Betts pushes to lead parliamentary inquiry into surpluses

Clive Betts, who was re-appointed as chair of the Communities and Local Government (CLG) committee last week, told Inside Housing he would like his committee to explore why surpluses are not ‘being used as much as some people might like to see’, as part of an inquiry into housing association development.

The CLG committee, which has not yet been appointed, would need to approve Mr Betts’ plans. But if Mr Betts gets his way, housing association chief executives would be invited before parliament to answer questions about surpluses and whether they are stretching their capacity to build.

Housing associations responded by saying an inquiry would give them a chance to explain publicly why surpluses are vital.

David Montague, chief executive of L&Q, which made a £174m post-tax surplus in 2013/14, said: ‘There’s a lot of misunderstanding about why housing associations make surpluses. ‘If greater public scrutiny can help everybody to understand the way that housing associations are financed, I think it’s going to be a huge benefit.’

Keith Exford, chief executive of Affinity Sutton, which made a £75m surplus in 2013/14, said an inquiry could help ‘explode the myths’ around surpluses.

According to the latest Homes and Communities Agency (HCA) global accounts, the housing sector’s annual surplus rose by 22% in one year to £2.4bn in 2013/14.

Associations use their surpluses to give banks assurances that they will pay back debt and to cushion against unexpected events. They are becoming increasingly important in a lower-grant environment. The proposed inquiry would also focus on the wider issue of housing association development.

Mr Betts is concerned that associations are apprehensive about new development ‘in light of the lower grant per unit they are getting, compounded by concerns over welfare reform’.

Mr Betts said: ‘I think it’s a concern that housing associations aren’t developing to the extent we would like to see them.’

The 2015/20 Affordable Homes Programme received a lower level of bids compared to previous years – 62,000 homes in initial bids compared to 84,000 in 2011/15 – with many larger providers choosing to shun government grant.