Welfare Reform Bill

Session 2010 - 11
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Other Bills before Parliament

Welfare Reform Bill

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Part 5 — Social security: general
71

104
Application of Limitation Act 1980
(1)
Section 38 of the Limitation Act 1980 (interpretation) is amended as follows.
(2)
In subsection (1), in the definition of “action”, at the end there is inserted “(and
see subsection (11) below)”.
(3)
At the end there is inserted—
5
“(11)
References in this Act to an action do not include any method of
recovery of a sum recoverable under—
(a)
Part 3 of the Social Security Administration Act 1992,
(b)
section 127(c) of the Social Security Contributions and Benefits
Act 1992, or
10
(c)
Part 1 of the Tax Credits Act 2002,

other than a proceeding in a court of law.”
(4)
The amendments made by this section have effect as if they had come into force
at the same time as section 38 of the Limitation Act 1980, except for the
purposes of proceedings brought before the coming into force of this section.
15
Investigation and prosecution of offences
105
Powers to require information relating to investigations
In section 109B of the Social Security Administration Act 1992 (power to
require information), in subsection (2)—
(a)
after paragraph (i) (but before the final “and”) there is inserted—
20
“(ia)
a person of a prescribed description;”
(b)
in paragraph (j), for “(i)” there is substituted “(ia)”.
106
Time limits for legal proceedings
In section 116 of the Social Security Administration Act 1992 (legal
proceedings), in subsection (2)—
25
(a)
in paragraph (a), for “other than an offence relating to housing benefit
or council tax benefit” there is substituted “(other than proceedings to
which paragraph (b) applies)”;
(b)
in paragraph (b), after “proceedings” there is inserted “brought by the
appropriate authority”.
30
107
Prosecution powers of local authorities
(1)
The Social Security Administration Act 1992 is amended as follows.
(2)
After section 116 there is inserted—
“116ZA
Local authority powers to prosecute housing benefit and council tax
benefit fraud
35
(1)
This section applies to an authority administering housing benefit or
council tax benefit.
(2)
The authority may not bring proceedings against a person for a benefit
offence relating to either of those benefits unless—

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(a)
the authority has already started an investigation in relation to
that person in respect of the offence,
(b)
in a case where the proceedings relate to housing benefit, the
authority has already started an investigation in relation to the
person in respect of a benefit offence relating to council tax
5
benefit, or has already brought proceedings against the person
in respect of such an offence,
(c)
in a case where the proceedings relate to council tax benefit, the
authority has already started an investigation in relation to the
person in respect of a benefit offence relating to housing benefit,
10
or has already brought proceedings against the person in
respect of such an offence,
(d)
the proceedings arise in prescribed circumstances or are of a
prescribed description, or
(e)
the Secretary of State has directed that the authority may bring
15
the proceedings.
(3)
The Secretary of State may direct that in prescribed circumstances, an
authority may not bring proceedings by virtue of subsection (2)(a), (b)
or (c) despite the requirements in those provisions being met.
(4)
A direction under subsection (2)(e) or (3) may relate to a particular
20
authority or description of authority or to particular proceedings or any
description of proceedings.
(5)
If the Secretary of State prescribes conditions for the purposes of this
section, an authority may bring proceedings in accordance with this
section only if any such condition is satisfied.
25
(6)
The Secretary of State may continue proceedings which have been
brought by an authority in accordance with this section as if the
proceedings had been brought in his name or he may discontinue the
proceedings if—
(a)
the proceedings were brought by virtue of subsection (2)(a), (b)
30
or (c),
(b)
he makes provision under subsection (2)(d) which has the effect
that the authority would no longer be entitled to bring the
proceedings in accordance with this section,
(c)
he withdraws a direction under subsection (2)(e) in relation to
35
the proceedings, or
(d)
a condition prescribed under subsection (5) ceases to be
satisfied in relation to the proceedings.
(7)
In exercising a power to bring proceedings in accordance with this
section, a local authority must have regard to the Code for Crown
40
Prosecutors issued by the Director of Public Prosecutions under section
10 of the Prosecution of Offences Act 1985—
(a)
in determining whether the proceedings should be instituted;
(b)
in determining what charges should be preferred;
(c)
in considering what representations to make to a magistrates’
45
court about mode of trial;
(d)
in determining whether to discontinue proceedings.
(8)
Regulations shall define “an investigation in respect of a benefit
offence” for the purposes of this section.

