Selling off housing associations would rid George Osborne of £60bn worth of debt
Wednesday’s Autumn Statement could mark the beginning of the end for the country’s 1,700 housing associations. The chancellor, announcing the results of the Comprehensive Spending Review (CSR) for the next three years, may announce that housing association assets will be sold off before the General Election in 2020 to help him achieve the elimination of the structural deficit in this parliament.
This could be the largest ever sale of public assets – which housing association homes became following the Office for National Statistics reclassification of associations as public bodies – and the most radical solution the chancellor could pursue.
Otherwise, Osborne faces £60bn of housing association debt – equivalent to 3 per cent of total public debt – sitting on the national accounts, throwing his debt reduction strategy into disarray, and a blockage to his status as favourite to succeed David Cameron as prime minister in 2019.
Getting shot of this debt, possibly by reversing the ONS reclassification, will be a major CSR priority.
The backdrop to this muddle has been the decision by successive governments since 1988 to deploy the housing association sector as a means of transferring council housing and leveraging private investment into social housing without taking a hit on what used to be called the Public Sector Borrowing Requirement.
Since 2010 though, Tory-led governments have set aside this consensus, aiming to fundamentally reshape social housing into so-called ‘affordable’ housing, while targeting social tenants for welfare cuts and negative stereotyping in the media.
A year of policies aimed at housing associations and their tenants, including lowering the Benefit Cap, imposed rent reductions for the next four years, requiring better-off tenants to pay market rents or to move out, and, most controversially, the extended right to buy, have all piled pressure on social landlords and tenants alike.
In the middle of the year, attacks on the housing association sector by Channel 4 News, the Spectator and The Times, claiming house building under-performance by associations, even though such claims have largely been refuted by housing commentators, was seen by many as a ‘softening-up’ of the sector.
Hot on the heels of these attacks came the rent reduction announcements in July’s Budget followed by a housing association vote in September on whether to accept the right to buy ‘voluntarily’, which was meant to head off the ONS decision reclassification – unsuccessfully, as it turned out.
On Wednesday, more than 100 years of history could be wiped away in a stroke of the chancellor’s pen. With the exception of the endowed housing trusts, such as Peabody, Cadbury, Rowntree, Sutton and Salt, the housing association legacy stretches back to the mid-1920s as part of the ‘Homes Fit for Heroes’ campaign in the wake of the First World War. They were created to improve the slums – back-to-back housing that were homes to many working class people.
Since then, housing associations have grown to own 2.2m homes in England, with an average stock holding of about 1,800 homes. The majority are community-based, answerable to local people, tenants and councils. A few hyper-housing associations, pursuing a commercialisation agenda, have been singled out by the government for attack on the bloated salaries of some top executives.
Placeshapers is an example of a more representative group of housing associations that have focussed on physical, economic, social and environmental interventions to relieve housing stress and poverty, especially in inner city communities. The most recent audit of such housing association community investment to tackle disadvantage and boost the life chances of tenants, is calculated at more than £1.7bn annually. All of this is now at risk from the CSR.
A future without community-based housing associations such as these – successful examples of the state, the private sector and local people working together in the ‘Big Society’ – remember that? – is a real possibility after the chancellor sits down on Wednesday.
Selling-off housing association assets as part of a short-term reduction strategy, will throw away a century of association achievements in supporting the most vulnerable members of society in the name of a discredited, neo-liberal economic ideology.
Kevin Gulliver is a contributing editor to Left Foot Forward and a director of Birmingham-based research charity the Human City Institute and chair of the Centre for Community Research. He writes in a personal capacity
To reach hundreds of thousands of new readers and to make the biggest impact we can in the next general election, we need to grow our donor base substantially.
That's why in 2024, we are seeking to generate 150 additional regular donors to support Left Foot Forward's work.
We still need another 124 people to donate to hit the target. You can help. Donate today.
23 Responses to “Will tomorrow mark the end of housing associations?”
Gemma Stockdale
I still find it incredulous that the Government are so desperate to pass off the responsibility of property through RTB and RTBe to tenants who are among the lowest income brackets AT ALL, let alone selling off HA properties for them as well. In theory, some self-funding HA tenants may well be able to afford to pay a mortgage when it comes in at almost 30% below market rate, but will they also be able to bear the cost of all the extras that come with it? Buildings insurance, life insurance, repairs… I’d love to know the average cost of annual repairs to a HA or LA property. I doubt it’s cheap.
Robert Jones
It’s blatant theft. It will have a disastrous impact on the poorer HA tenants (which is most of them) and if some of our Labour MPs were of the slightest use they would be exposing this now rather than persisting in niggling away at the leader they didn’t want, but whom the party elected.
Woo11
going to sell it on are you? or make money by the housing shortage/housing bubble? then move out to some area where housing is cheap and prospects low….good luck, and remember you will have helped deny another person after you a home. You want to own – go out to the private market!
sean connor
We have a good indication of what will happen to the future of Housing Associations by looking at what happened to Municipal Housing because of Thatcher’s right to buy policies. To put it simply, there is no future for Housing associations. The Tories hate the idea of any built by the Municipalities, or the idea of Social Housing.
david munnik
Well here is a response from a very ANGRY Housing association tenant,I and many others are very active in trying to hold our housing association to account, as well as our local council, But as my local council is Tory and have no interest in social housing we continue to bang our heads against a brick wall, being retired myself (im alright jack) but i worry about the future generations, everybody should be entitled to a decent secure home but for those on low wages it now looks very bleak, Thats why this goverment must go,but untill then i urge all tenants to get together as we have done and
form a tenants/ residents association and make your voices heard.