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Schedule 6 - Schedule to be inserted in the Pneumoconiosis etc. (Workers' Compensation) Act 1979
317. Please see the explanation under clause 55 above.
Schedule 7 - Minor and consequential amendments relating to Part 4
318. Schedule 7 makes provision for minor and consequential amendments to the Vaccine Damage Payments Act 1979, the Social Security Contributions and Benefits Act 1992, the Social Security Administration Act 1992 and the Social Security Act 1998 which arise from the provisions of Part 4 of the Bill.
FINANCIAL EFFECTS OF THE BILL
Employment and support allowance
Direct costs
319. Pathways to Work is to be rolled out nationally before the employment and support allowance is introduced in order to provide the service required to implement a conditionality regime. This will form the basis of the conditionality model within the employment and support allowance. Initial estimates suggest the annual cost of Pathways to Work will be in the region of £148 million.
320. The overall cost of moving to the new employment and support allowance will be dependent on the rate of the allowance. In addition it is likely that there will be implementation and information technology costs incurred during the transition from the existing benefits to employment and support allowance - again these costs will vary depending on how the transition is managed.
Indirect costs
321. It is not possible to quantify the scale of indirect costs until the passage of the Bill has been completed.
Housing benefit and council tax benefit
322. It is not possible to quantify the cost of the changes to benefit until the new local housing allowance rates are set in regulations.
323. There would be one off implementation costs of around £62 million to local authorities on moving to the local housing allowance. These costs would be funded out of the Housing Benefit Reform Fund, where resources have already been allocated through the Consolidated Fund, so there would be no resulting increase in the Department for Work and Pensions' expenditure.
324. Clause 28: The proposal will be piloted in around 10 English local authority pilot areas over a period of two years. The Department for Work and Pensions will fund the pilots from existing resources and estimates that piloting would cost the following:
- Implementation and running costs: £0.467 million.
- Evaluation: £0.200 million.
325. These are total costs and include meeting the costs of any additional burdens placed on local authorities or other government departments.
326. If evaluation shows that this proposal is effective, the Department for Work and Pensions would consider implementing a national scheme.
Overpayment recovery
327. No significant additional costs are expected to arise as a result of this clause.
Benefit fraud
328. Clauses 43 to 45, would involve initial set up costs to Government as a whole of around £15,000 and costs to local government of around £20,000 per year. Set against this, central and local government would share in estimated overall savings of at least £450,000 to £600,000 per year in terms of more efficient investigative processes. The set-up costs for central government would come out of the Department for Work and Pensions existing funds. There would be no additional funding for local authorities. The minor costs, less than £50 per local authority per year, would be met from within existing subsidy arrangements but will be more than offset against overall savings.
329. Clause 46: Only minimal costs are expected to be incurred from amending the current legislation because all the processes required to apply the "two strikes" system, including the supporting information technology system for storing and monitoring the offences, are already in place and operational.
Part 4 of the Bill (Miscellaneous)
330. No significant additional costs are expected to arise as a result of the provisions in Part 4 of the Bill.
EFFECTS OF THE BILL ON PUBLIC SERVICE MANPOWER
Employment and support allowance
331. Work is underway to assess the precise impact on public service manpower. On current estimates:
- For the Department for Work and Pensions, simplified processes and improved information technology for administering the employment and support allowance are likely to lead to a net reduction in the annual staffing requirement over time. However, these will be offset in the first years of administration by the need to continue to maintain the administration of payments to existing incapacity benefit claimants and to manage any migration to the employment and support allowance. During this period therefore staffing costs are not expected to increase.
- The policy may also have an impact on the Department of Constitutional Affairs if, as expected, there is an increase in appeals and an increased requirement for training tribunal members.
Housing benefit and council tax benefit
332. The Bill is expected to have the following effects on public service manpower:
- The Bill is not expected to result in any changes of staffing in central Government. However, the Rent Service is an independent agency of the Department for Work and Pensions, and the removal of the need to refer most cases to the rent officer when determining housing benefit is expected to lead to a decrease in the number of rent officers required. Rent Officers in Scotland and Wales are part of the Scottish Executive and the National Assembly for Wales, and the proposed changes to benefit administration would affect Rent Officers in the Devolved Administrations.
- The staffing requirements of local authorities, who deliver housing benefit on behalf of the Department for Work and Pensions, are also likely to be affected. There would be an initial increase in workload to cope with the move to the local housing allowance. It is too early to say what the level of steady state activity would be after all existing cases have transferred to the local housing allowance, but this would continue to be monitored by the Department for Work and Pensions.
- Conversely, the local housing allowance was designed to be a simpler system in order to reduce the burden on local authorities. In the longer-term therefore it is anticipated that the net effect of the simplification of the system versus the increased activity related to 'vulnerability' decisions and reviews would lead to a balancing out of resources. However, the workload for local authorities currently operating the local housing allowance system will continue to be monitored. The financial effects of the change in workload for local authorities are discussed below.
Overpayment recovery
333. The staffing requirements for government departments and their agencies are not expected to change as a result of these clauses.
Benefit fraud
334. The proposed amendment to the "two strikes" system does not alter the process of prosecution for benefit offences. It is therefore expected that the same number of investigators, legal advisers and court officials would be required.
Part 4 of the Bill
335. The staffing requirements for government departments and their agencies are not expected to change as a result of these clauses.
SUMMARY OF THE REGULATORY IMPACT ASSESSMENT
Employment and support allowance
336. A full Regulatory Impact Assessment for the employment and support allowance is included within the overall Regulatory Impact Assessment for Welfare Reform and published alongside the Bill. Copies are available from the libraries of both Houses of Parliament as well as from the Department for Work and Pensions website (www.dwp.gov.uk).
