Welfare Reform Bill |
7. Part 1 of this Bill introduces a new social
security benefit: Universal Credit. Part 2 makes changes to the
conditions of entitlement to jobseeker's allowance, employment
and support allowance and income support to introduce new work-related
requirements and sanctions. Part 3 amends provisions relating
to industrial injuries benefits, housing benefit, the social fund
and state pension credit. Part 4 introduces a further new benefit,
Personal Independence Payment, to replace disability living allowance.
Part 5 makes a large number of miscellaneous changes, mainly concerned
with the administration of benefits; but, most significantly,
it introduces a benefit cap. The Department for Work and Pensions
(DWP) has submitted a memorandum
to the Committee about delegated powers in the Bill, at the back
of which there is a table listing the delegated powers in the
Bill and identifying any parliamentary procedure that is to apply.
Background and context
8. Social security law, particularly where concerned
with means-tested benefits, tends to be detailed and complex in
character, because it seeks to make provision for as wide a range
of personal circumstances as is practicable. That objective along
with a perceived need for adaptability has for decades caused
the statutory scheme to be heavily reliant on delegated legislation.
9. The great majority of delegated powers have
by long-standing practice required only negative procedure scrutiny.
For instance, the Social Security Contributions and Benefits Act
1992 contains many delegated powers that deal with benefits; but
few of those powers attract the affirmative procedure. That Act
consolidated, and reflected, an existing pattern of delegations
under the Social Security Act 1975 (and its various amendments).
10. With recent bills about social security,
the Committee's approach has been to consider new delegated powers
and their level of scrutiny against the settled regime of wide
delegation and a presumption in favour of negative resolution
procedure, departing from that only where a new power seemed very
significantly out of line with an existing comparator.
11. The changes made by the present Bill amount
to a significant revision of the structure of means-tested benefits
since at least 1986, when the present arrangements for them were
enacted. (That of course pre-dated the establishment of the first
Select Committee on Delegated Powers.) In view of that basis,
we have approached the present Bill without necessarily according
the same significance to precedent as we have previously for social
12. We draw the House's attention to certain
amendments made in the House of Commons at Report Stage to introduce
a requirement for affirmative procedure on the first exercise
a number of powers in the Bill (see paragraph 13 of the memorandum).
The list of first-time affirmative powers in Part 1 is set out
in clause 43(3). The first-time affirmative procedure is most
obviously capable of being an effective control where a new regime
is being established in subordinate legislation and is unlikely
to change in any essential way. It may not however necessarily
be appropriate where there is no constraint on the opportunities
for subsequent amendment, and particularly where the scale and
impact of later changes could have a significant effect.
Part 1, Chapter 1 - Universal Credit: Entitlement
13. The scheme of Universal Credit can be seen
from the framework set out in Chapter 1. Claimants must satisfy
both "basic conditions" and "financial conditions".
The five basic conditions are listed in clause 4(1), of which
four (those in subsection (1)(a) and (c) to (e)) are capable of
being supplemented by regulations under subsections (2) to (7).
The power in subsection (7) on its face amounts to an unlimited
delegation with respect to the last of the basic conditions in
subsection (1)(e) and while paragraph 26 of the memorandum gives
an example of how it might be used, it does not say how the power
might be exercised so as to treat a person as not satisfying
that condition. As the use of the power conferred by clause
14(7) could be significant in determining entitlement to Universal
Credit, we recommend the power to make regulations under that
provision should be subject to affirmative procedure.
14. Clause 6 provides for restrictions on entitlement
that are left largely to negative regulations. The power in subsection
(1)(a), which is subject to no constraint in the Bill, could affect
entitlement very significantly. We draw it to the attention
of the House so that the Minister may be invited to satisfy the
House that the negative procedure affords adequate control over
the exercise of the power. Unless the House is satisfied
with the Minister's response, we recommend that the affirmative
procedure should apply.
15. The award of Universal Credit depends on
a calculation whereby a "maximum amount" is reduced
by deductions (clause 8) by reference to an assessment period
determined in accordance with regulations (clause 7). The four
elements that may potentially make up the maximum amount are set
out in clause 8(2) and amplified in clauses 9 to 12. Provisions
in clauses 9 to 11 are substantially dependent on regulations.
