Welfare Reform Act 2007

Welfare Reform Act 2007

2007 CHAPTER 5

Commentary on Sections

PART 2: Housing benefit and council tax benefit

Section 32: Housing and Council Tax Benefit for persons taking up employment; Section 33: supplemental; and Section 34: interpretation

172. The housing benefit and council tax benefit extended payment schemes provide access to a four week run-on of benefit in certain circumstances, after a qualifying person starts work or increases their hours / wages of current employment. There are two parallel schemes:

(i)

for people going off either income support or income-based jobseeker’s allowance; and

(ii)

for people leaving either incapacity benefit or severe disablement allowance.

Generally the four week extended payment will be at the same rate of benefit as the person was receiving in the week before they took up work. This is intended to bridge the gap between leaving benefits and the first pay packet.

173. In order to be entitled to an extended payment a number of criteria need to be satisfied, which are set out in secondary legislation. For example:

• claimant or partner must have been entitled to and in receipt of the relevant qualifying benefit(s) for 26 weeks immediately before taking up work or increasing hours / wages of current employment; and

• claimant or partner must be entitled to housing benefit or council tax benefit in the week before employment commenced.

174. Under the current scheme, a claimant’s housing benefit or council tax benefit award is ended when they move off the qualifying benefit and meet the other criteria to enable payment of the extended payment. A new claim must be made in order to obtain any in-work entitlement to housing benefit and council tax benefit.

175. These sections provide for a simpler method of making extended payments and remove the need for those who receive extended payments to submit a new claim for any in-work housing benefit or council tax benefit. If a person stays in their original local authority for the extended payment period, then the amount of the extended payment will be the higher of the out of work housing benefit or council tax benefit they were receiving or their in work entitlement to housing benefit or council tax benefit. The extended payment will be paid by the original authority, i.e. the authority that the person was living in just before they took up work. So the move to employment (and entitlement to an extended payment) will be treated like a change of circumstances in a continuing award.

176. If the person moves to a new authority in order to take up work, the amount of the extended payment will be the amount of their out of work housing benefit or council tax benefit entitlement and it will be paid as an extended payment by the original authority. They will not need to make a new claim to receive their out of work extended payment. However, if the claimant thinks that their in-work entitlement to housing benefit or council tax benefit exceeds their extended payment entitlement, they will need to claim in-work housing benefit or council tax benefit from the new authority. The new authority will pay as housing benefit or council tax benefit (not an extended payment) any amount by which the in-work housing benefit or council tax benefit exceeds the extended payment.

177. The current extended payment provisions are set out in regulations primarily made under powers in sections 130(2), 130(4) and 131(10) of the Social Security Contributions and Benefits Act 1992. The detailed rules are in: regulations 72, 73, 77, 78 and schedules 7 and 8 of the Housing Benefit Regulations 2006 (S.I. 2006/213); regulations 52,53, 58 and Schedule 7 of the Housing Benefit (Persons who have attained the qualifying age for state pension credit) Regulations 2006 (S.I. 2006/214); regulations 60, 61, 65, 66 and Schedules 6 and 7 of The Council Tax Benefit Regulations 2006 (S.I. 2006/215); and regulations 44, 49 and Schedule 5 of the Council Tax Benefit (Persons who have attained the qualifying age of state pension credit) Regulations 2006 (S.I. 2006/216).

178. Section 32 is designed to recast the underpinning powers for extended payments.

179. Subsections (1) and (2) provide for the basic underpinning entitlement conditions for extended payments of housing benefit or council tax benefit, namely that a person entitled to housing benefit or council tax benefit will be entitled to such a payment for a prescribed length of time when his own or his partner's entitlement to one of a number of prescribed benefits ends, in prescribed circumstances, and certain prescribed conditions are satisfied (e.g. he is liable to make payments for the dwelling he occupies as his home). The detailed rules are expected to remain the same or similar to the current scheme, and will remain in secondary legislation to provide the flexibility to keep these under review. The length of the extended payment period is likely to be four weeks as it is now.

180. Subsections (3) and (8) provide for the extended payment conditions of entitlement take precedence over normal entitlement rules, in calculating the amount of housing benefit or council tax benefit during the prescribed extended payment period.

181. Subsection (4) clarifies that where a person meets the qualifying conditions for an extended payment, there will be no need to make a separate claim for the extended payment. (There will still be a requirement for certain notifications to be made to the local authority).

