68.     Subsections (3) to (5) of clause 1 make other amendments which are consequential on new section 17A.

69.     Subsection (3) inserts a new subsection (4A) in section 36 (regulations and orders) of the Jobseekers Act 1995 to make it clear that regulations made under new section 17A may make different provision for different areas and that they may make provision only in relation to an area or areas specified in the regulations.

70.     Subsection (4) amends Schedule 3 to the Social Security Act 1998 (c. 14) to provide that a decision relating to non-payment of benefit under section 17A may be appealed.

Clause 2: Work-related activity: income support claimants and partners of claimants

71.     This clause amends the Social Security Administration Act 1992 by inserting new sections 2D to 2G.

72.     New section 2D allows the Secretary of State to make regulations which may require a person in receipt of income support (subsection (1)), or the partner of a person receiving income support, income-based jobseeker’s allowance or income-related employment and support allowance (subsections (2) and (3)) to undertake work-related activity, as part of their progression to work outlined in Professor Gregg’s recommendations, as a condition of continuing to receive the full amount of benefit. The regulations made under this section will make provision for -

• the circumstances in which a person is to be subject to any requirement to undertake such activity;

• notifying a person of such a requirement;

• prescribing the time and amount of work-related activity which a person is required to undertake;

• detailing the circumstances in which a person is or is not to be regarded as undertaking such activity;

• determining, in the case of a claimant in a polygamous marriage, which of the partners is required to undertake work-related activity;

• imposing a sanction where a person required to undertake work-related activity has failed, without good cause, to comply with the requirement. The regulations will prescribe which matters are, or are not, to be taken into account when determining good cause for such failure. Where a sanction is imposed, the regulations will make provision for benefit to reduced, and prescribe the amount and period of the reduction;

• definitions for the purposes of this section and for new sections 2E and 2F. In particular ‘work-related activity’ is defined as activity which makes it more likely that the person will obtain or remain in work or be able to do so;

• information supplied under the regulations made under this section to be taken to be information relating to social security. This will enable the exchange of information with, for example, training providers.

73.     New section 2E relates to persons in receipt of certain benefits and to the partners of such people who are required to attend a work-focused interviews under the provisions of section 2A and section 2AA of the Social Security Contributions and Benefits Act 1992. The benefits in question are income support, income-based jobseeker’s allowance or an income-related employment and support allowance and their partners. The provision requires the Secretary of State, in circumstances to be specified in regulations, to provide such people with an action plan. Regulations made under this section will provide for the form, content and review and updating of action plans. Where a person is required under the provisions of section 2D to undertake work-related activity, the action plan will contain details of the activities which will allow that requirement to be met. The regulations will also allow a person provided with an action plan to ask for it be reconsidered, and set out the circumstances and time in which such a request may be made; the matters to be considered when deciding on reconsideration; notification of the reconsideration decision, and directions giving effect to the decision on reconsideration.

74.     New section 2F allows the Secretary of State, in circumstances to be set out in regulations, to issue a direction to a person required to undertake work-related activity under section 2D. The direction will specify either -

• the only activity, in that case, which will be regarded as work-related activity, or

• activity which, in that person’s case, will not be treated as work-related activity.

75.     The regulations will provide that any direction must be reasonable, taking into account an individual’s circumstances, must be included in an action plan given under section 2E and may be varied or brought to an end by a subsequent direction made under section 2F(1). Where a direction is varied or ended by a subsequent direction, that change may have retrospective effect.

76.     New section 2G will allow the Secretary of State to authorise staff of contracted out suppliers to carry out his functions in issuing action plans under new section 2E and issuing directions under new section 2F. In addition regulations may provide for those persons to carry out the functions of the Secretary of State in revising or superseding decisions made under those sections. However, they will not be able to make decisions about whether a person has failed to comply with a requirement to undertake work-related activity, whether that person had good cause for such a failure or whether benefit should be reduced as a result of that failure. Those decisions will remain with the Secretary of State.

