Ken Gibb's 'Brick by Brick'

Housing, academia, the economy, culture and public policy

Returning to the Start: Housing and Public Health

 

Housing intervention by the state started with public health challenges. Public health approaches today have much to say about the structural determinants of health inequality, spatial inequities and connections to key sites and drivers of these inequalities. Housing is of course centrally implicated both in terms of physical and mental health, but also in relation to the broader wellbeing of individuals, families and communities. Housing conditions, fuel poverty, unaffordability, all manners of indicators of unmet need are relevant.

The Scottish Public Health Network have just published a new report: Foundations for Well-being: reconnecting public health and housing. A Practical guide to Improving health and reducing inequalities (lead author Emily Tweed). It sets out to be a ‘best practice resource’ to guide the Scottish housing and public health sectors to improve health and reduce inequalities through good housing. It is well worth a look.

The report is a primer that sets out the context facing the different professional communities, provides useful links to data and policy resources and provides recommendations for good practice and development for both. The big health themes touched on by housing include well-being, ageing, inequality and poverty, health and care integration, community empowerment and climate change. What is helpful as an educational and professional resource is that the report provides a basic grounding or primer for either group, sets out a long list of statistics and other policy and practice connections as well as key practice pointers.  There are also useful diagrams and boxed case studies.

The report (section 2 and appendices) has a nice discussion of the complex multi-dimensional relationship between housing and health (also see a recent review of housing and health inequalities by NHS Health Scotland ). These dimensions include:

  • Bi-directional – while housing may influence health the opposite is also true with health issues constraining locational choices and housing design as well as impacting on financial constraints and employability.
  • Context-specific – impacts and strength of these connections will vary across different populations (and sub-groups), eras and places.
  • Direct and indirect dimensions – where indirect effects can include for instance burdensome housing costs reducing access to other health-benefitting activities.

As the authors say (p.15): “acknowledging these complexities helps add nuance to our understanding, but does not undermine the central fact that housing can be a powerful determinant of health and wellbeing, and of inequalities in their distribution across the population”.

Section 5 is an excellent compendium of resources for housing and public health. Just one example worth following up – a very useful public health oriented report from Wales on the prevention case for housing investment . The final section looks at opportunities for joint working, initiatives that might be taken to link data in housing and health (potentially very powerful) and specific priorities like the private rented sector and strategic joint planning around for instance health and care integration.

I would not pretend to have any background in public health other than reading about it in a housing context and occasionally debating these causality questions with colleagues. More recently through What Works Scotland and through public health colleagues in the University and beyond I have become more engaged with these important inequalities questions. A report like this one is a great practical way into these questions for researchers, students, practitioners and policy facing professionals alike. Well done.

 

Rent Reform and the Too difficult Box

 

Over the last 20 years, I have worked on at least five discrete projects about rents and rent-setting. This has included studies funded by governments and by individual providers in Scotland and Northern Ireland. A feature of this experience has been on the one hand that precious little reform of how rents are set followed on from this work (score zero for ‘impact’), but at the same time, it has been a learning curve. In this post, I want to reflect on these lessons.

First,  we are primarily interested in the pricing of social housing. By that we mean the level of the average rent, the way that rents are distributed around that average reflecting variations in, or differentiating the, quality of the stock, and, how we uprate rents each year. A fourth theme is whether these principles can be established not just for one provider but across a housing system (e.g. all social landlords), be that a local authority, a region or even a country. A fifth theme is whether rents should be consistent across the entire stock or whether pooling would not extend to separate well-defined schemes and new developments? Most of the following discussion assumes complete pooling (e.g. with a premium applied to new build should it be required).

Second, this desire to look at rents may arise because of policy seeking to remove anomalies and put rents on a more coherent basis than current perception or evidence would suggest. It may also arise because of the actions of a single landlord (e.g. taking over another landlord’s stock), it may be due to external policy challenge such as welfare reform or the sense that competitive threat makes its necessary to review the rents. It may also reflect asset management strategies and the use to which rental income is put. There could conceivably also be internal pressures from board members or tenant groups, or indeed staff groups, to address perceived shortcomings. However, we should not underestimate the ability of these groups alongside other stakeholders like lenders or the regulator – to resist or dilute rent reform proposals.

Third, what are the key principles involved? One would be consistency – that rents are differentiated on a rational and credible basis e.g. bigger properties, more space and more amenity command higher rents and do so in a coherent way. A second would be affordability (a thorny issue in its own right) but typically about securing low cost housing for low income households, especially those just above HB ceilings, often in low wage work. A third point would concern viability – does the rent allow development to take place and does it support the ongoing operational delivery of housing services thereafter?

Many readers will recognise longstanding problems of archaic rent structures lost in the mists of time, of anomalies in rent levels comparing similar properties from different landlords and inconsistencies within a given landlord’s portfolio when looking at different areas, vintages of stock and other similar problems. There is also often the sense that rent systems may be past their prime and are slipping into entropic disorder accelerating over time.  These discrepancies can be brought to light particularly during periods of new development, when stock transfers or mergers take place and when the external policy environment sheds perhaps too much light on the way rents are done.

