Armed Forces Bill; Welfare Reform Bill; Scotland Bill & Police Reform and Social Responsibility Bill: Government response - Delegated Powers and Regulatory Reform Committee Contents


Welfare Reform Bill

Introduction

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[2] 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 security bills.

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 and awards

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 responsibilities

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 the claimant.

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 Ministers.

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"[3], 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 appropriate maximum

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 exercise.

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) are satisfied.

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 procedure.

Clause 89 - power to make supplementary and consequential provisions

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 accordingly.

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 negative order.

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 regulations.

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.



2   http://www.parliament.uk/business/committees/committees-a-z/lords-select/delegated-powers-and-regulatory-reform-committee/bills-considered/ Back

3   Delegated Powers and Regulatory Reform Committee, 6th Report (1994-95) Back


 
previous page contents next page


© Parliamentary copyright 2011