Child Poverty Bill, etc - Delegated Powers and Regulatory Reform Committee Contents


APPENDIX 1: CHILD POVERTY BILL


Memorandum by the Child Poverty Unit (joint unit of the Department for Children, Schools and Families (DCSF), the Department for Work and Pensions (DWP) and Her Majesty's Treasury (HMT))

Introduction

1.  This Memorandum identifies the provisions in the Child Poverty Bill which confer powers to make delegated legislation. For each power, or where appropriate, group of powers, the memorandum explains:

  • the purpose of the delegated power;
  • why matters are to be left to delegated legislation;
  • the way in which the power is expected to be used; and
  • the nature of, and justification for, the Parliamentary procedures which apply.

2.  The descriptions of the powers are arranged in the order that the powers appear in the Bill.

The Delegation of Powers

3.  In deciding whether subordinate legislation is the appropriate vehicle for any particular provision, the Government has had regard to the following considerations:

  • the need to present substantive policy clearly in primary legislation;
  • the need to ensure flexibility to respond to changing circumstances; and
  • the difficulties associated with including detailed and technical provision on the face of the Bill.

Background

4.  An account of the policy initiatives introduced to tackle child poverty can be found in Ending Child Poverty: Everybody's Business[1], which was published in March 2008. In December 2003, the Government published Measuring Child Poverty[2] which set out a framework for measuring child poverty based on three measures: relative low income; absolute low income; and combined low income and material deprivation. The Government currently monitors child poverty against these three measures with a target attached to the relative low income measure of halving the number of children in poverty by 2010-11, on the way to eradicating child poverty by 2020 (Public Service Agreement 9). Public Service Agreements detail the aims and objectives of UK government departments for a three-year period. There is, however, no statutory basis for this target and no statutory duty on the Government to make progress against any of the child poverty measures.

5.  In January 2009, the Government published the consultation document Ending Child Poverty: Making It Happen.[3] A summary of the consultation responses is being published.

Overview of the Bill

6.  The purpose of the Bill is to define success in eradicating child poverty and create a framework to drive and monitor progress at a national and local level. The Bill is in three Parts which are summarised below:

Part 1 (clauses 1 - 17)

  • Part 1 of the Bill sets out the duties of the Secretary of State to ensure that four UK-wide income targets relating to child poverty are met in relation to the target year (currently the financial year beginning 1 April 2020). Clauses 2 to 5 describe these targets and clause 6 provides definitions of the terms used in these clauses. Clause 16 introduces Schedule 2, which requires the Government to ensure that the targets, once met, are met in later financial years, or to make provision about how to meet them if the targets have not been met by the target year or any later year.

  • Clause 7 establishes the Child Poverty Commission and outlines its functions. Details about the Commission are set out in Schedule 1.

  • Clause 8 places a duty on the Secretary of State to prepare a UK-wide child poverty strategy and to update this strategy within a three year period. Clauses 8 and 9 specify the content of that strategy, the parties that must be consulted when the strategy is being prepared and requires the Secretary of State to have regard to any advice provided by the Commission relating to the strategy.

  • Under clause 13, the Secretary of State is also required to report annually to Parliament on progress toward meeting the targets in clauses 2 to 5 and in the implementation of the strategy. Clause 14 requires that the final report must contain a statement as to whether or not the targets have been met.

  • Clauses 10 and 11 also require the Scottish Ministers and the relevant Northern Ireland department to prepare child poverty strategies, which must also be revised at three year intervals. Clause 12 specifies who the devolved administrations must consult and provides that they must have regard to the advice of the Commission in preparing their respective strategies.

Part 2 (clauses 18 - 24)

  • Part 2 makes provision requiring co-operation at a local level to tackle child poverty. Clause 20 imposes a duty on each responsible local authority to make arrangements to promote co-operation between itself and its partner authorities for the purpose of reducing, and mitigating the effects of, child poverty in its area. As part of these arrangements, clause 21 requires the local authority to prepare and publish an assessment of the needs of children living in poverty in its area.

  • The responsible local authority is also required in clause 22 to prepare a joint child poverty strategy, setting out the measures that it and each of its partner authorities propose to take to tackle child poverty in its area. In each case, local authorities and their partners are required to have regard to guidance issued by the Secretary of State.

  • Clause 23 amends section 4 of the Local Government Act 2000 to require responsible local authorities to take account of their local child poverty needs assessment, their joint child poverty strategy and other arrangements they have made to tackle child poverty when preparing their Sustainable Community Strategy.