So how to reform? I worked with one landlord who initially wanted to bring the full weight of evidence and analysis through a sophisticated formula rent. The stakeholders I mentioned earlier thought not and subsequently a much simpler model based really only on size and property type became the favoured option. Others lose their zeal for reform when they see that, as in England in the 2000s. shifting to a national formula rent (complete with local average rent convergence across landlords) requires long term adjustment over 10-15 years and also implementing protection measures for those losing out in the form of damping to lessen year-on-year effects. While the English model was relatively complex – such a process of transition and convergence could be devised for much simpler internally consistent models. But a big lesson from the English experience for me has been the unwillingness of Governments to see these sorts of policies through. The simplicity of a national formula rent, for all its problems (e.g. the financial pressure it put on landlords who had to slow down planned rent increase), fell apart after a change of Government and their desire to set off on different paths for non-market housing and required rents for new models. This was then followed up by statutory rent cuts to save on housing benefit – massively expensive for social landlords who in good faith planned reinvestment (as well as  just trying to retain the resource levels of  their landlord operations).

Geography is interesting concerning policy trajectories over rents. Alongside the English experience since 2000, Northern Ireland’s social sector appears to have had quite a lot of discretion though in fact almost all social landlords base their rents on some version of sorts of the dominant (Housing Executive) landlord’s rent points policy from the 1980s.  Again, this has gradually become less recognizable over time (and average rents remain lower for Housing Executive properties). In Scotland, on the other hand, despite earlier research studies examining the merits of a more national system of rent-setting, there has been absolutely no interest from those who would champion rent reform. And as a result, Scotland probably has the least coherent and comparable rents in the social sector across the UK. Yet no-one gets that excited about it, other than in terms of the starting rents required for new build, and the impact of LHA caps on rents and rental income received.

So, does viable, affordable and consistent pricing of rents matter? At one level, of course it does. But more broadly, surely it still makes sense for tenants to be able to make rational, informed judgements about price and quality both within a landlord’s stock and between different landlords? Arguably the growth and encroachment of private renting into the non-market housing sphere is another reason for more not less transparency. But if the regulator is tolerably happy with the situation, if tenants are not too despondent about annual rent increase (outside of England), and if providers are up to their necks in operations and crises, unless the policy environment forces it on them – rent reform is not going to be coming anytime soon. Like so many public policy reform questions, the rationality and benefits of rent restructuring are outweighed by their time, resource and political costs (and it is of course a nontrivial process) – but like council tax reform, not making the necessary change will only in due course make things worse.

 

 

Revisiting the Scottish National Performance Framework

 

The purpose of the Scottish Government is to focus government and public services on creating a more successful country, with opportunities for all of Scotland to flourish, through increasing sustainable economic growth’

In 2007 the first minority Scottish National Party Government established the Scotland Performs framework based on a core national purpose (2016 version above), five strategic objectives, a series of (currently) 16 high level national outcomes, and a set of 55 national indicators that operate at high level but can also drill down to clusters of indicators within specific sectors. This approach has been widely acclaimed internationally (it was initially, in part, the product of drawing on a similar model in the Commonwealth of Virginia in the United States) but has also undoubtedly found sceptics, critics and critical friends.

The Scottish Government is now consulting over the framework, its outcomes and indicators and is undertaking a large-scale stakeholder discussion exercise to support this process . Last week they started with an academic roundtable in Glasgow co-organised by What Works Scotland [link]. The session was held under the Chatham House Rule and involved an historical contextualisation of the origins of the framework, a presentation on the outcomes approach to public policy by Ailsa Cook (shortly to be published by WWS) and a detailed discussion on the structure, format, uses and functions of the framework. Below are my personal reflections on the meeting.

The framework sits at the heart of the so-called Scottish approach to public policy, one that stresses pursuit of agreed high-level outcomes consistent with the national purpose and the application of these objectives down to local level through agreeing objectives with each community planning partnership across the country. It is also about a decisive shift to prevention, stressing partnership working and co-production, community empowerment, inclusion and the breaking up of departments and silos in the way Government is structured and led. The touchstone document for all this is the 2011 Christie Commission on the Reforming of Scotland’s Public Services.

One person commentated that we know, for all the critique that may justifiably exist, that Scotland is ahead of the curve on this accountability-outcomes-performance nexus of public policy. How do we now go forward to better work with the complexity of governance and public service reform rather than adding to it?

A first point that came out of the discussion was an exploration of the implications of the different and not necessarily consistent elements of the national purpose. Economic growth, inclusion and sustainability all feature and may well in normal circumstances represent a series of trade-offs – i.e. increasing one may be at the expense of the others. So, how do you determine the weight to be attached to each element and how does that accord to societal preferences? This quickly moved into a conversation about Kenneth Arrow and social welfare functions in economics and the wider appeal of Sen’s capability approach (which is the underlying normative framework used in much of the work of What Works Scotland).

A second theme was that while there was a perhaps surprising degree of consent around the table for an outcomes-focused approach, recognising that there remains little rigorous evidence at a national level about the impact such an approach has on wellbeing, there was much more concern with the relationship between outcomes and indicators that act as performance proxies. As one commentator noted, there is world of a difference between attributing performance to a conscious service or intervention approach and recognising that it may contribute to it (and that this is located in a credible theory of change).

