UBS again

My last post on universal basic services (UBS) was rushed out in a naptime and an evening and, to be honest, I didn’t expect it to have the immediate impact it did. Many thanks to Jonathan Portes for replying on twitter, which may have had something to do with it.

As I mentioned early on in the previous blog, I wasn’t aiming to be critical, but to take the proposals seriously and critique what was being outlined in the report compared to what was being suggested in parts of the press. The closest I got to criticism was asking for more information on a couple of points, specifically about housing (or shelter) and food.

Full credit must therefore go to Andrew Percy, co-director of the Social Policy Network, for responding in his own blogpost. That said, I’m hoping he wasn’t just responding to me. Firstly because that wouldn’t be good for my ego and secondly because some of the things he refers to as “some confusion” aren’t in my piece.

In any case, I think there is enough in the reply in order to come to some broad conclusions about UBS, the scope of it and what this means if there is a serious attempt to implement it.

On food (or “nutrition”) the proposals are a big expansion of local and community led food services, so that those in need can call upon assistance. Andrew states he would ideally like to go further and have something everyone can partake in now and again, but the recommendation of the report is something more like a large community run but centrally paid for food bank in every local area.

I think we can leave food there. I have nothing more to say on it and would be happy if those proposals were put forward as some part of a UBS scheme.

On housing it gets a little bit more complicated. My concerns were essentially about cliff edges (between those who receive the service and those who don’t) and that the system looked static and that a dynamic component had to be added to make the policy more clear. Andrew has kindly sketched answers to those points.

His response states that whilst the 1.5 million properties proposed will be available rent (and utilities) free for 30 years, that doesn’t mean they will be let to the same household for 30 years. So we are looking at something like set tenancy lengths, with (I’m assuming) the possibility of renewal if things haven’t improved. In terms of the actual allocation of homes, this would be done based on housing need, perhaps in a similar way to how council housing is currently allocated.

For me that means there will still be some cliff edges. The person who is included gets a home for a period, utilities paid for, etc. The person who may be just slightly less in housing need, doesn’t. In the final analysis allocating resources like this means the line is always drawn between two very similar set of circumstances- one gets it, the other doesn’t.

Now, it is fair to say that there is already an element of this in the existing framework. Someone allocated a council home is likely to have a lower rent than their colleague who lives in a private rented home. With the same income the person paying  a higher rent loses out. Housing benefit does a little bit of smoothing this out, but past a certain income it no longer applies.

Where UBS shelter looks significantly different to me is that those who get it really do considerably better than those who don’t. In housing benefit, the minimum payment is 50p, so when the line is drawn the person included gets 50p a week and the person with a few pence a week higher income gets nothing. They’d probably agree that makes sense as their circumstances are so similar.

But under UBS shelter this distinction between very very similar circumstances, whether it is done on income or housing needs, means one person gets a subsidy of hundreds of pounds a week whilst the other with very similar needs gets nada.

Will politicians go for this? Will people vote for it? Will we be ready to change parts of our civil society and become more locally led to accommodate this? All questions I’ll leave here for now, apart from to say that I can imagine some sort of offsetting and mitigation of this cliff edge would be required to make it politically palatable.

On sketching how UBS shelter could be dynamic Andrew has envisaged that the tenancy length could be from “3 months to 30 years”. That’s a welcome clarification, but it means there is also a cliff edge for those who are allocated homes; the transformative aspect of UBS shelter and all the benefits it offers will come to an end for many. Yes, that means that they will be able to get a less-basic home, but it means they will have to pay for it and their utilities. They will have got used to the income they received being able to pay for much more, but when they roll off the service they will find themselves much worse off.

Perhaps a tax credits example is required here? In order to solve an issue of big overpayments, a large (ie. £25,000) in-year disregard was applied to changes of income. This meant when someone’s income increased by, say, £5,000, in the middle of the tax year it didn’t change the amount of tax credits they received straight away. They got used to their higher income, took out contracts and loans based on their income, started doing things they previously couldn’t afford like eating out, etc. In brief, their standard of life rose considerably.

