Select Committee on Delegated Powers and Deregulation Tenth Report


Memorandum by the Department of Social Security

  1.    This memorandum identifies provisions for delegated legislation in the Social Security Bill 1997. The object of the memorandum is to: explain the purpose of the delegated powers taken; describe why the matter is to be left to delegated legislation; and explain the procedure selected for each power and why it has been chosen.

  2.    The Social Security Bill 1997 contains a range of measures relating to social security benefits, the social fund, child support and national insurance contributions. It has three main strands:

        -  to reform the way in which decisions on benefits, social fund payments and child support are made, and to rationalise the appeals process (Part I of the Bill);

        -  to improve compliance in respect of National Insurance contributions (Part II); and

        -  a range of other miscellaneous measures which are designed to simplify the current legislation to remove anomalies and to facilitate improvements in service delivery, and to enable the Government to live within public expenditure targets.

Decision making and appeals

  3.    The basic legal framework for making Social Security decisions and handling appeals was laid down before 1948 and has been added to piecemeal as the social security system has developed. The Department of Social Security operates according to legal procedures which were designed prior to the introduction of the Next Steps Agencies and prior to recent advances in information technology.

  4.    The Social Security Bill aims to streamline and simplify the process for making and changing decisions to enable the Department to develop a system which is: more accurate; faster; easier for the public and staff to understand; more cost effective; and which will maximise the benefits to be gained from the latest developments in IT. It also contains proposals to rationalise and integrate the appeals arrangements to enable appeals to be handled more quickly.

  5.    The main proposals which relate to decision-making are: to replace the current system of multiple specified decision makers, some of whom are independent and some of whom act on behalf of the Secretary of State, with a simplified system of single status decision makers, all acting on behalf of the Secretary of State; to replace the current system of multiple component decisions, where various elements of decisions each carry individual appeal rights, with single "outcome" decisions; to simplify the rules on how and when decisions can be changed so as to enable decision makers to take a "second look" at disputed decisions and correct them at the earliest opportunity; and to facilitate the increased automation of decision-making, where appropriate.

  6.    With regard to appeals, measures in the Bill will: replace the five separate tribunal jurisdictions with a single unified appeals jurisdiction with, broadly, one set of powers to determine all cases; enable appeal tribunals to consist of one, two or three members according to the needs of the case, and to have access to appropriate expertise where necessary; provide additional powers for an appeal tribunal to correct its own decisions in order to reduce the number of cases which need to go to the Commissioners; and introduce a new right of appeal on contributions questions. Other measures restore the power to suspend payment of benefit in cases which would otherwise be affected by a decision of a Commissioner or the Courts in a "lead" case which the department is challenging; and introduce new powers to "stay" cases or make "safe" assessments where the decision will depend on the outcome of a "lead" case.

National Insurance contributions

  7.    The Bill contains a range of measures related to National Insurance contributions which are designed to limit avoidance; improve compliance and further align contributions rules with tax.

  8.    The main proposals are: to end the exclusion from National Insurance contributions of non-cash payments made under a restrictive covenant - an agreement under which employees agree to give up certain rights in return for a payment (if made in cash, such payments are already subject to National Insurance contributions but non-cash payments are not); make certain payments into funded unapproved retirement benefit schemes liable for national insurance; bring non-cash vouchers into liability; align the treatment of share options for national insurance purposes with the tax treatment of share options; introduce a new regime of civil financial penalties for less serious cases of non-compliance; increase to 7 years' imprisonment the maximum penalty for fraudulent evasion of national insurance; provide powers which will enable the Contributions Agency to distrain the goods of contributors as a means of enforcing payments of contributions debts; and reduce administrative burdens on business by enabling employers to settle NICs liability on minor and irregular payments to employees in a single lump sum as they do in relation to tax liability.

Other measures

  9.    Other measures in the Bill will simplify the process for making decisions on applications for social fund budgeting loans; reduce the period of time for which benefit may be backdated when a claim is made from three months to one month and enable regulations to be made to remove entitlement to the lone parent rate of child benefit for new claimants.