The critique of performance indicators in general is well known – cream-skimming, parking, only counting ‘what can be counted’, focusing on the indicator rather than the broader outcome or purpose, the scope for a wide range of other perverse incentives that undermine a service or intervention. The meeting also discussed the need for consistently rigorous, generalizable, valid and reliable evidence and operational indicators with which to make meaningful judgements. There is often quite a gap between the outcome statement and the indicators in terms of specificity and measureability.

This would seem to make a case for 1. a greater investment in the evidence and data audit required to build better indicators and 2. a comprehensive attempt to ensure minimum indicator quality. On the latter point, I have always taken the view that there is nothing intrinsically wrong with performance indicators, or with the use of sharper incentives or indeed (as came up in the discussion), the use of payment by results mechanisms – what matters is the appropriateness of their design and the careful assessment of how they are used and concern for unintended consequences.

Perhaps this suggests that Government might consider the creation of an independent review group who could support the performance team, comment and propose amendments to the indicators, evidence and data used? Academics and independent researchers could play a potentially valuable role (and the potentially complementary relationship between quantitative measures and qualitative evidence on the ground was stressed by different speakers). This could be an opportunity from the top of Government down to evangelise the use of evidence in accounting for government and public service performance against desired outcomes.

A third element of the story is the fit between local and national level approaches. With single outcome agreements and now with local outcome improvement plans, local community planning partnerships sign up to specific goals which nest into the national performance framework. On the one hand, this provides for a clear place-based representation of these ideas in localities all over Scotland, but it also brings with it the danger of compounding the performance indicator problems and the over-zealous focus on indicators discussed above at the level of the local authority and below.

There were other useful points highlighted. First, make distributional or social justice outcomes and indicators more explicit and more benchmarked consistently with other nations (in the way for instance economic productivity performance is measured against OECD quartile scores). Second, presentationally, the refreshed set of national outcomes  should be discussed and part of the public policy discourse in their own right,. This should be quite distinct to and separated from the mechanism that seeks to use the best practice theory of change and credible analytical evidence (which is valid, reliable and generalisable) by creating high quality indicators of the journey towards the outcomes (and unlike at present – those indicators should nonetheless be mapped on to the outcomes they seek to measure).

At the end of the roundtable I said I thought it had been a valuable exercise on the criteria that I had both learned a lot and we had produced a genuinely multi-disciplinary conversation – economist shall speak unto sociologist, etc. I think the Scottish Government team also felt there was genuine value from the day and I wish their endeavours well.

 

Accountable? Transparent? Budgets and Public Finance in Scotland

 

‘Exceptionally complex and opaque’ and ‘without precedent internationally’. Fraser of Allander Institute on the Fiscal Framework, quoted by the Finance Committee, Scottish Parliament in their 2017-18 draft budget report

I found myself reading the Scottish Parliament Finance Committee’s draft budget report  the other day in part to prepare for teaching on public finances in Scotland. I was struck just how non-transparent the fiscal framework is and how difficult it is to communicate the consequences of the rules of the game in terms of Scottish policy intentions and budgetary implications. It is as if the designers in Holyrood and Westminster were seeking to be rewarded for fiendish inventiveness rather than designing a set of financial rules that were clear, transparent and fostered accountability. In that respect, the Finance Committee’s report is remarkably helpful (along with the recent SPICe briefing on the budget).

I will get into the main points that struck me shortly but it also raised a second related question. In the year of the council elections in Scotland, there is a near equivalent lack of transparency regarding the local government settlement and the consequences for local decisions on tax and spend. This has, if anything, been exacerbated by both the implementation of the recent council tax reforms and the controversy over what the draft budget means for local spending by councils. We need more transparency here too and perhaps a local fiscal framework (something being pursued by the Scottish Greens) that makes explicable and straightforward how local tax and spend works, how it is impacted by Scottish ministers and what decisions mean for tax bills and spending choices.

What is it that makes the new national fiscal framework so difficult and why is it so significant? The devolution of new tax powers reduces the size of the Block grant. Critical to how this will operate is,  how the Block Grant adjusts, which comes down to a series of decisions, firstly, about the baseline reduction that is determined by revenue in the year prior to the devolution of the tax in question. Thereafter, the second critical question is how accurately tax revenues for the now devolved tax are forecast in terms of playing into public spending planning and control decisions and the risks of over-estimation. Third, there is the contentious question of how to uprate the block grant adjustment for the devolved taxes in subsequent years. This concerns the extent to which Scottish tax revenues grow relative to UK tax revenue growth and  (and this is where the controversy exists between the two governments) then how adjusting for relative population growth between Scotland and rUK operates.

These Byzantine and head-hurting rules are incredibly important. If Scotland can grow its tax revenue quicker than rUK, the block grant and the size of the fiscal cake expand. This fundamentally depends on relative tax policy changes, which currently benefit Scotland because we are not raising the threshold for the higher rate of income tax by as much as HM Treasury – and other things equal we should grow tax revenue per head more than rUK. But it is also driven by relative population change, relative economic and productivity growth (and these presently all look less favourable from a Scottish perspective). As the Finance Committee stress, the Scottish Government have taken on considerably more responsibility and the technical requirements for forecasting future tax, economic growth and in specific sectors too (e.g. land and buildings transactions tax depend on housing and commercial property markets) – and they have done so in a period of remarkable uncertainty, austerity and Brexit.

