowance
k. Maternity Allowance
l. Severe Disablement Allowance
m. Universal Credit
n. Widowed Mother’s Allowance
o. Widowed Parent’s Allowance
p. Widow’s Pension
102 Subsection (5) repeals section 96(11) which refers to regulations under section 96(10) as amended no longer contains provisions about regulations.
103 Subsection (6) omits the existing section 97(3) of the Welfare Reform Act 2012 which required the first regulations laid under the powers of section 96 to be subject to the affirmative regulations procedure. The first regulations were laid in April 2013 and therefore this subsection is no longer needed.
104 Subsection (7) makes a consequential repeal of paragraph 52 of Schedule 12 to the Pensions Act 2014. Paragraph 52 amends section 96(11).
105 Subsections (8) and (9) relate to the commencement of the other provisions in the clause. The powers state that regulations in relation to commencement may make such transitional provision or savings as the Secretary of State considers necessary and may provide that the amendments made by subsections (2) to (5) and (7) do not have effect until a time specified in a notice issued by the Secretary of State in relation to a particular description of person and may set out the form such a notice should take.
106 Subsection (10) provides that any regulations under subsection (8) do not require consultation with Local Authority Associations under section 176 of the Social Security Administration Act 1992.
107 Subsections (11) and (12) provide that any regulations made under this section must be done so through statutory instrument which would be subject to the negative procedure.
Clause 8: Review of benefit cap
108 The clause inserts a new section 96A, Benefit cap: review, into the Welfare Reform Act 2012.
109 The new section 96A(1) commits the Secretary of State to at least one review of the benefit cap in each Parliament to decide whether it is appropriate to increase or decrease one or more of the annual limits specified in subsection 96(5A.)
110 Notwithstanding the requirement in the new section 96A(1), the new section 96A(2) allows the Secretary of State at any other time to review any or all of the annual limits in section 96(5A) to decide whether it is appropriate to increase or decrease one or more of the annual limits.
111 The new section 96A(3) provides that when reviewing the cap the Secretary of State must take into account the national economic situation, as well as any other factors which the Secretary of State considers relevant.
112 The new section 96A(4) allows the Secretary of State, if they think it is appropriate after carrying out a review of the annual limits, to increase or decrease one or more of the annual limits by regulations. Subsection (5) of the clause amends section 97 to make provision about the Parliamentary procedure that applies.
113 The new section 96A(5) provides that any amendments to the annual limit can come into force on different days for different areas, cases or purposes.
114 The new sections 96A(6) and (7) provides similar powers to subsections (8) and (9) of Clause 7 and provide that the Secretary of State may: make such transitional provision or savings as he considers necessary; provide that the change to the annual limit does not have effect in a particular case unless a notice has been issued by the Secretary of State; and may set out the form any such notice should take. New section 96A(8) provides that any regulations do not require consultation with Local Authority Associations under section 176 of the Social Security Administration Act 1992.
115 The new section 96A(9) provides for the circumstances of an early Parliamentary election taking place in accordance with section 2 of the Fixed-term Parliament Act 2011. In such circumstances the duty to review the annual limits provided by the new section 96A(1) is to be disregarded.
116 Subsections (2), (3), (4) and (6) make consequential amendments to section 97 of the Act.
117 Subsection (5) inserts a new subsection (3A) into section 97 that provides that any regulations which amend an "annual limit" in section 96(5A) of the Act, following a review pursuant to inserted section 96A(1) and (2), will be subject to the negative Parliamentary procedure unless they propose a reduction to any one of the annual limits, in which case they will be subject to the affirmative Parliamentary procedure.
118 Subsection (7) and (8) omit section (5) of section 97 of the Act and section (7A) of section 150 of the Social Security Administration Act 1992 and so remove the obligation on the Secretary of State to review each year the level of the benefit against the level of average earnings.
Clause 9: Freeze of certain social security benefits for four tax years
119 This clause provides for a freeze of certain social security benefits for four tax years and introduces Schedule 1, paragraph 1 of which defines the relevant sums.
