Housing on the public books
agendaNi looks at the reasons why the Executive is working to reverse a decision by the Office of National Statistics (ONS) to reclassify housing associations from independent social businesses to public bodies.
At the annual conference of the Northern Ireland Federation of Housing Associations (NIFHA), NIFHA’s Chief Executive Cameron Watt described the recent ONS decision as “one of the biggest challenges facing housing associations”.
Owning and managing 47,000 social and shared ownership homes, Northern Ireland’s 22 associations hold the unique position of delivering vital public benefits, while remaining outside the public sector. In the past four years associations have built 6,000 social homes, a large proportion of Northern Ireland’s overall new developments.
Operating outside of state control has proven invaluable for housing associations, mostly in their ability to secure private funding. Their mixed-funding model, which includes a grant of around 50 per cent from government for the cost of a new home, has been a foundation for their success.
The decision by ONS taken on 29 September has threatened future development in Northern Ireland. As well as limiting ability to access the private finance they rely on to build new homes, it will also push the £1 billion of housing association debt on to the Executive’s balance sheet. That will pose a problem for the Executive in any future borrowing for other department initiatives and this has been recognised in a swift commitment to try and reverse the impact.
In England the response to overnight reclassification last year prompted the Government to change the law and reduce regulation of the bodies to ensure that they are once again classified as independent businesses. Following the announcement for Northern Ireland, Finance Minister Máirtín Ó Muilleoir and Communities Minister, Paul Givan, indicated that they would follow a similar route.
The Executive have also asked the Treasury for an interim derogation on the reclassification so that they may take action.
Stressing the importance of housing associations on the social housing sector in Northern Ireland, Givan said: “This is why the Finance Minister and I presented a joint paper to the Executive meeting, which they have approved, seeking a reversal of the ONS decision to reclassify Northern Ireland housing associations, including amending legislation where appropriate.
“The Executive is committed to providing suitable homes for all and we will now work together to find the best way forward to allow investment to continue.”
Ó Muilleoir added: “Having a secure and stable social housing sector is a key cornerstone of our civic society. We need to take all measures necessary to ensure that the sector has stability to invest and grow. The decision, if left unaddressed by the Executive, would change the budgeting rules and could result in an annual shortfall of almost £100 million in relation to social and affordable housing. That’s why we plan to seek a derogation to prevent this.”
Any impact caused by the change could also limit the Executive’s aims of improving the supply of suitable housing, a key focus on the housing indicator within the draft Programme for Government. It is estimated that a realistic target to meet demand in Northern Ireland would require 2,000 new homes per year.
Speaking at the NIFHA conference, Cameron Watt said: “Reclassification threatens many elements of our business plans, which is why we are strongly advocating for its swift reversal. Having engaged extensively with ministers and officials we recognise they are fully aware of the issues. We are also encouraged by the Northern Ireland Executive’s commitment to reverse reclassification and will work with them on this.”
