The case for fully devolving Housing Benefit

UNISON's case for the full devolution of Housing Benefit has been supported by the respected think tank IPPR. Scotland needs all the policy levers to effectively address our housing crisis.

The command paper 'Scotland in the United Kingdom: An enduring settlement', (love an optimistic title!) sets out the legislative provisions to enact the Smith Commission consensus for further devolution to Scotland. There has been some political froth over who holds power over those aspects of welfare that will be devolved. In fairness, consultation clauses are not unreasonable given the complexity of Universal Credit that will remain reserved to Westminster.

However, this fuss has masked an important debate around Housing Benefit. The draft legislation gives the Scottish government certain powers to vary the housing costs elements of the universal credit and how they are paid. But as UNISON, and now the IPPR have argued, the case for taking housing out of the universal credit altogether is a very strong one.

The rationale is set out in the IPPR North report, Poverty and devolution:

"…the devolved institutions are responsible for key aspects of the housing and property market. They control not just housing policy and investment, but also planning policy. As a result of the Scotland Act 2012 the Scottish government will also have responsibility for all property taxes. Devolved governments can encourage the construction of new houses in both private and public sectors, and in particular facilitate increases in the social housing stock through investment they make, direct or permit, if they wish.

‘And yet in spite of a stronger understanding of their respective national and local housing market conditions, their unique housing problems, and the housing competencies needed to influence the supply and type of housing, they do not have control over rent subsidy. Control over such a key investment stream is the missing piece of the puzzle for better housing policy and a clearer, more local focus on tackling the cost of housing.

‘First, rent subsidy control would allow the administrations to determine problems and priorities that accord to their local circumstances, rather than policies set in Whitehall (such as the spare room subsidy) which appear to be of little relevance to housing markets in the devolved nations – as evidenced by the deal that was struck with Northern Ireland – but nevertheless can force rent subsidy recipients into destitution. For instance, rather than the Scottish government having to invest resources in reversing the effects of the spare room subsidy, Scotland should instead be making rent subsidy budgeting decisions themselves, in a manner that would target Scottish allocation problems, not ones in London.

‘Second, devolving rent subsidy budgeting could over the long run increase the supply of affordable housing and reduce the costs of rent subsidy. By calculating the long-term trade-offs, devolved governments could target their investment in social housing to reduce the costs of housing benefit. Allowing the devolved governments to use a proportion of housing benefit money to build new social housing, and in turn reduce expenditure on the more expensive private rented sector, would result in socially useful assets (which potentially could be sold when no longer needed) and is arguably a better long-term use of public money. Cutting reliance on the private rented sector by offering cheaper rents offers social tenants a quicker route out of poverty.

‘Third, control over rent subsidy would also bring much more stability and certainty to their substantial housing investment budgets. With the ability to control how rent subsidy policy is made, the devolved institutions can provide revenue certainty to their own public housing investments, and provide a more stable platform for affordable housing supply from the registered social landlord sector. As IPPR has argued elsewhere, the devolving of housing benefit would, over time, potentially contribute to reversing the 30-year drift in public spending from building homes to subsidising rents. In the long run it would be far better to invest more in bricks and mortar than in paying private landlords. The devolved administrations have proven much better at investing in new supply of social housing, and are as a result more active in helping families to reduce the housing cost pressures that have such an impact on policy discussions."

UNISON did not argue for the devolution of welfare benefits in total because we accept that there are a number of benefits that should remain a shared risk across the United Kingdom. Mainly because they are cyclical and that creates particular financial challenges for a devolved government. However, this doesn't apply to housing benefit and only the misplaced desire to protect the integrity of the Universal Credit prevented this happening when the original Smith Commission proposals were being developed. The Tories under pressure from the DWP, already in a mess over Universal Credit implementation, changed their position from the original submission.

The announcement from Labour that, if elected, they will fully devolve Housing Benefit is a welcome commitment. Controlling all the levers of housing policy is important if Scotland is to tackle our housing crisis.