A social housing stimulus package for Ireland

by Ken Gibb

The Simon community’s campaign ‘Home for Good’ is seeking to protect and grow the homelessness and social housing budgets in the Republic of Ireland. This is at a time when spending on housing in Ireland has been hugely reduced and restructured into a plethora of initiatives and a bending of resources towards revenue rather than capital.

I was in Wexford this week, speaking at the biennial Irish social housing conference, and one could not fail to be struck by the depth of the problems faced (historically high and massive levels of housing need as measured by waiting list data), as ranged against the legacy effects of the earlier boom and bust in property and the now much reduced state of public funding available for social and affordable housing.

I can make no claim to be expert on housing in Ireland but what I did in my talk was to offer experience from the Joseph Rowntree Foundation work I led on innovations in affordable housing supply (www.jrf.org.uk) and provide an overview of recent developments in Scotland as we seek to deliver 30,000 social and affordable homes over five years.

I also was asked to draw on earlier research about the possible economic and other benefits of a social housing stimulus package which could make a claim for resources freed up by the end of the Irish Troika arrangements.

The following can I think be stressed:

  • A social housing stimulus will make a direct contribution to the near 100,000 housing need figures and thereby contribute to the Simon Community and wider housing sector’s core objectives.
  • However, the stimulus also will serve to support economic activity and will do so primarily because of the large multiplier effects that housing construction imparts into the economy. I discuss there further below.
  • But in addition to the economic effects on jobs, spending and income, there are wider non-trivial positive benefits associated with additional good housing on health outcomes, education and neighbourhoods. While these are difficult to measure and isolate, there is consensus and a literature on these intuitive benefits.
  • More recently, there has been interest in Scotland in wider characterisations of wellbeing (see the Oxfam GV Humankind index – http://policy-practice.oxfam.org.uk/our-work/poverty-in-the-uk/humankind-index ). Concerned about the narrow focus on GDP as a measure of welfare, Oxfam commissioned a multi-dimensional study of the things real people think are important to their welfare, finding for instance that income security, family and security were more important than cash per se. They also found that the most important quantitative elements of wellbeing were adequate housing and the quality of life in ones’ neighbourhood.

It is worth saying that economic multipliers calculated for house building, housing construction and construction more generally do generate different numbers and consequent impacts depending on where and when they are developed. But, it is also clear that type II multipliers (including direct impacts, indirect impacts and induced impacts from further rounds of spending or production etc) do suggest that in broad terms there are relatively strong positive effects and that these seem to be generally stable over time within countries.

The evidence to hand suggests:

  • Northern Irish research (Smyth and Bailey at the University of Ulster) suggested a type II multiplier of around 1.7 for the construction sector as a whole. A Scottish study for 2004 suggested a comparable figure of 1.9. The authors argued that there was relatively less leakage through imports than might be the case in GB. This means that for every 100 jobs directly created for a construction project a further 70-90 FTEs arise from indirect and induced effects of the initial stimulus.
  • Work by the Cambridge Centre of Housing and Planning Research for the Scottish Government suggested that these scales of impact are broadly right (they calculated a figure of 1.93) but that moreover housing construction might have a relatively high multiplier than construction as a whole. Furthermore, repair and maintenance or improvement expenditure work such as energy-efficient retrofitting may have still higher multiplier values because of their higher labour-intensity.
  • I was at another housing conference in Reading yesterday where further multiplier numbers for England/UK were reported of a similar if slightly larger scale based on recent work by Ernst and Young. Essentially, £1m of housing construction would support 19.9 FTE jobs and considerably more if spent on repairs and improvements. However, it was noted that at least in the UK there is leakage from remittances going abroad from foreign construction workers (as well as imported materials). More positively,  there is more scope for multiplier effects when there is more unused capacity than when the economy is near its limits.

A housing stimulus does good both for those housed and for the economy. It does need to be put in a wider context of the broader policy framework, the vision for society, etc, and there does need to be a sustainable programme for housing over time (and not just one off bonuses) – but against that background, there is pretty robust evidence to support this sort of use of a windfall.