SEVENTH REPORT
The Regulatory Reform Committee has agreed
to the following Report:
PROPOSAL FOR THE REGULATORY REFORM (SCHEMES
UNDER SECTION 129 OF THE HOUSING ACT 1988) ORDER 2003
Report under Standing Order No.
141
1. The Regulatory Reform Committee has examined the
proposal for the Regulatory Reform (Schemes under Section 129
of the Housing Act 1988) Order 2003 in accordance with Standing
Order No. 141. In order to provide some degree of certainty for
those affected, we are making a report of our assessment of the
proposal against the statutory and Standing Order criteria now.
However, some 14 days of the period for Parliamentary consideration
still remain, during which time we may yet receive further representations.
We will therefore make our formal recommendation to the House
later in the 60 day period.
2. We understand that the proposal will be revised
before a draft order is laid before the House. On this basis,
our intention is to recommend that the proposal should be amended
before a draft order is laid before the House. Our report on the
evidence before us is set out below.
Introduction
3. On 10 December 2002 the Government laid before
Parliament the proposal for the Regulatory Reform (Schemes under
Section 129 of the Housing Act 1988) Order 2003 in the form of
a draft of the order and an explanatory statement from the Office
of the Deputy Prime Minister (the Department).[1]
The proposed regulatory reform order would amend section 129 of
the Housing Act 1988 (the 1988 Act) by removing the requirement
for local housing authorities in England to obtain approval from
the Secretary of State where they wish to operate a scheme providing
for payments to assist tenants in obtaining other accommodation.
Such a scheme is known as a cash incentive scheme.
4. 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]
5. Our discussion of matters arising from our examination
is set out below. Where a criterion specified in Standing Order
No. 141(6) is not discussed in this report, this indicates that
we have no concerns to raise about that criterion. In the course
of our examination, we requested further information from the
Department about a number of matters. The Department's response
is discussed in paragraphs 14, 26 and 27, 29, 32, 34 and 40 below.
Background
6. Section 129 of the 1988 Act enables a local housing
authority to make a cash incentive scheme. Under such a scheme,
an authority may choose to make cash grants to qualifying tenants
or licensees of the authority for the purpose of freeing up existing
council housing for households in housing need. Cash grants may
be made for:
(a) purchasing properties on the open market,
and/or
(b) carrying out works to an existing house
to provide additional accommodation.
In 2001/02, 56 local housing authorities ran schemes
and made a total of 670 grants.[3]
In 2000/01, 827 grants were given in England totalling approximately
£11 million.[4]
The Department states that cash grants made under (b) are rare.
7. Under section 129, a local authority must have
a scheme approved by the Secretary of State before implementing
it (the section 129 requirement). At the time at which the section
129 requirement was introduced, schemes in England were partly
funded by central government grant, meaning that central government
had a direct financial interest in their operation. This is no
longer the case, as discussed in paragraph 9 below.
8. The information that should be included in a scheme
is specified in guidance notes issued by the Department from time
to time.[5] The consultation
document on the proposal states that, generally, the Secretary
of State requires as a condition of his approval that applicants
must be local authority tenants with at least two years' public
sector tenure. Authorities in London and the east and south-east
of England may offer grants of up to 80% of the average right
to buy discount in their area. These authorities may also pay
grants of £13,000 or more; in these cases the Secretary of
State will generally require as a condition of approval that the
applicant has been a public sector tenant for a minimum of five
years. Authorities elsewhere in England may offer grants of no
more than £10,000. It is for each local authority to consider
what level of grant would be appropriate; grants can be made at
a flat rate or may vary according to the size of the accommodation
released.[6]
Purpose of the proposal
9. The proposal would remove the section 129 requirement
in respect to England, so that the Secretary of State would not
have to approve schemes. The position in respect of Wales is discussed
in paragraphs 12 to 14 below. The Department considers that the
section 129 requirement is no longer needed because, in 1999,
the part-funding of cash incentive schemes by central government
grant ended, as part of a Government drive to reduce support provided
to local government in "ring-fenced" form for specific
schemes. The Government considers that reducing ring-fencing provides
local authorities with greater freedom to determine how they can
make best use of available resources to address local needs and
priorities. As a result, central government no longer has a direct
financial interest in the operation of cash incentive schemes.
