WELFARE REFORM AND PENSIONS BILL 1999
Memorandum from the Department of Social
1. This memorandum identifies provisions for delegated
legislation in the Welfare Reform and Pensions Bill 1999. The
- explains the purpose of the delegated powers
- describes why matters are to be left to delegated
- explains the procedure selected for each power
and why it has been chosen.
THE WELFARE REFORM AND PENSIONS BILL
2. The Welfare Reform and Pensions Bill 1999 contains
a range of measures relating to social security benefits, pensions
and national insurance contributions.
3. It introduces reform in 4 key areas:
- bereavement benefits;
- measures to keep people in touch with the labour
- incapacity and disability benefits.
4. Stakeholder pension schemes will be a new form
of pension provision which are designed to offer many more people
the opportunity to save for retirement. The Bill sets out the
definition of stakeholder pension schemes and arrangements for
their regulation. It also includes requirements for certain employers
to designate a stakeholder pension scheme and facilitate access
5. The Bill contains provisions on pension sharing
which are designed to allow couples to reach a fairer financial
settlement on divorce or nullity of marriage.
6. The Bill also contains measures to improve the
regulatory framework for occupational and personal pensions by
enhancing the protection afforded to scheme members and to tidy
up technical problems arising from the previous pensions legislation.
7. The proposals in the Bill will replace the current
Widows' Benefits with new bereavement benefits that will be paid
to both men and women. The Bill will provide new widows and widowers
who satisfy the qualifying conditions with a lumpsum payment
of £2,000. Widowed parents will then receive a continuing
weekly benefit until their youngest child ceases to be dependent;
those without children will receive a weekly benefit for six months
only. These provisions introduce no new delegated powers.
MEASURES TO KEEP PEOPLE IN TOUCH WITH THE LABOUR
8. The Bill includes a number of provisions designed
to keep people in touch with the labour market.
9. The Bill supports the introduction of a work-focused
interview into the benefit system. These new arrangements
are designed to ensure a more streamlined service by providing
claimants with a single point of contact for all of their benefit
requirements and for advice and support in finding work.
10. The Bill includes provisions to introduce Employment
Zones which are designed to provide the opportunity to offer
flexible support to a number of long-term unemployed Jobseeker's
Allowance claimants in areas of greatest need.
11. The Bill also includes proposals for a new
requirement for joint claims for Jobseeker's Allowance from
couples, the main purpose of which is to give both partners
in a couple the same opportunity to receive help and guidance
to return to work and to go onto employment programmes.
MODERNISING THE BENEFITS STRUCTURE FOR PEOPLE WITH
DISABILITIES OR LONG-TERM ILLNESSES
12. Proposals in the Bill will amend the National
Insurance contribution conditions for new claims and to provide
for some account to be taken of occupational and personal pensions
when determining entitlement to Incapacity Benefit. The Bill also
makes provision for the All Work Test to be replaced by a new
Personal Capability Assessment. The new assessment will provide
information about a person's capabilities as well as the degree
of their incapacity and that information can be used by them and
their personal adviser to help plan a possible route to greater
13. The Bill provides for the abolition of Severe
Disablement Allowance. Those disabled early in life, and who claim
benefit before the age of 20 (or 25 if a higher education student
or trainee), will be allowed access to Incapacity Benefit without
having to satisfy the Incapacity Benefit contribution conditions.
Existing Severe Disablement Allowance claimants will continue
to receive the benefit. It is the intention that recipients aged
under 20 at the point of change will become entitled to long-term
Incapacity Benefit a year later.
14. Three further proposed changes to disability
benefits are included in the Bill. It:
- gives a power to prescribe conditions of entitlement
to Attendance Allowance in regulations to provide greater future
flexibility and alignment with Disability Living Allowance;
- extends entitlement to the higher rate mobility
component of Disability Living Allowance to 3 and 4 year-old severely
disabled children with serious mobility problems; and
amends the wording which refers to awards made for
15. Other measures in the Bill will:
- allow hardship payments in Jobseeker's Allowance
to be paid to a third party;
- introduce a requirement for a National Insurance
Number to claim Child Benefit;
- allow for the sharing of information between
the Inland Revenue and Child Support Agency;
- provide a power to incur preparatory expenditure
in advance of future legislation;
- provide a power to pilot an under-occupation
scheme for persons on Housing Benefit;
- change the structure of national insurance contributions
- make improvements to maternity allowance;
- make a number of minor changes to National Insurance
Contributions and correct omissions and make technical additions
to the Social Security Contributions (Transfer of Functions, etc.)
- provide that certain overpayments of benefits
made before 1 June 1999 cannot be recovered from the recipient;
- make changes to the National Insurance liability
for some of those who have set up service companies.
