Drawing special attention to: various orders and regulations - Merits of Statutory Instruments Committee Contents


First Report


We drew attention to the exceptionally high volume of "last-minute" instruments being laid in our 11th and 17th reports of the last session.[1] This trend continued right up the very end of the Parliament with over 60 SIs laid in the final few days. These could not be scrutinised until our first meeting of the new Session was convened - this meant that the majority were already in effect before the Committee could consider them. This is undesirable. We once again ask Departments to plan their legislation better to avoid significant regulations coming into effect during a recess.

Instruments Drawn To The Special Attention Of The House

The Committee has considered the following instruments and has determined that the special attention of the House should be drawn to them on the grounds specified.

A.  Employment and Support Allowance (Transitional Provisions, Housing Benefit and Council Tax Benefit) (Existing Awards) Regulations 2010 (SI 2010/ 875)

Summary: These Regulations enable the migration to Employment and Support Allowance (ESA) of the majority of people currently receiving incapacity benefits, allowing simplification of the administration of such benefits. Over the period October 2010 to March 2014 all those with existing claims for incapacity benefits will be reassessed using the new Work Capability Assessment. The Department estimates that 23% will be found fit for work and will be required to make a new claim for Jobseeker's Allowance (JSA) with its obligation to participate in activities to improve job prospects. The rest will be moved across to ESA. The Social Security Advisory Committee has expressed particular concerns about the Department moving ahead with the initiative without a solid evidence base for either the decision to migrate or the proposed migration arrangements as it believes that DWP has underestimated the support required by this vulnerable group of claimants. The evaluation of ESA for new claimants, the first phase of the programme, will not be complete until 2011 by which time the proposed migration arrangements will have commenced. The Merits Committee shares those concerns but notes that the current instrument does not take full effect until October 2010, which allows the incoming Secretary of State some time for reflection: the House may wish to monitor closely how he addresses this programme.

These Regulations are drawn to the special attention of the House on the grounds that they give rise to issues of public policy likely to be of interest to the House

1.  These Regulations have been laid by the Department for Work and Pensions (DWP) under the provisions of the Social Security Contributions and Benefits Act 1992, the Social Security Act 1998, the Child Support Pensions and Social Security Act 200 and the Welfare Reform Act 2007 along with and Explanatory Memorandum (EM) and an Impact Assessment (IA). A report from the Social Security Advisory Committee (SSAC), a statutory consultee, was published as an Act Paper on the same day.

2.  These Regulations continue the programme of reform of Social Security Benefits by providing for the migration to Employment and Support Allowance (ESA) of the majority of people currently receiving benefits on the grounds of incapacity. Over the period 1 October 2010 to end March 2014 all those with existing claims for incapacity benefits will be reassessed using the new Work Capability Assessment, some (an estimated 23%) will be found fit for work and will be required to claim Jobseeker's Allowance (JSA) with its obligation to participate in activities to improve job prospects. Those found unfit for work through physical or mental incapacity will be moved across to ESA. Eventually the existing schemes such as Incapacity Benefit, Severe Disablement Allowance and Income Support will be wound down thus simplifying the administration of such benefits.

3.  The Committee has seen a succession of regulations aimed at the reform of benefits and while welcoming the overarching policy intention of simplifying the system, the Committee has previously questioned some of the practicalities of its implementation - in particular whether Jobcentre staff have the capacity to absorb the pace of change and whether the DWP's original plans had been sufficiently adapted to take the sudden rise in general unemployment generated by the recession into account.[2] These Regulations inspire similar questions.

4.  In order to achieve the migration of the 2.3 million customers currently on incapacity benefits to ESA within the planned timescales around 10,000 cases per week will need to be processed. We have previously questioned the robustness of DWP's plans for the transition of claimants of other benefits into ESA and JSA; the answers to the specific questions raised about the latest Regulations are contained in Appendix 1. Although DWP's quality of explanation in the EM has improved to a degree, we are still disappointed to find that significant information is only included in the Act Paper or has been received in response to our supplementary questions. For example we learn from Q11 that migration cases will not be processed by normal Jobcentre Plus offices, but by Benefit Delivery Centres. There will be about 20 Benefit Delivery Centres that will process migrated cases which would equate to around 450 claims per week per site.

