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Privileging privatisation: accounting practices and state transformation in the UK

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British Politics Aims and scope

Abstract

How do accounting practices interact with processes of state transformation? Focusing on the privatisation of social housing in the UK, we clarify an important mechanism through which accounting practices served to constitute material incentives in favour of privatisation. Our archival research demonstrates that the UK government’s atypical practice of including public corporations’ liabilities in its own debt calculations shaped discussions and decisions over the transfer of public housing stock to non-state Housing Associations in the 1980s. By unpacking the constitutive relationship between accounting practices and material incentives, we advance and bring together scholarship on state transformation and the politics of accounting.

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Fig. 1

Source DCLG Live Tables. DCLG Official Website. https://www.gov.uk/government/statistical-data-sets/live-tables-on-dwelling-stock-including-vacants. Accessed 14 Mar 2017

Fig. 2

Source DCLG Live Data Tables. HCA Official Website. https://www.gov.uk/government/statistical-data-sets/live-tables-on-social-housing-sales. Accessed 15th Mar 2017

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Notes

  1. In the following section of the paper we explain the public sector net debt framework more fully and counter-pose it to the widely used general government gross debt measure, to clarify its constitutive power over material incentives.

  2. Archival work for the paper was carried out in June 2019 at The National Archives, Kew. Files were identified through an initial search that related to Housing Associations, the Housing Corporation, housing finance, national debt, and public and private sector classification. This initial search covered a period from the mid-1970s (when public corporation debt began to be incorporated into presentations of government debt) through to the most recent available materials. In total 16 files were reviewed, coming mainly from Treasury and Housing and Local Government department holdings.

  3. For an overview of transformations in national housing systems across the European continent, see Scanlon et al (2014).

  4. For an overview of points of (dis)continuity through the 1990s and early 2000s specifically in the UK experience, see Jessop (2007).

  5. For a review of conceptualisations of structural constraint and agency in UK executive politics, see Byrne and Theakston (2019).

  6. For an overview of approaches to calculating net government debt, see Eurostat (2014).

  7. For a detailed exploration of these ‘fiscal illusions’, see Irwin (2012). Thanks are owed to one of the article’s reviewers for highlighting both the ‘triple positive effect’ from the public sector net debt framework, and the additional detail available in Irwin’s IMF Staff Discussion Note.

  8. The government of Greece, for example, was criticised for having classified ordinary government operations as ‘public corporation’ operations to creatively comply with Stability and Growth Pact rules on government debt (Eurostat 2010, p. 10).

  9. Indeed, in 1983–1934 unresolved tensions were in evidence between HM Treasury’s desire that relaxed standards be applied that allowed for substantial government ownership and control to be retained over ‘private’ corporations, and the CSO who wanted to see much more limited state involvement in such entities (cf. National Archives (1983e, 1983f, 1984a, 1984b, 1984c).

  10. See Table 678, ‘Annual social housing sales by scheme’, MHCLG official website available at https://www.gov.uk/government/statistical-data-sets/live-tables-on-social-housing-sales#right-to-buy-sales. Accessed 28 June 2021.

  11. See National Archives (1986).

  12. Beyond these privatisations, even where stock was retained by a local authority their level of influence was often reduced through the creation of Arms-Length Management Organisations (for additional detail, see Pawson 2006). Authorities can, however, play a significant role in shaping social housing provision through their oversight of planning processes (for additional detail, see Clegg and Farstad 2021, and Clegg 2021).

  13. As a post-script, the intersection of UK national debt practices and social housing provision again became prominent in 2015–2017. The Conservative government’s move to extend ‘right to buy’ (R2B) to Housing Association residents prompted the Office for National Statistics to alter the designation of Associations from private to public corporations (on account of the state’s influence over Association operations, evidenced by the R2B extension). Under public sector net debt norms, with this re-designation, Associations’ £67bn debts were added to the UK government debt stock. In the shadow of the Conservative government prioritisation of debt stabilisation, legislation was rapidly passed through parliament that shored-up the formal independence of Associations from government, thereby allowing the ONS to revert their designation to private corporations and therefore move their £67bn debt stock back off the government’s balance sheet. For more detail, see Apps (2016) and Barratt (2017).

  14. Beyond this accounting framework-driven impact on debt, government also stands to benefit from such a privatisation through a reduction of its budget deficit through the removal of the annual liability for an operational shortfall, and through the potential use of the windfall revenue from privatisation to pay-down wider debt stock or for other purposes.

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  1. Department of Politics, University of York, York, UK

    Liam Clegg

  2. Department of Politics and International Studies, University of Warwick, Coventry, UK

    Chris Rogers

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Clegg, L., Rogers, C. Privileging privatisation: accounting practices and state transformation in the UK. Br Polit 17, 452–468 (2022). https://doi.org/10.1057/s41293-021-00190-8

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