Pensions Act 2014 (Consequential Amendments) Order 2016 — House of Lords, 2016-09-08
Topic: Labor
David Freud (Conservative, Centre-right): My Lords, you will recall a previous set of consequential amendments connected to the introduction of the new state pension, together with a set of affirmative regulations that were discussed in February this year. This order makes a small number of further such consequential amendments. They do two things First, they ensure that existing administrative arrangements which are designed to facilitate the annual uprating exercise will continue to operate as they do now. Secondly, they give appeal rights to decisions about national insurance credits that count for new state pension purposes Article 2 amends provisions of the Social Security Administration Act 1992 which deal with alterations in the payable amount of certain income-related benefits: income support, income-based jobseeker’s allowance, income-related employment and support allowance, universal credit and pension credit. These provisions allow the income-related benefit award to be adjusted without the need for a further decision if the adjustment is due to uprating—whether it is the benefit itself that is being uprated, another benefit is being taken into account, or both. They also enable the decision-maker to take account of the new rates from the uprating date in determining new awards that begin before the uprating order has come into force. These are long-standing administrative easements which help to ensure the effective operation of the annual uprating exercise As your Lordships know, where a person is a member of a couple, their entitlement to benefits can be affected by their status as a couple. Therefore, where a working-age income-related benefit is in payment for a couple but the non-claiming partner is a pensioner, the benefit income could include state pensions. The amendments made by Article 2 simply ensure that business as usual will continue where a person’s benefit income includes new state pension. The forthcoming uprating exercise which will determine the rates to be applied from next April is, of course, the first to apply to the new state pension National insurance credits which count for new state pension purposes are provided for under Part 8 of the State Pension Regulations 2015. These are new regulations, made under a new power inserted in the legislation by the Pensions Act 2014. The policy is that decisions made in relation to these credits should, as is the case with decisions made in respect of existing credits awarded under the old credits regulations, have the right of appeal. As the law stands, they do not. The amendment being made by Article 3 gives that appeal right. This amendment should have been in place from 6 April 2016 but, unfortunately, it was overlooked. Having identified the omission, we have acted as quickly as we could to put it right. This is why the order will come into force on the day after it is made My officials have been working closely with HMRC, which administers credits on DWP’s behalf, to devise a workaround. Once the order has come into force, HMRC will be revisiting the decisions made before it came into force. Where fresh decisions are made, they will carry an appeal right. There will be no substantial difference in outcome between an original decision, had it been appealable and successfully appealed, and a fresh decision that is successfully appealed. A successful appellant will have credits awarded to them. I should stress that to date there have been no appeals. That there have been no appeals is understandable. First, this issue relates only to decisions made in the period between 6 April 2016 and the date the order takes effect, which is around five months. Secondly, it only affects credits which a person has to apply for The practical impact of the gap in the law is restricted to decisions about credits which a person has been able to apply for since 6 April 2016. These include new credits to cover past periods in which a person was accompanying their Armed Forces spouse or civil partner on service overseas. Ordinarily, credits awarded for the tax year 2016-17 would be taken into account only in the assessment of new state pension awards made on or after 6 April 2017. However, the new credits for Armed Forces spouses and civil partners could affect awards made this year. A further mitigation is that before a disputed decision can be appealed, it goes through a process of mandatory reconsideration. So the decision-maker has to look at it again and if, on reflection, they consider that the decision should be changed then it can be revised, without the claimant having to go through an appeal process We also know that in relation to the new credit for an Armed Forces spouse or civil partner made under Part 8 of the State Pension Regulations 2015, out of 1,647 applications which have been decided up to 5 September 2016, 324 were refused—and of those refusals, 201 were because the tax year in question is already a qualifying year for other reasons Finally, based on data from last year—2015-16—about credits decisions made under the 1975 regulations, we know that only a tiny number of disputed credits decisions actually proceeded to appeal So with the change in the law imminent, and if they are needed, we anticipate that the contingency arrangements we have put in place will be required for only a very small number of cases. I can also confirm that, in my view, this statutory instrument is compatible with the European Convention on Human Rights. I hope this gives noble Lords reassurance that while it is accepted that justice may be delayed, it will not be denied. I beg to move.