Section 16: Contracting out

98.     This section has the effect of allowing contracted providers in the private and voluntary sectors ("providers") to exercise functions of the Secretary of State relating to conditionality.

99.     It is envisaged that the conditionality regime within employment and support allowance will, when employment and support allowance is introduced, be similar to Pathways to Work that is currently being operated by Jobcentre Plus in 40 per cent of Great Britain. The Government has announced that providers will be contracted to deliver some aspects of Pathways to Work to the rest of Great Britain as it is rolled out. It is intended to put similar arrangements in place for the purposes of employment and support allowance. It is intended that providers will be contracted to provide back to work support to claimants. In addition these organisations may take on responsibility for providing the work-focused interviews.

100.     Subsection (1) provides that the Secretary of State can authorise providers to undertake certain functions conferred on him by primary legislation (sections 12, 14 and 15) relating to work-focused interviews, action plans and directions relating to work-related activity.

101.     Subsection (2) allows regulations to be made that allow the Secretary of State to authorise provider organisations to undertake certain of his functions under regulations made under sections 11 to 15. The Secretary of State cannot authorise provider organisations to undertake decisions to which subsection (3) applies ("excluded decisions").

102.     Subsection (2) also provides that regulations may be made authorising provider organisations to undertake functions relating to conditionality decisions e.g. revisions and supersessions of conditionality decisions in line with existing decision making processes and legislation. Again, the Secretary of State cannot authorise provider organisations to exercise these functions in relation to excluded decisions.

103.     Subsection (3) contains a list of excluded decisions. Excluded decisions will be any decision as to whether a person has failed to comply with a conditionality requirement under sections 11 (work-focused health-related assessments), 12 (work-focused interviews) or 13 (work-related activity); decisions as to whether a person had good cause for not complying with the conditionality requirement; and decisions about the reduction in benefit as a result of a person failing to comply with a conditionality requirement.

104.     Subsection (5) makes it clear that where authorisation is given for providers to undertake a function then authorisation may only apply to part of that function.

105.     Subsection (7)(b) provides that authorisations granted under or by virtue of section 16 can be revoked and subsection (7)(c) provides that giving authorisation to a provider does not preclude the related function from being undertaken by another person, for example the Secretary of State.

106.     Subsections (8) and (9) establish that, where a function is undertaken by a provider, that function is treated as if it had been undertaken by the Secretary of State. This would not apply for the purposes of the operation of a provider - for example a contractor would be treated as performing work-focused interviews for the purposes of being paid for them. It also establishes that responsibility lies with the provider in respect of any criminal proceedings brought because of their actions.

107.     Subsection (10) ensures that any decision made by a private or voluntary sector organisation by virtue of section 16 has effect as a decision of the Secretary of State under section 8 of the Social Security Act 1998. This ensures that such decisions fit into the decisions and appeals legislation in the Social Security Act 1998.

108.     Subsection (11) establishes that where authorisation for a function is revoked by the Secretary of State and the provider is therefore unable to perform the functions which they are contracted for, the contract can be treated as repudiated by the Secretary of State.

Miscellaneous

Section 17: Income and capital: general

109.     This section enables the Secretary of State to set out in regulations how the income and capital of a claimant (and their partner) is to be calculated for the purpose of determining whether a claimant is entitled to an employment and support allowance and, if so, how much is to be payable. Regulations under this section will be based on the existing provisions for the purposes of income-related benefits (income support and income-based jobseeker's allowance) in the Income Support (General) Regulations 1987 (S.I. 1987/1967).

110.     Subsections (1) and (2) provide regulation-making powers to prescribe how income and capital will be assessed. It is intended that the regulations will provide that income may be averaged. In averaging income for fluctuating earnings, for example, the Secretary of State may take an average for a past period and a current period and apply it to a future period, as occurs in connection with income support.

111.     Subsection (3) provides a power to make regulations prescribing that a person is to be treated as having, or not having, certain income or capital. It also enables regulations to provide for income to be treated as capital, or vice versa. In particular, regulations could make provision about how capital holdings would be taken into account in relation to an employment support allowance. The intention is that a rate of return of £1 per week for every £250 will be applied to capital in excess of £6,000 and below the upper capital limit of £16,000. In the case of people in residential care and nursing homes this range would be between £10,000 and £16,000. Capital below this amount would not be treated as giving rise to income which is to be taken into account in the assessment. Certain types of actual income from capital will be relevant to the assessment. These are expected to be limited to income from boarders and sub-tenants in the person's own home and income from certain trusts. There would be different provision as to disregarding different types of income which is expected to follow the existing provision for income support.