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(9)
This section does not apply to Scotland.”
(3)
Section 116A (local authority powers to prosecute benefit fraud) is amended as
follows.
(4)
In the heading, after “prosecute” there is inserted “other”.
(5)
In subsection (2)—
5
(a)
for “unless” there is substituted “only if”;
(b)
in paragraph (b), for “must not”, there is substituted “may”.
(6)
In subsection (4)(b), for “gives” there is substituted “withdraws”.
Penalties as alternative to prosecution
108
Penalty in respect of benefit fraud not resulting in overpayment
10
(1)
Section 115A of the Social Security Administration Act 1992 (penalty as
alternative to prosecution) is amended as follows.
(2)
After subsection (1) there is inserted—
“(1A)
This section also applies where —
(a)
it appears to the Secretary of State or an authority that there are
15
grounds for instituting proceedings against a person for an
offence (under this Act or any other enactment) relating to an
act or omission on the part of that person in relation to any
benefit, and
(b)
if an overpayment attributable to the act or omission had been
20
made, the overpayment would have been recoverable from the
person by, or due from the person to, the Secretary of State or an
authority under or by virtue of section 71, 71ZB, 71A, 75 or 76
above.”
(3)
In subsection (2)(a) for “such proceedings” there is substituted “proceedings
25
referred to in subsection (1) or (1A) above”.
(4)
In subsection (4)—
(a)
in paragraph (a), after “is” there is inserted “or would have been”;
(b)
in paragraph (b), at the end there is inserted “or to the act or omission
referred to in subsection (1A)(a).”
30
(5)
In subsections (6) and (7), at the beginning there is inserted “In a case referred
to in subsection (1)”.
(6)
In subsection (7B)(a), after “is”, in both places, there is inserted “or would have
been”.
(7)
In subsection (8) after “subsection (1)(a)” there is inserted “or (1A)(b)”.
35
(8)
In the Social Security Fraud Act 2001—
(a)
in section 6B(1)(b), the words “by reference to any overpayment” are
repealed and for “the offence mentioned in subsection (1)(b) of the
appropriate penalty provision” there is substituted “the offence to
which the notice relates”;
40
(b)
in sections 6C(2)(b) and (3), 8(7)(b) and (8) and 9(7)(b) and (8), for “the
overpayment” there is substituted “any overpayment made”.

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109
Amount of penalty
In section 115A of the Social Security Administration Act 1992 (penalty as
alternative to prosecution), for subsection (3) there is substituted—
“(3)
The amount of the penalty in a case falling within subsection (1) is 50%
of the amount of the overpayment (rounded down to the nearest whole
5
penny), subject to—
(a)
a minimum amount of £350, and
(b)
a maximum amount of £2000.
(3A)
The amount of the penalty in a case falling within subsection (1A) is
£350.
10
(3B)
The Secretary of State may by order amend—
(a)
the percentage for the time being specified in subsection (3);
(b)
any figure for the time being specified in subsection (3)(a) or (b)
or (3A).”
110
Period for withdrawal of agreement to pay penalty
15
(1)
The Social Security Administration Act 1992 is amended as follows.
(2)
In section 115A (penalty as alternative to prosecution), in subsection (5)
(cooling-off period), for “28” there is substituted “14”.
(3)
In section 115B (penalty as alternative to prosecution: colluding employers etc),
in subsection (6) (cooling-off period), for “28” there is substituted “14”.
20
Civil penalties
111
Civil penalties for incorrect statements and failures to disclose information
(1)
After section 115B of the Social Security Administration Act 1992 there is
inserted—
“Civil penalties
25
115C
Incorrect statements etc
(1)
This section applies where—
(a)
a person negligently makes an incorrect statement or
representation, or negligently gives incorrect information or
evidence—
30
(i)
in or in connection with a claim for a relevant social
security benefit, or
(ii)
in connection with an award of a relevant social security
benefit,
(b)
the person fails to take reasonable steps to correct the error,
35
(c)
the error results in the making of an overpayment, and
(d)
the person has not been charged with an offence or cautioned,
or been given a notice under section 115A, in respect of the
overpayment.

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(2)
A penalty of a prescribed amount may be imposed by the appropriate
authority—
(a)
in any case, on the person;
(b)
in a case where the person (“A”) is making, or has made, a claim
for the benefit for a period jointly with another (“B”), on B
5
instead of A.
(3)
Subsection (2)(b) does not apply if B was not, and could not reasonably
be expected to have been, aware that A had negligently made the
incorrect statement or representation or given the incorrect information
or evidence.
10
(4)
The appropriate authority may recover a penalty imposed under
subsection (2) from the person on whom it is imposed.
(5)
Sections 71ZC and 71ZD apply in relation to amounts recoverable by
the appropriate authority under subsection (4) as to amounts
recoverable by the Secretary of State under section 71ZB.
15
(6)
In this section and section 115D—
“appropriate authority” means—
(a)
the Secretary of State, or
(b)
an authority which administers housing benefit or
council tax benefit;
20
“overpayment” has the meaning given in section 115A(8), and the
reference to the making of an overpayment is to be construed in
accordance with that provision;
“relevant social security benefit” has the meaning given in section
121DA(7).
25
115D
Failure to disclose information
(1)
A penalty of a prescribed amount may be imposed on a person by the
appropriate authority where—
(a)
the person, without reasonable excuse, fails to provide
information or evidence in accordance with requirements
30
imposed on the person by the appropriate authority in
connection with a claim for, or an award of, a relevant social
security benefit,
(b)
the failure results in the making of an overpayment, and
(c)
the person has not been charged with an offence or cautioned,
35
or been given a notice under section 115A, in respect of the
overpayment.
(2)
A penalty of a prescribed amount may be imposed on a person by the
appropriate authority where—
(a)
the person, without reasonable excuse, fails to notify the
40
appropriate authority of a relevant change of circumstances in
accordance with requirements imposed on the person under
relevant social security legislation,
(b)
the failure results in the making of an overpayment, and
(c)
the person has not been charged with an offence or cautioned,
45
or been given a notice under section 115A, in respect of the
overpayment.