Timing of the proposal
10. Shortly after the proposal was laid, the Minister
of State for Housing, Planning and Regeneration wrote to us, seeking
our co-operation in reporting to the House on the proposed order
as soon as possible. The Minister would like the proposed regulatory
reform order to be in force by 1 April 2003, so that local authorities
can run their schemes for 2003/04 without the need to have them
approved by the Secretary of State. The Minister acknowledges
that "the timetable is extremely tight". The 60 day
statutory period expires on 7 March; the first day on which the
draft order could be laid will therefore be 10 March.[7]
Standing Order No. 141(15) then allows us 15 sitting days in which
to report to the House on the draft order.[8]
11. Taking the Minister's request into account, we
have reported on the proposal as soon as possible in the 60 day
statutory period. We undertake to report on the draft order as
soon as possible in the 15 sitting day period, although our ability
to do so will obviously be dependent on the Minister ensuring
that the draft order complies with the requirements of the Regulatory
Reform Act and takes account of the issues raised in this report.
Extent of the proposal's application
12. Although section 129 applies to both England
and Wales, the proposal would remove the section 129 requirement
in relation only to England, and not to Wales. The National Assembly
for Wales exercises the Secretary of State's section 129 power
in Wales, in accordance with the Transfer of Functions Order;
consequently, if the proposal were to apply to Wales, it would
require the consent of the National Assembly.
13. In the explanatory statement, the Department
states that the proposal would apply only to England because "the
Secretary of State considers that it is probable that approval
[from the National Assembly] would not be forthcoming".[9]
The Secretary of State's assessment appears to be based on a decision
by the National Assembly's Minister for Finance, Local Government
and Communities, cited in the explanatory statement, that the
National Assembly "should not agree" to the proposal
extending to Wales, in view of the comparatively little use made
of such schemes in Wales.[10]
Currently, only one scheme has been made in Wales under section
129. Additionally, the Department notes the opinion of the Wales
Office that, as very little use is made of section 129 in Wales,
there is no significant benefit to be gained from the application
of the proposal to Wales.
14. We asked the Department to elaborate on the statement
that the National Assembly "should not agree" to the
proposal extending to Wales. We also asked the Department to provide
further details of the consultation process it undertook with
respect to the National Assembly. The Department stated that the
National Assembly considers that the proposal should not seek
to cover Wales because of "greater priorities for the Assembly's
time".[11] This
assessment appears to be based on the minimal use made of cash
incentive schemes in Wales. We are satisfied that the Department
undertook appropriate consultation with respect to the National
Assembly for Wales.
Assessment of the proposal against
Standing Order No. 141(6) criteria
15. Before setting out our assessment of the proposal,
we wish to comment on the adequacy of the explanatory statement
accompanying the draft order. We consider that the quality
of the explanatory statement is unsatisfactory. It addresses
the requirements of section 6(2) of the Regulatory Reform Act
in a muddled fashion and, in respect of requirements relating
to burdens, undertakes only a superficial analysis of whether
these are in fact met. We are concerned that the Department has
brought forward a proposal for a regulatory reform order on the
basis of what appears to be an inadequate analysis, particularly
given the Minister is seeking to have priority given to the progress
of the proposed order. We expect any future explanatory statements
from the Department to address the requirements of the Regulatory
Reform Act in a much more satisfactory manner.
Inappropriate use of delegated
legislation
16. The proposal appears to be appropriate for
delegated legislation.
Removal or reduction of burdens
17. We are satisfied that the proposal removes
a burden imposed on local housing authorities in England.
As it is currently drafted, we consider that the proposal re-enacts
a provision which imposes a burden on local housing authorities
in respect of Wales. However, the Department has informed us that
it intends to revise the proposed order in such a way that it
will no longer re-enact a burden in respect of Wales. If the
proposed order is revised in the way indicated by the Department,
we consider that the proposal would no longer re-enact a provision
having the effect of imposing a burden on local housing authorities
in Wales.
1 Copies of the proposal are available to Members
of Parliament from the Vote Office and to members of the public
from the Department. The proposal is also available on the Cabinet
Office web site http://www.cabinet-office.gov.uk/regulation/act/proposals.htm Back
2
Standing Order No. 141(2) Back
3
See the explanatory statement,
para 5.3; it is not clear whether this figure applies only to England
or whether it includes Wales. Back
4
Explanatory statement,
Appendix B, para 2.6 Back
5
See Appendix C of the
explanatory statement for a copy of the most recent guidance note. Back
6
Explanatory statement,
Appendix B, para 2.3 Back
7
The 60 day statutory
period is provided for in section 8(2) of the Regulatory Reform
Act. Back
8
We anticipate that this
period will expire on 28 March. Back
9
Explanatory statement,
para 4.1 Back
10
Explanatory statement,
para 4.2 Back
11 Appendix,
para A1 Back
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