Commentary on clauses

Clause 55: Attendance Allowance

Currently, the rules that specify the conditions of entitlement and the circumstances in which a person qualifies for Attendance Allowance (AA), are set out in primary legislation, in the Contributions and Benefits Act (sections 64(2) and 64(3)). The present lack of regulation-making powers in AA means, for example, that when proposed changes apply to both AA and Disability Living Allowance (DLA), which are very closely related benefits, it is not possible to introduce the changes simultaneously through regulations.

Subsection (1) introduces a regulation-making power for AA similar to the power to make regulations for DLA. It inserts a new section 64(4) into the Contributions and Benefits Act, to create a power to prescribe circumstances in which the AA night attendance or day attendance conditions are, or are not, to be taken as met.

It is intended that the regulations would be used when the conditions of entitlement to AA needed to be amended or clarified: for example, if a judicial decision departed significantly from the policy intention.

Attendance Allowance for the terminally ill

AA can be awarded, and special rules applied, in respect of people who are terminally ill. Section 66 (1) of the Contributions and Benefits Act refers to entitlement "for the remainder of his life". This can give the mistaken impression that entitlement under the special rules for people who are terminally ill can never be changed, even if their prognosis improves. The definition of "terminally ill" is in section 66(2)(a), and this Bill does not seek to change it.

Subsection (2) amends sections 66(1)(a) and (b) of the Act to make it clear that entitlement to AA under the special rules for terminally ill people only applies during the period in which a person is classed as "terminally ill". Clause 56 makes a similar amendment to awards of DLA "for life"

Clause 56: Disability Living Allowance

Section 71(3) of the Contributions and Benefits Act permits awards of Disability Living Allowance (DLA) to be made "for life". Life awards are made where it seem likely that a person's entitlement to benefit will continue indefinitely. This has led to misconceptions: many people with a life award believe that the benefit will continue even if they are no longer entitled to it. However, these life awards, like all other awards, can be altered when there are grounds for doing so.

Subsections (1) and (2) remove the reference to awards for life in section 71(3) of the Act, and make it clear that DLA may be awarded either for fixed periods or for indefinite periods, subject to review-but that entitlement only applies while the person satisfies the conditions of entitlement. Clause 55 makes similar provision for awards of Attendance Allowance for the terminally ill.

Entitlement to the higher-rate mobility component of DLA

The rules for entitlement to the higher rate mobility component of DLA are in section 73 of the Contributions and Benefits Act. Currently, under section 73(1), children must reach the age of 5 before they can become eligible.

Subsection (3) extends eligibility to the higher rate mobility component to severely disabled 3 and 4 year-olds, in recognition that they can encounter serious mobility problems. The rules governing eligibility to the lower rate mobility component will not be affected, and this will continue to be available to children on reaching the age of 5.

The subsection inserts a new section 73(1A) in the Contributions and Benefits Act, to provide for children aged 3 and over to qualify for the higher rate mobility component if they satisfy the eligibility requirements, and to draw a distinction on grounds of age between eligibility between the higher and lower rates of the mobility component.

Subsection (4) confirms that the extended eligibility does not affect awards made before the date when subsection (3) comes into force.

CLAUSES 57-59: MISCELLANEOUS PROVISIONS

Clause 57: Child Benefit: claimant to state national insurance number

This clause requires all people claiming Child Benefit either to state their national insurance number, giving proof that it is theirs, or to provide information that would enable them to be allocated a national insurance number. This applies to the adult claimant (usually a parent), rather than the child on whose behalf Child Benefit is claimed (children under 16 would not normally have national insurance numbers).

Section 19 of the Social Security Administration (Fraud) Act 1997 makes entitlement to most benefits conditional on the production of a national insurance number. However, because of the definition of "benefit" used (in section1(1C) of the Administration Act), the requirement does not apply to Child Benefit. This clause corrects that position, by adding a new subsection (1A) to the rules for claiming Child Benefit set out in section 13 of the Administration Act.

The Fraud Act allowed regulations to be made exempting certain categories of people from the requirement to supply a national insurance number. The inserted subsection (1C) allows exceptions to be made by regulations for claims to Child Benefit: for example, for certain members of the armed forces, voluntary and charitable bodies.

The requirement in the Fraud Act did apply to Guardian's Allowance. However, since entitlement to Guardian's Allowance is conditional upon the receipt of Child Benefit, regulations were made to exempt it. As a consequence of this clause, it is intended that further regulations will be made to reverse this exemption.

