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
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