Cicero Policy Briefer

Issue 3, August 2006

Ten years in the making: What happened to HIPs?

By Roger Harding

Fewer policies seemed so entrenched within the Government's programme than Home Information Packs. A reference was made to them in the 1997 election manifesto, they were researched and piloted in 1999, proposed in 2000, relaid at the start of 2004, passed into the statutory books in late 2004, had their Draft Regulations laid just a few weeks ago and are less than a year from implementation. Almost a decade in the planning – and then, with the whisper that is a Written Ministerial statement, they are suddenly to all intents and purposes scrapped.

Where did it all go wrong?

Firstly, did the long gestation period make the birth of HIPs less likely? When the policy was first conceived back in the mid-to-late 90s, the housing market looked very different. Local searches weren't electronic (and could therefore take weeks), and the mortgage application process was slow. Regardless of HIPs, the longer we went on the quicker the whole process got—and continues to do so with the near arrival of Automated Valuation Models. At the same time as the costs crept up, the benefits began to slip away.

Secondly, did the DCLG (and the ODPM before it) do enough planning to make their case? Since 1998 they had commissioned several research reports into HIPs from academics and professional researchers, and they had even conducted a small pilot in Bristol. Yet with less than a year before mandatory national implementation, the DCLG could not accurately say what the impact might be on the economy, had not piloted the scheme on a mandatory basis, had not piloted HIPs to iron out any procedural failures and had only seen just over 200 home inspectors pass their qualification.

So why did they strip the Home Condition Report (HCR) from the mandatory HIP?

The answer would seem to be that the pressure simply became too high, too prolonged, too wide-ranging and too vocal to ignore. Concerns from some estate agents, surveyors, lawyers and lenders had been hanging around HIPs for some time, but no Government will overly fear voter retribution if these market structures change or those costs increase (even if they are eventually passed on to consumers). But, three months ago, the volume of concern began to further increase—and, crucially, began to reach consumers. The media began questioning whether the number of home inspectors needed for implementation would be trained in time.

This triggered the wider Government concern. But why remove the HCR? Surely this highlighted a greater departmental failure?

There’s a couple of things one would be wise to avoid in current government politics: troubling the Treasury (the most powerful since the war, and one which shadows every Government department), and troubling the housing market (the backbone of Labour’s sustained electoral appeal has been their reputation as a safe pair of hands with the economy). So if you manage to combine both of these…

With the pressure already building, the news came that HIPs could damage the economy by causing a decline in housing sales. Research commissioned by GMAC-RFC and conducted by respected analysts Oxford Economic Forecasting revealed that if HIPs led to a reduction in housing transactions this would lead to a fall in employment, GDP and Government tax-take. Not good news for the Treasury’s accounts and, given that the policy would start in June 2007, not good news for the head of the Treasury’s leadership and premiership ambitions.

HIPs had by this time become a consumer issue, perhaps highlighted best when the issue dominated a Daily Mail front page with the headline “AXE THE HOME SELLER PACKS”. Now they were gaining increasing media coverage, the Conservatives in the House began to further pile on the pressure and the Treasury ordered a review. This was inevitably too much pressure for a policy with decreasing benefits to bear, and down came the HCR.

Is this the end of HIPs?

Not quite. They will remain with some searches and an energy efficiency report. However, this is less a HIP and more an Energy Efficient Report Plus. The main part of the HIP has been removed and it is hard to see it being reinstated. The Government risks going through this process all over again—and more importantly, who wants to train as a Home Inspector now?

Even if policies have gradually been entrenched over years and have the full backing of Government, if they have flaws—particularly those close to consumers and the Treasury’s hearts—there is still always the potential that they can be dropped.

Roger Harding can be contacted on +44 (0)20 7665 9536 or click here to email.

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