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UK government to intervene over Northern Ireland reclassification issue

The UK government will intervene to prevent the debts of Northern Ireland’s housing associations being shifted onto the public balance sheet, Inside Housing can reveal.

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In a highly unusual move by the UK government, Westminster’s Northern Ireland office has told Inside Housing that it intends to legislate on Northern Ireland’s behalf to prevent housing associations being shifted to the public sector.

The threat of reclassification – meaning their £1bn of debt would be scored against the region’s budget – has hung over associations in Northern Ireland since being announced by the Office for National Statistics (ONS) in 2016.

Leo O’Reilly, permanent secretary for Northern Ireland’s Department for Communities (DfC), has previously warned that reclassification could result in “a very considerable shortfall in the funding available for a social housing programme”.

However, a spokesperson for Westminster’s Northern Ireland Office said that the Northern Ireland Civil Service (NICS) has drafted legislation designed to prompt the ONS to review its decision to reclassify Northern Irish housing associations.

The spokesperson added: “Alongside this, the UK government is considering when this legislation could be introduced in parliament on behalf of NICS.”

Ministers in England, Scotland and Wales moved to pass legislation to deregulate housing associations that was enough for the ONS to reverse its decision, allowing them to remain private bodies.

But Northern Ireland has been without a functioning government for two years, meaning no such legislation has come forward in the region.

The UK Treasury put in place a derogation to postpone the ONS reclassification of housing associations in Northern Ireland, which is set to expire next month.


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Housing policy in Northern Ireland has been implemented by the Northern Ireland Assembly since the last period of direct rule finished in 2007.

The new drafted legislation includes an end to the House Sales Scheme – Northern Ireland’s equivalent of the Right to Buy – which civil servants believe is required to prompt the ONS to reverse its reclassification decision.

Keith Buchanan, housing spokesperson for the Democratic Unionist Party (DUP), said: “The DUP is supportive of the necessary legislative provision being made to restore the previous classification of housing associations.

“This is a practical measure needed to ensure the continuing delivery of social housing and as such should not be a matter of controversy but an act of necessity.”

Sinn Féin did not respond to requests for comment.

It is unclear whether the Treasury derogation will be extended to provide enough time for the legislation to be passed.

The DfC wrote to the Treasury late last year to ask for an extension when it was unclear whether UK government ministers would act, but told Inside Housing it has not yet received a response.

Ben Collins, chief executive of the Northern Ireland Federation of Housing Associations, said: “We welcome the UK government commitment to pass the legislation which has been drafted by DfC. There is cross-party support for this and it needs to be done quickly.

“UK Treasury should also now extend the current arrangements, until the legislation is passed.

“This will also allow time for ONS to reverse its reclassification of Northern Ireland housing associations.”

Update: at 14.57pm 11/02/19 Following an updated line from the NIO, the paragraph referring to legislation being drafted by the NICS was updated to make it clear that the ONS is an independent body.