182. Subsections (5) and (6) provide that, in contrast to the current scheme, the local authority that was administering housing benefit or council tax benefit immediately before the claimant or his partner took up work shall fund and administer the extended payment, even if the recipient moves out of that local authority's area. The effect of this will be to avoid the claimant needing to re-claim any balance of their extended payment after moving, although they will need to apply to the new local authority for any in-work housing benefit or council tax benefit in the usual way.

183. As now, the Department expects that the method of calculating the extended payment will be contained in regulations, which are provided for by subsection (7). It is intended that the amount of the extended payment will be the higher of the out-of-work entitlement or the in-work entitlement. The effect of this is to ensure that the claimant is entitled to at least the amount of housing benefit or council tax benefit they were receiving before they started work or increased their income from work, during the extended payment period. However, in the small number of cases where a claimant moves local authority during the prescribed extended payment period the amount of the extended payment will be the out-of-work entitlement. If they suspect that they will be entitled to in-work benefit that is higher than this, they will need to make a new claim with the new authority in order to receive the additional amount. Subsection (10) provides for the extended payment to be offset against the in-work entitlement to achieve this.

184. Subsection (9) provides that regulations can prescribe how the entitlement under subsection (2) interacts with an entitlement of housing benefit or council tax benefit, whether the housing benefit or council tax benefit entitlement is claimed by the extended payment claimant or their partner. For example, regulations made under this provision could provide that the out-of-work award will continue during the extended payment period, although nothing would be paid on that award and what happens when the prescribed extended payment period finishes, i.e. how a claimant transfers back on to normal housing benefit or council tax benefit if they have in-work entitlement at that point. If the claimant is part of a couple, regulations can provide whether the calculation of the extended payment will be based upon the claimants or the partner’s housing benefit or council tax benefit entitlement and how a partner’s housing benefit / council tax benefit entitlement will be treated when an extended payment is in payment.

185. Subsection (11) provides that in a case where a person moves during the prescribed extended payment period, the amount payable by the new local authority can be reduced to nil. This is intended to cover cases, for example, where the extended payment in payment from Authority A was greater than the entitlement established by the claimant in Authority B, for example because he has moved to a lower rent area, or now has non-dependants living with him.

186. Some flexibility is provided by subsections (12) (a)-(c). Subsection (12)(a) provides that regulations may disapply subsection (8). Subsection (12)(c) provides that regulations may provide for benefit not to be reduced as mentioned in subsection (10). This flexibility may be needed if for example there are cases where the claimant has an unavoidable rental liability on two properties, either in the same or in different local authorities. Subsection (12)(b) is necessary to stop couples obtaining dual provision by changing which one of them is the housing benefit / council tax benefit claimant when they move from one authority to another.

187. Subsection (13) enables the Secretary of State to make special provision in regulations for a person who was not entitled to housing benefit or council tax benefit when they stopped being entitled to any of the qualifying benefits, but had been so entitled until a week before they took up employment. This may happen, for example, because a person moved out of their current home to start work in another local authority area (and as a result ceased to be entitled to housing benefit and/or council tax benefit) in the week they took up employment or in the preceding week. Without this provision the subsequent ending of the qualifying benefit for work-related reasons – one of the basic conditions of entitlement for an extended payment – would have no effect, as the housing benefit claim would have already been closed.

188. Section 33 supports those arrangements by providing in subsections (1), (2) and (3) that the Secretary of State can prescribe in regulations any modifications to the housing benefit and council tax benefit provisions contained in the Social Security Administration Act 1992, or subordinate legislation made in pursuance of that Act, which he considers are required in relation to extended payments. In particular, modifications made under subsection (1) (b) allow in cases where someone moves local authority area during the prescribed extended payment period, and they normally have their benefit paid in the form of a rent or council tax rebate, that the former local authority can make payments directly to the new local authority. The intention is that the secondary legislation under these subsections will avoid disrupting the normal method of benefit payment, and where appropriate, will complement the payment provisions under the new local housing allowance arrangements.

189. Subsections (4), (5), (6) and (7) relate to the proposed regulation-making powers, and ensure consistency with existing regulation-making powers in relation to housing benefit and council tax benefit entitlement.

190. Subsection (8) provides that payments under Section 32 are classed as housing benefit and council tax benefit, for example for cross-references to these benefits in other legislation. For example, Schedule 7 of the Child Support, Pension and Social Security Act 2000, which provides the revisions and appeals mechanism for housing benefit and council tax benefit, will also apply to payments under section 32.

191. Section 34 provides specific details on the interpretation of terms used in Sections 32 and 33, thereby clarifying specific terms and ensuring consistency with established legislation.