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This move into the public sector could signal the end for housing associations This move into the public sector could signal the end for housing associations
(3 days later)
The exact legal status of housing associations has been unclear for decades. Are they “private, independent, charitable organisations” in the words of David Orr, chief executive of the National Housing Federation, or are they public bodies?The exact legal status of housing associations has been unclear for decades. Are they “private, independent, charitable organisations” in the words of David Orr, chief executive of the National Housing Federation, or are they public bodies?
This lack of clarity goes to the very heart of the government. Within the past few weeks, chancellor George Osborne described housing associations as “classified to the private sector” while a few days later David Cameron, at prime minister’s questions, described them as an inefficient part of the public sector.This lack of clarity goes to the very heart of the government. Within the past few weeks, chancellor George Osborne described housing associations as “classified to the private sector” while a few days later David Cameron, at prime minister’s questions, described them as an inefficient part of the public sector.
Related: On social housing, Tory ideology trumps all evidence | Peter HetheringtonRelated: On social housing, Tory ideology trumps all evidence | Peter Hetherington
The decision on Friday 30 October by the Office for National Statistics to re-classify housing associations as non-financial public corporations puts an end to this ambiguity.The decision on Friday 30 October by the Office for National Statistics to re-classify housing associations as non-financial public corporations puts an end to this ambiguity.
You can see the logic of this decision. For years, housing associations have effectively been the tools of government policy. Are there many “private independent organisations” whose policies on governance, buying and selling assets, setting rents, financial management, development and customer standards are so heavily regulated by the government?You can see the logic of this decision. For years, housing associations have effectively been the tools of government policy. Are there many “private independent organisations” whose policies on governance, buying and selling assets, setting rents, financial management, development and customer standards are so heavily regulated by the government?
Apparently the ONS was swayed by the ability of ministers to appoint board members and managers to associations and by the fact that consent is required before they can dispose of properties. The recent decisions to offer a “voluntary” deal to extend the right-to-buy to social housing tenants and to cut social housing rents were not even part of the ONS decision.Apparently the ONS was swayed by the ability of ministers to appoint board members and managers to associations and by the fact that consent is required before they can dispose of properties. The recent decisions to offer a “voluntary” deal to extend the right-to-buy to social housing tenants and to cut social housing rents were not even part of the ONS decision.
One silver lining is that housing associations could now be subject to the Freedom of Information Act. That could open them up to the same level of scrutiny and transparency as local authorities and other public bodies.One silver lining is that housing associations could now be subject to the Freedom of Information Act. That could open them up to the same level of scrutiny and transparency as local authorities and other public bodies.
What are the implications of the ONS announcement? First, £60bn of privately-procured housing association debt will now be placed on the government’s balance sheet. Total government debt is around £1.5tn so this is not a major increase, but it does add to the deficit and the cost of borrowing. In an age of austerity, Osborne might be keen to get this debt off the public books as quickly as possible. There are two ways of doing this. Either he could sell the debt (and the £45bn of grant that goes with it) into the private sector. That would signal the end of the road for genuine social housing, because investors would have a very large foot in the door to allow them to access housing association assets, which are worth at least £400bn at open market values.What are the implications of the ONS announcement? First, £60bn of privately-procured housing association debt will now be placed on the government’s balance sheet. Total government debt is around £1.5tn so this is not a major increase, but it does add to the deficit and the cost of borrowing. In an age of austerity, Osborne might be keen to get this debt off the public books as quickly as possible. There are two ways of doing this. Either he could sell the debt (and the £45bn of grant that goes with it) into the private sector. That would signal the end of the road for genuine social housing, because investors would have a very large foot in the door to allow them to access housing association assets, which are worth at least £400bn at open market values.
The alternative is for the government to lift the regulatory burden on housing associations altogether and allow them to act more like commercial property companies, buying and selling as they wish, setting rents as they wish and picking and choosing the tenants they take. If this happens, the ONS would be forced to re-classify them back into the private sector, although given that today’s decision has been backdated to 2008 this is unlikely be a speedy process.The alternative is for the government to lift the regulatory burden on housing associations altogether and allow them to act more like commercial property companies, buying and selling as they wish, setting rents as they wish and picking and choosing the tenants they take. If this happens, the ONS would be forced to re-classify them back into the private sector, although given that today’s decision has been backdated to 2008 this is unlikely be a speedy process.
In either scenario, the outlook for tenants of housing associations landlords in England looks perilous.In either scenario, the outlook for tenants of housing associations landlords in England looks perilous.
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