112.     It is also intended that existing provisions in the Income Support (General) Regulations 1987 (S.I. 1987/1967) concerning unacceptable deprivation of income or capital will be applied to an employment and support allowance. These will contain provisions which state what unacceptable deprivation is. Thus, for example, a claimant may be treated as possessing notional capital if they have disposed of the capital solely or mainly to secure or increase entitlement to an employment and support allowance. This is the same as applies for the purposes of income support and income-based jobseeker's allowance.

Section 18: Disqualification

113.     Section 18 provides that in certain circumstances, similar to those which exist now at section 171E of the Social Security Contributions and Benefits Act 1992, a person can be disqualified from receiving an employment and support allowance for a period of up to six weeks. This may be because someone is limited in their capability for work because of their own misconduct, because they remain someone who has limited capability for work through failure, without good cause, to follow medical advice, or because they fail, without good cause, to observe specified rules of behaviour. The regulations will specify the circumstances and the matters which are to be taken into account when making such a decision, including the considerations to be taken into account in deciding whether or not the person concerned had good cause for the failure.

114.     Subsection (4) of this section provides that unless regulations specify otherwise, a person shall be disqualified for receiving contributory employment and support allowance for any period where he is undergoing imprisonment or detention in legal custody, or is absent from Great Britain. This is similar to section 113(1) of the Social Security Contributions and Benefits Act 1992 which applies to incapacity benefit currently.

115.     This provision with a range of regulations will allow such a person to continue to be entitled to employment and support allowance whilst disqualified from payment. This is because once the period of disqualification has ended it is intended that awards will be resumed where it is appropriate to do so without the need to re-claim.

Section 19: Pilot schemes

116.     This section provides for pilot schemes to operate in relation to any regulations under Part 1 of the Act excluding certain sections identified below. A "pilot scheme" means a set of regulations made under subsection (1).

117.     Pilot schemes may only have effect for a specified period which must not exceed 24 months. Subsection (7) provides that one pilot scheme can be replaced by another pilot scheme which is the same or similar.

118.     Pilot schemes can apply to any regulations under the Social Security Administration Act 1992 which relate to the employment and support allowance as well as to any regulations under Part 1 of this Act, apart from regulations under:

-     Section 3 - deductions from contributory allowance;

-     Section 8 - limited capability for work; and

-     Section 9 - limited capability for work-related activity.

119.     It is intended to roll out full conditionality linked to participation in work related activity as resources allow. It is envisaged that in time pilot schemes may operate to explore different variations of the conditionality regime in order to understand what works best to help employment and support allowance claimants to work.

120.     Subsection (3) provides that pilot schemes may only be put in place for the purpose of ascertaining whether their provisions will facilitate or encourage claimants to obtain or remain in work. Subsection (5) provides that a pilot scheme may apply to different geographical areas, types of claimant or persons selected to meet certain criteria.

Section 20: Relationship with statutory payments

121.     Section 20 provides for the interaction of an employment and support allowance with statutory payments paid by employers, namely statutory sick pay, statutory maternity pay, statutory adoption pay and additional statutory paternity pay.

122.     Subsection (1) provides that a person is not entitled to an employment and support allowance at the same time as statutory sick pay.

123.      Subsection (2) provides that a contributory employment and support allowance is not payable at the same time as statutory maternity pay, except as regulations may provide.

124.     Subsection (4) makes similar provision in the case of statutory adoption pay.

125.     Subsection (6) makes similar provision in the case of additional statutory paternity pay.

126.     Subsections (3),(5) and (7) contain regulation-making powers to provide for the circumstances in which statutory maternity pay, statutory adoption pay and additional statutory paternity pay respectively may be paid at the same time as a contributory employment and support allowance.

Section 21: Deemed entitlement for other purposes

127.     Where specified legislation leads to a loss of entitlement this section enables regulations to be made so that a person can be treated as still entitled to employment and support allowance in order to retain their rights and obligations. This is similar to provisions which currently apply to incapacity benefit.

Section 22: Supplementary Provisions

128.     This section provides that the provisions set out in Schedule 2 have effect (discussed below).

Section 23: Recovery of sums in respect of maintenance

129.     This provides the Secretary of State with powers, to make regulations so that payments can be recovered from people who should be paying maintenance to their spouse or civil partner but are not doing so, when the spouse or civil partner is receiving income-related employment and support allowance. These payments may be made to the Secretary of State. Similar provisions relate to income support (s106 of the Social Security Administration Act 1992) and income-based jobseeker's allowance (s23 of the Jobseekers Act 1995).

