Social Security Contributions and Benefits Act 1992

168.     Paragraph 25 ensures that the existing rules linking entitlement to incapacity benefit across an intervening period of receipt of disabled person's tax credit will continue to have the same application for people entitled to the disability element of working tax credit who receive working tax credit or any element of the child tax credit other than the family element. Paragraph 30 has the same effect as paragraph 25 for the purposes of long-term incapacity benefit.

169.     Paragraphs 31 and 32 make consequential amendments reflecting the fact that the State Earnings-Related Pension Scheme is to be replaced by the State Second Pension.

170.     Paragraphs 36 to 44 make equivalent amendments to the Social Security Contributions and Benefits (Northern Ireland) Act 1992.

PART 2: CHILD BENEFIT AND GUARDIAN'S ALLOWANCE

Section 49: Functions transferred to Treasury

171.     Section 49 transfers to the Treasury responsibility for policy relating to child benefit and guardian's allowance, for setting the level of those benefits, and for the rules concerning entitlement. The functions transferred consist mainly of the exercise of powers to make subordinate legislation in relation to those benefits. This section covers the transfer of policy relating to those benefits within both Great Britain and Northern Ireland.

Section 50: Functions transferred to Board

172.     Section 50 transfers to the Board the functions relating to child benefit and guardian's allowance which are not transferred to the Treasury by section 49. It transfers to the Board the day-to-day operational functions currently discharged by the Child Benefit Centre on behalf of the Secretary of State, and by the Child Benefit Office in Northern Ireland on behalf of DSD.

173.     Existing social security legislation contains extensive powers to make regulations. To the extent that these powers relate to child benefit or guardian's allowance, they are specifically transferred under sections 49 or 50 to either the Treasury or the Board.

Section 51: Consequential amendments

174.     Section 51 gives effect to Schedule 4, which makes amendments to the law about child benefit and guardian's allowance needed in consequence of the transfer of functions made by sections 49 and 50.

Schedule 4: Transfer of functions: consequential amendments

Social Security Administration Act 1992

175.     Paragraph 2 removes the power to deduct overpaid child benefit or guardian's allowance from other benefits. At present, the power to recover benefits from child benefit or guardian's allowance is limited in effect, as it requires the consent of the claimant. As a result of the transfer to the Board, the link between child benefit and other social security benefits will be severed. In future, overpaid child benefit or guardian's allowance will only be recoverable directly from the claimant or from future payments.

176.     Paragraph 3 relates to the responsibility for setting rates of child benefit and guardian's allowance. For those benefits which remain the responsibility of the Secretary of State, any power to change the rates of those benefits will remain subject to the consent of the Treasury.

Social Security Administration (Northern Ireland) Act 1992

177.     Paragraph 8 mirrors the amendment made in paragraph 2 by removing the power to deduct overpaid child benefit or guardian's allowance from other social security benefits payable under Northern Ireland legislation.

178.     Paragraph 9 ensures that where an order is made in Great Britain up-rating child benefit or guardian's allowance, or where a mistake in the calculation of the rate of these benefits is rectified by the Treasury under its power to do so by regulations, the effect of the change is mirrored in Northern Ireland.

Social Security Act 1998

179.     Paragraph 15 provides for references to decisions by the Secretary of State to be construed, in relation to child benefit and guardian's allowance, as references to a decision of the Board, or of an officer of the Board.

Social Security (Northern Ireland) Order 1998

180.     Paragraph 19 provides for references to decisions by the Department in Northern Ireland to be construed, in relation to child benefit and guardian's allowance, as references to a decision of the Board, or of an officer of the Board.

Immigration and Asylum Act 1999

181.     Paragraph 21 enables the Treasury to make regulations providing that persons subject to immigration control are entitled to child benefit in prescribed circumstances. Paragraph 22 provides for the Treasury to make regulations allowing the backdating of entitlement to child benefit and guardian's allowance in certain circumstances when people who were subject to immigration control acquire refugee status.

