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Welfare Benefits Up-rating Act 2013

Commentary on Sections

Section 1: Up-rating of certain social security benefits for tax years 2014-15 and 2015-16

20.Section 1 introduces a duty on the Secretary of State for Work and Pensions to up-rate relevant sums by 1 per cent, to take effect in the tax years 2014-15 and 2015-16; and introduces the Schedule, paragraph 1 of which defines the relevant sums. It also makes provision for the event that the increase in prices is less than 1 per cent.

21.Subsection (1) sets out the new duty on the Secretary of State for Work and Pensions to make an order by statutory instrument, in each of the tax years ending with 5 April 2014 and 5 April 2015, increasing each of the relevant sums by 1 per cent.

22.Subsection (2) specifies that the order under subsection (1) must bring the increases into force in the week beginning with the first Monday of the new tax year, or, on an earlier date in April. Increases take effect on various dates because of differences in the prescribed payday of the benefit or payment and depending on whether the benefit or payment is a weekly or daily benefit.

23.Subsection (3) allows for the rounding of sums after the 1 per cent increase has been applied. This follows the existing provision set out in section 150(5) of the SSAA 1992. Generally, rounding is to the nearest 5 pence (up or down).

24.Subsection (4) requires the Secretary of State to lay before Parliament a copy of a report by the Government Actuary on the likely effects of the order on the National Insurance Fund. This follows the existing provision set out in section 150(8) of the SSAA 1992.

25.Under section 150 of the SSAA 1992, the Secretary of State for Work and Pensions must in each tax year review the sums of benefits and certain pensions in order to determine whether they have retained their value in relation to the general level of prices obtaining in Great Britain estimated in such manner as the Secretary of State thinks fit. Subsection (5) sets out that if, when conducting that review, the Secretary of State finds that prices have not increased, or have increased by less than 1 per cent, for the period under review, new subsection (1) does not apply. In this circumstance, the Secretary of State must revert to exercising his discretion in the up-rating of the relevant sums for the tax year in question (as he must continue to do for certain other benefits and payments not covered by this Act).

26.Subsection (6) requires that where subsection (1) applies in relation to a tax year, the draft of any up-rating order made under the existing provisions of section 150 of the SSAA 1992 must not include any of the relevant sums as defined in paragraph 1 of the new Schedule.

27.Subsection (7) secures that for the purposes of the sums set out in section 150(l)(i) of the SSAA 1992, namely Child Benefit, it is the Treasury on which the obligations of section 1 fall.

28.Subsection (8) provides that where there is a reference in any other enactment to an order made under section 150 of the SSAA 1992, that reference includes a reference to an order made under section 1 (with the exception of sections 189 and 190 of the SSAA 1992, which concern general points with respect to orders). In particular, this includes section 132 of the SSAA (NI) 1992, which includes a reference to an order under section 150 of the SSAA 1992, and therefore will also include a reference to an order under section 1.

29.Subsection (9) provides that nothing in section 166 of the SSAA (NI) 1992, which concerns the control of orders and regulations, should apply in relation to an order made by the Treasury (under section 132 of the Act) with respect to the up-rating of Child Benefit in Northern Ireland, corresponding to an Order under section 1.

30.The Schedule, paragraph 1, sets out the relevant sums for the purposes of section 1. These are:

  • The personal allowances for a person or couple used in the calculation of Income Support;

  • The personal allowances for a person or couple used in the calculation of Housing Benefit;

  • Rates of Child Benefit; and of Statutory Sick Pay, Statutory Maternity Pay, Ordinary Statutory Paternity Pay, Additional Statutory Paternity Pay, and Statutory Adoption Pay;

  • The age-related amount for contribution-based Jobseeker’s Allowance which is relevant for calculating the claimant's personal rate;

  • The personal allowances for a person or couple used in the calculation of income-related Jobseeker’s Allowance;

  • The contributory allowance of Employment and Support Allowance;

  • The work-related activity component of contributory Employment and Support Allowance;

  • The prescribed amounts for income-related Employment and Support Allowance;

  • The work-related activity component of income-related Employment and Support Allowance;

  • The standard allowance for a single or a joint claimant of Universal Credit;

  • The additional amount of Universal Credit for a disabled child or qualifying young person (but only the smaller or smallest of sums specified);

  • The limited capability for work element of Universal Credit.

Section 2: Up-rating of tax credits for tax years 2014-15 and 2015-16

31.Section 2 introduces a duty on the Treasury to up-rate relevant amounts by 1 per cent, to take effect in the tax years 2014-15 and 2015-16; and introduces the Schedule, paragraph 2 of which defines the relevant amounts. It also makes provision for the event that the increase in prices is less than 1 per cent.

32.Subsection (1) sets out the new duty on the Treasury to make an order by statutory instrument increasing the relevant amounts by 1 per cent in each of the tax years ending with 5 April 2014 and 5 April 2015.

33.Subsection (2) specifies that the order made under subsection (1) must come into force for the tax year following that in which the order is made.

34.Subsection (3) allows for the rounding of sums after the 1 per cent has been applied. Generally, rounding is to the nearest £5 a year (up or down).

35.Under section 41 of the Tax Credits Act 2002, the Treasury is required to review the amounts of certain elements of tax credits each year to determine whether the elements have retained their value in relation to the general level of prices. Subsection (4) sets out that if, when conducting the review, the Treasury finds that prices have not increased, or have increased by less than 1%, for the period under review, new subsection (1) does not apply. In this circumstance, the Treasury will revert to exercising discretion in the up-rating of the relevant amounts for the tax year in question.

36.Subsection (5) requires that the Treasury does not exercise discretion to up-rate by any other amount the relevant amounts to be up-rated by 1 per cent under subsection (1).

37.The Schedule, paragraph 2 defines the relevant amounts for the purposes of section 2. These are:

  • The basic element, the 30 hour element, the second adult element and the lone parent element of Working Tax Credit;

  • The child element of Child Tax Credit (including qualifying young people).

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