The Office for National Statistics has announced it is to reclassify housing associations as part of the private sector after the government took steps to deregulate the housing providers in an effort to get £60bn in debt wiped off the public sector balance sheet.
In a statement published today, the ONS confirmed that the passage of 2017 legislation on the regulation of social housing in England meant that the sector now met the standard of private non-financial corporations under international accounting rules.
The legislation sets out a new limit of 24% for the percentage of housing association board members who can be local government officers in order to establish the separation between local government and the housing associations, which are often large owners of local social housing.
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According to the ONS announcement, the conclusion has been approved by its director of national accounts Nick Vaughan “on the basis of our current understanding of the role of the public sector in private registered providers [housing associations]”.
The 2015 decision to move the classification from private to public sector was taken on the basis of revised European accounting rules, which judged that the oversight of housing associations under the Housing and Regeneration Act 2008, which established the Homes and Communities Agency, amounted to public sector control. It was not linked by the ONS to government plans at the time to extend the Right to Buy to housing associations.
The switch then meant that the sector’s estimated £60bn of debt was added to the public sector balance sheet, and the latest reclassification will see that taken off the government books. But the decision is being seen as an opportunity to boost housing investment ahead of next week’s Budget.
Communities secretary Sajid Javid said that “freed from the shackles of public sector bureaucracy, associations will be able to concentrate on their core, crucial mission – building homes”.
He added: “I know it sounds like a piece of bureaucratic box-ticking. But the results will be far-reaching.
“Freed from the distractions of the public sector, housing associations will be able to concentrate on developing innovative ways of doing their business, which is what matters most: building more homes.”