Social Housing – the council house or housing association house is SUBSIDISED and therefore, (a) it is a scarce resource and a privilege; (b) higher earners should pay MORE to stay; (c) that is the ONLY reason why it is cheaper than the (uber-efficient?) private rent; and (d) any number of other policy ‘proposals’ based on it being SUBSIDISED
Yet if social housing is not ‘SUBSIDISED’ then it follows all the above is nonsense.
Social housing receives £1.2bn per year in ‘subsidy’ from the public purse yet take that away and what happens? – Social landlords become in effect private landlords as they receive no public money and the consequence would be social landlords would raise their rents to the level of private rents & Housing Benefit payments would have to increase to the same level.
We can accurately say what effect that would have as the official HB figures break down benefit levels by housing tenure. The national average social housing HB payment is £80.85 per week and the national average benefit paid to private rented is £107.06 per week – a difference of £26.21pw.
The social housing ‘subsidy’ of £1.2bn per year means that the public purse and taxpayer saves £26.21pw in ongoing ‘subsidy’ (Housing Benefit) for every social housing in reduced benefit payments. There are 3,382,870 social housing properties in receipt of housing benefit each receiving £26.21pw less in public purse benefits than the private rented properties receive. This means the taxpayer pays out £4.626bn less to social housing each year in Housing Benefit than it would if social housing ‘subsidy’ was taken away.
The argument for social housing ‘subsidy’ is therefore economic as it means the taxpayer who ultimately pay any form of benefits through their taxes have to pay £4.626bn LESS in tax because of the ‘subsidy.’ Subsidy is therefore the wrong term.
More correctly social housing ‘subsidy’ is an invest to save programme that works and means every taxpayer pays £170 per year LESS in tax.
[As a ballpark figure every £1bn of public purse spend is £40pa in tax from each taxpayer]
One of the fundamental issues every social housing provider has to face is the MYTH that social housing is SUBSIDISED. Social housing is castigated because of the ‘subsidy myth’ and it is largely castigated because it is perceived by the general public that it is a public purse and taxpayer cost. The ‘my taxes are paying for the feral scum that live on council estates’ type of rent we hear the general public say and the blame game we read in the media of much the same argument.
Unfortunately even many social housing practitioners believe (errantly) that social housing is subsidised and that is the biggest failing of the sector which has fallen from a 75-80% share of the rented market to less than 50% in the last 30 years or so. It is not the numbers which are staggering but the idea. Social housing provides a better all round product and service to the customer as the tenant has greater security, better conditions, more rights to repairs and involvement and so many other benefits not enjoyed by the private tenant.
In what other ‘market’ does the better product and service all provided at a much cheaper cost reduce its market share?
That makes no economic sense whatsoever yet it is precisely what has happened in social housing over the past 30 years. I would argue strongly this has to be because social housing is seen as a political construct and not as it should be perceived and economic one that as the above figures prove is most definitely in the national interest and in the interest of every single taxpayer in the UK.
Look at it another way, every mortgage payer knows the more you put down as a deposit then the less you have to pay in ongoing monthly mortgage payments. Yet that is called a ‘deposit’ and not called a ‘subsidy’ despite this being exactly the same principle and rationale for social housing ‘subsidy.’ Further every mortgage payer sees the economic benefit in paying as much of a deposit as they can. So why is social housing ‘subsidy’ viewed so differently and in such a pejorative way?
It is because social housing is seen errantly as a political issue and not an economic one.
It is that simple factual message that the social housing sector has repeatedly failed to get across to the general public. In NOT advocating and promoting that factual economic argument the social housing ‘sector’ allows the political opponents of social housing the opportunity to spout and propose nonsense such as ‘pay more to stay’ and the ‘bedroom tax’ and the ‘affordable (sic) rent model’ and all other housing reforms which will damage the country economically. It also allows this coalition to describe and portray social tenants as scroungers and privileged and to get on their high horse over all social housing policy matters.
It allows the general public to errantly believe their taxes subsidise social housing tenants when in fact the reverse is true. Bob Crow, the union leader, is often cited as the example of a huge moral wrong – that those that can afford to live in private housing should do so and / or pay more to stay in social housing. Yet Bob Crow saves every taxpayer £170pa as does the non-working tenant. Bob Crow saves David Cameron £170pa in tax and saves Richard Branson or any other UK billionaire £170pa in tax and saves every taxpaying reader of this blog £170pa in tax.
So next time you read any argument based on social housing is ‘subsidised’….dismiss that argument as errant nonsense because it will be.