Wednesday 21 February 2018

Universal basic housing: could it work?

Currently, we have a plethora of different schemes designed to house those on incomes so low they can't afford to cover the cost accommodation. Stock photo: PA
Currently, we have a plethora of different schemes designed to house those on incomes so low they can't afford to cover the cost accommodation. Stock photo: PA

Ronan Lyons

This Tuesday, Social Justice Ireland is holding its annual conference in Croke Park. The topic is an idea that has been aired quite a bit around the globe in recent years, a universal basic income.

The idea of a universal basic income is that people have a right to a certain standard of living and thus that the Government has a responsibility to provide that. The State already attempts this partially with universal child benefit and pensions for those under and over working age.

But providing everyone with an unconditional income is somewhat controversial - mostly because of the cost. The first job of society is to decide the bundle of necessary goods and services that are rights, rather than luxuries and then cost these. If, totting up the various headings such as food, shelter and other services, this came to a cost of €10,000 per person a year, then the cost of such a plan would be roughly €46bn in Ireland.

This money would be spent instead of - rather than in addition to - existing transfers, such as unemployment benefit, child welfare and pensions. Realistically, it would be a lower cost given the one million residents under the age of 15 as well as the savings when people live in households or three or more.

But still, it is the high cost of a universal basic income that scares off many people who otherwise support the idea in theory. To me, it is more of an end goal rather than an overnight transition - precisely for this reason. And housing makes sense to me as the place to start.

Currently, we have a plethora of different schemes designed to house those on incomes so low they can't afford to cover the cost of their accommodation needs. This includes rent supplement, Part V and a huge variety of schemes that differ across local authorities.

But all of these schemes are ultimately trying to address the same underlying problem: if a household doesn't earn enough, it won't be able to afford accommodation. The solution, therefore, is to ensure that - regardless of how low non-housing income is - every household in Ireland can access good quality accommodation.

This is a particular challenge in Ireland now. The figure accompanying this chart shows the average cost per month of renting a room in Dublin over the last 15 years. For a single room - the only option for many of Ireland's lowest-income households - the cost rose from €375 a month to €425 between 2004 and 2007. During the crash, it fell to less than €340 per month but now stands at over €500 a month.

For households that have no option to live in anything but a single room, this means that their annual accommodation bill has gone from €4,000 a year in early 2010 to over €6,000 a year now. Even compared to the height of the Celtic Tiger, they are paying 20pc more for shelter.

A simple option is to match this market rent using the 'golden rule' of housing affordability. That rule of thumb states that no more than roughly one third of after-tax income should be spent on accommodation.

A single person on social welfare payments of €250 a week could be expected to spend no more than €350 a month on accommodation - well below the €500 market rate. A fair system, one where there is an effective right to housing, would means they receive a top-up of €150 a month to ensure they have sufficient post-shelter income.

This, of course, still ignores where the housing comes from. Suppose the Government replaced the many current distortionary systems at work in social housing, such as rent supplement and Part V, with a single housing subsidy, based on the difference between a household's ability to pay and its housing needs.

This would then in reality give the approved housing bodies the collateral they need to go and build social housing. They could do this alone, or in partnership with local authorities and/or private developers. Anyone renting a home would have the ability to cover the cost - even if they lost their work. And if their income went up, the support they received would simply fall in proportion.

What I am suggesting is closer to a negative income tax than a universal income. I am also suggesting it only for housing, as I believe this is where the system (ie, the market plus the Government) is currently failing to meet people's basic needs the most. However, supporters of a universal basic income could also see this as the first step on the road to making real the economic and social rights espoused in Ireland, Europe and at the UN.

  • Ronan Lyons is assistant professor of economics at Trinity College and author of the reports

Sunday Independent

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