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Lords Committee criticises Ministry of Justice for law breach; calls for resolution timetable

21 July 2023

In its 47th Report of Session 2022-23, the cross-party House of Lords Secondary Legislation Scrutiny Committee comments on changes made by the Administration of Estates Act 1925 (Fixed Net Sum) Order 2023 (SI 2023/758).

The Order increases the fixed net sum, which is the amount that a surviving spouse or civil partner receives if a person who also has descendants dies intestate, from £270,000 to £322,000. The fixed net sum is designed to balance the interests of the surviving partner and the descendants. Increases in the sum should follow a mechanical process, set out in primary legislation, and which the Ministry of Justice (MoJ) must implement within 21 days of an inflation index rising by more than a certain percentage.

The Committee’s report highlights the following issues and concerns:

Inexcusable error in timing of the Order. This Order should have been introduced in December 2022 when the inflation index rose above the 15% threshold. However, MoJ only made the Order in July 2023. This means that MoJ has breached the law requiring it to increase the fixed net sum within the 21-day timeframe. The consequence of this is that some estate beneficiaries may have lost out because they have received amounts that are significantly lower than they would have been entitled to, had the primary legislation timeframe been complied with. Some beneficiaries of future estates may also lose out.

Deficient Explanatory Memorandum laid with the Order. The Explanatory Memorandum (EM) laid with the Order was deficient in many respects. Most importantly, the original EM did not acknowledge that the process breached the legislative requirements and in addition contained inaccurate and misleading information about movements in the inflation rate.

Although MoJ has agreed to revise the EM, the Committee’s report expresses disappointment and points out that it should not require the Committee’s intervention to ensure that essential, accurate and not misleading information should be provided as background to any statutory instrument. In addition, the report notes that although MoJ has indicated it will review the situation and consider what next steps are appropriate, it has not yet said what action it will take and whether this will include compensating those who have lost out.

The Committee has drawn the Order to the special attention of the House on the ground of inadequate explanatory material and has written to the Parliamentary Under Secretary of State at the Ministry of Justice to request more information on the concerns raised. The response will be published in a subsequent Report.

Lord Hunt of Wirral, Chair of the Secondary Legislation Scrutiny Committee said:

“We have, through our previous weekly and special reports, highlighted the importance of clear and accurate explanatory material in allowing Parliament to deliver its scrutiny function effectively. In particular, we have had cause to raise this issue with the Ministry of Justice recently in respect of a different instrument.

It was, therefore, particularly disappointing to note the deficiencies in the original explanatory memorandum (EM) accompanying the Order. In particular, the EM did not acknowledge that the uprating process for the Fixed Net Sum, which culminated in this instrument, breached requirements in primary legislation—an inexcusable error. This breach is a critical piece of information in understanding the background to the Order and it should have been included in the EM. In addition, the EM also contained an inaccurate description of the inflation index being used.

While the EM has been revised by the Department, we have written to the Minister and await his response on the steps MoJ will take to deal with those who may have lost out as a result of its errors. We have also asked why the EM was laid in its original form and what progress is being made to ensure the MoJ does not approve such inadequate EMs in the future”.