HOUSING, POLICY REFORM AND
CONSTITUTIONAL CHANGE: SCOTLAND
AND THE UK
Ken Gibb
1. Scottish Housing Policy Framework
• 1998 – everything is devolved unless it is explicitly reserved
• Housing Division devolved covering:
Social housing investment, regulation and reform;
2. Private renting regulation, housing standards;
3. Housing-relevant bits of spatial planning and development
control;
4. Standards for new build, relevant parts of climate change
and carbon emissions; fuel poverty policy;
5. Low cost home ownership; Innovation in public and private
partnerships; stock transfer and other tenure change e.g.
RTB & ALMOs
• Paid for by DEL/Block Grant subvention and by HB (perceived
asymmetry identified by IPPR) … but it is a little more complex.
1.
Housing in Scotland – a Hybrid
Reserved
Devolved
Most Tax &
Benefits
Rent Sector/
Regulatory
Policy
Public &
Private
Finance Rules
Local Tax and
LBTT
1. Framework…./
• Hybridity permits experimentation, innovation and divergence:
- homelessness
- initially in a context of growing real public spend
- later as a response to the GFC and austerity
• Divergence is also about not following England e.g. Affordable
Rent Model
• Barnett consequentials work in both directions:
- big cuts to DCLG after 2010 were initially visited on Scottish
housing programme
- subsequent positive consequentials were often redirected to
housing
- UK policies like Help to Buy modified slightly
- Financial Transactions provide limited further support
2. Housing and the Smith Commission
• Response to the 2007 Scottish election was the UK parties
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•
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•
signing up to the Calman Commission process and subsequent
2012 legislation made all the more urgent by the 2011 Scottish
election SNP majority
The 2012 Act: devolved 10p from each income tax rate and
stamp duty creating Revenue Scotland and also limited
borrowing powers – enacted April 2015 with the income tax
provisions due April 2016
Referendum debate – housing did not really feature except as
a proxy in the welfare reform and austerity debates and as a
capital funding issue
The bedroom tax SNP manifesto commitment in 2011
Post-referendum in the Smith Commission lead up to reporting
– devolving HB was a ‘no-brainer’
Smith
Commission
Powers
• Administrative power to change frequency of UC payments… and pay
landlords directly for housing costs
• Power to vary housing cost elements of UC, including varying the underoccupancy charge and LHA rates, eligible rent, and deductions for nondependents
• DHPs to be fully devolved along with a number of other benefits
Finance
• Control over income tax rates and threshold, but not personal allowance
• Half of VAT revenues assigned to Scotland
• Borrowing powers to deal with economic cycle but not much more
Bell, D and Eisner, D (2014) The Scottish Budget under the Smith Proposals
Draft Clauses
• In January we had the actual draft clauses for the
prospective post election bill:
• Retains Barnett
• Complexity of the critical Block Grant Adjustment process
• Removed two critical proposals by Smith for the Scottish
Parliament to have the ability to top up reserved benefits
or to create new benefits.
• EVEL stalks the land and Housing Benefit is not after all
devolved
3. Key Policy Areas
• I want to now look briefly at four established or emerging
key policy issues that are significant both in Scotland and
rUK
1. Affordable New Supply
2. Investing in Private Renting
3. Housing Benefit
4. Council Tax Reform
New Affordable Supply
• Unmet need nationally 8-10,000 units (2006)
• Post 2007 recession crisis reaction was to accelerate
spend, innovate with partnership models and redirect
consequentials; there was a one year ‘innovative’
experiment with lower grants but it was then forgotten
about
• Post 2011 and strategy development led to 5 year plan to
build 30,000 social and affordable units, 2/3 of which
would be social
• Essentially a different trade-off from England: Scottish
decision to boost grant rates (£55K for HA & LA) which
limits the size of the overall programme.
