On Friday last, the Office for National Statistics (ONS) reclassified housing associations as public bodies following a review of the national accounting status. The decision moves the collective £60bn of debt accumulated over the years by housing associations in order to build affordable housing onto the national balance sheet to fit in with the European System of Accounts. What does the housing industry think of this decision?
In their detailed review, the ONS stated that "Private registered providers (PRPs) are units which provide social housing and are registered with the Homes and Communities Agency. This includes all housing associations registered with the Homes and Communities Agency.”
"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."
Responding to the announcement from the Office for National Statistics that private registered providers of social housing (including registered housing associations) in England will be reclassified as public non-financial corporations, Terrie Alafat, chief executive of the Chartered Institute of Housing (CIH), said “This decision means that government finances will now have to be adjusted to incorporate the finances of 1,300 different, often charitable organisations. This could have significant implications both for the sector and for the government itself.
The government has already been clear that it intends to introduce measures that see housing associations become private bodies again as soon as possible, which CIH welcomes. But in making these changes it is important that the government creates a framework that still allows housing associations to meet housing need, respond to their tenants and meet their funders’ requirements as well as ensuring that historic public investment in the sector is protected.
“We would argue that both housing associations and council housing are affected by government accounting rules that don't apply in the rest of Europe. CIH believes the government should now review these rules, which will help to ensure a new framework that maintains housing association independence as well as safeguarding the interests of tenants, the use of public money and the interests of funders.”
David Orr, chief executive at the National Housing Federation expressed disapproval, saying “We are disappointed that the ONS has decided to reclassify housing associations as public bodies. Reclassification could mean fewer new homes are built at the time of a national housing crisis.”
“We therefore welcome the Government’s commitment to take the necessary steps through deregulatory measures in the Housing Bill to address the issues raised in this decision. Our deal on a voluntary Right to Buy is an example of how the sector and Government can work together to strengthen the independence of housing associations.”
The ONS statement said “These assessments are made purely for accounting purposes: it is important to note that these classification decisions do not affect the legal ownership or management structures of organisations.”