The Scottish Government is presently consulting over the Scotland Performs National Performance Framework. In the light of the above maybe they need to change the absolute or top line purpose of Government to maximising relative tax revenue growth?

One might conceivably say ‘well, these risks are what happens with more responsibility and that is what real devolution is all about’. My view however is that what we might be seeing is actually the outcome of bargaining over an inherently complex system and one that consequently is difficult to predict, manage and base fiscal plans on. I am sure the Scottish Government will step up to the plate – they have to get this right and must invest the necessary resources and capacity in doing so. Specific forecasting expertise by the Scottish Fiscal Commission will also become much more important in the future. Moreover, the plan is that in less than 5 years the whole basis of the fiscal framework will be reviewed and the indexing methods and other fundamentals may well be substantially revised. Let’s hope for less haste and that a simpler and more durable set of negotiated outcomes is the result.

Then there is the controversy over the local government settlement. There are several accounts of what is happening to local government spending, depending on what you compare it against (draft or final budget in 2016-17), how wide you draw local government activity, and, if you do include other elements, that you know what these extras are worth. SPICe estimates that local government spend in 2017-18 may either fall (compared to 2016-17) by 1.6% to 3.2% in real terms, or if you just look at the core grant (including non-domestic rates), it may fall by between 4.5% to 5.8%. However, speaking to the local government committee of the Scottish Parliament, the Cabinet Secretary argued (para 273, Finance Committee Report on the 2017-18 Draft Budget) that ‘when wider spend on local services, including funding for health and social care integration and from council tax reform is considered, there is an increase in expenditure on local services by local authorities of £240 million or 2.3 per cent.

Clear as mud. And then there is the interaction between grant, non domestic rates and council tax – we (i.e. tax paying voting citizens of Scotland) surely need to clearly understand how all this works together so that we can make sense of the financial and service outcome implications of different political platforms? Can we not do better?

 

Evidencing the Scottish Approach to Public Policy

 

Back in August I attended a roundtable hosted by the Carnegie UK Trust and the Alliance for Useful Evidence (AFUE) in Glasgow about the extent to which we can discern a Scottish approach to evidence that would underpin the so-called Scottish approach to public policy. The findings from that event has now been put together in a helpful discussion paper by Pippa Coutts and Jenny Brotchie.

What Works Scotland (WWS) is a multi-disciplinary programme of work carried out by the Universities of Glasgow and Edinburgh, supported by its many partners and funded by ESRC and the Scottish Government. I am part of the WWS team. WWS is fundamentally concerned with the use of evidence to inform and support public service reform in Scotland and different dimensions of the Scottish approach to public policy, as exemplified by whole place based policies at community planning partnership levels (and also disaggregated down to local community or neighbourhood levels).

How might we characterise the Scottish approach to public policy? The discussion paper stresses the combination of the outcomes focus of the National Performance Framework estsblished in 2007, the impact of the Christie Commission and its emphasis on the four pillars of empowering people, shifting to preventative spend, promoting partnership and more efficient public services. The Scottish approach stresses integrated, joined up and cross–sectoral co-produced working. Subsequent developments have included espousing greater government openness, legislating on community empowerment and with further decentralising proposals proposed for the current parliamentary session. The discussion paper describes this approach as emergent and the summary states (p.2): ‘whilst we understand these intentions may not be matched in implementation, we think the Scottish approach offers exciting opportunities’.

The discussion paper goes on to argue that the system or modes of evidence required to support the Scottish approach is not yet in place. What is required is a system-wide production and use of mixed forms of evidence rather than concentrating on specific sectors or programmes. The paper argues that the evidence base for greater collaboration and co-production across the research producer and user community in Scotland needs to be strengthened and needs to better involve citizens in that process. At the same time, evidence, from whatever sources (quantitative or qualitative), should be rigorous and seek to minimise bias. The paper speculates that there are lessons and evidence from participatory research and directly from communities (e.g. undertaking participatory budgeting exercises or other forms of deliberative decision-taking) that could improve policy effectiveness.

What needs to happen? The road map suggested by the Carnegie UK Trust and the AFUE involves first, strengthening the national performance framework and promoting its use coherently at local level. Second, they contend that there should be investment in research on co-production. Third, high quality evidence should be embedded to support decision-makers at all levels. Fourth, there  would be value in brokering and developing boundary-spanning relationships across professional, academic and third sector communities to enable them to better work together. Fifth, there is much to learn from outside of Scotland and also a duty to share the Scottish experience more widely.

The paper is an interesting read and one that cannot be adequately captured in a short blog post. Experience from What Works Scotland (see outputs on our website) leads me to make the following points. First, the game-changer for me is how to embed evidence systematically into working practice at local level in all localities. We know that presently there is considerable variety of experience, capacity, resource and use of evidence. At the same time, second, there is actually something of a crowded landscape of providers of profiles and indicators from national levels to the local and there is clearly much interest in how this could be better co-ordinated and more locally contextualised. Third, the Scottish approach is clearly evolving and parts of it have to be refreshed. The Scottish Government is currently consulting widely over the National Performance Framework including its local dimensions and we in WWS look forward to contributing to that process.