77.     Regulations made under new section 2G will further specify the extent to which a contractor and its staff may be authorised to carry out functions of the Secretary of State and the duration of the authorisation. The Secretary of State will be able to revoke the authorisation at any time, and will not be prevented from exercising any function himself. Any action or omission by the authorised person is to be treated as an action or omission of the Secretary of State, except where it relates to the exercise of the function, or where criminal proceedings are brought in respect of anything done by the authorised person.

78.     Subsections (3) to (6) of clause 2 make minor consequential amendments to the Social Security Administration Act 1992 and the Welfare Reform and Pensions Act 1999.

Clause 3: Entitlement to jobseeker’s allowance without seeking employment etc.

79.     Subsections (1) to (3) amend the Jobseekers Act 1995 by inserting new sections 1A and 1B to provide entitlement to jobseeker’s allowance for different categories of claimant including groups who would currently claim income support.

80.     New section 1A makes provision for claimants who are not a member of a joint-claim couple. It re-states the existing basic conditions under which people who are not in remunerative work can qualify for contribution-based or income-based jobseeker’s allowance if they satisfy jobseeking conditions (such as to be available for and actively seeking work.) It creates a new entitlement for people of a description provided in regulations, who are not required to meet the jobseeking conditions but meet the other basic conditions of entitlement, such as presence in Great Britain and satisfy an income test. This will enable income-based jobseeker’s allowance to be extended to groups who currently qualify for income support

81.     New section 1B ensures that the existing provision in section 3A of the Jobseekers Act 1995 (the conditions for claims by joint-claim couples) can continue to operate in the light of the amendments made to the Jobseekers Act by the new section 1B above. Where a person is a member of more than one couple, regulations will make provision for deciding which couple is included for the purposes of a joint claim. This would apply, for example, to someone in a polygamous marriage.

82.     Subsection (4) introduces Schedule 1, which includes amendments to the Jobseekers Act 1995 to support these changes.

Clause 4: Couples where at least one member capable of work

83.     This clause amends the law relating to certain claimants who are members of a couple.

84.     Subsection (1) amends the Social Security Contributions and Benefits Act 1992 by inserting new regulation-making powers into section 124(1) of that Act (entitlement to income support) and by inserting new subsections (6A), (6B) and (7) (employment and support allowance).

85.     Subsection (2) amends paragraph 6 of Schedule 1 to the Welfare Reform Act 2007 (the conditions for entitlement to income-related employment and support allowance).

86.     The purpose of these provisions is to remove entitlement to income support and income-related employment and support allowance for couples where one member is capable of work. This will mean that the only route to income-related support for such couples will be through income-based jobseeker’s allowance and the member of the couple who is work ready will be required to fulfil the jobseeking requirements in section 1 of the Jobseekers Act 1995.

87.     Regulations will prescribe the circumstances in which a member of a couple will not be treated as being capable of work, for example, he or she has claimed or is receiving employment and support allowance or he or she is in receipt of carer’s allowance.

Clause 5: Statutory sick pay and employment and support allowance

88.     This clause amends section 20(1) of the Welfare Reform Act 2007 which prevented eligibility for employment and support allowance by those entitled to statutory sick pay. That section is amended to include a regulation-making power to allow people who are receiving statutory sick pay to claim income-related employment and support allowance, instead of income support. Currently people may receive income support in addition to statutory sick pay. In order to abolish income support, alternative provision needs to be made for this group of people.

Clause 6: Transitional provision relating to sections 3 to 5

89.     This clause makes provision for the transition of people who move from income support to employment and support allowance or jobseeker’s allowance as a result of the provisions in clauses 3 to 5. This includes stopping awards of income support or employment and support allowance, where it is appropriate. A transitional allowance can be paid for a time and an amount prescribed in regulations.

Clause 7: Abolition of income support

90.     This clause provides for the abolition of income support and the repeal of its associated references if, as a result of changes made in this Bill or otherwise, there are no longer any groups of people that require income support. There is scope in subsection (4) to provide any transitional protection necessary.

