Debate of the Week – Housing Associations: Reclassification

On September 29 the Office for National Statistics decided that housing associations – in NI, and also Scotland and Wales - were no longer independent social enterprises and are instead public bodies.

There has been outcry about how this will affect local central funds in general – and social housing plans in particular.

The matter was debated at Stormont on Monday. Ulster Unionist Andy Allen begged to move (after a timely amendment, with help from the SDLP):

That this Assembly notes "the decision by the Office for National Statistics to reclassify Northern Ireland’s 22 housing associations from independent social businesses to public bodies; recognises that this will have a significant impact on housing associations and their ability to provide new social and shared ownership homes; further notes that this decision will add nearly £1 billion of housing association debt to the Northern Ireland Executive’s balance sheet, seriously impacting on the Executive’s ability to borrow money for other initiatives across the Executive Departments; and calls on the Minister for Communities and Minister of Finance to expedite the steps necessary to reverse this reclassification; and agree quickly an interim derogation arrangement with HM Treasury to enable the sector to continue to function normally, to engage closely with the Scottish and Welsh Governments to agree a joined-up approach, and to outline a clear and detailed timeline for specific action, including bringing forward legislation, within the time frame that any HM Treasury derogation allows, to ensure that Northern Ireland’s housing associations can remain classified as independent social businesses.".

The motion itself outlines Mr Allen’s position well – with his two main concerns the effect on plans to build 8,000 new social houses over the next four years, and also the effect on potential borrowing across all of government following the transfer of £1bn debt, while he also said there could be “major implications” for the co-ownership scheme.

To the floor

Christopher Stalford of the DUP offered an assurance that the government will work to reverse this decision, and that the Ministers for Finance and for Communities took the matter to the Executive on the afternoon of the decision.

Sinn Fein’s Fra McCann said the amended motion is “redundant” because the two relevant ministers have agreed a joint paper to seek a reversal of the ONS decision, and that this paper was welcomed by the Northern Ireland Federation of Housing Associations (NIFHA).

Nichola Mallon, SDLP, said the motion was “essential” and criticised the lack of detail from the ministers for what was a foreseeable issue. She said the motion is more specific than anything so far from the Executive, and asked a number of questions of government:

“What level of deregulation will be implemented? Will it have empowerment of the tenant at its core? What consultation has taken place and will take place to ensure that Northern Ireland gets the right response? What discussions have both Ministers had with their counterparts in Scotland and Wales to deliver a joined-up approach and ensure that Northern Ireland is not left behind?

“What is the Minister's clear and detailed timeline for specific action? What amended legislation is being proposed? At what stage is that legislation? When will it be enacted? Will it be within the time frame that any Treasury derogation allows? If it falls outside the derogation period granted, what safeguards will both Ministers provide? How advanced are derogation negotiations with the Treasury?”

Responses

Alliance’s Naomi Long said the Executive needs to be more specific in its proposed solutions as this is a matter of public interest, and said the people most greatly affected by this decision will tend to be those who face to most general hardships, “the ability to leverage private funds is crucial in allowing housing associations to develop new stock” – and it is “inconceivable” that the Executive could afford to make up the shortfall.

DUP MLA Paul Girvan said he supported the amended motion but that measures were already underway to deal with this issue, and that asking for a derogation was “sensible”. He said further that, while the associations have a lot of debt, they are “asset rich” and so the days of the Housing Executive as it is constituted “are probably numbered”.

In response to an intervention from Mr Stalford aimed at those asking for more details, the South Antrim representative also agreed that there are difficulties with this because the ONS has yet to publish the details of its ruling.

Sinn Fein’s Michelle Gildernew said the fundamental issue is that there is not enough social housing, right across NI, while the Housing Executive is no longer in a position to build more homes and that “this is something that we will want to rectify during this mandate”.

Roy Beggs, of the UUP, said this should not have been a problem because there was an analogous issue in England previously and so solutions should have been put in place ahead of time.

Green Party leader Steven Agnew reiterated previous comments that the Executive should have been more public with the detail of its response, and noted that there is a broad consensus on the main thrust of the matter.

People Before Profit’s Gerry Carroll said a lack of social housing is the main issue – and that housing bodies should all be allowed to borrow in order to build more homes.

The minister

Communities Minister Paul Givan said he supported the amended motion, but that the Executive had begun its response “within hours” of the ONS decision.

“It was also agreed that officials in the Department of Finance should commence negotiations with Her Majesty's Treasury to agree a derogation from normal budgeting rules for a period to allow us time to progress the necessary legislative changes. On one level, this is a technical adjustment to do with the application of international statistical standards to national accounts, and, if that was the extent of the impact, this would not be the important issue that it is.”

“…Over the next number of months, we will develop and consult on the proposals and complete the drafting of the legislation. We will then take that draft Bill through its Committee Stage and bring it to the Assembly. I will need the support of the Committee in carrying out its scrutiny role when we get to that stage. Given that the issue, as Members have indicated, is so critical to them, I have every confidence that the Committee will expeditiously deal with all that scrutiny and we will get this through by receiving Royal Assent as soon as possible after we know the exact nature of what we need to legislate for.”

Question, That the amendment be made, put and agreed to.

Main Question, as amended, put and agreed to.