Finally, I strongly concur with one of the roundtable participants who stressed (p.13) the importance of learning from failed projects, from what does not work: ‘There’s also something for me about….it’s a kind of form of publication bias, because we only ever hear about the success stories….you don’t send ministers to visit the failed projects’. Indeed.

 

Lessons from German Housing?

 

IPPR has recently been producing a series of reports on housing in Germany asking why can’t the UK follow in its stead and take on some of the apparently desirable features of their housing system. As with other examples of policy transfer, diffusion or mobility, I don’t think it is always as straightforward, though IPPR are demonstrably aware of either the barriers to transfer or that we do need to look closely and critically at the German system as well as positively regarding certain undeniably positive outcomes.

What do IPPR say in their reports? The first one says why is it that Germany builds more homes, has a less volatile housing market and a bigger private rented sector? The second report, out last week, describes renting (i.e. the PRS) as the dominant tenure, more stable and with greater rights than for those in England. Since 1995,  and with much lower levels of volatility, German house prices have risen by 50%; in the UK they have gone up 400%.

IPPR argue that greater levels of housing construction are associated in Germany with a wider range of builders, both SMEs and larger firms. Ostensibly similar (a plan led system like in the UK), Germany seems to do better at converting planning permissions into new supply (i.e. the housing delivery system) but they have also seen a significant reduction in the volume of affordable housing being constructed. Perhaps more significantly, German public authorities are more proactive in the land market assembling sites and delivering infrastructure. Unlike the English, they continue to use planning gain to support the development of affordable housing. The lending environment is  more conservative than the UK and mortgage debt to GDP is considerably lower. While the housing tax regimes are not dissimilar, the German system of capital gains tax encourages long term property holding rather than speculation.

Interestingly, the IPPR conclusions include what they call mis-steps that should be avoided in the UK: first, they argue that a model of long term covenants (20-30 years) has failed to deliver more affordable units and second, they argue that there are higher transactions costs and inflexibilities that may impact negatively on the labour market.

Turning to the second report on private renting, IPPR stress that alongside security of tenure, private rents in Germany are much less likely to be associated with housing stress or very high housing cost to income ratios. Germany has a large supply of rental properties (which helps reduce the impact of longer tenancies on the supply of vacancies and this is supported by rent controls and a further control or brake on rents when properties are re-let. Not surprisingly, in such a different tenure distribution, tenants are also organised politically and have voice in a way that does not exist in the UK. This leads IPPR to recommend for the UK that: government should let LAs construct build-to-let schemes as part of the PRS and also recommends longer tenancies if public subsidy is involved.

The reports are worth reading and make excellent points. However, one must recognise the universal challenges of lesson-learning, transfer and diffusion of policy across national boundaries where market contexts, institutional settings and the evolution of housing systems move differently. Germany has more than half of its households in private renting but the institutional features of the PRS in Germany are quite different, as we have seen, from the deregulated UK. The benefits of the system stability and much more moderate volatility have taken decades to achieve and have had to overcome the challenges of reunification and surplus low demand social housing in the East. They have also enjoyed a comparatively stable policy framework without the catalogue of initiatives and innovations that we suffer from.

Yes, it is true that they do not meet their housing need targets and affordable housing completions are moving in the wrong direction. It may also be the case that the German mortgage market is more conservative and it is undoubtedly true that their rental market (by definition) is less flexible than that of the UK. But this may be an acceptable trade-off in terms of overall housing policy outcomes?

The point about the mortgage market is interesting for other reasons. Recently, in the House of Lords Economics Affairs Committee inquiry into housing, Dame Kate Barker made the point that there is a massive tension between housing-related government departments trying to boost housing supply and home ownership while, at the same time, HM Treasury, the Bank and the financial regulators are re-regulating and constraining mortgage lending.  Acknowledging this difficult trade-off and trying to develop the right balance is a critical requirement for housing policy and the forthcoming White Paper on housing.

I think these reports are a fundamentally good idea because it is by looking at other places in some depth that we shed light on some of the things wrong with our housing system. However, apart from one references to legislating over letting agency fees, I was a little surprised that IPPR did not make more reference to Scotland, given that we have just undergone fundamental reform to our tenancy laws (creating open-ended tenancies and limited specific routes only for eviction) and also proposed rent uplift limitations in pressured market areas. It is Ironic that there appears to be less interest with intra UK policy diffusion. After all while housing policy is diverging rapidly across the UK, it is nonetheless much more similar than comparisons made with Germany. Although it is early days and the law is not yet in force,  considering reform along Scottish lines might be preferable to the IPPR proposals suggested above which are premised on retaining the present tenancy laws and hence privileging, it seems to me, labour market flexibility over housing security.

 

 

Scottish Welfare Benefit: Using the New Powers

The Scottish Government last week announced the first use of its new devolved powers over welfare benefits. The 2016 constitutional legislation gave Scotland power over specific benefits amounting to around 15% of all benefit spend in Scotland as well as powers to top up and create new benefits in most areas (though not pensions) which would be funded from within Scotland, as well as discretion to amend specific benefit rules in certain ways as they apply to the application of Universal Credit. 