Provisions in clause 12 (other particular needs or circumstances)
are left almost entirely to regulations, although clause 12(2)
gives a non-exhaustive list of what the regulations might provide
for. Where regulations are to specify an amount critical to the
calculation (for instance, the amounts of the "standard allowance"
(clause 9(2)) or those for children etc. (clause 10(3)), or where
an amount derived externally (for instance, a person's rent) may
be modified by regulations (see clause 11(3) to (5) as respects
housing costs), the powers require the affirmative procedure but
only on first exercise. In relation to the "standard"
and "children" elements of the maximum amounts there
are powers of exception in regulations (clauses 9(3) and 10(4))
which are potentially very significant; yet both require only
negative resolution. We see no reason why there should be less
Parliamentary control over regulations made under clauses 9(3)
and 10(4) than there is over regulations made under clause 11(5)(a);
and there is no clear explanation in the memorandum of the principles
on which regulations under clauses 9(3) and 10(4) will be based.
We therefore recommend that regulations made under clause 9(3)
and 10(4) should also be subject to affirmative procedure on the
first exercise of the powers.
16. As respects deductions from the maximum amount,
the provision on the face of the Bill is brief: both earned and
unearned income is to be calculated in accordance with regulations
under clause 8(3) (the reference to a prescribed percentage is
explained in paragraph 34 of the memorandum). The delegated power
is supplemented by paragraph 4 of Schedule 1 (see clause 31).
All of these powers require the affirmative procedure on first
exercise and we are satisfied that this is appropriate.
Part 1, Chapter 2 - Universal Credit: Claimant
17. Clause 13 provides that the Secretary of
State is to impose "work-related requirements" (listed
in subsection (2), and applied by reference to claimant groups
specified in subsection (3)). Much of the provision in Chapter
2 of Part 1 is, in practical terms, claimant-specific - in the
sense that the Secretary of State (in many cases this may actually
be the Secretary of State's agent or contractor) is permitted
by the Bill itself to impose specific obligations directly on
18. In respect of those obligations, powers are
conferred in clauses 14 to 18 to make general provision about
what may be imposed: some of these are only residual, to add to
descriptions set out in the Bill (for example, clauses 16(3)(g)
and 17(3)(f)) or are procedural in character (see clause 14).
Other powers are clearly significant, as they have the effect
of enabling restrictions to be placed on the kind of work that
may be the subject of restrictions (clauses 17(4) and 18(3)).
The powers conferred by clause 18 (4) and (5) are potentially
important, as they may go to the root of a claimant's ability
to comply with a work availability requirement. They are subject
to negative procedure in the Bill. We recommend that regulations
made under clause 18 should be subject to affirmative procedure.
19. In respect of the groups of claimants described
in clauses 19 to 22 for the purposes of Chapter 2, the power conferred
by clause 19(2)(d) (and amplified in subsections (3) and (4))
is clearly significant; and this is recognised by the requirement
for first time affirmative procedure. We do not regard the
first time affirmative procedure as necessarily inappropriate
but the House may wish to be satisfied by the Minister that the
exercise of this power on the first occasion will sufficiently
define the Government's approach, and that subsequent uses of
the power will make only minor adjustments.
20. Clauses 26 to 28 are concerned with the sanctions
that may be applied where there is a "sanctionable failure"
on the part of the claimant. These are described in clauses 26(2)
and 27(2). Clause 28 enables regulations to provide for hardship
payments where sanctions are applied. All powers conferred in
clauses 26 to 28 require the affirmative procedure on first exercise.
We are satisfied that the first-time affirmative procedure is
appropriate in the case of clauses 26 and 27. We draw clause
28 to the attention of the House because it leaves provision for
hardship payments entirely to regulations. Again, the Minister
should be invited to satisfy the House that the principles of
hardship payments are likely to be established when the power
is first exercised and are unlikely to change significantly.
Clause 33 - Supplementary and consequential provision
21. Clause 33(1) contains a Henry VIII power
which enables regulations to make consequential, supplementary,
incidental or transitional provision in relation to any provision
about UC, and the provision may include amendment of Acts (whenever
passed) - see subsection (5). Where exercised by the Scottish
Ministers or the Welsh Ministers to amend a 'devolved' Act, the
power requires affirmative procedure. But where exercised by the
Secretary of State to amend an Act of Parliament, only the negative
procedure is required. Paragraphs 141 to 145 of the memorandum
seek to explain the reason for this difference; and paragraph
142 acknowledges that the scope of the power goes beyond that
of making purely consequential amendments (of the kind that the
House has, in earlier Welfare Reform Bills, regarded as appropriate
for the negative procedure).
