Citation, commencement, effect and interpretation

1. —(1) This Order may be cited as the Income-related Benefits (Subsidy to Authorities) Amendment Order 2006, and shall come into force on 9th February 2006.

(2) This Order shall have effect from 1st April 2004.

(3) In this Order, “the principal Order” means the Income-related Benefits (Subsidy to Authorities) Order 1998( 4 ).

Amendment of Part II of the principal Order

2. —(1) Part II of the principal Order (claims for and payment of subsidy) shall be amended in accordance with the following paragraphs.

(2) In article 2 (interpretation of Parts II and IV) in the definition of “final subsidy”, after “interim subsidy” insert “or an amount paid, withheld or deducted pursuant to article 8A”.

(3) In article 4 (requirement of claim), in paragraphs (2)(c) and (3) for “31st July” substitute “30th June”; and

(4) After article 8, insert—

“ Payment of subsidy before audit complete

8A —(1) Where an authority has submitted the final claim by the due date in accordance with article 4(2)(c) but the claim has not yet been audited in accordance with article 6 and—

(a) the Secretary of State estimates that the final subsidy will exceed the amount of interim subsidy that was paid to the authority in the relevant year, taking account of any withholding, reducing or deducting of subsidy by him, following the audit of that authority’s final claim, he may pay subsidy in accordance with paragraph (2); or

(b) the Secretary of State estimates that the interim subsidy that was paid to the authority in the relevant year will exceed the amount of final subsidy, taking account of any withholding, reducing or deducting of subsidy by him, following the audit of that authority’s final claim, he may withhold or deduct subsidy in accordance with paragraph (2).

(2) The amounts that may be paid to, withheld or deducted from an authority under paragraph (1) shall be equal to the amount which the Secretary of State estimates is likely to be payable by way of final subsidy, taking account of any withholding, reducing or deducting of subsidy by him, following the audit of that authority’s final claim. ” .

(5) In article 9 (payment of subsidy for the relevant year)—

(a) for paragraph (2), substitute—

“ (2) Any payment pursuant to paragraph (1) shall only be in respect of the balance of subsidy due after the Secretary of State—

(a) has deducted any interim subsidy paid during or in respect of the relevant year;

(b) has added or deducted, as the case may be, any amount paid, recovered or withheld pursuant to article 8A in respect of the relevant year;

(c) has added any amount pursuant to article 9A(3); and

(d) has deducted any amount pursuant to article 9A(4). ” .

(b) After paragraph (4), insert—

“ (5) In paragraph (1), a reference to paying final subsidy calculated in accordance with Part III may also be a reference to deducting or withholding subsidy, as the case may be. ” .

(6) After article 9, insert—

“ Transitional Protection Adjustments

9A —(1) After 1st September in the year after the following year the Secretary of State shall calculate an authority’s final subsidy in accordance with Part III.

(2) The Secretary of State shall compare the final subsidy in respect of a relevant year with the nominal subsidy calculated in accordance with paragraph (6).

(3) Where, in accordance with paragraph (2), the final subsidy that an authority would receive is less than the nominal subsidy, the Secretary of State may add such amounts to any payment made pursuant to article 9(1) to ensure that the difference between the final subsidy and the nominal subsidy will be limited to—

(a) 0.5 per cent in the year 2004/05;

(b) 1 per cent in the year 2005/06, but only if sub-paragraph (a) applied to the authority; and

(c) 2 per cent in the year 2006/07, but only if sub-paragraphs (a) and (b) applied to the authority.

(4) Where, in accordance with paragraph (2), the final subsidy is greater than the nominal subsidy then the Secretary of State may deduct such amounts from any payment made pursuant to article 9(1) as he considers appropriate, taking into account—

(a) the circumstances of the case; and

(b) the amount of subsidy other authorities will receive pursuant to this article,

but the amount deducted shall not result in a final subsidy which is less than the nominal subsidy.

(5) If an authority has not complied with any condition specified in this Part by 1st September in the year after the following year the Secretary of State may estimate the amount of any subsidy, including any nominal subsidy and any additions or deductions which may be made as a result of paragraphs (3) and (4), payable to that authority and he may take into account for that purpose such information as he considers relevant.

(6) For the purpose of this article the Secretary of State shall calculate the nominal subsidy by—

(a) calculating the authority’s final subsidy as if that authority’s final subsidy had been calculated at 31st March 2004; and

(b) adding an amount equivalent to that part of the revenue support grant that would have been paid to the Authority in relation to Housing Benefit and Council Tax Subsidy for the relevant year.

(7) In paragraph (6)(b) above, “revenue support grant” means a grant that was paid under section 78 of the Local Government Finance Act 1988 ( 5 ) or, for Scotland, section 191 of the Housing (Scotland) Act 1973 ( 6 ) . ” .

Amendment of Part III of the principal Order

3. —(1) Part III of the principal Order (calculation of subsidy) shall be amended in accordance with the following paragraphs.

(2) In article 11 (interpretation of Part III) —

(a) in paragraph (1) omit the definition of “X percent”; and

(b) in paragraph (2) in the definition of “qualifying expenditure”, after the words “article 15” insert “or 15A”.

(3) In article 12 (amount of subsidy)—

(a) for sub-paragraph (1)(b) substitute—

“ (b) for the purposes of section 140B(4A)(a) of the Act (subsidy in respect of costs of administering relevant benefits) shall include, for an authority identified in column (1) of Schedule 1, the sum specified in column (2) of the Schedule for that authority; and

(c) shall include an additional amount calculated in accordance with paragraph (4), if the authority has modified any part of a scheme it administers in recognition of the operation of a local scheme under sections 134(8) (arrangements for housing benefit) or 139(6) (arrangements for council tax benefit) of the Act ( 7 ) . ” ; and

(b) after paragraph (3) insert—

“ (4) For the purposes of sub-paragraph (1)(c), the additional amount will be 0.2 per cent of the amount or total of amounts calculated in accordance with article 13 but will not exceed 75 per cent of the cost of the total of relevant benefit paid under the scheme. ” .