While not underestimating in any way the importance of the devolved benefits to their recipients, it is in truth the medium term development of top-up, new benefits and the use of these discretionary rules that will mark out Scotland’s own path on welfare benefits mostly distinctively. And of course this will also be where the political debate will be most intense.
A strand of the party political discourse in recent months has been the Government’s reluctance to take on the new financial powers and use spending, tax and benefit powers to pursue a range of home-grown policies. In truth, there are plenty of reasons not to alter radically income tax rates, contemplate fundamental reform of council tax or spend block grant at the margin on extra benefit spending. The overall budget is undoubtedly under pressure which makes extra spending more difficult. Equally there is caution over raising taxes or being seen to threaten property owners via local tax reform. Third, Scotland has a minority government where tight votes over budget issues and their implications have to be carefully thought through. Fourth, the new benefit powers require new local policy and service delivery infrastructure that cannot be rushed – delay to the full devolution of benefits is inevitable and should not be surprising.
It was in this somewhat risk-averse context that it was encouraging to see the Scottish Government last week announce that it would (a) look at moving the frequency of Universal Credit payments to be shortened to fortnightly rather than monthly (with scope to consider who receives the payment too) and (b) that the rental element of Universal Credit could be paid direct to landlords, both social and private rental providers. These are low hanging fruit in the sense that they are relatively simple and low cost but they are important to the people affected, symbolic of what is possible and in the current circumstances, offer sensible policy development.
The direct payment issue is an interesting topic. Private landlords have longer experience of tenant responsibility for making rent payments but both social and private will undoubtedly welcome the security of payment offered by rent paid direct. It was always apparent that vulnerable households and people already in arrears should be exempt but that begs further questions about definitions of such categories and the opportunity cost of setting up systems to manage them and to prepare social tenants for payment responsibility. One might in principle want to shift over time cautiously  to a system of tenant payment responsibility but this is simply not realistic at present or in the foreseeable future. The benefits of direct payments to landlords far outweigh the cost.
The big challenges remain – in particular, for housing costs, removing the ‘bedroom tax’ and contemplating increasing the levels of housing costs covered by Universal Credit. These will have direct spending implications (though will be offset in the case of the bedroom tax by reducing the need for discretionary housing payments to go to help tenants meet the spare room charge as well as other contributions from the Scottish Government). But we do have a start in the announcements made last week. And, as Frank Herbert once said ‘a beginning is a difficult thing’.

Welfare Reform and Devolution

 

I was part of a panel at the Social Security Committee of the Scottish Parliament today talking about their work programme priorities for the next five years. It was particularly attractive as a session because Steve Fothergill from Sheffield Hallam was first presenting new evidence  on the impacts of the post Coalition Government welfare reforms on Scotland. However, train problems on the way to Edinburgh meant I only heard his discussion session with the MSPs. In this  post I am going to go over his and Christina Beatty’s findings and then move on to the discussion we had about the committee future priorities.

Beatty and Fothergill’s analysis is a model of clarity, it builds on an established body of work, it makes clear where the data and evidence shortcomings are and it implies where new research is needed. Fothergill was refreshingly straightforward and more than willing to point to the political dimensions of welfare reform. The main findings suggest that, first, there will be big financial losses to households as a result of the additional post-2015 election welfare cuts in Scotland. These will be of the order of £1 billion a year as a result primarily of – the four year freeze on many working-age benefits and reductions in the work allowances within Universal credit (i.e. the point where benefit withdrawal tapers kick in). Cuts arising from the move to PIPs from DLA will also be important, as will planned reductions in tax credits.

Second, there are significant variations across Scotland with older ex-industrial and more deprived areas tending to fare more badly on a per capita basis (although the Scottish average is close to the GB average as a whole). Third, the expected figure of an annual additional financial loss of a £1b per annum for the post 2015 period needs to be added to the 2010-15 welfare changes which themselves imposed a financial loss of £1.1b (admittedly a lower figure than was anticipated because of the challenge in bringing down spending on ESA).

The report is thought-provoking stuff and it is great to see this analysis done at a Scottish level. I was struck by some of the housing-related evidence implied by their research.  Some of the housing information included:

  • The lower benefit cap (£20,000 p.a.) will impact on 11,000 Scottish households and cost £25m a year compared to just 900 under the previous regime.
  • Mortgage interest support, converted into a repayable loan (on entering work or on sale), affects 17,000 Scottish households and costs £25m a year.
  • 1,500 people are set to lose out because of the exemption of Housing Benefit for those aged 18-21 (and not deemed vulnerable – existing an estimated £4m a year.
  • The LHA cap extension to the social sector is estimated to affect 55,000 Scottish households and to cost £40m a year (not clear how this disaggregates between general needs and supported housing, the latter of which is expected to be particularly problematic though it will not be initially affected). Also it was not clear from the report whether this 55,000 sum explicitly includes the under 35 single person households who are treated as if they are sharing housing (ie receive benefit up to the shared accommodation rate).