120 Subsection (1) provides that for each of the tax years ending with 5 April 2017, 5 April 2018, 5 April 2019 and 5 April 2020 ("the four tax years"), each of the relevant sums is to remain the same as it was in the tax year ending 5 April 2016.
121 Subsection (2) provides that for each of the four tax years the rates of child benefit are to remain the same as they were in the tax year ending 5 April 2016
122 Under section 150(1) of the Social Security Administration Act 1992, the Secretary of State for Work and Pensions must in each tax year review the sums of benefits and pensions in order to determine whether they have retained their value in relation to the general level of prices obtaining in Great Britain estimated in such manner as the Secretary of State thinks fit. Subsection (3) provides that the review in each of the four tax years preceding the tax years in which the benefits are to be frozen need not cover any of the relevant sums or the rates of child benefit.
123 Under section 150(2) where it appears to the Secretary of State that prices have increased relative to the value of benefits and pensions the Secretary of State must make an up-rating order. Subsection (4) provides that a draft up-rating order made in each of the four tax years preceding the tax years in which the benefits are to be frozen (e.g. an up-rating order that applies to the four tax years in which benefits are to be frozen) need not cover any of the relevant sums or the rates of child benefit.
124 Subsection (5) requires, in each of the four tax years preceding the tax years in which the benefits are to be frozen, the Secretary of State to lay before Parliament a copy of a report by the Government Actuary on the likely effect of the freeze of each of the relevant sums on the National Insurance Fund in the following tax year (i.e. the years of the freeze), so far as the freeze of the relevant sum relates to any sum payable out of the Fund.
Clause 10: Freeze of certain tax credit amounts for four tax years
125 This clause introduces a freeze on certain relevant amounts, that is, of working tax credit and child tax credit for the tax years ending 5 April 2017, 5 April 2018, 5 April 2019 and 5 April 2020 explaining that the relevant amounts are to remain the same as they were in the tax year ending 5 April 2016. Relevant amounts is defined in paragraph 2 of Schedule 1 (see subsection (3).
126 Subsection (2) specifies that the review under section 41 of the Tax Credits Act 2002 that is undertaken in each of the four tax years preceding the years of the freeze, which shows whether certain benefits have retained their value in each tax year need not cover any of the relevant amounts.
Clause 11: Changes to child tax credit
127 The clause makes amendments to section 9 of the Tax Credits Act 2002 which sets out the maximum rate at which a person or persons may be entitled to child tax credit (CTC).
128 Subsection (2)(a) amends section 9(2)(a) of the Tax Credits Act 2002 by substituting wording so that it provides for an element (defined in section 9(3) as the family element), which must be included in the prescribed manner of determination of the maximum rate of CTC, in respect of every person or persons entitled to CTC who is or are responsible for a child or qualifying young person born prior to 6 April 2017.
129 Subsection (2)(b) inserts a new paragraph (c) into subsection (2) of section 9 of the Tax Credits Act 2002 to provide for a new element which must be included in the prescribed manner of determination of the maximum rate of CTC in the case of a child or qualifying young person who is disabled or severely disabled. This enables the support that is currently provided through the higher amount of the individual element of CTC payable in respect of a disabled or severely disabled child to be made available from 6 April 2017 through the new disability element. The disability element will be payable in respect of all relevant children or qualifying young persons regardless of their date of birth and whether they are the first, second, third or subsequent child or qualifying young persons in the family.
130 Subsection (5) substitutes a new paragraph (c) into section 9(5) of the Tax Credits Act 2002 so as to provide that the prescribed manner of determination of the maximum rate of CTC may include provision for the disability element of CTC to vary according to whether the child or qualifying young person is disabled or severely disabled.
131 Subsection (3) inserts new wording in subsection (3) of section 9 of the Tax Credits Act 2002 to define the element provided for in new section 9(2)(c) as the disability element of CTC.
132 Subsection (4) inserts two new subsections into section 9 of the Tax Credits Act 2002.
133 New subsection (3A) of section 9 of the Tax Credits Act 2002 provides for new subsection (3B) to apply in a case of a person or persons entitled to CTC who is or are responsible for a child or qualifying young person born on or after 6 April 2017.