  10.    The Bill also includes a measure to ensure that the Department may use any information supplied in connection with one of its functions for any other of its functions.

  11.    Other minor measures remove anomalies in benefit legislation which unnecessarily complicate the administration of incapacity benefit, retirement pension and maternity allowance; and enable women who have received maternity allowance to be eligible for statutory sick pay from their employer.

Delegated powers

  12.    The Bill contains 52 Clauses and 6 Schedules (in all 108 subsections and paragraphs) which contain powers to make delegated legislation, a summary of which is attached at Annex A to this memorandum.

  13.    It may be helpful to the Committee to identify here certain important features in the structure of the legislation itself which have an impact on the number of delegated powers in the Bill.

  14.    Part I of the Bill replaces Part II of the Social Security Administration Act 1992 in its entirety, an approach which makes the overall legislative framework for social security more transparent. As a result, it is necessary for the Bill to contain some clauses which re-enact existing provisions (some with minor amendments) which themselves provided for delegated powers, under which, in many cases, regulations have been in existence for some time. So, in these cases, the Bill does not take regulation-making powers which are novel. (Good examples are Clauses 12 18, 19, 21, 31, and 32).

  15.    Furthermore, the Bill aims to introduce unified decision-making and appeals arrangements across the range of the Department's business. This means that separate provisions, containing equivalent regulation-making powers, need to be introduced into the Social Security Administration Act 1992, the Child Support Act 1991, the Vaccine Damage Payments Act 1979 and in some cases the Social Security (Recovery of Benefits) Act 1997 and the Pensions Schemes Act 1993. Thus, the Bill necessarily contains a good deal of repetition, with the consequent multiplication of essentially equivalent delegated powers. Examples of this are Clauses 28, 44 and 47, which reproduce provision on the correction of errors and the setting aside of decisions for benefits, child support and vaccine damage payments respectively; Clauses 22 and 35 which provide for suspension of payment of benefit for centrally administered benefits and Housing Benefit/Council Tax Benefit respectively.

  16.    Part I of the Bill aims to set in place a framework for decision-making, rights of appeal, and the new appeals arrangements. Within that framework it is intended that the detail will be set out in regulations and guidance. The Department has taken this approach because these measures relate to the administration of the social security system, and the Department wishes to be in a position to respond over time to as yet unforeseeable issues which will inevitably arise throughout the implementation and operation of the new arrangements. These include - innovations in working practices; developments in information or communications technology; lessons learned from practical experience of customers' needs, behaviour and preferences. If this type of provision is made in primary legislation, there is, in the Department's view, a substantial risk of constantly returning to take up Parliament's time with relatively minor amendments to the legislation; or, more likely, being unable to respond effectively to the sort of changes described above because of other pressures on the Parliamentary timetable for primary legislation.

  17.    In addition, the Department intends that this Bill will provide a robust administrative framework for the social security system during what may prove to be a period of change across the whole of welfare provision. If it is to fulfil this central stabilising role, the legislation needs to be capable of adjustment to take those changes into account.

  18.    Many provisions in Part I deal with procedural matters - for example the manner in which an appeal is to be lodged. It is in the nature of procedural matters to require a good deal of technical detail to be made explicit, to ensure that procedures operate consistently, fairly and effectively.

  19.    The Committee will also wish to note that all regulations made under the powers in this Bill will follow the negative resolution procedure as the Department considers that none of the considerations set out in paragraph 78 of the Second Report of the Joint Committee on Delegated Powers ("the Brooke Report") applies in any case.

  20.    Clause 64(1) inserts a new section into the Social Security Administration Act 1992 which provides for an Order to be made relating to the re-rating of Class 1B NICs, in a similar way as for Classes 1, 1A and 2. An Order made under that part of the Administration Act is subject to affirmative resolution.

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