Re-classifying housing associations

Slightly under the radar (possibly), but of enormous significance, the ONS has re-classified housing associations (or private registered providers of social housing – in the new language which I can’t get used to) as private sector, and in so doing has wiped around £60billion off the public sector debt.  It is this re-classification which has given Hammond room to manoeuvre in the coming budget (although the rumours are that he is going to put £5billion only, and that appears to be going towards home ownership – plus ca change), which kind of proves the value in spreadsheets and the significance of audit practices.

The reason for this change is a result of the provisions in the Housing and Planning Act 2016, ss 92-4 (reducing social housing regulation), and regulations laid under s 93, The Regulation of Social Housing (Influence of Local Authorities(England) Regulations 2017.

There has been some discussion as to whether the ONS re-classification might affect whether associations are public bodies for the purposes of public law and human rights (as in Weaver).  Given that the ONS re-classification as public was put before Davis J in R(Macleod) v Peabody  and did not stop that judge problematically (imho) categorising the act there concerned (a transfer) as private, I doubt very much that the re-re-classification as private will be of any real significance.  After all, as Andy Lane points out in this note, the public function question is multi-factoral (and, of course, Weaver was decided when housing associations were regarded by the bean counters as private any way).

The real significance, however, of these changes which has gone remarkably unremarked is that these changes have made incredibly important alterations to the influence that local authorities can have on associations.  For example, by reg 5(1) of the 2017 regs, “a local authority may not hold or exercise any local authority voting rights in relation to a private registered provider”; reg 3 restricts the number of local authority officers at a housing association; and Schedule 4 to the 2016 Act makes significant alterations to the disposal powers of associations.  The loosening of local authority control takes place against the following backdrop: (i) associations are now responsible for a much greater proportion of the social (and affordable) housing stock, (ii) many of the larger associations at least began life as large-scale voluntary transfers of local authority stock, (iii) nominations agreements are the principal mechanisms through which local authorities access housing association stock, and (iv) all the evidence over the last 35 years suggests that the operationalisation of those agreements is fraught in practice.  To add to this, there is also the evidence compiled by the excellent work of Tony Manzi and Nicky Morrison (paywall, I think, sorry, but the abstract is accessible and provides detail of the study), which demonstrates just how much the risk, business and entrepreneurialisation agendas have infiltrated into housing association practices; we also are becoming more aware of housing association responses to welfare reform (ie exclusions); and, finally, the kinds of mega-mergers that are going on suggest a potential weakening of state regulation at least as far as compliance practices go.  As Manzi and Morrison put it (in the abstract):

Housing organisations face a stark dilemma about whether to continue a strategy of ‘profit for purpose’ or to embrace an unambiguously commercial ethos. The article contends that the trajectory of decision-making (although not unidirectional) leads ultimately towards an increased exposure to risk and vulnerability to changes in the housing market. More fundamentally, the attempt to reconcile social and commercial logics is likely to have wider consequences for the legitimacy of the sector.

In other words, this is precisely the time when, rather than reducing social housing regulation, we should be tightening it up.  Giving the government budgetary room to manoeuvre appears rather more important than considering the roles and legitimacy of “social housing” providers.

#angry

 

Posted in Housing law - All, Regulation and planning and tagged .

5 Comments

  1. “profit for a purpose” is always a phrase that’s made me laugh. Is there a company in the country that makes a profit “just for the hell of it”?

    That being said, I do agree absolutely with your point about regulation – this is not the time to start laying off regulation but rather the time to tighten it up.

  2. what happened to the conservatives manifesto promise for housing association tenants to have the right to buy?

    • There is supposed to be a pilot project in the West Midlands. But no-one has figured out how it can be paid for yet. Also, it wasn’t a promise for all HA tenants. Merely for those where housing associations volunteered to take part.

      Hopefully will die a quiet death.

  3. I’ve not read Manzi and Morrisons article … but a big concern is the unregulated status of these housing associations as ‘exempt charities’ … many are carrying out commercial activities through primary purpose trading rather than through commercial subsidiaries and are free to do so because there is no charity regulator to report them to or to stop them

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