16. The Bill contains 215 powers to make delegated
legislation. A list of these is attached as an annex to this memorandum.
17. It may be helpful to the Committee to discuss
here the overall approach to the drafting of the legislation which
has an impact on the number of delegated powers in the Bill.
18. The Department has followed the precedent in
current legislation relating to social security and pensions matters
(for example, the Contributions and Benefits Act 1992, the Pensions
Act 1995 and the Jobseekers Act 1995) by setting out the overall
legislative framework on the face of the Bill and providing for
regulations to set out the matters of detail. This provides flexibility
for the Department to amend the detailed rules more easily in
the light of operational experience or other developments, without
having to take up a substantial amount of parliamentary time to
amend primary legislation.
19. In addition, where the Bill amends or supplements
existing legislation, similar delegated powers have been taken.
For example, the Bill provides for the introduction of joint claims
to Jobseeker's Allowance for couples through making a number of
changes to the Jobseekers Act. Many of the sections in the Jobseekers
Act which are being amended provide for delegated powers under
which regulations have been in existence for some time. In these
cases, the Bill is not taking any novel regulation-making powers,
but simply extending current powers to joint claims.
20. The Committee will also note that nearly half
of the delegated powers in the Bill concern the proposals on pension
sharing for divorcing couples. Many of these are regulation-making
powers concerned with requirements imposed on pension arrangements,
including occupational and personal pension schemes. Such schemes
are themselves complex and varied, containing detailed provisions
as to the types of benefit to be provided to members and their
dependants and as to the way in which the scheme is to be funded
21. As a consequence of pension sharing, the Bill
imposes a number of new requirements on pension arrangements.
Given the complexity and variety of arrangements, the requirements
will necessarily themselves be detailed and it would, the Department
believes, be inappropriate to attempt to deal with every aspect
of such requirements, and for every circumstance, in primary legislation.
To do so, with all the variants that would be needed, would produce
primary legislation of great complexity, length and detail. And
it would still be impossible to be sure that all possible variants,
now and for the future, had been covered.
22. There will, moreover, be a need to change the
detailed requirements from time to time. It is particularly important
for powers to be provided to make exceptions and modifications
to the requirements so as to avoid over-regulation or inappropriate
regulation. So, as in the Pensions Act 1995, the Department has,
therefore, sought to avoid the primary legislation in this area
being enormously lengthy and prescriptive and proposes to leave
to secondary legislation technical matters and matters where flexibility
23. A similar approach has been taken for stakeholder
pension schemes. As mentioned in paragraph 4 above the Bill provides
the legislative framework for stakeholder pension schemes. It
is intended that the more detailed issues will then be dealt with
in regulations. This is an approach adopted with previous pensions
legislation - for example, the Pensions Act 1995. It allows for
the legislative provisions for stakeholder pension schemes to
be flexible enough to allow adjustments in the light of consultation
and experience of operating schemes.
24. Two of the provisions in the Bill are subject
to affirmative resolution by both Houses of Parliament. Firstly,
any regulations made under section 30DD (3) (b) and (c) of the
Contributions and Benefits Act (as inserted by clause 58 of this
Bill) concerning the definition of pension income. This is in
line with the procedures for defining pension income in Jobseeker's
Allowance which are subject to the affirmative procedure. Secondly,
the power to uprate the £30 earnings threshold to qualify
for Maternity Allowance (which is provided for in clause 48(7)
and paragraph 32 of Schedule 8 of this Bill). This matches the
general provisions for uprating in social security benefits, which
are also subject to the affirmative procedure.
25. All of the other regulations made under the powers
in, or introduced by, this Bill will follow the negative resolution
procedure as the Department considers that none of the considerations
set out in paragraph 78 of the Second Report of the Joint Committee
on Delegated Powers ("the Brooke Report") apply.
26. Clause 70 make changes to the National Insurance
liability for some of those who have set up service companies.
Clause 71 makes equivalent provisions for Northern Ireland. It
is intended that this measure will come into force on 6 April
2000. The clauses include measures which parallel tax provisions
which it is intended to present to Parliament in the next Finance
Bill. In order to ensure the simplest possible systems for business
to operate it is necessary to keep the tax and National Insurance
Contribution rules in alignment. Subsections (9) of both clause
70 and 71 therefore propose a Henry VIII power that will enable
adaptation of these clauses by Order in the event of any modification
of the statutory provisions relating to income tax. In line with
previous precedents, this power will enable changes to the clause
to be made by Order only in the event that the parallel tax proposals
change. This power is discussed in some detail in paragraphs 412
to 413 of this memorandum.