Parliamentary Connections

One of the biggest governmental fiascos of recent years has to be the chaos that has enveloped the planned Home Information Packs. The smart money now has to be on them never seeing the light of day, although the energy certificates will have to be re-born to comply with European legislation. They, however, are essentially a sideshow.
This is one of those policy cul-de-sacs that governments occasionally back themselves into by making grand pledges to “improve” something that may have its faults, produces lots of grumbles and always creates the feeling that somewhere there is a better way of doing it but actually works, albeit imperfectly.
The key is that whatever is the sudden focus of a politician’s reforming zeal has been in place for a long time and isn’t obviously broken but gets a disproportionate amount of attention devoted to its imperfections, totally obscuring the fact that it works. The hidden trap is that it is something that doesn’t lend itself to perfection so they end up buying short term popularity that comes with long term grief.
The starkest example of being seduced by this folly of striving after perfection where it is truly the impossible dream is the Poll Tax. No-one particularly liked the old property rating system for funding local government but it largely worked. However, in the late 70s the Tories were desperate to embrace what they imagined were popular causes and so pledged to reform the rating system without having a clue how they were going to do it. Rather like Labour with is all too vague pledge to improve the house purchase process.
To cut a long story short, the Tories struggled to find a suitable replacement for the rates, then embarked on a huge assault on local government and its funding which exacerbated the anomalies in the existing system and, eventually, found themselves saddled with the Community Charge – the Poll Tax – because Mrs Thatcher could not contemplate a U-turn on her pledge to abolish the rates. Disaster and the end of Thatcher premiership were the result. Now we have something in the Council Tax that looks incredibly similar to the old rates.
Back to 2007 and we can see that one lesson Labour appears to have learnt is that when you look over the precipice you don’t have to jump.
They actually started pulling back from it in July last year when they dropped the home condition reports from the packs, probably the one element that most potential home buyers would see as potentially useful to them. From then on the packs looked to be just an additional burden and cost in the already fraught and expensive property selling process. It was such a flimsy construction that one assault by the Royal Institution of Chartered Surveyors brought it tumbling down.
The arrival of HIPs is, in theory at least, merely postponed but look for a ministerial champion and it is like watching rabbits scurry back to their burrows when the fox arrives for lunch. With the Gordon Brown new broom about to sweep over the horizon it looks as if HIPs will be swept under the carpet as quietly as possible. Given the opposition has never been a fan of them this is likely to happen with minimal fuss.

A decade is a long time in the worlds of politics and personal finance as was amply demonstrated yesterday when Andrea Rozario, chief executive of Safe Home Income Plans, the body the represents the equity release market, addressed the All Party Group.
SHIP was born out of the scandals in the equity release market that tarnished its reputation so badly in the late 1980s and early 1990s and has obviously done an extremely good job in turning round opinion. The last time the All Party Group tackled this subject was on the back of those scandals – concentrated around the mis-selling of a couple of Midlands building societies – and there were alot of extremely angry constituency MPs who wanted the market regulated out of existence. Eventually, some common sense prevailed and a compensation deal was brokered that gave the market breathing space to sort out the mess it was in. To its credit, it has made great strides in doing just that and has clearly won the confidence of politicians along the way.
Yesterday's meeting with SHIP was well-attended by the standards of all party group meetings and was attentive and positive, with MPs and peers of both main parties wanting to know what more they could do to help the market, especially in its difficult interface with the benefits system.
SHIP's introduction of a code of practice and requirements for training have clearly raised standards in the market, although I was disappointed that we didn't hear more about what happens when one of its members falls short of those standards: some figures on complaints and the processes for dealing with them would have been useful too beyond the referral of individual complaints to the FSA that its.. It was interesting to hear SHIP distancing itself from the emerging problems in the sale and rent back market which it clearly sees as having the potential to drag the whole equity release market back into the mire. It does offer some robust advice to consumers on this fraught topic, however, so it isn't sticking its head in the sand.
Ms Rozario was full of praise for politicians and regulators for understanding what the market had done to clean up its act but mildly critical of the media for not given it so much credit. The media is notoriously cynical about trade associations born out of market scandals, and rightly so given the track record of many, and it also has long memories. SHIP will have to be patient if it expects ringing endorsement on the personal finance pages as a decade is not always such a long time in the media.