Part 3 (clauses 25 - 30)

  • Part 3 contains general provisions.

Schedules

  • Schedule 1 concerns the structure and functions of the Commission.

  • Schedule 2 contains provision regarding the continuing effect of the targets after the target year.

Provisions for Delegated Legislation

7.  This section covers the provisions that contain powers to make regulations and orders. It is intended that all of the delegated powers are to be exercised by the Secretary of State by way of statutory instrument. The Government has considered on a case by case basis the most appropriate procedure to be followed when exercising delegated powers.

8.  The Bill includes three delegated powers that will be subject to the negative resolution procedure:

  • a power in clause 4(3) to make regulations prescribing the manner in which the absolute poverty indicator is to be adjusted to reflect changes in the Retail Price Index;
  • a power in clause 19(6) to amend by order the list of bodies considered partner authorities in relation to a responsible local authority; and
  • a power in clause 21(2) to make regulations about local child poverty needs assessments.

9.  The Government considers that the remaining powers in the Bill to make delegated legislation are of sufficient importance that they should be made subject to the affirmative resolution procedure.

Part 1: National Targets, Strategies and Reports

10.  Part 1 sets four child poverty targets that must be achieved by 2020 and establishes an accountability framework to drive progress at a national level towards this aim. It provides powers for delegated legislation to be made on the following matters:

  • Clause 3: a power to specify in regulations the circumstances in which a child would be regarded as experiencing material deprivation in a particular financial year, for the purposes of the combined low income and material deprivation target (affirmative resolution procedure);
  • Clause 4: a power to prescribe the manner in which the absolute low income target is adjusted to reflect changes in the Retail Price Index (negative resolution procedure);
  • Clause 5: a power to set in regulations a target percentage relating to persistent poverty (affirmative resolution procedure); a power to substitute a different persistent poverty target (affirmative resolution procedure);
  • Clause 6: a power to enable provision to be made in regulations about a number of technical definitions underpinning the child poverty targets in clauses 2 to 5 (affirmative resolution procedure);
  • Clause 7: a power to abolish the Commission by order, at any point after the end of the target year (affirmative resolution procedure).

11.  The provisions which include delegated powers are described in detail below.

Clause 3: The combined low income and material deprivation target

Powers conferred on: Secretary of State

Powers exercised by: regulations made by statutory instrument

Parliamentary procedure: affirmative resolution procedure

12.  Clause 3 sets the combined low income and material deprivation target. The target is that, by the end of the financial year beginning 1 April 2020, less than 5% of children who live in qualifying households live in households which have an equivalised net income below 70% of median equivalised household income and experience material deprivation. This target focuses on those children who live in households that experience both a low income and a low standard of living, meaning that they are experiencing the effects of living in poverty.

13.  Subsection (3) imposes a duty to make regulations setting out the circumstances in which a child would be regarded as experiencing material deprivation in a particular year. These circumstances might include the household in which the child lives being unable to afford particular goods or services.

14.  The regulation-making power will enable the Government to establish what is meant by 'material deprivation' and to update this definition over time to ensure that the combined low income and material deprivation target continues to reflect contemporary living standards. Experts consulted by the Child Poverty Unit have advised that such adjustments may be needed. The Government believes that because of the sensitivity around the setting and amending of the measurement details of this child poverty measure, exercise of these powers should be subject to the affirmative resolution procedure.

Clause 4: The absolute low income target

Powers conferred on: Secretary of State

Powers exercised by: regulations made by statutory instrument

Parliamentary procedure: affirmative resolution procedure and negative resolution procedure

15.  Clause 4 sets the absolute low income target. The target is that less than 5% of children living in qualifying households live in households that have an equivalised net income for the financial year below 60% of median income in the financial year beginning 1 April 2010, uprated annually in line with inflation. Many respondents to the consultation Ending Child Poverty: Making it Happen indicated that it was important for the Bill to include an absolute low income target.

16.  Subsection (3) provides a regulation-making power to set the calculation for uprating the base amount annually, taking into account changes in prices, as measured by the Retail Price Index. The provisions of these regulations involve a level of technical detail that the Government believes is not appropriate to set out in the Bill. As this power is uncontroversial, the intention is that it should be subject to the negative resolution procedure.

