Scottish housing associations reclassified to public sector by ONS

ONSThe Office for National Statistics (ONS) has today reclassified registered providers of social housing in Scotland as public non-financial corporations.

The classification applies with effect from 18 July 2001; the date of the Housing (Scotland) Act 2001.

A review was undertaken to establish whether registered social landlords and housing associations, alongside those in Wales and Northern Ireland, should continue to be recorded as private non-financial corporations in ONS economic statistics.

It follows a similar review into private registered providers (PRPs) of social housing in England that concluded in 2015 adding an estimated £60 billion to the public sector net debt south of the Border. The decision led the UK government to introduce deregulation and drop planned reforms in an attempt to reverse the decision.

The main conclusions reached in the assessment were that the Scottish Housing Regulator (SHR) is a public sector funded non-market body and has been classified to the central government (S.1311) subsector, with effect from 1 April 2011.

The ONS judged that Scottish RSLs should be considered as institutional units as they have the ability to incur liabilities and hold assets on their own accounts, enter into contracts, and exhibit sufficient decision making autonomy.

It also concluded that RSLs are subject to public sector control due to, amongst other things: SHR powers over the management of an RSL, SHR powers over constitutional changes of an RSL, and SHR powers of consent in relation to the disposal of land and housing assets.

RSLs were also judged to be market producers.

The ONS said: “The review’s outcome is a statistical matter that does not have a direct bearing on the management structure, ownership or legal status of the organisations in question. Any potential implications arising from a classifications review (such as impacts on budgeting and fiscal management) are a policy matter for the relevant public body – in this instance the relevant devolved administrations.”

In its Programme for Government earlier this month, the Scottish Government laid out plans to introduce a Housing (Amendment) (Scotland) Bill which will ensure registered social landlords (RSLs) continue to be classified as private sector bodies should the ONS make today’s announcement.

The Bill would provide the basis for the ONS to revisit its decision by removing the need for the Regulator’s consent to the disposal of assets by RSLs; limiting the Regulator’s ability to appoint members and managers to RSLs and removing the need for the Regulator’s consent to the restructuring, winding up and dissolution of RSLs.

Registered providers of social housing in Wales and Northern Ireland were also reclassified although each country’s case was considered independently due to regulation variations.

For Wales the classification applies with effect from 24 July 1996; the date of the Housing Act 1996 and from 15 July 1992 in Northern Ireland; the date of the Housing (Northern Ireland) Order 1992.

CIH Scotland executive director, Annie Mauger, said: “We support the Scottish Government’s proactive work to put in place a mechanism that will enable the ONS decision on housing association reclassification to be reversed as part of its legislative programme for 2016-17. We believe it is vital to ensure that, as far as possible, we continue protecting the key aims of the current regulatory regime in the broadest sense that are designed to demonstrate value for money, to ensure good standards of financial management and governance, to safeguard tenants’ interests and accountability and to protect historic public investment.

“It is important to bear in mind that the current system of regulation has helped create an environment in which lenders have been prepared to invest with confidence; and it has reassured tenants that housing associations are bound by rules and by a regulator which protect their interests. Achieving the Scottish Government’s target to deliver 50,000 affordable homes over the lifetime of this Scottish Parliament may be compromised if housing associations are subjected to public sector borrowing rules.”

Annie Mauger added: “We look forward to working closely with the Scottish Government and other key stakeholders to ensure the reversal of the ONS decision is well-informed by our members working across the housing sector in Scotland.”

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