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Welfare Reform Act 2009

Section 24: Loss of benefit provisions

125.Section 7 of the Social Security Fraud Act 2001 (‘the 2001 Act’) enables certain specified benefits to be withdrawn, or reduced payments to be made, for a period of 13 weeks (known as the disqualification period) where a person is convicted of benefit fraud on two occasions, and the second offence was committed within five years of the date of the first conviction. These loss of benefit provisions are commonly referred to as the ‘two strikes’ rule.

126.Section 24 extends the loss of benefit provisions by introducing a similar benefit sanction for the same specified benefits to be applied following a first conviction for benefit fraud, or following a first (or subsequent) agreement to pay a penalty or acceptance of a caution.

127.Where such an offence comes to light, the offender may be prosecuted, agree to an administrative penalty as an alternative to prosecution under section 115A of the Social Security Administration Act 1992, or agree to be given a caution.

128.Subsection (1) inserts new sections 6A, 6B and 6C into the 2001 Act. New section 6A defines, for the purposes of section 6B and section 7, the meaning of ‘disqualifying benefit’ and ‘sanctionable benefit’. In Northern Ireland, the references in new section 6B and section 7 to ‘sanctionable benefit’ relate only to a war pension. This preserves the existing position under section 7 as it stands.

129.New section 6B introduces the new benefit sanction to apply after the first conviction, or after any administrative penalty or caution. The combined effect of subsections (1), (4) and (5) is for benefit to be reduced or withdrawn for the disqualification period where the offender has –

  • been convicted of one or more benefit offences in any proceedings;

  • accepted an administrative penalty as an alternative to prosecution; or

  • agreed to be given a caution.

130.The disqualification period is defined in subsection (11) as a period of four weeks beginning at a prescribed time after conviction or the agreement of an administrative penalty or caution.

131.Subsection (2) of new section 6B sets out definitions of the terms used in new section 6B(1)(b) and new section 6C(2), (3) and (4).

132.Subsection (3) of new section 6B provides that a sanction under the new rules will not apply where a conviction would be the second conviction for the purposes of section 7 (‘two strikes’).

133.Subsections (6) to (10) of new section 6B provide that the amounts by which income support, jobseeker’s allowance, state pension credit, employment and support allowance, housing benefit or council tax benefit are to be reduced will be prescribed in regulations. These amounts will be the same as those currently prescribed for the purposes of section 7.

134.Subsection (13) of new section 6B sets out definitions of the terms used within new sections 6B and 6C; in particular, ‘benefit offence’ is defined in such a way that the provisions will only apply to offences committed after new section 6B comes into force.

135.Subsection (1) of new section 6C provides that in the event that a conviction is quashed all payments that would have been made but for the sanction are to be made as if no restriction had been imposed.

136.Subsection (2)(a) of new section 6C provides that where the person had agreed to pay an administrative penalty but has withdrawn that agreement, all payments that would have been made but for the sanction are to be made as if no restriction had been imposed.

137.Subsection (2)(b) of new section 6C provides that where, following an appeal or in accordance with regulations, it is decided that there was no overpayment or that it is not recoverable, all payments that would have been made but for the sanction are to be made as if no restriction had been imposed.

138.Subsection (3) of new section 6C provides for subsection (4) to apply where the person had agreed to pay an administrative penalty, but following an appeal or in accordance with regulations the amount of the overpayment is revised.

139.Subsection (4) provides that where there is a new penalty or caution relating to the same offence, the new disqualification period is to be reduced by the length of the old disqualification period and that in any other case the necessary adjustments are to be made to reverse the effects of the sanction.

140.Subsection (4)(b) of new section 6C provides that if a new agreement to pay an administrative penalty is not made then all payments that would have been made but for the sanction are to be made as if no restriction had been imposed and the Government can proceed to prosecute the offence.

141.Subsection (5)(b) of new section 6C provides for convictions that result in absolute discharges, conditional discharges, or probation orders made by a court in Scotland and absolute discharges made by a court of summary jurisdiction in Scotland to count as convictions for the purposes of the new sanction.

142.Subsection (2) of section 24 introduces Schedule 4 which contains further amendments to the Social Security Fraud Act 2001 and related amendments to other legislation.

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