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certainly want to go further, with publicity, than the draft guidance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
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
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
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
Education and Social Policy
28 January 2002