Background

Although a national insurance number is currently not legally required for a claim to Child Benefit, it is requested. In practice, approximately 95%-97% of new claimants do provide national insurance numbers.

The requirement to supply a national insurance number and supporting evidence was introduced to help secure the benefits system against abuse. In addition, national insurance numbers are essential for the efficient processing of benefit claims on the computer systems used by the DSS. For example, the use of a national insurance number enables the Child Benefit system to relay details of a claim to the National Insurance Recording System, which stores people's contributions records. This ensures the accurate assessment of Home Responsibility Protection (HRP) which safeguards the pension entitlement of those who are unable to work due to caring responsibilities.

Clause 58: General functions of local authorities as regards claims and information

Local authorities have statutory responsibility for the administration of Housing Benefit (HB) and Council Tax Benefit (CTB) and, under current legislation, may collect information relevant to claims for those benefits only. Legislation governing the supply of social security information from the DSS to local authorities provides only for such information to be supplied where it is relevant to a HB or CTB claim. This clause will enable local authorities to take part in the Government's proposals for a Single Gateway to the benefits system (see clauses 47 and 60), by enabling them to collect and record information, and give advice, in respect of other social security matters.

The clause is also needed to enable local authorities to play a full part in the wider DSS initiative to make social security as a whole more customer-focused and better co-ordinated. The Department's aim is that, as far as possible, customers should be able to claim social security benefits, child support and war pensions, give information and make enquiries concerning their social security business through a single point of contact. This might be, for example, the Benefits Agency or the local authority.

It is also intended that claims for a range of social security benefits should be able to be made on a single, integrated claim form. For example, pensioners wishing to claim Retirement Pension, Income Support, HB and CTB will be able to do so on the same form, rather than having to complete separate claims and provide the same information to both the Benefits Agency and the local authority.

Commentary

The clause inserts a new section 16A into the Administration Act to provide powers:

• to make regulations to widen the categories of social security matters for which local authorities may collect information; and

• to make regulations enabling local authorities to give information and advice on social security matters other than HB and CTB.

Subsection (1)(a) provides a regulation-making power to enable local authorities to receive and pass on claims for prescribed benefits. Regulations made under this subsection would prescribe the benefits for which local authorities may take claims, and provide for those claims to be passed to the relevant adjudicating authority for processing. For example, a claim for Income Support would be passed to the Benefits Agency for assessment and adjudication. Claims for war pensions and applications for child support would be passed direct to the War Pensions Agency and the Child Support Agency respectively.

Subsections (1)(b) and (1)(d) provide powers to make regulations to enable local authorities to collect and record information relating to social security matters from customers who are claiming or receiving HB, CTB, or any prescribed benefit.

Subsection (1)(c) provides a power to make regulations to enable local authorities to give advice and information on social security matters to customers claiming or receiving HB, CTB or any prescribed benefit. The Government intend that regulations made under this subsection would allow local authorities to view information held on the Benefits Agency's computer systems relating to an individual's benefit claim, specifically for the purpose of answering an enquiry from that person concerning their claim. This would enable local authority staff, for example, to answer a customer's enquiry about the due date of their next Income Support payment.

Subsection (2) provides that a reference to any prescribed benefit in subsection (1) includes a reference to child support or war pensions, and defines "social security matters" for the purposes of subsection (1) as matters relating to social security, child support or war pensions.

Clause 59: Welfare benefits: miscellaneous amendments

Part IV: "splitting" of Jobseeker's Allowance hardship payments

Regulation 34 of the Social Security (Claims and Payments) Regulations 1987 allows certain benefit payments to be paid, wholly or in part, to a third party where this is considered necessary in order to protect the interests of the claimant, child or dependent. An example of where this might happen is where the claimant is totally unable to manage his financial affairs and would therefore not use his benefit payment to meet his family's immediate needs. Whereas standard income-based Jobseeker's Allowance (JSA) can already be "split" in this way, the current wording of the Jobseekers Act means that hardship payments of JSA made under section 20(4) or paragraph 10(2) of Schedule 1 can only be made to the claimant.

Paragraph 26 of Schedule 8 amends the Jobseekers Act, to enable all or part of any hardship payment of JSA to be paid to a person other than the claimant. An officer acting on behalf of the Secretary of State will identify the circumstances in which a hardship payment should be paid to another person, whether all or part of the benefit is involved, and the person to whom the payment is to be made.