5.  Despite this new information our concerns over whether Jobcentre staff will have sufficient capacity to process the transition to this timetable remain, as the whole chain of events needs to be considered. As the response to Q18 confirms, those found unfit will have their claims automatically moved across to ESA but those found fit will have their incapacity claim terminated and will need to make a new claim for JSA. In addition to the sheer numbers involved in the influx, many of these customers will have special needs which will put additional burdens on Jobcentre staff if they are to be handled appropriately. Following the first phase of assessment it was concluded that 38% of new ESA claimants were found to be fit for work (Para 18 of the IA). Para 19 of the IA indicates that because this figure was significantly higher than anticipated, DWP is revising its estimates of those likely to be found to be fit for work during phase 2 from 15% to 23% but there is no indication of how robust this assumption may be.

6.  From those former incapacity claimants assessed as fit for work it is expected that around half will go on to claim JSA. The Department recognises that claimants with a health condition or disability moving to JSA following the Work Capability Assessment may need additional support, but DWP is yet to decide exactly what form this will take. (Appendix A1, Answer 4) Although the answer to Q12 indicates what flexibility will be given to those with mental health or learning difficulties[3], for example an additional 15 minutes per caller for those who attend Jobcentre Plus offices in person.

7.  The report from the SSAC highlights concerns about the delivery of the current ESA and JSA regimes that cast doubt over the Department's ability to process this number of claimants appropriately. The SSAC conducted a consultation on the proposals and the majority of the respondents expressed concerns over the quality of the Work Capability Assessment (paragraphs 100-107, Act Paper page 20). Additionally, in the initial phases DWP contractors have not been able to deliver the assessments within the target deadline; the proportion completed within 13 weeks has increased from 19 per cent to 48 per cent, and DWP express confidence that due to changes in its arrangements with its contractor Atos and the way assessments are conducted this improvement will continue into the future.

8.  At the same time as the migration project both the Work Capability Assessment regimes and the Pathways to work regime are being evaluated and modified (paragraph 8.6 of the EM). In response to our question whether staff will have the ability to absorb so much change, the Department states that "ESA was always intended to be dynamic" and "DWP staff are well used to implementing change as part of a system which is subject to continuous improvement." (Appendix 1, Answer 14). DWP also state in response to Q17 that they monitor the overall burden on their staff from accumulated change and on that basis they are confident that Jobcentre Plus does have the capacity to deliver the programme within the timetable set, but no evidence is provided to support that assertion.

Unintended consequences?

9.  Paragraph 7.5 of the EM reiterates the Government commitment that "no incapacity benefits customer who qualifies for ESA will see a cash reduction in their benefit at the point of migration".[4] However the SSAC noted that the migration may result in consequential changes, particularly in respect of the taxation of the income, that may result in the individual actually having less money. (Paras 5-12 Act Paper pages 3-4) DWP acknowledge that they need to consider this matter further with HM Revenue and Customs but say "this is not something that needs to be resolved for these regulations as they do not provide for the taxation of benefit income." (Appendix 1, Answer 9), which again raises concerns that DWP are not looking sufficiently broadly at the impact of their regulations when formulating them.

Unknown consequences

10.  This strengthens the Committee's view that, from the limited evidence we have seen, a major project with a potential impact on the lives of some of the most vulnerable in the community is being conducted in a rather ad hoc fashion. The second phase is being rolled out before the first has been evaluated and although better information will be sought on the outcomes, the Department's intended course of action, and evidence to support it, all seem rather vague.