Clause 8: Power to direct claimant to undertake specific work-related activity

91.     Clause 8 allows the Secretary of State to specify a work-related activity which a claimant of employment and support allowance, in the work-related activity group, must undertake to meet the requirements of the claim. Work-related activity is activity aimed at helping the claimant obtain work, remain in work or to be more likely to obtain or remain in work. This will not apply to claimants whose condition limits them to the extent that they could not reasonably be required to undertake work-related activity as a condition of receiving their benefit.

92.     Clause 8 amends section 15 of the Welfare Reform Act 2007 which provides a power for the Secretary of State to direct that a specific activity in the case of an individual is not to count as work-related activity under the requirements imposed by section 13 of that Act. This is intended to stop claimants seeking to satisfy the requirement to undertake work-related activity by undertaking activity considered inappropriate for their circumstances.

93.     New subsection (1)(a) provides that in addition to the existing power under section 13 of the Welfare Reform Act 2007, the Secretary of State can, in prescribed circumstances, direct that a specific activity is the only activity which can, in the person’s case, be regarded as work-related activity. This is intended to enable the Secretary of State to require claimants to undertake a specific activity in certain circumstances.

94.     New subsection (2)(a) requires that any direction given to the claimant must be reasonable, having regard to the person’s circumstances. New subsection (2)(b) requires that any direction given to the claimant under subsection (1) must be recorded in the claimant’s action plan. Failure to undertake the specified activity without showing good cause for this within the allowed time would be sanctionable.

Clause 9: Claimants dependent on drugs

95.     This clause and Schedule 3 make provision in relation to persons claiming jobseeker’s allowance and employment support allowance who are dependent on, or have a propensity to misuse, drugs. They will be required to engage in certain activities if their condition affects their prospects of finding work. The Schedule also contains a power to extend the provisions to those who misuse alcohol.

Clause 10: Conditions for contributory jobseeker’s allowance

96.     This clause amends the contribution conditions for jobseeker’s allowance. It amends the Jobseekers Act 1995 so that the first contribution condition for jobseeker’s allowance is met by the claimant having paid, or being treated as having paid, at least 26 weeks of Class 1 contributions on relevant earnings at the base year’s lower earnings limit (£90 per week in 2008/09) in one of the two tax years prior to the claim. Class 1 national insurance contributions are those paid on earnings from employment. Relevant earnings are those upon which contributions have been paid and which count towards establishing entitlement.

97.     Subsection (3) introduces a regulation-making power which will be used to set out the detail of the calculation to determine whether a person has paid contributions on enough earnings to be entitled to the contributory benefit. A further regulation-making power is introduced by subsection (5) to allow for prescribed categories of claimants to satisfy the first contribution condition by alternative criteria. This new provision in the Jobseekers Act 1995 for jobseeker’s allowance will parallel the provision in the Welfare Reform Act 2007 in respect of employment and support allowance.

Clause 11: Conditions for contributory employment and support allowance

98.     This clause amends the contribution conditions for employment and support allowance. The clause amends the Welfare Reform Act 2007 so that the number of tax years in which a person can pay national insurance contributions and qualify for employment and support allowance is reduced from three years to two. This aligns the period for employment and support allowance with that for jobseeker’s allowance.

99.     The clause further amends the Welfare Reform Act 2007 to provide that the first contribution condition for employment and support allowance is met by the claimant having paid, or being treated as having paid at least 26 weeks of Class 1 or Class 2 contributions on relevant earnings at the base year’s lower earnings limit (£90 per week in 2008/09) in one of the two tax years prior to the claim. Class 1 national insurance contributions are those paid on earnings from employment. Class 2 national insurance contributions are those paid on earnings from self-employment. Relevant earnings are those upon which contributions have been paid and which count towards establishing entitlement.

100.     The clause provides a regulation-making power which will be used to set out the detail of the calculation to determine whether a person has paid contributions on enough earnings to be entitled to the contributory benefit. The existing regulation-making power in the Welfare Reform Act 2007 is amended to allow for further prescribed categories of claimants, for example partners of overseas service personnel, to satisfy the first contribution condition by alternative criteria.

