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Session 2004-05 Publications on the internet Other Bills before Parliament Arrangement of Clauses (Contents)

Child Benefit Bill

These notes refer to the Child Benefit Bill as introduced in the House of Commons on 13th December 2004 [Bill 13] CHILD BENEFIT BILL            EXPLANATORY NOTES INTRODUCTION      1.     These explanatory notes relate to the Child Benefit Bill as introduced in the House of Commons on 13th December 2004. They have been prepared by the Inland Revenue in order to assist the reader in understanding the Bill. They do not form part of the Bill.      2.     The notes need to be read in conjunction with the Bill. They are not, and are not meant to be, a comprehensive description of the Bill. So where a section or part of a section does not seem to require any explanation or comment, none is given. SUMMARY      3.     Child benefit is a non-contributory, non-income related, free benefit payable where a person is responsible for a child. It is not taxable. The Bill contains measures regarding the conditions of entitlement to child benefit provided for in Part 9 of the Social Security Contributions and Benefits Act 1992 (c 4) - after this referred to as the Contributions and Benefits Act - and in Part 9 of the Social Security Contributions and Benefits (Northern Ireland) Act 1992 (c 7) - after this referred to as the Northern Ireland Contributions and Benefits Act.      4.     Section 141 of the Contributions and Benefits Act and section 137 of the Northern Ireland Contributions and Benefits Act provide for child benefit to be paid for each week in which a person is responsible for one or more children. Sections 142 of the Contributions and Benefits Act (and 138 of the Northern Ireland Contributions and Benefits Act) define the circumstances in which a person is treated as a child for child benefit purposes in any week. 5.     Under section 142(1)(a) anyone who has still to attain the age of 16 is treated as a child without condition. However, when a person attains age 16 they can only be treated as a child for each week in which they satisfy the conditions set out in section 142(1)(b) or (c). Section 142(1)(b) requires that the person be under the age of 18 and not receiving full-time education and satisfy prescribed conditions. Section 142(1)(c) requires that the person be under age 19 and receiving full-time education by attendance at a recognised educational establishment or elsewhere provided that the [Bill 13—EN]     53/4 education is recognised by the Secretary of State or by the Board of the Inland Revenue.      6.     Section 142(2) provides for the circumstances in which the Secretary of State or the Board may recognise education provided otherwise than at a recognised educational establishment. Section 142(3) provides for regulations to prescribe the circumstances in which education is or is not to be treated as full-time. Section 142(4) provides for regulations to prescribe the circumstances in which interruptions to full-time education can be disregarded. Section 142(5) provides for regulations to prescribe the circumstances in which a person who no longer satisfies the conditions in section 142(1) to be treated as satisfying those conditions provided that the person has not attained age 19. 7.     Section 138 of the Northern Ireland Contributions and Benefits Act is in similar terms OVERVIEW OF THE BILL 8.     In March 2004 HM Treasury, the Department for Work and Pensions and the Department for Education and Skills published a report concerning financial support for young persons in the context of their education and training entitled "Supporting young people to achieve: towards a new deal for skills". The Child Benefit Bill stems from the findings made in that report. 9.     The Bill amends the definition of a child by replacing it with a definition of a child and a definition of a qualifying young person. Under the new provisions a child is defined as a person who has not attained the age of 16. A qualifying young person is defined as a person, other than a child, who has not attained the age (greater than 16) that is prescribed in regulations, and who satisfies prescribed conditions. It is the intention that in the first instance regulations under the powers introduced by the Bill should extend child benefit entitlement to include young people who are on specified unwaged vocational training arranged by the Government as well as those in full-time, non-advanced education. The Government also intends to extend support to 19 year olds completing a course of learning begun before they reached that age. Future changes to the scope of entitlement will respond to developments in curriculum policy and further consultation. COMMENTARY 10.     Clause 1 of the Bill seeks to amend the provisions which identify the persons in respect of whom child benefit is payable. Hitherto the child benefit provisions have not distinguished between children of different ages. Anyone in respect of whom child benefit is payable is regarded as a child, even though the Contributions and Benefits Act requires that a child who had attained age 16 needs to satisfy additional requirements in order to continue to be treated as a child. 11.     Clause 1(1) provides for section 141 of the Contributions and Benefits Act to be amended so that child benefit will be payable to a person who is responsible for a child or children or a qualifying young person or qualifying young persons. 12.     Clause 1(2) substitutes in section 142 of the Contributions and Benefits Act a description of those persons who will be treated as a child or as a qualifying young person for the purposes of Part 9 of the Act. Under the new provision, a person will be treated as a child if he has not attained age 16. Once a person has attained the age of 16 continuing entitlement to child benefit will be dependent on the person being treated as a qualifying young person. 