130.     Subsection (3) states that the regulations under subsection (1) may make provision about matters relevant to the determining of an application for such an order, the enforcement of such orders, and the rights of the Secretary of State in respect of such orders.

General

Section 25: Regulations

131.     This section makes additional provision about the regulation-making powers under this Part.

132.     Subsection (6) provides that regulations under sections 11, 12, 13, 14 or 15 may make provision which applies only in relation to an area or areas specified in the regulations.

Section 26: Parliamentary control:

133.     This section provides that certain regulations to be made under provisions in sections 2 (amount of contributory allowance) and 4 (amount of income-related allowance), the first regulations under section 13 (work-related activity) and regulations providing for a pilot scheme (section 19) must be subject to the affirmative resolution procedure in the Houses of Parliament. Subsection (2) provides that all other regulations under Part 1 are subject to the negative resolution procedure.

Section 27: Financial provisions relating to Part 1

134.     This section explains that payments of contributory employment and support allowance will be funded from the National Insurance Fund and payments of income-related employment and support allowance will be funded out of the Consolidated Fund. It also provides for the repayment to those funds of any sums recovered in connection with payments of employment and support allowance.

Section 28: Consequential amendments relating to Part 1

135.     This section provides for the consequential amendments set out in Schedule 3. Subsection (2) enables regulations to make provision consequential on this Part amending, repealing or revoking any provision of earlier legislation.

Section 29: Transition relating to Part 1

136.     This section provides that the provisions in Schedule 4 relating to transitional arrangements for those currently on incapacity benefit have effect (discussed below).

PART 2: Housing benefit and council tax benefit

Section 30: Local housing allowance

137.     The provisions in section 30 provide for powers that will facilitate the national roll out of a new way of calculating maximum housing benefit, known as the local housing allowance, across the private rented sector. A version of the local housing allowance scheme is currently operating for private sector tenants in 18 local authority areas.

138.     The main secondary legislation dealing with housing benefit (referred to here as the housing benefit rules) is contained in the Housing Benefit Regulations 2006 (S.I. No. 213), the Housing Benefit (Persons who have attained the qualifying age for state pension credit) Regulations 2006 (S.I. No. 214) the Rent Officers (Housing Benefit Functions) Order 1997 (S.I. No.1984) and the parallel Rent Officers (Housing Benefit Functions) (Scotland) Order 1997 (S.I. No.1995).

139.     Under the current housing benefit rules for claimants in the private rented sector, the maximum amount of benefit that can be paid is the "Appropriate Maximum Housing Benefit", subject to reductions to take account of income. The Appropriate Maximum Housing Benefit is the weekly amount of rent eligible to be met by housing benefit, less deductions made in relation to non-dependants. The eligible rent is determined by establishing whether the rent charged is considered appropriate for the particular area, property and the claimant's particular needs. Local authorities are required to refer each individual case (with some exceptions) to the rent officer service ⁷. Rent officers decide whether rents are appropriate for the particular area or property and the claimant's particular needs using a system of 'rent restrictions' set out in The Rent Officers Orders. Rent officers must also deduct any charges included within the rent that are ineligible for housing benefit purposes, such as for the costs of fuel bills or meals.

⁷ Rent officer service is used here as shorthand for the role of rent officers. In England rent officers form an executive agency "The Rent Service" within the Department for Work and Pensions. In Scotland the Rent Registration Service is part of the Scottish Executive and in Wales the rent officers are located within the Housing Executive Directorate of the Welsh in the National Assembly Government.

140.     The local housing allowance replaces the existing rent restrictions by providing a new way to determine the maximum amount of housing benefit payable. Non-dependant deductions and reductions to take account of higher incomes will still apply. Any given claimant will be eligible, as a maximum, to the local housing allowance rate that applies according to the number and mix of occupiers, and the area in which the claimant lives. The detailed rules on how the local housing allowance is set are in secondary legislation, as is the case under the current housing benefit rules. There will still be a need for rent officers to collect market evidence and consider geographical areas. However, rather than determining referrals on individual cases, they will make 'generic' determinations establishing the local housing allowance rates for different sized properties within the geographic areas they have identified.

141.     Section 30 provides for powers that are more specifically appropriate for the local housing allowance approach to the determination of a claimant's maximum housing benefit. This will facilitate the roll out of the local housing allowance nationally across the private rented sector.

142.     Subsection (1) of section 30 removes section 130(4) of the Social Security Contributions and Benefits Act 1992, which requires regulations to be made setting out how a claimant's Appropriate Maximum Housing Benefit should be determined in any case. This provision is replaced by the new 130A (2). Subsection (2) of section 30 introduces a new section, 130A, into the Social Security Contributions and Benefits Act 1992.