• Progress thus far
Investing in Private Renting
Tenure of Scottish households
(Annual data)
80%
Tenure of Scottish households where highest-income householder is
under 35 (Annual data)
60%
60%
40%
Owner occupied
40%
Social rented
Private rented
Other
20%
20%
0%
Owner occupied
Social rented
Private rented
Other
2005
2009
2013
0%
1999
2001
2003
2005
2007
2009
2011
2013
1999
2001
2003
2007
2011
PRS
• Stock growing less dramatically than England but still a key
•
•
•
•
•
trend and now largest sector for young households
Major regulatory initiative in Scotland still underway – classic
tension between antipathy to the market and well-grounded
concerns regarding affordability and HB costs on the one hand
and the desire to promote quality corporate and institutional
investment on the supply side
No build to rent in Scotland (yet) and no equivalent to S106
reforms in Scotland
Homes for Scotland research, RICS Commission and the PRS
Champion
With rare exceptions, social landlords either not interested or
focused on mid market rent at most
Private investors/corporate landlords concerned with future
regulatory stance but not wholly opposed to longer leases
Housing Benefit
• Welfare reform and
constitutional tinkering
make a badly designed HB
system worse
• Our new report for Shelter
argues for devolution with
a purpose - doing it to
improve housing and
income maintenance
policy
• The long term aim is to
help shift subsidy from a
demand to supply-side
focus
Reforming Housing Benefit
• The constitutional debate around HB has obsessed with the
bedroom tax and across the political spectrum has not
coherently addressed what to do with it once it is devolved
[even though it has not been!]
• At the heart of the problem is the age-old debate between HB
as an income maintenance or as a housing policy
• Our view:
- shift back over time to a general housing element in working
age cash benefits
- introduce a new but limited affordability based ‘gap’ allowance
- transition slowly and protect losers over time
• Strong assumption about required political consensus to
achieve this and recognition that shift to supply subsidy focus is
far from straightforward.
Reforming Council tax
Council Tax and Alternatives
• The politics of council tax reduction and the council tax freeze
• SNP long term commitment to reform, formerly in favour of a
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•
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•
local income tax; perhaps more open now
LTC is an almost all party set-up (cf Burt Review in 2006)
Reports in the Autumn to be ‘put’ to the electorate in the Spring
of 2016.
Options:
- reformed CT (revalued, rebanded, reweighted)
- Burt-like (NI) property tax
- Local income tax with or without a further property tax
- land value tax (local or national?)
What to do about low income households and asset-rich cash
poor households?
4. Post-Election Progress?
Stamp duty as example of
policy competition
Learning to live with
considerable fiscal
responsibility
Federal asymmetries: city
deals, Devo Manc, Scotland
Poliitcal Uncertainty and
instability ahead?
The big issue - building a big tent
consensus for locking in long term
housing policy solutions – more
credible in Scotland and perhaps in
a more regionalized England?
5. Wider Lessons for the UK and Scotland
• Hard to imagine that the Draft Clauses of the Smith
Commission will be the final word on constitutional change but
nonetheless, there is huge change ahead that will impact to
housing if it does stop where we are.
• Is there wider value in the distinctive performance framework
and the Scottish approach to public policy? Rhetoric of
outcomes, integration, prevention and partnership.
• HM Treasury, the UK financial regulators and the Bank of
England remain the key players for the mortgage market and
home ownership policy.
• Quasi-federalism and other constitutional change at different
levels takes much time, so far remarkably ill-thought through in
terms of knock-on and unintended consequences, and, it takes
our collective eye off substantive policy work (or it obscures
and confuses).
Wider Lessons…/
• Austerity and Welfare reform remain key pressure points
for both Scotland and the UK – how much will things
change after the election?
• Housing supply: will the private sector retreat further from
social/affordable housing work now that the market and
profitability is recovering? How will that gap be filled? Can
rUK emulate Scottish council house building?
• Can Scotland learn from rUK policies to support corporate
and institutional investment in market renting?
• Hybridity and the macro importance of housing requires
greater co-ordination between governments – a
recognition of this would be a start to longer term
consensus about means and ends of housing policy
Markets and Housing do not Welcome
Uncertainty
• Quantum states of
political uncertainty
• Not unlike September
18 2014
• Schrodinger and the
highway patrol