Clause 5: The persistent poverty target

Powers conferred on: Secretary of State

Powers exercised by: regulations made by statutory instrument

Parliamentary procedure: affirmative resolution procedure

17.  Clause 5 sets the persistent poverty target. This target relates to the percentage of children living in households whose equivalised net income has been less than 60% of median equivalised net household income for at least three out of the past four years. The target is included because longer periods in poverty can have a significant detrimental impact on children's experiences and life chances. Research shows that children who live in persistent poverty are likely to be at risk of worse outcomes than those who live in temporary poverty, for example, being suspended or expelled from school (11% compared to 6%) or living in bad housing (48% compared to 33%).[4]

18.  Subsection (3) provides for the target percentage to be set by regulations which must be made before 2015. The target level cannot be set in primary legislation because the required data is not yet available.[5] The Government expects that sufficient data will be available before 2015.

19.  Subsection (5) provides that instead of exercising the regulation-making power provided in subsection (3), to set a target percentage relating to persistent poverty, the Secretary of State may instead substitute a different persistent poverty target. This power may be necessary if, for example, evidence emerges that a new target would be a more reliable measure of persistent poverty. Regulations made under this power may only be made before 2015 and with the consent of the Commission (subsection (6)).

20.  Recognising the sensitivities of setting the target percentage, or amending the persistent poverty target, the Government considers it appropriate that these powers should be subject to the affirmative resolution procedure.

Clause 6: Interpretation of terms used in relation to targets

Powers conferred on: Secretary of State

Powers exercised by: regulations made by statutory instrument

Parliamentary procedure: affirmative resolution procedure

21.  Clause 6 enables provision to be made for a number of technical terms underpinning the child poverty targets in clauses 2 to 5 to be defined in regulations.

22.  The child poverty targets are defined in the Bill in such a way that success can be measured by Government analysis of statistical surveys. Currently, data for the relative low income, combined low income and material deprivation, and absolute poverty targets is taken from the Households Below Average Income dataset that is derived from the Department for Work and Pensions' Family Resources Survey. The Family Resources Survey collects income data from a representative sample of UK households each year. Data relating to the persistent poverty target will be derived from a new survey Understanding Society to be undertaken by the University of Essex on behalf of the Economic and Social Research Council. This survey will work on a similar basis to the current survey used to measure persistent poverty, the British Household Panel Survey, which follows the same households over a number of years.

23.  If survey methodologies improve with regard to measuring income and poverty for children, and these improvements are incorporated into these surveys, then it may be necessary to amend the definitions used for the child poverty targets in the Bill so that they match the definitions used in the survey. This would ensure that the survey is still able to measure success against the targets as defined in the Bill. If no such regulation-making powers were conferred, and the survey methodology changed, then it is possible that the survey could not be used to measure success against the targets.

24.  These powers will also ensure that if the way in which income is defined for the relevant survey statistics changes in response to research or methodological evidence, these changes can be reflected in the definitions used in the Bill.

25.  Subsection (1)(a) provides a power to set out in regulations the definition of a 'qualifying household' for the purposes of the child poverty targets. Qualifying households are likely to be defined according to the rules the surveys use to sample households.

26.  Subsection (1)(b) provides a power to define the circumstances in which a child is or is not to be regarded as living in a qualifying household. This would cover, for example, situations where a child spends part of the week with one parent and part of the week with another.

27.  Subsection (1)(c) provides a power to set out in regulations what is to be regarded as the income for a household for the financial year, for the purposes of the targets. This is likely to set out how different types of income from different family members is to be treated, and how the income data collected is to relate to a financial year.

28.  Subsection (1)(d) provides a power to make provision about what deductions are to be made from a household's income in calculating its net income. Subsection (2) provides that any deductions prescribed under regulations made under subsection (1)(d) must not include housing costs, but regulations made under that subsection may provide that specified expenses are not to be treated as housing costs.

29.  Subsection (1)(e) provides a power to set out in regulations how household income is to be equivalised. Income is equivalised using equivalence scales, which reflect the extent to which households of different size and composition require a different level of income to achieve the same standard of living. There are a number of different scales that could be used and the intention is that regulations under this power will set out the equivalence scale to be used for the purpose of calculating household income under the Bill.

30.  It is also the Government's intention to ensure that as many children are covered by the child poverty targets as is practicable, having regard to the statistical surveys that are being or can reasonably be expected to be undertaken. This safeguard is reflected in subsection (4) which the Secretary of State must have regard to when making regulations under subsection (1)(a). The Government believes it is appropriate that scrutiny of any regulations made under these powers should be by the affirmative resolution procedure.

Clause 7: The Child Poverty Commission

Powers conferred on: Secretary of State

Powers exercised by: order

Parliamentary procedure: affirmative resolution procedure

31.  Clause 7 establishes the Child Poverty Commission. Details about this body are set out in Schedule 1.

32.  Subsection (4) provides that the Secretary of State may make an order abolishing the Commission at any point after the end of the target year. This power will be used if the Government considers that there is no longer any role for the Commission.