Background

Hardship payments of JSA, and the circumstances in which they may be made, are described in Part IX of the Jobseeker's Allowance Regulations 1996. Hardship payments are only made where the claimant, their partner, or a member of their family would suffer hardship because JSA is not paid. Two of the situations in which the Jobseekers Act provides for hardship payment to be made are:

• Section 20(4) provides that hardship payments may be made to claimants even when sanctions have been applied, under section 19, and their JSA has been withheld. For example, this might be because the claimant failed to attend a prescribed training programme, or lost a job through misconduct.

• Paragraph 10(2) of Schedule 1 to the Jobseekers Act provides that hardship payments may be made where a claimant's JSA payments have been suspended, where a question arises as to whether the claimant satisfies any of the labour market conditions of entitlement.

Part VI: Social Security Advisory Committee

One of the statutory functions of the Social Security Advisory Committee (SSAC) is to scrutinise proposals for regulations to be made under "relevant enactments" (i.e. social security legislation listed at section 170(5) of the Administration Act). This Part of Schedule 8 adds to the list two new provisions from this Bill which would not otherwise fall within SSAC scrutiny functions:

• Clause 60: powers to supply information; and

• Clause 65: provisions for a scheme to reduce under-occupation of social housing.

Clause 60: Disclosure and use of information

This clause will facilitate cross-Government working in a number of social security and employment-related areas. It is needed to deliver the Single Work-Focused Gateway, Employment Zones and the new Personal Capability Assessment, and to ensure that information can be used to best effect in operating the New Deal for Lone Parents, the New Deal for Disabled People and the New Deal for Partners of Unemployed People.

Single Work-Focused Gateway

An important focus of this clause is to enable the introduction of the Single Work-Focused Gateway (see also clause 47). The Single Gateway will be administered by staff from the Employment Service, the Benefits Agency and local authorities, as well as private or voluntary organisations. In this last case, the staff will be contracted to carry out parts of the Gateway process.

This clause does two main things to facilitate the Single Gateway process. First, it will allow staff from any organisation administering the Single Gateway to use and disclose information relating to claims to all benefits involved in the Gateway. Second, it will allow staff who are administering the Gateway to use and disclose information about a claimant's employability. For example, it will enable information which is collected at the "registration and orientation" stage of the Gateway - such as information about the client's previous work experience, skills and educational attainment - to be passed on to the client's personal adviser, who may be from a different organisation.

The use and disclosure of information under this clause will be limited to persons who are prescribed in regulations. It is intended that information which is needed to assess the benefit claim will only be passed on to the appropriate agency for processing, and that information about the client's employability will only be passed on to their personal adviser.

From June 1999, a series of pilots will be run to test the feasibility and success of the Single Gateway. This provision will be introduced into the pilots once the legislation is enacted. Until then, any transfer of a claimant's information will be voluntary, and depend on consent.

In the course of the work-focused interview, the personal adviser may also identify a source of help or support that is available to the client, which would improve his capacity to become more independent. For example, the client might benefit from help with literacy skills. However, since any action other than participation in the interview will be voluntary, any passing of information beyond this stage will be voluntary too. So if the personal adviser makes a suggestion which the client wishes to take up, he would ask the client to sign a disclaimer, allowing the personal adviser to pass a specific piece of information to that specific specialist provider. There is no provision in this Bill for this to take place, since it will happen on a purely voluntary basis.

Employment Zones

The Bill also provides for the introduction of Employment Zones (see clause 49). This clause will enable information obtained for Jobseeker's allowance purposes to be passed on to the Employment Zone provider, which may be an organisation in the public, private or voluntary sector. The Employment Zone provider will need to know the amount of JSA to which the claimant is entitled, so that they can pay him or her an equivalent amount (minus the nominal amount of JSA which would still be in payment by the DSS). Information will also need to flow from the Employment Zone provider to the Employment Service and Benefits Agency (BA), for example to inform BA when a participant has obtained work so that their nominal JSA payments can be terminated; or when the circumstances of the participant have changed in a way which may require their level of benefit to be increased (such as the birth of a child).

New Deal for Partners of Unemployed People, New Deal for Lone Parents and New Deal for Disabled People

In addition, this clause is needed to ensure that information can be used to best effect in operating the New Deal for Lone Parents, the New Deal for Disabled People and the New Deal for Partners of Unemployed People.

In the case of the New Deal for Partners of Unemployed People, partners of long-term JSA claimants are invited by the Employment Service to receive specialist advice and support, to help them into work if they wish. The Employment Service may contact the partner direct.