134 New subsection (3B) of section 9 of the Tax Credits Act 2002 provides that the prescribed manner of determination in relation to the person or persons to whom new subsection (3A) applies must not include an individual element of CTC in respect of a child or qualifying young person born on or after 6 April 2017 unless they are claiming the individual element for no more than one other child or a prescribed exception applies. Section 67 of the Tax Credits Act 2002 provides that for the purposes of Part 1 of the Tax Credits Act 2002, "prescribed" means prescribed by regulations. An exception will apply, for example, to protect instances of multiple births where a family would otherwise have exceeded two children in a family.
Clause 12: Changes to child element of universal credit
135 This clause amends section 10 of the Welfare Reform Act 2012 in relation to the calculation of an award of Universal Credit to provide that the child element will only include amounts in respect of a maximum of two children or qualifying young persons for whom a claimant is responsible.
136 The limit of two will not apply to the additional amount that is paid in respect of a child or qualifying young person who is disabled and the clause is amended to allow this amount to be paid for each disabled child or young person for whom the claimant is responsible.
137 The clause makes it clear that there is provision to allow the Secretary of State to make regulations to allow for an amount to be included in the child element for a child or qualifying young person in certain circumstances where the number of children or qualifying young persons exceeds two, for example in the case of a multiple birth prior to which there were less than two children or qualifying young persons in the household.
138 The clause amends the Universal Credit Regulations 2013 to remove the distinction between the first and subsequent children in the rate of the child element. This means there will be a single rate for the child element instead of the current situation where there is a higher rate payable for the first child which corresponds with the family element in Child Tax Credit.
139 The clause also contains provision to make regulations providing for transitional provisions. For example, it is intended that savings will be made so that existing claimants who are already responsible for more than two children or qualifying young persons at the point the clause comes into force will not see a reduction in the child element of their award and they will continue to receive a higher rate of child element for their first child or qualifying young person. However, such claimants will not be entitled to any further amounts for new children or qualifying young persons who enter the household after the implementation date where this would cause the limit of two to be exceeded, and the higher rate will cease to be payable once the first child or qualifying young person leaves the household.
Clause 13: Employment and support allowance: work-related activity component
140 The clause amends Part 1 of the Welfare Reform Act 2007 which introduced Employment and Support (ESA).
141 Subsection (2) amends section 2 of the Welfare Reform Act 2007 to remove provision for payment of a work-related activity component in relation to contributory ESA.
142 Subsection (3) amends section 4 of the Act to remove provision for payment of a work-related activity component in relation to income-related ESA.
143 Subsection (4) provides the Secretary of State with the power to make regulations for transitional and savings purposes in connection with subsection (2) and (3). The intention is that these regulations will include provision for claimants who are already in receipt of the work-related activity component in ESA to continue to receive that component.
144 Subsection (5) clarifies that regulations under subsection (4) may provide for the work-related activity component to be payable to existing incapacity benefit, severe disablement allowance and income support claimants who have not yet had their awards converted to ESA and are placed in the limited capability for work group following conversion.
145 Subsections (6) and (7) provide that the regulations under subsection (4) are made by statutory instrument subject to the negative procedure.
Clause 14: Universal credit: limited capability for work element
146 The clause amends section 12(2) of the Welfare Reform Act 2012 which provides for an award of universal credit to include an amount in respect of such particular needs or circumstances as may be prescribed in regulations.
147 It removes the fact that a claimant has limited capability for work as a need or circumstance that may be prescribed.
148 The intention is that regulations under existing provisions of the Welfare Reform Act 2012 will remove provision for the limited capability for work element but that this will not apply to claimants who are already in receipt of that element.
Clause 15: Universal Credit: work-related requirements
149 The clause changes the conditionality for responsible carers in Universal credit to the following effect:
a. those with a child aged 3 or 4 should be subject to all-work related requirements;
b. those with a child aged 2 should be subject to work-focused interview requirements and work preparation requirements;
c. those with a child aged 1 should remain subject to work-focused interview requirements only.
