Mark Whitehead 18 September 2015

Housing associations could join public sector

Housing associations could be reclassified as part of the public sector because of the Government’s increasing involvement in the way they are run.

The change is being considered after chancellor George Osborne announced plans in the summer budget to reduce rents charged by the associations by 1% each year for the next four years.

The Government has also extended its Right To Buy scheme to housing associations which would force them to sell homes above a certain value.

The Office for National Statistics says it is in the early stages of a possible reclassification of the bodies which are currently considered part of the private sector.

If the reclassification goes ahead it would add £60b to the Government’s balance sheet.

Prime Minister David Cameron told Parliament on Wednesday that housing associations were ‘part of the public sector’.

‘I think it is vital that we reform housing associations and make sure that they are more efficient,’ he told MPs.

‘They are a part of the public sector that has not been through efficiencies and has not improved its performance, and I think it is about time that it did.’

Last year the ONS changed the way public finances are calculated to bring the UK in line with European accounting standards, adding £127bn to the Government's balance sheet by including the cost of bank bail-outs, quantitative easing, and Network Rail as part of central government rather than the private sector.

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