For the New Deal for Lone Parents and the New Deal for Disabled People, information provided in connection with a person's benefit claim may, where appropriate, be passed on by the Benefits Agency to the Employment Service, so that lone parents and disabled people who claim benefits can be contacted and offered advice on jobsearch, training and childcare. Schemes under the New Deal for Lone Parents and the New Deal for Disabled People need information to be disclosed to and used by private or voluntary sector organisations where they administer these schemes. Both the New Deal for Lone Parents and the New Deal for Disabled People operate on a voluntary basis.

Personal Capability Assessment

This clause is also needed to ensure that information collected during the new Personal Capability Assessment which relates to a person's work-related capabilities (including information that also relates to the question of whether they are technically incapable of work for benefit purposes) can be made available to personal advisers. The information may also be used more generally, for the purpose of enhancing a person's employment prospects and rehabilitation. The provisions for the Personal Capability Assessment are contained in clause 50 and Part II of Schedule 8 (see earlier commentary).

Data Protection

The processing of information in this area will be governed by data protection law, including the Data Protection Act 1998 when commenced. Such processing must be fair and lawful, and comply with the other data protection principles such as the right of individuals to see their own records.

Commentary

Subsection (1) provides a power to make regulations specifying how, when and for what purposes social security information can be provided by those people mentioned in subsection (2) (Ministers of the Crown and persons providing services to them, local authorities, and persons providing services to, or exercising functions of, local authorities). It limits the use which can be made of such information to "relevant purposes", as defined in subsection (7).

The clause as a whole provides a framework for the information sharing activities which underpin a number of social security and employment-related initiatives. Regulation-making powers within the clause are provided to achieve appropriate flexibility in an area where configurations of services and help are likely to change and evolve - for example, in the light of experience from current pilot and prototype operations or to try new ways to improve the effectiveness of existing national programmes. Subsection (1) restricts the use of these regulations to the provisions of this Bill listed in subsection (3), or to any scheme defined under subsection (4).

Subsection (4) enables regulations under subsection (1) to prescribe schemes which are concerned with the employment or training prospects of a claimant or his partner. It is currently intended to prescribe the following schemes:

• the New Deal for Partners of Unemployed People;

• the New Deal for Lone Parents; and

• the New Deal for Disabled People.

However, this subsection enables new schemes to be prescribed as they are developed.

Subsection (5) ensures that regulations made under subsection (1) may enable information to be disclosed to supplement or amend information already held by another person. It also enables the recipient in turn to disclose this information to others, or use it for another purpose, insofar as they were permitted to disclose or use the information which they already held. This provision echoes section 122B(4) of the Administration Act 1992.

Subsection (6) allows the Government to make regulations permitting those people in subsection (2) who hold social security information to use it for purposes connected with employment and training. The intention is that regulations which are made under this power will specify that information supplied for benefit purposes can be used in order to invite the claimant's partner to take part in the New Deal for Partners of Unemployed People and to receive advice and support to help them back to work.

Subsection (7) defines the purposes for which information supplied under this section can be used. These are purposes connected with social security, child support or war pensions; or purposes connected with employment or training. It also defines "social security information" for the purposes of this section, as information relating to social security, child support or war pensions. This is consistent with the definition in section 3 of the Social Security Act 1998.

CHAPTER II: NATIONAL INSURANCE CONTRIBUTIONS

Clauses 61 and 62 : Class 1 contributions

Clause 61 amends sections 8(1) and 9 of the Contributions and Benefits Act. It restores the power to define non-weekly equivalents of the weekly earnings thresholds used to calculate Class 1 National Insurance contributions.

Sections 8 and 9 contain the rules for calculating Class 1 National Insurance contributions. Section 8 deals with 'primary' (i.e. employee) contributions, which are paid on earnings between the lower and upper earnings limits; section 9 covers 'secondary' (i.e. employer) contributions, which are paid on earnings over an earnings threshold. Since these limits are all based on weekly earnings, both sections should contain a power to define 'prescribed equivalents' for those people paid other than on a weekly basis.

However, when section 51 of the Social Security Act 1998 amended sections 8 and 9, it unintentionally duplicated this power in section 8, and removed it from section 9. Therefore,

• subsection (2) removes the duplicated provision in section 8(1);

• subsections (3) and (4) amend section 9, to restore the provision to prescribe an equivalent threshold.

Clause 62 makes corresponding provision for Northern Ireland.

Clauses 63 and 64: National Insurance Class 1B contributions

Clause 63 ties the National Insurance Class 1B rate to the rate of 'secondary' (employer) Class 1 contributions, thus preventing the Class 1B rate from being raised independently by regulations. Both rates are currently set at 12.2%.

