Select Committee on Deregulation and Regulatory Reform Sixth Report


The Deregulation and Regulatory Reform Committee has agreed to the following Report:



  1. On 13 December 2001 the Government laid before Parliament the proposal for the Regulatory Reform (Housing Assistance) (England and Wales) Order 2002 in the form of a draft of the Order and an explanatory memorandum from the Department for Transport, Local Government and the Regions.[1] The proposed Regulatory Reform Order would remove many of the detailed provisions that govern the way local housing authorities carry out housing renewal, and replace them with a broad power to allow authorities to provide financial and other assistance for home repair and improvement which would be subject to only limited constraints.

2. The House has instructed us to examine the proposal against the criteria specified in Standing Order No. 141(6) and then, in the light of that examination, to report whether the Government should proceed, whether amendments should be made, or whether the Order should not be made.[2]

3. We have concluded that a draft Order in the same terms as the proposal should be laid before the House. However, we are concerned about the level of resources available to local authorities for the exercise of the new power which the Order would confer, and we have recommended that the Government look again at this point. Our detailed comments on this and other matters arising from our consideration of the criteria specified in the Standing Order are contained in the remainder of this Report.[3]

Purpose of the proposed Order


  4. The main powers of authorities[4] to give grants for home improvement are contained in the Housing Grants, Construction and Regeneration Act 1996 ("the 1996 Act"). In addition to mandatory Disabled Facilities Grant (which would be left largely unchanged by the proposed Order), these grant-giving powers cover:

  • renovation grants;
  • common parts grants;
  • discretionary disabled facilities grants;
  • HMO (Houses in Multiple Occupation) grants;
  • home repair assistance (HRA);
  • group repair; and
  • relocation grants.

5. Authorities also have powers under two other Acts to give financial assistance for home improvements. Under Part VII of the Local Government and Housing Act 1989 ("the 1989 Act"), they can declare and carry out renovation activity in renewal areas. They also have powers under Part XIV of the Housing Act 1985 ("the 1985 Act") to make loans and to provide help towards the cost of obtaining a mortgage.

6. All these grant-giving powers are discretionary, not mandatory. They were each designed for a specific purpose, and are explained in detail in Chapter Two of the explanatory memorandum.

7. The main grants are subject to a number of detailed conditions, which govern, among other things:

  • the form of application;
  • the eligibility criteria for the grants, including ownership and tenancy conditions and (for renovation grants) a prior residency requirement;
  • other conditions on approving grant, such as a requirement for the property to be fit for habitation on completion of the works;
  • the manner in which grant is calculated (which is done by a test of the applicant's resources);
  • the maximum grant that may be paid in any case;
  • the procedure for notifying applicants of the authority's decision;
  • the manner in which grant may be paid;
  • the circumstances in which an applicant ceases to be entitled to a grant; and
  • the circumstances in which grant must be repaid.

Many of the requirements are set out on the face of the 1996 Act itself, although it also contains over forty separate powers to make secondary legislation. Secondary legislation under these powers sets out in detail certain requirements of the Act such as the test of resources, and provides some degree of flexibility in areas such as grant conditions and repayment.

8. According to the Government, "the present legislation places a number of unnecessary restrictions on authorities' freedom, which has limited their ability to provide effective help to those who need it. The highly prescriptive nature of the legislation has led many authorities to take a narrow and rigid approach to housing renewal, which has not always contributed to their strategic objective of ensuring that people are adequately housed".[5]


  9. The proposed Order would therefore:

10. The new power would enable local housing authorities to give assistance in any form and to any person to improve living conditions in their area. The power could be used for:

      (i)  acquiring accommodation, either where the authority wish to purchase a person's existing home or as an alternative to the adaptation, improvement or repair of their existing home;

      (ii)  adapting, improving or repairing accommodation;

      (iii)  demolishing accommodation; and

      (iv)  replacing accommodation that has been demolished.[7]

11. The Government propose that assistance may be unconditional, or subject to conditions such as the requirement to contribute towards or repay the assistance. Authorities would also be able to take security (including a charge on a person's home), and to require people who have applied for assistance, or to whom it has been provided, to provide information.

12. The power would be subject to certain limitations, set out in chapter 4 of the explanatory memorandum (and later in this Report; see "Imposition of Burdens"and "Necessary Protection" below). In particular, exercise of the power would be subject to the requirement that it be used in accordance with a published policy on housing renewal assistance. Authorities will be able to use the new power as soon as they have published their policy; but to allow them time to do this the existing power (with one exception) will remain in place for a period of 12 months after the Order comes into force. The exception will be the streamlining of the provisions governing declaration of renewal areas ((d) above), which will take effect immediately.

