Published on Friday 1 February 2013 Belfast Newsletter
AFTER many months of delay, the shape of Minister Nelson McCausland’s vision for public housing has been revealed – he wants to privatise it.
He will deny this; as will supporters of his decision.
So let’s look at what he actually said. “The development of a new landlord function out with the public sector … enabling access to private funding to allow for suitable investment.”
The minister’s statement is lacking in detail on the form of the new landlord(s); but the policy of transferring housing from “out with the public sector” is well established in Britain.
The first stock transfer took place in 1988 in England, when a local council transferred its housing stock to a not-for-profit housing association.
It is this destination that allows supporters of the policy to claim it is not privatisation. However, this is a narrow view of privatisation and glosses over important issues.
Firstly, the housing stock will no longer be a public asset. Instead it will be used as collateral to raise private finance. Importantly, this borrowing will not count as government debt according to HM Treasury rules. But the former Northern Ireland Housing Executive (NIHE) houses will be mortgaged to financial institutions.
Secondly, transfer housing associations claim greater tenant involvement as they often have tenant board members. However, housing associations are usually formed as companies (limited by guarantee) and therefore operate under company law. Accordingly any tenant board members are legally bound to act in the best interests of the housing association (as are directors of private companies). They are excluded from acting as representatives of fellow tenants.
Thirdly, the post-transfer experience in Britain is one of higher rent levels, a reduction in legal rights and higher eviction rates. For example, in Northern Ireland in 2010/11 the average weekly NIHE rent was £52.76 but was £81.69 for housing associations.
Fourthly, housing associations in England are increasingly subject to takeovers and mergers. Where this happens any promises made to former council tenants do not have to be honoured by the new landlord. Ultimately this means the stakes are very high; once the homes are transferred from the Housing Executive there is no going back.
This leaves two pieces of advice.
First, the minister should scrap the plan to privatise the housing stock; instead concentrating his efforts on persuading the Treasury to bring their borrowing rules in line with the rest of Europe. This would allow the NIHE to borrow and fund maintenance to existing stock and even build much-needed public housing.
Second, tenants need to exert their right to have a formal ballot on the transfer. This right was originally won by tenants campaigning in the late 1980s, when the Conservative government summarily announced their homes were to be handed over to local businesses. Since that time it has become best practice and subsequently a requirement to ballot tenants in Britain.
A ballot of all tenants is the only way of guaranteeing that all sections of the community are able to express their view on this hugely important decision.
Stewart Smyth is Lecturer in Accounting at Queen’s University Management School