143.     The new section 130A (1) provides that a claimant's Appropriate Maximum Housing Benefit must be determined in accordance with this section.

144.     Subsections (2) and (3) enable regulations to provide that claimants may have their Appropriate Maximum Housing Benefit calculated by reference to rent officer determinations. These could be property specific determinations, or the generic determinations required under the local housing allowance, which apply to properties of a certain size in a particular area.

145.     Subsection (4) enables regulations to be made requiring local authorities to refer certain cases to rent officers for property specific determinations. This will be necessary for cases that are exempt from the local housing allowance.

146.     Subsection (5) introduces an additional "treat as liable" power solely for the purpose of calculating the Appropriate Maximum Housing Benefit. This provides a more specifically appropriate power centred on the local housing allowance approach, providing for a claimant's housing benefit to exceed their rent liability if the appropriate local housing allowance is higher than their actual rent liability. Equivalent provision is made by subsection (6) for claimants who are 'treated' as having a rent liability under regulations made under section 137(2) (j) (e.g. because it is their partner who has the actual liability). This provides for their housing benefit to exceed their deemed liability, if the appropriate local housing allowance is higher than their deemed liability.

147.     Subsection (3) of section 30 provides for a power to prescribe when local authorities must review a Housing Benefit award. Under the local housing allowance, this allows for the local authority to apply a new local housing allowance rate each year to ensure that a claimant's award is updated.

Section 31: Loss of housing benefit following eviction for anti-social behaviour, etc

148.     Subsection (1) of section 31 will insert sections 130B to 130G in the Social Security Contributions and Benefits Act 1992. Section 130B will provide for the reduction, or non-payment, of housing benefit where certain conditions are met. The first condition is that a relevant order for possession of the claimant's (to be known as the "former occupier") home has been made by a court on grounds relating to anti-social or criminal behaviour. The relevant orders are set out in section 130C. The second condition is that he has ceased to live in that home as a result of that order.

149.     The third condition will operate slightly differently depending on the territory concerned. In England and Wales, the third condition is that the claimant has failed to comply, without good cause, with a warning notice issued to him by a local authority with a view to improving his behaviour (section 130B(2)). In Scotland, the third condition is that the claimant has failed to comply with a requirement by a local authority to take specified action, without good cause, having been warned that such a failure would affect the amount of Housing Benefit payable to him (section 130B(3)) and the authority has recommended that the claimant's benefit be so affected. The final condition is that the claimant satisfies the conditions for entitlement to Housing Benefit.

150.     It is intended that once a person has satisfied the first two conditions, the relevant local authority will make an attempt to engage with him, if it has not already, with the aim of ending, or preventing repetition of, his anti-social behaviour through the provision of rehabilitation. Where the person refuses to co-operate, the local authority will have the option of using this sanction to encourage him to co-operate with the rehabilitation.

151.     Section 130B (4) will provide a power to prescribe the rate of benefit reduction and the circumstances in which it is payable. The intention is to reduce Housing Benefit by 10% for the first 4 weeks, followed by 20% for a further 4 weeks and then 100% for either a period of up to 5 years beginning with the date of the possession order (section 130B(8)) or until the local authority considers that the sanction should no longer apply (section 130B(6)). Examples of circumstances where the local authority might consider the sanction is no longer appropriate are where the person has begun co-operating with rehabilitation, where rehabilitation services are no longer available or where the person has, or his family have, become particularly vulnerable. It is intended that a lower rate of reduction will apply to those considered to be in hardship. This could include households where someone is seriously ill or pregnant and households with children or which include those with caring responsibilities.

152.     The sanction, having been brought to an end by a local authority can be restarted if the person fails to comply with a further warning notice or, in Scotland, fails to comply with a further requirement and the authority recommends it should apply. So, if the person stops co-operating with rehabilitation, a further warning can be issued or further action specified. If this is not complied with, without good cause, the sanction will start to run again (sections 130B(6) and (7)).

153.     Only one sanction can be applied in relation to a relevant order for possession, albeit the sanction can stop and start up to the date 5 years after the original possession order was made (section 130B(9)).

154.     Section 130B(10) will define a local authority for the purpose of this section by reference to existing legislation.

155.     Section 130C will set out the relevant orders for possession. All the orders for possession specified in subsections (1) and (2) are made on grounds of behaviour causing a nuisance or annoyance to neighbours or criminal behaviour. It does not matter if the possession is made purely on those grounds or on those grounds coupled with other grounds (section 130C(3)).