13. Non-statutory guidance from the Department for Transport, Local Government and the Regions (DTLR) will accompany the Order. The guidance, the explanatory memorandum says,

    "will focus mainly on setting strategic priorities (which do not lend themselves to legislation), on principles already set out in other legislation (such as the duty to obtain Best Value), and on principles already enshrined in administrative law (such as the need to act reasonably and fairly), or on procedural issues (such as steps to minimise the risk of fraud). Authorities will be expected to consider the guidance, particularly when developing their published policy. However, they should not limit themselves to the guidance alone; we would also expect them to consider local circumstances. It will set out good practice and certain over-arching principles such as the need to:
  • be fair;
  • give priority to the most vulnerable households, in particular to disabled and older households;
  • ensure that applicants for loans are properly advised; and take realistic account of people's ability to contribute.

    "The guidance will also highlight the need to obtain best value from the resources available, and to provide advice on tackling fraud. Further, it will reflect the conclusions that emerge from the work of the Performance and Innovation Unit (PIU) on modernising government loans".[8]


  14. We are satisfied that the proposal is appropriate for delegated legislation. Like the proposal concerning voluntary aided schools, on which we have recently reported,[9] this proposal appears to us to make a most welcome use of the powers conferred by the Regulatory Reform Act, and we look forward to seeing further examples.


  15. A consultation paper setting out the Government's proposals was issued on 19 March 2001. It was sent to a wide range of consultees, including all local authorities in England and Wales, and was published on the Cabinet Office website. A full list of those consulted can be found at Annex F of the explanatory memorandum. The consultation period ended on 29 June 2001.

16. Of a total of 160 responses, the majority (75%) of responses were from local authorities. The other responses were mainly from national organisations and representative bodies such as the Local Authority Associations, Chartered Institute of Environmental Health (CIEH) and the Council of Mortgage Lenders (CML), registered social landlords (RSLs) and Home Improvement Agencies (HIAs). A few interest groups, such as Age Concern and Radar, also responded. Only two individuals made a response.

17. Three-quarters of the respondents were in favour of the principle of the reforms and no-one said they should not proceed. A summary of the main points raised in consultation, and the Government's response to those points, may be found in Chapter 15 of the explanatory memorandum (pp.54-60).


  18. The only matter raised in consultation which we were initially unhappy with the Government's response to was that of the provision of financial advice by local authorities. A number of consultees were concerned about authorities' ability to provide appropriate financial advice, and about liability in the event of poor advice being given. Although the Government noted that it intended to offer guidance on the provision of advice along with the guidance on other matters relating to the exercise of authorities' powers under the proposed Order, the outline guidance provided on the issue at Annex G of the explanatory memorandum was sketchy. Given the importance of the matter (recipients of assistance in the form of a loan secured by a charge on their property, for example, could risk losing their home if inappropriately advised) we asked the Department for further details of the guidance it proposed to offer on this issue.

19. The Department noted in reply that local authorities already have the power (and previously, the duty in the case of Right to Buy) to give loans and mortgages under the 1985 Act, so giving financial advice was not a new role for authorities.[10] It added that it was currently looking at how the Local Government Ombudsman, to whom authorities would be answerable in the event of any complaint about the financial advice they give, could work together with the Financial Services Authority (FSA). It had been hoped that the Government guidance on the use of the power conferred by the Order could incorporate guidance from the FSA on giving financial advice and administering loans, but unfortunately the FSA guidance is not now expected to be published until next year.

20. We also invited the Local Government Association (LGA) and Welsh Local Government Association (WLGA) to comment on this point. The LGA accepted that many authorities lacked the internal expertise to give appropriate financial advice, but gave details of work which it has itself been doing to try to overcome this difficulty.[11] The WLGA expressed the hope "that sufficient weight is given in the guidance to the need to provide advice to local authorities in respect of this issue".[12]

21. We recognise that the provision of financial advice is not a new role for local authorities; and we welcome the work in which the Local Government Association has been engaged in order to improve authorities' performance in this area. However, in view of the concerns expressed by consultees, and confirmed by the Welsh Local Government Association in particular, we recommend that the guidance to be given on the exercise of the power conferred by the Order give a very clear steer to local authorities on the provision of such advice; that the FSA guidance referred to above be incorporated into the guidance to authorities at the earliest possible opportunity; and that the Department stand ready to assist any authority which finds itself in need of any additional help in fulfilling its duties in this area.