Section 52: Transfer of property, rights and liabilities

182.     The Child Benefit Centre, and its Northern Ireland equivalent, receive goods and services under a wide range of contracts. Those contracts relating wholly to functions transferred to the Treasury or the Board will, from the date of transfer, become contracts with those Departments. However, the Child Benefit Centre and its Northern Ireland equivalent also receive goods and services under contracts that provide for the supply of goods and services to other parts of DWP or, in Northern Ireland, DSD. In those cases, the right to enforce those contracts and liabilities resulting from them is transferred but only to the extent that they relate to the functions transferred.

183.     Section 52 makes provision for the transfer of any property, rights or liabilities associated wholly with the functions relating to the operation of child benefit or guardian's allowance to be transferred to the Treasury or the Board, as appropriate. It enables the Treasury or the Board to issue a certificate, where required, as evidence that the transfer has taken place (subsection (3)) and ensures that all rights and liabilities are to be transferred, even where the contract itself states that they should not be (subsection (4)).

184.     Subsections (5) and (6) deal with those contracts which relate partly to functions transferred to the Board or Treasury and partly to functions retained by the Secretary of State or the original Departments. They provide for the transfer of rights and liabilities under those contracts, but only so far as they relate to child benefit and guardian's allowance and the functions being transferred.

185.     Subsection (7) also allows the transfer by Order in Council to the Home Civil Service of staff currently employed in administering child benefit and guardian's allowance in Northern Ireland. Those staff are currently members of the Northern Ireland Civil Service.

Section 53: General functions of Board

186.     Section 53 brings child benefit and guardian's allowance under the care and management of the Board. Child benefit and guardian's allowance are also brought within the definition of 'inland revenue' as set out in the Inland Revenue Regulation Act 1890.

187.     This section also provides for the Board to appoint staff to operate, pay and account for child benefit and guardian's allowance and sets out the accounting requirements (subsections (3) and (4)). The Board will be required separately to identify the amounts of child benefit and guardian's allowance paid out in any period, the costs of operating each system and amounts received in respect of those benefits.

188.     In addition, this section makes similar provision in relation to the declaration of secrecy made by members of Inland Revenue staff and the General and Special Commissioners under the Taxes Management Act 1970 as is made by section 2(6) (subsection (5)).

Section 54: Transitional provisions

189.     The transfer of functions will not be effective until a date appointed by a commencement order. Until that date, the Secretary of State will continue to carry out all functions in relation to child benefit and guardian's allowance.

190.     The effect of subsections (4) to (9) is to ensure that anything done by the Secretary of State or DSD, in the exercise of any of those functions before transfer will continue to have effect after the date of transfer, as if they had been actions of the Treasury or the Board. It follows that any decisions made, appeals against such decisions, or actions being taken by or against the Secretary of State or DSD become the responsibility of the Treasury or the Board from the date of transfer, depending on the function to which they relate. The Treasury or the Board would be substituted for the Secretary of State or DSD in any contracts, legal proceedings or other instruments.

191.     Before the date of transfer, the Treasury or the Board will need to exercise certain of the functions to be transferred to them, to enable them to take over responsibility from the date of transfer. To allow for a smooth transfer, regulations need to be in force to provide the Board with the power to carry out those functions from that date. Subsections (1) and (2) therefore confer a power on the Treasury and the Board to make regulations during the period after Royal Assent but prior to commencement of the transfer, to enable them to prepare for transfer. Such regulations cannot come into force, however, until the date of transfer.

192.     Subsection (10) enables an order made before the transfer of functions facilitating electronic communications in respect of child benefit or guardian's allowance to stay in force after transfer.

Section 55: Continuing entitlement after death of child

193.     In the current child benefit system, entitlement ceases immediately a child dies. In addition, if a child dies within days or hours of its birth, the family may never become entitled to child benefit for that child. Under current legislation, the child must be alive before, and into, the first day of the next complete benefit week (Monday) for the family to become entitled.