33.  Subsections (5) and (6) allow an order abolishing the Commission to include any necessary transitional arrangements and to repeal the various provisions of the Bill relating to the Commission, as well as any other statutory references to this body

34.  The Government believes that because of the sensitivities involved in abolishing the Commission, scrutiny should be subject to the affirmative resolution procedure.

Part 2: Duties of Local Authorities and other Bodies in England

35.  Part 2 makes provision requiring cooperation at a local level to tackle child poverty. It includes powers to make delegated legislation on the following matters:

  • Clause 19: a power to amend by order the list of bodies considered 'partner authorities' in relation to a responsible local authority (negative resolution procedure); and
  • Clause 21: a power to make regulations about local child poverty needs assessments (negative resolution procedure).

36.  In addition, it is intended that in exercising their functions under this Part, responsible local authorities and their partners should have regard to guidance issued by the Secretary of State on the following matters:

  • Clause 20: co-operating to reduce child poverty in a local area;
  • Clause 21: local child poverty needs assessment; and
  • Clause 22: preparing a joint child poverty strategy for local area.

37.  The provisions containing powers to make delegated legislation and to issue guidance are described in detail below.

Clause 19: Partner authorities

Powers conferred on: Secretary of State

Powers exercised by: order

Parliamentary procedure: negative resolution procedure

38.  Clause 19 lists the public bodies and persons who will be 'partner authorities' in relation to responsible local authorities (as listed in clause 20) for the purposes of Part 2. Respondents to the consultation for Ending Child Poverty: Making It Happen [6] indicated that it was important to name the key partners for a responsible local authority in the Bill.[7]

39.  Subsection (6) provides that the Secretary of State may, by order, amend the list of partner authorities by adding any person with functions of a public nature, removing any person, or by adding or removing references to the Secretary of State's functions under subsection (3). The intention of this power is to allow flexibility to add or remove partners or persons with functions of a public nature, and references to the Secretary of State's functions. This will ensure that the legislation can be kept up to date with future changes to the structure of delivery agencies.

40.  Before exercising this order-making power, subsection (7) requires the Secretary of State to consult representatives of local government and any other persons he thinks fit. With this statutory consultation requirement in place, the Government considers it appropriate for the order to be subject to the negative resolution procedure.

Clause 20: Co-operation to reduce child poverty in local area

Powers conferred on: Secretary of State

Powers exercised by: power to issue guidance

41.  Clause 20 imposes a duty on each responsible local authority to make arrangements to promote co-operation between the authority, each of its partner authorities, and such other persons or bodies as the authority considers appropriate, in order to reduce, and mitigate the effects of, child poverty in the local authority's area. Subsection (4) provides that the responsible local authority and its partner authorities must have regard to guidance issued by the Secretary of State. This guidance is intended to cover the arrangements that responsible local authorities should put in place. It is expected that responsible local authorities and partner authorities will use existing partnerships, such as Local Strategic Partnerships, rather than setting up new arrangements.

Clause 21: Local child poverty needs assessment

Powers conferred on: Secretary of State

Powers exercised by: regulations made by statutory instrument and power to issue guidance

Parliamentary procedure: negative resolution procedure

42.  Clause 21 requires a responsible local authority, as part of the arrangements to co-operate made under clause 20, to prepare and publish an assessment of the needs of children living in poverty its area. Because of their duty to co-operate in the making of arrangements under clause 20(3), partner authorities are required to co-operate with the responsible local authority in the preparation of a local child poverty needs assessment.

43.  Subsection (2) gives the Secretary of State the power to make regulations about local child poverty needs assessments. Subsection (3) sets out the things that the regulations can make provision about. The intention is that the regulations will set out those matters which a responsible local authority must consider in its child poverty needs assessment, while giving the authority flexibility to consider other matters that it considers appropriate. As these regulations are procedural the Government considers it appropriate that they be subject to the negative resolution procedure.

44.  Subsection (4) provides a power to issue guidance, which the responsible local authority and each of its partner authorities must have regard to when exercising their functions under this clause.

Clause 22: Joint child poverty strategy for local area

Powers conferred on: Secretary of State

Powers exercised by: power to issue guidance

45.  Clause 22 requires the arrangements to co-operate made by a responsible local authority under clause 20 to include arrangements to prepare a joint child poverty strategy in relation to the authority's area and to modify it in accordance with the provisions in this clause. The strategy must set out the measures that the authority and each partner authority propose to take for the purpose of reducing, and mitigating the effects of, child poverty in the responsible local authority's area.

