(DPRR/10-12/68) House of Lords Select Committee on Delegated Powers and Regulatory Reform Welfare Reform Bill, as brought from the House of Commons on 16 June 2011 Memorandum from the Department for Work and Pensions Introduction 1. This memorandum identifies the provisions for delegated legislation in the Welfare Reform Bill introduced on 16 February 2011. It explains the purpose of the powers, the reason why they are left to delegated legislation and the procedure selected for the powers and why it has been chosen. 2. The Coalition Government wishes to reform the benefits system to make it fairer, more affordable and better-able to tackle poverty and reliance on welfare. The Government wants to make the benefits system simpler and more efficient, with fewer benefits, fewer layers of bureaucracy and with financial support firmly focused on making work pay. 3. In July 2010 the Department published 21st Century Welfare (Cm 7913), a consultative paper that laid out the problems of poor work incentives and complexity in the benefits and tax credit systems, and set out the key principles for reform. 4. One of the main proposals in the paper was for universal credit, which would incorporate out-of-work benefits, in-work support and appropriate amounts for housing, disability and families, for people of working age. A key aim of universal credit is to ensure that anyone on benefits who starts work will be better off as a result. Another key objective is to make universal credit simple to administer and simple to understand. 5. On 11 November 2010, the Department published a White Paper “Universal credit: welfare that works”, setting out the Government‟s plans to introduce universal credit. The Bill implements these proposals, setting out the framework for the new system. 6. The Government has also decided to reform the disability living allowance, creating a new replacement benefit. The personal independence payment is designed to be more efficiently targeted and to support disabled people who face the greatest challenges to remaining independent and leading full and active lives. Key to the new benefit will be an objective assessment of individual need, designed to ensure that resources are focused on those most affected by their impairments. 7. A public consultation on the reform proposals1 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. 8. The Bill is organised into the following Parts: Part 1: Universal Credit Part 2: Working-age Benefits (jobseeker‟s allowance, employment and support allowance, income support, statutory payments and state maternity allowance) Part 3: Other Benefits (industrial injuries benefit, housing benefit, social fund and state pension credit) Part 4: Personal Independence Payment Part 5: Social Security: General (changes to matters relating to the administration of benefits and tax credits, a benefit cap, prosecutions, appeals and information) Part 6: Miscellaneous (Tell Us Once, child support maintenance, employment and training and the Social Mobility and Child Poverty Commission) Part 7: Final (repeals, financial provision, extent, commencement) 9. The proposed delegated powers will enable delegated legislation to provide for the detailed rules of the new benefits, the way they are administered and appropriate transitional arrangements. This will provide the Secretary of State with the flexibility to amend the detailed rules easily, and within appropriate timescales, in the light of operational experience and other developments – while still ensuring that Parliamentary scrutiny is maintained. The Department has considered in each case the appropriate Parliamentary procedure to apply to the regulations concerned. Territorial coverage 10. The Bill, with certain exceptions, extends to England, Wales and Scotland only. Clauses 33 (power to make consequential and supplementary provision: universal credit), 34 (abolition of benefits), 89 (power to make consequential and supplementary provision: personal independence payment), 123(1) to (13) (tax credits: transfer of functions), 124(1) to (9) (information-sharing between Secretary of State and HMRC) and much of Part 7 (final) extend to England and Wales, Scotland and Northern Ireland. 1 http://www.dwp.gov.uk/docs/dla-reform-consultation.pdf 11. Any amendment or repeal of existing legislation has the same extent as the enactment to which it relates. Parliamentary Scrutiny 12. The Department for Work and Pensions has considered in each case the appropriate procedure to follow in making regulations and orders. Most of the provisions deal with technical or procedural detail. On this basis, it is proposed that the delegated powers to make regulations or orders should be subject to negative resolution procedure except as otherwise stated in this Memorandum. 13. Following debate at Commons Committee stage, the Minister for Employment agreed to consider whether certain powers should be made affirmative. At Report stage in the House of Commons, amendments were made to make several powers relating to Universal Credit, State Pension Credit, JSA and ESA subject to the affirmative resolution procedure in the first instance. 14. The Committee may also wish to note that, other than regulations made within six months of the primary provisions coming into force, the Secretary of State for Work and Pensions is required to submit social security-related regulations to the Social Security Advisory Committee for scrutiny and comment. Any benefit regulations made more than six months after the Bill provisions have been brought into force would fall within this scrutiny requirement. General 15. All the delegated powers are exercisable by statutory instrument. An annex to this memorandum lists and provides references for all of the clauses containing powers to make delegated legislation. The annex lists the provisions by which the powers are created. Provisions which illustrate how a delegated power must or may be used are not listed, but have of course been explained where appropriate in this memorandum. 16. In this memorandum, jobseeker‟s allowance is referred to as JSA and employment and support allowance is referred to as ESA. Analysis of delegated powers by clause PART 1 UNIVERSAL CREDIT CHAPTER 1 ENTITLEMENT AND AWARDS Introductory Clause 1 Universal credit 17. This clause sets the scene for universal credit and does not contain any delegated powers. Clause 2 Claims 18. Subsection (2) allows for regulations to specify circumstances in which a member of a couple may make a claim as a single person. 19. The general rule set out in subsection (1) is that to be entitled to universal credit, a claim must be made either by a single person or by members of a couple jointly. Subsection (2) allows for particular exceptions which will apply in specific cases only (for example where one member of a couple does not have a right to reside in the UK and so is not entitled to universal credit) and so it is considered that this level of detail is more appropriately dealt with in regulations. Entitlement Clause 4 Basic conditions 20. The basic entitlement conditions for universal credit are set out in subsection (1), and subsections (2) to (7) then provide regulation-making powers to either allow for particular exceptions, or to provide for definitions. This is the sort of detail which is commonly included in regulations, rather than on the face of the Bill. 21. Subsection (2) allows for regulations to provide for exceptions to any of the basic conditions set out in subsection (1). The purpose of this power is to allow for claimants to be entitled to universal credit in particular circumstances where they do not meet a basic condition. An example of where this power may be used is where one member of a couple does not meet the condition of entitlement to be below state pension credit age, but the other does meet this condition. Regulations could provide that the couple would still be entitled to universal credit, despite one member not meeting the upper age limit condition of entitlement. 22. Subsection (3) allows for regulations to specify a different minimum age for universal credit entitlement to 18 years old in prescribed cases. This power could be used for example to provide for entitlement for 16 and 17 year olds who are currently eligible for income-based benefits for example lone parents, those with limited capability for work and others in particularly vulnerable circumstances such as those who are orphaned. 23. Subsection (5) relates to the basic condition in subsection (1)(c) for claimants to be in Great Britain. It contains provisions similar to those in current legislation. It allows for regulations to: a) specify circumstances in which a person is to be treated as being or not being in Great Britain; b) specify circumstances in which temporary absence from Great Britain is not counted; c) modify the application of Part 1 in relation to a person not in Great Britain who is by virtue of subsection (5)(b) entitled to universal credit. 24. Regulations made under these powers could: a) allow for people who are temporarily absent from GB for particular periods to be treated as being in GB; b) treat people who are not habitually resident or who do not have a right to reside in GB as not being in GB; c) modify universal credit related provisions in their application to persons whose form of employment means that they are temporarily absent from GB, for example those who are employed on board a ship or aircraft. 25. Subsection (6) relates to the basic condition in subsection (1)(d) that claimants must not be receiving education. The purpose of the regulation-making powers is to ensure that there is the ability to set out the detail of what “receiving education” means.