194.     Section 55 extends entitlement to child benefit after the death of the child in question for a period to be specified in regulations. The section also provides for a person to receive child benefit during that extension period in cases where they would normally have been excluded from entitlement because the child did not survive until the Monday following its birth.

195.     Section 55 also provides that the surviving partner of a person entitled to child benefit for a child who has died can claim child benefit for the extension period if:

• the child benefit claimant dies as well as the child; and

• the claimant and the surviving partner were a married or unmarried couple who were living together at the time of the claimant's death.

196.     Entitlement to guardian's allowance is extended in the same way as entitlement to child benefit.

Section 56: Presence in United Kingdom

197.     Section 56 introduces a change to the child benefit rules to bring them closer into line with the rules proposed for the child tax credit. It retains the requirement for both the child and the claimant to be in Great Britain or Northern Ireland, as appropriate, for any week of a claim for child benefit, subject to prescribed exceptions enabling entitlement to continue during periods of temporary absence. But it removes the requirement for both the child and the claimant to have been present for 182 days before entitlement begins. Instead, the section provides a power to set out in secondary legislation when a person may be treated as being, or not being, in Great Britain or Northern Ireland for purposes of child benefit.

Section 57: Abolition of exclusion of tax exempt persons

198.     This section removes the provision that anyone who has income exempt from UK income tax (or whose partner has such income) is excluded from child benefit entitlement. Child benefit originated in an earlier income tax relief and retained this restriction on claims from that relief. One of its effects is to exclude some people from child benefit entitlement who do pay UK tax. There will be no such restriction on claims for child tax credit and this change brings the rules for child benefit into line with those for that tax credit.

PART 3: SUPPLEMENTARY

Section 58: Administrative arrangements for claims

199.     Jobcentre Plus staff, who will administer benefits on behalf of the DWP, and their equivalents in Northern Ireland on behalf of DSD, may also carry out functions that relate to tax credits, child benefit and guardian's allowance, such as assisting people to make a claim. Section 58 provides a power to make regulations to allow for these administrative arrangements.

Section 59: Use and disclosure of information

200.     Section 59 gives effect to Schedule 5, which is concerned with providing powers to the Board to:

• pool information it holds for any of its functions;

• disclose tax credits, child benefit and guardian's allowance information to other Government Departments in certain circumstances; and

• obtain information from other Government Departments for the purpose of carrying out its functions under the Act.

Schedule 5: Use and disclosure of information

201.     Paragraph 1 allows the Board, or any person providing services to it, to use information it holds for the purposes of its functions relating to tax credits, child benefit and guardian's allowance for any of those functions. Information may also be supplied to any person providing services to the Board, for the purposes of, or in connection with, those functions.

202.     Paragraph 2 allows the Board to pool information it holds for the purposes of any of its functions. Information held for the purposes of, or relating to, tax credits, child benefit, guardian's allowance, tax, national insurance contributions, statutory maternity pay, statutory sick pay, or any other function of the Board may be used for any other of those functions. Information may also be supplied to and used by anyone providing services to the Board, for the purposes of the Board's functions or in connection with the services provided.

203.     Paragraph 3 allows DWP or DSD to use the information they hold in relation to social security benefits (including child benefit or guardian's allowance) or tax credits to exercise certain administrative functions in relation to tax credits, child benefit or guardian's allowance given to them by regulations under the Act or social security legislation

204.     Paragraph 4 enables the Board to provide information relating to child benefit, guardian's allowance or tax credits to the Secretary of State or DSD to enable them to carry out their statutory functions in respect of social security, child support, war pensions and certain authorised functions relating to evaluation and statistical studies.

205.     Paragraph 4(3) enables an officer authorised by the Secretary of State or DSD specifically for this purpose to require tax credits, child benefit and guardian's allowance information to be provided to the Secretary of State or Northern Ireland Department for social security or child support purposes.

