Select Committee on Delegated Powers and Deregulation Thirteenth Report



Memorandum by the Department of Social Security


1.  This memorandum identifies provisions for delegated legislation in the Child Support, Pensions and Social Security Bill. The memorandum:

  • explains the purpose of the delegated powers it is proposed to take;
  • describes why matters are to be left to delegated legislation; and
  • explains the procedure selected for each power and why it has been chosen.


2.  The Child Support Pensions and Social Security Bill contains a range of measures relating to child support, social security benefits, pensions and National Insurance Contributions.

3.  The main elements in the Bill are:

  • reform of the child support system;
  • reform of the State Earnings Related Pension Scheme by way of the State Second Pension;
  • measures to withdraw or reduce benefit entitlement where an offender has breached the terms of a community sentence.


4.  The plans for the reform of child support are set out in the White Paper "A new contract for welfare: children's rights and parents' responsibilities." (Cm 4349), published on 1st July 1999.

5.  The proposals in the Bill will reform the current child support system. The new system is intended to deliver maintenance more quickly and effectively. In particular, it changes the way that child support liability is worked out and enforced.

6.  Provisions in the Bill will replace the existing complex formula with a simpler system of percentage rates based on the non-resident parent's net income. Where parents seek to delay the process new penalties will be available to ensure compliance. Powers will also be taken to ensure maintenance assessment cannot be unnecessarily delayed by disputing paternity.


7.  The Bill includes provisions intended to ensure that people with a lifetime (ie 49 years) of employment or caring behind them can retire on a pension sufficient to lift them above means-tested benefits. And to provide similar help to certain disabled people who have been in the labour market but who may have broken work records. At the same time, the intention is to ensure that those who have opted out of the state scheme are not given an incentive to opt back in.

8.  There will be two stages to State Second Pension.

Stage 1

9.  The first stage will be earnings-related and is intended to bring about an improvement in Additional Pension for lower paid earners. Those earning between the annual Lower Earnings Limit (LEL) and £9,500 a year will be treated for State Second Pension purposes as if they had earned £9,500, regardless of their actual earnings.

10.  Carers of a sick or disabled person, or of a child under 6, and certain long-term disabled people with broken work records will also be treated as if they had earnings of £9,500 in a qualifying year.

Stage 2

11.  Once stakeholder pension schemes have become established as low-cost, flexible, funded second pensions, the second stage of State Second Pension will be introduced. This will be a flat-rate scheme, paid at the rate for those earning £9,500 a year. Those on moderate and higher earnings will then be encouraged to join a funded pension scheme, but this will not be compulsory. Low earners carers and long-term disabled people with broken work records will continue to benefit as under Stage 1.


12.  The proposals in the Bill are intended to ensure that the benefit system reinforces the need for offenders to meet their obligations to the state to comply with community sentences.

13.  This will be achieved through powers in the Bill to allow regulations to withdraw, or reduce, benefit entitlement from those failing to comply with designated community sentences. Where benefit is withdrawn rather than reduced, the Bill provides for hardship payments to be made in specified circumstances.

14.  The measure will, in the first instance, apply to people aged 18 - 59 who are receiving Income Support, Jobseeker's Allowance or a Training Allowance. It will initially be piloted in 3 or 4 areas in England and Wales to test the links between Social Security offices and the Probation Service and to assess the behavioural impact on offenders.


Modification of earnings factors

15.  Proposals in the Bill provide for the situation in which people who have earnings in a single tax year both from contracted-out employment and from contracted-in employment have that taken into account in the calculation of their additional pension under SERPS.

Inherited Serps

16.  The proposals in the Bill will provide for the 50% reduction in inherited SERPS to come into effect in respect of deaths occurring on or after 6 October 2002 and allow for the regulations to postpone the change to an even later date. Proposals are also intended to clarify the eligibility criteria for the Inherited SERPS Scheme and provide for the regulations to make further specific provision relating to the manner in which decisions under the scheme may be taken.

