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English housing associations are part of the public sector for the purposes of national accounts, an Office for National Statistics review has concluded.
The reclassification this morning means that housing association debt will be counted as public borrowing, pushing £60bn on to the government’s balance sheet.
The decision does not in itself lead to a material change in the way housing associations operate, but it will spark fears that the government would seek to limit or control their borrowing.
The ONS review looked at changes introduced over recent years, including the Housing and Regeneration Act 2008.
However, recent government policies – including the rent cut, Pay to Stay and the Right to Buy – did not form part of the review as they are yet to come into force.
Experts have suggested reclassification would remove a potential barrier to the government nationalising associations.
The ONS said it had drawn its conclusion to reclassify housing associations because of government consent powers over asset disposals and the restructuring and winding up of housing associations, as well as ministers’ powers to appoint managers and officers to landlords. The ONS will provide further details on the impact of the re-classification on public sector debt and net borrowing on 20 November.
The government, however, responded to the announcement by pledging to bring forward measures to allow housing associations to become private bodies again “as soon as possible”. A Department for Communities and Local Government spokesperson said: “This statistical matter relates to an historical legislative change, made by a previous government, which came into effect over eight years ago and makes no difference at all to the way housing associations run themselves and imposes no new controls or rules.”
UPDATE: 10.45am on 30.10.15
This article is being periodically updated with more information about the ONS decision and reaction. We will not be noting here what the changes are.