Housing Associations Facing Credit Crunch Too Say Lib Dems

1.58.15pm GMT Fri 2nd Jan 2009

With the Housing Minister Margaret Beckett warning Parliament that many banks are racking up the cost of borrowing for housing associations and with the questionable efforts being made by South Cambridgeshire District Council to transfer its housing stock Liberal Democrats are calling on the Government to come clean on the extent of the credit crunch crisis facing housing associations.

Liberal Democrat parliamentary spokesperson for South East Cambridgeshire and South Cambs councillor Jonathan Chatfield said:

" The cost of borrowing for housing associations is very worrying at a time when the Tory controlled South Cambs council is applying pressure on council tenants to vote to have their homes transferred to a housing association.

Peter Marsh, recently appointed chief executive of the new social housing regulator, the Tenant Services Authority, in referring to the financial stability of housing associations has said; "There are certainly some more exposed than others. We are now doing a regular survey of associations that have, for instance, a high degree of reliance on shared-ownership sales, or relatively short lines of credit compared with their neighbours."

At the last Prime Minister's Questions in 2008 Liberal Democrat Treasury spokesperson Vince Cable exposed the crisis facing housing associations saying the Government's funding formula for housing associations was "crippling" and six leading ones are now in danger of collapse.

He said: "The Leader of the House may not be aware either that, a few days ago, the regulator of the housing associations warned that six of the leading associations are in grave financial difficulty and in danger of collapse. What are the Government proposing to do about it?

"Will she now give the same attention to the financial crisis in the housing associations as the Government are giving to the banks? Will she tell us which of them are in grave difficulty and what the Government is going to do to rescue them and to ensure that the public sector can play a role in kick-starting the moribund housing activity?"

Leader of the House Harriet Harman who was standing in for the Prime Minister evaded the question adding fuel to the speculation that housing associations are being adversely affected by the credit crunch.