337. The main points made in the Regulatory Impact Assessment include:
- These proposals would not have any particular effect on small businesses.
- There are no competition issues associated with the replacement of incapacity benefits with the employment and support allowance.
- Jobcentre Plus will be responsible for the implementation of the employment and support allowance, working closely with other government departments and agencies and its own partner organisations.
Housing benefit and council tax benefit
338. The secondary legislation that would stem from Part 2 of the Bill is expected to have an effect on business, although the effect is not expected to be significant. It is expected that the costs of some private landlords would increase; overall the cost is not expected to be more than £6.5 million to £10 million per year across the whole sector, i.e. approximately £12 per private rented sector housing benefit tenant per year.
339. The secondary legislation that would stem from Part 2 of the Bill is also expected to have an effect on local authorities. Local authorities administer housing benefit on behalf of the Department for Work and Pensions and the cost of the administration of the benefit is subsidised. The Department for Work and Pensions would take account of both the implementation costs and any longer term costs to local authorities when providing funding. The Department for Work and Pensions has set aside £62 million of the Housing Benefit Reform Fund to fund the implementation costs for local authorities.
340. It is not possible to summarise the costs and benefits arising as a result of clause 34 (payment of housing benefit) at this stage, as the details of an appropriate approach are yet to be developed with stakeholders. However, it is intended that stakeholders, including Local Authority Associations, will be consulted on draft regulations.
341. Clause 28 can only affect people who are evicted for anti-social behaviour. The Department for Communities and Local Government (DCLG) estimate that 1,500 people are evicted for anti-social behaviour per year in England and Wales (approximately 40 are evicted for anti-social behaviour in Scotland). Therefore this measure is not likely to impact significantly on business, the public sector, charities, the voluntary sector or on a specific sector or sectors of the community.
342. Additionally, the intention is to begin by piloting the new measure in about 10 local authorities in England and therefore the numbers affected will be much lower than the 1,500 mentioned above.
Overpayment recovery
343. A Regulatory Impact Assessment has been carried out for these clauses. However, since the proposed amendments to overpayment recovery provisions are not expected to affect business, the Regulatory Impact Assessment is not required to be published.
Benefit fraud
344. Clause 46 is not expected to affect the private sector. The only impact, which is expected to be slight, is expected to be seen by the Department for Work and Pensions and, to a lesser extent, local authorities, although it is not considered that this amendment will greatly impact upon the payment of housing benefit, or on the Local Government prosecution process.
345. Local Authority Associations have been consulted in connection with the clause.
Part 4 of the Bill (Miscellaneous)
346. The provisions in Part 4 of the Bill are not expected to have any impact on business, charities or the voluntary sector. They are expected to have little impact on the public sector. A full Regulatory Impact Assessment is not necessary.
EUROPEAN CONVENTION ON HUMAN RIGHTS
347. Clauses 1 to 26 make provision for an employment and support allowance. The provisions generally provide powers to make regulations. It is possible that the provisions and regulations under them may engage Articles 6, 8, 14 and Article 1 of the First Protocol. For example regulations under clauses 10, 11 and 12 may provide for the amount of an employment and support allowance to be reduced for failure to participate in work-focused health-related assessments, work-focused interviews or work-related activity. These powers and all powers set out in these clauses are considered to be capable of being exercised compatibly with the rights set out in the Convention.
348. Clauses 27 and 34 provide for the national application of the local housing allowance and some matters relating to payment. Clause 28 provides for the new housing benefit sanction. Clauses 29, 30 and 31 provide for new arrangements for extended payments and clauses 32 and 33 provide for information sharing. The majority of these provisions provide powers to make regulations. Clause 37 and Schedule 5 provide for minor and consequential amendments. It is possible that the provisions and regulations under them may engage Articles 6, 8, 14 and Article 1 of the First Protocol. The powers contained in these clauses are considered to be capable of being exercised compatibly with the rights set out in the Convention.
349. Clauses 38, 39 and 40 make provision in relation to the sharing of social security information. Clauses 41 and 42 make provision in relation to the recovery of overpayments and clauses 43 to 46 make provision in relation to local authority functions in relation to benefit fraud and the loss of benefits for the commission of benefit offences. The clauses contain a range of regulation making powers. It is possible that the provisions and regulations under them may engage Articles 6, 8, 14 and Article 1 of the First Protocol. Again, the Government considers that the powers contained in these clauses are considered to be capable of being exercised compatibly with the rights set out in the Convention.
350. Section 19 of the Human Rights Act 1998 requires the Minister in charge of a Bill in either House of Parliament to make a statement about the compatibility of the provisions of the Bill with the Convention rights (as defined by section 1 of that Act). The statement has to be made before second reading. The Secretary of State for Work and Pensions, John Hutton, has made the following statement:
"In my view the provisions of the Welfare Reform Bill are compatible with the Convention rights."
TRANSPOSITION NOTES
351. None of the measures in this Bill have any effect on or are affected by any European Directive.
COMMENCEMENT
352. The following provisions come into force on Royal Assent:
- Clause 60 (Northern Ireland).
- Paragraph 8 of Schedule 5 and clause 37 in so far as it relates to those provisions; and
- The general provisions in clauses 61 (interpretation), 62 (financial provisions), 64 (transition), 65 (extent), 66 (commencement) and 67 (short title).
353. Other measures come into force either two months after Royal Assent or on a day appointed by the Secretary of State by order (see clause 66).
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