Commentary on Sections Schedule 7: Minor and consequential amendments Paragraphs 31, 33 to 39 and 60
248.Paragraph 31 of Schedule 7: This paragraph is intended as a transitional provision, to provide flexibility in deciding how to recover any overpaid HRA subsidy paid for rent rebates. It amends section 80A of the Local Government and Housing Act 1989 (‘the 1989 Act’), so that amounts of HRA subsidy overpaid (by the First Secretary of State or National Assembly for Wales) in respect of rent rebates granted to tenants of houses within an authority’s Housing Revenue Account (‘HRA rent rebates’) may be recovered by withholding or reducing rent rebate subsidy payable (by the Secretary of State for Work and Pensions) under section 140A(2) of the Social Security Administration Act 1992. This paragraph enables the Secretary of State for Work and Pensions to recover overpaid subsidy for HRA rent rebates from authorities, even where the original subsidy was paid as part of HRA subsidy. This will be in addition to the powers of the First Secretary of State and Assembly to recover overpaid HRA subsidy in respect of HRA rent rebates by withholding HRA subsidy payable in future in respect of e.g. management and maintenance.
249.Paragraph 33 of Schedule7: This paragraph amends Schedule 4 to the Local Government and Housing Act 1989 (“the 1989 Act”) which makes provision for the keeping of the Housing Revenue Account. Schedule 4 to the 1989 Act sets out the items to be debited and credited to that account.
250.Sub-paragraph (4) means that the amount of rent rebates granted for the year to tenants of property in the HRA will no longer be debited to that account. Sub-paragraph (2), read with the repeal of section 140D(2) of the Social Security Administration Act 1992 (in paragraph 38 of Schedule7), means that the authority will no longer transfer an amount to the HRA from another of its accounts where it has exercised its discretion under section 134(8) of the Social Security Administration Act 1992 to grant a higher rent rebate than would otherwise be granted (e.g. by disregarding war disablement or war widows’ pensions in calculating an individual’s benefit entitlement).
251.Sub-paragraph (5) inserts a new debit item 10, Sums directed by the Secretary of State or the National Assembly for Wales. This authorises the giving of directions requiring an authority to carry a specified amount, or an amount calculated in accordance with a prescribed formula, from its Housing Revenue Account to another revenue account (other than its Housing Repairs Account). While the 1989 Act currently provides a power to direct an authority to transfer a sum to its HRA from another revenue account (Item 10 of Part 1 of Schedule 4), there is no direct equivalent authorising directions requiring transfers from the HRA. A separate direction-making power will remove the need to use determinations under Item 8 of Part 2 of Schedule 4 to effect such transfers, which would further complicate what is already a complex determination.
252.The power to direct the transfer of sums from the HRA to another account may be used where an authority has chosen to increase the rents of dwellings in the HRA above the level at which rent rebate subsidy may be paid in respect of property in the HRA under the Social Security Administration Act 1992. HRA subsidy currently paid by the National Assembly for Wales and the First Secretary of State in respect of rent rebates for tenants of dwellings is subject to a “rent rebate subsidy limitation” policy. This means that where an authority increases its rents above a certain level, it must meet additional benefit costs itself, rather than receiving subsidy for them. It is proposed that rent rebate subsidy limitation will continue to apply when HRA tenants’ rent rebates are subsidised by rent rebate subsidy paid under the SSAA 1992 instead of as before through HRA subsidy. Rent rebate subsidy limitation will operate from April 2004 by including provision for a deduction, from the amount of subsidy which would otherwise be paid, in the order under section 140B of the SSAA 1992 setting out how rent rebate subsidy is calculated.
253.If the authority chooses to set its rents above the limit rent set out in the policy of rent rebate subsidy limitation, then it is considered appropriate that the costs that will not be subsidised should be met by the authority out of its HRA, rather than out of some other account. The extent to which these rebates are unsubsidised would be a consequence of a decision by the authority in its landlord role, and therefore the associated costs should be met by its landlord account, that is, its HRA. A direction under the new debit item 10 inserted by sub-paragraph (5) would allow an appropriate transfer of resources from the HRA to another revenue account in the authority’s general fund (or council fund in Wales) to which rent rebates would be debited.
254.Sub-paragraph (3) substitutes a new item 9 for the current Item 9 of Part 1 of Schedule 4 (credits) to allow for amounts under the new Item to be calculated in accordance with formulae. This brings that Item in line with the new Item 10 of Part 2 of that Schedule (debits), which it mirrors.
255.Paragraphs 34 to 39 of Schedule 7: These paragraphs make minor and consequential amendments to the Social Security Administration Act 1992 (“the SSAA 1992”).