11.  In paragraph 24 of the Impact Assessment it is stated that customers who are found fit for work will have their entitlement to incapacity benefits ended and will be able to claim another benefit or appeal. Of those found fit for work DWP estimate that:

·  50% will move onto Jobseeker's Allowance;

·  20% will move onto another benefit or reclaim ESA; and

·  30% will move off benefit.

12.  The Impact Assessment also asserts that as well as savings to the benefits system from these changes there will be individual health benefits from more disabled people returning to work. While this may be true for individuals, DWP's information on the current contribution of their policy in achieving this outcome is sparse. In response to our questions on what percentage of those ESA claimants sent down the JSA route obtained work, and what happened to the 30% who moved off benefits, DWP replied :

"The Department does not hold information centrally on whether people are moving from a claim for ESA via JSA and into work. The Department intends to carry out a qualitative piece of in-depth research on unsuccessful ESA claimants who do not qualify for ESA, have their claim closed, or withdraw their claim. The aim of this research is to provide further understanding of this group, to find out what happens to them, and what support could benefit them. It will help inform support for claimants who do not qualify for ESA and streamline ESA to JSA claims. Researchers who are experienced at contacting and interviewing 'hard to reach' groups will be used." (Appendix 1, Answers 5-7)

13.  The SSAC report raises concerns about whether what is being delivered is achieving the policy intention:

"It is of particular concern to the Committee that the Department is moving ahead with the migration of existing claimants of incapacity benefits without a solid evidence base for either the decision to migrate or the proposed migration arrangements. The Committee notes that the evaluation of ESA for new claimant is not planned to be complete until 2011 by which time the proposed migration arrangements will have commenced.

14.  The Committee believes that the Department has underestimated the support required by this vulnerable group of claimants in terms of both their participation in a more active benefit regime and the support required to move them closer to the labour market. With the Pathways model, as currently delivered and targeted, having been found to be largely ineffective and no alternative yet proposed, the Committee is concerned that the migration will neither be informed by evidence of how ESA is working for new claimants , nor supported by the sorts of services and programmes that these claimants will need if they are to comply with more demanding benefits conditionality" (Paras 134-5, Act Paper page 25).

15.  The Merits Committee shares those concerns. However, since the instrument was laid there has been a change of Government. Although the same objective of simplifying the system and reassessing all current claimants of Incapacity Benefit for their readiness to work was included in the Coalition Agreement (section 19) it is not yet clear whether the means of achieving that end will be the same. The legislation and therefore the supplementary questions asked about it remain valid but the answers should for now be regarded as transitional. The current instrument does not take full effect until October 2010, which allows the incoming Secretary of State some time for reflection: the House may wish to monitor closely how he addresses this programme.

B.  Home Information Pack (Suspension) Order 2010 (SI 2010/1455)

Energy Performance of Buildings (Certificates and Inspection) (England and Wales)(Amendment) Regulations 2010 (SI 2010/1456)

Summary: The changes to the Energy Performance Certificate regime are welcome, since by extending the longevity of the certificates from 3 to 10 years the new legislation corrects the defects the Committee identified in the way the previous system transposed the original Directive. Although this Committee has reported on Home Information Packs (HIPs) 6 times, more than on any other subject, because of enduring doubts that there was a mismatch between the stated policy objective and the proposed means of delivering it, we are concerned about the precipitate way the Government has acted to suspend them. While not necessarily dissenting from the Government's objective, the Committee would expect to see a more evidence-based consideration of the impacts of removing HIPs than the current explanatory material provides. Simply abolishing HIPs will not solve the well-known problems in the house-buying process, and we encourage DCLG to take up the offer to conduct positive discussions with the industry before bringing forward further legislation.

These regulations are drawn to the special attention of the House on the grounds that they give rise to issues of public policy likely to be of interest to the House.