156.     The relevant orders for possession specified can be stayed, suspended, or (in Scotland) sisted, with conditions attached. Those conditions may relate to behaviour and the payment of rent and rent arrears. If a relevant possession order is made and stayed, suspended or sisted with behaviour conditions, the sanction can only be applied if the order takes effect as a result of the breach of those behaviour conditions (section 130C(4), (5) and (6)).

157.     Section 130D(1) will provide a power to prescribe circumstances in which benefit not paid due to the application sanction can be paid to the claimant. An example of such circumstances will be where a claimant has made a successful application for the relevant order for possession to be set aside.

158.     Section 130D(2) will provide a power to vary the definition of relevant orders for possession.

159.     Section 130D(3) will provide a power to prescribe the matters which should be taken into account when deciding whether or not a person has good cause, and circumstances in which a person is, or is not, to be regarded as having good cause, for not complying with a warning notice or a requirement of a Scottish local authority.

160.     Section 130E will make provision for cases where the claimant is a member of a couple. Subsection (2) would provide that where both members of a couple lived in a dwelling to which a relevant order for possession relates and leave the dwelling as a result, housing benefit could be subject to a future sanction should either member of that couple fail to comply with a warning notice or in Scotland take specified action. If only one member of the couple resided in a dwelling to which a relevant order for possession relates the sanction is not to apply (section 130E (3)).

161.     Section 130F will make provision for the necessary information sharing. New information sharing powers are necessary to provide for relevant information regarding relevant orders for possession to be given to the Secretary of State by the courts or others who may be aware of such an order (in England and Wales); for the Secretary of State to provide relevant information relating to relevant orders for possession or housing benefit to local authorities providing services related to rehabilitation; for authorities providing rehabilitation services to give relevant information to the Secretary of State for purposes relating to the administration of housing benefit; and for the sharing of relevant information within and between authorities administering housing benefit or providing rehabilitation services.

162.     Section 130F(1) will allow the Secretary of State, through regulations, to require courts to notify him when a relevant order for possession is made and provide relevant details of it. Section 130F(1) will also enable the Secretary of State, through regulations, to require similar information to that required from a court from others who may be aware of the making of a relevant order for possession. Such people could include for instance the landlord or local authority. The intention is to place the obligation on the courts in the first instance. This subsection will not apply to Scotland.

163.     Section 130F(2) will enable the Secretary of State to provide information obtained under section 130F(1) to a relevant local authority providing rehabilitation services, or to a person authorised by the authority to provide those services. It will also allow the Secretary of State to provide information he holds relating to housing benefit to those authorities or service providers.

164.     Section 130F(3) will provide for the Secretary of State to require, through regulations, relevant information for purposes relating to the administration of housing benefit to be provided by a relevant authority providing rehabilitation services or a person authorised by the authority to provide those services to him. Information could include whether a person has satisfied some or all of the conditions of sections 130B (1), (2) and (3).

165.     Section 130F(4) will allow the Secretary of State to require, through regulations, that relevant information may be shared within and between authorities administering housing benefit and those providing rehabilitation services for purposes relating to the administration of housing benefit.

166.     Section 130F(5) will allow the Secretary of State to require, through regulations, that relevant information be shared within and between authorities administering housing benefit and those providing rehabilitation services for purposes relating to the provision of rehabilitation services. This subsection would not apply in Scotland, where existing legislation already allows such information sharing.

167.     Section 130F(6) will define relevant information. The manner in which relevant information is to be supplied may be prescribed by the Secretary of State (section 130F (7)).

168.     The intention is to pilot the use of a sanction in about 10 authorities in England for a period of 2 years. Section 130G will provide the necessary piloting powers. It will not apply to Scotland.

169.     Subsection (2) of Section 31 will provide that any regulations made under subsection 130B(4), relating to the rate of the benefit reduction, and regulations made under subsection 130D(2), relating to varying what constitutes a relevant order for possession, must be approved by both Houses of Parliament.

170.     Subsection (3) of section 31 will limit the duration of the powers in section 31. Subsection (3) will bring the provisions of section 31 to an end at 31 December 2010. Any regulations made under this provision will cease to have effect after this date, although it is possible for the regulations to cease to have effect before that date if they so provide. For example, it is intended that regulations made under the piloting power (section 130G) will cease to have effect before that date. Further primary legislation will need to be in place to allow the scheme (or any replacement scheme) to operate after 31 December 2010.

171.     Subsection (4) will enable Secretary of State to make orders preventing anything which has been done under section 31 (other than piloting) from having effect after 31 December 2010. The piloting regulations will end any sanction in force at the end of the pilot period. It is unlikely that this power will be used but it is included as a safeguard.