Some £60bn of housing association debt was reclassified as public in October 2015 when the Office for National Statistics (ONS) deemed associations to be public sector bodies. The government is now seeking to reverse this decision and seemingly has the backing of most of the sector, with 80 per cent of respondents in our latest survey disagreeing with the ONS’ decision. The sector has always seen themselves as independent bodies so it’s unsurprising they don’t want to be considered as part of the public sector.
57 per cent of RPs think that the government should dilute regulation in order to get the ONS to re-assess their decision, a figure which is a little lower than expected given so many providers don’t want to be part of the public sector. This is perhaps indicative of some concern within the sector about the impact of diluting the regulator’s powers, with the majority of RPs appearing to favor the HCA’s more detailed and in-depth approach. English associations do appear fairly content with HCA’s existing policies on regulation, with 74 per cent of English RPs supportive of the HCA’s more forensic ‘deep dive’ approach to regulatory visits.
The Scottish Housing Regulator will be pleased to receive endorsement of their revised guidance (June 2015) on how they assess risk. 72 per cent of our respondents believe the guidance creates a proportionate and reasonable approach to regulation, with only 10 per cent disagreeing.
There has been a real focus by the Scottish Housing Regulator on proportionate regulation and in sharing good practice through guidance within their ‘Governance Matters’ documents, and this appears to have been welcomed by the sector.
English and Welsh RPs have responded well, in part, to the new regulatory framework introduced by the HCA in 2015. The changes, designed to enable the social housing sector to manage risks more effectively, have been adopted by some providers, with 90 per cent of respondents having completed their stress testing calculations, and more than 85 per cent of respondents having completed their stress testing action plans.
It is concerning though to see that almost a third of respondents have not yet completed their register of assets and liabilities, even though there is a regulatory requirement to confirm this has been completed in 2016 accounts. The near collapse of Cosmopolitan Housing Group in 2012 was a key driver behind the introduction of this regulation and should act as a timely reminder to the sector of what can happen when things go wrong. Scottish providers are taking the issue seriously, with 95 per cent of them annually stress testing their five year forecast and assumptions.
Despite the regulators increased focus on viability, 76 per cent of respondents in our latest survey are expecting more RP failures to occur in the future, up from 60 per cent in 2015.