Clause 16: Loans for mortgage interest etc
150 The clause enables the Secretary of State to replace existing provisions that allow owner-occupiers who are receiving an income-related benefit to claim additional help towards their owner-occupier payments so that help is instead available by way of a loan. The term "owner-occupier payments" will be defined in regulations and will make provision about mortgage interest payments and payments under alternative finance arrangements. The clause enables the Secretary of State to specify in regulations: conditions that will govern eligibility to receipt of a loan (including that a claimant must be entitled to receive jobseeker's allowance, income support, employment and support allowance, state pension credit or universal credit); provision about the liabilities in respect of which a loan can be made; the method for calculating the amount of loan which can be made; and that the loan will be secured by a charge over land.
Clause 17: Section 16: Further provision
151 The clause enables the Secretary of State to specify in regulations the circumstances in which a person is to be treated as liable or not liable to make owner-occupier payments and the circumstances in which a person is to be treated as occupying or not occupying their home. The clause also enables the Secretary of State to provide for the following in regulations: how a person can apply for a loan; the requirements which they must satisfy before a loan can be made (such as receiving financial advice); provision about entering into an agreement with the person receiving a loan; when and how a loan must be repaid; other terms upon which a loan is made; that interest will be charged on the loan and the rate; that administration charges will be charged; and provision enabling substituted security be taken in cases where a person moves to another property.
152 The clause also provides regulation making provisions to require that loans are paid direct to the claimant’s mortgage lender and sets out what constitutes a "qualifying lender" for these purposes. This provision mirrors the existing legislative provisions in section 15A of the Social Security Administration Act 1992 which will be repealed under clause 18, and will help to ensure the continued forbearance of lenders.
Clause 18: Consequential amendments
153 This clause repeals certain provisions relating to the payment of support for mortgage interest direct to lenders out of a claimant’s entitlement to a relevant benefit. Payment of support for mortgage interest loans will instead be paid direct to lenders by virtue of the provisions at clause 17(4) of the Bill.
154 This clause also amends section 11(3)(a) of the Welfare Reform Act 2012 and section 3A of the State Pension Credit Act 2002, which are about the meaning of "payments in respect of accommodation", by omitting the reference to mortgage payments. This is because mortgage payments will no longer be paid as part of a claimant’s award of universal credit or pension credit, and will instead be offered as a loan under clause 16(1) of the Bill.
Clause 19: Transitional provision
155 This clause makes provision about the transition from the current provision of support for mortgage interest to the new scheme for providing support by way of loans. This clause will ensure that the Government can manage the introduction of support for mortgage interest loans as it sees fit, in particular the migration of those who currently get support for mortgage interest as a benefit to the new loan system.
Clause 20: Expenses of paying sums in respect of vehicle hire etc
156 This clause allows the Secretary of State to recover the administrative costs of making certain payments from the organisation to which the payments are made. Specifically, it relates to payments made to any organisation that leases or sells motor vehicles to disabled persons. It only applies to payments made on behalf of those in receipt of the higher rate mobility component of Disability Living Allowance ("DLA") or the enhanced rate mobility component of Personal Independence Payment ("PIP").
157 This clause works by modifying the Social Security Administration Act 1992 and takes effect through secondary legislation. The costs can be defrayed either by requiring the organisation to pay a fee or by deducting and retaining part of the benefit payment.
Clause 21: Reduction in social housing rents
158 Clause 21 requires that in relation to each relevant year registered providers of social housing must reduce the rents payable by their individual tenants by at least 1%. Subsection 21(1) provides that reduction is calculated by reference to the amount of rent that was payable by the tenant in respect of the preceding 12 months.
159 Subsection (2) clarifies that if a tenancy comes to an end after part of a relevant year or, if the rent reduction requirement no longer applies to the tenancy, then there will be a proportionate reduction in the maximum amount of rent payable.
160 Subsection (3) makes special provision for determining the amount of rent payable in respect of the 12 months preceding the first relevant year. Its effect is that, for the purposes of calculating rent payable during the rent reduction period, social rents are essentially frozen from 8 July 2015 (the date of the summer budget when the rent reduction measures were announced), or another day if the Secretary of State for Communities and Local Government consents to use of a different reference date ("the permitted review day"), and are afterwards reduced, That might be the case where, for example, a private registered provider’s normal annual rent review date is later in the year. The Secretary of State’s consent can be given individually or be in the form of a general consent (subsection (4)).
