UK housing associations off the government’s balance sheet

 

By Adam Morton, Policy Leader at the National Housing Federation (NHF)

Whilst some commentators may deride this as simply an ‘accounting trick’ or a box-ticking exercise, having worked closely with colleagues from the Department for Communities and Local Government (DCLG) over the last two years, we have understandably strongly welcomed the announcement. Following the £2bn additional investment in affordable housing, the return to rent increases of CPI + 1% from 2020 and abandoning plans to apply the LHA cap supported (or wider social) housing, it’s testament to the growing strength of the sector’s relationship with government. And a further reflection of the Government now regards the sector as one it can work with.

Perhaps understandably, the Government have framed the announcement in terms of freeing the sector from the shackles and distractions of the public sector – and that’s certainly one of the benefits. The initial decision to classify housing associations as public bodies added some £70bn to the national debt overnight. In a period of continuing austerity, had today’s change not been made, it is likely that the Government would have limited the amount of money the sector could borrow, in the way it does for local authorities. Not only would this mean housing associations ceding control of a key part of their finances, but would almost certainly have reduced their ability to build new affordable homes. Put simply, it would have undermined the sector’s key strengths – matching every £1 of government money, with £6 of their own.

But the effects are more than just financial. The measures we have worked with DCLG on to help the ONS make this change reinforce the primacy of boards, putting them back in control of decision-making. Among other things, they ensure that housing associations are better able to manage their stock, whilst limiting the control government and local authorities can exert over their business. These will ensure boards are able to take the long-term, strategic decisions about the future of their organisation – enabling them to deliver even better services for their customers.

As the sector seeks to make the most of these changes, it will be important to do so in a way which retains the confidence of local authority partners. Housing associations will be mindful how these changes could reinforce the view held by some local authorities (and parts of the Labour Party) that they are largely unaccountable, becoming too commercial and losing their social purpose. Continuing to forge strong partnerships and links with each – and delivering high-quality services for those most in need – will be key.

With these announcements, alongside housing’s increasing prominence on the political agenda, comes great expectations. The sector finds itself in the spotlight like never before. This is, of course, a great opportunity to showcase its great work. It’s vital that the sector responds positively to these announcements by delivering on their ambitions and building many more affordable homes – and ensuring people’s experience of housing associations is as positive as possible.

 

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