46.  Subsection (7) provides a power for the Secretary of State to issue guidance, which the responsible local authority and each of its partner authorities must have regard to when exercising the functions under this clause.

Schedule 2: Continuing effect of targets after target year

Powers conferred on: Secretary of State

Powers exercised by: regulations made by statutory instrument

Parliamentary procedure: affirmative resolution procedure

47.  Schedule 2 places a duty on the Secretary of State to ensure that the targets, once met, are met in later financial years, and confers powers on the Secretary of State to make regulations about how the targets will continue to apply after the target year if they are not met in that year or any later ('renewed') target year. Recognising the sensitivities involved in making these regulations, the Government believes that scrutiny should be subject to the affirmative resolution procedure, ensuring a high level of parliamentary scrutiny.

48.  Paragraph 3 imposes a duty on the Secretary of State to make regulations about how the targets will continue to be met after the end of the target year if the targets are not met in relation to the target year or any renewed target year. The regulations must be made as soon as is reasonably practicable after the final report (under clause 13(3)) or statement (under paragraph 8 of Schedule 2) is laid before Parliament (paragraph 4). These regulations must: set a new target year; require the Secretary of State, the Scottish Ministers and relevant Northern Ireland department to publish further strategies; require the Secretary of State, the Scottish Ministers and relevant Northern Ireland department, when preparing strategies, to consult the persons and bodies with whom they are required to consult under clauses 9 and 12; and require the Secretary of State to publish annual reports on the implementation of the strategies.

49.  Paragraph 5 provides that regulations made under paragraph 3 may include provision conferring or imposing functions on the Commission after the target year.

50.  Paragraph 6(a) to (d) provides that regulations made under paragraph 3(b) may include provision relating to: UK, Scottish and Northern Ireland strategies, and consultation on the strategies; reports; and the Commission providing further advice to the Secretary of State, the Scottish Ministers or the relevant Northern Ireland department.

51.  Paragraph 7 provides that the matters listed in clause 15(2) must be taken into account by the Secretary of State, and the matters listed in clause 15(3) must be taken into account by the devolved administrations, when preparing any strategy under regulations made under paragraph 3. The matters listed in clause 15(2) must also be taken into account by the Commission when considering any advice to be given under such regulations.

52.  Paragraph 8 requires the Secretary of State to publish a statement in relation to each renewed target year, stating whether the targets have been met in relation to that year and, if not, explaining why not.

53.  Paragraph 9(1)(a) provides that regulations may amend the target percentage and base year of the absolute low income target, in its application to any financial year later than the target date. This provision is required for the purposes of measuring absolute low income because in order for it to remain an accurate measure, it will be necessary to reset the current baseline of 2010-2011 at regular intervals. It is intended that this regulation making power will be subject to the affirmative resolution procedure.

54.  Alternatively, paragraph 9(1)(b) provides that regulations may make provision to repeal clause 4 (the absolute low income target), and the reference to this target in clause 24(3)(a). This is a power to amend primary legislation through a statutory instrument; however, it will be subject to the affirmative resolution procedure. Meeting the absolute low income target level by the target year will require sufficient real terms growth in household incomes. If the necessary growth in incomes has been secured by 2020, it may be decided that it is not necessary to establish a new absolute low income target. This is the rationale for including this power

55.  Paragraph 9(2) makes it clear that paragraph 9(1)(b) is not intended to have effect in relation to financial years before the regulations are made.

Child Poverty Unit

January 2010



1   Ending Child Poverty: Everybody's Business, HM Treasury, DWP, DCSF, March 2008 Back

2   Measuring Child Poverty, DWP, December 2003 Back

3   Ending Child Poverty: Making it Happen, HM Treasury, DWP, DCSF, January 2009 Back

4   The Circumstances of Persistently Poor Children: Evidence from the Families and Children Study, DWP Research Report 487, 2008 Back

5   Data relating to the persistent poverty target will be derived from a new survey Understanding Society to be undertaken by the University of Essex on behalf of the Economic and Social Research Council. This survey will work on a similar basis to the current survey used to measure persistent poverty, the British Household Panel Survey, which follows the same households over a number of years. Back

6   Ibid. Back

7   These bodies comprise some of the 'partner authorities' listed for the purposes of Chapter 1 of Part 5 of the Local Government and Public Involvement of Health Act 2007. Back


 
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