161 Subsection (5) makes clear that for the purposes of calculating the rent payable in the first relevant year a tenancy existing on 8 July 2015 is to be treated as having been in place for at least 12 months.
162 Subsection (6) sets out what is a ‘relevant year’. It makes clear that there are four relevant years commencing from 1st April 2016. Generally, this is a year beginning on 1st April, however, where a private registered provider's rent year for the majority of its tenancies commences on another date then the rent reductions may be applied from that date instead.
163 Subsection (7) clarifies that a private registered provider is not obliged to use that alternative relevant year provision, but may also use a year commencing 1st April as its relevant year.
Clause 22: Exceptions
164 The clause makes provision for exceptions to the rent reduction requirement set out in Clause 21. Subsection (1) provides that the rent reduction requirements do not apply to low cost home ownership or shared ownership.
165 Subsection (3) provides that the rent reduction requirement also does not apply when the property is subject to a mortgage or other security arrangement and the mortgagee or other security holder is in possession of the property, a receiver is appointed to receive the rents and profits of the property, or a person is appointed pursuant to the mortgage or other security arrangement to administer or sell the property for the purpose of enforcing the security.
166 Subsection (4) provides that if the property is sold for the purpose of enforcing a security then clause 21 ceases to apply from that time.
167 The clause also gives the Secretary of State power to make regulations to disapply the requirement in other cases.
Clause 23: Exemption of a registered provider of social housing
168 Clause 23(1) provides that the Regulator of Social Housing in England may, by direction, exempt a private registered provider from the rent reduction requirement. The Regulator may only issue a direction in circumstances where the Regulator considers that compliance with Clause 21 would jeopardise the financial viability of the provider or, if the circumstances of the private registered provider satisfy requirements prescribed in regulations made by the Secretary of State under subsection (5).
169 Any direction issued by the Regulator has to have the consent of the Secretary of State.
170 Subsection (6) enables the Regulator to publish a document about measures that it considers could be taken by a private registered provider to comply with section 21 and to avoid jeopardising its financial viability.
171 Clause 23(7) gives the Secretary of State powers to by direction grant an exemption to a local authority if conditions are set out in subsection (10), relating to serious financial difficulties, or subsection (11), relating to requirements prescribed in regulations, are satisfied. Subsection (12) enables the Secretary of State to publish a document about measures that he considers could be taken by a local authority to comply with section 21 and to avoid serious financial difficulties.
172 The Regulator or Secretary of State (as applicable) may grant to a provider a full or limited exemption. The clause provides the flexibility to tailor the exemption to the circumstances of a provider such as granting an exemption in respect of only some of the provider's social housing or for a limited period, applying a lesser reduction or limiting rent increases as specified in the direction.
Clause 24: Enforcement
173 The clause makes consequential amendments to Part 2 of the Housing and Regeneration Act 2008, to ensure that, if appropriate, the Regulator may take enforcement action in relation to breaches of the rent reduction requirement.
Clause 25: Further provision about social housing rents
174 The clause introduces Schedule 2 which makes provision for the rent initially payable by tenants of social housing whose tenancies begin after the beginning of 8 July 2015.
Clause 26: Provision about excepted cases
175 The clause provides the Secretary of State with a power to make regulations regarding the maximum amount of rent payable by a tenant in a category excepted by regulations under clause 22 or Schedule 2. It enables the Secretary of State to make regulations setting out the maximum amount of rent payable by a tenant who ceases to be excepted from the rent reduction provisions part of the way through a relevant year. The regulations would deal with the rest of that year and, if there is one, the following relevant year.
176 The regulations may make provision about disapplying or modifying a requirement relating to a registered provider. Subsections (4) to (7) enable the Secretary of State to make provision for an exemption regime applicable to excepted cases (i.e. provision equivalent to clause 23). The regulations may allow a direction to specify the period and particular social housing covered by an exemption. The regulations may also provide for conditions to be satisfied before an exemption may be granted, and require the Regulator to obtain the consent of the Secretary of State before issuing an exemption.
