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Twenty Seventh Report Contents

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Drawn to the special attention of the House

Rent Officers (Housing Benefit and Universal Credit Functions) (Modification) Order 2023 (SI 2023/6)

Date laid: 9 January 2023

Parliamentary procedure: Negative

This instrument freezes Local Housing Allowance (LHA) rates in 2023-24 at the levels applied in April 2020. We found the Explanatory Memorandum (EM) obscure: it did not mention the Department for Work and Pensions’ (DWP) policy objective in doing this or what the effect on the payments to individual claimants might be. We therefore wrote to DWP for clarification.

The response makes it clearer that DWP’s intention is to retain LHA payments at the cash levels set in 2020, that average rents increased by 8.6-10.45% between September 2020 and September 2022 (depending on the size of the accommodation), and as a result of this Order claimants will therefore receive a smaller proportion of their monthly rent from housing support.

Although DWP’s letter goes on to explain that other benefits will be uprated by inflation at 10.1% (subject to parliamentary approval), we anticipate that this increase will be absorbed by other cost of living increases. DWP also states that, for those who do face a shortfall in housing costs, Discretionary Housing Payments (DHP) are available from local authorities. The original EM simply stated what this legislation does without setting out the wider context: that is simply unacceptable — the policy and impact of legislation should always be made clear to enable the House to perform its scrutiny role.

This Order is drawn to the special attention of the House on the ground that the explanatory material laid in support provides insufficient information to gain a clear understanding about the instrument’s policy objective and intended implementation.

1.The Local Housing Allowance (LHA) determines the maximum housing support for tenants in the private rented sector. It ensures that claimants in similar circumstances living in the same area are entitled to the same maximum rent allowance regardless of the contractual rent paid.

2.The Explanatory Memorandum (EM) to this instrument provided by the Department for Work and Pensions (DWP) simply states what it does: “The modification in this order provides that from April 2023 all LHA rates in 2023-24 to be frozen at the levels applied in April 2020”. It does not explain the policy objective however, in particular what the effect of that change will be on individual claimants and whether this sum represents a reduction or increase in support relative to the current rent paid.

3.We therefore wrote to the responsible Minster for a more precise description of the policy intent and likely effects of this legislation: the correspondence is published at Appendix 1.

Effect of the change

4.We interpreted the statement that “the Local Housing Allowance rates for 2023-24 will be maintained in cash terms at the elevated rates agreed for 2020” to mean that if benefit claimants were in receipt of £100 LHA in September 2020, the effect of this Order is that they will continue to receive £100 in September 2023, assuming that their circumstances remain the same and their rent levels have not fallen. It is widely reported, however, that rents have risen significantly in the intervening three years, so we would anticipate that in September 2023 £100 LHA will represent a much smaller proportion of the rent due.

5.DWP’s response confirmed that this is the case - average rents at the 30th percentile increased by 8.6-10.45% between September 2020 and September 2022 (depending on the size of the accommodation), therefore, as a result of this Order, claimants will receive a smaller proportion of their monthly rent from housing support.

The counterfactual

6.The EM went on to state that “if the Order is not made, the Rent Officers Orders will revert to their previous text which took effect from April 2020 to increase rates to 30th percentile of local market rates, and this will apply for 2023-24” but gave no indication of how that would contrast with the policy adopted.

7.We also asked DWP for clarification on this point and they responded rather opaquely: “The estimated AME [Annually Managed Expenditure] costs to the department to revert LHA rates to the 30th percentile in 2023/24 only is in the region of £600-£700 million for just 23/24.”

8.We deduce from this that the decision to maintain LHA rates at the 2020 levels represents a saving to the DWP in the order of £600 million.

Complementary benefit changes

9.DWP’s letter however makes the point that benefits more generally will be uprated by inflation at 10.1% (subject to parliamentary approval) from April this year. DWP states that “most capped households are also renters and will benefit by an average of £29 per week”. We anticipate, however, that this increase will be absorbed by other cost of living increases.

10.The letter continues that “for those who do face a shortfall in housing costs, Discretionary Housing Payments (DHP) are available from local authorities. Since 2011, the Government has provided nearly £1.6 billion in DHPs to local authorities to support people who need help with their housing costs. DWP and DLUHC are working collaboratively to establish how existing and new government levers can be used effectively in the short, medium, and long term to address housing challenges”.

Conclusion

11.This additional information is key to understand the DWP’s policy intention. The benefit landscape is complex and the House should not be left to speculate on the effects of any changes to claimants’ income. The original EM simply stated what this legislation does without setting out the wider context: that is simply unacceptable — the policy and impact of legislation should always be made clear to enable the House to perform its scrutiny role.

