Isabel Hardman

David Cameron’s PMQs answer with £60bn price tag

David Cameron's PMQs answer with  £60bn price tag
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PMQs today was interesting for all sorts of reasons. But one answer to a question which may have a longer-lasting impact than all the new politics stuff (which though quite welcome did feel a bit like someone making a show of going to the gym in January) may have completely escaped most people’s attention. It was this, from David Cameron in response to Jeremy Corbyn’s question about cutting rents:

‘What I would say to Steven, and to all those who are working in housing associations and doing a good job, is that for years in our country there was something of a merry-go-round. Rents went up, housing benefit went up, and so taxes had to go up to pay for that. I think it was right in the Budget to cut the rents that social tenants pay, not least because people who are working and not on housing benefit will see a further increase in their take-home pay, and will be able to afford more things in life.

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

Now, it has been clear for a few months that the Tories believe housing associations are often inefficient and poorly-led by overpaid chief executives. George Osborne cut their rents by 1 per cent each year in the summer Budget, and Downing Street seems very keen for further changes.

But Cameron’s answer and Osborne’s rent cut both add to the risk that something far worse than an inefficient housing association might come along, and that’s the £60bn of housing association debt being added to the public sector debt. Currently housing associations are not considered public bodies, and their debt is therefore considered part of the private sector. But as the OBR warned after the Budget, too much meddling over rents and right to buy could lead the Office for National Statistics to reclassify them, thus transferring all that debt onto the public balance sheet. The ONS has said it will look at these organisations’ status. Cameron’s suggestion today that ‘they are a part of the public sector’ is hardly helpful on that front.