Welfare Reform Bill 2009

Issue 208 (February 2009)

The Government published a Welfare Reform Bill on 14 January 2009. The Bill follows the Green Paper 'No one written off: reforming welfare to reward responsibility' published in July 2008 and a White Paper 'Raising expectations and increasing support: reforming welfare for the future' published in December 2008.  

Edward Graham outlines the main proposals in the Bill.

Introduction

The Bill itself is skeletal in the extreme - the crucial detail to be set out in regulations. No draft regulations have been published, and rather worryingly, at the time of writing Ministers have not given any undertaking to produce draft regulations (as they did with the Welfare Reform Act 2007) before the Bill is scrutinised in Parliament.1

The Bill covers a wide range of topics, from workfare to fraud, and makes amendments to existing social security provisions rather then establishing a new Act or scheme. However, the various changes to income support (IS), jobseeker's allowance (JSA) and employment and support allowance (ESA) do help the Government move towards a system envisaged in Professor Gregg's report for the DWP,2where almost all claimants can be subject to some level of conditionality, which is based on their circumstances rather than the particular benefit they are claiming. Such a system itself is a possible step on the road to a single working-age benefit.

Abolition of income support

The Bill grants the Secretary of State wide unfettered powers to remove the right of any category of person to claim IS.3It would empower her/him to amend, repeal, or revoke any statutory or regulatory provision s/he considers necessary or expedient to achieve this aim. The dwindling number of those still entitled to claim IS includes lone parents with young children, carers, foster parents and some pregnant women. The Bill separately provides that any groups that remain on IS can be required to attend work-focused interviews (WFIs) and undertake work-related activity (WRA) or be subject to a sanction. It is the Government's intention that all claimants, apart from carers, will be moved on to JSA, and that carers will remain entitled to claim IS until a single working-age benefit is introduced.4

The Bill also creates new categories of JSA claimants, those previously entitled to IS, who will not be subject to the normal jobseeking requirements.5The Government intends that some will be subject to 'ESA type' conditionality. They will have to attend WFIs and undertake WRA or be subject to a sanction. Lone parents and partners of claimants whose youngest child is aged between one and six will be in this category. The Bill also allows for a category of claimants on JSA who will not be subject to any conditionality or work seeking requirements. This is intended mainly for those lone parents and partners whose youngest child is under one year old.6

Partners

The Bill makes other changes which will affect couples claiming benefit. Firstly, it removes the right of a sick or disabled person to claim ESA for the couple where their partner could instead qualify for JSA.7The White Paper stated that the partner who is sick would still have to comply with the ESA regime in order to receive the WRA component,8implying this provision would not apply to those entitled to the support component of ESA. Secondly, the Bill allows for the partners of claimants of IS, ESA and JSA to be required to undertake work-related activity or be subject to a sanction.

Work-related activity

The power to require ESA claimants to undertake 'work-related activity' was introduced in the Welfare Reform Act 2007. As yet, the power has not been exercised. The Bill amends the definition of WRA, not only for ESA claimants but for others obliged to undertake it by other provisions of this Bill (see above).

This amendment will allow the Secretary of State, and private contractors, to issue mandatory directions to lone parents and sick and disabled claimants that they must undertake a specific activity, and to treat an activity that they are carrying out or wish to carry out as not being WRA. A failure to comply will result in the imposition of a sanction, a decision that will remain with the DWP.

Work for your benefit

The Bill would create a 'work for your benefit' scheme for JSA claimants. It is effectively a workfare scheme, enforced labour at a rate of £1.73 per hour (based on a 35 hour week on current JSA rates). Claimants who reach the end of the 'flexible new deal' will be required to undertake up to six months full-time work while remaining on benefit. The explanatory memorandum states that regulations will provide that some claimants (e.g., lone parents with children under seven) will be exempted from the scheme, and that some claimants will be required to participate in the scheme earlier (i.e., before they have reached the end of the flexible new deal). The Bill allows for the scheme to be piloted, but no further primary legislation would be required for the scheme to become mandatory nationwide.