(4) In article 13 (relevant benefit)—

(a) in heads (1)(a)(i) and (1)(b)(i) for “95 per cent” substitute “100 per cent”;

(b) in heads (1)(a)(ii) and (1)(b)(ii) for “X per cent” substitute “100 per cent”; and

(c) omit paragraph (3).

(5) In article 14 (backdated benefit) —

(a) in sub-paragraph (1)(b) for “50 per cent” substitute “100 per cent”.

(6) In article 16 (treatment of high rents in rent allowance cases)—

(a) in paragraph (1) omit “(3)”;

(b) in paragraph (2) for “paragraphs 3, 10, 11 or 11A” substitute “paragraphs 3 and 5 to 11A”; and

(c) omit paragraph (3).

(7) In article 17 (subsidy in respect of homeless and short lease rebate cases) —

(a) In paragraphs (2) and (3) for “95 per cent” substitute “100 per cent, wherever it occurs; and

(b) omit paragraph (7).

(8) In article 18 (additions to subsidy) —

(a) in head (1)(b)(i) for “95 per cent” substitute “100 per cent”;

(b) in head (1)(b)(ii) for “X per cent” substitute “100 per cent”;

(c) in paragraph (1) after sub-paragraph (d), insert—

“ (e) where, during the relevant year, it is discovered that an overpayment in respect of which a deduction is to be made under article 19 is an authority error overpayment, where the proportion of total authority error overpayments as a percentage of the total specified subsidy is —

(aa) less than or equal to 0.48 per cent, the addition shall be 100 per cent of the total authority error overpayment;

(bb) greater than 0.48 per cent but less than or equal to 0.54 per cent, the addition shall be 40 per cent of the total authority error overpayment; and

(cc) greater than 0.54 per cent, the addition shall be nil. ” ;

(d) in paragraph (5) for “112(1)” substitute “112”;

(e) in paragraph (6) for “In paragraph (2)(a),” substitute “In paragraphs (1)(e) and (2)(a)”;

(f) after paragraph (6), insert—

“ (6A) In paragraph (1)(e), “total specified subsidy” means the total amount of housing benefit and council tax benefit that attracts 100 per cent subsidy for the relevant year, including any subsidy paid pursuant to article 14. ” .

(g) omit paragraph (9); and

(h) after paragraph (10), insert—

“ (11) Where the addition payable under this article would be greater than a sum equivalent to the appropriate amount under article 17(2)(b)(i), (2)(b)(ii) and (3)(b)(ii) had the expenditure been qualifying expenditure, then the addition will be a sum equivalent to the appropriate amount.

(12) Where, during the relevant year, an overpayment that has been classified as an overpayment under one of paragraphs (4), (4ZA) (4A), (5), (6) or (7) is reclassified, the addition referred to in article 13(1) shall be the amount payable under paragraph (1) for the final classification of the overpayment. ” .

(9) In article 19 (deductions to be made in calculating subsidy) omit sub-paragraph (1)(d).

(10) In article 21 (additions to subsidy in respect of security against fraud and error)—

(a) in sub-paragraph (1)(a) for “Circulars specified in paragraph (2)” substitute “Housing Benefit and Council Tax Benefit Security Manual and Circular HB/CTB F10/2004”;

(b) in sub-paragraph (1)(b) for the words “those Circulars”, wherever they occur, substitute “the Housing Benefit and Council Tax Benefit Security Manual and Circular HB/CTB F10/2004”; and

(c) omit paragraph (2).

Amendment of Schedules to the principal Order

4. —(1) For Schedule 1 to the principal Order (sums to be used in the calculation of subsidy) substitute the Schedule set out in Schedule 1 to this Order.

(2) Omit Schedule 2 to the principal Order (adjustment for the prioritisation of claims).

(3) Omit Schedule 3 to the principal Order (calculation of deductions from subsidy in respect of period overruns).

(4) In Schedule 4 to the principal Order (high rents and rent allowances)–

(a) omit Part 1;

(b) for paragraph 6, substitute—

“ Except where paragraph 5 applies, this Part also applies in a case where an authority is required under regulation 12A of the Housing Benefit Regulations (requirement to refer to rent officer) to apply for a determination in relation to a dwelling, but the appropriate amount shall be nil if the authority fails to apply for that determination—

(a) during the relevant year; or

(b) as soon as possible thereafter but before the date of the due date for the submission of the final subsidy claim for the relevant year. ” ; and

(c) omit paragraph 14.

(5) In Part 1 of Schedule 4A to the principal Order (rent rebate limitation deductions (housing revenue account dwellings))–

(a) after “In this Schedule–” insert—

• “ “dwelling” has the same meaning it bears in the determination made under section 80(1) of the Local Government and Housing Act 1989, ” ; and

(b) for paragraph (b) of the definition of “new service” substitute—

“ (b) an extension to a service, where the service is provided in the relevant year to a greater extent than in 2001-02, or ” .

Article 4

SCHEDULE 1 SCHEDULE TO BE SUBSTITUTED FOR SCHEDULE 1 TO THE PRINCIPAL ORDER

Articles 12(1)(b) and 17(1) and (8)

“ SCHEDULE 1 SUMS TO BE USED IN THE CALCULATION OF SUBSIDY