Then the new financial year came along and their tax credit payments suddenly reduced. They had less income than before, they couldn’t afford the contracts or loan repayments (and thus had credit companies chasing them), couldn’t eat out either at all or as often. In brief, their standard of life rose and then fell as a result of the tax credit changes. It didn’t fall as much as it had risen, but they didn’t feel that way.

I think there is a real risk in UBS shelter that a similar thing could happen, people will -even if they know the tenancy is coming to an end- expect the experience of UBS shelter to be an improvement in their way of life. Even if they are better off financially or in terms of housing need at the end compared to the beginning, will they feel that way if they have a higher standard of living in the middle?

These are not fatal issues with UBS shelter, they are simply things that need to be considered as the policies are worked up. But they do lead to the question of whether UBS shelter would be better than other ways of financing, building and then allocating a large number of affordable homes.

That’s something we need to look at in the round, comparing this to other affordable housebuilding policies (of which there are many) and looking at their chances of political and economic success and the overall impact they would have. It requires us to be self-questioning and open to debate, but also prepared to work together on the solutions, whether they are quick or slow, in order to ensure everyone can access basic services.

Blurring the universal

When Jonathan Portes has put his mind to something the policy community usually sits up. So this week we have been like meerkats, with the launch of the IGP report on Universal Basic Services.

Having read it through a couple of times, I have a few comments, which are meant simply to ask for some more information to help us understand what is actually being discussed, especially about housing and food provision.

Whilst the press reporting has mostly repeated the line about this being services for everyone, there is a pretty huge caveat running through the report about the provision of housing and food. Indeed, in the penultimate page of the report out and out says:

“ the options modelled would not be “universal” in the sense of providing free housing to all, or even to all those who would take up an offer of free, basic social housing; similarly the food program modelled is one that would end “food insecurity” rather than provide free food to all or even to all those on low incomes.“

So whilst universal does mean free bus passes, BBC services, broadband, etc. it doesn’t mean housing and food for everyone. It means “everyone who doesn’t have the resources”. So it has a form of conditionality; a bar some will pass and some will not.

This allows for the “universal” services to be highly progressive, but it opens up a whole new can of worms.

Firstly, where and how do we draw the line? At some point, assuming this is arranged by income (with perhaps an income proxy for capital) or housing need, there will someone who gets a house rent free with cash for utilities and someone else, on a slightly higher income or in slightly less need, who doesn’t.

That has the potential for all sorts of difficulties- political, societal and legal. Sure, we’ll assume the person just outside the line can still receive some support for housing (through Housing Benefit, Support for Mortgage Interest or Universal Credit– good luck to them!) but it has the potential to create a significantly unfair situation where one family is significantly helped and another very much like it has to deal with the benefit cap, LHA rates, etc.

The paper also presents people’s situation as effectively static- those in the lowest decile stay there and so on. Whilst this is sadly true in many cases, trying to make the system dynamic has the potential to redouble this problem, particularly in terms of housing. The paper suggests that rent and utility free homes could be provided for 30 years. That’s a long time and some people’s income will change. Is the paper really suggesting those who do well can continue to live rent free for a generation whilst other who fall on hard times get hard cheese?

I’m sure there are ways around this issue, but on the first couple of reads it looks like there is the potential for quite a big cliff edge between the “haves” (who, confusingly in this situation, to begin with, have not) and the “have nots” (who have slightly more to begin with!).

There are probably ways around this, most likely trying to ease the burden on those outside of the group receiving housing. But that would need to be costed itself and included in the price of the policy.

Another way would be to apply an income based approach but this would very quickly collapse back into something like a means tested benefit- exactly what they are trying to avoid!

Of course the reason housing cannot practically be a universal service is that would require public ownership of the means of accommodation. No elected government in the UK is likely to consider confiscating people’s homes for the greater good.

So, given 2 of the 4 new services being suggested for universalisation are not universal, is this just good branding of extending the welfare state? Free bus passes and kitty gifs for all as cover for social housing for some?

That wouldn’t be a bad thing. If a bit of canny marketing is required to get more affordable homes built and a better safety net for those who need food then I can live with it.

But I’d rather have a full and frank discussion about the changing nature of work, productivity any support for those who would otherwise lose out as our society and economy continues to change.