Clause 12: Maternity allowance and carer’s allowance

101.     This clause repeals sections 82 and 90 of the Social Security Contributions and Benefits Act 1992 which make provision for Adult Dependency Increases (ADIs) to be paid with maternity allowance and carer’s allowance respectively, in circumstances where the claimant has an adult dependant.

102.     The clause will abolish the payment of ADIs for all new claims to maternity allowance and carer’s allowance at the same time as they cease to be available on new claims to state pensions in 2010.

103.     ADIs in payment with carer’s allowance at the time of change will be phased out between 2010 and 2020. This will be in line with the arrangements for phasing out the existing ADIs paid with the state pension. Phasing out will not apply to maternity allowance as this is a short-term benefit paid for 39 weeks. Payment of ADI for existing maternity allowance claims will therefore cease when the maternity allowance entitlement ends.

Clause 13: External provider social loans

104.     Clause 13(1) inserts new sections 140ZA, 140ZB and 140ZC into the Social Security Contributions and Benefits Act 1992.

105.     New section 140ZA will allow the Secretary of State, with the agreement of the Treasury, to make arrangements with external providers to make loans to individuals who are receiving prescribed benefits or have prescribed needs. Arrangements under this section may have effect in particular areas, or throughout Great Britain. Under subsection (9) loans made under these arrangements are to be referred to as external provider social loans.

106.     Subsections (4) to (6)) set out matters which may be covered by the arrangements made under new section 140ZA. These include power for the Secretary of State to make payments to the lender. Subsections (7) and (8) provide for certain payments to be made out of and into the social fund.

107.     New section 140ZB will allow the right to repayment of loans to be transferred between the Secretary of State and an external provider. So a social fund loan which is outstanding when the arrangements come into force could be transferred to the external provider. Similarly, where arrangements with an external provider cease any outstanding repayments in respect of an external provider social loan could be transferred to the Secretary of State.

108.     Section 140ZC will require the Secretary of State to publish a report annually on the operation of arrangements under section 140ZA.

109.     Clause 13(2) inserts new section 78A into the Social Security Administration Act 1992. It is a regulation-making power which will enable the Secretary of State to collect repayments due on an external provider social loan (by way of deduction from benefit or other methods) and to pay these over to the lender, except where the regulations make other provision. The regulations may apply to the collection of repayments of equivalent loans made in Northern Ireland.

Clause 14: Power to restrict availability of social fund loans

110.     This clause inserts into section 138 of the Social Security Contributions and Benefits Act 1992 a provision which will enable access to crisis loans or budgeting loans from the social fund to be restricted in any area in which external provider social loans are available.

Clause 15: Supply of information to or by lenders making external provider social loans

111.     Clause 15 inserts a new section 122G into the Social Security Administration Act 1992 which allows regulations to provide for the exchange of information between the Secretary of State and an external provider with whom arrangements have been made under new section 140ZA, and for the use or disclosure of such information including provision for a criminal offence for unauthorised disclosure.

Clause 16: Community care grants relating to specified goods or services

112.     Under the existing law, successful applicants for community care grant may be provided with cash to obtain the goods or services that the award covers. At the discretion of the appropriate officer, a payment may be made to a third party to provide the goods or services. These amendments to the Social Security Contributions and Benefits Act 1992, taken with those in clause 17, enable the Secretary of State to require that, where the goods or services are covered by arrangements the Secretary of State has made with a supplier, the award made must relate to specified goods or services and the payment would be made to the supplier. It is expected that these arrangements will involve the supply of white goods and furniture at a discounted rate.

Clause 17: Community care grants: reviews and information

113.     Clause 17 (1) and (2) preclude an application for review being made where goods or services have been awarded as set out in clause 16. 17(3) inserts a new section 122H into the Social Security Administration Act 1992 which allows regulations to provide for the exchange of information between the Secretary of State and relevant suppliers and for the use or disclosure of such information, including provision for a criminal offence for unauthorised disclosure. There is power by regulations to make exceptions to this.