177 Subsection (8) makes provision for enforcement of regulations under this new clause by providing that the regulations under this new clause may make provision applying Part 2 of the Housing and Regeneration Act 2008 with modifications.
Clause 27: Rent standards
178 The clause makes the powers of the Regulator of Social Housing to issue rent standards , under Sections 194(2A) and 198(3) of the Housing and Regeneration Act 2008, subject to the provisions in the Bill about rent levels.
Clause 28: Interpretation
179 The clause makes provision about terms used in the social housing rents provisions. In particular, subsections (3) and (4) make provision clarifying when a tenancy begins and how a tenancy is to be treated as continuing, or as coming to an end.
Schedule 1: Meaning of "the relevant sums" and "the relevant amount"
180 Schedule 1, paragraph 1, sets out the relevant sums for the purposes of Clause 9 (freeze of certain social security benefits for four tax years). These are:
181 The personal allowances for a person or couple used in the calculation of Income Support;
182 The personal allowances for a person or couple used in the calculation of Housing Benefit;
183 The work-related activity component of housing benefit;
184 The age-related amount for contribution-based jobseeker’s allowance which is relevant for calculating the claimant's personal rate;
185 The personal allowances for a person or couple used in the calculation of income-related jobseeker’s allowance;
186 The contributory allowance of employment and support allowance;
187 The work-related activity component of contributory employment and support allowance;
188 The prescribed amounts for income-related employment and support allowance;
189 The work-related activity component of income-related Employment and Support Allowance;
190 The standard allowance for a single or a joint claimant of universal credit;
191 The additional amount of universal credit for a disabled child or qualifying young person (but only the smaller or smallest of sums specified); and
192 The limited capability for work element of universal credit
193 Schedule 1, paragraph 2, sets out the relevant sums for the purposes of clause 10 (freeze of certain tax credit amounts for four tax years). These are:
194 The individual element of child tax credit;
195 The basic, 30 hour, second adult and lone parent elements of working tax credit.
Schedule 2: Further provision about social housing rents
196 Schedule 2 makes provision for the rent initially payable by tenants of social housing where a tenancy begins after the beginning of 8 July 2015. Part 1 of the Schedule sets out how such rents should be set in 3 different scenarios: new and existing social rent housing and Affordable Rent housing.
197 Paragraph 1 of Part 1 sets out the case for a new tenant of existing social rent housing where a tenancy begins after the beginning of 8 July 2015. The initial rent payable by that tenant should be the higher of the ‘social rent’ rate, or the ‘assumed rent’ rate, on a pro-rata basis, with appropriate reductions. It also prescribes how the ‘social rent’ rate and the ‘assumed rent’ rate are determined.
198 Paragraph 2 of Part 1 sets out the case for a tenant of new social rent housing where a tenancy begins after the beginning of 8 July 2015. The rent payable by that tenant is the social rent rate, on a pro-rata basis, with appropriate reductions.
199 Paragraph 3 of Part 1 sets out the case for a person becoming tenant of Affordable Rent housing after 8 July 2015. The rent payable by that tenant should be set at no more than 80% of the market rate for that social housing, with the 1% reductions then applied in each of the following years. The market rent should be based on the valuation methods recognised by the Royal Institution of Chartered Surveyors.
200 Paragraph 4 enables the Secretary of State to make provision for identifying accommodation that may be let as social housing at an affordable rent, for example, where there are agreements or arrangements with the Homes and Communities Agency, the Greater London Authority, and the Secretary of State.
201 Part 2 of Schedule 2 sets out exceptions, exemptions and makes provision for enforcement of the requirements in Part 1. Provision for exceptions and exemptions mirror the conditions in Clauses 22 and 23 of the Bill. Paragraph 7 gives the Secretary of State a power to provide for the enforcement of this Schedule.
202 Part 3 of Schedule 2 sets out the general provisions. Paragraph 8 makes provision relating to regulations under the Schedule. Paragraph 9 gives the Secretary of State power to issue guidance relating to the determination of assumed rent. Paragraph 10 sets out the meaning of 'the relevant day'.