Wednesday, 27 October 2010

The stupid is spreading

The coalition government in Britain recently outlined plans to reduce the role of social housing. This included ending tenancies for life, instituting a means test qualification and raising rents to match the market. I said, this was stupid. Unfortunately, it looks like the stupid is spreading to New Zealand (1).

Means testing is a disincentive for people bettering themselves. If moving off the benefit, or taking a new job is going to mean you have to move from cheap, secure accomodation to the expensive, insecure private sector, it is a very compelling reason not to do it.

It also changes the role of state housing. Social housing was intended to accomodate people from all social backgrounds - hence, the idea of a means test was anathema to the philosophy underpinning it. Obviously, people with wealth didn't need it - but if they had become weathly since being allocated a state owned house, they weren't forced out.

Reserving it only for the poorest and most needy would - inevitably - mean it would become the preserve of the poorest and the most needy. The 'social tapestry' envisaged in the classic model, where a a wealthy family might live next door to someone poor, will be replaced by ghettos, where poverty is the sole thing uniting the occupants. Being given a state house will not be a starting point for a new life, but a signal that you've reached the very bottom.

This has broader implications as well. Areas where there are state houses will become stigmatised, because of the prejudices that will accrue to the tenants. This, of course, already happens, but reserving state houses for the most desperate will accelerate and intensify the process.

Saying that state housing should be provided based upon need sounds good, but it misses the real cause of the problem - lack of supply. If there is a such a desperate shortage of state housing that people need to be moved out of them to make way for those with greater need, then the more sensible solution would be to build more.

Interestingly, this might also have the effect of lessening the upward pressure on private sector prices, meaning that more people would be able to move out of the public sector - if they wanted to.

Its a policy dressed up in the rhetoric of concern that conceals a rather stupid, and ultimately ideological, intent.
1 - "'State house for life' axed in review plan," by Derek Cheng. Published in the New Zealand herald, 25th of October, 2010.

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