206.     Paragraph 5 allows the Board to provide tax credits, child benefit and guardian's allowance information to the Secretary of State or the Department of Employment and Learning in Northern Ireland for certain functions related to employment and training which will be set out in regulations.

207.     Current social security legislation imposes a criminal sanction on any member of staff in DWP or its Northern Ireland equivalent if any information held by it is disclosed to any unauthorised third party. This restriction on disclosure of information is very similar to the restrictions placed on the Board and its officers so, as in the Tax Credit Act 1999, no further restriction on onward disclosure of information is necessary.

208.     Paragraph 6 allows information held by the Secretary of State or the appropriate Northern Ireland Departments in connection with social security, child support, war pensions, employment and training to be provided to the Board. The Board may require information held in connection with child support or social security to be provided.

209.     Paragraphs 7 and 8 allow the Board to provide tax credits, child benefit and guardian's allowance information to authorities administering housing benefit and council tax benefit. The authorities may not pass on information they have received except to someone who could have received it direct from the Board anyway or in connection with certain civil and criminal proceedings. The Board may require authorities administering housing benefit or council tax benefit to supply to them information relevant to the administration of those benefits, for tax credits, child benefit and guardian's allowance purposes.

210.     Paragraph 9 allows the Board to provide tax credits, child benefit and guardian's allowance information to the Department of Health, and the respective departments in the devolved administrations, for certain purposes related to health, which will be set out in regulations. Sub-paragraph (3) provides that information supplied under this paragraph may not be passed on to anyone else, except to someone who could have received it direct from the Board or for use in civil or criminal proceedings, and then only with the consent of the Board.

211.     Sub-paragraph (4) makes it a criminal offence to disclose information which has been supplied under this paragraph, unless sub-paragraph (3) applies, the disclosure was required by a court order, the person to whom the information relates gave consent or the information had been anonymised.

212.     Paragraph 10 allows the Board to provide child benefit and guardian's allowance information to civil servants and others to enable them to provide services covered by section 114(1) of the Learning and Skills Act 2000. Those services relate to encouraging, enabling or supporting participation in education or training. Sub-paragraph (3) provides that information supplied under this paragraph may not be passed on to anyone else, except to someone who could have received it direct from the Board or for use in civil or criminal proceedings, and then only with the consent of the Board.

213.     Sub-paragraph (4) makes it a criminal offence to disclose information which has been supplied under this paragraph, unless sub-paragraph (3) applies, the disclosure was required by a court order, the person to whom the information relates gave consent or the information had been anonymised.

214.     Paragraph 11 extends the offence under section 182 of the Finance Act 1989 (of disclosing information held by the Board or provided to the Tax Commissioners other than for authorised purposes) to cover information obtained in carrying out the Board's functions in relation to tax credits, child benefit and guardian's allowance.

215.     Paragraphs 12 and 13 provide for consequential amendments to the Social Security Administration Acts and the Finance Act 1997 to reflect the repeal of exchange of information powers under the Tax Credits Act 1999 and the creation of replacement powers in the Act.

Section 60: Repeals

216.     Section 60 gives effect to Schedule 6, which lists the provisions which are repealed or revoked as a result of the Act.

Section 62: Transitional provisions and savings

217.     Section 62 enables the Secretary of State, or DSD in relation to Northern Ireland, to make transitional provisions or to preserve any provisions of existing legislation otherwise repealed, in connection with the abolition of the child dependency increases in certain social security benefits. It also enables the Treasury to do the same in respect of all the provisions in the Act.

Section 63: Tax credits appeals etc.: temporary modifications

218.     Section 39 sets out the framework for appeals under Part 1 of the Act. That section provides for appeals to be handled by the Tax Commissioners in the same way as appeals relating to tax. However, section 63 provides for transitional arrangements for certain appeals and related matters. Those transitional arrangements will remain in place until a day appointed by order under subsection (1) of section 63.

