Select Committee on Deregulation and Regulatory Reform Sixth Report


Reply from the Local Government Association to the Clerk of the Committee

Proposal for the Regulatory Reform (Housing Assistance) (England and Wales) Order 2002

Thank you for your letter of the 17th of January. Please find below our outline response. We would be pleased to expand on these issues should more detailed comment be required.

The question of set up costs is not straightforward. These welcome changes have been born of very specific and substantial problems, which authorities faced, across the country. The flexibilities and responsibilities that the changes give to authorities are substantial. In these authorities the start up costs will reflect the scale of the problem the changes have been designed to meet. These costs will include and cover the following broad issues.

Research, Consultation and Publicity

The Best Value regime would expect authorities to be fully aware of the scale of the issues in their area. However for some authorities these changes will, also, entail a comprehensive survey of property that goes substantially beyond that which Best Value would require. Authorities will also need to consult consumers and anecdotal information derived from Members' surgery, although invaluable, may be insufficient to gain a sense of what customers will be looking for. Once these issues have been processed into a reliable policy and taken through the democratic process there will need to be substantial publicity at all these stages to ensure consistency with all parts of the community. Authorities will certainly want to go further, with publicity, than the draft guidance suggests. All these issues entail new cost.

In other authorities all these issues will be a significantly less apparent and costs will be much lower and the perceived issues will have a lower corporate priority so start up costs will not feature to the same degree.

New Systems and Processes

Major policy changes will entail significant new systems being established and the robust processes to ensure effective switchover. In reality this will probably be a phased changeover but, in any event, will have to be made in a year, so realistically staff with appropriate knowledge will have to be seconded and replaced. These costs will need to be met. However balanced against that will be the possibility of using means testing in a more creative way than at present. This could, possibly, reduce some costs.

It is therefore very difficult to give a clear and nationally uniform answer to this question. Although we understand that member authorities have provided the DTLR with specific figures and these represent good examples of the kind of costs that authorities might face.

The existence of the Best Value regime and the requirement to produce a housing strategy would also appear to suggest that the changes will be part of an authorities normal, strategic, annual, processes and that additional costs should not be significant. However, once again, those authorities facing the largest problems will require the greatest concentration of staff resources to address both the Best Value report and the effective solutions to impact upon the Best Value findings. The changes afforded by the regulatory reform give the new opportunities provided the human resources and professional expertise can be made available. Additional costs to maximise the effective benefits of the changes are therefore inevitable.

There is also the influence and pressure from other Government policy on authorities. The commitment to realising the Decent Homes Standard has led, in many cases, to a year on year reduction in the Private Sector Programme. The authorities that are most in need of this policy are often the ones that have the most difficult choices to make.

We accept the point that many authorities may lack the internal expertise to give advice on the matters under discussion. The LGA has been engaged in discussion with the Council of Mortgage Lenders, Home Improvement Trust and Aston Reinvestment Trust over the development of Loan Products and Funding. It is recognised that the co-operation of the Private Sector will be essential to the success of these changes. As a result of preliminary meetings lenders are now engaged in specific case studies with some leading authorities in an effort to develop products that would be beyond the means of the authorities on their own. This work is at an early stage but it recognises the strategic relationships and the greater and more regular level of contact that has been established, through the LGA, between authorities and lenders. For the commercial lenders maintaining such policies as part of a broad strategic package of regeneration will be an essential element as will consistency in delivery.

There is also the possibility of establishing buffer organisations, between the local authorities and the lenders. Again Aston Reinvestment Trust and Home Improvement Trust feature as examples of the kind of "not for profit" organisations that could be attractive to authorities, lenders and the Government. At the instigation of the LGA preliminary discussions have taken place between interested parties and it may be that an innovative formula and relationship will emerge that will be acceptable to the Government and to other bodies, including the Financial Services Authority. However this work is also at an early stage.

Against this background it is possible to see why giving precise figures on start up costs, that could be applied generally, would not be empirically reliable. However it remains the case that assistance from the Department on start up costs would serve only to ensure maximum efficiency. Many authorities are keen to make use of these new powers. The strategic and policy value that the Government's core commitments will derive from this initiative would amply justify assistance with the initial costs of getting the changes under way.

The Local Government Association will be pleased to assist the Committee further should Members so wish.

John Austin Locke
Policy Officer
Education and Social Policy

28 January 2002

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