While the report is about welfare cuts post 2015 in Scotland, it does allude to possible offsetting effects – higher personal tax allowance, enhanced child care, and the minimum wage. But more could have been done to bottom these figures out and and quantify the balance between winners and losers in net terms. In the discussion with the MSPs Fothergill argued strongly that there was no evidence that employment growth follows from sharper benefit incentives as experience din recent economic cycles. He also argued that the long term growth, for instance, in levels of ESA are about lack of jobs. The demand-side explanation is strengthened by the evidence that in high demand labour markets in southern regions people with disability or illness are more likely to get work and can find jobs – but this is more difficult in low demand areas. Supply does not create its own demand.

Turning to the priorities for the committee in the coming Parliament, I recognise that the housing end of social security does not always come top of the bill and today we focused much more on disability, employment support allowance, work assessments and broader system level questions associated with the devolution of social security powers. Consequently, my contributions were modest.

It was not long when despite the conclusion from Beatty and Fothergill that we should not overstate the Importance of devolution of social security powers to the Scottish Parliament, we nonetheless agreed that this was in fact the priority, but also a huge challenge and an opportunity wrapped up in one.  Despite the fact that the Scottish Government does not intend to fully take on the powers till 2020 as one MSP said, the time is now to start planning, and also to ensure the infrastructure and systems are established, and to build the necessary policy and delivery capacity.

My view was that the 15% figure (the proportion of social security spending to be devolved) is a bit of a red herring (though Kirstein Rummery made the good point that it us like being given a block of cash that, now devolved, the Scottish Parliament can design it and use it as it thinks best – there are therefore many opportunities). This is because it is the additional powers to top up, create new benefits and change the rules applying to things like Universal Credit and its housing cost elements that create open-ended flexibilities and choices for Government. However, they all have to be paid for out of the Block and this means Scotland has to consider both its revenue-raising capacity and economic growth (including its new tax powers) to fund expansion and also whether there are choices between spending headings that could change to meet the social objectives of new and better social security benefits. There are opportunity costs from constrained political choice but there are also genuine opportunities.

Much of the discussion was about work assessment, disability benefits and also of course conditionality and sanctions. I was struck by the fact my colleagues around the table had so much relevant evidence to bring especially on their own direct projects and in relation to reviews of international studies. There does seem to be, as was true also in the last parliament, that committees do genuinely want to work from a proper evidence base. This has to be a positive sign in these otherwise concerning times.

True Grit – Ken Loach and the reality of welfare conditionality

 It has been quite a week. I saw ‘I, Daniel Blake’ in the cinema, there has been considerable media scrutiny of the new lower benefit caps and their impact, the DWP has produced a controversial green paper on the future of Employment Support Allowance and the Scottish Parliament debated the effects of sanctions and welfare conditionality, in part as a result of the ongoing ESRC programme which includes the excellent work of my colleague Sharon Wright.

The new lower benefit cap moves the likely burden from very large working age households or people often only in high cost housing reliant on benefits to many more households and often with children right across the UK. From 7th November 2016, the lower benefit cap begins to be rolled out. For couples and single parents, it will fall from £500 per week to £384.62 outside of London and for single people it falls from £350 to £257.69 outside of London (higher costs in the capital mean the reduction in the cap is less there). The benefits primarily affected are housing benefit, universal credit (and its components) and other working age benefits but also things like child tax credits and child benefit. The Guardian reported that 116,000 households would be materially affected.

The Green Paper (Improving Lives) is focused on increasing economic activity among the sick and vulnerable.  It is critically summarised by Paul Spicker in a blog this week who said: “It proposes to extend to those for whom working is least viable the kind of regime that has so signally failed for people in the ‘work related activity group’. If people who are sick cannot find ways to engage with the labour market, why should we imagine that people who are  sick and vulnerable should fare any better?”

The conditionality debate in Parliament highlighted the strength of feeling among our politicians about the impacts of sanctions and the problems they pose for welfare policy and people affected. In a piece for the Daily Record Sharon Wright summarised the key difficulties evidenced in her research:

  • Sanctions led to short term crises and long term debt repayment problems.
  • They were associated with rent arrears, the threat of eviction and possibly homelessness.
  • Sanctions often come without warning – and if people don’t know about the sanction how can it effect the DWP’s desired behavioural change?
  • Sanctions had profound negative wellbeing effects on those directly affected and in the end it was support to help people into work that mattered not sanctions – carrots not sticks.

And what about the film? ‘I, Daniel Blake’ was highly-charged and emotional. I will long remember the complete silence in the cinema when the credits abruptly come up. People looked stunned and many were upset. The film uses highly plausible scenarios to document the descent into poverty of normal people who are dealing with  common human circumstances like sudden ill health or family break-up. Engaging with benefits and systems like Employment Support Allowance and ultimately conditionality, is overwhelming for those less skilled in the world of digital by default and coping with the abrupt shifts into conditionality, as also reported by Sharon in her research. Vulnerable people can be forced to turn to food banks for resources and the black market and illegality for income. There is a strong Kafka-like feeling in the film as Job Centre Plus officers repeatedly use the ‘decision maker’ as the disembodied arbiter of whether or not one gets the benefit they are applying for.

It is a great piece of fiction but one that has a real sense of authenticity. It is well acted and brilliantly made. I did however think the Job Centre Plus staff were with one or two exceptions a little two dimensional, especially the nurse ratchet character and the general demeanour of the staff who were ‘just following orders’.