Clause 18: Payments on account

114.     Clause 18(2)(a) repeals section 5(1)(r) of the Social Security Administration Act 1992, which enables regulations to be made providing for the making of a payment on account of benefit where it is impracticable for a claim to be made immediately, where it is impracticable for a claim to be determined immediately or where an award of benefit has been made, but it is impracticable to pay the whole immediately. Subsection (2)(b) of clause 18 inserts a new subsection (1A) into section 5 of that Act. It provides a regulation-making power to allow a payment on account of benefit to be made where -

• no claim has been made or a claim has been made (including where a claim has been determined and an award made) and, in either case, a person who is or would be covered by such a claim would be in need if no payment on account was made, and

?     an award has been made but it is impracticable for the full amount of the benefit to be paid immediately.

115.     The new subsection broadens the range of situations in which a payment on account may be made before an award has been made. It enables these payments to be made on a need basis rather than in situations where it is impracticable to make a claim, determine a claim or pay benefit. It provides the Secretary of State with improved flexibility to address short-term hardship.

116.     The new subsection (1B) enables regulations to make provision about the manner in which payments on account of benefit are to be set against subsequent payments of benefit and to prescribe circumstances in which they are not to be set against subsequent payments and are not otherwise recoverable.

117.     Subsections (3) to (5) of clause 18 make consequential changes to references to section 5(1)(r) in other sections of the Social Security Administration Act 1992.

Clause 19: Loss of benefit provisions

118.     Section 7 of the Social Security Fraud Act 2001 (‘the 2001 Act’) enables certain specified benefits to be withdrawn, or reduced payments to be made, for a period of 13 weeks (known as the disqualification period) where a person is convicted of benefit fraud on two occasions, and the second offence was committed within five years of the date of conviction for the first. These loss of benefit provisions are commonly referred to as the ‘two strikes’ rule.

119.     Clause 19 extends the loss of benefit provisions by introducing a similar benefit sanction for the same specified benefits to be applied following a first conviction for benefit fraud, or following a first (or subsequent) agreement to pay a penalty or acceptance of a caution.

120.     Where such an offence comes to light, the offender may be prosecuted, agree to an administrative penalty as an alternative to prosecution under section 115A of the Social Security Administration Act 1992, or agree to be given a caution.

121.     Subsection (1) inserts new sections 6A, 6B and 6C into the 2001 Act. New section 6A defines, for the purposes of section 6B and section 7, the meaning of ‘disqualifying benefit’ and ‘sanctionable benefit’. In Northern Ireland, the references in new section 6B and section 7 to ‘sanctionable benefit’ relate only to a war pension. This preserves the existing position under section 7 as it stands.

122.     New section 6B introduces the new benefit sanction to apply after the first conviction, or after any administrative penalty or caution. The combined effect of subsections (1), (4) and (5) is for benefit to be reduced or withdrawn for the disqualification period where the offender has -

• been convicted of one or more benefit offences in any proceedings;

• accepted an administrative penalty as an alternative to prosecution; or

• agreed to be given a caution.

123.     The disqualification period is defined in subsection (11) as a period of four weeks beginning at a prescribed time after conviction or the agreement of an administrative penalty or caution.

124.     Subsection (2) of new section 6B provides that a sanction under the new rules will not apply where a conviction would be the second conviction for the purposes of section 7 (‘two strikes’).

125.     Subsections (6) to (9) of new section 6B provide that the amounts by which income support, jobseeker’s allowance, state pension credit, employment and support allowance, housing benefit or council tax benefit are to be reduced will be prescribed in regulations. These amounts will be the same as those currently prescribed for the purposes of section 7.

126.     Subsection (13) of new section 6B sets out definitions of terms used within new sections 6B and 6C; in particular, the definition of ‘benefit offence’ means that the provisions will only apply to offences committed after the section comes into force.