Commentary on Sections Part 1 – Social Security Section 16: External provider social loans
108.Section 16(1) inserts new sections 140ZA, 140ZB and 140ZC into the Social Security Contributions and Benefits Act 1992.
109.New section 140ZA will allow the Secretary of State, with the agreement of the Treasury, to make arrangements with external providers to make loans to individuals who are receiving prescribed benefits or have prescribed needs. Arrangements under this section may have effect in particular areas, or throughout Great Britain. Under subsection (9) loans made under these arrangements are to be referred to as external provider social loans.
110.Subsections (4) to (6) set out matters which may be covered by the arrangements made under new section 140ZA. These include power for the Secretary of State to make payments to the lender. Subsections (7) and (8) provide for certain payments to be made out of and into the social fund.
111.New section 140ZB will allow the right to repayment of loans to be transferred between the Secretary of State and an external provider. So a social fund loan which is outstanding when the arrangements come into force could be transferred to the external provider. Similarly, where arrangements with an external provider cease any outstanding repayments in respect of an external provider social loan could be transferred to the Secretary of State.
112.Section 140ZC will require the Secretary of State to publish a report annually on the operation of arrangements under section 140ZA.
113.Section 16(2) inserts new section 78A into the Social Security Administration Act 1992.  It is a regulation-making power which will enable the Secretary of State to collect repayments due on an external provider social loan (by way of deduction from benefit or other methods) and to pay these over to the lender, except where the regulations make other provision. The regulations may apply to the collection of repayments of equivalent loans made in Northern Ireland.