Thinking on the big themes of the film, I think a complete overhaul of the employment support allowance is needed and the DWP has to end the byzantine and often impossible choices created by the system facing the lead character who was turned down for ESA and can only apply for JSA when he is patently not fit for work. Paul Spicker’s views about these matters as suggested in the new Green Paper seem to be a good place to start. Second, there can be no basis or situation where individuals and especially children in families face destitution as a result of sanctions. This has to end. Third,  the film stressed the confusion and lack of help available to vulnerable people so that they have some chance to navigate (consistently) the arcane complexities of this obtuse and often dehumanising system. There must be a clearly stated rapid assistance system 24/7 on the end of a phone or for working hours  in a town centre office that offers clear and independent advice across all of the UK. Or if it already exists, people must be clearly directed towards such support and this should be done at the earliest possible point in the journey.

Land, Tax & Housing Supply in Scotland

 

The Scottish Government has its five-year target of 50,000 new social and affordable homes and is exploring ways that the sector might overcome bottlenecks and impediments to the required levels of new build. Not surprisingly, there has been a focus on the supply delivery system, planning, the development industry and the land market. Scotland has recently had an independent review of the planning system chaired by Crawford Beveridge and earlier inquiries by RICS Scotland  and by the Shelter Commission on Housing and Wellbeing. Now, as a sidebar to the recent proposed reforms of the council tax, it has been suggested that the Scottish Government would consult on the efficacy of a tax on vacant and derelict land, so as to incentivise the supply of housing land from those relatively untapped sources. This follows on the recent introduction of a similar levy on such land in Ireland.

This was the context for a roundtable discussion I attended Tuesday morning about the pros and cons of such a tax chaired by the minister and populated by stakeholders across the housing supply delivery system, professionals, policy, academics and practice. It followed the Chatham House Rule so I will simply reflect on themes expressed around the table.

The meeting was structured around three key questions: why can’t we deliver more housing supply; would a tax on vacant & derelict land help; what other policy instruments might help? There was a wide range of views on show both in terms of diagnosis and what needs to be done.

Regarding what prevents housing land supply coming forward more speedily, there was (unresolved) disagreement over whether or not speculative land banking played a part. Other culprits were identified as high levels of risk, infrastructure constraints, construction capacity questions, the reduction in SME builders since the crisis, the cost of decontamination many derelict sites relative to the funds available, and lack of access to sufficient affordable land – amongst several other issues. Underlying much of what was said was the continuing large discrepancy between the volume of housing land with consents in the housing land supply figures and the much lower number of what actually gets completed. How do we rectify this and what quantitative significance does vacant and derelict land play as part of this story?

Contemplating a tax on vacant and derelict land means having clear definitions of what it means to be derelict or vacant and targeting the tax appropriately. That is not easy. Assuming that it can be done the tax would have to overcome a series of standard hurdles: the tax should be cheap to set up and run, it should be simple, transparent and be credible as a fair burden. It should also minimise wider distortions or unintended consequences.  I argued that if these criteria could be met through careful design, the tax should also possess local discretion so that the nuances of locally heterogeneous markets could to an extent be addressed. Overall, a wide range of views were expressed about the feasibility and desirability of such a tax.

In the course of the discussion a number of important wider points were made. First, there is of course a major issue about dereliction in our town centres and working on creating residential demand and solutions for these properties could play an important role in the future of many urban areas across Scotland. Second, there was a sense in some quarters that derelict and vacant land was a part of the problem of land supply for housing but it should not be over-cooked against the wider questions of how we best deliver on new housing targets. One view was that there was essentially nothing that far wrong with the planning systems aims and goals but there was a too common failure to actually deliver the housing delivery public policy outcomes we desire – and we need a range of mechanisms to make that happen.

How might this be done? First, there was discussion of the prospect that planning permission might be taken away on a site if it is not used. This is often discussed but of course there are dangers here – the site may nonetheless be a viable site and its development will be delayed and, moreover, by taking consent away, the effective housing land supply is actually being reduced. Second, there was discussion of national and regional land development agencies that could overcome market failures by delivering serviced affordable land for housing. To that end I would also support local revolving land funds that could do the same once they are pump-primed with initial funding. Third, it was suggested that the state can borrow over much longer periods than the private sector and should do more to exploit this by playing a larger role as an investor in infrastructure versus the relatively short run requirements of market sector developers and that, furthermore, there was an appetite for this long term state investment debt from pension funds.

Finally, there was debate about whether the local state has the capacity and even the confidence to use its existing powers, notably CPO as a way of braking log jams, assembling land and moving sites forward. Several speakers stressed the opportunity to use compulsory sales of land which has the added advantage that it is far cheaper to do in terms of transaction costs than CPOs from the point of view of local government.

Plenty of those present brought specific experienced examples to the table to make their arguments. Only one academic brought detailed research evidence (it was not me). One takeaway point for me from the debate in public policymaking terms, therefore, was that the Scottish Government still has an exercise ahead of it to collect different forms of rigorous evidence as well as this distillation of key stakeholder views – before decisions are taken about the direction of, and specific instruments for, a policy aimed at successfully expanding housing land supply and completions.