22. It is clear from paragraph 142 that some
of the "incidental" or "supplementary" changes
that are in contemplation could potentially be fairly significant,
in that they could affect the level of benefit payable. We
do not therefore regard what is said in support of the negative
procedure for the exercise of this Henry VIII power by the Secretary
of State as particularly compelling. We therefore recommend that
regulations made under clause 33 should be subject to affirmative
procedure to the same extent as regulations made by the Scottish
Clause 47 - Parliamentary scrutiny of regulations
23. Clause 47 provides that regulations under
sections 6 and 7 of the Jobseekers Act 1995 should require only
negative, rather than, as now, affirmative procedure. Those sections
are concerned with a claimant satisfying the requirements to be
available for work and to be actively seeking work, on which his
right to jobseeker's allowance (which replaced unemployment benefit)
depends under sections 1(2)(a) and (c), and each section confers
extensive powers in connection with the relevant requirement.
When our predecessor Committee considered the Jobseekers Bill
in 1995 it considered the provisions about availability for work
and actively seeking work to be "of fundamental importance
to the Bill", and
it recommended that the regulations about them should require
the affirmative procedure, whenever made (it had been proposed
that a first-time affirmative procedure would be appropriate).
24. The reasons behind clause 47 are summarised
in paragraphs 219 to 223 of the memorandum, and the DWP explains
in paragraph 223 that regulations to be made under either section
are "generally advantageous to JSA claimants" and that
the affirmative procedure "makes implementing ... changes
more onerous than it needs to be". The implication is that
it is the Department that finds the procedure onerous. But paragraph
223 does not seek to explain why the powers are affirmative nor
why it is thought that the objections of the Committee in 1995
to the negative procedure (after first exercise of the powers)
no longer hold good. It is also not explained why it is thought
that the powers might not now be exercised in a way that is disadvantageous
to claimants. In line with our recommendation in paragraph
18, we recommend that clause 47 should be removed from the Bill.
Clause 68 - Housing benefit: determination of
25. Clause 68 amends section 130A of the Social
Security Contributions and Benefits Act 1992. At present, that
section enables regulations to provide that the appropriate maximum
housing benefit ("AMHB") is to be ascertained by reference
to determinations of a rent officer, and that the amount of a
person's liability for housing costs is to be taken as the amount
of that determination rather than the actual amount of the liability.
The amendments made by clause 68 will enable the regulations to
provide that the AMHB is to be ascertained by other means as well,
and that the liability for housing costs is to taken as some other
amount than the actual amount of the liability.
26. In paragraphs 262 to 264 of the memorandum,
the DWP explains a number of ways in which it envisages these
new powers might be used, in particular for the purpose of limiting
"the amount of rent met by housing benefit for claimants
in the social sector who under-occupy their dwelling"; and
paragraph 264 refers to the possibility that the 'local housing
allowance scheme' (currently applicable to claimants in private
sector housing) might under the new powers be extended to those
in social housing. The DWP explains that the negative procedure
is thought to be appropriate for the exercise of the amplified
powers because it will "allow legislation to be made as necessary
to adapt to changing rental markets".
27. In our view, the amendments made by clause
68 will extend very significantly the Secretary of State's legislative
powers in relation to housing benefit, so that he may, without
any apparent constraint on the face of the Bill, provide that
the amount of (for instance) a claimant's rent liability is to
be treated as if it were some other amount entirely - which could
be an amount significantly lower than the actual amount. In the
light of this, we recommend that any regulations to be made
by virtue of subsections (3), (5) or (6) of section 130A, as amended
by the Bill, should require the affirmative procedure on first
Part 4 - Personal Independence Payment
28. Clause 75 makes provision for entitlement
to a Personal Independence Payment comprising a daily living component,
a mobility component or both. Each component is payable at a standard
rate or an enhanced rate according to whether conditions set out
in, respectively, clause 76(1) or 77(2) or clause 76(2) or 77(3)
29. The daily living component depends on the
limits of a person's ability to carry out 'daily living activities',
and the mobility component similarly depends on the limits of
ability to carry out 'mobility activities'. The basis on which
a person's ability and its limitations are to be judged in either
case is to be provided for entirely in regulations under clause
78. Those regulations require the affirmative procedure on their
first exercise; and the affirmative procedure is also required
for the first regulations that provide for the assessment of persons
under the age of 16.
30. The expressions "daily living activities"
and "mobility activities" are defined in terms of clauses
76(4) and 77(4), but each of those provisions leaves the definition
to negative regulations. In paragraph 294 of the memorandum the
DWP explains that the policy behind these two expressions is still
under development and that "the activities [as specified
in the regulations] may be adjusted ... without the need to await
an opportunity to amend the primary provisions". We draw
the House's attention to the explanation given in paragraph 7
of the memorandum in respect of the Personal Independence Payment:
"7. A public consultation on the reform proposals
ran until 14 February and the results are being evaluated by the
Government. This is one of the principal reasons why the new provisions
on the personal independence payment include a range of regulation-making
powers on the face of the Bill."