Universal Credit (Administrative Earnings Threshold) (Amendment) Regulations 2023 (SI 2023/7)

Date laid: 9 January 2023

Parliamentary procedure: Negative

These Regulations increase the Administrative Earnings Threshold (AET) of Universal Credit which relates to those who are in work but on low income, from the current level to £617 PCM (per calendar month) for an individual and to £988 PCM for a couple with effect from 30 January 2023. Department for Work and Pensions (DWP) analysts estimate that this change will bring a further 130,000 claimants into the Intensive Work Search (IWS) regime

The Committee considered an instrument with similar effect in September 2022. We were disappointed that the Explanatory Memorandum (EM) to this “next step” made no reference to the outcome of that previous instrument or how this second increment contributes to DWP’s overarching policy goal. We therefore wrote to the Minister.

The Minister’s response clarifies that this second step is being taken because DWP regards the programme as having been successful administratively in terms of the process of drawing claimants into the IWS regime. Although DWP asserts that it has “robust evidence that the Intensive Work Search regime can support the lowest earning UC claimants to boost their earnings” it is not yet in a position to publish that information. We therefore regard the instrument as premature: if there is “robust evidence” why is it not being used in support of the policy change (albeit in some suitably caveated form)?

We note that we also commented critically on the quality of information in the EM to the preceding DWP instrument and urge DWP to review its clearance processes so that the explanation provided with any future instruments meets acceptable standards.

These Regulations are drawn to the special attention of the House on the ground that the explanatory material laid in support provides insufficient information to gain a clear understanding about the instrument’s policy objective and intended implementation.

12.These Regulations increase the Administrative Earnings Threshold (AET) of Universal Credit which relates to those who are in work but on low income, from the current level to £617 PCM (“per calendar month”) for an individual and to £988 PCM for a couple with effect from 30 January 2023. Department for Work and Pensions (DWP) analysts estimate that this change will bring a further 130,000 claimants into the Intensive Work Search (IWS) regime from the Light Touch regime.

13.We considered an instrument with similar effect in September 2022, 1 which raised the AET to the levels now being increased and which was anticipated to bring 114,000 claimants (16.5% of Light Touch claimants) into the IWS regime. We were disappointed that the Explanatory Memorandum (EM) to this “next step” made no reference to the outcome of that previous instrument or how this second increment contributes to DWP’s overarching policy goal. We therefore wrote to the Minister and the exchange of correspondence is included at Appendix 2.

14.DWP has subsequently told us that they plan to extend in-work conditionality to over 500,000 claimants on Universal Credit whose household income is between the equivalent of working 15 and 35 hours a week at the National Living Wage. DWP’s response references two policy papers that were not mentioned in the original EM and describes the policy objective as a “strong package of measures designed to incentivise and support claimants into work and to increase their earnings, fulfilling the policy intent of Universal Credit”.

Evidence and evaluation

15.In relation to taking this second step without mentioning the outcome of the first instrument, DWP responded that:

“The decision to raise the AET for a second time was made in autumn 2022 and was included in the Growth Plan.2 We have robust evidence (which we plan to publish soon) that the Intensive Work Search regime can support the lowest earning UC claimants to boost their earnings”.

16.DWP’s letter indicates, however, that the second step is being taken now on the basis of the conversion process having operated well from DWP’s administrative perspective:

“Our internal Management Information (MI) measures the process of moving claimants impacted by the AET rise from the Light Touch regime into the Intensive Work Search regime, rather than looking at outcomes. The MI indicates that this process has been handled successfully by Jobcentres, with good attendance rates and the majority of impacted claimants having a tailored Claimant Commitment. “

17.Although DWP states that the prime motivator for the changes is to support claimants to increase their earnings, the letter concludes that:

“earnings increases will take around 6-9 months to materialise given claimants need time to discuss their goals with their Work Coach, talk to their employers and families and take the necessarily steps to grow their income”.

Conclusion

18.This additional information gives a clearer picture to the House of what the policy in regard to the AET is and how it is progressing: we recommend that the Department should revise the EM so that the new information is available to all.

19.The additional information also clarifies that this second step is being taken because the programme has been an administrative success in terms of the process of drawing claimants into the IWS regime. Although DWP asserts that it has “robust evidence that the Intensive Work Search regime can support the lowest earning UC claimants to boost their earnings”, it is not yet in a position to publish that information. We therefore regard the instrument as premature: if there is “robust evidence” why is it not included in the EM in support of the policy change (albeit in some suitably caveated form)?

20.We note that we also commented critically on the quality of information in the EM to the preceding DWP instrument. We should not have to keep writing to the Department for basic information on the policy objectives and contextual information. We urge DWP to review its clearance processes so that the explanation provided with any future instruments meets acceptable standards.