219.     During the lifetime of these transitional arrangements, appeals made by people claiming tax credits, but not appeals made by employers responsible for the payment of tax credits, will be to an appeal tribunal (that is, a tribunal set up under Social Security Act 1998 or, in Northern Ireland, the Social Security (Northern Ireland) Order 1998) rather than to the General or Special Commissioners. Appeals against decisions by the appeal tribunal will be to the Social Security Commissioner, rather than to the High Court or Court of Session.

220.     Regulations will make provision for the procedures to be followed in relation to the hearing of such appeals since the procedures prescribed for hearings by General Commissioners and Special Commissioners may be inappropriate. Such regulations will apply the provisions contained in Chapter 2 of Part 1 of the Social Security Act 1998 and Chapter 2 of Part 2 of the Social Security (Northern Ireland) Order 1998, modified as appropriate. The regulations may also apply section 54 of the Taxes Management Act 1970, which allows for any appeal to be settled by agreement between the appellant and the Revenue with the same consequences as if the appeal had been decided by a Tribunal.

221.     Similar transitional arrangements will apply in relation to proceedings for penalties, other than employer information penalties, under paragraph 3 of Schedule 2 and to applications for a direction for an enquiry under section 19 to be closed down.

Section 64: Northern Ireland

222.     This section amends the Northern Ireland Act 1998 to make the new tax credits, child benefit and guardian's allowance excepted matters in Northern Ireland.

223.     Subsection (4) provides that the Northern Ireland Assembly may amend or repeal any provisions of the Employment Rights (Northern Ireland) Order 1996 dealt with in Schedule 1 (in particular, when consolidating employment legislation), provided that the amendment or repeal affects employment rights generally. The fact that tax credits are excepted matters would otherwise prevent this.

Section 65: Regulations, orders and schemes

224.     This section provides that orders, regulations and schemes to be made under the Act are to be made by statutory instrument, apart from orders and schemes made by the Department of Health, Social Services and Public Safety in Northern Ireland and DSD which are made by statutory rule. Regulations under sections 25 or 26 relating to appeals in Scotland require the consent of Scottish Ministers and regulations under sections 39(6) or 63(8) require the consent of the Lord Chancellor and Scottish Ministers.

Section 66: Parliamentary etc. control of instruments

225.     Subsection (1) provides that certain regulations, listed in subsection (2), are to be subject to the affirmative procedure. Any regulations prescribing monetary amounts that the Treasury are required by section 41 to review each year against prices will be subject to the affirmative procedure, as will regulations made by virtue of subsection (2) of section 12 setting the maximum amount of child care costs that may be taken into account in calculating entitlement to the child care element of working tax credit.

226.     In addition, the first regulations made under sections 7(8) and (9), 9, 11, 12 and 13(2) are made subject to the affirmative procedure. These regulations make provision about the definition and calculation of income for the tax credits, prescribe the manner in which the maximum rate at which a person or persons may be entitled to child tax credit and working tax credit (including the child care element) is to be determined, and prescribe manner of determining the rate at which a person is, or persons are, entitled to a tax credit in a case where they are not necessarily entitled to the maximum rate. Subsequent regulations made under these provisions will be subject to the negative procedure.

227.     A statutory instrument setting out a child care scheme made by Scottish Ministers under section 12(5) is subject to negative resolution in the Scottish Parliament (subsection (4)). Similarly, a statutory rule made by the Department of Health, Social Security and Public Safety in Northern Ireland under section 12(5) is subject to negative resolution in the Northern Ireland Assembly (subsection (5)).

228.     Other statutory instruments are subject to annulment in pursuance of a resolution of either House of Parliament (the negative procedure) (subsection (3)).

COMMENCEMENT

229.     Apart from section 54(1) and (2), the provisions of the Act preceding section 61 are to be brought into force by commencement orders made by the Treasury. The first such order was made on 8 July 2002, following Royal Assent (the Tax Credits Act 2002 (Commencement No. 1) Order 2002 (S.I. 2002/1727)).

HANSARD REFERENCES

230.     The table below sets out the dates and Hansard references for each stage of the Act's passage through Parliament.