16.  The Department for Communities and Local Government (DCLG) has laid the Home Information Act (Suspension) Order under section 162 of the Housing Act 2004, and the Energy Performance of Buildings (Certificates and Inspection)(England and Wales)(Amendment) Regulations under section 2(2) of the European Communities Act 1972. They are laid with a joint Explanatory Memorandum (EM) and Impact Assessment (IA). A supplementary Q& A briefing about the suspension of Home Information Packs (HIPs) policy is published on the DCLG website.[5]

What is being done

17.  The Home Information Pack (Suspension) Order ("the Order") suspends the requirement to have or provide a HIP when marketing a residential property from the date that the Order comes into force. The principal regulations, the Home Information Pack (No.2) Regulations 2007 ("the Principal Regulations") (SI 2007/1667) concerning the content and provision of HIPs will remain for the time being, but not in operation. The EM states at paragraph 2.2 the Government's intention to abolish HIPs altogether at the earliest opportunity, but this can only be done by primary legislation.

18.  The Energy Performance of Buildings (Certificates and Inspections) (England and Wales) (Amendment) Regulations 2010 ("the EPC Regulations") make amendments to the Energy Performance of Buildings (Certificates and Inspections) (England and Wales) Regulations 2007 (SI 2007/991) in consequence of the suspension of HIPs to preserve their operation, in conformity with the Energy Performance of Buildings Directive (OJ No L 1, 4.1.2003, p. 65). They also extend the validity of the Certificate from 3 to 10 years. In addition a new regulation 5A aims to improve compliance by requiring:

·  a seller of residential premises (where no such certificate is already available) to commission an energy performance certificate (EPC) before marketing of the property commences,

·  the person acting on behalf of the seller (usually the estate agent) to be satisfied that an EPC has been commissioned before commencing marketing,

·  both the seller and a person acting on their behalf to make reasonable efforts to secure an EPC within 28 days, and

·  Enforcement authorities to give a £200 penalty charge notice for breach of any of these duties.

19.  Both instruments breach the 21 day rule without providing any evidence of the harm that might occur if DCLG allowed the standard time for Parliamentary scrutiny to elapse. This period is also meant to allow the information about the changes in the law to be disseminated and to prevent inadvertent breaches of the new duties: in this case both sellers and estate agents overnight became liable to a penalty if they put a property on the market without an EPC having been commissioned and home sellers may not be able to claim a refund if they have commissioned HIPs unnecessarily. This is not best practice.

Why it is being done

20.  In paragraph 7.2 of the EM it states that "the Government believes that HIPs are an expensive and unnecessary burden and that they have not achieved their objective to improve the home buying and selling process for consumers." This Committee has reported on HIPs 6 times, more than on any other subject, because of enduring concerns that there was a mismatch between the stated policy objective and the proposed means of delivering it.[6] While not necessarily dissenting from the Government's objective, the Committee would expect to see a more evidence-based consideration of the impacts of removing HIPs than the current explanatory material provides.

21.  Paragraph 7.2 of the EM continues "The Government believes that HIPs have acted as a deterrent to people wishing to sell their homes and that their abolition will help aid the recovery of the housing market." Yet paragraph 41 of the Impact Assessment says the number of transactions is unlikely to be significantly affected by the removal of HIPs and paragraph 43 concludes that there will be very little impact on house prices. In paragraph 38 it notes that the suspension of HIPs shifts some costs back to the buyer and in consequence this adds another burden to first-time buyers. In paragraph 32 it states that, although the removal of HIPs could see an increase in sellers (who may benefit from the shift in costs), a large proportion of these additional listings may only be speculative sellers who are just "testing the waters". In each case the IA indicates that other economic factors will have a stronger influence on the decision to buy or sell property.

Costs and benefits

22.  Although critical of the existing HIPs regime, the House may wish to be persuaded that its overnight removal provides the most appropriate solution. The new government is not legislating in a vacuum, and the explanatory material gives little evidence of the benefits of the proposal. In addition precipitate action may exaggerate the negative impacts particularly on the providers of such packs, many of whom will have had their employment removed overnight. (The Association of HIPs providers (AHIPP) puts this figure at around 3,000 jobs lost and 10,000 affected, for example those who will have to modify their services ).

