I think it is an awful idea. I say that as the parent of a child who the school were not going to enter into the test but have changed their mind. He'll fail, I know it, the school know it, and ds knows that phonics is as far as he is concerned, hard.
He can read ok, not great, but at an appropriate level for his age, and would be achieving at old national curriculum levels, but thus year can't because he will fail phonics, (and writing). In both cases due to a disability, we know that, the school know that, we have finally convinced the lea to give him ICT to deal with this, but facing known he was disabled since he was 1, and know he will always need targeted help but can't get it in early years because he is too young this is a waste of our time, his time and his enthusiasm.
I am all for tests, if the teachers don't know where children are struggling, but if they do, and can't get the help they may need anyway due to funding etc... what is the point.
(On last year's test DS got all but 1 of the real words and only 6 alien words, because he contextualises and uses memory so dack becomes duck, fip becomes flip etc, as it wil if a neurological condition means the messaging in visual perception is damaged, the brain rewires to use all clues, not just phonics, and taking the context out is artificial and imo cruel when we don't read in the abstract. Yes phonics is a method, but if there is an issue with neurological deficit it is important to consider all factors, not just that the government wants).