  22. The following changes were made to the proposal in the light of responses to consultation:

Requirement to have regard to guidance from the Secretary of State

  23. Additionally, the consultation document suggested that authorities would be required by the order to have regard to guidance from the Secretary of State. The explanatory memorandum states that Cabinet Office lawyers "advised that this would not be possible under the Regulatory Reform Act, and suggested instead that we include [the] main principles [of the guidance] as subordinate provisions in the Order." It goes on to list a number of safeguards now included on the face of the Order.[14]

24. We asked the Department to clarify the advice which had been given by Cabinet Office lawyers.[15] It transpired that the advice given had not in fact been that it would not be possible for the Order to require that authorities have regard to guidance from the Secretary of State; but rather that, in order to ensure that the practice intended to be followed in this instance accorded with Government advice on the use of codes of practice, a different approach should be taken.[16] As a result, the guidance is non-statutory; and those safeguards which the Department considers should be the subject of a legal requirement have been included on the face of the Order. None is in fact designated as subordinate.

25. Those safeguards originally intended for the guidance, but now included on the face of the Order, are as follows:

  • a requirement to obtain the owner's consent before providing assistance to carry out work on their property;
  • a requirement to obtain every affected person's consent before changing any specification of assisted work or any of the conditions under which assistance has been given;
  • a requirement to have regard to a person's ability to pay before requiring a contribution or repayment; and
  • a requirement to set out in writing the terms and conditions under which the assistance is being given and to be satisfied that recipients have received appropriate advice or information about any obligation (financial or otherwise) that they are taking on.


  26. We are satisfied that the proposal has been the subject of, and taken appropriate account of, adequate consultation. None of the changes made as a result of consultation appears to us to have been significant enough to have warranted re-consultation.

Removal or Reduction of Burdens

  27. We are satisfied that the proposal would remove or reduce a number of different burdens imposed by the current legislation. In particular, it will have the following effects:[17]

  • the detailed provisions governing authorities' use of the power to give grants for housing renewal will be removed, and replaced with a power for authorities to set conditions of their own, appropriate to the particular locality;
  • authorities' limited powers to offer relocation grants would be extended, enabling them to help in two broadly defined sets of circumstances: firstly, where the authority and the homeowner agree that moving house is a better alternative to adapting or repairing the existing property; and secondly, where the property is subject to voluntary or compulsory purchase by the authority as part of a renewal or clearance strategy;
  • the proposals would enable authorities to help people in all tenures, including owner-occupiers, tenants and landlords; it would also extend the ability of authorities to assist park (mobile) home and houseboat occupiers, who are excluded from receiving most of the grants currently available;
  • authorities' powers to give loans (currently restricted to circumstances defined in the Housing Act 1985[18]) will be extended; these powers will also be brought into the same legislative framework as the grant-giving powers, thereby reducing a bureaucratic burden.

Other benefits

  28. The Government contends that the removal of the burdens referred to above will also result in a number of other benefits to authorities, individuals and the public purse.[19] Those benefits include:

  • more discretion for authorities to address the specific needs of their area;
  • more effective use of resources, allowing more people to be helped than under local authorities' present powers;
  • less dependency on grants, and better reinforcement of homeowners' responsibilities towards their properties;
  • more choice for homeowners and disabled people, for example between a grant or a loan, or between help with improvements or help with a move (thus helping to prevent people from being trapped in an unsuitable home);
  • a possible reduction in the bureaucratic requirements on applicants for assistance, particularly if an authority chooses not to apply a means-test (as they are currently required to do);
  • better tools to tackle obsolete and surplus housing as a result of more scope for providing more help with moving house;
  • more coherent legislation, leading to more consistent service delivery by authorities; and
  • more consistency with wider Government objectives, including those of Modernising Government.

Imposition of Burdens/Proportionality

  29. Commensurate with the removal or reduction of burdens as set out above, however, and in order to ensure proper use of the powers available to authorities, a number of burdens would be either imposed or re-enacted by the proposed Order.[20] The Regulatory Reform Act requires that, where a burden is created or reenacted, it must be proportionate to the benefit which is expected to result.


  30. A number of provisions in renewal areas legislation relating to matters of procedure are considered by the Government to be overly prescriptive, and will be removed. However, renewal areas legislation also contains powers of compulsion, and contains a number of safeguards to ensure that they are used properly for the benefit of local residents. For that reason, the Government intends to keep the renewal area provisions separate from the general power and to retain the following safeguards:[21]

  • the requirement (in section 89(1)[22]) for an authority to satisfy itself that a renewal area is the most effective way of improving the living conditions in the area (retained as necessary protection);
  • the requirement (in section 89(1)) to carry out a social and economic assessment before declaring a renewal area (retained as necessary protection);
  • the requirement (in section 89(6) and (7)) to consult publicly (new burden);
  • the requirement (in section 89(5)) to have regard to any guidance issued by the Secretary of State (reenacted burden; see also "Necessary protection" below);
  • the requirement (in section 91) to publicise the renewal area declaration (new burden);
  • the requirement (in section 92) to publish regular updates on the action proposed or taken in the area (retained as necessary protection);
  • checks on local authorities' enforcement powers (in relation to its compulsory purchase powers) in sections 93, 94 and 97 (retained as necessary protection);
  • the requirement (in section 95) to notify and consult local residents on a decision to exclude land from, or wind up, a renewal area (new burden).