23.  The impact on providers is glossed over in the Impact Assessment saying they will have to compete more vigorously to provide better quality, value added products to homebuyers. But it is only made clear in the Q& A paper posted on the DCLG website that there will be no compensation provided to those affected. In response to a question about HIPs providers' qualifications now being redundant, DCLG write that there is work available to Home Inspectors who are accredited energy assessors in producing domestic EPCs which continue to be required for both sale and rental properties. However this is somewhat disingenuous when the EPC regulations simultaneously decrease the market demand by 2/3rds by extending the lifetime of such certificates from 3 to 10 years.

The way forward

24.  The Committee notes from paragraph 8.1 of the EM that the Government takes the view that no further consultation is needed because the abolition of HIPs was a manifesto commitment. We have observed many times the role consultation with interested parties has played in preventing flawed legislation and unintended consequences. The Committee notes that AHIPP and the Royal Institution of Chartered Surveyors (RICS), both key stakeholders in this matter, recognise in their comments[7] that HIPs have not effectively addressed the problems in the market and should be scrapped. Equally they both invite DCLG to begin constructive discussions with industry to formulate a policy that will be more effective and "not throw the baby out with the bathwater".

25.  This echoes the findings of this Committee's report on post-implementation review.[8] We note from paragraph 12.1 of the EM that the proposed evaluation of HIPs has been cancelled and are concerned that that DCLG risks losing valuable information on any beneficial aspects of HIPs or on any practical lessons that might inform future policy development in this area. We therefore trust that they will seek to capture this information, albeit in some modified form.

Conclusion

26.  The changes to the EPC regime are welcome, since the new legislation corrects the defects the Committee identified in the way the previous system transposed the original Directive. In particular it removes the "gold plating" by extending the longevity of the certificates from 3 to 10 years.

27.  The Committee notes DCLG's intention to permanently remove HIPs by means of primary legislation at the earliest opportunity: although HIPs have apparently failed to resolve the problems in the house buying process they were originally intended to address, simply abolishing HIPs will not solve those problems either. We therefore encourage DCLG to take up the offer to conduct positive discussions with the industry before bringing forward further legislation.


1   11th Report paragraphs 26-30; 17th Report paragraphs 20-21, both Session 2009-10. Back

2   Social Security (Work-Focused Interviews Etc.) (Equalisation Of State Pension Age) Amendment Regulations 2010 (SI 2010/563) 15th Report Session 2009-10 ; Draft Jobseeker's Allowance (Skills Training Conditionality Pilot) Regulations 2010 5th Report Session 2009-10; Social Security (Claims And Payments) Amendment Regulations 2009 (SI 2009/604); And Social Security (Transitional Payments) Regulations 2009 (SI 2009/609) 13th Report Session 2008-09; Social Security (Flexible New Deal) Regulations (SI 2009/480) 12th Report Session 2008-09; Draft Social Security (Lone Parents And Miscellaneous Amendments) Regulations 2008 30th Report Session 2007-08.

 Back

3   The IA indicates 43% of Incapacity Benefit claimants have mental or behavioural disorders Back

4   Commons Hansard: 20 Feb 2007, Col GC8-9 Back

5   DCLG Q & A on the Suspension of Home Information Packs

http://www.communities.gov.uk/housing/buyingselling/homeinformation/homeinfopackquestions/  Back

6   39th Report of session 2005-06;18th & 24th Reports of session 2006-07; 5th & 15th Reports of session 2007-08 and 3rd Report of session 2008-09 Back

7   AHIPP comment http://www.hipassociation.co.uk/node/1190; RICS comment http://www.rics.org/site/scripts/news_article.aspx?newsID=1470  Back

8   What Happened Next? 30th Report session 2008-09

 Back


 
previous page contents next page

House of Lords home page Parliament home page House of Commons home page search page enquiries index

© Parliamentary copyright 2010