256.Paragraph 35 of Schedule 7 corrects the reference in section 134(2) of the SSAA 1992 to the subsections in that section which prescribe when housing benefit takes the form of a rent rebate and when it takes the form of a rent allowance. This amendment is deemed to have come into force on 1st April 1997 when the amendment to section 134 under the Housing Act 1996, which inserted new subsections referring to rent rebates and allowances, took effect.
257.Paragraph 36(a) repeals the second sentence of section 140B(2) of that Act (exclusion of “Housing Revenue Account rebates” paid by housing authorities in England and Wales from the amount of relevant benefit). Paragraph 39 deletes the definition of “Housing Revenue Account rebate” from section 140G of the SSAA 1992 since there will no longer be any such rebates debited to the HRA. The repeal of the second sentence in section 140B(2) and the definition of Housing Revenue Account rebates will ensure that in calculating rent rebate subsidy, the Secretary of State is not prevented from taking into account any rent rebates which had been debited to the HRA in earlier years, e.g. where such rebates had been overpaid, and a deduction needs to be made in respect of the overpayment.
258.Paragraph 36(b) of Schedule 7 repeals subsection (7) of section 140B of the SSAA 1992. The powers under the other provisions of section 140B to calculate the amount of rent rebate subsidy, rent allowance subsidy and council tax benefit subsidy payable, and in particular to pay additional amounts or deduct amounts from the subsidy which would otherwise be payable, are broad. The Secretary of State may determine such additions and deductions by reference to such matters as he thinks fit, including, for example, the amount of relevant benefit paid by the authority during a previous year, or the rents of dwellings in the HRA (for the purposes of a deduction for rent rebate subsidy limitation in respect of rent rebate subsidy payable for rent rebates to tenants of HRA dwellings). Subsection (7) did not confer any additional power on the Secretary of State, and made the true extent of the Secretary of State's powers unclear.
259.Paragraph 37 of Schedule 7 inserts a new subsection (1A) into section 140C of the SSAA 1992. Section 140C(1) of the SSAA 1992 allows the Secretary of State to impose conditions, subject to which subsidy will be paid, in respect of claims, records, certificates, audit or otherwise. Conditions can be imposed under section 140C(1) requiring authorities to provide the Secretary of State with information. Where such conditions are imposed, the new subsection (1A) expands the kind of information that can be required. This will enable the Secretary of State to require the authority to provide information necessary for the Secretary of State to carry out any of his functions relating to subsidy. These functions include making an order setting out how subsidy will be calculated (including any rent rebate subsidy limitation deduction), as well as calculating the amount of subsidy payable under an order.
260.Conditions imposed under subsections (1) and (1A) of section 140C of the SSAA 1992 could require authorities to provide information to the First Secretary of State or to the National Assembly for Wales, as well as to the Secretary of State for Work and Pensions. The First Secretary of State in England and the National Assembly in Wales could continue to collect information as part of monitoring the policy of rent rebate subsidy limitation. They could then pass the information on to the Secretary of State for Work and Pensions along with representations as to the form of rent rebate subsidy limitation formulae. This would be possible as an alternative to requiring authorities to send that information directly to the Secretary of State for Work and Pensions. Information which authorities may be required to supply under this section could include the level of rents set by an authority for any year, the amount of rent rebates granted to tenants of property within the HRA, or information relating to rent restructuring for an authority in England.
261.Paragraph 60 of Schedule 7 makes a consequential amendment to section 122(4) of the Housing Act 1996, as a result of amendments made by the Social Security Administration (Fraud) Act 1997 to section 140B of the Social Security Administration Act 1992. The amendments made in 1997 resulted in provisions in section 140B being shuffled between its subsections. As a result section 122(4) no longer refers correctly to the subsections of section 140B. The amendments made by paragraph 60 of Schedule 7 mean that readers do not have to rely on section 17(2)(a) of the Interpretation Act 1978 to interpret section 122(4) because section 122(4) will now refer correctly to the subsections of section 140B under which the Secretary of State may include provision in an order for additions to or deductions from subsidy, or deduct subsidy which he considers it would be unreasonable to pay. Paragraph 60 is deemed to have come into force on 1st July 1997 when the amendments to section 140B of the Social Security Administration Act 1992 made by the Social Security Administration (Fraud) Act 1997 came into force.
262.The amendment in paragraph 38 of Schedule 7 omitting section 140D(2) needs to be read with the repeal of item 5 of Part 1 of Schedule 4 to the Local Government and Housing Act 1989 (see paragraph 33(2) of Schedule 7 to the Act).
263.The SSAA 1992 extends to (i.e. forms part of the law of) Scotland. The effect of section 129 of the Act is that the amendments will have effect in relation to the SSAA 1992 as operating throughout England, Wales, and Scotland. This means that all the amendments to the SSAA 1992 will also form part of the law of Scotland. It should be noted that sections 140A to 140G of the SSAA 1992 are not devolved matters in Scotland (see paragraph 1(2)(e) of Schedule 4 to the Scotland Act 1998).