Contribution conditions

The Bill proposes restrictions on eligibility for contributory JSA and ESA that will reduce the number of claimants who qualify.

Firstly, the Bill aligns the qualifying years used for the first contribution condition for ESA with that of JSA. Only the last two complete tax years before the relevant benefit year will be qualifying years for the purpose of the first contribution condition.

The second change replaces the concept of an 'earnings factor' with a requirement to have actually earned equal to the lower earnings limit for at least 26 weeks in each qualifying year. So six months work, regardless of the amount of national insurance contributions paid, will be needed to meet the requirement for any year.

Social fund

The Bill contains only two concrete proposals regarding the social fund. Firstly, it authorises the Secretary of State to outsource the delivery of the social fund loan scheme to external providers, and to make payments to such providers for their expenses.9Such outsourcing could be in a specified geographical area, and in those areas claimants would not be able to apply to the DWP for crisis or budgeting loans.10Secondly, it authorises the Secretary of State to enter into an agreement with a third party to supply goods and services under the community care grant scheme to successful applicants, rather than the applicant be given the money to purchase the good or services themselves independently.11

Shortly before Christmas, the Government was forced by a welter of criticism to renounce the idea of charging interest on social fund loans. It's unclear where this, and the current malaise in the banking system, leave the power in the Bill to outsource delivery. On the face of it, it seems a rather bizarre proposal to try and commercialise the credit of last resort for benefit claimants at a time when the Government is socialising the wider banking system.

Fraud12

The Bill proposes that claimants who have not been convicted of any offence of fraud will have their benefit suspended for four weeks. The proposal widens the current 'two strikes rule' considerably. No conviction is required for the penalty to be applied - those who accept a caution or an administrative penalty will be caught, and it can be applied to a first 'offence'.

Dependents additions13

The Bill proposes to abolish dependent additions paid with carer's allowance (CA) and maternity allowance. The Bill provides for transitional protection for those already in receipt of the additions in April 2010, and for CA this will expire in April 2020 if entitlement to CA has not already ended.

Payments on account14

The Bill repeals the provision for payments on account in s5(1)(r) Social Security Administration Act 1992. It creates a new power to make a payment on account to people who have claimed, or who might claim a benefit, where a person 'would be in need if no payment were made'. The Government says it is concerned about the large numbers of application for crisis loans from people waiting for their benefit claims to be determined and intends to use this power to instead make advance payment of the benefit claimed, which will be recovered from or offset against subsequent payments

Drug misusers15

The Bill gives the Secretary of State the power to ask a JSA or ESA claimant questions about whether s/he is 'dependent on, or has a propensity to misuse, any drug' and if so whether this affects her/his prospects for finding work. Claimants who refuse to answer such questions can be obliged to undertake a 'substance related assessment' and anyone who refuses to participate in this can be required to undergo an intimate drug test. The penalty for not complying with the test, or any resulting 'rehabilitation plan', is loss of benefit for 26 weeks. These provisions initially apply only to controlled drugs, but the Bill provides for them to be extended to alcohol misuse.

 


 

Please be aware that welfare rights law and guidance change frequently. Therefore older Bulletin articles may be out of date. Use keywords or the search function to find more recent material on this topic.

  • 1. Minister for Employment and Welfare Reform, Tony McNulty. Hansard 27 Jan 2009: col 267
  • 2. Realising Potential: A Vision for Personalised Conditionality and Support, DWP 2008
  • 3. Welfare Reform Bill clause 7
  • 4. Raising expectations and increasing support: reforming welfare for the future Cm7505 para 2:17
  • 5. Welfare Reform Bill clause 3
  • 6. Cm7505 para 4.3
  • 7. Welfare Reform Bill clause 4
  • 8. Cm7505 para 6.86
  • 9. Welfare Reform Bill clause 13
  • 10. Welfare Reform Bill clause 15
  • 11. Welfare Reform Bill clause 16
  • 12. Welfare Reform Bill clause 19
  • 13. Welfare Reform Bill clause 12
  • 14. Welfare Reform Bill clause 18
  • 15. Welfare Reform Bill clause 9 and Sch 3