13.     Clause 1(2) provides that a person will be treated as a qualifying young person if he has not attained a prescribed age greater than 16 and also satisfies further prescribed conditions. The Treasury is given the power to prescribe in regulations the age at which a qualifying person will cease to be so treated and the further conditions a qualifying young person will need to satisfy. 14.     Clause 1(3) provides for the amendments set out in Part 1 of Schedule 1 to the Bill to take effect. These arise as a consequence of making the distinction introduced by clause 1(2) between a child and a qualifying young person. 15.     Sections 137 and 138 of the Northern Ireland Contributions and Benefits Act are similarly amended by clauses 2(1) and 2(2). 16.     Clause 2(3) provides for the amendments set out in Part 2 of Schedule 1 to the Bill to take effect in respect of the provisions which apply in Northern Ireland. These arise as a consequence of making the distinction introduced by clause 2(2) between a child and a qualifying young person. 17.     Parts 1 and 2 of Schedule 1 to the Bill amend references to a child or children in the Contributions and Benefits Act and the Northern Ireland Contributions and Benefits Act to include references to a qualifying young person or qualifying young persons. 18.     Some of the amendments are in respect of provisions governing entitlement to other benefits for which entitlement to child benefit is a condition and which rely on the same concepts as child benefit. In the case of entitlement to widowed mother's allowance under section 37 of the Contributions and Benefits Act, widowed parent's allowance under section 39A of that Act and guardian's allowance under section 77 of that Act, entitlement is conditional upon the person being also entitled to child benefit. Consequently, where entitlement to child benefit is extended by virtue of regulations made under the powers in clause 1(2) of the Bill, the period of entitlement to these other benefits will also be extended. 19.     Similarly increases of maternity allowance for an adult dependant under section 82(4) of the Contributions and Benefits Act and increases of unemployability supplement and industrial death benefits for child and adult dependants provided for in Schedule 7 to that Act are conditional upon the person being entitled to child benefit. Again, the period of entitlement to these increases will be extended if a person's entitlement to child benefit is extended by virtue of regulations made under the powers in Clause 1(2) of the Bill. 20.     Part 2 of Schedule 1 to the Bill amends the equivalent provisions of the Northern Ireland Contributions and Benefits Act and has the same effect as Part 1 of Schedule 1 to the Bill. FINANCIAL EFFECT 21.     Expenditure on child benefit is met from Votes. Regulations made under the powers provided by this Bill will involve extra expenditure because of the extension of support to new groups of learners aged 16 and above. The Government has been consulting stakeholders on how to identify unwaged trainees in the proposed regulations and the criteria for reform of the current age 19 cut-off. The Government will publish regulations in draft in early January 2005, in time for the expected date of the Bill's Second Reading. Estimates of the additional expenditure arising from the extension of entitlement will be published alongside the draft regulations. 22.     The extension of entitlement to widowed mothers allowance and widowed parents allowance, guardian's allowance, to an increase of maternity allowance for an adult dependant and increases of unemployability supplement and industrial death benefits for child and adult dependants, will be an additional charge on the National Insurance Fund. The amount of this additional expenditure will be contingent on the scope of the extension to child benefit entitlement made by regulations and will be included with the estimates for additional child benefit expenditure. PUBLIC SERVICE MANPOWER 23.     The Bill is not expected to have a significant effect on administrative costs and public service manpower. REGULATORY IMPACT ASSESSMENT 24.     The Bill should raise no significant issues for business, nor have any disproportionate impact on small businesses. This assessment has been agreed with the Small Business Service. A full Regulatory Impact Assessment for this Bill will be available in the consultations and legislation index on the HM Treasury website (http://www.hm-treasury.gov.uk). EUROPEAN CONVENTION ON HUMAN RIGHTS 25.     None of the provisions of the Bill is considered to be incompatible with the Articles of the Convention or at significant risk of legitimate challenge under them. The Chancellor of the Exchequer has signed a statement to this effect. TERRITORIAL EXTENT 26.     The Bill extends to the whole of the UK. 27.     Child benefit is available throughout the United Kingdom and is an excepted matter throughout the United Kingdom. 28.     Except in so far as they relate to section 77 and Part 9 of the Northern Ireland Contributions and Benefits Act and to the provisions of the Social Security Administration (Northern Ireland) Act 1992 concerning the administration of guardian's allowance and child benefit, the amendments set out in Part 2 of Schedule 1 to the Bill relate to devolved matters in Northern Ireland. 29.     The Bill has no special provision for Wales. 30.     There are no matters dealt with by the Bill which would require a Sewel motion in the Scottish Parliament. COMMENCEMENT DATE 31.     The Bill is expected to come into force from 10th April 2006. In order to allow time for regulations made under the Bill's powers to come into force from 10 April 2006 the Bill provides for the regulation making powers to be used by the Treasury at any time after the Bill receives Royal Assent.