The memorandum does not explain why certain activities
cannot appear in the Bill itself with, for instance, a (negative)
power to add more and perhaps an (affirmative) power to remove
some. We are not persuaded by this explanation. These
are key terms, which go to the very root of entitlement to the
Personal Independence Payment. We recommend that regulations made
under section 76(4) and 77(4) should be subject to affirmative
Clause 89 - power to make supplementary and consequential
31. Clause 89 enables the Secretary of State
and the Scottish Ministers to make supplementary, incidental or
consequential provision by way of amendments of Acts, in connection
with Part 4 of the Bill. As with the power conferred by clause
33, the affirmative procedure applies, where an Act is amended,
to regulations made by the Scottish Ministers but only the negative
procedure where regulations are made by the Secretary of State.
In our view, similar considerations apply to those in relation
to clause 33 (see paragraph 22 above). We do not find the explanation
given in paragraphs 321 and 322 of the memorandum is persuasive
and we therefore recommend that regulations made by the Secretary
of State under clause 89 should be, where they amend an Act, subject
to affirmative procedure.
Clauses 93 and 94 - Benefit cap
32. Clause 93 is wholly enabling, in that it
provides for a benefit cap to be introduced entirely by regulations.
The effect of the cap is described in subsection (2) in terms
of a limit on a person's (or a couple's) total entitlement to
welfare benefits during a particular period, by reference to a
specified amount. If total entitlement exceeds that amount, the
regulations may provide for reductions in benefit to which the
person (or couple) would otherwise be entitled, until the amount
is not exceeded.
33. This is a novel provision in social security
law. A careful reading of subsection (2) indicates that the nature
of the cap (and accordingly the extent of the power) and its practical
implications for claimants will turn on three key expressions:
"welfare benefits", "reference period" and
"relevant amount". Each of them is to be defined in
negative regulations: see subsections (10), (3) and (5) respectively.
Even "couple" is defined (subsection (10)) as "two
persons of a prescribed description" - the connection between
the two being left entirely to negative regulations.
34. We are not persuaded by the very brief
explanation in support of the negative procedure provided in paragraph
336 of the memorandum. The House may wish to seek an explanation
from the Minister as to why more provision about the cap mechanism
cannot be included in the Bill itself. But even if that can be
done, we remain of the view that regulations made under clause
93 should require the affirmative procedure, and we recommend
Clauses 111 and 113 - Amounts of civil penalties
35. Clause 111 amends section 115A of the Social
Security Administration Act 1992 to substitute new provision about
the civil penalties that are payable where an overpayment of benefit
occurs due to the act or omission of any person in circumstances
giving rise to grounds for bringing proceedings for an offence
against that person. In such cases the person may be given the
opportunity to pay a civil penalty, as an alternative to being
prosecuted. New subsection (3) provides for a variable penalty
of 50% of the overpayment, subject to a maximum and minimum amount;
new subsection (3A) provides for a fixed penalty. New subsection
(3B) enables the Secretary of State to amend that percentage,
or the maximum or minimum amount, or the flat rate amount, by
36. Clause 113 inserts new sections 115C and
115D to provide for a civil penalty to be payable where incorrect
information is negligently provided in connection with claims
for or awards of social security benefits, or where required information
is not provided or a required notification is not given. The amount
of the civil penalty is in each case to be specified in negative
37. There is no upper limit imposed in the Bill
on the level of penalty that may be specified in an order under
section 115A(3B) or in regulations under new section 115C or 115D.
Our approach to powers of that kind is that the affirmative procedure
should apply unless there is some compelling reason to the contrary
(for instance, that the power is subject to some other form of
constraint in the Bill). Paragraphs 422 and 429 of the memorandum
explain only that DWP considers that the negative procedure "will
ensure an appropriate level of Parliamentary scrutiny" for
orders under section 115A(3B), and that "it would not be
an appropriate use of Parliamentary time to make these regulations
[under new sections 115C and 115D] by the affirmative procedure";
but in neither case does it say why this should be so. As respects
the regulations, it explains (paragraph 428) that it is not the
intention to increase the penalty above the minimum penalty payable
under section 115A.
38. We recommend that regulations made under
new sections 115C and 115D should be subject to affirmative procedure.
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Delegated Powers and Regulatory Reform Committee, 6th Report (1994-95) Back