31. In addition, a further amendment relating to renewal areas will be made. Currently, legislation specifies that a renewal area must last 10 years. This provision will be replaced by a requirement (in section 89 (1)) for authorities to declare the period for which the area will be a renewal area, and a power for authorities to extend that period, by resolution, if they consider it appropriate.

Burdens in respect of renewal areas: proportionality

  32. Where a safeguard above is marked "retained as necessary protection", the Order leaves the original legislation substantially unchanged, and the proportionality test does not have to be met. Those safeguards marked "reenacted burden" or "new burden", however, must be proportionate to the benefit expected to result from their creation or enactment.[23] In each case apart from that requiring authorities to have regard to any guidance issued by the Secretary of State, which is substantially unchanged from the burden imposed by the current legislation, the burdens imposed by the Order are less onerous than those imposed by the current legislation (being designed to achieve the same end but in a less prescriptive manner). The benefit expected to result from the creation of these new burdens, and from the reenaction of the requirement to have regard to guidance, is the maintenance of necessary protection of individuals against the misuse of the power to declare renewal areas. The burdens do not appear to us to be disproportionate to this benefit.

33. The explanatory memorandum presents the amendment relating to the specification of the duration of a renewal area (see para 31 above) as a new burden. We suggest that this provision, which gives authorities discretion to decide upon the period for which the area will be a renewal area, and the power to extend that period if they consider it appropriate, could be regarded not as a new burden, but as a reduction of the burden represented by the imposition of a 10-year period which cannot be altered. If that is the case, the provision does not have to meet the "proportionality" test. Nevertheless, the Department argues that "it is important in terms of confidence and expectations that both residents and private interests (e.g. lenders, business, investors) within the area know how long the authority intends to commit to the area"; and that such knowledge constitutes the benefit expected to result from the imposition of this burden. As such, insofar as this provision can be considered to impose a new burden, it does not appear to us to be disproportionate.


  34. A number of further new burdens would also be imposed by the proposed Order. These new burdens take the form of limitations on the exercise of the powers conferred by the Order, and may be either entirely new burdens, such as the requirement to publish a policy on housing renewal assistance; or represent extensions to new areas of existing burdens, such as the requirement for an authority to satisfy itself that the owner of the living accommodation concerned has consented to the carrying out of assisted works (a requirement which currently applies to grants, but which would be extended to any assistance given under the new general power). Those burdens are as follows:

  • Consent to works: The Order would require that authorities must be satisfied that the owner of the living accommodation concerned has consented to the carrying out of assisted works.
  • Variation of scheme: The Order would require that authorities must seek the consent of those concerned if they want to vary, or require the variation of, assistance or works.
  • Provision of information: The Order would give authorities the power to require an applicant to provide information to support their application for assistance (e.g. proof of ownership, financial details and contractors' estimates) or to prove, after assistance has been given, that they are complying with conditions that the local authority has set. This may constitute a burden on the individuals concerned.

1   Copies are available to Members from the Vote Office and to members of the public from the Department for Transport, Local Government and the Regions. It is also available on the Cabinet Office website http://www.cabinet­ regulation/act/proposals.htm. Back

2   Standing Order No. 141(2). Back

3   Where a criterion specified in the Standing Order does not appear in this Report, there are no matters which we wish to raise under that heading. Back

4   in England and Wales: the Order would not apply to other parts of the United Kingdom.  Back

5   Explanatory memorandum, Ch. 3, p.10. Back

6   Explanatory memorandum, Chapter 4. Back

7   Article 3(1). Back

8   Explanatory memorandum, p.20. See also Annex G, which comprises a draft outline of the proposed guidance. Back

9   Fourth Report, Session 2001-02 (HC 583). Back

10   Appendix 2, s.4. Back

11   Appendix 6. Back

12   Appendix 7. Back

13   See paras 31 and 33 below. Back

14   Explanatory memorandum, pp.19-20. Back

15   Appendix 1, para 3. Back

16   Appendix 2, para 3. Back

17   For further details, see chapter 6 of the explanatory memorandum. Back

18   See p.9 of the explanatory memorandum. Back

19   Further detail on each of the points below may be found in chapter 7 of the explanatory memorandum (pp.27-28). Back

20   In addition to those in current legislation left untouched. Back

21   For further detail on the provisions relating to renewal areas, see chapter 8 of the explanatory memorandum. Back

22   References, here and below, are to the 1989 Act as it would be amended by the Order. Back

23   Regulatory Reform Act 2001, s1(1)(b) and (c). Back

24   For an outline of the proposed guidance, see Annex G of the explanatory memorandum. Back

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