Appendix
Letter from the Office of the Deputy Prime
Minister to the Committee Specialist
Proposal for a draft Regulatory Reform (Schemes
under Section 129 of the Housing Act 1988) Order 2003: request
for further information
Q1. Can the Department elaborate on its
statement that the National Assembly for Wales' Minister for Finance,
Local Government and Communities has decided that the National
Assembly "should not agree" to the proposal extending
to Wales?
A1. Both the National Assembly (NAW) and
the Wales Office were consulted about the inclusion of Wales in
this proposed RRO. Under s.1(5) of the Regulatory Reform Act 2001,
an order removing a function of the NAW requires their consent.
The formal response from the officials in NAW stated that their
Minister for Finance, Local Government and Communities "has
decided that, in view of the comparatively little use made of
the scheme in Wales, the proposed Regulatory Reform Order should
not seek to cover Wales". This primarily reflected
their view that, given that the scale of the current burden (only
one authority affected), there were greater priorities for the
Assembly's time.
Q2. Can the Department provide further
details of the consultation process it undertook with respect
to the National Assembly?
A2. The first contact with the NAW about
the proposed deregulation of schemes under section 129 was made
in early January 2002. This explained that ODPM Ministers were
considering ending the requirement for authorities to obtain approval
for such schemes, provided some background to this and explored
the process for establishing whether the deregulation should apply
to Wales. On 30 January 2002 officials in the Department wrote
to HM Treasury seeking their agreement to proceed with the deregulation.
The NAW was copied in on this correspondence. There were further
contacts at official level before the NAW's formal response in
June which indicated that the National Assembly's Minister for
Finance, Local Government and Communities had decided that, in
view of the comparatively little use made of the scheme in Wales,
the Order should not seek to cover Wales. The proposal to proceed
with deregulation but not to cover Wales was cleared with Ministers
through DA and LP Committees. The NAW have been consulted on the
draft order and the associated explanatory statement. Consultation
also took place with the Wales Office who wrote to the National
Assembly's Minister for Finance Local Government and Communities
saying it would be more efficient if the regulatory reform order
related to England .
Q3a. What benefit is expected to result from
the re-enactment of the section 129 requirement that local housing
authorities must obtain approval from the National Assembly of
Wales to operate a cash incentive scheme?
Q3b. Is this benefit proportionate to the
burden imposed on local housing authorities by section 129?
A3. The aim of this order was to remove
the burden in England and to maintain the status quo in Wales
rather than to re-enact the provision and, therefore, re-impose
the burden in Wales. However, given that the Committee clearly
takes the view that s.1(1)(b) of the Regulatory Reform Act 2001
is engaged, it has become necessary to consider how best to address
the problem.
Before making an order that was intended only to
affect burdens in England, the Department had to consider whether
it was appropriate to do so. It is accepted that there is no difference
between housing authorities in England and Wales in the limit
on an authority's statutory powers to make schemes under s.129
of the Housing Act 1988 arising from the need for the Secretary
of State's approval or in the case of authorities in Wales that
of the National Assembly In Wales, only one authority is currently
operating a scheme under section 129. The NAW concluded that the
current legislation didn't represent a significant actual burden
for all authorities and in the light of this concluded that there
were greater priorities for the Assembly's time. Ministers concluded
that the approval requirement should be removed only in respect
of authorities in England.
Given that housing functions have been devolved to
NAW, it is difficult to see how the Secretary of State can be
sufficiently informed to take a view on the effect of re-imposing
the burden (and whether or not the burden would be proportionate
to the benefit) without requesting detailed evidence from the
National Assembly. In the circumstances it has therefore been
decided to re-draft the order so as to give effect to the proposal
on which consultation took place, while avoiding the making of
a provision which will in the opinion of the Committee involve
the exercise of the power in s.1(1)(b). A copy of the re-drafted
order is attached. The Department apologises for any lack of clarity
caused by its failure to be more precise in the Statement as to
its view of the law.
Q4. When is it intended to issue the
good practice guide referred to in paragraph 8.4 of the explanatory
statement?
A4. We intend to issue a non-statutory guidance
note to local housing authorities in February 2003.
Q5. Does the Department intend to undertake
any monitoring of cash incentive schemes to establish whether
they are following good practice? If so, how and when will that
monitoring be undertaken?
A5. Information on the number of cash incentive
scheme grants, total expenditure and average value of a grant
will continue to be available from the regular returns that authorities
provide on housing capital expenditure. The Government is keen
to promote greater use of the Cash Incentive Scheme by authorities
in high demand areas and this will involve discussions between
Government Offices and authorities about the operation and structure
of schemes. Although there are not as yet any detailed plans in
place, we will want to carry out some analysis of the impact of
deregulation over the next 18 months.
Q6. Would the Department consider it
appropriate for a local housing authority not to continue carrying
out means testing? If not, what sanctions would there be against
an authority which did not carry out means testing?
A6. Local authorities will, as now, need
to be able to be satisfied that any grants made are appropriate
and represent good value for money. In the context of CIS grants
this should involve ensuring that an applicant can afford to sustain
home ownership and that they do not have sufficient resources
to purchase a property on the open market without the grant. We
would not expect any authority to run a scheme without a mean
test but there would not be any sanctions, other than general
administrative law principles on reasonableness, including those
relating to an authority's fiduciary duty, and the need to satisfy
auditors about financial prudence and propriety. There is no statutory
requirement to means test in relation to renewal grants paid to
improve poor conditions in private sector housing following the
recent deregulation in that area Although the present approval
requirement ensures that means testing is carried there are no
specific details which need to be met. This means that authorities
have considerable flexibility over what they do now.
Q7. Can the Department clarify whether
it considers that the proposal would result in savings in local
housing authorities' staff time, given the apparently contradictory
statements in the consultation document and the explanatory statement?
Did the re-assessment in the explanatory statement arise as a
result of the consultation responses?
A7. The reassessment in the explanatory
document arose from additional information provided by some authorities
in the consultation process. However it is still the case that
the Order will remove a burden from local authorities. Our consultation
document recognised that authorities would still need to spend
time working up schemes and operating schemes that the administrative
savings would be small. There will also be benefits to authorities
in terms of the delays in starting up are amending schemes linked
with the approval process and the flexibility to tailor schemes
more to local circumstances.
Q 8. Does the Department stand by its assessment
that, if the proposed draft order were made, government regional
offices would save around ten person days a year, given the issues
raised about monitoring cash incentive schemes to establish whether
local housing authorities are following good practice (set out
under "Whether the proposal continues all necessary protections",
above).
A8. Yes. The estimate relates to the savings
in the administration of applications for approval, and in dealing
with requests for information (from authorities and tenants) about
the approval arrangements. General issues about the role of CIS
as part an authority's overall housing strategy will continue
as now.
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