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Housing association deregulation takes another step

Housing Associations reclassified as private bodies

 

An obscure letter from the Office of National Statistics (ONS) to the treasury signalling its intention to move £63.5bn of housing association debt back off the public sector balance sheet marks a further step to greater deregulation.  In a letter to the Treasury sent on 31 August and published last week, the ONS said that after looking at draft regulations proposed by the government, it will provisionally reclassify housing associations as private bodies.

 

Deregulation of housing associations is one of the most significant elements of the 2016 Housing Act although its significance is often not fully understood.   Calls for a return to council housing and for a halt to the commercialisation of housing organisations have grown in recent months.  The terrible events at Grenfell tower posed these questions and the vocal concern of tenants and residents of Genesis and Notting Hill housings associations that a commercially driven merger is being forced through without real consultation are examples of the changing mood.  Earlier in the year a Guardian investigation found that housing associations had been guilty of 'serial neglect of residents and properties'; we commented at the time that many of the associations involved also showed scant regard for their staff and in some cases had moved to derecognise unions.

 

Without much publicity

 

But, without much publicity, the government is now actually pressing ahead with further deregulation using the 'need' to move borrowing off public accounts and reclassify it as private as an excuse.  Housing associations have already been placed under a more limited regulatory regime in terms of their finance.  For example, they are no longer required to seek ‘consent’ before selling housing stock; they can now sell tenanted social homes to private landlords.   The Homes and Communities Agency (HCA) report that ‘disposals’ from the social sector has reached a record level.  Associations also no longer need consent before merging with other housing associations.

 

Under new deregulatory proposals from the government, councils will councils will lose powers of veto over housing associations and the right to vote at general meetings.  Council representation on boards will also be limited to a maximum of 24% of board members.  That means that specific assurances given to tenants and residents when homes were transferred from local authorities to housing associations are now being ripped up.  The dry official name, Regulation of Social Housing (Influence of Local Authorities) Regulations 2017, hides a significant further change in the position of housing associations.

 

Breaks fundamental relationship with tenants

 

Inside Housing quote Ian Davis, a partner in the housing and regeneration team at law firm Trowers & Hamlins as saying, “With the exception of some who already made alterations in anticipation of the regulations coming through, most [stock transfer] housing associations are going to have to make changes to their constitution as a result of this.”  Local authorities have made the case that the move would be a backward step and “breaks the [housing association’s] fundamental relationship with tenants” making associations less accountable.

 

A ‘Policy Exchange’ report sponsored by one big housing association and based on non-attributable ‘Chatham House terms’ conversations with housing association bosses set out a plan for housing association privatisation some years ago and government policy has moved in this direction since then.  The sector has continued to book bumper surpluses, £3.4 billion last year  and its margins compare very favourably with the fully private sector but pay for front line staff has and spending on services have been held down.

 

Northern Rock?

 

Associations make big surpluses but threats to their future come from their participation in the casino economy; building for sale and commercial operations have fundamentally changed their ‘risk profile’.   Many have compared their evolution with the transformation of Northern Rock from a locally based Building Society to a 'dynamic' growing bank and finally to the source of the first bank run of modern Britain. 

 

The Financial Times quotes Nick Raynesford, a former housing minister under Tony Blair as warning, “The commercial reputation of housing associations as a whole has been good. There have not been spectacular failures and problems have been mopped up without tenants suffering. But given their higher risk profile, I think it is now almost inevitable that there will be a failure which is too large to be easily coped with.”  That means there is a threat hanging over housing association workers and residents.  This is no longer simply a matter of culture, fundamental change is need to bring real accountability and security.  Certainly there can be no justification for cutting services, delaying post Grenfell safety work or holding pay down; they have the money, it is a question of what they prioritise.

 

Paul Kershaw  4 November 2017

 

 

 

 

 

 

 

 

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