It amends section 10A of the Contributions and Benefits Act which deals with Class 1B contributions, replacing subsection (6) (which provides that the percentage rate is to be 12.2%, but enables it to be altered under section 143A of the Administration Act) with a provision to tie it to the rate of the secondary contribution, as specified in section 9(2) of the Contributions and Benefits Act.

Background

Measures introduced in the Social Security Act 1998 provide that from 6 April 1999, employers can settle the National Insurance liability on items included in a Pay As You Earn Settlement Agreement (PSA) for tax purposes. This introduces a new class of National Insurance known as Class 1B.

The percentage rate of Class 1B NICs was initially set at the same level as the rate of secondary (employer) contributions, but was capable of being varied independently of the secondary Class 1 rate.

This clause ties the rate of Class 1B directly to the rate of secondary (employer) contributions, thus taking away the ability for it to be varied independently of that rate.

Clause 64 makes corresponding provision for Northern Ireland.

Schedule 10 Parts VI and VII: Repeals : National Insurance contributions

All the repeals in Parts VI and VII are consequential on clauses 61 to 64-except the repeal of Schedule 1 paragraphs 8(2) and (3) of the Contributions and Benefits Act. This updates the legislation by removing reference to the payment of National Insurance contributions by adhesive stamps, to reflect the current methods of payment available.

Background

Before April 1993, flat rate National Insurance contributions payable by the self-employed (Class 2) or paid on a voluntary basis (Class 3) could be made by affixing a stamp of appropriate value to a contribution card in respect of each contribution week. Since then, it has been possible to:

• make a payment of the amount of contributions specified in a written notice issued within 14 days of the end of the quarter in question; or

• pay by direct debit.

Adhesive stamps ceased to be sold by the Post Office soon after, and could not therefore be used as a method of paying National Insurance contributions. The references in Schedule 1 paragraph 8(2) and (3) are therefore redundant.

CHAPTER III: MISCELLANEOUS

Clause 65: measures to reduce under-occupation by housing benefit claimants

This clause allows tenants living in the social rented sector (typically, property owned or managed by the local authority or a housing association), who are in receipt of Housing Benefit (HB), to keep part of any benefit saving generated by moving to cheaper and smaller accommodation.

This pilot scheme will encourage tenants who are "under-occupying" accommodation in the public or social rented sector (that is, living in accommodation that is considered large in relation to their number and needs) to move to smaller and cheaper accommodation. On completion of the move, HB claimants will be rewarded with a lump-sum payment equivalent to half the difference between their old and new weekly rent, multiplied by 156. Since HB usually meets 100% of rental costs in the social rented sector, this is roughly half of the benefit savings expected over three years. It is intended that the lump sum will be disregarded as capital in the calculation of entitlement to income-related benefits, such as Income Support or the Working Families Tax Credit.

The clause is needed because the scheme involves making payments for purposes beyond those prescribed in primary legislation. It allows the details to be set out in regulations.

• Regulations under subsections (1) and (3) would define exactly how the sum paid to claimants should be calculated, and in what circumstances a dwelling would be regarded as "under-occupied" (for example, a 3-bedroom house could be said to exceed the requirements of a couple).

• Subsection (4) gives the power to make deductions from the lump-sum payment for any arrears of rent owed by the tenant, or for any over-payment of HB which is recoverable from the claimant. Other debts to the local authority or to the DSS (e.g. the Social Fund) are not to be deducted; deductions are to be strictly limited to the two items mentioned.

• Regulations under subsection (5) would provide for a right of appeal against decisions made under the scheme.

• The power would allow the under-occupation scheme to be applied nation-wide, though subsection (7) makes clear that no local authority would be obliged to take part in the scheme. However, the intention is to pilot the scheme in three local authorities; therefore subsection (6) allows the power to be used for a limited time and in certain areas only, and for any necessary transitional arrangements to be made.

• Subsection (9) provides that the under-occupation scheme payments should be administered under the rules and powers for Housing Benefit (which are set out in the Administration Act)-but allows for exceptions to be specified.

• Among these HB rules is the procedure for the DSS to reimburse local authorities for the money they pay in benefits. Normally this happens through a subsidy system; the subsidy rules mean that an authority may not always receive the full amount it pays out. However, subsection (8) provides the power to prescribe a different claims and payments mechanism. The intention is that, under the scheme, authorities should be reimbursed in full for the lump-sum payments they make.

• Subsections (10) and (11) define some of the terms used in the clause, using standard definitions.