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(3)
Where a person is making, or has made, a claim for a benefit for a
period jointly with another, and both of them fail as mentioned in
subsection (1) or (2), only one penalty may be imposed in respect of the
same overpayment.
(4)
The Secretary of State may recover a penalty imposed under subsection
5
(1) or (2) from the person on whom it is imposed.
(5)
Sections 71ZC and 71ZD apply in relation to amounts recoverable
under subsection (4) as to amounts recoverable under section 71ZB.
(6)
In this section “relevant change of circumstances”, in relation to a
person, means a change of circumstances which affects any entitlement
10
of the person to any benefit or other payment or advantage under any
provision of the relevant social security legislation.”
Loss of benefit
112
Benefit offences: disqualifying and sanctionable benefits
(1)
In the Social Security Fraud Act 2001, section 6A (meaning of “disqualifying
15
benefit” and “sanctionable benefit”) is amended as follows.
(2)
In subsection (1), in the definition of “disqualifying benefit”, after paragraph
(e) there is inserted—
“(f)
child tax credit;
(g)
working tax credit.”
20
(3)
In that subsection, in the definition of “sanctionable benefit”, after paragraph
(f) there is inserted—
“(fa)
child tax credit;
(fb)
working tax credit.”
113
Benefit offences: period of sanction
25
(1)
The Social Security Fraud Act 2001 is amended as follows.
(2)
Section 6B (loss of benefit in case of conviction, penalty or caution for benefit
offence) is amended as follows.
(3)
In subsection (11), for “the period of four weeks” there is substituted “the
relevant period”.
30
(4)
After subsection (11) there is inserted—
“(11A)
For the purposes of subsection (11) the relevant period is—
(a)
in a case falling within subsection (1)(a) where the benefit
offence, or one of them, is a relevant offence, the period of three
years,
35
(b)
in a case falling within subsection (1)(a) (but not within
paragraph (a) above)), the period of 13 weeks, or
(c)
in a case falling with subsection (1)(b) or (c), the period of four
weeks.”
(5)
After subsection (13) there is inserted—
40
“(14)
In this section and section 7 “relevant offence” means—

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(a)
in England and Wales, the common law offence of conspiracy to
defraud, or
(b)
a prescribed offence which, in the offender’s case, is committed
in such circumstances as may be prescribed, and which, on
conviction—
5
(i)
is found by the court to relate to an overpayment (as
defined in section 115A(8) of the Administration Act) of
at least £50,000,
(ii)
is punished by a custodial sentence of at least one year
(including a suspended sentence as defined in section
10
189(7)(b) of the Criminal Justice Act 2003), or
(iii)
is found by the court to have been committed over a
period of at least two years.”
(6)
After subsection (14) (inserted by subsection (5) above) there is inserted—
“(15)
The Secretary of State may by order amend subsection (11A)(a), (b) or
15
(c), or (14)(b)(i), (ii) or (iii) to substitute a different period or amount for
that for the time being specified there.”
(7)
In section 7 (loss of benefit for second or subsequent conviction of benefit
offence), after subsection (1) there is inserted—
“(1A)
The following restrictions do not apply if the benefit offence referred to
20
in subsection (1)(a), or any of them, is a relevant offence.”
(8)
In section 11 (loss of benefit regulations)—
(a)
in the heading, after “benefit” there is inserted “orders and”;
(b)
in subsection (3) at the end there is inserted—
“(e)
regulations under section 6B(14) or an order under
25
section 6B(15), or”;
(c)
in subsection (4) after “make”, in both places, there is inserted “an order
or”.
114
Benefit offences: sanctions for repeated benefit fraud
(1)
The Social Security Fraud Act 2001 is amended as follows.
30
(2)
In section 6B (loss of benefit in case of conviction, penalty or caution for benefit
offence), in subsection (3) for “later” there is substituted “current”.
(3)
Section 7 (loss of benefit for second or subsequent conviction of benefit offence)
is amended as follows.
(4)
In the heading, for “second or subsequent conviction of benefit offence” there
35
is substituted “repeated benefit fraud”.
(5)
For subsection (1)(a) to (e) there is substituted—
“(a)
a person (“the offender”) is convicted of one or more benefit
offences in a set of proceedings (“the current set of
proceedings”),
40
(b)
within the period of five years ending on the date on which the
benefit offence was, or any of them were, committed, one or
more disqualifying events occurred in relation to the offender
(the event, or the most recent of them, being referred to in this
section as “the earlier disqualifying event”),
45