Sharing of State Scheme Rights

17.  The proposals in the Bill are intended to correct an oversight during the passage of the Welfare Reform and Pensions Bill 1999. Without the sub-delegation power provided by this amendment detailed tables would have to be included in regulations to enable state scheme rights to be valued. Each time the Government Actuary decided that the methods and assumptions underlying the tables needed to be changed, then the tables would have to be revised and amendments to the regulations would need to be laid before Parliament.

Disclosure of State Pension information

18.  The Bill contains measures that are intended to permit state pension information to be passed to employers and pension scheme providers for the purpose of providing statements of private and state pension rights unless individuals have indicated that they do not want such information disclosed ("opt-out" procedure").

Occupational and Personal Pensions

19.  The Bill includes a number of provisions designed to reform the regulation of occupational and personal pensions.

20.  The Bill provides for:

  • increased member involvement in schemes;
  • further protection of members' pensions rights;
  • changes to the existing regulation-making powers to enable future regulations to require money purchase schemes to provide members with an illustration of the likely future value of their pensions;
  • measures aimed at speeding up the winding up of occupational pension schemes; and
  • measures to provide further clarification, simplification and flexibility for those operating schemes.


21.  The provisions in the Bill are intended to give members of defined contribution occupational pension schemes the option of using the non-protected rights element of their accumulated pension fund accrued from April 1997 to buy an investment-based annuity instead of an index-linked annuity. The clause also provides for a power to prescribe the conditions which investment-based annuity products must satisfy.

War Pensions Appeals

22.  The measures in the Bill on war pensions include provisions to extend appeal rights available to war pensioners and to amend the time limits for appeals.

Investigators' Powers

23.  Proposals in the Bill will strengthen, clarify and align the powers used by benefit fraud investigators, thereby placing their activities on a clearer and more robust legal footing.

Housing Benefit: new decision making and appeals arrangements

24.  The Bill includes measures to introduce new arrangements for decision making and appeals in Housing Benefit and Council Tax Benefit which will align with the current arrangements for other social security benefits.

Housing Benefit: discretionary housing payments

25.  The Bill includes a measure which will enable the Secretary of State to introduce to a system of "discretionary housing payments" which will enable local authorities to make payments to people are entitled to housing benefit or council tax benefit, but who appear to require some further financial assistance in order to meet their housing costs.

Housing Benefit: Overpayment Recoveries

26.  Proposals in the Bill are intended to remove the discretion of Local Authorities to recover overpayments of Housing Benefit resulting from tenant fraud from a landlord (other than in cases of collusion) where the landlord has reported the alleged fraud.

National Insurance Contributions

27.  The Bill includes measures to align the treatment of benefits in kind for employers' National Insurance Contributions with their treatment for Income Tax purposes by extending the Class 1A charge. The measures will follow the shape of the existing charge on car and fuel benefits.

28.  Where a third party provides an employee with a benefit attracting a Class 1A NICs liability, and the provision of the benefit has not been arranged or facilitated by the employer, the Class 1A NICs liability is to be moved to the third party provider.

29.  The following measures do not have regulation making powers in the Bill:

Earnings Factors (Clauses 36 and 37)
Investigation powers (Clause 66)
Child Benefit disregards (Clause 71)
Social Security Advisory Committee(Clause 72)


30.  The Bill contains 269 powers to make delegated legislation. A list of these is attached as an annex to this memorandum.

31.  The Department has followed the precedent in current legislation relating to social security and pensions matters (for example the Child Support Act 1991, the Contributions and Benefits Act 1992, the Pensions Act 1995, the Jobseekers Act 1995 and the Welfare Reform and Pensions Act 1999) by setting out the overall legislative framework on the face of the Bill and providing for regulations to set out the matters of detail. This provides flexibility for the Department to amend the detailed rules more easily in the light of the operational experience or other developments, without having to take up a substantial amount of parliamentary time to amend primary legislation.

32.  There are a number of measures in the Bill which are subject to affirmative resolution by both Houses of Parliament. These have been highlighted in the annex to this memorandum. The reason for using the affirmative procedure is described in the main text.

33.  All of the other regulations made under the powers in, or introduced by, 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 Brook Report") apply.

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