Housing associations in England reclassified as private bodies
The Office for National Statistics (ONS) has reversed its decision to classify housing associations in England as public non-financial corporations, allowing their estimated £70 billion debt to be removed from the UK government’s balance sheet.
Announced a week before Chancellor Philip Hammond’s autumn Budget, housing providers hope that the change in their financial status would help them secure the “long-term finance” needed to build more homes.
In 2015, the ONS said housing associations could no longer be seen as charities or private businesses due to the intrusive nature of ministerial control over them.
It said: “ONS also concluded that PRPs are subject to public sector control due to, amongst other things; HM Government consent powers over disposals of social housing assets; HM Government consent powers over constitutional restructuring of PRPs’ constitutional documents; and HM Government powers over the management of PRPs.
“Consistent with conditions described in ESA 2010, PRPs were also judged to be market producers. Based on these conclusions, ‘private registered providers’ of social housing in England will be reclassified as public non-financial corporations (S.11001) from 22 July 2008.”
The sector warned at the time that this could have a negative impact on its ability to build homes.
Now, after the drafting of new regulations currently going through Parliament, the ONS has agreed the government has become hands-off enough again to take all that debt away.
Chartered Institute of Housing head of policy, Melanie Rees, said: “Although we have been expecting this decision for some time, it is welcome news. It’s important that housing associations retain their independent status, not least because it means they can secure significant amounts of private finance to bolster public investment in housing.”
She added: “It’s encouraging to see that ministers are backing housing of all tenures, particularly more social housing.”
Responding to the announcement, Councillor Martin Tett, the Local Government Association’s Housing spokesman, said: “It is vital that the government also lifts the cap on the amount councils can borrow to build homes and remove that borrowing from contributing to the national debt. That is essential to provide a sustainable long term financial framework for councils to invest in desperately-needed new homes.
“All social housing must be treated the same and council housebuilding must be part of the solution if we are to stand any chance of solving our chronic housing shortage.
“As a nation we need to build more than 300,000 homes a year, and we’re currently building roughly half that. The last time this country hit that number, in the 1970s, councils built more than 40 per cent of new homes.
“We have no chance of housing supply meeting demand unless councils can build again. For that to happen, the Chancellor needs to use the Autumn Budget to let councils borrow to build again.
“It is also important that housing associations continue to work with councils to provide the genuinely affordable homes our communities desperately need.”
A Housing (Amendment) (Scotland) Bill was drafted in response to last year’s decision by the ONS that Registered Social Landlords (RSLs) in Scotland should also be classified as public bodies in the national accounts. The Bill is currently making its way through Parliament following a call for written views.