Gender Recognition Reform (Scotland) Bill (Prohibition on Submission for Royal Assent) Order 2023 (SI 2023/41)

Date laid: 17 January 2023

Parliamentary procedure: Negative

This Order, made by the Secretary of State for Scotland, prohibits the Presiding Officer of the Scottish Parliament from submitting the Gender Recognition Reform (Scotland) Bill (“the Bill”) for Royal Assent. Article 4 of, and Schedule 2 to, this Order state the UK Government’s reasons for intervening. The enabling provision, section 35 of the Scotland Act 1998, creates an opportunity for the Bill to be reconsidered by the Scottish Parliament, should the Scottish Government choose to do so. Additional information describes the potential number of applicants and the latest steps taken by the UK Government to consult the Scottish Government on the matter.

The Order is drawn to the special attention of the House on the ground that it is politically and legally important and gives rise to issues of public policy likely to be of interest to the House.

21.This Order, made by the Secretary of State for Scotland, prohibits the Presiding Officer of the Scottish Parliament from submitting the Gender Recognition Reform (Scotland) Bill (“the Bill”) for Royal Assent. Article 4 of, and Schedule 2 to, this Order state the UK Government’s reasons for making this Order. The enabling provision, section 35 of the Scotland Act 1998, creates an opportunity for the Bill to be reconsidered by the Scottish Parliament, should the Scottish Government choose to do so. 3

Areas of concern

22.The Bill would make it quicker and easier for an applicant to obtain a Gender Recognition Certificate (GRC) in Scotland and would extend the current eligibility criteria to include:

• applicants aged 16 to 17 years,
• applicants without a diagnosis of gender dysphoria, and
• applicants who have not lived for two years in their acquired gender.

23.In Schedule 2 to the Order and in the Explanatory Memorandum the Office of the Secretary of State for Scotland states that the Order has been laid because of concerns that this legislation would have an adverse impact on the operation of Great Britain-wide equalities legislation. The EM lists the concerns as including:

• difficulties for GRC holders, employers and service providers in trying to operate two parallel, and very different, regimes in the UK for issuing and interpreting GRCs,
• practical consequences on the operation of the law as it applies to reserved matters such as the administration of tax, benefits and State pensions,
• questions on how to deal with fraudulent or malicious applications, and
• difficulties caused to the operation of the protections under the Equality Act 2010, in particular the difficulties caused to single sex schools by the reduction in the qualifying age for the GRC to include 16-18 year olds.

More detailed information is also provided in a policy statement published by the Secretary of State.4

Numbers involved

24.The EM does not set out the numbers anticipated to apply for GRCs but in additional information the Office of the Secretary of State for Scotland set out an estimate:

“The Scottish Government’s policy memorandum5 sets out that the Bill would result in an increase in the number GRC applicants from a baseline of about 30 per year to 250-300, suggesting a tenfold increase.

The UK Government’s statement of reasons notes that these numbers are vulnerable to significant uncertainty and that the closest such system in a country with a similar sized population to Scotland has seen an average of 550 applications a year.

The numbers given in the Scottish Government’s policy memorandum are not broken down by age; under the existing GRC scheme we have some limited data on the age of applicants, with just under 50% of successful applicants in 2020-21 born after 1990.6”

Time Constraints

25.Although subject to the negative resolution, the Order was made on 17 January 2023 and brought into effect the following day. It may be useful to clarify that the Government are constrained by the timetable set out in the enabling Act: section 35 of the 1998 Act gives the Secretary of State for Scotland four weeks, following the passage of a bill, to make an Order to intervene. In this instance the Bill was passed by the Scottish Parliament on 22 December 2022.

26.The Office of the Secretary of State for Scotland explained that amendments to a bill in the Scottish Parliament can be made up to its final stages (which were on 22 December 2022) and the final vote on the Bill was also held on 22 December which completed its passage:

“In this case, there were a number of significant amendments proposed after the second stage, which meant it was not possible to carry out a full assessment of the Bill until it had been debated at stage three and passed in its final form.

The UK Government’s approach to the Order and accompanying documents was formed in recognition of the statutory timescales in the Scotland Act 1998, and the respective tests under section 35 of the Scotland Act 1998. The department considered it was appropriate to provide an impact assessment with the information at our disposal in these circumstances given the nature of the instrument, the fact it is the first time it has been used and in recognition of the fact the bill can be reconsidered to respond to the s.35 order and the statement of reasons, should the Scottish Government choose to do so.

The Minister for Women and Equalities met with the Cabinet Secretary for Social Justice, Housing and Local Government on 19 December 2022 to set out her concerns. The Secretary of State for Scotland also met with the Cabinet Secretary for Social Justice, Housing and Local Government on 24 January 2023 to discuss the UK Government’s position and possible next steps, including how the Scottish Government may wish to bring an amended Bill for reconsideration.”

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